The makings of a ‘geopolitical’ European Commission
29 Nov 2019|

On 1 December, Ursula von der Leyen will finally take office as president of the European Commission. She has promised to lead a commission that will avoid a scenario in which, as French President Emmanuel Macron recently warned, Europe might ‘disappear geopolitically’ amid an escalating Sino-American rivalry.

To be sure, the European Union has the largest market in the world, the second-highest defence spending (after the United States), 55,000 diplomats, and the world’s largest development-assistance budget. But these strengths are constrained by the fragmentation of European power both between and within member states and EU institutions. While China and the US are both adept at integrating geopolitics with their economic interests, the EU stubbornly acts as if these were separate agendas.

If von der Leyen is to succeed in building an effective ‘geopolitical commission’, she will need to pass seven big tests. The first will be to build unity behind her proposed European green deal, which she has made one of her central priorities. The question is not just whether she can direct an effective European response to climate change, but whether she can prevent the issue from becoming another front in the culture war between the EU’s western member states and the cohort in Central and Eastern Europe.

Voters in the Czech Republic, Poland and Slovakia are ambivalent about whether climate change needs to be addressed at all. If von der Leyen’s commission doesn’t take steps to bring these populations on board, the European green deal could reprise the politics of the euro and refugee crises, when marginal EU constituencies felt neglected by more powerful actors in the EU core (many of whom were clearly convinced of their own moral superiority).

Second, von der Leyen’s commission will have to be open to potential countermeasures against America’s weaponisation of the dollar. Since US President Donald Trump withdrew from the Iran nuclear deal, his administration has effectively been deciding with whom Europeans may trade, by threatening secondary sanctions against any company that does business with Iran. The challenge for a geopolitical commission, then, is to identify areas where US companies are asymmetrically dependent on Europe, and where European sanctions (or the mere threat of sanctions) could be deployed to maximum effect. This strategy has already proved effective in the standoff over auto tariffs.

Third, von der Leyen’s commission will have to take up the issue of European defence. There are three discernible camps. The first includes the French, who want to achieve European strategic autonomy and end the bloc’s dependence on the US. The second camp, epitomised by Poland, favors ‘strategic servitude’ and wants to double down on the transatlantic relationship by purchasing more US equipment and establishing ‘Fort Trumps’ to keep the US engaged on the continent. The third, represented by Germany, advocates ‘strategic patience’, based on the hope that Trump’s eventual departure will allow for a return to normality. The only way to reconcile these views is to strengthen Europe’s contributions to NATO, so that it is seen as a better partner to the US.

Fourth, von der Leyen’s commission must reconsider the EU’s competition policy, which currently focuses only on state aid and other unfair practices within Europe, while ignoring unfair competition from abroad. Fifth, and on a related note, the commission will need to develop a screening mechanism for foreign investments that both protects sensitive sectors and compensates EU member states that are asked to turn down foreign capital. In addition to establishing common screening procedures, the EU should empower the commission to veto foreign investments on security grounds, with the European Council retaining the final say (through qualified majority voting).

Sixth, von der Leyen’s commission will need to develop a European cyber defence agency worthy of the name. Specifically, the EU’s new leaders should transform ENISA (the EU Agency for Cybersecurity) into a well-staffed and well-financed institution with centralised computer emergency response teams, cyber forensic squads, and legislative representatives to push for stronger security protocols across the bloc.

Finally, von der Leyen will be tasked with repositioning the European Investment Bank and the European Bank for Reconstruction and Development as credible counterweights to China’s Belt and Road Initiative. So far, the EU hasn’t taken a strategic approach to reshaping the global financial architecture, and its response to China’s global investment and development activities has been timid at best. Giving the EIB and the EBRD a global remit to fund projects outside of Europe would help to reverse this failure. It would also allow Europe to bail out countries facing fiscal or financial crises in the event that the US or China ties the hands of the International Monetary Fund or other institutions.

Each of these seven tests is in an area where the EU could potentially become a key global player, capable of holding its own with other great powers. But each challenge will require genuine unity among Europeans, with EU institutions and member-state governments working together seamlessly.

Rather than dealing with these issues in a piecemeal fashion, von der Leyen should pursue a grand bargain that gives real meaning and shape to the next five years of EU policymaking. Among other things, that will require creative thinking about the next seven-year budget framework, which should be used to marshal the resources that Europe needs to establish itself as a global player, and to advance innovative measures like green bonds, digital taxation and carbon pricing. Only then will ‘geopolitical commission’ be a turning point, not a sound bite.