The European Union, born out of a vision for peace, unity, and prosperity, is now at a pivotal juncture. This transformative phase, marked by environmental, political, and geopolitical challenges, calls for decisive action.
Here’s a look at three pressing areas where tough decisions beckon:
- Re-orienting the EU Green Deal: from emissions reduction to re-industrialisation?
The Green Deal, hailed as Europe’s ‘man on the moon moment’, represents the world’s most ambitious regulatory roadmap towards net-zero by 2050. However, the political capital and resources required to achieve it are enormous. While the ‘Fit-for-55’ legislative package to reach our 2030 climate goals survived, the all-important implementation phase at national level has not yet gotten underway. With increasing inflationary pressures, the Russian invasion of Ukraine, the residual effects of the energy crisis and the pandemic aftermath, there’s an echoing uncertainty in some national capitals and among the largest political groups: can Europe afford the Green Deal in its current form?
This has given rise to an essential debate. Some argue that the very fundamentals of the EU Green Deal, including chunks of its funding, might be better redirected towards the re-industrialisation of the European economy. Some decision-makers, for example, want to connect revenues from the Emissions Trading System with the Net Zero Industry Act. One can argue that there is no political consensus (yet) to reverse EU sustainability efforts and decarbonisation policies, but rather to adapt them to serve a dual purpose: ensuring a successful transition while reigniting Europe’s industrial heartlands. The balancing act between climate action and economic rejuvenation remains a tough one. The EU needs to revitalise its industrial players, encompassing both upstream and downstream, fostering an open debate around mining on European soil. The distinction between heavy or energy-intensive industries (metals, fertilisers, chemicals, among others) and clean tech industries (renewables, batteries, heat pumps, hydrogen, data centres) is becoming harmful, as it undermines the necessity to reinforce new regional and global value chains with integrated industrial ecosystems.
- The war in Ukraine: enlargement (widening) or reforming the club (deepening)?
The ongoing Russian invasion of Ukraine poses a fundamental challenge raised during the State of the Union address. As Ukraine inches closer to the European ideal in its democratic pursuits, its integration into the EU becomes a topic of contention. On the one hand, extending EU membership to Ukraine (and other countries such as Moldova and the Balkan states) could cement European values in the region and push back against aggressive geopolitical tactics.
However, the EU is also wary of over-expansion. With 27 members already, decision-making processes are complex, and further enlargement might exacerbate bureaucratic stagnation, which may in turn lead to a chronic incapability to deal with external shocks (e.g., financial crises, conflicts, cyber-attacks, natural disasters, etc.). This dilemma poses a critical question: should the EU prioritise rapid integration at the risk of internal inefficiency, or maintain its current structure – with a potential reform of the rusty Treaty of the EU – and risk losing influence on its Eastern front?
- Geopolitical shifts: pragmatism or soft power?
Global geopolitical changes, marked by the rise of China in critical economic sectors and the United States’ big push in rebuilding its domestic industrial and clean tech power via the Inflation Reduction Act (IRA), compel the EU to rethink its geo-economic strategy and its raison d’être. Historically, the Union has relied on its soft power—trade, culture, and the allure of its vast single market. Yet, as the world increasingly becomes more bipolar, unstable and fragmented, the EU might need to adopt a more pragmatic approach in its foreign and trade policies.
Does the EU then pivot towards a more assertive, geopolitically oriented stance, or does it double down on its soft power strengths, hoping that culture, trade, and shared values will win the day?
The recent concept launched by the President of the European Commission around ‘de-risking from China’ is emerging and will set the tone of the last year of her mandate. The announced anti-subsidy investigation against Chinese electric vehicles shows the direction of the EU – and other cases will pop up via anti-dumping files (read more on the new case on optical fibre cables from China).
There is no doubt that trade defence instruments will regain space in the EU agenda. However, whether we like it or not, a trade offensive will never be a sum-zero game between Brussels and Beijing. It may generate new tensions among larger Member States, as winners and losers may emerge very clearly, increasing the pressure to re-balance the relationship once again.
To conclude, the European Union stands at a moment of reflection, confronted by hard choices. Such trends will set the tone for the upcoming European elections in 2024. Its decisions as a bloc in the coming years will not only shape its future, but also the broader course of international diplomacy, trade, and sustainability. Far from 2019 realities, when Ursula von der Leyen took office, the era of hard choices is now an unescapable reality for the EU and its future leaders.