Europe is in a fight

Noah Barkin.  @noahbarkin

Writer, analyst, adviser, speaker. I follow Europe’s relationship with China for Rhodium Group and the German Marshall Fund

European Commission President Ursula von der Leyen delivered her annual State of the European Union speech today. This is what jumped out at me.

Does Europe have the stomach to fight?

In past years, she has used the address to announce big new initiatives, like the EU’s anti-subsidy investigation into Chinese electric vehicles. There were no major surprises this year. But she did begin her speech with an unusually stark message about the gravity of the challenges (Russia, China, US, economic, technological) that Europe faces.

Here are some of her most interesting quotes in this vein:

“Europe is in a fight. A fight for our values and our democracy. A fight for our liberty and our ability to determine our destiny for ourselves. Make no mistake, this is a fight for our future.”

“Battle lines for a new world order based on power are being drawn right now. So yea, Europe must fight for its place in the world, in which many major powers are either ambivalent or openly hostile to Europe. A world of imperial ambitions and imperial wars. A world in which dependencies are ruthlessly weaponized.”

“The central question for us today is a simple one: does Europe have the stomach to fight? Do we have the unity and the sense of urgency, the political will and the political skill to compromise? Or do we just want to fight between ourselves, be paralyzed by our divisions. That is what all of us have to answer.”

More sanctions on Russia

On Russia, she called for more sanctions, a faster phasing out of Russian fossil fuels in Europe and the mobilisation of Russian frozen assets to provide Ukraine with a reparations loan. She said Europe stood in “full solidarity” with Poland following the “reckless and unprecedented” violation of Polish and European airspace by Russian drones.

But there was no mention of reported demands by US President Donald Trump that Europe impose tariffs of 100% on China and India for their ongoing purchases of Russian energy.

Barely a mention of China

Von der Leyen spent the final years of her last mandate focused on China, unveiling an economic security agenda, pushing through tariffs on Chinese electric vehicles, and wielding new instruments like the Foreign Subsidies Regulation and International Procurement Instrument in a bid to level the economic playing field. In recent state of the union speeches, she announced a China-focused forced labour ban and the trade investigation into Chinese EVs. But this speech barely touched on China and offered nothing new on how the EU plans to approach its two main concerns with Beijing: Chinese overcapacities and its support for Russia’s war in Ukraine.

This underscores how much bandwidth is being eaten up by the war in Ukraine, the broader threat from Russia, growing uncertainties in the transatlantic relationship, Israel’s war on Gaza, and Europe’s economic troubles – all of which received prominent mention in the speech. It is surprising that Von der Leyen did not go into more depth on her economic security and trade defence agendas. She made no mention, for example, of Commission plans to unveil an “economic security doctrine” by year-end.

This may be a reflection of the fact that she has spoken extensively about the EU’s approach to China in recent months, including at the G7 summit in June and the EU-China summit in late July. It may also reflect ongoing uncertainty surrounding the trajectory of US policy toward China. The Commission’s economic security strategy was developed in close consultation with the Biden administration. It could also be a sign that the Commission’s strategy of slowly rolling out very targeted tools aimed at China is running up against its limits.

What Von der Leyen did say on China-related issues was this:

That the EU would look more closely at the support that third countries are providing to Russia

That the EU will introduce a “Made in Europe” criteria in public procurement (an idea already floated in previous Commission documents)

That global overcapacity was squeezing the margins of European companies and that a new long-term trade instrument would be proposed to replace expiring steel safeguards (also not new)

That Europe cannot allow China to conquer the global car market

That Europe needs to double-down on diversification and on seeking new partnerships

A robust defence of the EU-US trade agreement

Von der Leyen defended her trade agreement with Trump amid criticism from some member states and members of the European Parliament, who must approve the deal for it to go through. She said that Europe had secured the “best possible deal” and that it was a better agreement than those clinched by other US trading partners:

“We have put our companies at a relative advantage. Some of our direct competitors face much higher tariffs.”

Digital regulations are a red line

However, she also made clear that there was no room for negotiation on the EU’s digital and environmental regulations, amid pressure from the Trump administration for Europe to weaken or dismantle some of its rules, including the Digital Markets Act and Digital Services Act. She said:

“I want to be crystal clear on one point. Whether on digital or environmental regulations, we set our own standards, we set our own regulations, Europe will always decide for itself.”

Australia-style age limits for social media

Interestingly, she suggested that the EU could follow Australia’s lead in imposing age restrictions on social media, saying she would ask a panel of experts to come up with policy recommendations by the end of the year:

“When it comes to kids safety online, Europe believes in parents, not in profits

She also vowed to build a coalition of like-minded countries to reform the global trading system, pointing to nascent conversations between the EU and members of the CPTPP. But there was little in the way of detail here.

An avalanche of other new initiatives

There was not a major new initiative that stood out today, but that doesn’t mean that there were not a lot of new projects floated in the speech, in addition to the ones listed above. Among them:

A European drone alliance with Ukraine under a new program dubbed “Qualitative Military Edge”

An “Eastern Flank Watch” involving real-time space surveillance that allows Europe to respond swiftly to any movement of Russian forces.

A proposal on a partial suspension of the EU’s association agreement with Israel as it relates to trade.

A “Single Market Roadmap” for 2028 that is meant to impose clear deadlines on the completion of the single market in sectors like finance, energy and telecommunications

A “Buy European Food” campaign

A new “Media Resilience” program