This year’s State of the European Union address was the first to take place while a war raged on the continent. As expected, support for Ukraine and condemnation of Russian President Vladimir Putin featured prominently.
The corresponding energy crisis was also top of mind – bills are expected to soar this winter, and as some MEPs demonstrated in the subsequent debate, many citizens are already suffering from high energy prices. One of the main takeaways from European Commission President Ursula von der Leyen’s speech was that “Europe will respond”. As for what that response will look like, let’s dig into her speech.
“Europe’s solidarity with Ukraine will remain unshakeable.”
Like many of the policymakers present, von der Leyen was clad in the colours of the Ukrainian flag, and the First Lady of Ukraine, Olena Zelenska, was the guest of honour at the proceedings.
After praising Ukraine as a nation of heroes and emphasising the importance of courage and solidarity, von der Leyen asserted that Europe would prevail in the fight against Putin. She also stressed that sanctions are here to stay, and that it is time for resolve, not appeasement.
The only tangible aid promised for Ukraine was €100 million to support the rehabilitation of damaged Ukrainian schools. von der Leyen also announced that the Commission will work with Ukraine to ensure seamless access to the Single Market.
Yet for all the talk about the courage of the Ukrainian people and EU solidarity efforts, there was no mention of defence in her speech – a surprise, given that this year’s the Commission made strides this year to strengthen the bloc’s military capabilities.
“Russia keeps on actively manipulating our energy market.”
Von der Leyen placed the blame for the current energy crisis firmly at the feet of Putin (a point she hammered home in the debate that followed), while also acknowledging that the climate crisis has aggravated the situation. Taking inspiration from the bloc’s people – specifically workers in ceramics factories in central Italy who moved to early morning shifts to benefit from lower energy prices – she called for Member States to reduce their overall electricity consumption. (Later in the day, Parliament voted in favour of revising the Energy Efficiency Directive to raise the EU target for reducing final and primary energy consumption.)
As for a more immediate and targeted attempt to mitigate escalating energy prices, von der Leyen announced that the Commission was proposing a cap on revenues of companies that produce electricity at low cost. Those profits, which she put at more than €140 billion, will then be channelled back to those who need it most.
She also proposed reforms to the gas market – citing that the TTF benchmark has not adapted – and the electricity market, specifically decoupling electricity prices from gas prices. The latter was of particular interest to MEPs in the debate that followed, and many pressed von der Leyen for a timeline. Her response was that she hoped and expected the Council to decide on the revenue cap by the end of September, and that decoupling electricity and gas will come by the end of the year.
“Hydrogen can be a game changer for Europe”
As for the European Green Deal, the main announcement was that the Commission will create a new European Hydrogen Bank, which will help guarantee the purchase of hydrogen and invest €3 billion to construct a future hydrogen market.
“We must remove the obstacles that still hold our small companies back.”
The Commission will put forward an SME Relief Package to support the small companies that are the backbone of the bloc’s economy. It will include BEFIT, a proposal for a single set of tax rules for doing business in Europe.
In another boost to SMEs, the Commission will revise the Late Payment Directive, because, as von der Leyen explained, it is not fair that 1 in 4 bankruptcies are due to invoices not being paid on time. She hopes it will be a lifeline for millions of family businesses.
“New partnerships help us not only to strengthen our economy, but also to advance our interests and our values globally.”
Trade agreements with like-minded partners are crucial to gain access to rare earth metals, which will soon be more important than oil and gas. And, as the bloc learned with fossil fuels, dependency on one country for natural resources comes with a high price. Consequently, von der Leyen announced that she will submit trade agreements with Chile, Mexico and New Zealand for ratification.
She also announced that the Commission would put forward the European Critical Raw Materials Act to identify strategic projects along the supply chain and build up reserves. The aim is to decrease dependency on one country not only for rare earth metals but also for the processing of these metals.
Part of advancing the EU’s interests globally includes deepening ties and strengthening democracy on the continent. Speaking to the people of the Western Balkans, Ukraine, Moldova and Georgia, von der Leyen emphasised that their future is in the Union.
Moreover, building on the success of the Global Gateway investment plan, which has already led to the construction of two factories in Rwanda and Senegal to manufacture mRNA vaccines, the bloc will similarly invest across Latin America as part of a larger engagement strategy. She later clarified in the debate that the Commission plans to do the opposite of China – be transparent and not leave these countries with a huge debt burden.
“The Commission will present measures to update our legislative framework for fighting corruption.”
Von der Leyen was met with vigorous applause when stating that the bloc must eradicate corruption at home if they want to be credible when asking candidate countries to strengthen their democracies. To do so, the Commission will raise standards on offences such as illicit enrichment, trafficking in influence and abuse of power, beyond the more classic offences such as bribery.
“I believe that it is time to enshrine solidarity between generations in our Treaties.”
The moment has arrived for a European Convention in order to amend the Treaties, argued von der Leyen, especially if the EU is serious about preparing the world for tomorrow and creating a larger Union. As she said, “we need to improve the way we do things and the way we decide things.”
In conclusion
It was interesting to note that early in her speech, von der Leyen praised the bloc’s improved crisis response time. As she explained, after the financial crisis hit 15 years ago, it took the EU years to find lasting solutions; when the pandemic hit, mobilisation occurred in a matter of weeks; and when Russia invaded Ukraine, the reaction was immediate. But by doing so, she inadvertently underlined a point that multiple MEPs raised in the following debate about rising prices this winter: How quickly can the bloc act? When can relief be expected?
The implication being that it can’t come soon enough.
Click here to read the full speech by President von der Leyen.