The new European Commission faces three major challenges

Will the European Union remain a key player in the emerging global order or will it lose relevance? That’s the question many commentators are asking themselves after Ursula von der Leyen unveiled the new European Commission in Brussels last week.

One thing is clear: the conditions that allowed the Union to expand from 12 member states after the Second World War to the current 27 in the wake of the Cold War no longer exist. After 1989, many in the West believed that the global adoption of a US-led political and economic model was both desirable and achievable. That belief has since proven to be an illusion.

Today, we are witnessing the emergence of a multipolar world. The process appears chaotic, often violent and associated with an increase in military conflicts. Isolationism, nationalism and protectionism are gaining ground in many parts of the globe. This is almost the antithesis of the environment in which the EU has become an economic power – and in which it has remained a political and especially military weight.

Can the EU maintain its status as an economic powerhouse and also become a significant geopolitical force? In trying to do this, it faces three major challenges.

1. Political polarization

Extremist movements on both the left and the right are gaining ground in many European countries, including the EU’s two largest member states, Germany and France. In Berlin, the ruling “traffic light” coalition – named after the colors associated with each of its three parties – is struggling to limit the rise of the far-right Alternative for Germany, or AfD, and the far-left Alliance Sahra Wagenknecht, known as BSW, in the eastern regions of the country. Meanwhile, in France, the conservative government relies on the tolerance of the far-right National Rally and faces staunch opposition from the left-wing France Unbowed party.

The rise in extremism reflects a wider crisis of confidence. Many voters are increasingly disenchanted with the socioeconomic, political and cultural foundations of their societies. This can be seen in the growing virulence of the migration debate, as well as in the intensifying and increasingly intractable culture wars. As a result, some countries have become vulnerable to authoritarian governance. For example, illiberal democracies have taken root in Hungary, Slovakia and Serbia, where separation of powers and freedom of the press are sacrificed in favor of an all-powerful executive.

This crisis of confidence has also made societies more susceptible to Russian disinformation and Chinese and Islamist propaganda. In particular, far-left and far-right parties reject the EU as a universalist and capitalist project. Their power weakens the EU at a time when European unity and decisive action are more critical than ever

2. Productivity challenges

Europe’s economy risks falling behind that of the United States due to insufficient productivity gains. The Draghi report and the ensuing debates over its proposals only reaffirmed these concerns. The key factor limiting productivity is Europe’s fragmented, nationally structured economy, which lacks the scale to compete with global giants. Europe has few truly large corporations outside of sectors such as automotive and healthcare. However, the most significant productivity gains are in other areas, especially technology and communications. It is in particular the telecommunications sector where regulation in Europe is still highly concentrated at national level – as is the defense sector.

A tension remains between the EU’s commitment to competition within the single market and its ambition to foster industries capable of competing with Chinese and American rivals. Mario Draghi, former President of the European Central Bank and former Italian Prime Minister, made this issue clear in his recent high-profile report on European productivity. The rejection in 2019 of the merger between Alstom (France) and Siemens (Germany) provided an example of regulation that strengthens free markets but simultaneously stifles the emergence of firms capable of becoming world leaders, he said.

Like many others, Draghi has called for greater integration of national capital markets to facilitate access to (venture) capital. However, some of his report’s other proposals remain divisive. For example, he estimated that the EU needs to invest an additional €750 to €800 billion annually, which he argued should be done jointly, including through joint debt issuance. In Germany, even the mention of common EU debt can shut down any discussion of EU competitiveness. As a result, it remains unclear whether this critical issue will gain political traction or whether Draghi’s report will simply end up gathering dust.

3. Geopolitical uncertainty

The EU’s foreign policy framework was developed in an era when peace reigned in its neighbourhood, multilateralism was valued and international relations were rules-based – at least in theory. That era is over. The question now is whether the EU can adapt to this new reality.

The European Union Institute for Security Studies has given this some thought. The think tank proposed abandoning the European Neighborhood Policy, which applied a uniform approach to political and economic relations with neighboring countries. Instead, the institute argued, the focus should shift to building deeper ties with strategically important partners, especially those along the southern Mediterranean, which play a key role in migration issues. Von der Leyen’s appointment of a new commissioner specifically tasked with tackling this region has been welcomed by many.

EU foreign policy must also involve strengthening the EU’s engagement with difficult partners and competitors, including China. The EU has enough leverage as a trading partner to put pressure on Beijing, particularly over its tacit support for Russia’s war in Ukraine. This could also involve the gradual integration of Eastern European countries such as Ukraine, Moldova and Armenia, as well as the Western Balkans, into the EU’s common foreign and security policy.

The think tank also suggests increasing the role of EU foreign policy chief Kaja Kallas. Instead, he argues that he should be given the title of security adviser, similar to the national security adviser in the United States, and should be given greater influence over the bloc’s defense, energy, migration and technology agendas. Finally, the institute suggests that the EU’s civilian and military missions be strengthened and focused on fewer locations, starting with a military training mission in Ukraine.

These are thoughtful proposals. However, the central question remains: can the 27 member states reach a consensus on these or similar measures and agree to give up the elements of national foreign policy sovereignty that this would entail? The probability seems low.

The prospects for reforming the EU are weak

Currently, the most influential EU member states, Germany and France, are barely visible on the scene in Brussels. Like many of their neighbors, they are paralyzed by internal divisions. In economic policy, the question of how the EU can strengthen its competitiveness against global rivals remains controversial. On security policy, it is far from certain whether the fragile unity on support for Ukraine will hold in the coming months.

Thus, the chances of the EU making significant progress as a geopolitical actor within the new Commission seem slim. The bloc lacks both the governance framework and the political legitimacy to lead such a transformation. The Commission remains a paper tiger, which depends on the approval of member states for all major decisions – and often even requires their unanimous agreement.

The fact that the President of the Commission is centralizing executive power in his own hands like never before, mercilessly clearing rivals, does not change anything in this reality. But at least one long-standing question – posed by Henry Kissinger, who famously asked “Who do I call if I want to talk to Europe?” – can be answered now, post mortem. The person to call is now clearly Ursula von der Leyen.

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