EU Builds Team to Avoid Draghi’s Warning of ‘Slow Agony’ Ahead
(Bloomberg) -- Ursula von der Leyen announced an ambitious restructuring of her European Commission, adopting some of former European Central Bank President Mario Draghi’s proposals aimed at making the bloc more competitive.
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Von der Leyen, who is German, announced key roles in the European Union’s executive arm for France, Spain and Italy to lead a fresh industrial strategy aimed at digitalizing the bloc’s economy and making it more climate-friendly at a time of increased rivalry with the US and China.
Draghi warned last week that the EU would face a “slow agony” if it didn’t boost its competitiveness to better contend with Beijing and Washington, which have invested more in their own economic transformations. Not everyone in the bloc agrees, with countries including Germany and Sweden pushing back against his bid for joint borrowing to finance the transformation.
Von der Leyen told reporters on Tuesday that her new commission was designed to promote prosperity, security and democracy. She said this would prepare the EU for what she described as its “twin transitions”: decarbonization and digitalization of the economy.
“This is one of the main recommendation of the Draghi report,” she said. “Strengthening our tech sovereignty, security and democracy. Building a competitive, decarbonized and circular economy, with a fair transition for all.”
Von der Leyen granted key portfolios in the commission to larger member states, cementing influential capitals’ support as she seeks to implement an ambitious legislative agenda. In addition to the EU’s economic transformation, the commission will be contending with a war raging on its border as well as a surge in populist parties — particularly in France and Germany — that’s rewritten the European political script.
Her slate of commissioners still needs to be approved by the European Parliament, which will hold confirmation hearings in the coming weeks.
Despite a warning from European Socialists not to offer a key position to the far right, von der Leyen appointed Italy’s Raffaele Fitto to one of six executive vice president roles, overseeing the expenditure of nearly €400 billion ($445 billion) under the EU’s cohesion budget. Fitto comes from Prime Minister Giorgia Meloni’s conservative, populist Brothers of Italy party.
Meloni, who voted against von der Leyen’s appointment, praised Fitto’s assignment, hailing the “newfound central role” of Italy in the EU.
“The fact that a candidate from a far-right government is nominated as vice president of the European Commission remains a big concern for our group,” Terry Reintke, president of the Green party in the European Parliament, said after the announcement. “Appointing Raffaele Fitto could create a dangerous shift toward the far right in the commission and endanger the pro-democratic majority in the European Parliament that voted for Ursula von der Leyen in July.”
Green Ambitions
The protests by farmers against the Green Deal, and concerns from industry that the costs of the ambitious net-zero goal for 2050 will hamper European manufacturers, led von der Leyen to change her tactics in the second term.
She is poised to continue the energy transition, nominating Spain’s Teresa Ribera as an executive vice president in charge of both preparing the ground for a new 90% emissions reduction target for 2040 and coordinating the work on the Clean Industrial Deal. Ribera will also hold the influential antitrust portfolio.
The new initiative that aims to ensure the competitiveness of the EU industry during the shift to sustainable future will also involve oversight from France’s Stephane Sejourne. Von der Leyen pledged to unveil the details of the plan within the first 100 days of the new term.
Von der Leyen “aligned skillfully her team toward a clean industrial deal as the next stage for the Green Deal,” said Jos Delbeke, a professor at the European University Institute in Florence and a former senior climate official at the commission.
There is, however some risk that the overlapping responsibilities of her team could lead to internal conflicts over policy. Chris Glueck, managing director at Forefront Advisers, a political intelligence firm, said that Ribera, who championed green policies in Spain, will have to work with Dutch conservative Wopke Hoekstra, who is expected to continue in his role as climate commissioner, where he has pushed a more pragmatic approach. He added that pair could also find themselves at odds with Sejourne and his mission.
“This is the apparent fault line for conflicts in the next term,” Glueck said.
Budget Reform
The shape of the EU’s next long-term budget is set to be one of the most contentious issues for the next commission. Von der Leyen is seeking to reform the way the 27-nation bloc allocates and spends its common funds in the next seven-year budgetary period starting in 2028, making it “simpler, more focused and responsive.”
The next budget commissioner, Poland’s Piotr Serafin, a well-known figure in Brussels and skilled political operator, was tasked with designing the overhaul.
Serafin will be one of the new heavyweights together with seasoned members of the EU executive such as Valdis Dombrovskis and Maros Sefcovic, part of a centralized chain of command designed to strike a delicate balance.
Von der Leyen had said she wanted a gender-balanced commission, but struggled to persuade countries to put forward both male and female nominees, meaning she had to settle for a slate where only 11 of the 26 choices were women. Four of her six picks for executive vice president roles, however, were women.
She had 11 women when her first commission took office in 2019.
Beyond its borders, the European bloc will face mounting pressure stemming from Russia’s invasion of Ukraine and the tensions from Israel-Hamas war in Gaza. To face a more unstable and hostile environment, von der Leyen nominated candidates from the Baltic and Nordic nations — some of the most hawkish among their colleagues — especially when it comes to Russian President Vladimir Putin.
Together with the leaders’ choice of Kaja Kallas from Estonia as EU’s top diplomat, she proposed Henna Virkkunen to deal with issues of security and the protection of democracy among others, as her home nation Finland is accustomed to dealing with the risks of hybrid warfare and is an expert on civil preparedness. Meanwhile, Lithuania’s Andrius Kubilius will drive the common push to launch the European defense industry as the EU seeks more autonomy and ramp-up its arsenal.
--With assistance from Andrea Palasciano.
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