Ursula von der Leyen delivered the State of the Union 2023 address. It was the last SOTEU before the European elections next year. Eight of our experts explain what particularly caught their attention regarding eight different topics.

Malte Zabel: Much as expected but three things stand out

In large part, this year’s SOTEU was the expected report on the EU’s biggest achievements. Against the backdrop of the EP elections nine months from now, this is all too understandable. And indeed, there are things to highlight. The EU effectively managed the Pandemic, made progress with its Twin Transition, took a more robust role as a geopolitical actor and responded largely united in its support for Ukraine. In many respects, the EU has answered the “call of history”, as von der Leyen put it. Naturally, she underlined this by referring to a number of initiatives her Commission has pushed forward: the Green Deal, the Digital Decade and the Net Zero Industries Act, to name just a few.

Three other aspects stood out in my view:

1) A lot of space for economic issues, which is understandable. Competitiveness, green and digital innovation, trade, diversification of supply chains – all these have long been geopolitical issues, which a self-proclaimed “geopolitical commission” must address.

2) A clear commitment, with a very emotional introduction, to continued support for Ukraine, including a decisive call for EU enlargement. In this context, von der Leyen stressed the urgent need to reform the EU and to do so quickly, although her remarks on a treaty change remained somewhat blurry. The vdL-Commission, in its final months, wants to contribute to the reform debate by analysing policy by policy which changes are necessary and seeks to deliver respective reports to the next Council presidency (Belgium).

3) The things that were missing: von der Leyen largely omitted the issue of fiscal policy, as well as the need to strengthen the EU’s internal cohesion or to upgrade citizens’ participation. Also, she did not mention CSDP issues explicitly, did not elaborate on how to deal with Russia and said almost nothing about the transatlantic partnership.

Miriam Kosmehl: A compelling vision – completing the Union through enlargement

Addressing the Russian war of aggression only after the Green Deal and the competitiveness of European industries is logical because only a strong and united Union can shape the future. As if anticipating the increasing difficulty of maintaining EU-citizens’ support, von der Leyen emphasised solidarity and recalled that “the future of Ukraine is in the European Union”. Like previous statements, this contrasts with being “at the fence of Metternich’s garden”, as Ukrainian intellectual Mykola Riabchuk titled his personal account of painstaking “Europeanization”.

Exclusion has been the feeling of many EU neighbours—until Ukraine’s defiance of Russia’s invasion exposed the ambiguous dichotomy of “deepening versus widening”. Von der Leyen underlined that deepening and widening can move ahead in parallel and that enlargement can still boost progress if paired with EU reforms. Her main message to the candidates, beware of the Rule of Law, was stressed by announcing the opening of the (internal) Rule of Law Reports.

Another Enlargement Package is due in October, to be followed by a European Council decision on opening accession negotiations. The (standardised) focus on Rule of Law fundamentals has so far not delivered for new nor for older candidates. Von der Leyen must insist that the rights of individuals and companies in the Union are to be protected by robust institutions and public servants of integrity. She did deliver a compelling vision: completing the Union through enlargement as an investment in peace, security and prosperity for the old continent. The EU no longer leaves neighbours who see their place as in the bloc to be wooed by those undermining the EU’s values and interests.

Lucas Resende Carvalho: Industrial competitiveness but little new on funding

Industrial competitiveness was clearly a driving agenda of this SOTEU. Apart from calling out external market distortions in the form of heavy Chinese subsidies that damage the European industry, von der Leyen notably stated that the EU would also not accept internal market distortions. This could be a possible hint that the Commission will stay committed to phasing out the current framework of relaxed state aid rules, which strongly favour German industry within the European single market.

Instead, von der Leyen emphasised the need for a European strategy for industry support. However, she fell short on the details of such a plan. A European approach towards industry support has long been on her agenda but has been consistently thwarted by the national heads of state. Therefore, unsurprisingly, no large-scale common instrument was announced to support domestic industrial production. Roughly eight months after her assertive announcement of new billions of Euros for industry support in the form of a European Sovereignty Fund (that ultimately failed to materialise), there was now much less ambition in von der Leyen’s speech. She urged an agreement on the budget proposal for the new Strategic Technologies for Europe Platform (STEP). STEP is a far cry from the original idea of a Sovereignty Fund, as it does not foresee significant fresh money for industry support but rather relies on a reshuffling of existing funds, such as the Recovery and Resilience Facilities and the cohesion funds.

Cathryn Clüver Ashbrook: On AI and tech – the challenge to position the EU as a player, not just a regulator

On technology, the SOTEU was as important for what it said between the lines than for what it didn’t say: Europe is unlikely to catch up on the tech development front with the United States and China, try as it might. Access to the Union’s supercomputers is an important signal for EU AI start-ups to accelerate in this catch-up phase, but it cannot be more than that. Von der Leyen implicitly acknowledges that, unlike previous regulatory initiatives in the tech space (and the DMA and DSA are only now coming into force), the AI Act will need consistent adjusting or be priced out of its effectiveness immediately post-Trilogue based on the speed of AI development alone. For all the regulatory muscle the Union has flexed over the past years, a voluntary declaration by US AI leaders  (published just yesterday) puts Europe back into a reactive posture. To position itself as a player – not primarily a regulator – Europe’s focus will have to be both narrower and deeper, and SOTEU begins to set these priorities, which will need urgent amplification. The EU’s opportunities lie in deep tech, in biotech – and in synthetic biology. IPCEI projects offer a way to focus strategic interest and to connect strategic needs with strategic interests – signalling how these might fit more directly into a tech space could have been a valuable opportunity had it been taken in the speech.

To be sure, norms, rules and standards matter. For too long, China (and, to a certain extent, Russia) claimed too much power in international regulatory and norm-setting bodies. Those days are gone – von der Leyen recommits to these principles. To make up for lost time, however, the EU will need its powerful partners – not least the United States – to realise the Critical Raw Materials Club on surfacing, protecting, and distributing rare and critical materials vital to technological advancement and on engaging in adequate risk management and forecasting to prevent supply chain vulnerabilities and breakage points. And yet Europe’s most powerful partner in its strategic ambitions is almost entirely absent from the speech – perhaps a prudent signal ahead of a volatile election year on both sides of the Atlantic. Still, true guardrails will only be possible with the United States, and with election clocks ticking, these will need to be urgently set.

Cora Jungbluth: Still searching for concrete ways on how to diversify the EU’s economic external relations

Unsurprisingly, Ursula von der Leyen gave the concept of de-risking attention in her address. In particular, she emphasized two aspects and the EU’s related achievements: first, the reduction of critical dependencies to make supply chains more resilient, and second, closer coordination and cooperation with others to diversify external relations.

While the EU has taken substantial steps to achieve the first goal (e.g. Critical Raw Material Act; European Chips Act), this is far less certain in regard to the second. I.e., Ms. von der Leyen came up with no vision for transatlantic cooperation – at a time that is ripe for reviving a transatlantic trade deal to create a serious counterweight to China’s increasing economic leverage.

Engaging with African countries and other regions, which is an explicit goal of the EU, also is a far cry from what it could be. Even more surprising is the fact that Ms. von der Leyen had nothing but praise for the Global Gateway Initiative, which had a rather stuttering start and has been criticized for being too little and too slow compared to China’s Belt and Road Initiative.

The EU therefore still needs to find answers to the question on how to diversify its external relations, including intensifying cooperation with like-minded partners like the US, but also finding new ways to engage with partners in other regions on a more equal footing.

Stefani Weiss: Global Gateway was called a success – but that is premature

When Anu Bradford published her famous book “The Brussels Effect”, corks were literally popping in the Berlaymont. However, the celebratory mood was already dampened at that time. The fact that Ursula von der Leyen took up her Commission presidency with the claim to lead a “geopolitical Commission” meant nothing other than that the EU with its rule-setting and multilateral approach did not cut a good figure in the new era of old great power rivalries.

In this year’s address, von der Leyen mentioned Global Gateway as a success and an important response to China’s Belt and Road Initiative. That is understandable as Global Gateway is a key instrument in vdL’s goal to regain lost political influence through the financing of infrastructure projects in the digital, climate protection and energy, transport, health and education and research sectors around the globe. However, it seems premature to name it a success. For example, it remains to be seen whether the India-Middle East-Europe Economic Corridor project, which was launched only last week on the sidelines of the G20 summit, will actually bear fruit.

In fact, the Global Gateway Initiative, with its nearly 100 projects – all dubbed flagship projects – is in danger of getting bogged down. The 300 billion euros allocated to this initiative in the 2021-2027 budget may ultimately be too little to give the EU brand new prestige and political clout. The Global South has learned to pick and choose, especially if – as the Global Gateway portends – in all these projects, our European democratic values, high labour costs and environmental standards apply.

Nathan Crist: Green Deal – old ambitions, new challenges

The first accomplishment von der Leyen touted was the European Green Deal. However, just four years after its introduction, with Europe reeling from its hottest-ever summer and deadly natural disasters, it no longer feels ambitious enough.

The EU is not on track to meet its Fit for 55 2030 goals. This will be an embarrassment for Europe at the coming UN Climate Change Conference (COP28), which will feature the first “global stocktake” of climate efforts. Instead of acknowledging that the EU has fallen behind its own goals and proposing a ramp-up of emissions-cutting measures, von der Leyen focused on support for EU industries.

Von der Leyen announced plans for “Clean Transition Dialogues” to discuss with various industry clusters their concerns about the green transition. She also made special mention of the green sectors endangered by subsidies and unfair trade practices by China, namely solar panels, electric vehicles (EVs), and batteries and announced an anti-subsidy Investigation. This might lead to future countervailing measures such as local content requirements (like the United States IRA) or additional taxes on Chinese EVs and solar panels to support Europe’s own domestic green production.

Overall, her remarks were more about showing support than setting new goals. France and Germany will feel acknowledged here since both are worried about cheaper Chinese EVs flooding the EU market. And von der Leyen expressed her appreciation of Europe’s farmers, who represent a strong bloc of support for her European People’s Party, though they have also been obstructive in some climate-friendly policies.

Jake Benford: Cohesion policy unnamed but essential

Von der Leyen’s most glaring big-picture omission was arguably that of the EU’s multi-billion cohesion policy. Ensuring a balanced and indeed converging economic development of Europe’s regions constitutes a political goal of the EU, enshrined in the Treaty of Lisbon. Advocates of the program highlight its crucial role in holding the EU together at its core, counteracting unequally distributed benefits of the single market and other EU policies, such as its traditionally excellence-oriented science and innovation policies. Opponents point to a mixed record in terms of its impact and the urgent need to reform distribution, governance and conditionality mechanisms. While von der Leyen flagged cohesion-related subjects (the success of the green transition, the support of industries and SMEs, and the proposed Social Partner Summit), her overarching push for competitiveness will amplify already existing trade-offs between, for instance, advancing strategically important industries and supporting lagging regions.

The policy is currently undergoing a Commission-initiated review, drawing inter alia on a high-level group of experts with a mandate to propose future reforms. Against this background, von der Leyen’s failure to stress the importance of economic cohesion per se will be viewed with disappointment in both Brussels and in many of Europe’s regions. Closing the prosperity and innovation gaps between EU regions requires investing in education, reskilling, and upskilling for the green and digital transition in Europe’s less developed regions. And EU enlargement will require an expansion in the scope and size of cohesion funds in a way never seen before. Offering a few words on the importance of cohesion policy in these contexts would have been appropriate and politically expedient.

Further Reading

On Europe Day: The EU as a Necessity and a Task

The European Economic Security Strategy: Zeitenwende in the EU’s Trade and Investment Policy?

Keeping Friends Closer: Why the EU Should Address New Geoeconomic Realities and Deepen Partnerships with its Neighbours

Ukraine’s Future is a European Affair – Why Recovery and EU Integration Must go Hand in Hand

Cohesion Policy’s Blind Spot: Strong Regional Institutions are Crucial to Implementing Effective Growth Strategies on the Ground