State of the Union Report 2021 by Antall József Tudásközpont

A J R C A N A LY S E S

ANTALL JÓZSEF RESEARCH CENTRE AJRC2021E24

Alessandro D'Onofrio – Csepregi Zsolt

STATE OF THE UNION REPORT 2021

d i g i t a l i s t u d a s t a r. a j t k . h u

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STATE OF THE UNION REPORT 2021 ALESSANDRO D'ONOFRIO – CSEPREGI ZSOLT

INTRODUCTION The European Union (EU) remains one of the most ambitious political projects of world history. It created and aims to maintain an “ever closer union” of European nations, warring over centuries, creating peace and prosperity on the continent and beyond. The internal challenges are manifold, yet the integration process furthermore also needs to carve out its own place, assert its values and interests in an ever more competitive global order. As a union of 27 member states it is not an easy task to analyse the potential scenarios of the EU’s future development, as governments change almost on a monthly basis, not to mention the complex, even Byzantine structure of European institutions. It is therefore with great interest that experts watch the State of the Union Addresses of European Commission Presidents, as they outline their vision for the EU. These visions are of course not the sole intellectual property of one President. They are integrated ideas from the inputs of different EU institutions and member states, put into a framework waved by the possibilities and the limitations of intra-EU capabilities and the external environment. We at the Antall József Knowledge Centre are utilising this year’s State of the Union Address to create a report on the path forward for the EU. We see two main questions which will define the EU’s viability in the future, namely the ever greater need for treaty change and, very much related to the first issue, achieving strategic autonomy. Alessandro D’Onofrio argues that the fiscal and military side of the EU’s development are both crucial and in particular “the only way to make the NGEU a permanent instrument and move towards the completing of the EU fiscal union would be through a treaty reform”. The fact that the chances are currently minimal are not a reason for not insisting on the most urgent need for restructuring the most fundamental legal pillars of the EU, without which democratic legitimacy will continue to erode. Regardless of the ambitious plans of the recent State of the Union Address this issue was sorely missing from the Commission’s plans. Zsolt Csepregi focuses on the issue of strategic autonomy and the EU acting as an effective great power in the emerging international order. He argues that the process by which the EU is set out to achieve great power status is a process which is undoubtedly spurred by the challenging external environment. This transformation is leading to the emergence of a sui generis great power that the current international system desperately needs for its military capabilities, connectivity strategy and for enforcing a rulebased world order against the other great powers. We offer these ideas in our analysis not as a final judgement of the Commission’s work or the recent State of the Union Address, but as a contribution to the discussion on the future of the EU. The transformation of the EU into a great power, due to the unique nature of the political entity, is an uncharted territory where more perspectives and solutions have to be offered and tested at least intellectually, with the sole purpose of creating a stronger EU for our nations and the world.

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CHAPTER I THE WAY FORWARD: TREATY CHANGE OR MULTISPEED EUROPE? Alessandro D’Onofrio

On September 15 Commission President Ursula von der Leyen, delivered in front of the European Parliament her annual State of the Union speech. This year’s message was slightly shorter compared to last year’s but, in spite of this, the President of the Commission covered a wide range of topics. However, if we exclude some attentiongrabbing announcements, the speech was rather restrained when it touched upon topics connected to the EU’s future developments. Understandably, the coronavirus pandemic and the EU-wide vaccine rollout strategy made the headlines of von der Leyen’s discourse. The COVID-19 virus, and its mutations, are still threating the life of millions of Europeans but hopefully we have left behind the worst of the crisis and thanks to the EU-wide digital certification, or Green Pass, we are able once again to move freely in the EU. It is undeniable that the coordinated efforts of the EU member states under the direction of the Commission have contributed, after initial criticisms, to the success of the EU vaccination campaign and the European way is today a synonym of efficiency. Currently, more than 72% of adult EU citizens have been fully vaccinated against COVID-19.1 However, the biggest challenge for the EU comes now, and it is not a health crisis but an economic one. As a matter of fact, the COVID-19 pandemic caused a contraction of the bloc’s GDP by 6.1% in 2020, with some countries suffering an even harder recession (Italy - 8,9%, Spain -10%).2 When the pandemic hit, the EU intervened—maybe not so readily—to provide immediate support to member states: fiscal and state aid rules were suspended; the European Central Bank (ECB) adopted extraordinary actions to help the economy absorb the shock and loosened bank capital rules and, eventually, powerful common instruments were introduced. Now, the economic recovery must be the EU’s main objective and the extent of this will decide upon the future of the European edifice as well. As we know, in the Commission’s post-pandemic recovery plans, the European Green Deal occupies a position of uttermost importance. In fact, on the issue of climate change and environment, where the Commission is making wider use of its competencies, von der Leyen exposed the results the EU obtained over the past few months and set a series of new legally binding obligations for EU member states in order to reduce greenhouse emissions and become climate-neutral by 2050.3 The EU’s ambitions to became world leader in regards of green policies and lead the world-wide decarbonisation

State of the Union Address 2021. <https://ec.europa.eu/commission/presscorner/detail/en/ SPEECH_21_4701 > Accessed: 4 October 2021

Eurostat: Real GDP growth rate – volume. Eurostat. 2021. <https://ec.europa.eu/eurostat/databrowser/view/ tec00115/default/table?lang=en > Accessed: 24 September 2021 2

State of the Union Address 2021.

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process have to first and foremost cope with internal challenges (coming from member states but also from rising energy costs) and international. In fact, next to the US and the UK’s competitive attitude with the EU on these issues, the Commission also has to consider to build up better relations with China, one of the biggest polluters in the world. Alas, von der Leyen’s usual grand tone was missing when she had to give details on what will be EU’s course in the future and what reforms are needed to make the whole European edifice stronger. The absence of a bold narrative is even more noticeable considering that the EU is now living its momentum. In this crisis the EU found its original strength and brought forward interesting, as well as revolutionary initiatives. Also, a positive alignment of the positions of the bigger member states, helped the EU Commission to assume the leadership of a process that is expected to increase the degree of integration in several areas. This paper tries to focus on what the more relevant aspects of von der Leyen’s speech are that need to be analysed and developed in the light of possible reforms that the EU should undertake in the future in order to become a stronger and more resilient union. Surely, the economic recovery and the creation of a fiscal union are the areas which deserve greater attention, since they are the most likely to happen and where member states, or at least those belonging to the euro area, could find an agreement. On the other hand, recent developments in the area of foreign policy and the US withdrawal from Afghanistan brought back into the spotlight the issue of a common European defence. While this is a real necessary step for the EU, it is unlikely to happen in the short-term given the high sensibility that this topic assumes in some member states. These crucial and urgent reforms, and the related treaty changes, need an in-depth and serious debate on the future of the European continent. The last decade has been practically lost in this regard since the EU did not offer a working solution to combat the effects of the 2008 economic crisis. It has been daunted by some member states sovereignist rhetoric in regard of migration, has been questioned by others in regards of its founding values and culture. It has also lost a member country for the first time in its history, which happened to be also the second biggest economy. But, this new crisis sounded like a wake-up call for the EU and raised hopes among its member states and peoples who expect the EU to contribute to the promotion of their interests in a much more efficient way. All the same, these expectations and interests should and will shape the agenda of the upcoming Conference on the Future of Europe.

BUILT THROUGH CRISES: HOW THE EU SHOULD EVOLVE AND BECOME STRONGER The pandemic and the ensuing economic crisis brought, contrarily to what happened at the time of the 2008 crisis, the EU member states to the negotiating table and resulted in an agreement regarding a common solution which in turn led to the creation of a revolutionary recovery fund. In her speech, President von der Leyen declared that Europe learned from the mistakes made at the time of the last economic crisis and that the Next Generation EU (NGEU), aims at investing in both short-term recovery and longterm prosperity. However, the NGEU risks, if not otherwise agreed, to be a one-off and, together with the reintroduction of the Stability and Growth Pact’s rules, will re-impose

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austerity throughout Europe and reinforce the old divisions between member states. On this point, the President of the Commission didn’t say much and it is has failed to explain how the EU intends to proceed in the next years. The absence of a convincing narrative on the future of the EU’s fiscal integration at the time of the hardest economic crisis since the end of the World War II, goes hand-inhand with the Commission’s inexplicable indecisiveness in regard of developing a common European defence. The Afghan crisis showed once again that the US interests and the EU’s expectations not always coincide. In order to guarantee its own and its member states’ security, the EU should start envisaging its own strategic autonomy. Naturally, a step like this requires the support of a significant number of member states and a political will that, according to Ursula von der Leyen, is currently missing. In fact, EU member states are still trapped into the illusion of sovereignty which causes, using the world of Italian President Sergio Mattarella, them to not realise that “in the EU there are just two categories of countries: small countries and those who didn’t fully understand that they are small but they are just realising now”.4 This is why, in order to be preserved, sovereignty must be shared in the EU, which doesn’t amount to a renouncement but to an attempt to save it, enabling also smaller countries to effectively face global difficulties. However, this doesn’t mean that the EU is currently trapped in decisional inertia. On the contrary the EU member states showed that they are better capable of taking decisions that are more collective and quicker compared to the last financial crisis while also being able to adopt a common position at the time of the Brexit negotiations. This shows that the European architecture has become more integrated compared to the beginning of the 2000s and that the EU member states realised that their membership is their biggest asset. But, it is mostly considering these elements that von der Leyen’s hesitations in presenting clear-cut plans towards major reforms seems even more evident.

EU FISCAL UNION: THE ONLY WAY FORWARD In May 2020, mostly due to the great impetus given by the German Chancellor Angela Merkel and the French President Emmanuel Macron, the European Commission decided to present the plan for a financial instrument aimed at fostering the recovery of the European economy hit by the effects of the pandemic and the lockdown measures. This EUR 750 billion instrument, called Next Generation EU, was eventually approved, with some slight modification, by the leaders of the 27 member states at a five-day European Council summit in July 2020. Crucially, the resources provided by the NGEU are offered to member states to help the recovery of their economies, taking into consideration the EU Commission’s long-term priorities, while borrowing from international markets. The investment plans drafted by the EU nations must allocate at least 37% of the NGEU funds to climate-related objectives and a further 20% to digital initiatives. At the same time, the reform proposals

4 Il Presidente della Repubblica Sergio Mattarella risponde ad alcune domande di giovani partecipanti al 40° seminario per la formazione federalista europea in occasione dell’80° anniversario del Manifesto di Ventotene. Presidenza della Repubblica. 29 August 2021. <https://www.quirinale.it/elementi/59421 > Accessed: 24 September 2021.

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need to follow, at least in part, the Commission’s “country-specific recommendations,” which require structural-reforms that national governments have pushed aside for years. This sort of debt mutualisation (to be repaid starting from 2028) is a concrete revolution in the EU financial set-up and this is often referred as Europe’s “Hamiltonian moment.” According to von der Leyen, the resources provided by the NGEU will help most of the EU countries to bring back their GDP at pre-pandemic levels this year with the rest following suit in the next financial year. However, as things stand, this instrument will operate until 2023, and will be tied to the regular 2021–2027 MFF. The chance of seeing the recovery fund becoming a permanent component of the EU—or at least of the eurozone—financial structure is entrusted in the member states’ ability to spend the money efficiently and productively. If successfully implemented, NGEU will help legitimise this new model and make the EU more resilient should a future crisis again threaten to destabilise national economies. But this is a path fraught with real difficulties since there are already some countries opposing in principle the extension of the EU’s debt-issuing provisions, and the use of EU bonds, beyond its current deadline. Afraid that a permanent EU “transfer union” would favour Europe’s fiscally careless member states, fiscal conservatives in countries like the Netherlands or Austria, often dubbed as “frugal states,” have already spoken against the continuation of the NGEU after 2027. Crucially, Austria demanded from the European Commission to reintroducing of the Stability and Growth Pact (SGP) procedures already in 2022, even if the pact is currently suspended until 2023. The SGP, reformed in 2011 at the time of the eurozone crisis, set a ceiling to public debt (60%) and budget deficits, which not cannot be higher than 3% of GDP. Focusing predominantly on corrective measures, sanctions and austerity, the SGP contributed to aggravating and prolonging the eurozone economic, social, and political inequalities, instead of reducing them. This resulted in growing disparities within the eurozone and, despite some flexibility introduced by the previous Commission, hindered growth in countries such as Italy, Greece and Spain. The COVID-19 pandemic has once again exposed the flaws of the EU’s fiscal rules and for this reason, the von der Leyen Commission has been forced to suspend them and provide extensive support the most-hit member states with little or no conditionality. This strategy has been embodied not only by the NGEU but also by the employment policy support facility SURE, the new pandemic lending facility within the ESM and the ECB’s new flexible bond purchase programmes. Thanks to the NGEU the EU is effectively getting a fiscal capacity that is essential for strengthening the monetary union. However, even if the Commission President affirmed that there will not be a return to the rigour of the past, the emerging fiscal union remains incomplete. The only way to make the NGEU a permanent instrument and move towards the completing of the EU fiscal union would be through a treaty reform. This solution would be crucial not only from the perspective of democratic legitimacy (since the new EU owns resources needed to finance it needs to be approved unanimously as well), but it will involve also a reallocation of sovereign power. In fact, the power of levy taxes is crucial for every nation state and to transfer some of these prerogatives to the EU is not enticing for many member countries eager to retain their freedom by diverging their taxation from the rest of the EU. In any case, the emerging EU fiscal union would be a decisive step in the direction

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of federalism and it would strengthen the role of EU institutions by creating a more defined delimitations of EU competencies and responsibilities in fiscal matters. In fact, in a working federal system matters falling under the competence of the federal government would require the use of federal funds, while national matters would require just national funds. Even if the chances of a treaty reform on these terms seem, in the foreseeable future, minimal, the success of the NGEU and the recovery of the European economy might broaden the way for some changes. In order to do so it is important to overcome the opposition of the northern member states which is not only reducing the possibility that the EU will change its constitutional set-up in the short-term but it is also putting in danger its very existence. What these countries do not understand is that the reform of the EU institutional structure is economically necessary especially for the most open economics, such as they are, since without the creation of a fiscal union, the eurozone will remain fundamentally vulnerable to shocks. As seen, the Commission might be ready to move in this direction but it lacks the political leverage that could only come if the bigger member states, and especially Germany, put their weight on its side. From this perspective, al the eyes are on the German elections, since the outcome of the vote matters greatly to the future of Europe. A German support for the fiscal union could allow progress towards reforms that would have been unthinkable just few months ago.

EUROPEAN COMMON DEFENCE: THE QUANTUM LEAP Building up a fiscal union is not the only evident necessity emerged when reading through the lines of von der Leyen’s State of the Union speech. The expectations of the supporters of a stronger EU are not, in fact, limited only at fiscal matters, but look well beyond, towards a more sovereign and autonomous EU. In order to do so the next fundamental step requires the creation of a common foreign policy and a common defence. Surely, also this represents a huge leap forward in the process of building a stronger union and the lack of political will, together with the necessity of recovering from the pandemic and the economic crisis, will probably delay this aspect indefinitely. Currently, the building of European defence capabilities is clearly an ongoing process, although not in the form of a formal grand design, and surely not in the shape of a proper European army. On the contrary, the EU common defence strategy sees a series of progressive, cumulative and multifaceted projects open to those member states willing to participate. Already the terms European army or strategic autonomy are enough to raise suspicious in some member states and in EU’s most important ally, the US. Mostly countries from Eastern Europe fear that to put too much emphasis on EU’s strategic autonomy might undermine the belonging of the EU countries to NATO which is still considered to be the most effective tool of protection against external threats. The creation of a real common defence structure, that is still not clearly defined, might even motivate the US to disengage more quickly than now and leave the EU to provide exclusively for its own security. Moreover, some believe that building a military union parallel to the American-led alliance is a useless and burdensome duplication of efforts and costs. However, the latest developments in Afghanistan showed that far from being unnecessary, a European common defence is a key

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priority. A European army is, in fact, the most efficient instrument to safeguard areas where the EU and its member states have more strategic interests which are not always the same where the US are ready to intervene. Also, the idea that an independent European army could be an antagonist to NATO is not only unsustainable but even unacceptable. In fact, NATO and the EU represent first and foremost a community of values, which they not only share but are on the frontline in spreading. Thinking about a possible competition among the two blocs is only a pointless speculation which doesn’t take into account the history of the Western world. Likewise, in order to build its own strategic autonomy, the EU should involve all the member states, also those with different traditions in regard of defence cooperation. For example, next to the member states which want to rely just on NATO for their own protection, there are in the EU also member states that are historically neutral or non-aligned, or that have opted out completely or partially from common defence. All these differences between the EU countries make coordination even more difficult with visible uncertainties when it comes to giving a common response to certain issues which requires the EU to show a more solid position. In addition, the requirement for unanimity in regard of foreign policy and defence matters is the key reason behind the weakness of the EU in these areas, where it could otherwise be very successful. For this reason, another necessary reform for improving the EU’s functioning is the gradual extension by the European Council of Qualified Majority Voting over the currently dominant unanimity system (where each member basically can exert its veto powers).5 In order to overcome a veto situation, the EU should proceed with two major reforms. The first one is to reduce or even abolish the unanimity vote on foreign policy and defence matters. The second would be the creation of a first nucleus of a fully European defence strategy, and therefore a European army, by making use of Enhanced Cooperation. In her speech, von der Leyen made a clear reference to the fact that “it is time for Europe to step up to the next level,” following its ambitions to become an active player worldwide. Interestingly, a leaders’ summit dedicated to European defence will be convened by the President of the Commission and the French president, Emmanuel Macron, in the first half of next year, when France holds the rotating presidency of the EU. The support of the Franco-German axis is crucial for the success of this operation and to break the resistance of some member states. Moreover, public opinion is currently even more convinced that the EU should do more to improve the lives of citizens in various policy areas, including foreign and defence, but the lack of convergence among member states make any significant reform of the EU treaties unlikely in the near future. It must also be underlined that the reduction of the decision taken by unanimity doesn’t even actually require a treaty change, but a simple unanimous decision of the European Council supporting the extension of the qualified majority vote to the areas of defence and foreign policy. This, of course, while on paper looks like an easier task, is not fraught 5 European University Institute Robert Schumann Centre for European Studies, Reforming the Treaties’ Amendment Procedures, report submitted to the European Commission, 31 July 2000. <https://www.eui.eu/ Documents/RSCAS/Research/Institutions/2ndrapportUK.pdf > Accessed: 30 September 2021

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with obstacle since for some member states the national control over these powers, is an incontrovertible dogma. In order to bypass this stalemate, a group of member states (not less than 9) could decide to move faster and deepen their level of integration on certain matters. The Enhanced Cooperation instrument allows member states to implement some desired measure if an agreement cannot be reach by all member states on a determinate issue. Of course, the EU countries initially excluded by this instrument can join at any time they want and increase their integration level as well. Understandably, in a mostly intergovernmental EU, where nation states are still the depositaries of sovereign powers, to reach a consensus on every topic is almost impossible. For this reason, the Enhanced Cooperation procedure is an attempt to overcome decisional inertia, in case a proposal is blocked by an individual country or a small group of countries that do not wish to be part of the initiative. Surely, momentum for EU treaty changes seems to be mounting and while these reforms (the fiscal union, the common defence and the QMV reform), might not be achievable at once there is potential to transform the way the EU works, and most importantly, improve its service to the European citizens. In this situation, the Conference on the Future of Europe is expected to be an important opportunity to put these ideas at the forefront of the debate, shape the discussion, and achieve reforms aimed at making the EU stronger, more resilient and more united.

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CHAPTER II FOREIGN AND SECURITY POLICY Zsolt Csepregi ENTERING AN ERA OF HYPER-COMPETITIVENESS It seems that we have finally received the answer to the three decades long question, namely what will the global order look like after the “unipolar moment,” as famously coined by the late Charles Krauthammer6 the uncontested US dominance over the international system following the Cold War era. These epochs fundamentally define the global environment for a significant timespan, lasting for a generation or more. The Cold War lasted for more than four decades, and even the unipolar moment lasted for two before entering into the transformation period of 2010-2020. We can expect the new era emerging to last similarly until the middle of our century. We, as individuals, nations and members of the EU are facing an emerging new era characterised by “hyper-competitiveness” between the major and the minor powers as well.7 Naturally, due to historical experiences the risk of great power conflict looms as the most significant threat, to which the EU’s answer is not the (impossible) return to a US led unipolar world order, but instead the creation of a resilient multilateral framework.8 This multipolar competition is playing itself out in multisectoral mode, in military, economic, political, technological dimensions, and, importantly, within the cross-section of each theoretically distinct sectors. The challenge is therefore twofold for the EU, first, it needs to adapt to an era which can last for decades, but due to the nature of world affairs, the fast pace of development, the window of opportunity is greatly reduced. Secondly, the EU is not a unitary state like the other global competitors but a sui generis political entity with varied roles in each sector and dimension in which the global competition is being played out. It is like a ship, with not one but many captains, each responsible for different parts of the ship, negotiating with each other on the way forward. This has been manageable during “peace times” but now this complex European ship is getting deeper into troubled waters ahead. Ursula von der Leyen’s 2021 State of the Union Address aims to provide answers to these issues and outlined the goals for the EU in this complex external environment. In her speech, as in the case of the pillars that her Commissions’ strategic thinking is built upon and formulated, it is apparent that in this complex international environment one country may be the EU’s partner in one task, while an ardent competitor in another. Even further, Charles Krauthammer: The Unipolar Moment. Foreign Affairs 1990/1. <https://www.foreignaffairs.com/ articles/1990-01-01/unipolar-moment > Accessed: 10 October 2021. 6

State of the Union Address 2021. 6.

Paul B. Stares et. al.: Perspectives on A Changing World Order. Council on Foreign Relations Discussion Paper Series on Managing Global Disorder. 2020/1 <https://cdn.cfr.org/sites/default/files/report_pdf/discussionpaper-collection_stares-et-al_final-with-cover.pdf > Accessed: 10 October 2021. 15. 8

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while we may aim to partner in a particular item on the agenda, in the case of another we may be rivals. Naturally, this shift towards heightened competition on the international arena is occurring in the context of the COVID-19 pandemic. One could argue over the question whether this is merely affecting a “sector,” namely healthcare, among the other areas of competition or an even more fundamental aspect of the current international order. This paper argues that, while the pandemic may seem (for completely justifiable reasons) the new normal, in the medium and long term it will move back to rather become a factor belonging to one of the sectors of competition and cooperation. For now, however it is treated as an overarching framework for setting the EU’s conduct in the global order and it was portrayed as such in von der Leyen’s address. In the context of the epochal framework (hyper-competitiveness) and temporal state of affairs (pandemic) the other three main actors on the international scene, namely the US, Russia and China are also undergoing fundamental shifts. First of all, there is a new US administration led by President Biden, who promised to open a new era of transatlantic cooperation. After the initial, quite tumultuous months, we can now evaluate the Biden administration’s approach to reinvigorating the transatlantic relations and also discuss von der Leyen’s vision for it. Secondly, China has in recent years emerged as a systemic rival in the EU’s strategies and it has therefore become an increasingly contentious issue in EU foreign policy. Thirdly, Russia continues to present a significant security threat, both conventional and hybrid, on the Eastern flank of the EU combined with its close ally Belarus. These three external powers with their global reach compete with each other, while the EU aims to direct its strengths and correct its weaknesses to chart a new path and shape a sustainable, peaceful, rules-based world order. The gravest danger is that the EU would be less than the sum of its parts and participate solely in the international contest as a middle-tier power, brought down by internal quarrels. Von der Leyen’s vision tried to address these issues in order to fulfil her Commission’s concept of an effective, resilient, geopolitically capable EU.

READJUSTING THE TRANSATLANTIC ALLIANCE TO THE NEW ERA The most important external relation that the EU has is the transatlantic bond, the alliance with the US, which expands not only to the military dimension (NATO), but also includes robust economic, cultural and political links. This relationship has stood the test of time and, more importantly, the various and oftentimes differing leadership visions on the other side of the Atlantic Ocean. One of the transatlantic alliance’s most crucial challenges was the tenure of the previous Trump administration which was characterised by unilateral decisions, lack of consultations with European partners and a looming threat of withdrawing from NATO if European allies do not start to carry their own weight in terms of defense expenditure. Obviously, most of these allegations were exaggerated, as Washington has blamed its European partners for not spending enough on defense for decades and unilateralism was also not uncommon during previous administrations. The US is, in the end, the global hegemon and even the largest European states are middle powers at best. Regardless, the Biden Administration promised a return to a harmonious transatlantic relationship and new heights of alliance cohesion. However, it quickly turned out that the US will maintain to primarily follow its own interest and will not take

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the European allies any more seriously than they have to. Washington has conducted the withdrawal from Afghanistan without any serious joint planning with the other nations supporting the military operations, leading to a frenzy of last minute planning and execution.9 More recently it has announced the so-called AUKUS partnership focusing on the Indo-Pacific and indirectly balancing China. A key point is providing Australia with advanced nuclear-powered submarines, effectively cancelling a previous diesel submarine deal with the French, causing Paris to lose out on billions of dollars of income. This deal was also made without informing the European allies, showing how Washington envisages coordination on a “need-to-know” basis. This second instance, showed that we can see a distinct pattern emerging in US foreign and security policy and not a onetime event or a slip of judgement on Afghanistan. The US unilateral move also came as a reality check for the EU member states as a whole and underline the importance of a strategically autonomous EU.10 Seeing the reality of the transatlantic relationship does not take away from the importance of the alliance for Europe and, more broadly, for a peaceful, stable, rules-based world order. Despite all the cleavages, the US and the EU are embarking on new ambitious initiatives in order to support their common goals. Four issues have to be highlighted here, namely joint action against emerging threats, EU-NATO cooperation, the China question and green policy. President von der Leyen argued in her address that the nature of the threats we are facing are developing rapidly in the (highly interconnected) dimensions of cyber, hybrid and disruptive technologies. In this field Washington and Brussels aim to cooperate more closely and focus on seizing the opportunities deriving from cooperation while combating at the same time its adverse effects, for example by establishing the EU–US Trade and Technology Council. This initiative aims at creating the platforms needed to enhance the alliance resilience from the regulatory, civilian side.11 Naturally, the most important military framework of the transatlantic bond is NATO. Here the relationship with the EU was marred in controversies, as the US sees the EU strategic autonomy in the military sphere as a competitor of NATO.12 Von der Leyen aimed at assuring both the audience on the other side of the Atlantic and in certain parts of Europe (e.g. the UK) that an upcoming EU-NATO joint declaration will clarify the outstanding issues, due in the end of 2021. Naturally the issues mentioned above are deeply connected to the increasingly competitive nature of the world order where China, as the emerging power, plays a fundamental role. Under

9 Frederick Kempe: Afghanistan threatens Biden’s shot at being A historic foreign-policy leader. Atlantic Council Inflection Points. 21 August 2021. <https://www.atlanticcouncil.org/content-series/inflection-points/ afghanistan-threatens-bidens-shot-at-being-a-historic-foreign-policy-leader/ > Accessed: 10 October 2021. 10 Sven Biscop: AUKUS and the EU: A Snub for the Bloc? Egmont Institute Commentaries 22 September 2021 <https://www.egmontinstitute.be/aukus-and-the-eu-a-snub-for-the-bloc/ > Accessed: 10 October 2021

Marcin Szczepanski: EU-US Trade and Technology Council. European Parliamentary Research Service Briefing. 27 September 2021. <https://www.europarl.europa.eu/thinktank/en/document.html?reference=EPRS_ BRI(2021)698037 > Accessed: 10 October 2021.

NATO 2030: United for A New Era Analysis and Recommendations of the Reflection Group Appointed by the NATO Secretary General. 25 November 2020. <https://www.nato.int/nato_static_fl2014/assets/pdf/2020/12/ pdf/201201-Reflection-Group-Final-Report-Uni.pdf > Accessed: 10 October 2021. 55.

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the Trump administration the great power contest between the US and China has reached previously unprecedented heights. These issues are mostly centred on military power and maritime access (focusing on the first island chain around China eg. Taiwan), technological prowess and supply chain resilience. The EU has not been in lockstep with the US as most of its members are interested in attracting Chinese capital, cheap imports and accessing the single greatest market on the globe. The tides are however slowly turning since recently the EU has named China as a systemic rival and is ever more attuned to adverse actions by the Chinese state- and state-owned companies. The US is trying to find the angle through which its European allies may be mobilised, such as putting the issues to NATO’s agenda. However, it seems like it will be China’s actions themselves which will alienate and make the EU more aware of the threats stemming from this new competitive environment. During this year it became clear that the EU refused to be solely a reactive actor to the ever competitive external environment and caught up in the great power struggle of others. Currently, it aims to chart its own path and become a sui generis great power, a unique pole in the emerging multipolar word order. A key message from von der Leyen’s address was the Commission’s objective to stand for a green EU and bringing sustainability, transparency and fairness in all initiatives it supports and champions. Unlike the other great power competitors, the EU aims at reaching a new level of great power responsibility by combining a geopolitical mind-set with a mindful and transparent execution in foreign and security policy, economic planning and green transition. While due to the structure of the EU we cannot point to the exact moment it will emerge as a great power, by now it is clear: the new decade will see the competition of the EU, US and Anglo-Saxon countries (Canada, UK, Australia, New Zeeland), Russia and her orbit, China and middle and small powers. In order to be effective the EU has realised by now that it must restructure itself to various degrees.

EU STRATEGIC AUTONOMY HAS NO ALTERNATIVE The realisation that the EU cannot provide security and wellbeing to its own citizen if it does not provide it to others as well is a strong one. The current commission is working towards rebuilding the EU and pursue a global leading position in the next decades but in order to achieve this complex role it must become strategically autonomous.13 Currently, the EU is not autonomous enough compared to the needs of a great power and a security provider, within its borders and beyond them.14 President Ursula von der Leyen outlined in her address three crucial focus areas for making the EU more effective as a foreign and security policy actor. These areas can be presented through three crucial initiatives which serve as the main “backbone” of each of them. First, it must reinvigorate its Neighbourhood Policy. Secondly, the EU must develop into a European Defense Union. Thirdly, it must adopt and execute its own Global Gateway Strategy. All three areas are naturally highly interconnected and success and failure in one area affects the other two in a similar fashion. European Commission: 2021 Strategic Foresight Report. 8 September 2021. <https://ec.europa.eu/info/ sites/default/files/strategic_foresight_report_2021_en.pdf > Accessed: 10 October 2021. 21-22.

We must note here that autonomy is A relative expression. In our interconnected world order there is no absolute autonomy we can only speak about degrees of achieving autonomous capabilities in A number of areas. 14

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The EU’s Neighbourhood Policy looks back to decades of history. However, its dual nature became apparent with the geopolitical orientation of the current Commission’s outlook. As President von der Leyen explained in her address, Europe’s geography is such that security “threats will come to us” if they are left unaddressed at their place of origin. We can divide these threats to two main strategic directions, the Southern flank and the Eastern flank, presenting widely different challenges to the EU. While in the Eastern flank Russian ambitions represent the dominant threat, in the South the absence of stable state actors and the power vacuum present the main challenges. The dominant forms of security challenges are, therefore, terrorism, civil wars, and irregular migration. Consequently, the EU’s strategic directions must be carefully separated in the analysis, in order to shed light on the possible solutions and actions. The EU must be able to provide security in its neighbourhood(s) and must also act through genuine partnerships in which its strengths can manifest optimally. A successful management of this issue will help the EU becoming more and more strategically autonomous and still benefit from regional partnerships. The main areas of cooperation formats for the EU are naturally the Eastern Partnership countries, the Mediterranean and the Western Balkans. The latter is by now a group of countries aiming at EU accession, therefore they do not belong to the classical neighbourhood policy as the previous two but represents more an example of integration policy. Regarding the Southern direction the EU has come to the realisation that it has to expand the scope of its interest towards the Sahel and not only deal with the Mediterranean costal nations, as the main security threats are coming from beyond the Sahara.15 The EU was able to put its money where its mouth is, as it allocated EUR 7 billion for the Southern neighbourhood in order to alleviate the pandemic’s economic and societal effect and earmarking almost EUR 100 billion in the 2021-2027 MFF for external stabilisation and developmental efforts.16 Apart from finances, the EU is a unique security provider which, even if it does not carry the kind of hard power in out of area missions as the US, it excels in combining tasks and capabilities. According to President von der Leyen the way forward for the EU is to bring together military, policy, diplomatic and capability building aspects in its missions to contribute to the stabilisation of its (broadly defined) neighbourhood. What is needed, after the reaffirmation of the importance of neighbourhood policy and providing impressive funds for the task, is a clear guiding blueprint in the form of the Strategic Compass. After five years have passed since the implementation of the, which can be said that has given a broad vision for the EU as an external and relevant political actor, currently (with some minor updates needed e.g. on China) a more actionable document is highly needed.17

Sahel: Council approves conclusions on the EU's integrated strategy in the region. Council of the EU Press Release. 19 April 2021. <https://www.consilium.europa.eu/en/press/press-releases/2021/04/19/sahelcouncil-approves-conclusions-on-the-eu-s-integrated-strategy-in-the-region/ > Accessed: 10 October 2021.

Étienne Bassot: The six policy priorities of the von der Leyen Commission. European Parliamentary Research Service In-Depth Analysis. September 2021. <https://www.europarl.europa.eu/RegData/etudes/ IDAN/2021/696205/EPRS_IDA(2021)696205_EN.pdf > Accessed: 10 October 2021. 10.

17 Dick Zandee — Adája Stoetman — Bob Deen: The EU’s Strategic Compass for security and defence. Clingendael. May 2021. <https://www.clingendael.org/sites/default/files/2021-05/Report_The_EUs_Compass_ for_security_and_defence_May_2021.pdf > Accessed: 10 October 2021. 13.

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While the Neighbourhood Policy definitely plays on the strengths of the EU and has decades of history in action, the second pillar of the envisioned EU strategic autonomy is much more difficult to realise. As von der Leyen expressed, the EU member states lack the political will to use their forces in military actions. This is an obstacle which must be overcome if there would be any real chances for EU strategic autonomy. Apart from the will, military capabilities of EU states are also widely debated. This paper however argues that while certain capabilities (e.g. strategic airlift) are missing, no one could seriously debate that an effective coordination and pooling of French, German, Italian, Polish armed forces and middle and smaller EU states would not create one of the world’s most potent military power. The issue is not whether it can be done, or if it should be done, but how it should be done. In order to achieve this goal, the address envisioned a “Summit of European Defense” to be held under the upcoming French Presidency in 2022, to plan how and where would these ideas naturally develop. This process needs of course the support from the governments of all EU states, which will largely depend on the outcome of the German and French elections. Or the EU can even go the direction that Alessandro D’Onofrio suggested in his chapter as an option and use enhanced cooperation as a way forward in achieving strategic autonomy in military affairs. In this case however it would be the EU itself which would be autonomous but solely a distinct group of core of EU states. The real question is whether the largest common denominator between the member states on the degree of EU military actorness is sufficient to achieve strategic autonomy. Capabilities were impressively addressed by joint programs such as PESCO with many more investment and development schemes in arms in the pipeline. It comes down in the end whether the EU can have effective collective decision making in military issues. Furthermore, the President highlighted the need for situational awareness— intelligence in a broad sense. Sharing sensitive information between member states and developing a joint strategic perception and analysis are also prerequisites for any significant degree of strategic autonomy. Finally, the EU aims at becoming a proactive force in terms of global connectivity, an area it was largely left behind and opted to be reactive to other great powers’ initiatives, first and foremost China’s Belt and Road Initiative. The proclaimed Global Gateway Strategy aims at creating links and not dependencies in the world. The EU is using this policy area to present its brand the strongest way possible putting transparency, sustainability and justice in the forefront. The EU is not against linking these initiatives with other powers’ projects but it expects them to adopt the rules of the game.18 In reality, the EU aims at becoming a normative power once again, a quality it has largely lost after the 2008 financial crisis broke many of its member states and the raison d’être of the integration. The Global Gateway Strategy is clearly important for serving as an anchor for other competing infrastructural initiatives and tap into the economic and societal benefits these efforts can bring to participating countries. From this paper’s perspective, however, we must identify Mauel Widmann: The EU Connectivity Strategy: Putting Words into Action. European Institute for Asian Studies Briefing Paper, 2021/2 <https://eias.org/wp-content/uploads/2021/08/The-EU-Connectivity-Strategy-.pdf > Accessed: 10 October 2021. 4. 18

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this strategy as a new and crucial element of the EU’s “geopolitical toolbox,” enhancing its strategic partnership.19 The internal struggles in the EU are of course still present but the von der Leyen Commission has gone to the “offensive” on the external front after a decade of inward focusing. The hope is that a more effective EU foreign and security policy project can vitalise the internal cohesion of the EU and temper the dissident voices. While not optimal, the EU does not have the time to address first the internal issues, as the hyper-competitive new world order is rapidly unfolding, threatening with the increased great power competition and regional destabilisation. The values and the actions which a geopolitical and strategic autonomous EU can bring to the global scene and particularly its neighbourhood is needed more than ever. Understanding the values these initiatives are created around, it would be to great benefit of the global community, alongside the EU’s citizens. Von der Leyen’s ambitious address would be further broken down to actionable items and realised in the coming years. The rate of success of the motions which were already started gives us hope that this is possible.

2021 Strategic Foresight Report. 19.

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