Published in ECFR on the 26.05.2021
Van der Leyen as President Elect of the European Commission made it clear in her speech in the European Parliament, that she has a geopolitical Commission in her mind. It is not known what kind of strategy and instruments she had in mind when she promoted that vision. As a former minister of defense, she could have thought about military instruments. But the EU has very few military means and that will not be changed soon. So what else could it be? If we think about the great geopolitical powers, the US and increasingly China, it is the economy which gives them strength – besides their military capacity. Certainly, the economic capacity of the EU is an asset which could and should be used geopolitically. There is not much else the EU can play with globally. Of course, the EU is strongly committed to protection of human rights in its neighborhood and around the world. However, its impact on authoritarian leaders has been very small thus far. The shortfalls of the EU supply with vaccines showed that in addition to the dissatisfactory vaccination rate of its own population, the EU did not manage to deliver vaccines to those countries which it wants to convince of the EU’s superior political and social system. Acting promptly, authoritarian Russia and China tried to fill the gap.
Certainly, the EU’s economic and social system is attractive for many citizens of poorer countries. Otherwise, it would not be the target destination for many refugees and migrants. But a thorough and critical analysis of the EU`s industrial development shows several decisive deficiencies. The EU and its leaders must be concerned with the fact, that the EU missed the target of the Lisbon strategy of 2000, namely to become “the most competitive and dynamic knowledge-based economy in the world, capable of sustainable economic growth and better jobs and greater social cohesion.” Certainly, the financial crisis interrupted the European path of growth. However, already before this crisis it had become clear that the Lisbon Strategy would fail to reach its target. Competition and free markets are important ingredients of any successful economic strategy. But they could not and cannot achieve the Lisbon goals alone. Especially if some of the EU’s main competitors have strong political instruments at hand – in addition to the “self-regulating” markets. All these past years competition policy was unfortunately dominating the economic agenda of the EU. Yes, some important achievements in fighting unfair competition have been visible. But the other side of the coin, namely an active European industrial policy, was considered an ideological anathema and enjoyed only weak support in the EU Commission. The European Council has repeatedly failed to support an active industrial policy, especially when it tried to cut the budget for R&D. Yet, strong investment into R&D lies at the root of any industrial policy. To put it bluntly, the EU needs some elements of long-term planning in addition to the market forces.
The European Commission is slowly changing its one-sidedness and is moving towards an active industrial strategy. Its analysis clearly shows the deficiencies – or strategic dependencies – in important supplies needed for achieving the EU’s target. In particular, these concern supplies of raw and processed materials like cobalt, lithium, molybdenum, etc. needed for decarbonization of European industry. A second group of dependencies concerns the health ecosystem as we have seen during the pandemic. A third group concern the digital and electronic ecosystems. In addition – as the Commission states – “the EU has been gradually losing leadership in many technologies in terms of its share in worldwide patent applications“. Of course, the EU cannot rank in all sectors of industry and research on top. Furthermore, some of the dependencies are mutual. But when the EU has to recognize a strong external dependance on vital products for the EU’s ecological and digital transformation, and for preserving people’s health, it is extremely weakened in its geopolitical aspirations. The EU has high flying aims but does not care enough to have the ingredients to achieve these aims.
Surprisingly, nowhere in the industrial strategy documents of the EU is it made clear, that without a stronger industrial policy the EU cannot achieve its geopolitical goals of keeping China, Russia etc. at bay. Sanctions may be a necessary instrument to express moral indignation. But they turn to be very weak instruments if they are seen as an expression of Western arrogance and not followed and supported by other countries. Unfortunately there is much more talk about severing the sanctions regime than about beefing up the industrial and research policy.
Strong incentives to reach or preserve the number one position for as many industrial indicators as possible must constitute the core of any successful geopolitical strategy. This must include a strategy of autonomy for strategic goods and services. The EU also needs to do some planning to have the necessary qualified workforce to realize the digital and ecological transformation. However, having research and production of critical goods and services located inside the EU is not enough. A geopolitical strategy must include the possibility to mobilize these resources if needed. China and Russia have such possibilities and – as has been seen during the pandemic – even the US have it in form of the instrument of presidential Executive Orders. The Executive Order on Ensuring Access to United States Government COVID -19 Vaccines has recently become extremely well-known. Even this order has been geopolitically motivated.
The United Kingdom has also managed to mobilize vaccination resources much better than the EU due to strong public intervention. The EU must create a legal framework for a strong Europe-wide industrial policy. This must also include rules for active public procurement policies, which would give preference to EU products and services in critical areas. In addition, it must also create the possibility to mobilize such resources if a crisis situation – like a pandemic - makes it necessary. Even if this should be done on a more democratic basis than with Executive Orders of US presidents.
Dr. Hannes Swoboda, President of the International Institute for Peace (IP), started his career in urban politics in Vienna and was elected member of the European Parliament in 1996. He was Vice President of the Social Democrat Group until 2012 und then President until 2014. He was particularly engaged in foreign, enlargement, and neighborhood policies. Swoboda is also President of the Vienna Institute for International Economics, the Centre of Architecture, the University for Applied Science - Campus Vienna, and the Sir Peter Ustinov Institute.