Competitiveness is good, but we need more EU resilience too

In Brussels we are gearing up for a new European Commission about to start its five-year term. As in the past, the new College of Commissioners – one for each of the 27 EU member states – is a mixture of the old and the new, with several Commissioners staying in the team. The centre of gravity is the centre-right and in the image of the reappointed Commission President, Ursula von der Leyen. Yet change is in the offing too with a new post of Commissioner for Defence and the return of a Commission post dedicated to the EU’s internal security and citizen protection, especially in the digital and tech domain. The first will be occupied by the MEP and former Lithuanian prime minister, Andrius Kubilius, and the second by the Finnish former minister, Henna Virkkunen. The former Belgian foreign minister, Hadja Lahbib, will take charge of Preparedness and Crisis Management. A new post of Commissioner for the Mediterranean has been created too, to be filled by the Croat, Dubravka Šuica. All four Commissioners will work closely with the incoming High Representative for the Common Foreign and Security Policy, Kaja Kallas, of Estonia. This lineup clearly shows how issues of security and defence have risen to the top of the EU’s agenda over the past five years whether it be the defence of EU borders, the protection of its citizens at home against a host of threats and malicious actors or assistance to other European democracies under attack or political and economic pressure from Russia or China. It will be interesting to see how the two new portfolios, defence and the Mediterranean, develop. Will defence mean essentially investing in the EU’s arms industries to ramp up the production of equipment and ammunition or will the new Commissioner be able to contribute to the strategic debate on the EU’s future level of ambition and role in defence as well? Will the new Commissioner for the Mediterranean have to handle the EU’s complex relationship with Turkey, or will that continue to be handled by the Enlargement Commissioner, given Turkey’s long-standing application for EU membership?  At all events, it cannot be business as usual. Although Von der Leyen spoke of a “geopolitical Commission” when introducing her programme during her first term five years ago, the challenges facing the EU from both without and within have certainly become more serious and more intense since then, posing the question of whether the EU’s responses, although not nugatory, have been half–hearted and inadequate – meaning that in terms of providing for the prosperity and security of its citizens (its fundamental aims) it continues to fall behind its allies, competitors and adversaries alike. Speed after all is a relative concept depending on how fast the rest of the world is travelling.

For the last decade or so it has become fashionable for EU officials and observers to talk of ‘The Last Commission’. By this, they mean the last possibility for an incoming EU leadership to get to grips with the challenges facing the Union so as to preserve its capacity for economic progress, cohesion and solidarity as well as the confidence and support of its 450mn citizens. If it fails, so the argument goes, global pressures resulting from globalisation, increased competition, more migrants, climate change and geopolitical rivalries, coupled with more extremism and anti-European sentiment at home, will progressively overwhelm the EU’s capacity to identify, let alone implement common European solutions. Of course, this kind of argument is perhaps more useful as a tool of political mobilisation, injecting a sense of urgency into the debate, than it is a serious analysis of the effectiveness and opportunity costs of political action. The essence of politics, after all, is to decide and to act, however favourable or unfavourable a given situation. Yet even if talk of a ‘Last Commission’ may be overdramatic, there is still a palpable sense in EU circles that the Union needs to massively up its game and formulate much more ambitious policy objectives if the EU is not to sink into decline, and become stuck in stagnation and slow growth, falling behind in innovation, and becoming irretrievably less united, prosperous and secure. With this backdrop in mind, Von der Leyen not only trumpeted her own achievements when seeking re-appointment as Commission President but also launched a series of major independent policy reviews, looking for fresh thinking and bold proposals to get the EU back out in front of its many challenges, but its many critics as well.

The first of these, the Draghi report on the EU’s competitiveness, was presented by its author, former EU Central Bank governor and Italian prime minister, Mario Draghi, in Brussels last week. Draghi certainly did not pull his punches, using a direct language and a blunt, honest analysis that are unusual in EU publications. “Do this or it’s slow agony”, declared Draghi in presenting his 400-page report to Von der Leyen. Otherwise, he added, it is not just European living standards but the entire European project that will be at risk. He recommended an overhaul of the EU’s industrial policy to better equip the Union for the digital and low carbon economy of the 21st century as well as measures to boost the EU’s domestic production of critical products, such as armaments and materials, which would make it less dependent on unreliable foreign suppliers and vulnerable global supply chains. His report pinpointed that over 60% of the EU’s foreign weapons imports come from the United States alone, and for things like aircraft and air defence systems that the Europeans are capable of making themselves. Draghi proposed both a horizontal approach to seeing how the EU, national governments and the private sector could work better together to develop European strategic industries, as well as a vertical approach in looking at the EU’s strengths and weaknesses in key production areas. His approach was pragmatic and realistic. For instance, Draghi stated bluntly that the EU could no longer compete with heavily subsidised solar panels and should accept Chinese dominance there; but those areas where the EU was competitive or even ahead, such as wind turbines, needed rapid EU investment – with as little of the traditional EU red tape and excessive regulation as possible. What inevitably grabbed the headlines was Draghi’s recommendation for a €800bn annual investment fund, to come jointly from the public and private sectors. This seemed modelled on the US Inflation Reduction Act whereby the Biden Administration has planned to pump subsidies into innovative US companies – particularly in the green energy and digital technology areas – to create employment, economic security and withstand the growing competition from China. Draghi also advocated the use of common EU debt and Eurobonds to kickstart these investments, particularly in defence integration and military production as well as energy grid interconnectors. This idea builds on the first EU use of debt obligations to fund the Next Generation Europe COVID-19 national recovery projects. While espousing the EU’s noble objectives for a green Europe, setting an example to the rest of the world, Draghi was also commendably hard-headed about the consequences. He pointed out, for instance, that the Union’s plan to stop the new production and sale of diesel and petrol cars by 2035 could harm economic activity if, at the same time, the member states have not developed the charging machines and supply chain networks to sustain millions of more electric vehicles on the EU’s roads.

We must now see what happens to Draghi’s report. These reports are often lauded for their thorough diagnosis of all the EU’s ills and their scores of helpful recommendations; but then conveniently ignored as implementing the recommendations becomes too difficult or electorally unpopular. The problem is that because politicians do not like this or that finding or proposal, they dismiss the entire report so that little follow-up results. Already, some German politicians have predictably given a lukewarm response, as they believe that more EU debt financing would undermine the traditional orthodoxy of EU member states keeping their national finances in order and not bailing out the indiscipline or excessive risk-taking of others. Unsurprising, but given the sclerotic state of the German economy, as its old model of cheap energy imports and traditional manufacturing runs out of steam, we might have expected a more open-minded approach. Draghi also had the courage to go up against his sponsor, the EU Commission. He decried regulation stifling innovation and the EU’s tendency to prefer to regulate the technology breakthroughs of others rather than to invent its own. Less regulation and better regulation was a leitmotiv of the report. Yet the biggest question of all is how can an EU operating on the consensus rule set a limited number of crucial objectives and then act quickly to pursue them? More streamlined regulation and better policy coordination between the Commission and member states will be needed too. And moreover, some upfront public money to incentivise the private sector to pitch in. Public procurement makes up 15% of the EU economy so there is scope to do things here. But can the sense of an ‘existential moment’ overcome the usual political hesitations and bureaucratic obstacles?

Yet now that the new Commission is grappling with the EU’s future competitiveness, a second and related challenge is following hard on its heels: that of the Union’s resilience and ability to withstand shocks whether manmade or natural.

Just like the subject of competitiveness is not new, but more the sense of the sheer number and urgency of the various challenges it poses, the resilience challenges to the EU are also intensifying with every passing day – and this is true of the natural challenges like climate change and pandemics as much as the manmade threats from state interference and hybrid warfare. No day now goes by without a baffling array of disruptions hitting one or more EU member states. It can be mysterious drones flying over Sweden and disrupting flights in and out of Arlanda airport. Or Russian TV channels exposed for funding disinformation political advertising. Or break-ins at Luftwaffe airfields in Germany and attempts to contaminate the water supply. Or forest fires and other sabotage efforts in central and eastern Europe. Russian drones carrying explosives and used in attacks against Ukraine land more frequently in Romania, Poland and now Latvia. And, of course, the persistent and sophisticated cyberattacks, social media campaigns and aggressive intelligence gathering to which we have for long been accustomed. As the EU and individual European countries continue to arm and support Ukraine, the proclivity of Russia to hit back against them with these hybrid warfare tactics becomes ever more evident. On top of this come the extreme weather events linked to climate change. After the hottest summer on record with wildfires impinging on the suburbs of Athens, come devastating floods from record rainfall in September in the Czech Republic, Poland and Romania. And it is not only because of Russian cyberattacks that critical infrastructure breaks down, as France discovered when its railways were vandalised by leftist radicals just before the Paris Olympics, or frustrated air travellers discover when air traffic control computers or airline booking systems suddenly collapse at the height of the holiday season. European pilots routinely report the corruption of GPS navigation and positioning signals, which are disrupting flights and forcing airlines to carry out expensive technical checks to determine if the cause was jamming and spoofing or due to a fault in the aircraft’s software. Northern Europe and the Baltic Sea, the Black Sea region and Larnaca airport in Cyprus have been especially affected. Upgrading GPS systems to be more resistant to GPS jamming and spoofing will cost airlines hundreds of millions of euros. GPS interference is even affecting dating apps as well as data services to farmers. The situation is already bad enough but the manmade and the natural world of disruption can also combine as when Russia and China used the initially slow EU response to the COVID-19 pandemic to spread disinformation calculated to undermine public trust in both national and EU institutions. It is not only EU countries that are the subject of these disruptions but EU partners too, such as Ukraine, Moldova and countries in the Western Balkans. The aim is to weaken them, divide them and to make them less stable and attractive candidates for EU membership.

All these shocks, often unrelated but following on from each other, mean that the EU now has to be on a permanent crisis footing. The days when it could deal with one crisis and then have a break for a year or so to digest the lessons before confronting the next crisis are long since over. Hybrid warfare campaigns and natural disasters can run in parallel and a particular crisis can have knock-on effects or longer-term consequences in other areas. COVID-19 lockdowns, for instance, produced anxiety and stresses that will put pressure on mental health services for years to come. So, resilience means being able to respond to the immediate aspects of a crisis while building resilient societies and resilient economies for the longer term that can progressively reduce the systemic vulnerabilities that make crises more likely. Resilience strategies need to divide attention and resources equitably between these immediate response and longer-term vulnerability reduction efforts. Yet structures have to have built–in flexibility and not try to second guess the next crisis. The United Kingdom, for instance, rightly classified pandemics as a Tier One threat in the last UK National Security Strategy, but then predicted that the pandemic would take the form of an influenza virus. It stockpiled flu jabs but not vaccines for a SARS coronavirus, which is what struck the world in 2020. So, instead of spending large sums on bulk buying influenza vaccines that then expired before they were needed, the money would have been better invested in generic vaccine research in universities and pharmaceutical companies so as to compress vaccine development and production time once the specific virus has been identified.

Another challenge is to balance defensive measures with diplomacy. Resilience obviously means making it harder and less profitable for our adversaries to hurt us. Effective cybersecurity built around firewalls and early detection. Faster interventions from the tech companies to spot fake news and fake material online, to flag up disinformation campaigns where the aim is clearly to encourage violence and racial or ethnic tensions and a clearer policy from the tech companies where freedom of speech on social media has its limits. The digital dimension of resilience has received a lot of attention in recent years because it was the ideal dimension of hybrid warfare, clouded in anonymity, relatively cheap and easy to do, and well below the threshold that would elicit a military or disproportionately damaging response. Yet recently, the nature of hybrid warfare is changing to more physical and brazen attacks, as with sabotage, electronic signals jamming, drone incursions, mapping of critical energy infrastructure such as offshore drilling platforms and underwater cables and assassinations using chemical or biological agents. The Western support for Ukraine has not only made EU countries more vulnerable to Russian missiles and armed drones entering their airspace but also to a salvo of Russian threats to retaliate by pointing more missiles at Europe, arming Europe’s enemies or even using tactical nuclear weapons. Thus the old distinction between low-key hybrid warfare in a grey zone and real kinetic warfare is rapidly vanishing as Moscow convinces itself that it is actually at war with NATO. Putin may be bluffing when he sets his red lines over Ukraine. But as we cannot know for certain, it would be foolish for Europe to base its security on the assumption of Russia’s restraint. This means that the new Commission will need to pay much more attention to the physical aspects of protection. Stronger borders and controls against migration as a weapon and strong backing for the German project for a European Sky Shield to build an integrated missile defence system against drone and missile incursions, whether intentional or otherwise, must be top of the list. The new Commission could also carry out a vulnerability assessment of the EU’s energy grid, transport routes and port and storage facilities to identify potential points of failure and impose common standards of security. For instance sensors, site security and backup systems. An EU Resilience Inspection Team could carry out regular audits of member states to assess if these minimal security standards are complied with. An annual Resilience Report, naming and shaming the laggards, might be a useful incentive for member states to make the right security investments. After all, NATO has done this successfully with its 2% of GDP defence spending target. Civil defence and emergency protection fit in here too, propelled by the experience of Ukrainians in suffering daily (and nightly) missile strikes from Russia and fears in central and eastern Europe that a defeat of Ukraine could expose their own territory to Russian invasion. Poland has been building air raid shelters, stockpiling food and medicines and rehearsing evacuation plans as well as building up its military reserve units for homeland defence. The question is whether the EU should set common standards for civil protection in wartime for all its 27 member states, particularly focusing on the border areas most likely to be affected as the Ukrainian experience has shown. It would be a difficult debate and it will not be resolved quickly; but it should at least be started with the most likely scenario, namely EU support to the frontline states in eastern Europe, being tackled first.

But adversaries need to be deterred as well as frustrated. Here, the EU has developed since 2019 a diplomatic toolbox to draw on in responding to hybrid aggressors where they can be clearly identified. The measures range from naming and shaming to asset freezes, travel bans, expulsion of diplomats and economic sanctions. Partners are useful here in demonstrating solidarity and their own experiences of coping with cyberattacks or influence campaigns can be useful in helping the EU to improve its resilience. They can also provide support and assets in a crisis as Ukraine has demonstrated by sending emergency rescue teams to Poland and the Czech Republic to help with the floods. So, a ‘Fortress Europe’ approach will not work and a key task of the incoming EU High Representative and of the EU Common Foreign and Security Policy must be to build these Resilience Partnerships for the longer term. Immediate data and information-sharing agreements on shocks and disruptions would help to build a common operational picture. A common database of emergency response skills and assets at high levels of readiness for potential cross-border assistance would also be a worthwhile objective. Yet what the new High Representative should do soon after taking office is to conduct a stocktaking of the implementation of the EU’s diplomatic toolbox thus far. It would be useful to know which measures, such as asset freezes or targeted sanctions, have had an effect on the perpetrators of hybrid campaigns or obliged them to change their tactics. That would prompt a debate within the External Action Service and among member states on how the EU diplomatic toolbox can be refined and adapted to meet the evolving threats.

Another lesson from recent crises in the EU is the need for a better integration of military and civilian responses. COVID-19 led to a major military mobilisation on the domestic front. Soldiers built temporary hospitals, operated mobile vaccination centres and transported patients from one hospital to another, including across borders. In flood situations too, the military and their heavy-duty vehicles and amphibious capabilities are useful to build flood defences, remove obstacles and bring flood victims to safety. They have rescued illegal migrants at sea and run migrant reception centres as well. Yet the war against Ukraine has shown how dependent the military is on civilian support. Internet connectivity provided by the private sector, rapid innovation by small companies on military systems to upgrade them against countermeasures on the battlefield, crowd-sourcing finance for drones, night vision equipment and uniforms as well as information gathering on enemy movements. So, we now need much greater military input into civilian response planning and vice versa. The NATO Summit Declaration of last July mentions this challenge and calls for more coordination of EU and NATO planning and crisis management procedures. A joint planning headquarters to do this work and provide a constant intelligence overview could be an early deliverable in this respect, to be unveiled at the NATO Summit in the Netherlands next summer. There are many NATO and EU headquarters that could potentially house this civilian-military planning cell but a separate building equidistant from Schuman and Evere in Brussels might avoid the anticipated turf fights.

Defining and managing multiple levels of resilience is important too. Resilient societies are impossible without resilient companies and resilient citizens who can act as first responders and supply threat information and intelligence in real-time to the authorities. The previous Commission spent much time in regulating the private sector through measures like the Network Information Security Directive and the Digital Services Act and imposing hefty fines on those companies in breach of its rules on cyberattack disclosures or individual privacy. The challenge for the new Commission is arguably to develop a more intimate and voluntary form of dialogue and cooperation between government and industry along the lines of the collegial and trusting mindsets that we see in EU states such as Finland and Sweden. In addition, the EU needs to pay attention to how it can encourage its citizens to be responsible actors rather than passive bystanders in their own resilience. Education for data protection and online safety or mobile phone alert systems have been much discussed, but some EU countries are requiring more of their citizens and have retained or are reintroducing conscription. This is not only for national defence but also to foster social cohesion. Those who have undergone some military training can take decisions under pressure, handle groups and assess situations clearly in ways that are useful in handling crises. Of course, reintroducing conscription will not be a political possibility in many EU members. A volunteer national service scheme, provided that it is properly funded and organised, might be more realistic in the short term. Yet the EU could consider selling up a common EU Civil Defence Rapid Reaction Force bringing together professional people skilled in the various aspects of emergency response, from medical to evacuation and transport. This force could have cross-border units as disasters like floods and forest fires frequently straddle borders as we saw with flooding on the Belgian-German border and the Ahr valley in the summer of 2021 or the Polish-Czech border just last week. The Commission’s initiative in its last term to establish a common EU aerial water tanker capability to deal with forest fires could usefully be fitted into this Rapid Reaction Force, as could the Cyber Reaction Teams that Lithuania has proposed to set up under its EU PESCO (Permanent Structured Cooperation) defence project. An EU joint civil-military headquarters could ensure recruitment, training and deployment of specialised personnel in situations where an individual EU member state is overwhelmed and needs the help of its neighbours. EU military personnel and police could also be rotated in the EU civil defence force and it could be an asset in wartime in helping to secure the rear areas and protection of military supply lines behind the front line of direct conflict.

Not all threats are the same or equally serious or persistent. Democratic change in Russia (admittedly unlikely) could overnight remove many of the current hybrid attacks and influence campaigns that the EU is suffering. Even with adversaries, diplomatic agreements are possible as when the Obama Administration in the US made a deal with China to halt cyber–espionage and cyberattacks on civilian targets. Unsurprisingly, it was never fully respected and broke down over time. It also meant that Beijing refocused its cyber activities on other countries. But any relief in this pattern of systemic interference, even transitory, is welcome, and therefore worth trying – with China at least. But the key focus of EU resilience strategy going forward has to be on the “inevitable threats”, the things that will get worse and harder to deal with whether the world becomes a more peaceful place or not. Climate change and pandemics certainly fit into this category. Europe is experiencing global warming faster than other continents and extreme weather events that used to occur every decade or so are now impacting on at least half of EU territory every year – whether extreme summer temperatures or multi–country flooding. Again, these are not isolated events but catastrophes that build upon each other to reshape the European space – from demographics to agriculture to tourism and health. Adaptation to climate change as we move past 1.5 degrees of global warming this year to 2 degrees and even beyond will take up more of the EU political agenda. Better early warning is key as major flooding from above-average rainfall continues to take us by surprise. More physical protections like flood barriers on rivers, drainage canals, elevated constructions and more fire-resistant building materials need more attention from EU policymakers too. Climate change could also have deep geopolitical consequences for the EU, for instance, if Russia emerges as a winner because of its vast size and capacity to bounce back from droughts or fires. Russia could become an even more important source of food, water, raw materials, habitable living space and energy for the EU, reversing the gains that have been made since 2022 to reduce the Union’s vulnerability to energy blackmail.

Resilience in peacetime, even enhanced, is not the same as resilience in wartime. The previous Commission began a debate on whether the greater intensity of disruptions and interference, coupled with the worsening international situation, makes it necessary now for the EU to go on a war footing. The outgoing commissioner for the EU Internal Market, Thierry Breton, put this idea into circulation and it has been given an extra wind by warnings of a war with Russia in as little as five years coming from European politicians and military figures. Some have suggested an EU equivalent of the US Defense Production Act, which gives the US government powers to switch industry to armaments production and to have companies reserve a part of their production chains and supply lines to military goods and materials. This is often referred to as a ‘surge capability’. Others have proposed that the EU, which began after World War II as a peace project to reconcile former adversaries, now has to become a ‘war project’ in terms of protecting its citizens against outside attempts to undermine its democratic and economic foundations. What putting the EU on a ‘war footing’ means in practice is not entirely clear. As the EU faces no imminent military threat and is defended by NATO it cannot mean a high degree of permanent military mobilisation and defence industries turning out weapons and explosives day and night, which would harm the civilian economy and the social welfare programmes for which the EU is rightly famous. So, it has to be something short of full-scale war preparation but something that heightens the EU’s current capacity to deter and to fight. One aspect is the stockpiling of critical materials, such as rare earths or urea for making fertiliser. Russia has already threatened EU countries with cut–offs in exports such as nickel, urea and uranium on which many EU member states depend. It can take 10 years to create alternative supply chains or to ramp up domestic mining and production, so this effort has to begin now. The model of how the EU greatly increased its storage of natural gas after reducing imports from Russia to guarantee winter supplies shows what can be achieved with a determined response. The recent deal between Germany and Serbia on lithium imports shows supply chains can be brought closer to home. Yet some EU institutions are still very much in a peacetime mentality and will need a change of mindset to contribute to the EU’s new resilience culture. The European Investment Bank in Luxembourg, for instance, has had a difficult time modifying its financial structures and lending criteria to accommodate dual use technologies, let alone conventional military equipment. As with Draghi’s wind turbines, the EU Defence Commissioner will need to define where Europe can continue to defend on foreign supplies and what it can increasingly manufacture itself and competitively vis-à-vis those foreign suppliers. Europe makes its own fighter aircraft, aircraft carriers, frigates, anti-air missiles, drones, tanks and artillery. Even nuclear weapons in the case of France and the UK. If important partners are brought in, such as the UK, Turkey and Norway, which all have advanced defence industries, Europe’s strategic autonomy in military systems and technologies would be even greater. So, this is not about protectionism or ‘Buy European’ in defence markets, as critics often allege, but about having a sensible EU defence industry strategy that integrates vital partners, including the US, into the European market through targeted joint ventures and mutual access agreements.

In sum, resilience seems no less of a multi–headed hydra, and no less of a challenge for the next Commission than fixing the EU’s competitiveness problems. There is clearly an overlap and even a mutual dependence between the two areas as we see from Draghi’s ideas on industrial strategy and public-private pump priming in key sectors, including defence and dual use digital technologies. As with competitiveness, the next Commission will need clear priorities and objectives and to convey a sense of urgency that will make member states move at equal speed. Recovery from shocks and disruptions is important in building future resilience. So, the EU Next Generation COVID-19 recovery funds can also be used by member states to fund projects that not only promote the green agenda but also enhance resilience, especially in the energy, transport and communications sectors. Given the enormity of all these challenges it is good that Ursula von der Leyen has also launched a second major review to do a stocktake and outline an action plan as the new EU leadership takes office. The report on Enhancing Europe’s Preparedness and Readiness should be presented to Von der Leyen in October. It is being led by Sauli Niinistö, the former president of Finland. He is the right person for the job, not only on account of his long political experience and deep knowledge of Russia, but also because he comes from Finland, an EU member state that has pioneered the whole–of–society approach to resilience. Finland has a community of like-minded leaders from government, industry and civil society who are used to working together and share information openly. They have an attitude on preparedness as much as an organisational or bureaucratic approach and understand each other’s cultures and working methods intimately. Of course, it will not be easy to transfer the cosy camaraderie of a small, cohesive state like Finland to the vastly more complex level of the 27 EU member states; but the closer Niinistö can come in this endeavour, the better off the EU will be. So, let’s wish him well and look forward to seeing soon what he proposes.

The views expressed in this #CriticalThinking article reflect those of the author(s) and not of Friends of Europe