Five years of Ursula von der Leyen: centralisation and degrowth

By
Pieter Cleppe
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It will soon be decided whether Ursula von der Leyen gets a second term as European Commission president. Even though she was not on any list for the European Parliament elections, she “campaigned” to succeed herself, travelling through several EU member states. Ultimately, however, she only has to convince the 27 heads of state and government. It may be true that the European Parliament votes on the appointment by majority, but it is extremely unlikely that MEPs would go against their political lords in the capitals.

The German politician is a member of the Christian Democratic CDU, but that did not exactly stand out over the past five years. Below is an assessment of her policies.

1 – Opaque decision-making

Both supporters and opponents of her policies denounced the lack of transparency von der Leyen showed in outlining her policies over the past five years. Luxembourg Eurocommissioner Nicolas Schmit, for instance, revealed that von der Leyen “never consulted us on the agreement with Tunisia and Egypt [aimed at stopping illegal migration]. There was no discussion in the College of Commissioners. If there had been, I would absolutely have voted against it. I cannot agree with this way of governing the college … We are not a presidential system”.

The nickname given by some to von der Leyen in Brussels is therefore “Queen Ursula“. Her wayward behaviour also ensured that she is now under investigation by both the Belgian court and the European Public Prosecutor’s Office in the so-called “Pfizergate” scandal concerning negotiations for the purchase of Covid vaccines, following a complaint by a Belgian lobbyist. This allegedly involved von der Leyen negotiating personally, by text message, with Albert Bourla, Pfizer’s ceo, without the participation of member states, and also without involving the permanent team appointed to negotiate vaccines. Von der Leyen had so far refused to clarify this unusual procedure, and when the New York Times asked her to see the text messages in question, they proved untraceable. A case about this is now pending at the highest EU court. The German politician was fiercely criticised by both the European Court of Auditors and the European Ombudsman, who spoke plainly of “maladministration”. That as much as EUR 4 billion worth of Covid vaccines ultimately turned out to be unnecessary may be easy talk in hindsight, but it doesn’t make the picture any brighter.

On top of that, there were controversies, such as the appointment of party colleague Markus Pieper as special envoy to the European Commission for SMEs, which von der Leyen eventually had to reverse after it emerged that there were better-ranked candidates who had not been selected, following protests from as many as four fellow European Commissioners. It also appears that Ursula von der Leyen concealed the fact that she was behind an advertising campaign worth €70,000, about which Politico stated that such a thing “violates European Union rules that were adopted while she was running the EU’s executive”.

2 – The wasteful Corona Recovery Fund

Amid the Corona crisis, in the summer of 2020, European heads of state and government decided to set up a so-called “Corona Recovery Fund” of no less than €750 billion. The European Commission played an important steering role in this, helping to overcome any opposition from thrifty member states.

Despite warnings from various quarters, including from the Italian judiciary that such a financial injection would be particularly vulnerable to organised crime in Italy – but thus elsewhere – they went ahead with it anyway. Now, four years later, the first major scandals are surfacing. According to Italian prosecutors, skimming this European money is even so lucrative for the mafia that it explains the drop in mafia murders. The fact that the von der Leyen Commission refuses to force member states to publish the exact recipients of the money already indicates that there is hardly any goodwill to ensure proper spending.

However, the biggest problem with the Corona Recovery Fund is that it will not – contrary to what outgoing Dutch Prime Minister Mark Rutte claimed – remain a one-off operation. The reason is that the money spent was not already disbursed by the European member states, as is the case with the regular European budget. On the contrary, the money was borrowed on the international markets, by the European Commission, which has yet to pay it back. The Commission itself would like to be given the power to tax European citizens directly, to repay the loan, but it is unlikely that EU member states will give such power to the Commission – let’s hope at least. Most likely, member states will allow the Commission to take out a new loan to repay the old one. After all, such questionable practices are already standard procedure for providing funding to national governments. However, it does ensure that this fund becomes permanent.

3 – Refusing to consider outsourcing the asylum procedure

No one would argue that it is easy to deal with uncontrolled migration, but to this day von der Leyen’s European Commission refuses to see outsourcing the asylum procedure as a solution. However, Australia did manage to bring the illegal influx of migrants to almost zero that way – regardless of people not respecting their maximum visa duration. As a result, for the past 20 years – because that is how long Australia has been doing it – almost no people died at sea on their way to Australia, while during the same period there were tens of thousands of drowning deaths of desperate people on their way to Europe.

Anyone trying to enter Australia illegally is taken to neighbouring Nauru. As a result, virtually no one tries anymore. There, one certainly retains the right to asylum, but one does not then get asylum in Australia, but in, say, Cambodia. Undoubtedly, there are many improvements to be made to this model – which the UK wants to copy with its Rwanda model – but fundamentally, it is a more humane approach than the deadly European asylum chaos, which ultimately also undermines public support for asylum. After all, Australia does still accept asylum seekers, but only people straight from refugee camps, properly screened. Not just young strong men who can survive the hellish crossing.

An initiative to introduce such a model in Europe too is currently supported by 19 member states. In March 2024, von der Leyen herself finally half-heartedly backed this model – a transparent attempt to gain support for a second mandate – after she had defended the current non-policy for years on end. Her own Commission may have come up with a so-called “Migration Pact“, but that too amounts to more of the same: mandatory dispersal of people within the Schengen zone, where no passport controls happen, and yet another attempt to start selecting people at EU borders – based on a warmed-over system of the already failed “hotspots” in the past. Separately, Von der Leyen also went so far as to promise billions to dictatorships around Europe, for which it is far from clear what kind of border control will replace it.

4 – Failed trade policies

Over the last five years, the European Union failed to conclude trade agreements with Australia and the Latin American trade bloc Mercosur. It did conclude a Brexit deal that limited new barriers on British-European trade, but that was really the least of it, and a smaller agreement with New Zealand was also reached. Taken by the tape, von der Leyen’s bilan on trade is still seen by most analysts as only bland.

According to Philippe De Baere, managing partner at law firm Van Bael and Bellis, the explanation is simple: “Everyone has tried to overload trade agreements with non-trade objectives. (…) This has killed the goose that lays the golden eggs.”

In other words, instead of trying to conclude trade agreements, the von der Leyen Commission tried to misuse trade talks to impose all kinds of specific policy choices on trading partners in terms of social or environmental policies. This was the case in the Mercosur negotiations, for example, where the EU suddenly asked for a sustainability annex to be added to the agreement. This move was not to the liking of the Mercosur governments, which were particularly opposed to the EU’s demand to immediately but also follow the new European deforestation legislation.

Such an approach has also soured trade relations with Southeast Asia, with palm oil-exporting countries Malaysia and Indonesia deciding to freeze trade talks with the EU in 2023 over Europe’s refusal to recognise their standards to prevent deforestation, despite the fact that NGOs such as Global Forest Watch have praised Malaysia’s success in reducing deforestation.

After Brexit, the UK can set its own trade policy, and it is taking a different approach. For example, it recognises Malaysia’s local deforestation standards – MSPO – giving it access to the Trans-Pacific Trade Agreement CPTPP, which covers countries representing 15 per cent of global GDP. This is considered the biggest trade deal for the UK after Brexit.

With Australia, the problem was then that the EU did not want to give up its own agricultural protectionism, while meanwhile there is also real climate protectionism. After all, because the EU thinks it is unfair that the rest of the world does not adopt Europe’s hugely expensive climate policy, it came up with a new climate tariff called “CBAM” or “Carbon Border Adjustment Mechanism”. This in turn led to a big row with emerging trading power India, which is challenging CBAM at the World Trade Organisation (WTO), as well as African countries, because it is estimated to cost them US$25 billion annually.

5- Neglecting the single market, the EU’s core mission

Even before von der Leyen took office, opening up internal trade barriers within the European Union was no longer a priority for the European Commission. Allowing Italy to bail out banks or France to nationalise a shipyard to prevent an Italian takeover: it happened with regularity. Back in 2014, Margrethe Vestager, the European commissioner for competition policy, had stated that she found it “natural that competition policy is political.” Such overt politicisation of enforcing the rules of fair competition is, of course, the last thing we needed.

Under von der Leyen’s rule, things got worse. Just about nothing was done to counter national protectionism, and competition policy became increasingly lax. The Corona crisis was the great excuse for this, but these relaxations were simply extended afterwards, with the result that member states now shamelessly hand out large-scale subsidies to counter the threat of deindustrialisation resulting from high energy prices – also already a result of European (climate) policy and energy supply experimentation.

For example, Vestager agreed to a €1.7 billion cash injection from taxpayers to recapitalise Berlin’s struggling New Airport, justifying that “airports have been hit particularly hard by the corona virus”.

US policy is also used as an excuse. In response to the protectionist US “Inflation Reduction Act”, legislation by which the Biden administration offers companies generous tax breaks to encourage green investments, von der Leyen advocated in February 2023 for even further dilution of European rules against state aid. On top of that, she wanted to create a so-called “European Sovereignty Fund”, which amounts to European industrial policy – something that has invariably led to wastefulness, nepotism and misallocation of investment in the past, then at the national level. Thus, European citizens will not only enjoy less competition, but will also be allowed to pay higher taxes. Fortunately, von der Leyen failed to push through her new fund.

Meanwhile, though, roughly 80 per cent of the state aid approved by the Commission in recent years is spent by Germany and France. This proves that this kind of undermining of the single market mainly benefits companies with good connections in the EU’s two largest economies. Distortion of competition, with the full backing of the European Commission. An internal document reflecting conversations among European heads of state and government also shows that they have doubts about a second term for von der Leyen because she has neglected enforcement of EU regulations, with the Commission also launching fewer infringement proceedings than in the past. They also have reservations about the institution’s increasing politicisation. European Council President Charles Michel called all this “regrettable”.

6- Fanatical green policies

Last but not least, the von der Leyen Commission created an avalanche of very expensive green legislation, under the banner of the “European Green Deal”. This caused discontent among consumers, who will soon be banned from driving combustion-engined cars and required to insulate their houses, even if the cost of doing so does not pay for itself. It also caused great anger among farmers, who only managed to get a few limited encroachments. Finally, the high cost also caused criticism among industry in the industrial heartland of the EU: Germany and the Benelux countries.

Remarkably, the green regulatory package was met with strong opposition from other Eurocommissioners when it was proposed in 2021 by Dutch EU Commissioner Frans Timmermans and top Eurocrat Diederik Samsom, once with Greenpeace. Yet von der Leyen let it all happen.

However, climate policy can be designed in another, more rational way, as suggested by researchers from the Climate & Freedom International Coalition. Instead of taxes and regulation, they propose a model in which countries committed to climate-friendly free-market policies enjoy trade advantages. Such a policy could then consist of targeted tax cuts (“Clean Tax Cuts”), specifically in the four sectors responsible for 80% of greenhouse gas emissions – transport, energy and electricity, industry and real estate – or tax cuts aimed at demonopolisation.

An alternative is to encourage investment in assets that are important to businesses in the long term (“Property, Plant, and Equipment (PP&E)”), through so-called tax-free “CoVictory bonds”, which reduce the cost of borrowing by at least 30%. The intent here is to encourage innovation, rather than the current model of taxing, regulating and protectionism.

However, such an alternative policy model does not enjoy support within the European Commission. According to its official advisory board, it should all be much more radical in the future, with stricter emission standards for farmers, more government subsidies for certain forms of energy, industrial policy (read: protectionism) and, as if they already realise the social consequences of this, more benefits to compensate for the damage.

Conclusion

According to a reconstruction by Politico, von der Leyen pushed through her major policy decisions “using the centralisation of policies, the pooling of [financial] resources and a form of state intervention normally unthinkable for the centre-right in Europe.” Consequently, according to Eric Ciotti, the leader of the French centre-right who sits with von der Leyen in the European People’s Party (EPP), she has “aligned herself with the degrowth policies promoted by the left.” It should be clear: this politician best not get a second mandate as European Commission president.

 

 

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