European leaders are meeting in Brussels on Thursday to discuss two crucial issues: the EU’s industrial policy in the face of American and Chinese competition, and the management of migrant arrivals at the EU’s borders.
The situation in Ukraine and the visit of Ukrainian President Volodymyr Zelensky are expected to occupy much of the media attention. However, at the end of the day, the leaders will also discuss proposals by European Commission President Ursula von der Leyen to strengthen the EU’s industrial policy.
Support for renewable energy and decarbonization of industry
The President of the European Commission wants to give more flexibility to Member States to grant aid to companies involved in renewable energies (solar, wind) and the decarbonization of industry (hydrogen, electrification, energy efficiency). Investments in new plants could be supported by tax incentives. However, this measure is controversial and is expected to be hotly debated.
Germany and France isolated
Germany and France, the big rich countries of the EU, could take undue advantage of these measures to support their companies at the expense of those in the EU. Italy and several smaller countries such as Austria, Denmark, and Finland support a more focused and limited mechanism, but they risk making it meaningless.
New financing
To mitigate the risk of fragmentation of the single market, France and Italy are calling for new joint funding. The European Commission has promised to propose a European sovereignty fund to invest in research or the capital of strategic companies. However, this idea is rejected by several countries, including Germany, the Netherlands and Sweden.
In addition, the European Commission is counting on the mobilization of existing funds to finance the green transition, including the €800 billion European recovery plan called NextGenerationEU, of which €250 billion could be dedicated to the green transition. According to German Chancellor Olaf Scholz, the EU is not far from the $370 billion announced by the United States in its climate plan adopted last summer.
Several debates
Several countries are opposed to including the sovereign wealth fund in the summit conclusions. However, according to a source close to the Elysée, “he will be present”. Paris intends to convince of its necessity after an evaluation of the financing needs to be conducted by the Commission.
The debates will also be intense on migration policy, which has become a burning issue in Europe due to the increase in asylum applications in 2022 that is putting the reception systems of several countries under pressure. Leaders will discuss tighter control of external borders and cooperation with countries of origin and transit of migrants to reduce irregular arrivals and increase deportations.
The issue of fencing will also be addressed, with several countries, such as Austria, calling for it to be funded from the EU budget. The Commission has so far refused to fund “walls and barbed wire” but not surveillance “infrastructure” such as cameras or motion detectors.
The leaders agreed to use “all tools” available, including restrictive visa measures, to encourage countries of origin to take back their illegal nationals.
The European summit will address crucial issues such as the green transition and migration policy, but the debates will be difficult due to differences of opinion between the member countries.
