[WATCH] Von der Leyen to MEPs: ‘Sanctions here to stay – Russia’s industry in tatters’

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European Commission president Ursula von der Leyen
European Commission president Ursula von der Leyen

European Commission president Ursula von der Leyen addressed MEPs in her annual State of the EU address, in which she sent out warning that sanctions against Russia will stay in place as Europe weans itself off Kremlin gas.

Von Der Leyen boasted that European sanctions launched since the start of the war in Ukraine had placed Russia’s financial sector on life-support, by cutting off three-quarters of Russia’s banking sector from international markets.

“Nearly one thousand international companies have left the country. The production of cars fell by three-quarters compared to last year. Aeroflot is grounding planes because there are no more spare parts. The Russian military is taking chips from dishwashers and refrigerators to fix their military hardware, because they ran out of semiconductors. Russia’s industry is in tatters,” Von der Leyen said.

“It is the Kremlin that has put Russia’s economy on the path to oblivion. This is the price for Putin’s trail of death and destruction. And I want to make it very clear, the sanctions are here to stay. This is the time for us to show resolve, not appeasement.”

Von der Leyen said this was not just a war unleashed by Russia against Ukraine, but called it a war on Europe’s energy, economy, values and on its future. “This is about autocracy against democracy. And I stand here with the conviction that with courage and solidarity, Putin will fail and Europe will prevail.”

Von der Leyen – who will later today meet Ukrainian president Volydymyr Zelenskyy – praised Ukrainains’ resolve in facing up to the Russian invasion, paying tribute to the innocent victims of the war.

“One lesson from this war is we should have listened to those who know Putin. To Anna Politkovskaya and all the Russian journalists who exposed the crimes, and paid the ultimate price. To our friends in Ukraine, Moldova, Georgia, and to the opposition in Belarus. We should have listened to the voices inside our Union – in Poland, in the Baltics, and all across Central and Eastern Europe. They have been telling us for years that Putin would not stop.”

She said Europe now had to take the costly decision to get rid of dependency on all Russian fossil fuels.

At 84% joint storage however, the EU’s efforts will not be enough as Russian pipeline gas dwindles to 9% from 40% of European gas imports.

In addition the climate crisis is also heavily weighing on our bills, with heatwaves boosting electricity demand, droughts shutting down hydro and nuclear plants, and gas prices rising by more than 10 times compared to before the pandemic.

Von der Leyen said millions of Europeans need support, which is why the EU is proposing a cap on the revenues of companies that produce electricity at a low cost.

“These companies are making revenues they never accounted for, they never even dreamt of. In our social market economy, profits are good. But in these times it is wrong to receive extraordinary record profits benefitting from war and on the back of consumers.”

The proposal will raise over €140 billion for member states to cushion the blow directly.

Major oil, gas and coal companies making huge profits will also have to give a crisis contribution.

Von der Leyen said the EU wanted to reform the design of the electricity market, by helping consumers reap the benefits of low-cost renewables, through the decoupling of the dominant influence of gas on the price of electricity.

Against foreign interference

A ‘Defence of Democracy’ package unveiled by European Commission president Ursula von der Leyen at her State of the European Union address to MEPs, will be deployed in a bid to fight malign interference in European politics.

Von Der Leyen said the package of laws will bring covert foreign influence and shady funding to light.

Earlier this year, the University of Amsterdam shut down an allegedly independent research centre, which was actually funded by Chinese entities. This centre was publishing so-called research on human rights, dismissing the evidence of forced labour camps for Uyghurs as “rumours”.

“These lies are toxic for our democracies. Think about this: We introduced legislation to screen foreign direct investment in our companies for security concerns.  If we do that for our economy, shouldn’t we do the same for our values?”

Von der Leyen said the EU will not allow “any autocracy’s Trojan horses to attack our democracies from within.”

She also committed her Commission to keep protecting the rule of law in the EU, judicial independence, and the EU’s budget through the conditionality mechanism.

“If we want to be credible when we ask candidate countries to strengthen their democracies, we must also eradicate corruption at home. That is why in the coming year the Commission will present measures to update our legislative framework for fighting corruption,” she said.

Von der Leyen said the EC will raise standards on offences such as illicit enrichment, trafficking in influence and abuse of power, beyond the more classic offences such as bribery. “And we will also propose to include corruption in our human rights sanction regime, our new tool to protect our values abroad.”

European Hydrogen Bank

Von der Leyen described hydrogen as Europe’s energy game-changer, with 2030 targets doubled to scale up the niche fuel to produce 10 million tons of renewable hydrogen in the EU, each year.

“That is why I can today announce that we will create a new European Hydrogen Bank. It will help guarantee the purchase of hydrogen, notably by using resources from the Innovation Fund. It will be able to invest 3 billion euros to help building the future market for hydrogen.”

On the climate crisis, Von der Leyen said that while the glaciers in the Alps helped as an emergency reserve for rivers like the Rhine or Rhone, as they melted faster than ever future droughts will be felt far more acutely.

“We must work relentlessly to adapt to our climate – making nature our first ally. This is why our Union will push for an ambitious global deal for nature at the UN Biodiversity conference in Montreal later this year. And we will do the same at COP27 in Sharm el-Sheikh.”

SME Relief Package

The EC will be proposing a single set of tax rules for doing business in Europe, called BFIT, by cutting down on red tape for better access to the continental market.

Von der Leyen said the Late Payment Directive will be revised, saying it was “simply not fair” that

one in 4 bankruptcies were due to invoices not being paid on time. “For millions of family businesses, this will be a lifeline in troubled waters.”

She also said European companies are also grappling with a shortage of staff. “Unemployment is at a record low, and this is great. At the same time, job vacancies are at a record high. Europe lacks truck drivers, waiters and airport workers, as well as nurses, engineers and IT technicians. Both low-end and high-end. We need everyone on board.”

As a first step, the EC will need to speed up and facilitate the recognition of qualifications also of third country nationals.

Von der Leyen also announced a European Critical Raw Materials Act, with ratification for agreements with Chile, Mexico and New Zealand on the processing of rare earth minerals like lithium.

Today, China controls the global processing industry with almost 90% of rare earths and 60% of lithium are processed in China. “We will identify strategic projects all along the supply chain, from extraction to refining, from processing to recycling. And we will build up strategic reserves where supply is at risk.”