US snub on war, China ties... EU looks at Ursula's address for road ahead

European Union officials are trying to work out how to turn their anxiety about an increasingly hostile world into action.

They've seen the bloc sidelined in US negotiations with Russia over Ukraine and forced into a humiliating trade deal by Donald Trump. They've failed, again, to rebalance their relationship with Beijing and watched another French government collapse over a budget impasse, while familiar divisions are hampering efforts to formulate a coherent response to the war in Gaza.

As the US, China and Russia abandon the rules-based order that underpinned European prosperity for decades, many EU leaders are aware of the dire consequences if they fail to meet the challenge, according to one senior official with knowledge of their conversations.


That's the sobering backdrop for EU Commission President Ursula von der Leyen when she makes her annual state of the European Union speech on Wednesday. "The common element now is fear," former Italian prime minister and EU commissioner Mario Monti said in an interview.

One theme of her address will be a call to action, in particular when it comes to rebuilding European militaries, according to people familiar with the preparations. A spokeswoman for the commission declined to comment on the details of her speech.

When von der Leyen began her second mandate 10 months ago, she warned that Europeans were fighting for their freedom and sovereignty. Yet her commission has suffered a series of defeats.

To avert a trade war with the US, she accepted an unbalanced trade deal which will eliminate tariffs on American goods shipped to the EU, while most European exports to the US will face 15% levies. Despite those concessions, Trump still threatened more retaliation after the commission imposed a fine of close to ?3 billion ($3.5 billion) on Alphabet Inc.'s Google last week.

In July, President Xi Jinping brushed off her warnings about curbing access to the European single market unless China opens up to European firms and refused to guarantee the supply of critical minerals that have helped to increase Beijing's leverage over Brussels. Israel's attacks on civilians in Gaza, despite the appeals of European leaders, have underlined the sense of powerlessness.