Vulcan View: The latest EU developments 7 July – 11 July

Commission President von der Leyen survives no-confidence vote

On Monday, July 7, European Commission President Ursula von der Leyen addressed the European Parliament in Strasbourg regarding ongoing allegations related to the so-called “Pfizergate” controversy, which had prompted a motion of censure from far-right groups. During her remarks, von der Leyen firmly denied the accusations and described them as unfounded and politically motivated, seeking to defend both her integrity and the Commission’s conduct in vaccine procurement. She defended her leadership and vaccine rollout as emblematic of the “Europe of solidarity,” stating that the alleged misconduct belonged to “the oldest playbook of extremists.”

The situation has sparked significant political tension. The Socialists and Democrats (S&D) group, the second biggest political party in the EP, threatened to abstain from a confidence vote – unless President von der Leyen secured a commitment that the European Social Fund Plus would remain in the EU’s budget plans – signalling a breakdown in the traditional centrist coalition that has underpinned von der Leyen’s mandate. Meanwhile, Renew, the liberal group in the European Parliament, which is an important part of the centrist majority in the hemicycle, signalled that it would vote against the motion, as would the Greens.

The motion of censure – called by far-right Romanian MEP Gheorghe Piperea and co-signed by about 74 MEPs – occurred on Thursday, 10 July, and was defeated decisively:

• 175 votes in favour
• 360 against
• 18 abstentions

The outcome fell short of the required two-thirds majority. Additionally, it marked the first such procedure since 2014 and the first under von der Leyen’s Commission.

Following the no-confidence vote, several political groups expressed intentions to pursue their own motions shortly, reflecting broader dissatisfaction within the Parliament. The lack of unified parliamentary backing highlights how volatile political alliances in Brussels have become. The S&D changing from an abstention to a vote against also highlights the transactional nature of the institutions.

While Ursula von der Leyen faces a symbolic defeat of the motion of censure, the move spotlights deepening fractures with centrist circles, with long-term tensions within her EPP coalition having the potential to influence future dynamics and her capacity to push forward her political agenda.

Paschal Donohoe remains as Eurogroup President for a third term

On Monday, 7 July, the 20 finance ministers of the euro area unanimously re-elected Ireland’s Minister for Finance, Paschal Donohoe, as President of the Eurogroup for a third consecutive term. His reappointment was effectively secured ahead of the vote after both potential contenders, Spanish Economy Minister Carlos Cuerpo and Lithuanian Finance Minister Rimantas Šadžius, withdrew their candidacies. His new term will begin on 13 July and last two and a half years.

He was first elected to lead the influential body in July 2020 and re-elected in December 2022.  His tenure has spanned a period of exceptional economic volatility, including the COVID-19 pandemic, inflationary shocks, and ongoing geopolitical instability.

In his re-election speech, he underscored the euro area’s resilience and reiterated his commitment to deepening fiscal and financial coordination across the bloc. Specifically, he outlined a set of core priorities for his next term, including advancing the Capital Markets Union, progressing the digital euro, and reinforcing budgetary coordination. Emphasising the strategic importance of a stronger currency union, he stated: “A stronger and more competitive euro area will reinforce the international role of the euro, further enhance our resilience and prosperity to the benefit of our citizens”.

Mr. Donohoe’s third term begins against a backdrop of renewed tension over financial integration, particularly the future of the EU’s long-stalled Banking Union. In recent weeks, German Chancellor Friedrich Merz publicly rejected the European Deposit Insurance Scheme (EDIS), delivering a significant blow to prospects for its near-term adoption. Mr. Donohoe, who has long championed banking sector reforms, responded by reaffirming Ireland’s strong backing for EDIS and the broader Savings and Investment Union, describing them as critical to the EU’s long-term competitiveness.

Beyond his Eurogroup presidency, Mr. Donohoe’s role as Minister for Finance places him at the forefront of critical domestic economic decision-making in Ireland. The upcoming Summer Economic Statement, scheduled for later this month, marks the next key milestone in Ireland’s budgetary cycle. As outlined in the Programme for Government, this statement will be published alongside Ireland’s new medium-term fiscal and structural plan, setting the stage for Budget 2026. Speaking this week, Donohoe noted, “From a fiscal perspective, we need to continue to calibrate budgetary policies that recognise the changed external backdrop”. The challenges extend beyond the national sphere, with looming EU tariffs and impending deadline extensions set for 1 August casting a shadow over Ireland’s economic outlook as transatlantic trade tensions persist.

European Commission publishes 2025 Annual Rule of Law Report

On Tuesday, 8 July, the European Commission released its 2025 Rule of Law Report, a comprehensive check on the democratic foundations of the 27 Member States and four candidate countries. The report, the first of the Commission’s new mandate, underscores the vital link between the rule of law and Europe’s collective democracy, security, and economic prosperity. Interestingly, it includes, for the first time, a single market dimension. Moreover, it reveals a positive, although uneven, trajectory of reform across the Union, celebrating significant progress in some nations while flagging serious, persistent concerns in others, confirming that a robust rule of law is essential for upholding the Union’s values.

Justice and Anti-Corruption efforts

At its core, the rule of law ensures that no one is above the law, a principle upheld by independent and efficient justice systems. The 2025 report shows that many Member States have made commendable strides in this area. Reforms have been advanced to strengthen the independence of judicial councils, guarantee the autonomy of prosecutors, and improve the overall quality and efficiency of justice.

However, the picture is not uniform. In some countries, such as in Hungary, the pace of reform has been sluggish, and serious concerns remain. These challenges often stem from political pressure on the judiciary and insufficient resources, which can strain justice systems and hinder their effectiveness.

Similarly, the fight against corruption remains a critical battleground for preserving public trust. As Commissioner for Democracy, Justice, the Rule of Law and Consumer Protection, Michael McGrath, stated, “The European Union stands for legal certainty — and with that comes economic stability and prosperity… The rule of law is not only vital for democracy and security, but also for our economy. This is our competitive edge.”

Encouragingly, several nations have bolstered their anti-corruption frameworks, launched new strategies and dedicated more resources to prosecution services. Yet, the report calls for more robust preventive measures, particularly concerning lobbying, conflicts of interest, and ensuring that high-level corruption cases are effectively prosecuted and judged.

Media freedom and institutional checks

The Commission acknowledges that a vibrant democracy cannot function without a free and pluralistic media, which holds power to account. The report highlights positive developments, with Member States beginning to align their national laws with the new European Media Freedom Act (EMFA). Many countries are also taking steps to ensure public service media is funded fairly and that the allocation of state advertising is transparent, reducing the risk of political influence.

Despite these advances, threats to journalists persist, and the report stresses the urgent need to improve their safety. In some Member States, the independence of media regulators and public service broadcasters remains a point of concern, alongside opaque media ownership structures.

Beyond the media, the report examines the broader system of institutional checks and balances that underpin a healthy democracy. This includes ensuring that new laws are drafted with proper consultation and that civil society organisations can operate freely. While many Member States have an enabling environment for these organisations, others have imposed obstacles, such as restrictive funding requirements. In a few Member States, the situation for civil society is particularly challenging, with organisations facing undue restrictions and inadequate protection, limiting their crucial role in public life.

Single Market dimension

This year’s report places a special emphasis on a crucial, but often overlooked, aspect of the rule of law: its direct impact on the EU’s Single Market. A stable and predictable legal environment is the bedrock upon which businesses, particularly small and medium-sized enterprises, build their plans and make investments. The report details how these principles translate into tangible economic benefits, from specialised courts that handle commercial cases efficiently to robust anti-corruption measures that ensure fairness in public procurement. A stable regulatory environment, free from sudden and unpredictable changes, is essential for businesses to thrive and for the Single Market to function effectively.

Conclusions

The report’s findings confirm that respect for the rule of law is not an abstract ideal but a practical necessity for the functioning of the Single Market, attracting investment, and creating a stable environment for businesses and citizens alike.

The Commission has issued specific recommendations to each Member State and will closely monitor their implementation. The coming year will see a renewed focus on ensuring that EU funds are tied to compliance with the rule of law. The Commission now calls on the European Parliament, the Council, national parliaments, and civil society to engage in robust debates based on the report’s findings. The key takeaway is clear: upholding the rule of law is a collective effort, essential for securing a democratic, secure, and prosperous future for the entire European Union.

Compliments of Vulcan Consulting – a member of the EACCNY