Valdis Dombrovskis is no stranger to Brussels. Now Executive Vice-President of the European Commission, he has already left his mark on several of the European Union’s major economic transformations. His new role, a position created for this new commission, encompasses a wide range of responsibilities: leading the economy, boosting productivity, and simplifying European regulations. This role, which didn’t exist in such an integrated form before, reflects the clear intent of the von der Leyen Commission: to accelerate reforms and make Europe more competitive.
A legacy shaped by crises and reforms – 2019-2014
From 2019 to 2024, Dombrovskis navigated through unprecedented crises. The COVID-19 pandemic severely tested the European economy, forcing institutions to deploy urgent solutions. The NextGenerationEU plan, which he helped shape, is a perfect example of this response: €750 billion mobilized to help member states revive their economies and fund structural reforms. However, despite the scale of this plan, all was not smooth sailing. By the end of 2024, less than half of the funds had been disbursed, largely due to administrative delays and setbacks in national plans.
He was not alone in these efforts. Paolo Gentiloni, in charge of economic affairs, led the reform of the EU’s fiscal rules, a sensitive but essential task to modernize budgetary governance. Meanwhile, Margrethe Vestager focused on the obstacles to competitiveness, ensuring that state aid encouraged innovation without distorting the single market. When Dombrovskis had to relinquish the financial services portfolio in 2020 to take over trade, it was to address another crucial situation: responding to the trade disruptions caused by the pandemic and geopolitical tensions, particularly with China and the United States. By managing such diverse issues, he strengthened his image as a pragmatic figure, capable of juggling strategic vision with crisis management.
A logical choice? – road to 2024-2029
Why him, why now? Dombrovskis’ selection reflects both his experience and the priorities of the Union. He is a seasoned technocrat, familiar with the intricacies of public finance. This position aims to tackle a dual urgency: making Europe more competitive on the global stage and simplifying a regulatory system often deemed overly complex, especially for SMEs. The challenge is even greater since European competitiveness is under pressure from giants like the U.S. and China.
Among his priorities, simplifying regulations stands as a major task. The Commission wants to reduce administrative obligations by 25% and by 35% for SMEs, a vital measure to stimulate private investment. This will involve direct consultations with businesses, “reality checks”, to identify what hinders their activities. For example, the use of tools like the European digital identity could significantly reduce paperwork. Dombrovskis will also need to ensure that NextGenerationEU funds are fully utilized by 2026, a colossal challenge, given that current delays are already hindering key projects for the green and digital transitions.
Finally, he must steer a project that is as strategic as it is complex: the digital euro. This electronic currency, meant to complement cash, raises both hopes and concerns, especially around privacy issues. But in a world where digital payments are exploding, it could become a valuable tool to strengthen Europe’s monetary sovereignty.
Numerous challenges ahead
Nothing will be easy for Dombrovskis in the years ahead. The reform of fiscal rules, for example, could bog down due to divisions between member states. Northern countries call for strict discipline, while Southern, more indebted nations, demand more flexibility. Maintaining this balance will be crucial to avoid a return to the budgetary tensions that marked the post-2008 years. But as we say, “When Valdis speaks, financial markets calm down.”
On the international front, the task is equally tough. Europe must find its place in a fierce global competition, where the United States, thanks to massive stimulus plans like the Inflation Reduction Act, is attracting foreign investors. The creation of a European Competitiveness Fund could provide an answer, but quick decisions and clear financing will be needed to ensure this tool doesn’t remain just a concept.
Finally, the ecological transition remains a central challenge. If Europe aims for carbon neutrality by 2050, it will need to convince its companies, especially SMEs, that climate policies can also be an opportunity. This could involve incentive mechanisms, such as targeted subsidies or tax cuts for sectors investing in green technologies.