On eastern Europe and the rule of law, Mr Juncker's preferred way forward is deeper inclusion rather than keeping some countries in a halfway house © Reuters

The tone, if nothing else, is a dramatic change. The previous State of the Union speeches from European Commission President Jean-Claude Juncker sounded as if they were given from the edge of an abyss. In 2015, he said that the European Union was neither European nor united enough. In 2016 the mood was darker still: an “existential crisis” faced the union and member states were “paralysed” by populism.

This year’s speech began with congratulations for the EU’s 27 member states — the exclusion of the UK from the count was one of the few implicit references to Brexit— on showing “that Europe can deliver for its citizens”. Much of what was delivered was, of course, the result of an accelerating economic recovery, but he pointed to the role of EU institutions in creating underlying stability.

The speech’s implications for policy were harder to read than its mood. Where the commission has real power — trade and business regulation — the focus was in the right place. Europe has become, by both choice and default, the world leader on free trade. The EU-Canada agreement in the bag, Mr Juncker stressed the EU’s commitment to completing the Japan deal and pursuing future deals with Latin America’s Mercosur trading bloc, Australia and New Zealand, all by the ambitious deadline of 2019.

His call for screening of bids for European companies by state-owned foreign groups makes sense. The shadowy ownership of acquisitive companies such as China’s HNA raises real concerns. The commission will have to be sure that these matters are not transformed into protectionism.

On internal issues, in particular those relating to the centralisation of power, optimism was blended with caution. On the proposal favoured by France’s president Emmanuel Macron, to create a single European finance minister, Mr Juncker agreed one was needed — that should mean a larger role for the commissioner on economic and financial affairs. On the proposal, favoured by Germany, that the European Stability Mechanism become a fully independent monetary fund, Mr Juncker was approving but wants the change to be gradual.

On the crucial matter of banking union, Mr Juncker hedged again. Its most crucial component, a common deposit insurance scheme, is an urgent priority. But further strengthening of individual banking systems must come first. Between the lines, another nod to Germany is perceptible: it will not have to fund a scheme that guarantees wobbly banking systems to its south.

The great non-economic challenge facing the EU is what to do about countries on its eastern edge that are driving away from the rule of law. Mr Juncker’s message to Hungary and Poland was that the rule of law is a “must”. His preferred way forward is deeper inclusion rather than keeping some countries in a halfway house. Mr Juncker did not address directly how violations of democratic principles should be dealt with. His delicate handling of Warsaw and Budapest shows that conflicts over values are not yet worth the cost of an east-west schism.

Mr Juncker’s caution reveals a hard fact: the union is not going to come any closer together than Germany is prepared to go. So he and the 27 must await the results of the German elections on September 24. Should she win a fourth term, the coalition that Chancellor Angela Merkel forges will shape politics inside and outside Germany. How she uses it to form a common approach to Europe with Mr Macron, will determine how many of the ideals written into Mr Juncker’s optimistic speech become reality.

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