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Tuesday 7 February 2023

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Europe had already banned Russian coal as well as most crude oil. It has now also imposed a ban on Russian diesel fuel and other refined oil products. (file photo)

Welcome to Wider Europe, RFE/RL's newsletter focusing on the key issues concerning the European Union, NATO, and other institutions and their relationships with the Western Balkans and Europe's Eastern neighborhoods.

I'm RFE/RL Europe Editor Rikard Jozwiak, and this week I'm drilling down on two major issues: the debates over Belarus sanctions and Russian oil caps, and what they really have in common; and why Ukraine is being overly ambitious in its attempts to join the European Union in two years.

Brief #1: Russian Oil Caps, Sanctions On Belarus, And The Battle For The 'Global South'

What You Need To Know: Over the last week, EU ambassadors have grappled with three separate, but intertwined topics directly related to the war in Ukraine: a new sanctions package on Belarus, the possibility of setting two new price caps on Russian oil products, and a review of the already existing price cap on Russian crude oil that was agreed in December 2022.

While there is consensus among the 27 EU member states that all three are needed, views differ on both the content and the timeline.

All three issues also concern the EU's relationship with the so-called Global South, in this case meaning countries, especially in Asia and Africa, that tend to be economically poorer than European nations but are playing an increasingly important role in world politics due to their steady economic growth.

Within the context of the war in Ukraine, Brussels has been keen to secure the support of many of these southern nations when it comes to votes in the United Nations condemning Moscow.

But the EU is also extremely wary of Kremlin propaganda, which portrays the bloc's Russia sanctions as damaging for the world economy and for creating shortages of food and fuel globally.

Deep Background: Perhaps the easiest bit for EU officials and diplomats to agree on is the new price caps.

This is because they are in agreement with the Group of Seven (G7) leading advanced economies that the cap should be $100 for Russian petroleum products, such as diesel, and $45 for other cheaper products made from oil, such as liquid paraffin and industrial lubricants.

There was also a strong desire to agree on this by February 5 when the EU embargo on buying these types of Russian oil products enters into force.

With most shipping and insurance companies based in the EU and G7 countries, the caps are meant to reduce the revenue that Moscow gets from sales to non-EU/G7 countries, while ensuring vital supplies continue to flow to the Global South.

The same idea was behind the EU/G7 cap on Russian crude oil, set at $60 per barrel in early December 2022. While that cap has contributed to the Kremlin losing out on crucial cash to fund its invasion of Ukraine, the Baltic trio of Estonia, Latvia, and Lithuania, as well as Poland, wanted an immediate review undertaken by the European Commission with the view to potentially lowering the cap to $40-50.

And they wanted this to happen before green lighting any agreement on the new caps. For most other EU countries, the United States, and the European Commission, the review can wait until March.

Drilling Down:

  • The European Commission analysis is that the price cap works: lower prices without the disruption of deliveries to third countries. The commission has also noted that China uses the cap to further negotiate the price down.
  • The Baltic trio, on the other hand, has pointed to the EU regulation, agreed in December 2022, that stipulates that the oil price cap "shall be reviewed, as of mid-January 2023 and every two months thereafter." The trio also notes that Brussels agreed that the cap should be at least 5 percent below the average market price for Russian oil.
  • With Russian oil currently selling around $50 per barrel, the Baltic countries are arguing that a $60 cap is an empty gesture, pointing to some estimates that show Russia still gets $600 million per day from the sale of various fossil fuels.
  • Other EU member states, however, shoot back that the G7 isn't bound by the EU regulation and that a review first in March will allow a rather volatile market to adjust to the cap introduced just two months ago.
  • In the end, EU ambassadors agreed on February 3 on the two new petroleum product price caps at the expected rate of $100 and $45. And to placate the Baltic trio and Poland, a clear legal procedure spelt out how the March review of the oil cap will be carried out.
  • The need not to disrupt the flow of oil to the EU's southern partners is the overriding fear here. That apprehension is noticeable in the EU's latest sanctions package on Belarus, the first since the summer of 2022. The proposal mirrors some of the measures already applied to Russia, such as an EU ban on providing IT services, consulting, polling services, and luxury goods to the country and a prohibition on the import of Belarusian steel and gold.
  • But just as with the last EU sanctions package on Russia, agreed at the end of 2022, there is also a derogation when it comes to fertilizers and food products. The Belarus proposal, seen by RFE/RL, notes that this is "in order to further address food security concerns in third countries" and that individuals who play "a significant role in international trade in agricultural and food products, including wheat and fertilizers" can have their assets unfrozen by Brussels.
  • For Minsk, this could mean Belarusian tycoon Ivan Halavaty and Russian billionaire Mikhail Gutseriyev, who has been supportive of Belarusian leader Alyaksandr Lukashenka, could potentially see EU asset freezes against them dropped.

Brief #2: Ukraine's Overly Ambitious Plan To Join The EU

What You Need To Know: Possibly the biggest talking point from last week's EU-Ukraine get-together in Kyiv was the timeline for Ukraine's EU membership.

Ahead of the meeting, Ukrainian Prime Minister Denys Shmyhal confidently proclaimed that his country had a very ambitious plan to join the club within two years.

He repeated the same thing at the press conference after his government had met with the 16 visiting European commissioners, although he did add the caveat that the approval process in EU member states might well take longer.

On that point he's certainly not wrong: There is a need for all 27 to agree to opening accession talks, and the same unanimity is needed to open and close every one of the 33 negotiation chapters.

European Commission President Ursula von der Leyen, who was standing next to Shmyhal, diplomatically dodged the question of timelines, simply adding bureaucratic platitudes such as "the accession process is merit-based."

She did note, however, that Kyiv's "speed and ambition and determination, while being in an atrocious war, is impressive."

Deep Background: Ukraine has every right to be optimistic about its chances. Last year, it received candidate status three months after applying -- something of a record -- and there is still widespread political and popular support across the EU for Ukraine and Ukrainians.

The fact that over half of the college of European commissioners travelled together to Kyiv is significant.

And, while there, they did agree on measures that will help Ukraine get closer to the bloc, including a road map to improve the country's access to the European Union's lucrative single market in areas such as public procurement and industrial products.

Import duties for Ukrainian goods will be waived for another year and the "solidarity lanes" -- transport links between the EU and Ukraine -- will be given a funding boost of 1 billion euros ($1.1 billion).

Drilling Down:

  • Yet, there is a hard road ahead. When Ukraine got its candidate status, it also received seven conditions to fulfil in order to open accession talks, including the enactment of new anti-oligarch and media laws, greater protection for national minorities, and reforming the country's Constitutional Court and anti-corruption bureau.
  • While Shmyhal says that all seven conditions have been either met or that considerable progress has been made, several EU officials I spoke to on condition of anonymity said that only about 50 percent of the work has been accomplished so far.
  • The European Commission will come with its big assessment on Ukraine's progress in October and, while Kyiv hopes for a positive review and the start of accession talks by the end of the year, there is every chance that the EU will come with more conditions before any talks can start. That would push the timeline to 2024 and possibly even beyond.
  • It is also worth noting that, while in Kyiv, the European Commission quietly published its assessment on how aligned Ukraine, as well as the other EU hopefuls Georgia and Moldova, are with EU legislation in all policy fields. Out of 33 chapters, Ukraine is deemed to have "a good level of preparation" in only four, including energy and foreign policy. To adopt all the necessary EU legislation within a year will be something of a Herculean task.
  • Then there is also the skepticism, notably among western member states, about rushing Ukraine into the EU. While some eastern member states wanted something akin to an official midterm report on Kyiv's accession progress already in the spring, that idea was shot down and will now simply be an "oral update" by the European Commission that won't have much legal bearing.
  • For more EU foot-dragging, look no further than the EU-Ukraine summit declaration that EU ambassadors haggled over for days. The main bone of contention was this sentence: "The EU acknowledged the considerable efforts that Ukraine demonstrated in the recent months towards meeting the objectives underpinning its candidate status for EU membership." In early drafts, the word "progress" was used in the sentence, however a good number of western EU member states objected, and it was replaced with "efforts." As a diplomat from one eastern member state noted to me: "Ukraine might be ambitious, but I really sometimes wonder if we are."

Looking Ahead

A week after travelling to East Asia to visit Japan and South Korea, NATO Secretary-General Jens Stoltenberg will spend most of this week in the United States, meeting with both the U.S. secretaries of state and defense, the National Security Council, and members of Congress. Expect a full range of issues to be discussed, including more arms to Ukraine, preparation for the meeting of NATO defense ministers in Brussels in mid-February, and the NATO summit in Vilnius in July.

EU leaders will gather in Brussels on February 9-10 for their first summit of the year. The focus will be on migration issues, amid a recent spike in asylum requests in the EU. The issue mainly concerns the bloc's southern borders, so the influx of Ukrainian refugees since Russia's full-scale invasion in February 2022 is not on the table. It's likely that EU candidate countries in the Western Balkans will be asked to do more to combat migrant smuggling along the so-called "Western Balkan route" leading to the EU.

That's all for this week. Feel free to reach out to me on any of these issues on Twitter @RikardJozwiak or on e-mail at jozwiakr@rferl.org.

Until next time,

Rikard Jozwiak

If you enjoyed this briefing and don't want to miss the next edition, subscribe here. It will be sent to your inbox every Monday.

And you can always reach us at newsletters@rferl.org.

Germany on January 25 approved the delivery of Leopard 2 tanks to Ukraine after weeks of pressure from Kyiv and many allies.

Welcome to Wider Europe, RFE/RL's newsletter focusing on the key issues concerning the European Union, NATO, and other institutions and their relationships with the Western Balkans and Europe's Eastern neighborhoods.

I'm RFE/RL Europe Editor Rikard Jozwiak, and this week I'm drilling down on two major issues: a deep dive into the decision to send Leopard tanks to Ukraine and what it means for the West, and why Hungary is trying to remove Russian oligarchs from the EU sanctions list.

Brief #1: What The Momentous Decision On The Leopards Means For The West

What You Need To Know: The decision last week by Germany -- not only to allow other countries to send German-made Leopard 2 tanks to Ukraine but also to provide Kyiv with its own Leopards -- is significant, not only for the Ukrainian war effort, but also for the credibility of organizations such as the European Union and NATO.

According to various EU officials I spoke to on the issue, it was highly significant that almost directly after the German announcement, the United States said it would be providing Ukraine with around 30 of its M1 Abrams tanks.

Washington not only continues to be the main security provider for Europe, but the United States is key in helping solve the political impasses that bedevil the European Union's position on Ukraine.

The promises of tanks send a clear message of unity to Ukraine and to the world. The cracks that have appeared in the Western alliance, for now, appear to have been papered over.

Deep Background: High-level discussions about the Leopards started in earnest at the summit of the Lublin Triangle in Lviv on January 11, in which the presidents of Lithuania, Poland, and Ukraine came together.

Polish President Andrzej Duda vowed to send the Polish Leopard 2 tanks to Ukraine, but what followed was days of back-and-forth between Warsaw and Berlin: the former pushing and admonishing the latter, often publicly; the latter noting that no official request had been sent and that Poland hadn't built up an alliance of other countries with the tanks (notably Finland, Spain, and Norway) to present a credible case.

Officials in Brussels and elsewhere that I have spoken to on the condition of anonymity say Warsaw knew very well that Germany would be reluctant to sign off on sending the tanks. The Poles also knew, however, that pressure could change their minds. The German ruling coalition was divided between the junior partners, the Greens and the liberal Free Democratic Party, which wanted to export the tanks, and the more skeptical Social Democrats under Chancellor Olaf Scholz.

My sources also noted Berlin had dragged its feet before over the past year, only to eventually come around on issues such as banning Russian banks from using SWIFT, which facilitates global money transfers, as well as sanctioning Russian media companies and energy concerns. Parliamentary elections are coming in the fall, and Berlin-bashing is popular among many Poles.

Drilling Down:

  • The outcry about Germany's stubbornness was evident both at the meeting of Western defense ministers at the Ramstein air base on January 20 and when EU foreign ministers gathered in Brussels three days later. On both occasions German officials made it clear they were unhappy about the public criticism Berlin had received.
  • This likely prompted both U.S. Defense Minister Lloyd Austin and NATO Secretary-General Jens Stoltenberg, who visited Berlin on January 24, to sing the praises of Germany's efforts on Ukraine so far, notably highlighting contributions such as the Patriot surface-to-air missile system.
  • Pressure from their European peers and the British decision to send its own Challenger 2 tanks probably wasn't enough to persuade the Germans. According to Scholz, it was the United States promising its tanks that sealed the deal.
  • While some U.S. officials repeatedly said that sending M1 Abrams made little sense, due to both long supply chains and considerable fuel consumption, several diplomats I spoke to praised Scholz for his role in getting Washington onboard.
  • Berlin still has plenty of historical baggage about using tanks in a European war. Moreover, Germany is reluctant to go it alone on any military matter.
  • The back-and-forth over the tanks puts to bed the idea of "European strategic autonomy," a popular expression in French politics. For now, the notion that Europe should be able to act alone militarily without help from the United States is pretty much dead and buried.
  • February looks like it could be a significant month. There are reports that U.S. President Joe Biden will travel to Europe, making several stops. One of those could be a summit to mark the one-year anniversary of Russia's full-scale invasion of Ukraine, a meeting slated for February 22 in Istanbul. A NATO defense ministerial will also take place a week before that. And there are likely to be more announcements about weapons for Ukraine, potentially even the Western fighter jets that Kyiv so desperately wants. The next big debate among Ukraine's Western allies won't be about tanks but about planes.

Brief #2: Horse-Trading And The Hungarian Veto

What You Need To Know: When RFE/RL last week broke the story that Hungary once again wants to remove people from the European Union's ever-growing Russia sanctions list, few, if any, in Brussels were surprised.

Budapest tried to remove three people when the sanctions were up for extension the last time in September 2022 but quickly backed down after intense pressure from the other EU member states.

This time around, Hungary is trying to delist the same trio, plus an additional six people -- all oligarchs or family members of oligarchs.

The sanctions, which now cover nearly 1,300 people and 170 entities, will need to be rolled over by March 15, so there's still time to find a solution.

Because of the EU's unanimity rule, all member states need to give the green light for the sanctions to be approved. That usually means horse-trading, where dissenting countries try to extract concessions in exchange for their vote.

Late last year, for example, Hungary connected the approval of the bloc's 18 billion euros ($19.6 billion) financial assistance to Ukraine to the loosening up of rules that would allow more EU money to flow to Budapest.

Hungary got what it wanted, despite the bloc's concerns about the country's backsliding on democracy. The horse-trading will be a recurring theme, as every six months the measures come up for extension.

Deep Background: Hungary has played the "veto card" to perfection in recent years. It has secured opt-outs from the EU's oil embargo on Russia, removed Russian Patriarch Kirill from being sanctioned, and watered down the bloc's arms embargo on Belarus.

But Hungary is not the only one. Cyprus managed to remove strict language from a ban on Russians buying property in the EU. Germany successfully pushed for longer phase-out periods on buying Russian coal, while others in the EU's south managed to lobby against the blacklisting of Russian-owned ships.

This will only continue, as there's no chance of the unanimity rule changing any time soon. Bureaucrats and diplomats have been debating for years the question of whether foreign policy decisions in the EU should move from unanimity to some sort of qualified majority voting.

The EU already does this in the fields of transport, energy, and humanitarian aid, to name a few. Some countries have also pushed to change the sanctions rollover from six months to 12 in order to avoid the constant "hijacking."

Yet, to enact those changes, you need unanimity. The uncomfortable truth is that many countries would be loath to give up such a powerful tool -- their veto -- and, as they see it, surrender their national sovereignty in a very sensitive and important field.

Drilling Down:

  • The question everyone is asking when it comes to Hungary's latest move is: Why these particular individuals? There are no known financial links between any of the nine people and Hungary. Not a single EU official I spoke to about this has any clue, either.
  • When asked at the EU Foreign Affairs Council in Brussels last week, the Hungarian foreign minister, Peter Szijjarto, didn't go into any specific detail about why any of the nine should be delisted. He simply noted there is an ongoing revision of the list and it was important not to include people if there was no reason for it, legal or otherwise.
  • According to several diplomats who are not authorized to speak on the record, the legal service of the EU's council of ministers has informed member states on several occasions that there are solid legal grounds for all the current listings, which seemingly contradicts the Hungarian position.
  • Some of the oligarchs Budapest wants to remove have also tried to be delisted by taking their case to the European Court of Justice. So far, the Luxembourg-based court has dismissed their requests.
  • Why is Hungary doing this now? Of course, Budapest might just be trying to curry favor with Moscow. Some observers have noted the sanctions renewal in March falls around the same time that Hungary might be due some frozen EU funds.
  • Budapest is also playing to a domestic audience. Earlier this month the Hungarian government published the results of a monthlong consultation in which 97 percent of respondents rejected several aspects of the EU's sanctions policies, especially measures concerning energy. The so-called consultation has been criticized in Brussels. Only 1.4 million of Hungary's 8.2 million registered voters took part in the process, which was also criticized by many for asking "misleading" questions.
  • That said, Hungary has given its consent to all 10 EU sanctions packages on Russia since the February invasion of Ukraine. Last week, it also gave its thumbs-up to the six-month rollover of all the bloc's economic sanctions on Russia, without making any fuss at all.

Looking Ahead

Ukraine continues to dominate the headlines. With the Leopard issue out of the way, the EU-Ukraine summit on February 2-3 is likely to be a much more upbeat affair. Another Ukraine-related event worth looking out for is the address by Andriy Yermak, head of Ukraine's presidential administration, to the European Parliament's Committee on Foreign Affairs on January 31.

Another one to watch is NATO Secretary-General Stoltenberg's visit to both Japan and South Korea on January 29-February 1. Stoltenberg first traveled to both countries in 2017, but this journey comes amid increased Western scrutiny over China's role in East Asia and its potential influence on Russia.

For the first time ever, both Japan and South Korea attended a NATO summit last year as observers. And it was at that Madrid gathering that NATO, also for the first time, listed China as one of its strategic priorities, noting that Beijing challenges the alliance's "interests, security, and values."

That's all for this week. Feel free to reach out to me on any of these issues on Twitter @RikardJozwiak or on e-mail at jozwiakr@rferl.org.

Until next time,

Rikard Jozwiak

If you enjoyed this briefing and don't want to miss the next edition, subscribe here. It will be sent to your inbox every Monday.

And you can always reach us at newsletters@rferl.org.

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About The Newsletter

The new Wider Europe newsletter briefs you every Monday on key issues concerning the EU, NATO, and other institutions’ relationships with the Western Balkans and Europe’s Eastern neighborhoods.

For more than a decade as a correspondent in Brussels, Rikard Jozwiak covered all the major events and crises related to the EU’s neighborhood and how various Western institutions reacted to them -- the war in Georgia, the annexation of Crimea, Russia’s support for separatists in eastern Ukraine, the downing of MH17, dialogue between Serbia and Kosovo, the EU and NATO enlargement processes in the Western Balkans, as well as visa liberalizations, free-trade deals, and countless summits.

Now out of the “Brussels bubble,” but still looking in -- this time from the heart of Europe, in Prague -- he will continue to focus on the countries where Brussels holds huge sway, but also faces serious competition from other players, such as Russia and, increasingly, China.

To subscribe, click here.

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