Wider Europe

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 am drilling down on two issues: EU financing for Ukraine going forward and a Baltic warning for the EU.

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Wider Europe Briefing: How To Finance Ukraine In 2027

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Briefing #1: Ukraine Financing Top EU Autumn Agenda

What You Need To Know: EU's foreign ministers gather in Ireland on September 1-2 for the traditional beginning of the autumn-term informal foreign affairs council, known in Brussels corridors as Gymnich after the German castle where the first of such meetings were held over 50 years ago.

The informality of the Gymnich means no decisions are taken, but it will allow for more in-depth discussions without the flock of aides and officials who normally surround the ministers at more regular council meetings.

This meeting is meant to set out the EU strategy ahead of the United Nations General Assembly (UNGA) at the end of September as well as the rest of the year. And, as in recent years, its support for Ukraine is left, right, and center of this strategy: more specifically, how to help finance the country, continue to sanction Russia, and get other countries to increase their support for Kyiv.

For now, sanctions might be easiest thing to agree on. Since the difficulties of getting the bloc's 21st package across the line in July and the many opt-outs when it came to the various sectoral sanctions proposed, the EU will now shift tactics.

The new plan is simply to concentrate on rolling, monthly updates to its asset freezes and visa bans blacklists. The list, which currently contains over 3,000 names, might add an additional 1,600 more in October as the EU's diplomatic corps, the European External Action Service (EEAS), is sending out proposals for new inclusions.

It is expected that most of these listings will be agreed upon quickly as the majority aren't household names but rather officials and businesspeople involved in the defense sectors of Russia and Moscow-allied countries.

Deep Background: Then there is the issue of rallying other non-EU countries to Ukraine's cause. It is significant that the foreign ministers of non-EU Canada, Iceland, Switzerland, Norway, and the United Kingdom also are present at the meeting. The EU side will press them to step up funding for Ukraine (more on this below) and help improve Ukrainian air defense amid incessant Russia attacks even though EU diplomats speaking under condition of anonymity believe the best bet of getting interceptors quickly for Kyiv now is if Japan, South Korea, and possibly Saudi Arabia could step up.

The EU also hopes its closest allies can help ahead of UNGA regarding the situation in the Black Sea. With Russia targeting Ukrainian ships and Kyiv responding by hitting nearby Russian grain export terminals, the developing world is increasingly nervous about spiraling food prices akin to 2022 when the full-scale invasion started. Here, Brussels and friends hope to secure some sort of cease-fire deal at least when it comes to Black Sea shipping of grains.

Drilling Down

• Most of the talks will center around the need to finance Ukraine going forward. This comes after Ukraine estimated a 23 billion euro shortfall needed for personnel, social support, and weapons purchases that also includes some 6 billion euros in advance payments for deliveries due at the beginning of 2027.
• The EU agreed on a 90 billion loan for Ukraine in late 2025 that would make up a large part of what Kyiv needed for both this year and next, but it's now clear that won't be enough. Ukraine has asked if most of the amount could arrive sooner and not be divided in half (45 billion for 2026 and the same amount in 2027), which is something EU officials are currently are studying the feasibility of.
• Ahead of the Gymnich, four countries -- the Netherlands, Poland, Spain & Sweden -- reflecting the north-south and east-west EU axis sent a letter to the European Commission to again look into the possibility of leveraging the 210 billion euros' worth of Russian frozen assets in the club.
• The text, seen by RFE/RL, states there is "no sign that Russia is willing to end the aggression" and that "Ukraine needs more financial support in both the short and long term."
• That idea of using Russian state assets, most of which are held by Euroclear, was last year's autumn big idea even though it eventually was rejected, notably by Euroclear's host nation Belgium.
• Brussels has not changed its stance, with the country's diplomats first leaking the quartet's letter to the media in order to drum up opposition.
• So why try it again? For starters, Euroclear might be willing this time to move as there was considerable reputational damage for the company by simply holding onto the assets the longer Russia's assault on Ukraine's civil population continues.
• There's a political argument holding that the issue of frozen assets is what truly matters to Russia as it was something Moscow pushed for repeatedly in its dealings with the United States when Washington was trying to settle the conflict. Brussels, in other words, senses this is a card one can play to bring Russia back to the negotiating table.
• Mostly, this is about discussions for the next long-term EU budget for the period of 2028-2034 on which EU countries hope to reach consensus before the end of this year. In the original proposal, some 100 billion euros would be set aside for Ukraine.
• But there are three issues at play here. The first is that this money will only become available in 2028, so if money is short for Kyiv for next year, some sort of stopgap is needed.
• The second issue is the urgency to agree on the next long-term EU budget before next year when several key European countries such as France, Italy, and Poland hold elections -- votes that could bring in populist governments that may not be too positively inclined toward Kyiv or toward bigger EU spending in general.
• Then there's the third issue. The EU budget, which is likely to be around 1 trillion euros, is largely made up of contributions from member states relative to their gross national income (GNI). With money needed for so many items such as European defense, agriculture, and support for new tech innovations, the argument then goes: Why not use another pot of money such as Russian assets to pay for at least the Ukraine part of the budget?

Briefing #2: The Baltic Warning For Europe

What You Need To Know: August has been filled with stories about the possibility of some sort of a Russian attack on the three Baltic states of Estonia, Latvia, and Lithuania.

The Wall Street Journal (WSJ), referring to fresh US intelligence reports, recently stated the Kremlin could try to test NATO with a small-scale land incursion as early as this year. A retired British Army Colonel wrote in the Daily Telegraph that he believed the Baltics to be Moscow's target to compensate for losses in Syria and the Black Sea, as well as to test the responses of NATO and its most important member, the United States.

Lithuanian Defense Minister Robertas Kaunes echoed this sentiment, noting Russian President Vladimir Putin “needs a new escalation, some kind of new victory, and the Baltic region, Poland, is the immediate target in this case."

It all culminated in CIA Director John Ratcliffe's surprise visit to Moscow on August 25. Ratcliffe flew to Russia to urge the Kremlin against escalating with US allies, particularly the Baltic trio, sources briefed on the visit confirmed to RFE/RL on August 26.

The possibility of a Russian strike on NATO was, however, at least partly, played down by the US President Donald Trump a day later.

Deep Background: Speaking to RFE/RL on condition of anonymity, several Baltic diplomats said there was additional intelligence during the summer of Russian false-flag operations but no indication about an imminent conventional attack.

European diplomats in Brussels also noted they had no intelligence report that any conventional attack was imminent. They did, however, point out that various Russian hybrid operations had been going on for a long time, and not limited to the Baltics, such as recent cases of alleged or suspected Russian involvement in assassination attempts, fires, and drone incursions in several NATO countries including Germany, Poland, and Slovakia.

However, there is nervousness in the bloc, notably on its eastern flank. That manifested itself in a letter, first reported by RFE/RL, by five European commissioners to their boss, European Commission President Ursula von der Leyen, warning of a "deteriorating security environment" amid an "increased frequency of airspace violations and drone incursions" in the region.

The letter, dated July 30, was not initially reported by any media as it was sent during the summer when a large part of EU Brussels is out on holidays. But it also came exactly at a moment when those few EU diplomats who still were in town were preoccupied with the migrant crisis in Ceuta.

What is significant about the letter is not only that it is undersigned by the commissioners from the eastern flank bordering Russia: Estonia, Finland, Latvia, Lithuania, and Poland. But these five figures are significant players with significant portfolios in Brussels. Estonia's Kaja Kallas is the bloc's foreign policy chief, and her Lithuanian counterpart, Andrius Kubilius, is responsible for defense -- the sector in which the EU is ploughing plenty of fresh money into.

Speaking of cash, Polish Commissioner Piotr Serafin is responsible for budget, and the long-term Latvian representative, Valdis Dombrovskis, occupies the economy portfolio. Finland's Henna Virkkunen is also one of the commission's heavyweights, dealing with all digital and tech related affairs.

Drilling Down

• Some of the commissioners' asks in the letter are distinctly symbolic, like suggesting that the entire commission urgently visit one of the Baltic states this autumn, which is unlikely to happen as agendas are usually set far in advance.
• There's also the request to create a "high-level special coordinator for the eastern flank" to "show political attention and support to the region, but also to have a special entry for governments from the region."
• The main demand, however, is further funding, with the text mentioning 100 billion euros to ensure that the business and investment environment in frontline states remains confident in response to "the deteriorating security environment, including the increased frequency of airspace violations and drone incursions."
• The letter adds that "these incidents are already having a negative impact on the region's business environment and public confidence in security. To prevent further deterioration and reinforce deterrence, visible and timely action is required."
• Speaking to Baltic diplomats, the main worry has long been that threats and various Russian hybrid actions have a chilling effect on those who want to invest in the region and also prompting some to relocate.
• Among the actions outlined are "rapid response capacity to disruptions in energy supply and toward critical electricity and gas infrastructure, setting up regional stockpiles for essential goods and civil protection assets, shelters and evacuation infrastructure and preparedness to respond to hybrid, cyber, sabotage, electronic and information threats."
• The text mentions two recent EU initiatives, the Eastern Flank Watch and the Eastern border communication, which were launched to help frontline states in various ways but essentially remain empty shells as they contain no concrete legislation or proposals.
• Conspicuously absent from the text and from most EU communications recently is the "drone wall," a proposed project widely discussed last year that the bloc considered funding. The idea was to equip the EU's entire eastern flank with sensors and capabilities to detect and shoot down unfriendly drones.
• Not much has happened in this regard. As one Baltic official put it to RFE/RL: "It's easier to talk about the drone wall than to build one. But let's be frank: Nobody has this wall yet, not even the Ukrainians."
• The problems are financial, technical, and legal. There is no clarity over who should pay for such an expensive system. France and Germany, the two key EU member states, have expressed reservations that such an expensive system should be financed with EU money and that this would give Brussels more powers, something neither Berlin nor Paris is keen on at the moment.
• But also key components such as sensors, radars, and an effective command-and-control system are not yet fully developed. And there is still a debate over whether the whole thing should be fully automated or overseen by humans.

Looking Ahead

The EU court will rule in an important EU Russia sanctions case on September 3. The Lithuanian trading company, Rao Lietuva, has challenged the way Lithuanian authorities implemented the sanctions as they affected the company's ability to carry out business activities on the ground that it maintained links with persons who were targeted by sanctions. The ruling will essentially decide how far reaching the bloc's sanctions on Moscow are.

That's all for this week!

Feel free to reach out to me on any of these issues on X @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.

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 am drilling down on one issue: Iceland’s EU referendum.

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Wider Europe Briefing: What Iceland's EU Referendum Means For Europe

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The Briefing: Iceland's Referendum -- Will It Restart EU Accession Talks?

On August 29, Iceland will hold a referendum on restarting European Union accession talks with Brussels.

Iceland has been here before. It applied to join the EU in 2009 and began accession negotiations the following year, but a new government put the talks on hold in 2013. Two years later, Reykjavik told Brussels that Iceland should no longer be considered a candidate for membership, although it stopped short of formally withdrawing its application.

What happens this time could resonate well beyond Iceland. While a referendum on an island of just under 400,000 inhabitants in the North Atlantic normally wouldn’t grab too many headlines, this vote could have far-reaching consequences for the EU, its current candidate countries, and other European countries that are pondering closer relations with the bloc.

A Test Of The EU's Appeal

For Hallgrimur Oddsson, director of the think tank Evrópustraumar (European Currents), which charts EU-Icelandic relations, the vote is very much a challenge for the EU’s expansion policy.

“The enlargement over the past decade and more has been pointing eastwards,” he told RFE/RL. “In my mind, from the EU perspective, this is a sort of a test. To see if the EU is attractive enough for the wealthier northern countries that are now currently outside of the union to join.”

Among European diplomats speaking to RFE/RL, there is a sense that this poll matters as much in Brussels as in Reykjavik -- largely because of the instant feel-good factor it would give the EU, which has endured a turbulent decade marked by Brexit, sluggish economic growth in parts of the union, disputes over migration, and security concerns fueled by Russian hybrid attacks.

It would also provide a symbolic boost to a bloc whose recent enlargement debate has largely centered on less wealthy candidate countries in Eastern and Southeastern Europe.

If Iceland were to join, it would be the third richest member state on a per capita basis and a net contributor to the European Union’s budget -- something that none of the current EU candidate countries in the Western Balkans or Eastern Europe is expected to be.

It would also be easily “absorbable,” as it would not only be the smallest member state population-wise, but is already part of the passport-free Schengen zone and large parts of the EU’s internal market and rulebook by virtue of being a member of the European Economic Area (EEA), together with non-EU Liechtenstein and Norway.

The Impact On Norway And Current EU Hopefuls

The most obvious and immediate impact if Iceland votes “Yes” on August 29 could be felt in Norway, another affluent, non-EU Nordic country that is already watching the vote closely.

EU diplomats have told RFE/RL off the record that Oslo is in regular contact with Brussels about what the potential Icelandic resumption of accession talks would look like and what would be left of the EEA if Iceland were to join.

Norway has rejected membership of the EU (or its predecessors) twice, once in 1972 and again in 1994. A majority of Norwegians is still against joining according to recent polls, but an Icelandic “Yes” could fuel calls for Norway to hold a vote on at least opening accession talks.

EU officials also believe that Iceland moving closer to the union could trigger renewed discussion in both Greenland and Scotland about their relations with Brussels.

Greenland, which is a Danish territory, was part of the EU forerunner, the European Economic Community, until it unilaterally withdrew in 1985, but leading politicians there have recently been keen to explore deeper ties with the EU.

And Scotland was, of course, part of the EU when the United Kingdom was a member and voted overwhelmingly in favor of remaining in the bloc in the 2016 Brexit referendum.

Any potential future talks with these two countries, however, would have to involve Copenhagen and London, respectively -- something that is likely to be politically sensitive as it could involve questions of greater autonomy or independence. But don’t rule either out if Iceland edges closer to EU membership.

There is also great hope in Brussels that renewed Icelandic accession talks will give fresh impetus to the current EU candidate countries -- notably front-runners like Albania and Montenegro in the Western Balkans, but also Moldova and Ukraine.

One reason is simply that it would demonstrate that enlargement remains possible, given that no country has joined since Croatia back in 2013. But more importantly, because some of these countries could be “paired” with Iceland in an eventual EU accession -- potentially not only speeding up the process but also making it more attractive to current EU member states, which must approve any new additions and are very keen to get Iceland in.

The most obvious candidate for “pairing” is Montenegro, which has advanced the furthest out of the current crop of candidates, with 18 out of 33 policy chapters closed.

Iceland had closed 11 chapters before it suspended talks with the bloc, so it is not inconceivable to see Reykjavik and Podgorica go hand in hand toward EU membership near the end of this decade, if all goes smoothly.

But Will Icelanders Vote Yes?

In politics, however, things rarely go as planned and Iceland could serve up a potential embarrassment for Brussels if it nixes the opportunity to relaunch the accession process in the upcoming referendum.

As Steven Blockmans, the deputy director of the International Center for Defense and Security (ICDS) put it to RFE/RL: “It will impact the international stature of the European Union. Take some more of its shine away for other candidate countries. So, the enlargement processes as a whole and its image will suffer. It will be a blow.”

And that blow could come later this week.

In most polls, the “Yes” side is ahead, but only by single digits and there are still a substantial number of respondents who have stated that they are unsure how they will cast their ballots.

Most are expecting a Saturday night nail-biter, including Vilborg Asa Gudjonsdottir, a researcher at the University of Iceland.

“It's impossible to predict, because this is super close,” she said. “And even those that were undecided a month ago and have decided what they're going to vote for today, these votes are splitting almost equally for the “Yes” and for the “No” side. So, I won't be making any predictions here.”

That split is also apparent in the Icelandic political landscape where the coalition government has two parties that are in favor of restarting the talks -- the center-left Social Democratic Alliance and the centrist Liberal Reform Party. On the other hand, the junior coalition partner -- the People’s Party -- and the entire opposition is against this.

If there is a “Yes” vote on August 29, Icelanders would still have to approve any final negotiated accession treaty with the EU in a second referendum.

EU membership is also expected to require constitutional changes to allow for the transfer of sovereign powers. Under Iceland's current rules, a constitutional amendment must be approved by parliament, followed by a general election, and then approved unchanged by the newly elected parliament. The next regular election is due no later than 2028, although passage of a constitutional amendment would itself trigger an election.

Euro Dreams And Transatlantic Tensions

When Reykjavik initially sought to join the bloc back in 2009, the island’s banking sector had been severely hit by the global financial crisis and membership not only of the EU, but especially the eurozone, was seen as a potential lifesaver.

That was just before the eurozone itself was engulfed in the same financial meltdown and quickly became less attractive to Iceland.

In many ways the economic argument is also very much front and center this time, too.

As Oddsson points out, Iceland has “high inflation and price stability has always been an issue.”

“We have a small free-floating currency,” he said, referring to the Icelandic krona. “And the question is, can we get that price stability and lower rates with the euro?”

Geopolitical issues, however, are also at the back of some voters and politicians’ minds, notably with transatlantic trade tensions and political spats as well as increased Russian submarine activity in the far north.

“Arctic security has become a hot button issue,” Blockmans said. “Of course, the saber rattling over Greenland and the fact that [US President Donald] Trump confused Iceland for Greenland a couple of times, has not helped. That has put nerves on edge, and it's been seized upon by this pro-European coalition”

The United States has not made any explicit claims regarding Iceland, however, with Washington honoring a 1951 defense agreement with Reykjavik that protects the island, which is the only NATO member without a standing army.

The Problem With Fish

Despite the will to get closer to the EU, there are notably two areas in which the North Atlantic nation is far from integrated with the union: the Brussels Common Fisheries Policy (CFP) and its Common Agriculture Policy (CAP).

Gudjonsdottir points out that farmers, a small but politically very influential interest group, are very much in favor of a “No” vote.

“Farmers are worried that joining the EU would mean a loss for them,” she says. “For example, we have protective tariffs on agricultural products and those would have to go if we joined the EU. What would that mean for their livelihoods and for their ability to continue to farm?”

But fishing will be the big sticking point in any future EU-Iceland negotiations.

The country has a long and proud history as a fishing nation and that has a big impact on politics today.

While its economy has diversified in recent years, fishing still accounts for around 10 percent of the country’s GDP, and the industry is still considered a proper power broker in the country.

Both people and politicians on the island are well aware of the 1975-1976 “Cod War,” when Iceland expanded its exclusive fishery zone from 50 nautical miles (80 kilometers) off its coast to 200 miles (322 kilometers).

This happened much to the chagrin of Britain, but London eventually backed down after Icelandic coast guards started cutting the nets of British fishing boats and 200 miles eventually became the UN-codified norm for exclusive fishing zones.

The EU also follows this zonal arrangement but with the caveat that fishing boats from one EU member state can fish in the waters of another EU member state, such as Irish boats operating in French waters and vice versa.

Reykjavik, however, isn’t keen to allow other European fleets have greater access to Iceland’s rich and well-managed fishing waters.

So, how do you square this circle?

Iceland ideally wants an opt out from the CFP, but other EU fishing nations, such as France, Portugal, and Spain, likely won’t accept such an exemption.

Another idea would be to allow non-Icelandic fishermen to fish for some species in Icelandic waters, such as mackerel, but not the more lucrative cod or haddock.

The EU may also toy with the idea of simply giving Iceland a transition period for a defined time, meaning that the country will be gradually integrated into the CFP over many years.

This thinking is similar to what might be in store for Ukraine and its massive agriculture sector should it become an EU member.

Either way, the negotiations will be tough and could potentially drag on.

And if Iceland feels it hasn’t got the best deal on fish and agriculture, the people will likely reject any deal -- that is if this process even starts after the August 29 vote.

That's all for this week!

Feel free to reach out to me on any of these issues on Twitter @RikardJozwiak, or via 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.