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 issues: What is holding up the EU’s latest sanctions on Russia and why air defenses have become NATO’s and the EU’s main defense priority.
Briefing #1: Why Are Austria And Slovakia Holding Up The EU's Latest Sanctions On Russia?
What You Need To Know: The European Union is edging closer to agreeing on new sanctions on Russia, the 19th round since the full-scale invasion of Ukraine three years ago, but two EU member states are still holding out before giving the green light. And perhaps surprisingly the perennial EU sanctions skeptic Hungary isn’t one of them. Instead, it is Austria and Slovakia that are hesitant to endorse the package -- and their issues aren't related to the proposed measures against Moscow at all. Bratislava has concerns about EU energy policy, as well as the future of Slovakia's automotive industry. Vienna is fretting over one of its biggest banks Raiffeisen's entanglement in the Russian market, meaning Austria is asking for the unfreezing of several already-agreed sanctions. In negotiations between EU ambassadors in Brussels, both Austria and Slovakia have so far refused to back down, with diplomats now expecting that this won’t be solved until leaders meet at an EU summit on October 23.
Deep Background: This has caused consternation in Brussels as there was hope that the sanctions would be quickly approved. Presented by the European Commission to the EU capitals in mid-September, the headline measure was a bid by the bloc to phase out completely Russian liquefied natural gas (LNG) imports by 2027, one year earlier than initially foreseen. This move was surprisingly accepted quickly by all member states as was the proposal, first pushed by the Czech Republic, to limit the movement of Russian diplomats inside the bloc. Other measures also green-lighted include the listing of 121 Russian shadow fleet vessels; the sanctioning of banks both in Russia but also in Belarus, Kazakhstan, Kyrgyzstan, and Tajikistan; and the possibility of blacklisting ports and locks outside Russia that are suspected of being involved in aiding the Kremlin in arms imports and oil exports. Surprisingly, the proposal never touched Russian oil imports to the EU, even though there was plenty of talk around Brussels beforehand that the European Commission was keen to address this issue with either sanctions or tariffs. With only Hungary and Slovakia still directly importing Russian oil via pipelines, the EU executive likely refrained from including it in the proposal knowing very well that it would be vetoed.
Drilling Down:
- This hasn’t, however, stopped Slovakia from objecting to these sanctions. Prime Minister Robert Fico has demanded that he first wants a real debate at the upcoming EU summit on how the EU’s restrictive measures on Moscow are driving up energy prices for European households.
- Most EU officials expect that he wants assurances that Russian oil imports won’t be touched in the future. But Fico is also dragging his feet on the sanctions so that he might be able to get concessions on the EU's decision to ban new petrol and diesel car sales starting in 2035.
- Brussels has included a review clause for that policy next year, but Slovakia, which has a large automotive sector, has already positioned itself to loosen this strict deadline.
- And given that more EU member states, including Germany and the likely new Czech governmentare questioning the EU’s ambitious climate targets, known collectively as the Green Deal, it could be that Fico gets some support on this issue.
- Austria is less likely to get much sympathy for its request -- to remove sanctions on two Russian individuals and three Russian entities -- in order not to complicate the work of its Raiffeisen bank in Russia. Yet Vienna has persistently pushed for this in recent days and has refused to green light the new sanctions package until it gets its way.
- Austria's proposed addition to the sanctions proposal, seen by RFE/RL, looks rather innocuous. It simply notes that “the competent authorities of a Member State may, under such conditions as they deem appropriate, authorize the release of frozen funds, and attributable, directly or indirectly, to the entities listed under entry numbers 475, 476 and 477 under the heading 'Entities' in Annex I to this Regulation or to persons listed under entry numbers 929 and 1825 under the heading 'Persons' in that Annex.”
- That makes more sense when you check who the people and entities behind those numbers are. Number 929 is the Russian oligarch Oleg Deripaska, blacklisted by the EU since 2022. And Number 1825 is his business partner Dmitry Beloglazov, who was sanctioned by Brussels last year for what the EU says is “a coordinated and complex evasion scheme” devised by Deripaska. Not surprisingly the entities are Deripaska’s company Rasperia and Beloglazov’s Titul and Iliadis.
- All this is connected to 2 billion euros ($2.3 billion) worth of frozen assets in Strabag, an Austrian construction company that once was part-owned by Deripaska, which he has tried to channel through Rasperia to Titul and Iliadis.
- In January, Rasperia and Deripaska won a case in a Russian court in which Austria's Raiffeisen bank was forced to pay 2 billion euros in damages. While the Austrian lender then said that the Russian court's verdict wasn't binding, they now seemed to have changed their tune as Vienna's proposed addition to the sanctions proposal would allow Raiffeisen to take ownership of the sanctioned shares and, by extension, comply with the Russian court decision.
- According to officials and diplomats familiar with the topic that RFE/RL has spoken to, all of the other 26 EU member states are unhappy about Austria's proposal for several reasons. Firstly, they are peeved that the European Commission has allowed Austria to include the proposal in the latest sanctions draft, indicating that the EU executive has sympathy for Vienna's position. The other member states are also upset that Brussels is seemingly helping Raiffeisen, given that the bank is so deeply immersed in the Russian market with over 50 percent of its total revenues last year being generated there. This comes as many other European companies have left Russia or at least reduced their business presence there since the full-scale invasion of Ukraine in 2022.
- Perhaps the biggest fear from the other EU member states is the precedent this would set if Austria got its way. It would imply that Russian court rulings indirectly apply to the EU and that other sanctioned Russian oligarchs could take legal aim at EU companies still working in Russia in a bid to have their assets unfrozen.
Briefing #2: NATO, EU Discussing European Air Defense
What You Need To Know: Spending targets, continued aid for Ukraine, and air defense will all be discussed when NATO defense ministers gather in Brussels on October 15 for their first official meeting since the military alliance's June summit in The Hague. There the alliance of 32 nations committed to spending 5 percent of gross domestic product (GDP) on defense by 2035. And now they need to work out how to actually achieve that. An estimated 3.5 percent of that 5 percent must go on what is known as “hard” military outlays, mostly spending on weapons, vehicles, and ammunition. At the June gathering in the Netherlands, the United States, which has strongly pushed for increased European defense spending, will be interested to see what progress has been made to meet those targets and to check that the spending splurge isn’t backloaded toward the end of the 10-year deadline.
European nations can include their military aid to Ukraine when calculating their defense spending targets, so the upcoming meeting -- where Ukrainian Defense Minister Denys Shmyhal will participate -- is expected to address the financing of the war-torn country. A meeting of the British-German-led Ukraine Defense Contact Group, also known as the Ramstein group, in which over 50 NATO and non-NATO countries coordinate military assistance to Kyiv, will follow directly after the NATO defense ministers' meeting. Especially relevant to the effort to assist Ukraine in its war against Russia is the US-led Prioritized Ukraine Requirements List (PURL), an initiative that was launched in August. So far, approximately $2 billion worth of American arms designated for Ukraine, including Patriot and HIMARS missile systems, have been financially supported by Canada, Denmark, Germany, the Netherlands, Norway, and Sweden. Another package worth $500 million is in the works, bankrolled by Belgium, Estonia, Iceland, Latvia, Lithuania, and Luxembourg. And it's possible that new packages will be announced in the coming days. Ukrainian President Volodymyr Zelenskyy has praised the PURL initiative for enabling a steady flow of older US weapons to Ukraine, while Washington is happy for the boost to its defense industry’s revenues.
Deep Background: But while the Europeans understand that increasing their defense spending is good for their relations with the US, there are also frustrations. One European diplomat, speaking anonymously because they weren't authorized to speak about the issue publicly, told RFE/RL that the current scheme is not optimal as "we essentially need to pay twice: first for the US defense industry and then for ourselves." However, another European diplomat, also not authorized to speak publicly, said that this “is the only way forward for now and that we will see more countries signing up" to the defense spending initiative.
The most pressing issue is not military aid to Ukraine but Europe's integrated air and missile defense. With NATO Secretary-General Mark Rutte underlining that the alliance needs to up its air defense spending by 400 percent in the coming years, the issue has been forced front and center due to increased Russian drone incursions and violations of NATO airspace. Essentially there are three Western air defense systems that can be used to counter the Russian threat: the American Patriot system, the German IRIS-T, and the Italian-French SAMP-T. Right now, the IRIS-T seems to be alliance's first choice -- even though all three can be used simultaneously. While many European nations would like to acquire Patriots, the high demand means that there is waiting list, already stretching to several years. In addition, the Patriot is focused more on long-range ballistic missile defense, whereas the IRIS-T is tailored for quick response at close to medium ranges and is particularly effective against drones. The IRIS-T is also cheaper and, at least for now, available faster for potential buyers.
Drilling Down:
- The debate over the effectiveness of various air-defense systems reflects a broader discussion about how best to protect European airspace from a wide range of evolving threats.
- There are currently three different and overlapping concepts that are being worked on: NATO’s Eastern Sentry initiative, the EU’s so-called "drone wall," and its complementary Eastern Flank Watch, which the European Commission President Ursula von der Leyen recently floated.
- The Eastern Sentry, which was launched by the military alliance almost directly after Russian drones entered Polish airspace in September, will most likely become a permanent feature as NATO countries are in agreement that the military presence on its eastern border needs to be boosted. While several European countries have already contributed, mainly with jets, the question going forward is what more can be done.
- This is where the Eastern Flank Watch initiative comes in. While still not fully fleshed out by the European Commission, the idea is to bolster the eastern land, air, and sea borders with four key elements: ground defenses such as fortifications and anti-mobility systems designed to hinder the movement of enemy forces; a "drone wall," which will detect, track, and intercept drones entering European airspace; maritime security in the Baltic and Black Seas; and a system to monitor space-based threats. With a potential common EU defense budget of over 130 billion euros ($151 billion) in the coming years, there is a lot that needs to be agreed on.
- The most important meeting on October 15 might not be the NATO ministerial meeting but the dinner of EU defense ministers later that evening. A less formal setting often means more candid conversations, for example about the actual merits of a drone wall.
- Both German Chancellor Friedrich Merz and French President Emmanuel Macron have questioned the need for such a sophisticated and costly system along the EU's eastern flank.
- While European leaders are mostly in agreement that anti-drone systems of various sorts are needed, there are also concerns that drone technology and tactics are moving forward with such speed that a "drone wall" could be redundant and outdated when it launches in two or three years' time.
- As shown by the four large drones that disturbed traffic over Copenhagen Airport on September 22, the threat can also come from inside the bloc, both land and sea. That has European leaders and officials questioning just how much a drone wall would really help.
Looking Ahead
On October 16, we will find out who the three shortlisted candidates for this year’s Sakharov Prize are after a secret morning vote among the members of the European Parliament’s development and foreign affairs committees. The favorite is the imprisoned Polish-Belarusian journalist Andrzej Poczobut.
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
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