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I'm RFE/RL Europe Editor Rikard Jozwiak, and this week I'm drilling down on two major issues: the EU's adoption of a global price cap on seaborne Russian oil and a look ahead to the EU-Western Balkans summit in Tirana.
Brief #1: The EU has adopted a global price cap on Russian oil. How did we get here, and how will it work?
What You Need To Know: On December 2, the European Union, the Group of Seven (G7) advanced economies, and Australia agreed on a $60-per-barrel price cap on Russian seaborne oil and petroleum products. The cap comes into effect on December 5, the same day EU sanctions on Russian oil come into force.
The sanctions, intended to punish the Kremlin for Russia's invasion of Ukraine, stop the inflow of around 90 percent of Russian oil to the EU, with only some landlocked Central European member states still benefitting from pipelined Russian oil and Croatia and Bulgaria getting some shipped petroleum products.
The G7 nations first agreed to work on a global price cap back in September with the view to achieve three things: Reduce spiraling energy prices, diminish Russian profits on oil sales to dent its war effort in Ukraine, and still ensure there is a reliable supply of Russian petroleum products on the global market as poorer countries in Africa and Asia have voiced concerns about a complete cutoff.
After months of deliberations, the G7 finally presented a proposal to the EU in mid-November for a cap in the range of $65-70 per barrel -- a level reflecting the prices in September, when Russian oil traded at $68-76 per barrel. While the G7 could go alone on this, they desperately want the EU onboard considering the bloc has some of the world's biggest maritime transporters and insurers in its ranks.
Deep Background: For the past few weeks, the EU has gone back and forth on the issue of the price cap and other related provisions. The talks have essentially been about two groupings: the hawks, consisting of Estonia, Latvia, Lithuania, and Poland, and the maritime nations of Cyprus, Greece, and Malta.
The hawks dismissed the $65-70 price range, arguing it was toothless as the price on the market now has dropped to around $52 and Moscow has budgeted for a price of $65 per barrel in 2023. A cap around that price, they argued, would do little to affect Russia's ability to wage war, adding that the cap should be as low as $30.
The seafaring trio of Cyprus, Greece, and Malta, on the other hand, lobbied hard for the price not to drop below $70, pointing to the loss of funds for the shipping industry and commitments the countries have to transport oil to poorer countries.
After weeks of talks in Brussels on various levels, the compromise was first $65 per barrel, then $62, before it finally reached $60 -- the absolute lowest the G7 was willing to consider.
Drilling Down:
- The $60 price cap can only fly due to other provisions in the EU legislation. In the text, there is an exemption for maritime transport to third countries "for the urgent prevention or mitigation of an event likely to have a serious and significant impact on human health and safety or the environment, or as a response to natural disasters."
- There is also a clarification stipulating that the price cap enters into force as of December 5 for crude oil and as of February 5, 2023, for petroleum products, giving exporting countries some leeway.
- Cyprus, Greece, and Malta have also managed to get in writing that the European Commission, by early next year, should draw up measures "aiming at preserving the credibility and strategic importance of the union's shipping industry" and a clarification that oil and petroleum products that "originate in a third country and are only being loaded in, departing from, or transiting through Russia" are exempt from the cap. However, Russian oil that is transported together with oil from other sources is subject to the price cap.
- The hawks, on the other hand, have also secured a couple of "wins" in the legislation. One is that the price cap should be linked to a new EU sanctions package on Russia and Belarus, with consultations on its content having started over the weekend. The idea is that this package should be agreed well before the EU summit in Brussels on December 15-16.
- The hawks are also happy that a review clause has been inserted into the legislation to see how effective the price cap is, with a first evaluation expected in mid-January and with European diplomats returning to the issue every two months thereafter. The idea is that the cap can be adjustable and always stay around 5 percent below the market rate.
Brief #2: A reset of EU-Western Balkans relations in Tirana?
What You Need To Know: EU leaders will meet with their counterparts from the Western Balkan six (Albania, Bosnia-Herzegovina, Kosovo, Montenegro, North Macedonia, and Serbia) in the Albanian capital of Tirana on December 6.
The meeting is significant for one big reason: It is the first time an EU-Western Balkans summit is being held outside the EU. All the diplomats I have spoken to say there are two unofficial goals for the summit, namely maintain a united front and avoid any fallouts. There have certainly been bad precedents on that front in the past 12 months.
The last summit, in Brdo, Slovenia, in fall 2021, was dominated by fights about whether the final declaration should contain the word "enlargement," as some Western EU member states at the time were reluctant to commit to expanding the club.
That was nothing compared to the acrimony after the more informal meeting between EU and Western Balkan leaders held in Brussels on June 23.
While it was a historic day for Ukraine and Moldova as the bloc's leaders acknowledged the pair as EU candidate countries, Bosnia failed to get the same recognition, and Albania and North Macedonia were once again denied the possibility to start EU accession talks because Bulgaria still had bilateral issues with Skopje.
Deep Background: There are indications the Tirana summit will go a little more smoothly. For starters, it's just a half-day meeting, which simply means less time to fall out. And secondly, the draft declaration seen by RFE/RL that the EU-27 have worked on over the past few weeks -- and that EU diplomats hope the Western Balkan partners will align with -- is both optimistic while not being too critical of the Balkans six.
Since the war in Ukraine began, enlargement skeptics such as France and the Netherlands have warmed to the idea that non-EU countries wanting to join the bloc isn't such a bad geopolitical move after all.
Over the summer, the Bulgaria-North Macedonia impasse was lifted and now, ahead of the summit, the draft declaration that European officials have been working on confidently proclaims that "the EU reconfirms its full and unequivocal commitment to the European Union membership perspective of the Western Balkans and calls for the acceleration of the accession process."
Even the word "enlargement" features now and again in this draft declaration. Sticking points are also being played down. The big one is Serbia's continued refusal to align with any of the EU's sanctions on Russia. So far, this has had few consequences for Belgrade, and the declaration doesn't even single the country out in this respect.
Drilling Down:
- There will also be some "deliverables" in Tirana. A joint declaration by EU and Western Balkans telecom operators will be signed that should pave the way for the first reduction in roaming costs between the bloc and the Western Balkans in 2023, with a view to fully removing it thereafter.
- A recent uptick of migrants coming to the EU via the so-called Western Balkans route has caused concern in some EU capitals. Expect the EU to call on their Balkan partners for more efforts to combat smuggling and human trafficking in Tirana. The EU recently pledged 40 million euros ($41.9 million) to strengthen border management in the region and another 30 million euros will be announced to aid investigations and prosecutions with regard to smuggling and trafficking.
- Some of the trickier issues will be tackled later in December. One of them is whether to grant Bosnia EU candidate status this year. All indications are that EU member states will agree to this when their respective Europe ministers meet in Brussels on December 13, but the current draft European Council conclusions on enlargement, seen by RFE/RL, so far make no mention of this.
- European diplomats, speaking on condition of anonymity, tell me they believe Bosnia will gain candidate status but with conditions -- a similar deal granted to Ukraine and Moldova in the summer.
- EU leaders might make the decision at the EU summit a few days later (December 15-16). Ultimately, European ministers might not agree on the enlargement conclusions. That has happened before, and there are indications it could happen again.
- It is not only the correct wording on Bosnia that remains to be settled. Bulgaria wants to push for stronger language on North Macedonia in order to pressure Skopje to live up to bilateral agreements, while some Eastern member states want a more ambitious text on Ukraine. It may just be semantics to outsiders, but for EU diplomats this is their bread and butter.
Looking Ahead
The European Commission last week announced that Hungary had not done enough to unblock 7.5 billion euros worth of EU funds, even if Brussels on the same day gave a conditional green light for Budapest to eventually receive its post-coronavirus recovery money from the EU.
Whether that's enough for Hungary to lift its veto on the 18 billion euros in EU aid for Ukraine remains to be seen. Expect EU finance ministers to discuss this when they meet in Brussels on December 6, even though they probably will need an emergency meeting later in December to try to solve all outstanding issues, including finding a plan B for sending money to Kyiv.
Also, look out for the EU home affairs ministers meeting on December 8 in Brussels to decide on the Schengen fate for Bulgaria, Croatia, and Romania. No one appears to have any issues with Croatia becoming a member of the passport-free Schengen Area on January 1, but the Dutch still have problems greenlighting Bulgaria's bid.
Austria appears to want to block both Bulgaria and Romania, even though Vienna apparently might soften its stance when the European Commission on December 5 publishes an action plan on how to combat increased migration on the Western Balkans route. The smart money right now is on only Croatia getting the thumbs up.
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
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