New Year in the EU: All or Nothing
Next year, the flagship projects of EU institutions will be called into question and fractures among member states will exacerbate doubts about continued support for Ukraine
The last four years have been a bitter reminder for the European Union that history is not over. The doctrine of development, which before the pandemic was supposed to secure the EU’s place in global competition alongside the US and China, has been replaced by thinking in terms of resilience and survival. Both the sluggish response to COVID-19 and friction in the approach to Russia’s war in Ukraine have exposed weaknesses in the EU’s cooperation mechanisms and decision-making processes, and highlighted divisions between member governments. While Vladimir Putin was recruiting hundreds of thousands of new conscripts by a single decree, the EU was bogged down in debates about sanction lists that lasted for weeks and sometimes months. It was also a harbinger of further institutional and administrative problems. Managing an organisation of 27 countries, and more than 30 in the future, on a legal basis shaped in completely different political and economic conditions, is an arduous task.
Discussions on this subject come at a time when new conflicts are erupting around the world, in which the EU is playing an increasingly marginal role. Following the withdrawal of French troops from Burkina Faso, Mali and finally Niger, the government in Paris lost its last influence in Africa. In the Israeli-Palestinian war, the EU has the status of a secondary player. The attempt to draw the Global South to the side of Europe after the Russian invasion of Ukraine failed. And China, from which the EU wants to become independent, despite resistance from some capitals, is looking at all this with calm.
A Dying Fire
The last European Council summit in 2023 could have provided Ukraine with three lifelines. The first is a EUR 50 billion financial support package, which requires an amendment to the multiannual budget. The second is EUR 20 billion spread over four years, which would go towards arms purchases. Finally, the third, more symbolic, is the start of accession negotiations. All three initiatives were held in check by Hungarian Prime Minister Viktor Orbán waving his veto. He said of Ukraine’s EU membership that it was being “pushed by force” by the European Commission. Into this theatre came Brussels, which unblocked Budapest’s EUR 10.2 billion Cohesion Fund frozen due to rule of law breaches. While the EC stipulated that the two issues were not connected, the head of the Hungarian Prime Minister’s office, Balázs Orban, said otherwise, announcing that only the transfer of the full amount of EUR 30 billion would result in the withdrawal of the veto. And Budapest kept its word. It agreed to open accession negotiations with Ukraine, but blocked financial assistance. Volodymyr Zelensky did not even appear at the summit, as it was not clear until the end whether this symbolic gesture would be agreed on by member states.
After the grain crisis and the blockade of traffic at the border, Poland has also provided arguments to those who speak with distance about Ukraine’s EU membership. Sceptics are no longer a fringe in the EU. While in early 2023 Orbán’s huffing and puffing was treated with indulgence, there was full mobilisation and the conviction that under Volodymyr Zelensky’s leadership the Kyiv government would succeed in guaranteeing it a warm welcome in Brussels, whereas today few EU leaders are as committed to the cause as they were then. For the year as a whole, only three packages of sanctions were adopted compared to nine in 2022. And even those that have been successfully introduced are being violated by many countries. The Commission, recognising the fading enthusiasm, empty budgets and shrinking eligibility for public aid, is trying to sustain interest in the war with substitute topics: enlargement or discussions about reconstruction. Bold ideas are being floated, including using of frozen Russian assets for this. Neither the accession process (which will take at least a few years) nor discussions about reconstruction are helping Kyiv on the battlefield. In fact, it is worsening an already less than ideal political climate. Europe is currently unable to keep its promises, both in terms of munitions supplies and financial assistance, let alone potentially replacing US support. This is all the more so as it slowly prepares for the European Parliament elections scheduled for early June 2024 and, consequently, a change in EU institutions.
Changing Compositions
When the Brothers of Italy and their coalition partners took power in Italy in May this year, commentators predicted a right-wing revolution in the EU. Prime Minister Giorgia Meloni, however, proved less radical than was widely expected. For several months, Meloni has been in talks with the leader of the European People’s Party, Manfred Weber, who is likely to deal the cards in the European Parliament again after the elections. This is especially true given that the EU’s People’s Party recently received a gift in the form of the takeover of power in Poland by the incumbent opposition, while the Socialists, weakened by a bribery scandal that ended in the arrest of, among others, former EP vice-chairwoman Eva Kala, cannot boast of similar successes. Pedro Sanchez’s PSOE only managed to form a government after many months in the face of protests against the announcement of an amnesty for Catalan separatists, and in Germany, Olaf Scholz’s SPD is struggling with declining support and the rising ratings of the far-right Alternative for Germany.
The EU will have to start discussing treaty reforms in this new context. The first proposals are on the table. The most radical, federalist project of MEPs envisages the abolition of the veto and the transfer of a large part of states’ competences to the EU; the second project, prepared by France and Germany, would introduce a multi-speed EU mechanism in addition to the elimination. The European Commission is also due to put forward its own proposals at the start of 2024, which are likely to become the starting point for negotiations.
Smaller states, especially in Central and Eastern Europe, look sceptically at the proposals from Berlin and Paris, although federalist trends are unlikely to be halted. Especially as no one today doubts that the decision-making process in the EU is outmoded.
The EU must also prepare to welcome new members, with Ukraine at the fore. And the problems with grain exports or the turmoil in the transport sector are just a drop in the ocean of challenges. Meanwhile, the discussion about reforms is focused on removing Orbán’s veto rather than resolving contentious economic issues.
It must be stressed that treaty reform is a long-term endeavour, with the whole procedure, including ratification, set to take at least several years. In contrast, minor changes can probably be carried out on the basis of current legislation.
The Global Race
The EU has some major reforms ahead of it. These include migration policy (including improving deportations and sealing the community’s external borders) and the Green Deal, the pace of whose implementation is being called into question in the face of the budgetary problems of some countries, including Germany. In the first half of 2023, Brussels decided to accelerate investment in carbon-free industry in an attempt to shorten supply chains and become independent of Russian hydrocarbons. The snag is that the EU’s production capacity, particularly in the new technologies sector, is based on critical raw materials, of which China is the world’s leading producer. And it is the relationship with Beijing, which is in a trade war with Washington, that will determine the success of the green transition and the future of European industry.
So far, the EU has been playing good cop, bad cop towards China. Ursula von der Leyen, representing the pro-US wing, has threatened to impose additional tariffs; the EC has also opened an investigation into the subsidisation of Chinese electric cars exported to Europe. In contrast, Charles Michel and Olaf Scholz took a much softer approach, urging some forms of cooperation to be maintained. Europe cannot afford to freeze relations with China. Despite the growing trade deficit (doubling between 2021 and 2022), this would be unrealistic, especially with the failure of trade agreement negotiations with Australia and Mercosur.
The EU’s achievement of its ambitious goals in green transformation, reindustrialisation and increasing economic sovereignty will ultimately depend on the political jigsaw on a global scale. The war in Ukraine will not only affect institutional and treaty reforms and the enlargement process, but also Brussels’ relations with Washington, Moscow and Beijing. It seems that the EU has no more aces up its sleeve in this game. ©Ⓟ
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