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'm looking at the key issues that will define the EU in 2024, from European Parliament elections to the ongoing debate about financial aid for Ukraine.

Briefing 1: A Busy And Potentially Defining Year Ahead For The EU

What You Need To Know: This year the EU will be focused on the European Parliament elections taking place across the 27-member bloc on June 6-9. The vote will open up a scramble for the selection of the top three institutional positions in Brussels: presidents of the European Council and the European Commission and EU foreign policy chief.

It is the prime ministers and presidents of the member states who select candidates for this role, often picking one from among their group. They do this by taking all sorts of parameters into consideration; there needs to be a gender balance and a balance of political allegiances, with the political party that finishes first in the European Parliament elections normally getting a first crack at naming the European Commission's president.

There also needs to be a good geographical spread, meaning ideally the positions will be dished out to people from northern, southern, western, and eastern parts of the union.

This "silly season" of jockeying for positions, both behind the scenes and in public, started early this year with Charles Michel, the president of the European Council -- which defines the political direction and priorities of the EU -- announcing on January 7 that he will run as a candidate for the European Parliament elections.

This surprise announcement will also focus the minds of EU leaders as it opens up the possibility that Hungarian Prime Minister Viktor Orban -- who is involved in various disputes with the bloc about the rule of law in his country and has often been noncooperative with Brussels, especially on Ukraine -- could become president of the council. Amid fears the divisive right-wing Hungarian leader could upset the EU's apple cart, Orban would not be a popular choice in Brussels or in most member states.

Orban could only become council president on a technicality. Under EU rules, if there isn't a permanent president of the European Council -- Michel's current job -- the country that holds the rotating six-month presidency will take over the president's functions. And Hungary is the member state that will hold that rotating presidency from July 1.

It's unlikely to happen, though. Michel, if elected to the European Parliament, would probably take up his seat in mid-July. But with two EU summits already scheduled in June to agree on the trio of top positions, chances are high that a successor will be found.

In European Council votes, there are no veto opportunities for Hungary or any other countries. Decisions are taken via qualified majority voting, thus support from 55 percent of EU member states, representing 65 percent of the EU's population.

Normally, the new council president would take up their position toward the end of the year; Michel's mandate, for example, runs until November 30. But this potential power vacuum between a possible selection of a successor in June and entering office in late fall is unlikely to create a backdoor for Orban, as a chosen successor could start their mandate as soon as the summer. An early start would only require a change to the rules of procedure, which can be pushed through with just a simple majority.

Deep Background: Internal politics aside, there will be several issues to look out for this year pertaining to Ukraine, arms deliveries, enlargement of the bloc, and sanctions on Russia. The most pressing of these issues is financial aid to Ukraine, especially after Hungary blocked a 50 billion-euro ($55 billion) package meant for Kyiv.

Ukrainian officials have said the country can survive without the money in the first quarter of 2024, so while the clock is ticking for Brussels to reach consensus on the financial package, there is still time. EU officials, speaking on background, have told me the package is likely to be green-lighted when EU leaders meet for another summit in Brussels on February 1.

It's likely to be pushed through for several reasons. For starters, many believe Hungary overplayed its hand in December 2023 when it blocked the aid package for Ukraine. Notably, Hungary was then the lone naysayer, with Slovakia -- under the rule of left-wing populist Robert Fico since October last year -- not aligning itself with Budapest as some had expected. It appears the country's dire economic situation and the fact that it is a eurozone country moderated Bratislava's response.

The 50 billion-euro package, which is meant to cover from 2024 to 2027, is also the largest chunk of a mid-term EU budget increase. Several billions have been earmarked to manage migration, help the bloc combat natural disasters, and provide more economic aid to the Western Balkans -- all initiatives Budapest supports. For this reason, officials in Brussels and some member states are keen to keep it all bundled together -- either all is approved or nothing.

Threats from the other 26 member states could also keep Hungary in line. The most credible one is to simply circumvent Hungary altogether. The 50 billion euros consists of 33 billion euros of loans guaranteed by the EU budget but also 17 billion euros from grants.

It's possible that amount could be covered by the other 26 members states, which would also pay for Hungary's share. The problem with this approach is that it would be time-consuming and risky as all 26 national parliaments would have to give their consent.

However, just the fact alone that other member states are looking at ways of bypassing Budapest could be enough of a scare tactic to secure a deal. Another threat aimed at Budapest could be invoking Article 7 of the Treaty On European Union, which would essentially strip Hungary of voting rights in the Council of the European Union, where government ministers from member states convene to amend and adopt laws and coordinate policies.

For such a drastic option, unanimity would be needed, and it's unlikely countries such as Austria and Slovakia, which are politically aligned with Hungary on many issues, would agree to freeze out Budapest. For EU officials, that would be a nuclear option if Hungary doesn't play ball -- and one Brussels will keep in its back pocket.

Another stick would be postponing Hungary's EU presidency, due to start in July. If four-fifths of the member states agree, Hungary's presidential stint could be postponed, with the country bumped down the list and not getting its chance till possibly as late as 2030. Again, as with the Article 7 route, as far as I understand from talking to EU officials, this is not actively being considered but it could be if there is no agreement at the EU leaders' summit in February.

Along with the sticks, the EU could also offer a few carrots. Brussels is still withholding 20 billion euros of money meant for Hungary. If the money is eventually released, the earliest that would happen would be after the February summit as there wouldn't be enough time for the European Commission to disburse it, especially given Budapest's slow pace of reforms.

The carrot probably wouldn't come in the form of cash, though, as was the case in December when Hungary received 10 billion euros of previously frozen EU funds -- a move many EU watchers believe paved the way for the bloc to green-light the start of accession talks with Ukraine after initial Hungarian resistance.

Instead, to get Hungary to sign off on Ukraine aid, Budapest could be offered more veto opportunities in the future. Hungary has pushed for so-called annual reviews of the cash flow to Kyiv. This means that, in principle, Budapest could stop the dispersal of funds every year, as the 50 billion euros is spread out over a four-year period.

While Hungary could still make trouble under this scenario, officials in Brussels just want to get money flowing to Ukraine as soon as possible, even if it's just a chunk of it for now. It is worth noting here that there is still no agreement on the amount to be dished out to Ukraine annually, and it doesn't have to be an even split of 12.5 billion euros each year until 2027.

Drilling Down:

• Instead of targeting Ukraine, Hungary could concentrate any new veto opportunities on the enlargement process. Amid much fanfare, EU leaders in December decided to open accession talks with Ukraine and Moldova. For Bosnia-Herzegovina, there was a partial green light to start talks but only after the European Commission reports back, by March at the latest, on the progress of various reforms.
• The issue here is that de facto EU accession talks with Kyiv and Chisinau haven't started yet, and no one really knows when they will. There are, in a sense, two things that need to happen. The first is screening, which essentially means EU officials go to Ukraine and Moldova and comb through the entire EU rulebook, which is divided up into 35 policy areas, known as chapters, and which both countries have to adopt as national legislation. This forms the basis of the EU accession framework, which needs to be adopted at the end of the screening process.
• As a recent example, for North Macedonia and Albania, the screening took 18 months. I understand from speaking to EU officials on background that Kyiv thinks it can be done in six months; others in Brussels say that is too optimistic. The issue here is the screening hasn't started yet for either Moldova or Ukraine, something the European Commission must initiate.
• According to several diplomats from EU countries who spoke on the condition of anonymity because they weren't authorized to speak on the matter, EU enlargement commissioner Oliver Varhelyi, a Hungarian close to the government in Budapest, isn't too keen to rush Ukraine's EU membership bid. What's more, a number of EU member states are probably not keen to proceed quickly either, stressing the bloc needs to undergo institutional reforms before any further enlargement can take place.
• There will also be another European Commission assessment. When it reports back on Bosnia, it will also mention some of the reforms still left for Moldova and Ukraine to complete. This assessment is slated for February 27, although that date could change. If the assessments are positive, there is hope in Kyiv and Chisinau for an intergovernmental conference to be convened in the first half of the year. This would be a symbolic opening of accession talks, but for that, all 27 member states must consent, something far from certain at this stage.
• Regarding sanctions on Russia, the EU passed its 12th package just before Christmas, and there is a chance a 13th package could be agreed around the second anniversary of Russia's full-scale invasion of Ukraine in late February. But since the Russian nuclear and gas industries likely won't be targeted, there is not much more that can be sanctioned -- or rather, there is not much more the EU is prepared to sanction. One possibility is for the EU to consider a wider ban of products that aren't allowed to transit Russia, remove or decrease state aid for EU companies still doing business in Russia, and finally use the instrument, so far untouched, to sanction third-country companies doing business with Moscow.
• The EU's economic sanctions on Russia need to be formally extended by six months by the end of January. At the EU leaders' summit in December, there was political agreement to prolong sanctions, although in return for their support some members states might get concessions in other policy fields. The same is true of the extension, due in March, of asset freezes and visa bans the bloc has slapped on the nearly 2,000 individuals and firms over the last two years. Hungary has previously used its veto threat to try to remove some names and, back in September, three Russian individuals were delisted.
• There is also an estimated 300 billion euros of frozen Russian assets in the bloc. In December 2023, the European Commission presented a plan to seize the profits and use it for Ukraine's reconstruction. Despite concerns from members of the eurozone that such a move could undermine the euro's standing as an international currency, talks are under way among the Group of Seven leading industrial nations, with the United States, United Kingdom, and possibly Japan, indicating they would be on board with the European Commission's plan.
• Finally, the EU will try to maintain arms deliveries to Ukraine. It is, however, unlikely this will be done via the common European Peace Facility as Hungary continues to block a 500 million euros tranche, and Germany has questioned the legality of topping up the fund with more cash. Instead, increased bilateral aid seems to be the way forward for now. The big test will be if the EU manages to deliver 1 million rounds of 155-millimeter ammunition to Ukraine by the end March, as promised last year. There have been a few reports that the EU won't make the deadline, and it will largely depend on the EU's capacity and how much pressure Brussels can put on the defense industry in the coming months.

Looking Ahead

How to support Ukraine militarily will also be top of the agenda when NATO's defense chiefs meet in Brussels on January 17-18. Ukrainian officials have briefed the military alliance about the recent Russian missile attacks on the country, and several NATO members have promised to increase the supply of defense and anti-drone systems. There should be more concrete announcements in the weeks leading up to the NATO defense ministers' meeting in mid-February.

Last but not least, the first European Parliament plenary of the year kicks off on January 15. For four days, members of the chambers will debate numerous issues, including Ukraine and rule-of-law concerns in Hungary. On the latter issue, lawmakers look set to pass a nonbinding motion pushing for EU funds earmarked for Hungary to remain frozen.

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.

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: the latest -- and weakest -- sanctions on Russia; and Schengen entry (of sorts) for Bulgaria and Romania.

Brief #1: The EU's New Sanctions Package On Russia: Weak And Watered Down

What You Need To Know: Just before the winter holidays and only a few days after a historic but turbulent European Union summit in Brussels, the bloc finally managed to agree on its 12th round of sanctions against Russia since its full-scale invasion of Ukraine in February 2022.

From EU officials speaking on background, I understand that the aim is to have yet another sanctions package ready for the second anniversary of the invasion on February 24 and that the Russian missile attacks on Ukrainian cities over the holidays convinced more officials in Brussels that further restrictive measures are needed.

That said, it still takes a while for all 27 member states to agree on new sanctions, with the latest round taking over a month to green-light. And with no consensus on how to tackle the Russian energy sector, dramatic measures are in short supply.

The biggest takeaway is that the EU, from the start of the new year, has banned imports of both natural and synthetic Russian diamonds, a business that generated over $4 billion for Moscow last year. Starting from March 1, imports of Russian diamonds processed in third countries will also be banned.

The rest of the sanctions package was much weaker tea. A few more Russian exports face EU import bans in the future -- liquefied petroleum gas (LPG), processed aluminum, pig iron, and copper wires -- which should deprive the Kremlin of an estimated $2 billion to $3 billion in revenue. The bloc will also cease the export to Russia of thermostats, static converters, resistors, propellants, and lithium batteries -- components also used in drones and other military equipment. And it will be prohibited for EU companies to provide services such as software for industrial design and for Russian nationals to hold high positions in EU companies providing crypto-asset services.

Deep Background: Senior European Commission officials briefed journalists that the 12th package would reduce Russia's war chest and close previous sanction loopholes. But looking at the final text, it seems that the EU has created new loopholes and exceptions as well. The diamond ban, for example, doesn't cover industrial diamonds. The LPG ban doesn't come into effect for another year. And some of the other import bans mentioned above also have phase-in periods ranging from between six to 18 months.

Croatia got an extension till 2025 on its exemption on importing Russian vacuum gas oil, an oil product often upgraded to diesel or gasoline, and the same goes for crude oil imports to some landlocked Central European countries. Exemptions related to the imports of certain Russian steel products were also prolonged from 2026 to 2028.

While no measures so far target the Russian nuclear sector, Hungary received legal assurances that there will be sanctions exceptions -- so-called "derogations" -- for all services related to the extension of Hungary's Paks nuclear power plant, which the Russian energy giant Rosatom is working on.

Germany also pushed for the final sanctions text to include clarification regarding what Russians traveling into the European Union can bring with them. This was after widespread media reports in the fall that some EU border guards were seizing personal items such as toothpaste and clothes. The text now notes that the EU allows "the entry into the Union of personal effects, which do not pose significant circumvention concerns, such as personal hygiene items, or clothing worn by travelers or contained in their luggage, and which are clearly intended for their or their family members' strict personal use."

While cars with Russian license plates are forbidden from entering the bloc, there are now exemptions for diplomatic vehicles entering the EU and for cars belonging to EU citizens living in Russia.

Drilling Down

• Along with the new exemptions, many of the new measures are, in fact, either lacking bite or have been completely watered down from the initial proposal, seen by RFE/RL, that was first presented to member states by the European Commission in November.
• Take the oil cap that was set up late last year with the Group of Seven leading industrial nations at $60 per barrel. The cap will not be touched, but Brussels is pushing for more transparency as regulators fear that extra costs -- for example, related to insurance and freight -- are being inflated to create more revenue for Russia. The problem here is that the EU can ask for more information from shipping companies but can do little in the way of enforcement.
• It's a similar issue with another novelty introduced in this latest package. The EU will introduce a notification register that will list all sales of EU tankers to all third countries in order to see how many of them are now part of Russia's "dark fleet" of vessels carrying oil around the world that is priced above the cap. The dark fleet is estimated at around 200 vessels, including those from EU countries. So, there isn't an actual ban on selling tankers to Russia. This is just a transparency measure for Brussels to "understand how the chain works," according to an EU official with knowledge of the issue who spoke on the condition of anonymity.
• Other proposed sanctions have also been watered down. Take the list of mainly Russian companies that EU firms aren't allowed to trade with anymore because Brussels suspects them of contributing to Russia's war machine. In the original November 2023 proposal, there were 31 companies -- all Russian, apart from one from Singapore, one from Uzbekistan, and two from Kazakhstan. When the final list was published on December 18, the two Kazakh companies had been removed. When I asked a European Commission official on background why this was, I was told that it was connected to the EU's engagement with third countries.
• In perhaps the starkest example of watering down, the original European Commission proposal stated that EU subsidiaries of Russian companies must get an authorization permit from Brussels to transfer funds above 100,000 euros ($109,000) either to Russia or to a third country -- a move that would potentially make it harder for Russia's EU subsidiaries to survive. What remains now -- again -- is just a notification system, meaning that the companies don't need a green light to send money out of the EU. While it may increase transparency, it certainly won't squeeze the Kremlin much economically. A European Commission official, speaking on the condition of anonymity as they weren't authorized to speak on the matter, said that certain member states were concerned that the original measure could be a heavy administrative burden for countries every time they needed to grant a potential authorization.

Brief #2: Bulgaria And Romania Partially Join Schengen

What You Need To Know: The European Union on December 30 agreed on the removal of internal border controls with Bulgaria and Romania for air and maritime traffic, with the new measures expected to come into force by March 31. For Sofia and Bucharest, this is a historic step, as the two countries have been waiting to join the bloc's visa-free Schengen Area ever since they became EU members in 2007. (Schengen now includes all of the EU member states, apart from the island nations of Cyprus and Ireland, as well as the non-EU countries of Iceland, Liechtenstein, Norway, and Switzerland.)

This is also an unprecedented step as the two countries are only being granted partial Schengen entry, as for now land border controls between the two countries and the rest of the EU will remain. This means that motorists will continue to queue at borders, such as between Bulgaria and Greece and between Romania and Hungary, to enter the de facto Schengen zone, which won't help Romanian and Bulgarian hauling companies. The decision to have, for the first time, a staged Schengen entry -- air and maritime first, followed by the opening of land borders -- could potentially be a formula used for Moldova and Ukraine and countries in the Western Balkans when they eventually join the EU.

Deep Background: The decision comes after a crushing disappointment for Bulgaria and Romania at the end of 2022 when they were blocked, but Croatia secured full entry into the Schengen Area, applicable as of January 1, 2023. That time -- as has been the case for many years -- the Netherlands wasn't satisfied that Sofia and Bucharest had fulfilled all the criteria for joining Schengen, especially when it came to the Cooperation and Verification Mechanism (CVM). The CVM was set up by the European Commission when Romania and Bulgaria joined the EU to ensure progress on judicial reform and the fight against corruption in both nations and to combat organized crime in Bulgaria.

In the fall of 2023, the CVM process was formally closed for both Bulgaria and Romania. With a European Commission fact-finding mission to Bulgaria near the end of last year giving a positive assessment about Sofia's readiness to join Schengen, the Netherlands finally relented. This was confirmed at a Dutch parliamentary debate on December 20. It's possible that the Dutch change of heart was due to a desire to sign off on the Schengen issue before the likely formation of a more EU-skeptical government, led or heavily influenced by the populist Geert Wilders, who finished first in parliamentary elections in November 2023.

Drilling Down

• Instead, the biggest obstacle to the pair's Schengen entry proved to be Austria. For some time, Vienna has expressed concern about including Bulgaria and Romania in the visa-free zone, citing fears of increased illegal immigration into the EU, with migrants using the two countries as transit points. The conservative-led Austrian government has taken much harder lines on many issues, notably on everything pertaining to migration, but also by delaying its approval of the EU's Russia sanctions and by watering down positive EU language on Ukraine. For context, Austria will hold parliamentary elections in the fall, in which polls indicate that the right-wing populist Freedom Party of Austria will comfortably finish first. In the end, Austria, Bulgaria, and Romania worked out a deal at the end of 2023, helped along by other EU member states and the United States.
• Apart from the partial accession to Schengen in three months' time, there was also a commitment from Bucharest and Sofia to make several key changes in the near future. This includes a tripling of personnel from the EU's external border agency Frontex on Bulgaria's border with Turkey and beefing up security on its border with Serbia.
• The Austrians are also asking the European Commission to increase financing to strengthen Bulgaria's and Romania's external borders with more fences, drones, and electronic surveillance systems. Vienna has also asked to deploy EU officials who can advise about documents for some flights at airports in Bulgaria and Romania and to conduct random spot checks upon arrival in Austria. Unsurprisingly, the Austrians are also asking both countries to take back all third-country asylum seekers, notably from Afghanistan and Syria, who have come to Austria via Bulgaria or Romania.
• Perhaps the most interesting commitment from the European Union is boosting controls on the land border between Bulgaria and Romania -- a border that is already under a good deal of surveillance. Some diplomats I spoke to suggested that this might be being done to prepare for a future decision to "decouple" Romania from Bulgaria, meaning that the former will be a fully fledged Schengen member before the latter.
• The reason for this suggestion is that Bulgaria is considered by Brussels to be the more problematic of the two -- mainly due to its border with Turkey, which is one of the main migration routes into the EU. While the 500-kilometer Bulgarian-Turkish border is partially fenced and guarded, there are still places, especially in the mountains, that can be used for illegal crossings, and EU officials have sometimes voiced concerns about the poor cooperation of Turkish border guards.
• So, when can Bulgaria and/or Romania become full Schengen members? Few believe there will be any movement before the elections for the European Parliament in June. A joint Austrian-Bulgarian-Romanian statement issued when the deal was announced just mentioned "a commitment to discuss in 2024 a date for a possible lifting of the checks at land borders."
• The statement from the Council of the EU, where ministers from each member state meet to amend and adopt laws and coordinate policies, noted that it "shall endeavor to take a decision lifting checks on persons at internal land borders," whereas the European Commission said that discussions will continue in 2024 and "a decision by the Council on this matter is expected to be taken within a reasonable time frame."

Looking Ahead

Brussels is still slowly waking up after the Christmas and New Year's holidays, but on January 10 a NATO-Ukraine Council on the ambassadorial level will be convened in Brussels in which Kyiv will brief the military alliance members about the latest barrage of Russian missiles targeting Ukrainian cities and key infrastructure. It's likely that NATO will reiterate its call on members to provide the war-torn country with more air-defense systems.

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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