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 drilling down on two issues: What NATO will be up to in 2024, and who will be next to adopt the euro?

Brief #1: NATO's Busy And Significant Year Ahead

What You Need To Know: For NATO, the year 2024 will be all about the five S's -- Sweden, succession, Steadfast Defender, spending, and summit. And possibly in that order as well. Perhaps the most imminent news could be the end of Sweden's drawn-out membership saga. Applying in the spring of 2022, most expected a quick entry later that year. But Turkey and Hungary had other plans, and while Finland joined in April last year, Stockholm had to wait.

But ahead of the first NATO ministerial meeting of the year, in Brussels on February 14-15, there is genuine hope that there will be a flag-raising ceremony and Sweden will become member number 32.

This is based largely on small, positive signs from Ankara. The Turkish foreign affairs committee approved the Swedish ratification instrument on December 26, 2023, and when the full plenary opened for business again last week the issue was the last of 42 items on the agenda.

But don't read too much into this. Ankara is still angling for F-16 fighter jets from the United States, plus there are local elections in Turkey on March 31 and recent Turkish air strikes against Kurdish militia in North Iraq and Syria -- all issues that can delay the ratification process. And then there is Hungary. While Budapest has promised that it won't be the last to ratify, the Hungarian government's spring legislation plan sent to the parliament didn't contain any references to Swedish accession. It could very well be that the flag-raising ceremony will have to wait till the next NATO ministerial meeting in April.

Deep Background: In April, we might find out who will be NATO Secretary-General Jens Stoltenberg's successor after the Norwegian's 10 years in the hot seat. From speaking on background to NATO officials, although he will officially leave in the fall, the organization is keen to lock down a candidate before the EU will select its new presidents for the European Council and the European Commission, as well as the bloc's new foreign policy chief after June's parliamentary elections.

The most likely scenario is that the larger NATO nations, led by the United States, will find a suitable compromise candidate that everyone can live with. The frontrunner is Dutch Prime Minister Mark Rutte, who is expected to leave national politics once a new Dutch government is formed. But don't rule out a push for a different candidate by the eastern-flank countries, who argue that, for a long time, they have spent significant budgetary resources on defense and have a greater political understanding of the military alliance's biggest adversary, Russia.

Estonian Prime Minister Kaja Kallas is a name on many lips; a dark horse could be Latvian Foreign Minister Krisjanis Karins, who was born and grew up in the United States, a neat symbol of the transatlantic nature of the alliance.

This spring will also see NATO conduct its largest military exercises in decades -- Steadfast Defender 2024 with over 90,000 troops. The exercises will last over four months across Europe, starting in late January, with the military alliance testing various aspects of NATO's new defense plan, a 4,000-page document adopted last year that details deployment and strategic roles for countries if NATO was attacked.

Drilling Down

• The headline event of the year will, however, be the Washington, D.C. summit on July 9-11. The three-day meeting suggests that it will be more than just a self-congratulatory birthday party, as the organization turns 75 this year. But the event could very much be entangled in the U.S. presidential election cycle, as the convention for the Republican Party takes place just days afterward.
• The Republican convention could be where Donald Trump is confirmed or coronated as the party's candidate for the November election. In his previous stint as president, between 2017 and 2021, Trump was critical of other NATO members for not spending enough on defense.
• While it is far from certain that Trump will be president again, even the possibility of him reentering the White House will bring the issue of defense spending to the top of NATO's agenda. And while European allies have been spending more and more for the last decade, particularly since Russia's full-scale invasion of Ukraine in February 2022, the question is if that is enough.
• Take the so-called Wales pledge, which was made at the alliance's summit in Newport in 2014. It was then agreed that all allies should reach the target of spending 2 percent of gross domestic product on defense in the next 10 years. A decade later only 11 out of 31 allies have done so, even if a few more are likely to hit the goal this year, including heavyweights such as France and Germany.
• Ukraine will obviously feature heavily both at the summit and in the run-up. But as the outcome of the war remains hard to predict, so is Kyiv's NATO integration. Amid U.S. skepticism about giving the country too much membership encouragement in Vilnius, few believe that the tune will change so close to the U.S. election.
• From speaking on background to diplomats and NATO officials, Ukrainian membership of the organization is seen as the elephant in the room and they have not seen what they would regard as hopeful signs from D.C. It looks like Washington won't be an "enlargement summit," with other NATO hopefuls such as Bosnia-Herzegovina and Georgia set to only be represented by ministers and not leaders.
• Instead, the focus will be the question of providing Ukraine with more military aid. Ukrainian diplomats earlier this month briefed NATO officials about recent Russian attacks, where there was discussion about Kyiv's missile stocks.
• Expect NATO allies to do a lot more "bulk buying" -- i.e. getting together to buy military equipment, just as Germany, the Netherlands, Romania, and Spain recently did to procure up to 1,000 Patriot missiles, some of them destined for Kyiv.

Brief #2: Which Country Will Be Next To Adopt The Euro?

What You Need To Know: The debate about the adoption of the euro for the seven European Union member states not using the common currency could come to the fore this year, with European Parliament elections in June approaching and much discussion expected within the bloc about various ways to make it more efficient. While it would be hard to force those countries to adopt the euro, six of them -- Bulgaria, the Czech Republic, Hungary, Poland, Romania, and Sweden -- are actually legally obliged to join once they fulfil all the economic and legal criteria. The seventh country, Denmark, is the only one with an opt-out even though its currency is pegged to the euro.

The relative success of the euro has also created some momentum. Since its introduction as a virtual currency in 1999 (coins and notes started circulating in 2002), it has gone from 11 members to 20 today, with Croatia the latest to join in 2023. Even non-EU Kosovo and Montenegro use the euro as their currency, without the direct permission of the European Central Bank (ECB). And this is despite the eurozone crisis more than a decade ago that threatened to rip apart the common currency zone and force some countries, largely in the south, to abandon the euro. In the end, no country left and the euro is now the world's second reserve currency after the U.S. dollar. According to a survey published last year, nearly 60 percent of the respondents of the seven non-eurozone EU member states thought the euro had a positive impact in countries already using it, and a majority in five of the seven countries would like their country to introduce it. (Only Bulgaria and the Czech Republic had majorities who were wary of joining the euro.)

Deep Background: The country closest to join should be Bulgaria, which was hoping to have the euro as its currency on January 1 this year but is now looking at the start of 2025 instead. Sofia is reportedly nearly ready when it comes to the economic convergence criteria -- keeping interest rates, debt, and the budget deficit under a specific threshold and having spent more than two years in the euro's antechamber, the European Exchange Rate Mechanism, in which a country's national currency exchange rate stabilizes against the euro.

Bulgaria still needs to lower its inflation rate; the benchmark is that it cannot be higher than 1.5 percentage points above the rate of the three best-performing member states. With the country's inflation gradually going down, it is very possible this can be achieved in 2024. In the end, it will be up to the other member states to decide via consensus. And it is very much a political decision, as was the case when Croatia joined little over a year ago, despite having a higher amount of debt than what is usually allowed.

The Netherlands and Germany still harbor fears about taking in Bulgaria, the poorest EU member, and will look closely at how well the country has implemented euro-related legislation, notably on money laundering, but also concerning such things as personal insolvency, changes to the insurance code, and the legal integration of the Bulgarian Central Bank into the Eurosystem -- the monetary authority of the eurozone -- which the Bulgarian parliament is soon set to pass. Key will be the convergence report, produced by the ECB and the European Commission, which is expected in June.

Drilling Down

• Romania is another of the seven countries that has stated that euro integration is a political goal. But it is not really on the horizon yet. Romania's economy has taken a big hit in recent years, and it hardly meets any of the economic convergence criteria. With 2024 being a super election year in the country (local, parliamentary, presidential, and European), there is little talk about the common currency now and the goal set by the country's national bank, to join by 2029, is still the tentative target.
• Hungary has no intention of joining the euro and has even amended its constitution to explicitly state that the forint is the country's currency. With its Prime Minister Viktor Orban locked in several political battles with Brussels in recent years, he is keen to keep Hungarian control over the national bank and key monetary policies such as the setting of interest rates.
• Besides Bulgaria, Romania, and Hungary, we are left with the Czech Republic, Denmark, Poland, and Sweden. And here things could become interesting. Czech President Petr Pavel threw a curveball in his New Year's speech on January 1 by noting that it was time to start taking concrete steps toward euro membership. While most parties in the ruling government coalition support adopting the euro, the biggest one, the Civic Democratic Party, is split and its leader, Czech Prime Minister Petr Fiala, noted that adoption is off the table until parliamentary elections next year.
• In Poland, euro adoption is not on the agenda for now even though the parties of the new, more EU-friendly government is generally in favor of joining.
• In Denmark, there is likewise not much political talk about the matter, but in Sweden there was, for the first time, a majority last year in favor of adopting the euro, according to various polls. That partly reflects the growing general unhappiness about the slide in value of the Swedish krona against the euro.
• In both Sweden and Denmark, there were consultative referendums over 20 years ago on joining the common currency in which the "no" side won. Similar plebiscites would be likely in the future . But if one country were to join, the other would probably follow -- this would also put pressure on Poland and the Czech Republic to follow suit -- as pretty much the entire Nordic-Baltic region would be part of the eurozone.

Looking Ahead

EU foreign ministers will gather in Brussels on January 22. They will meet their Ukrainian counterparts to discuss more EU sanctions on Russia, the attempts by Brussels to use frozen Russian assets to financially contribute to the rebuilding of the war-torn country, and the urgent question of weapons deliveries to Kyiv.

On January 28, Finns go to the polls to elect a new president. The incumbent, Sauli Niinisto, must step down after two six-year terms and will be remembered as a key player in securing the Nordic country's entry into NATO last year. Opinion polls point toward a second round in February, as the two front-runners, the center-right Alexander Stubb and the Green candidate Pekka Haavisto, are very unlikely to secure 50 percent of the vote outright this coming Sunday.

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 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

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