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'll be discussing two issues: whether the EU will go for a full ban on Russian aluminum imports and how Estonia is leading the way on confiscating frozen Russian assets.

Brief #1: Will The EU Target Russian Aluminum Next?

What You Need To Know: Last week, the EU passed its latest sanctions package on Russia to coincide with the second anniversary of the full-scale invasion of Ukraine.

As I discussed in a previous briefing, the measures introduced were weak, consisting largely of additional asset freezes and visa bans.

The rather feeble package also prompted internal criticism within Brussels, especially from more hawkish EU member states, with the argument that the European Union must be more ambitious in sanctioning the Kremlin in the future.

Speaking to several EU diplomats, who wish to remain anonymous because they don't have the authority to speak on the record, the European Commission has promised to start work on a new sanctions package with immediate effect. And this time it will try to include sectoral sanctions that would have a much greater impact on the Russian economy.

One of those sectors is aluminum. Estonia, Latvia, Lithuania, and Poland have pushed for both import and export bans on the metal for a while now.

Officials from the four nations noted in a discussion paper, seen by RFE/RL, that "Europe's imports of aluminum not only fund Russia's war economy but also benefit Kremlin-backed oligarchs and state companies."

It is estimated that the European Union still imports the metal from Russia to the tune of 2.3 billion euros ($2.5 billion) per year. The bloc also exports various aluminum products to Russia, worth some 190 million euros.

The only sanction the bloc has enacted in this field has been a very specific and targeted import ban on aluminum wire, foil, tubes, and pipes produced in Russia.

That still leaves 85 percent of the aluminum business -- including the lucrative construction and automotive industries -- untouched so far.

Deep Background: This could change as the aluminum industry in Europe is now calling for more sanctions on Russia.

Representatives of Europe's aluminum industry in Brussels have argued that on moral grounds "business as usual" with Russia cannot continue.

But there are also compelling economic reasons.

Before Russia's full-scale invasion of Ukraine in February 2022, imports of Russian aluminum represented well over 30 percent of the EU's total. Now, Russian aluminum represents only around 8 percent of the bloc's imports due to the industry decoupling from Moscow voluntarily. By relying on it less, there is less to lose by sanctioning.

Aluminum is also quite different from other raw materials, such as the much rarer uranium used in the nuclear industry. It is easy to obtain, produced all over the world, and easy to transport.

Given that the EU is now producing even more aluminum and importing it from new partners in Iceland, Mozambique, and Norway, supply is far outstripping demand.

Drilling Down

• There are still a number of issues that need to be overcome. While the dependency on Russian aluminum in general has reduced across the EU, a few EU member states -- most notably Greece -- still rely on Moscow for most of its imports of the metal. And as always with sanctions, all 27 EU member states need to sign off on them.
• Officials from the European Commission have also said there are three areas that Brussels, out of principle, won't target with sanctions: food, drugs and medical equipment, and critical raw materials. Aluminum is classified as a critical raw material by the EU, even if there might be an abundance of it on the market right now.
• The European Commission is aware of another obstacle. If sweeping sanctions on aluminum were to be introduced, some member states could ask for exemptions. Greece would be an obvious candidate. This is what happened when the EU introduced sanctions on Russian steel imports in 2023. A few EU member states won derogations, allowing them to ignore the measures until 2028, distorting the bloc's internal single market and giving those countries a competitive advantage.
• In the steel industry, there are certificates of origin, which establish the country where the alloy comes from and where it was manufactured. What concerns the EU is that there is no such thing in the aluminum industry, which makes it easier for Moscow to circumvent sanctions. A system similar to the one for steel could be created for aluminum, but it would probably require a sustained global effort to be effective, and this could prove time-consuming.
• Future sanctions in this field will also depend on EU-U.S. cooperation and coordination. The United States doesn't have any sanctions on Russian aluminum, but it has slapped a 200 percent tariff on the metal. Washington and the EU could also impose sanctions on RUSAL, the Russian state-owned aluminum giant.
• The United States has previously targeted the company. In 2018, the White House imposed sanctions on the company's then boss, oligarch Oleg Deripaska, and all his businesses due to "Russia's malign activity." (While the measures were lifted one year later, it does show that sanctions targeting aluminum haven't always been off the table.) With Deripaska on the EU's blacklist since April 2022 due to his economic support of Russia's war in Ukraine, some EU officials believe that there is room to go even further.

Brief #2: Will Estonia Lead The Way In Confiscating Frozen Russian Assets?

What You Need To Know: Recently, the European Union took the first step in actually using some of the money from Russian assets frozen in the bloc to financially support Ukraine.

As a first, cautious step, the EU is using the proceeds of blocked funds from the Russian central bank and the Russian National Wealth Fund. A decision to transfer some of these earnings to Ukraine has been agreed in Brussels, although the second step -- actually sending the money to Ukraine -- hasn't been cleared yet by the bloc's member states.

There are misgivings, though, especially in larger countries: What impact could this have on the euro as a global currency? And what about private property rights, which are considered fundamental in the EU?

Estonia has gone further, just passing a draft law in its first reading in parliament that would allow the proceeds from frozen assets belonging to Russian citizens to be sent to Ukraine as compensation for war damages. A second reading is due in March or April, and the law is expected to be adopted in the second half of the year.

Estonia has frozen Russian assets worth some 36 million euros ($39 million), through its own measures and the implementation of EU sanctions.

While it is still a relatively small amount, Brussels and some other EU member states are watching Estonia's experience with interest.

The Baltic country could set a precedent and go even further by not only confiscating earnings from assets but also the assets themselves.

Or as the country's Foreign Minister Margus Tsahkna, a supporter of the proposed law, put it before participating in the EU's Foreign Affairs Council on February 19: "If the law is passed, there won't be any excuses anymore that we cannot do it legally. Then it becomes a matter of political will."

Deep Background: What does the Estonian proposal look like? If enacted, the measure is an option, not an obligation, and it would be Estonia's Foreign Ministry that decides to use funds, registered assets, or any other type of asset of a person or entity under international sanctions. (While the target here is clear, it is not just Russian individuals or firms but funds belonging to people and companies from any sanctioned country.)

The people or entities that would be targeted under the measure are those with a connection to the policymaking of the state that has committed (or just assisted in) an unlawful act.

In the case of Ukraine, that means people "undermining or threatening the territorial integrity, sovereignty, and independence" of the country. As for entities, assets can be confiscated if the companies are more than 50 percent state owned.

Drilling Down

• For this to fly, there have to be sufficient safeguards -- because it is a mechanism of "last resort." According to the draft law, it should be applied when a state -- in this case, Russia -- fails to compensate for the damage caused to another state -- in this case, Ukraine. This, of course, hasn't happened yet and doesn't look likely to happen any time soon. But it means Moscow would be given a chance to pay damages to Ukraine before the measure could kick in.
• There are also legal safeguards. In each case, there would probably be a preliminary review in an Estonian court before anything was decided and then follow-up inspections on the procedure and how the money was disbursed. And the people or entities targeted would have the opportunity to contest the decision in Estonia.
• Perhaps the most crucial part of all this is the "right to claim" for those whose assets have been confiscated. This gives the individual the right to get their money back in the future from the state that is judged to have caused their damage in the first place (in this case, Russia). To do that, according to the draft law, "the persons are not required to actively act in the name of ending the military aggression" but to refrain from "showing their support of the military aggression." Then, according to the proposed law, they should try to persuade the offending state -- in this case, Russia -- of its "obligation to compensate for damage."
• Before any transfer of money takes place, Estonia would also need to conclude a treaty with the aggrieved state or with some kind of international compensation body. Such a deal would have to include the purpose of using the compensation, for example, repairing damaged schools or hospitals.
• But how well does this sit with international law? In a resolution passed in November 2022, the United Nations General Assembly acknowledged Russia's obligation to compensate for the unlawfully caused damage in Ukraine. This resolution is nonbinding, however, and it leaves lots of room for countries to interpret it differently. In the explanatory note to the draft law, the Estonian government makes its case by stating: "At this point, it should be taken into consideration that any country is a legal construct and acts and bears liability through its people. Stripping the persons who have contributed to the aggression in the aggressor state, the activity of which also endangers the security of Estonia and all of Europe, of their assets, which are located outside of their home country, is justified in the current situation, in which there is a war in the heart of Europe for the first time in more than 80 years."

Looking Ahead

The Hungarian parliament is set on February 26 to approve Sweden's NATO accession, which would complete the Nordic country's ratification process in all 31 countries of the military alliance. Sweden might even officially join NATO as member number 32 later this week in a flag-raising ceremony in Brussels.

The death of Russian opposition politician Aleksei Navalny will dominate the European Parliament plenary in Strasbourg this week. On February 28, his widow, Yulia Navalnaya, will address the chamber, which later that day is set to debate how the EU should respond to the Kremlin. The following day, February 29, lawmakers are expected to pass a nonbinding resolution on how the bloc should support other political prisoners and civil society activists in Russia.

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.

MUNICH -- If the Munich Security Conference last year felt optimistic, with Ukraine not only capable of resisting Russia's full-scale invasion of the country but also pushing back, with budding hopes that the summer offensive of 2023 would be a roaring success, this year's event in the Bavarian capital felt like the polar opposite.

Taking place over the weekend of February 16-18, the conference -- often billed as the world's leading forum for debating international security policy -- was supposed to bask in the glory of its 60th edition. Instead, it seemed as if the bad news never stopped.

All the talk leading up to the event was about a recent comment by Donald Trump, the front-runner for the U.S. Republican presidential nomination, who questioned defending NATO allies who failed to spend enough on defense from a potential Russian invasion.

This, combined with the inability of the U.S. House of Representatives to pass a $60 billion Ukraine aid package and instead go into recess until the end of the month, made people at the conference loudly question whether Washington was still committed to both Ukraine and transatlantic relations in general.

But this was just the start.

More And More Bad News

During the same weekend, Ukraine announced the strategic withdrawal of its troops from Avdiyivka, a city it had defended from Russian attacks for months. And then, on the first day of the gathering, news emerged that Russia's foremost opposition politician, Aleksei Navalny, had died in a Siberian prison.

The Kremlin opponent's wife, Yulia Navalnaya, was present in Munich. Just hours after the news broke, she took the main stage at the conference and, in the most poignant moment of the entire weekend, laid the blame on the Russian president.

"I want [Russian President Vladimir] Putin and everyone around him, his friends and the government, to know that they will be held accountable for what they did to our country, to my family, and my husband," she said, before adding, "That day will come soon."

From then on, it felt that most of the panel discussions, roundtables, and chit-chat in the corridors of the venue really circled around the two persons who weren't present: Putin and Trump.

SEE ALSO:

Aleksei Navalny, Dogged Anti-Corruption Crusader And Outspoken Kremlin Foe, Dies In Prison

So it was left to the people actually present in Germany to put on a brave face, starting with Ukrainian President Volodymyr Zelenskiy, who noted dryly with a not-so-subtle hint at the U.S. Congress that "dictators don't go on vacation."

Possibly aiming at those who want Kyiv to negotiate with Moscow, he added, "Don't ask Ukraine when the war is over; ask yourselves why Putin can continue."

He then outlined a number of things that the West could do to help Ukraine -- most of which won't be delivered any time soon. Take, for example, Western sanctions on the Russian nuclear industry, which Zelenskiy said he hoped for. While the EU is poised to impose more sanctions on the Kremlin in the coming days, it will be a rather symbolic package without hitting Russian economic sectors.

Or take the confiscation of frozen Russian assets in the West, which he also alluded to. While work is under way in the EU to use some of the proceeds of those frozen funds to help Ukraine, it is unlikely to move much beyond that.

Belgian Prime Minister Alexander De Croo, whose country holds the majority of Russian assets in the bloc, told the Munich crowd that his country cannot "do it on its own" and that a G7 framework was necessary. An EU official told me afterwards that there wasn't much appetite in the group of leading industrial nations for this now.

Zelenskiy was asked about Ukrainian NATO membership, with the military alliance holding a key summit in July in Washington, but even he admitted that not all members were ready to extend such an invitation -- something that Dutch Prime Minister Mark Rutte in a separate discussion hammered home matter-of-factly: "As long as war is raging, Ukraine cannot become a member of NATO. We cannot overpromise."

SEE ALSO:

Dutch PM 'Cautiously Optimistic' Military Aid For Ukraine Coming 'Soon'

Instead, Kyiv will focus on signing so-called "security pacts" with key Western allies, which essentially means assurances of a steady stream of arms in the future. Zelenskiy came to Munich directly after inking such deals in both Berlin and Paris. A Ukrainian official told me that pacts with France and Germany were worth billions, but they will be "staggered," meaning that they won't cover the immediate military aid Kyiv is craving right now.

When German Chancellor Olaf Scholz was asked if Germany was ready to provide Ukraine with the long-range Taurus cruise missile, he was simply noncommittal, saying that the "right moment was needed."

Eyes Across the Atlantic

So what about the specter of a Trump presidency next year?

Zelenskiy simply responded that he would take him to the front lines and show that the war was real. Rutte berated the crowd, arguing that "we should stop moaning and whining about Trump" and that "we have to work with whoever is on the dance floor," while EU foreign policy chief Josep Borrell simply noted that, "I am happy underneath the American [security] umbrella, but the umbrella might not be open all the time."

The crowd of U.S. politicians in Bavaria, especially Democrats, were understandably less enthusiastic about a return of Trump. Hillary Clinton, who was defeated by Trump in the 2016 presidential race, warned at a side event organized by the Victor Pinchuk Foundation to take Trump "literally and seriously" and continued, "He will be an absolute authoritarian leader if given the chance to be so."

U.S. Vice President Kamala Harris, with Trump's recent NATO comments clearly in mind, noted: "Imagine we went easy on Putin, let alone encouraged him. History offers a clue: If we stand by, they will keep going. And in the case of Putin, that means all of Europe will be threatened."

The problem appeared to be that while everyone seemed to agree that Russia might continue to attack other European countries in the near future if successful in Ukraine, concrete action on the ground tells a different story. Part of it seems to be that the general public in the West doesn't appear to take the threat from Moscow seriously.

The Munich Security Report (perhaps aptly this year titled Lose-Lose?), published in the days before the conference, notes that the perceived threat from Russia has abated compared to last year, when respondents in 5 out of 7 G7 countries saw the Kremlin as the No. 1 threat. This year it was only No. 2. Interestingly, German citizens now only see Russia as the seventh-greatest concern, and Italians see it as the 12th.

The trick then by politicians, especially in Europe, is how to try to "sell" the need to help Ukraine to what appears to be an increasingly skeptical audience.

It's Just Business

And here, a new strategy may be emerging: Use the war in Ukraine as a pure business opportunity. NATO Secretary-General Jens Stoltenberg spoke about the need to "expand the transatlantic industrial base" to refill arms stocks in the alliance and to send stuff to Ukraine, saying this would mean highly skilled jobs. Being in Munich, after all, he pointed to the building of a new high-tech production line in Bavaria to produce Patriot missiles as an obvious example.

European Commission President Ursula von der Leyen was even more open in her sales pitch, saying that she, in early March, would propose a new military-industrial strategy for the bloc in which more money would be invested and joint procurement between European countries would be encouraged by offering "off-take agreements," meaning that there will be an advanced commitment to buy even if the product isn't ready yet.

SEE ALSO:

Navalny's Death May Not Hasten Approval Of U.S. Aid For Ukraine

More importantly, she pointed out that "we want a return on our taxes" -- essentially saying that the good jobs must be in Europe, even though not necessarily provided by EU companies. She added that the move is fully aligned with NATO and that Ukraine will be integrated into the bloc's defense program.

When I later asked an EU official why this is happening only now, two years into Russia's full-scale invasion of Ukraine, I got the sad but telling reply: "The truth is that Europeans didn't expect the war to last so long, maybe just a few weeks, so why build a factory? But now there is a sense that this is an opportunity."

This also goes quite some way in explaining why Europe is struggling to provide Ukraine with ammunition now. The EU optimistically pledged in March last year to deliver 1 million 155 mm artillery shells to the country in a year. Nearly 12 months later, the bloc has provided 524,000 rounds and now promises to reach 1.1 million by the end of this year instead.

But there is more "EU spin" on the story. One senior EU official who wasn't authorized to speak on the record briefed journalists on background, saying that there is a difference between donating and selling and that the abovementioned figure is just donating. The official also admitted that nobody knows how much ammunition the bloc has sold to Kyiv, as it is an "opaque system" with a lot of confidential information.

That in itself is, however, not the end of the process, as various European countries have tinkered with standards in recent decades so that there isn't any uniform 155 mm shell that fits the artillery -- perhaps most amusingly summed up by Ukrainian Foreign Minister Dmytro Kuleba, who said that "politicians tick the box and get credit when there is agreement to send something to Ukraine, but on the ground it becomes a massive technical problem to send the right ammo to the right cannon."

And outside the merry diplomatic speed-dating at the Munich Security Conference, a Ukrainian official described the situation on the front line as absolutely dire, with the army shooting "with nothing," meaning less than 2,000 rounds per day compared to Russia's 10,000. The predicted result of this is losing more Ukrainian soldiers and eventually more territory. It was quite telling that Zelenskiy, when asked by the audience at the conference about the possibility of lowering the draft age from the current 27, elegantly dodged the question.

And this was, in many ways, how the Munich Security Conference this year shaped up: high in rhetoric but lacking in concrete news and outcomes.

While everyone spoke affectionately and emotionally about the loss of Navalny, pointing the finger solidly at the Kremlin, quite a few leaders quickly dismissed the need to punish Russia with new sanctions over the event. At least some believed that his tragic fate would spur U.S. lawmakers into passing the Ukraine supplement -- with some optimistically suggesting a vote will soon reach the floor -- but only in March, after the recess, naturally.