Welcome to Wider Europe, RFE/RL's new 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 big issues: Getting more Russian money for Ukraine and Armenia’s long road to EU visa liberalization.
Briefing #1: How The West Will Use Frozen Russian Assets
What You Need To Know: The European Union and the Group of Seven (G7) leading industrialized nations are slowly gearing up new legislation that will allow a $50 billion loan to go to Ukraine by the end of the year.
The political decision for that loan was already agreed when the G7 met in Italy for its annual summit on June 13-15. In the communique from the meeting, it was stated that “we decided to make available approximately $50 billion leveraging the extraordinary revenues of the immobilized Russian sovereign assets, sending an unmistakable signal to President Putin.”
There are roughly $282 billion worth of Russian frozen assets in G7 countries after these resources were targeted by sanctions in early 2022, mostly in the EU. And while no one is keen yet to face the legal consequences of actually confiscating the money -- as fears persist it could dissuade other countries from investing in the eurozone and thus undermine the euro -- there is momentum now to get creative in using the funds to financially support Kyiv.
The G7 declaration stated as much by noting that “Russia must end its illegal war of aggression and pay for the damage it has caused to Ukraine. These damages now exceed $486 billion, according to the World Bank. It is not right for Russia to decide if or when it will pay for the damage it has caused in Ukraine. Russia’s obligations under international law to pay for the damage it is causing are clear, and so we are continuing to consider all possible lawful avenues by which Russia is made to meet those obligations.”
Deep Background: Most Russian money located in the EU, the onus is on Brussels. EU leaders, including more Ukraine-skeptic nations such as Hungary and Slovakia, endorsed the G7 outcome at a summit in Brussels just a week after. They unanimously agreed on conclusions that urged the European Commission to take the work forward on this and added, “Subject to EU law, Russia’s assets should remain immobilized until Russia ceases its war of aggression against Ukraine and compensates it for the damage caused by this war.”
It should be recalled that the bloc already has a mechanism in place to send the annual windfall profits from the frozen Russian assets to Ukraine. This is estimated to generate some 3 billion euros a year ($3.2 billion), with 90 percent of it going to military equipment and the rest for reconstruction.
The first tranche of this money was disbursed over the summer.
This new G7 initiative, however, goes a step further, bringing the interest proceeds from frozen assets via a loan that is guaranteed by the G7 countries.
The preliminary division is that the EU and the United States will back this up with $20 billion each, and Japan and the United Kingdom will guarantee the remaining $10 billion between them. But a lot of nitty-gritty legal groundwork is still needed.
Drilling Down
- The item was discussed for the first time by EU ambassadors at the end of July with the European Commission providing a one-page outline, seen by RFE/RL, of what the options are. The idea is that the commission will present a fully fleshed-out legal proposal at the end of August with EU ambassadors discussing the text on September 4. But from the one-pager it is already clear that there are essentially just two avenues available to take.
- The main issues to ensure are legal certainty and predictability. And that means that Russian assets remain frozen for a longer period. Brussels is looking to either agree on an open-ended immobilization of Russian assets or prolong this sanction by a longer period of up to 36 months. It’s worth noting that all types of economic sanctions against Russia that Brussels has imposed currently are rolled over via consensus by the 27 member states every six months, with the latest prolongation confirmed on July 22.
- According to diplomats familiar with the initial discussion, the overwhelming majority favor an open-ended immobilization. The option paper says this option will still be “reviewed by the Council at regular intervals (e.g. 12 months), on the basis of clear predefined criteria (i.e. the end of the war of aggression and assurances of nonrepetition, the payment of compensation by Russia, etc. as set out by the EUCO – European Council).”
- It also adds that “ending the immobilization of the CBR (Central Bank of Russia) assets would require a new Council act, based on a report by the High Representative (EU foreign policy chief)/Commission assessing that the criteria for lifting are fulfilled.”
- The question is, however, whether Hungary has the appetite to agree on this. So far, EU leaders have never threatened not to roll over the sanctions but at the same time they haven’t been militantly against moving away from an extension beyond the six months mark. Budapest might go against both options outlined in the paper, and that would mean there isn’t much of the legal certainty and predictability that the EU seeks.
- If the EU can ensure this, the question is whether the United States, in the middle of its election period, is ready to give a green light. The U.S. Congress needs to approve this loan, and if there are any fears that Hungary (or any other EU member states, for that matter) might threaten to block the renewal a couple of times a year, the whole scheme risks unraveling.
- That’s why the United States initially wanted the EU to guarantee most, if not all, of the $50 billion and why most member states would prefer an open-ended immobilization. The diplomatic wrangling on this is likely to continue throughout the autumn.
Briefing #2: Armenia's Long Road To Visa Liberalization
What You Need To Know: EU foreign ministers officially gave the green light to the European Commission to commence visa liberalization dialogue with Armenia on July 22. The move came the same day as the bloc also rubber-stamped a 10-million-euro ($11 million) package of nonlethal military aid for Yerevan under the European Peace Facility (EFP) -- the first time ever that the South Caucasus republic got such support from Brussels.
EU diplomats I have spoken to have noted that the two decisions signal closer cooperation with Armenia as the country appears to loosen its political and economic dependence on Russia.
Of the two deals, the start of the visa liberalization dialogue is the bigger prize -- at least down the road. It would, if concluded positively in the future, allow Armenians with biometric passports to travel to all EU countries except Ireland plus non-EU Iceland, Liechtenstein, Norway, and Switzerland for 90 days in any 180-day period without any need for a visa.
Ask any official from Georgia, Moldova, or Ukraine and you will get the answer that they have all benefited greatly from visa-free travel to the bloc. It is, however, worth noting that the recent green light given by EU member states only represents the first baby steps of a process that will take years.
Deep Background: How long will it take? That's ultimately a political decision, of course. But I understand that the European Commission, which now is the EU body in charge of the matter, wants to launch the visa dialogue as early as this autumn.
This is significant as the European Commission is on its last leg of its current five-year mandate. In December, a new commission should be sworn in if all goes well with hearings of the new commissioners (26 of them; President Ursula Von der Leyen already passed a vote in July) scheduled in relevant European Parliament committees in September and October.
That means no time should be lost by waiting for a new team to take over in Brussels. After the dialogue is launched, the commission will work on a Visa Liberalization Action Plan (VLAP), which is a sort of guiding document for what Armenia needs to do to get a visa-free regime.
It’s worth comparing the timelines for Georgia, Moldova, and Ukraine. Kyiv went from launching the visa dialogue to getting a VLAP within a month -- largely because it had a big civil service that could expedite these things quickly. For Georgia and Moldova, it took around six months to go from one to the other, and it is likely to be something similar for Armenia.
What will the VLAP contain? Essentially, it will follow the same format as with the three other Eastern partners that secured visa-free travel to the EU, even though it is expected from diplomats I have spoken to that there could be issues that are tailor-made for Yerevan though these are yet to be determined.
Armenia will essentially have to undergo reforms in four areas: firstly, document security, including a fully functional system of providing biometric passports and a unified and secure electronic population registry.
The second bloc of reforms is perhaps the trickiest to complete as it concerns migration management and asylum. Armenia will have to ensure strict rules when it comes to readmitting Armenian citizens that sought asylum in the bloc but failed to get it, preventing migration from happening in the first place, and increasing capacity for receiving and accommodating asylum seekers.
The third area is called “public order and security” but essentially contains measures to fight corruption, terrorism and organized crime.
The fourth and final issue is about fundamental rights -- essentially ensuring that everyone has the right to have access to official Armenian travel documents.
Drilling Down
- After the VLAP is presented, the European Commission will issue progress reports on how Armenia is faring in the various fields every six to eight month or so. For Ukraine, for example, the VLAP was presented in November 2010 and the first report came in September the following year.
- The sixth and final report from the Commission on Ukraine was published in December 2015 and in the spring of 2016 it recommended visa liberalization for Ukrainian citizens. So, all in all a process lasting nearly six years.
- For Georgia, on the other hand, it went faster. The VLAP was presented in February 2013 and only four reports were needed, from the period November 2013 to December 2015. The commission then recommended a visa-free regime in March 2016. So pretty much three years.
- But there is a catch. As mentioned above, this is politics, after all. Even if the European Commission, sometime in the future, assesses that Armenia has fulfilled all conditions, it doesn’t mean Yerevan will get a visa regime right away.
- The move has to be agreed by both the European Parliament and all EU member states. And while the former rarely causes any problems when it comes to granting visa-free status, it can be hard to find consensus among EU member states.
- It took a year from the European Commission’s recommendations to member states finally agreeing on granting Georgia and Ukraine visa liberalization -- both eventually got it in 2017.
- It’s likely some member states will have reservations about Armenia going forward. In the discussion about starting visa liberalization dialogue with Yerevan, some fears were aired.
- France, which has a sizable Armenian diaspora, noted that it could not rule out that visa liberalization could lead to increased asylum claims. The Czech Republic worried that Russians could use it as an avenue into the EU as some have dual Armenian-Russian citizenship.
- Germany and Sweden aired concerns that visa liberalization for Georgia meant an increase in Georgian criminal gangs operating in their countries and the Netherlands and Austria, both with governments pushing for stricter European immigration policies in general, are cautious about potential visa liberalization being misused for that purpose.
Looking Ahead
The EU and NATO are still on the beach this week, but look out for two interesting visits on August 21. First German Chancellor Olaf Scholz is due in Chisinau in what is a symbolic show of solidarity from the EU’s most powerful member state to Moldova, which will hold a crucial presidential vote later this autumn and a referendum on whether the country should aim to join the EU.
That same day Indian Prime Minister Narendra Modi is due in Warsaw and will travel to Kyiv from there. The West has attempted to woo India for a long time and is hoping the country will be more vocal and practical in its support for Ukraine and opposition to Russia’s invasion.
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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