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. To subscribe, click here.
I'm RFE/RL Europe Editor Rikard Jozwiak, and this week I'm drilling down on two major issues: Will the European Union slap more sanctions on Russia and Belarus? And is Brussels really ready to up its game when it comes to financing Ukraine?
Brief #1: Piling On The Pressure
What You Need To Know: The European Union is slowly edging closer to a new set of sanctions aimed at Russia and Belarus, just a few weeks after it signed off on its eighth package of restrictive measures since the start of the war in Ukraine in late February.
Prompted by the recent missile attacks on various Ukrainian cities, including the capital, Kyiv, EU foreign ministers discussed the issue when they met in Luxembourg on October 17. There was a "rather broad consensus, without any concrete dissenting voices," to continue piling on the pressure, according to one senior EU official familiar with the talks.
A few days later, EU leaders met in Brussels and signed off on summit conclusions. They stated that "the European Union has further reinforced its restrictive measures against Russia and stands ready to continue to do so," after having been addressed by Ukrainian President Volodymyr Zelenskiy via video link. The president implored them to move swiftly toward the ninth installment of punitive measures against Moscow and Minsk.
Deep Background: The truth is that if a new round of sanctions is adopted anytime soon, it won't be particularly hard-hitting. Partly this has to do with the fact that the bloc has covered a lot of ground already, slapping asset freezes and visa bans on 1,239 individuals and 116 entities. It has also targeted Russian coal, steel, wood, and closed its airspace to Russian flights -- just to mention a few measures adopted in the last nine months.
But the other and more significant reason is that there are political realities that could curtail Brussels' ambitions. Hungarian Prime Minister Viktor Orban has increased his rhetoric against EU sanctions in recent weeks and started a "national consultation" with his fellow Hungarians -- basically, surveys are mailed out and the answers to the leading questions will be used to show support for the government's position.
With soaring energy prices, it also seems inconceivable that any more measures will be taken regarding energy. Ninety percent of Russian crude oil imports will be banned across the EU as of early December after a protracted decision was made in the summer. Don't, however, expect the bloc to ban the remaining 10 percent.
Similarly, the EU likely won't impose further sanctions on gas, and Russia's Gazprombank will continue to avoid being excluded from the SWIFT payment system. It looks like the same goes for nuclear, as some member states are still maintaining extensive cooperation with the Russian state nuclear agency Rosatom.
An import ban on liquefied petroleum gas products such as propane and butane has been considered before -- and, this time, it might just fly, largely because, all in all, it doesn't cause a great deal of damage.
Drilling Down
- So, what can be included in a potential new package? The use of Iranian drones by Russia in Ukraine already prompted Brussels to blacklist three Iranian officials and the manufacturer, Shahed Aviation Industries, last week. More could follow. Also, don't rule out that an export ban on all unmanned aerial vehicles, in addition to the already targeted military ones, will come into force.
- Much of the future sanctions work will be about "closing loopholes" in already existing measures, essentially adding to an ever-growing list of various items that can't be exported to Russia -- be it filters, plastics, or lasers, to give just a few examples. This is often a cat-and-mouse game, in which even a small component change can give the product a different industrial code, enabling it to get around sanctions. It's often not headline-grabbing stuff, but this type of nitty-gritty work is "a death by a thousand paper cuts for Russian industry," as one EU diplomat, speaking on condition of anonymity, put it to me.
- Expect that there might be a push to act on items that were proposed in previous sanctions rounds but for various reasons didn't pass. This time around, will Belgium be OK with a ban on diamond imports? And will Cyprus green-light a prohibition on selling EU property to Russian citizens? Are some maritime nations ready to restrict access not only to Russian-flagged vessels but also to those owned or operated by a Russian individual or company? Is there now enough evidence to sanction the cybersecurity firm Kaspersky Lab and de-SWIFT the largest Russian private bank, Alfa-Bank?
- Work is already under way in the European Commission to propose ways on how to legally recover frozen Russian assets in the bloc and use them to support Ukraine's reconstruction efforts. EU leaders and officials will have to decide what to do with the 17.4 billion euros ($17.2 billion) worth of assets seized from sanctioned individuals and entities in the 27 member states.
- Belarus was spared in the previous sanctions round on October 6, but with EU leaders last week calling out Minsk for permitting Russian armed forces to use Belarusian territory, more restrictive measures could be on the horizon. The idea is to "mirror" the sanctions already imposed on Moscow and then apply a similar package on the regime of Belarusian leader Alyaksandr Lukashenka. One of the chief aims of the sanctions would be to prevent Belarus from becoming a hub for Russian sanctions circumvention. Details still need to be worked out but, for example, there is a ban on importing timber placed on both countries. In addition, there is also a ban on importing wooden furniture from Russia, but there is no similar measure on Belarus. Closing those loopholes might mean a raft of new measures targeting Belarus.
Brief #2: How To Help Kyiv
What You Need To Know: EU leaders are also looking for other ways to help Ukraine, besides sanctioning its enemies. Having signed off on a mission to train Ukrainian soldiers earlier this month and pledged more funds for arms going to Kyiv, attention will now turn to how to financially support the beleaguered country through the winter and next year.
Ukraine's government has estimated that it would need $3.5 billion per month next year, with the United States already promising to pledge $1.5 billion per month. The big question is, can the EU match that?
Deep Background: Regarding this issue, there are two events to watch out for in the coming weeks:
Firstly, there will be an international expert conference in Berlin on October 25 dedicated to the recovery, reconstruction, and modernization of Ukraine. The conference is being co-hosted by European Commission President Ursula von der Leyen and, with Germany currently holding the rotating G7 presidency, German Chancellor Olaf Scholz. Several officials have been keen to point out that it is not "a donors or a pledging conference" but rather an important meeting to chart a way forward in supporting Ukraine.
Secondly, a document by the European Commission on future financial support for Kyiv is scheduled to be issued the next day, October 26. Initially, it was slated to come weeks before the Berlin conference, but a lack of clarity -- both on how much Brussels can offer and how to raise it -- has pushed the date back and could push it back even further.
Drilling Down
- To understand the hesitancy, look no further than the 9 billion euro macro-financial assistance that Brussels promised to Ukraine back in May. Of that 9 billion euros, only 3 billion has reached Kyiv's coffers so far. There is agreement that another tranche of 3 billion will be disbursed in 2022, but disagreement on when the final payment should be dispersed. There are indications that Germany is pushing for the final 3 billion euros to instead be rolled into a new and, as of yet unpublished, EU financial package for Ukraine for 2023. According to several sources familiar with the discussion, Kyiv's financing needs for the rest of 2022 have already been covered.
- EU leaders discussed the matter at their summit in Brussels last week and agreed to conclusions that stated: "The European Council calls for the timely provision of the remaining 3 billion euros in macro-financial assistance for Ukraine. It invites the Commission to present, and the Council to work on, a more structural solution for providing assistance to Ukraine." How to define "timely provision" is, of course, a key question.
- Perhaps more importantly, there is a reference to "a more structural solution." The crux of this matter is if the money should come in the shape of loans or grants, or a combination of both. Germany once again has played a key role here as the economic motor of the club by pushing for grants, as it is reluctant to provide guarantees for more loans.
- Berlin has also argued that countries that have already provided bilateral support could see their contributions under a new joint package lowered. As an example, Berlin pointed to a 1 billion euros grant given by Germany within the framework of the G7.
- The European Commission hopes to solve the issue of member states slowing down the process by borrowing on capital markets and using the EU's budget as a guarantee. This would mean that EU member states, as the main contributors to the EU budget, are indirectly becoming guarantors of the loan. So don't expect this one to be solved any time soon!
Looking Ahead
After much speculation in recent weeks, a decision was finally made over the weekend that Tirana will host the next EU-Western Balkans summit, slated for December 6. There has been a push to have the gathering in the Western Balkans, making it the first time ever that such a summit would be held outside the European Union.
Keep an eye out for developments surrounding Operation Althea, the EU's military deployment to Bosnia-Herzegovina that has been in operation since 2004. Every year, the United Nations must renew its mandate. This year, several EU diplomats have told me, on the condition of anonymity, that this might be a problem, as Russia has voiced objections. A decision is needed by November 2, so the end of October will see some frantic diplomacy to make sure the mission doesn't fall apart. An UN diplomat in New York, who wished to remain anonymous, said that "work on a technical rollover is still ongoing.
That’s all for now. I really hope you enjoyed the first edition of Wider Europe. To subscribe, click here. Please feel free to send me any questions, comments, or tips that you might have. You can also follow me on on Twitter @RikardJozwiak.
And you can always reach us at newsletters@rferl.org.
Until next time,
Rikard Jozwiak
