The European Union has acted with remarkable unity and speed to oppose and punish Russia over its invasion of Ukraine. Its response puts to rest the complaints over its aspiration to be a geopolitical player while not being able to agree on a joint strategy vis-à-vis the main global players. But Europe faces immense challenges in sustaining its ability to cooperate politically, economically, and strategically as the costs mount from the biggest and most violent conflict in Europe since World War II.
Once the bombs fell over the Ukrainian city Mariupol in February, the European Commission demonstrated unprecedented solidarity with Ukraine and agreed on several ambitious packages of economic sanctions aimed at isolating the Russian economy, while also excluding the country from political, cultural, and scientific cooperation. The European Union's so-called Peace Facility has been used to send military equipment to Ukraine, and the bloc has also mobilized several hundred million euros in humanitarian assistance, all in close cooperation with the United States, the United Kingdom, Canada, Japan, and Australia.
Overcoming past divisions
The war has also dramatically helped Europe overcome past discord. Hungary, whose Prime Minister Viktor Orban is a longtime ally to Russian president Vladimir Putin, has had no objections to the sanctions. Germany made a U-turn in stopping the Nord Stream 2 gas pipeline project and abandoning its military caution and is now sending weapons to Ukraine. Chancellor Olaf Scholz's government has also announced a massive military investment, aiming to reach 2 percent of GDP by 2025. Denmark, which has constitutionally granted opt-outs from European foreign policy and security cooperation, will have a referendum in June with the aim of abolishing these exceptions. In Finland and Sweden, a majority of the population now favors joining the North Atlantic Treaty Organization (NATO), according to several opinion polls.
Strong transatlantic NATO relations have led to more phone calls and videoconferences between Brussels and Washington this year than in the last five, no doubt to the surprise of President Putin. Hungary and Poland, longtime opponents of cooperating with other EU countries on refugees, are now opening their borders to millions of Ukrainians.
One exception to this unity has been differences over importing Russian gas and oil. Germany, Italy, and the Netherlands have so far refused to include a ban on these goods as too costly, despite pressure from Ukraine, a large majority of other EU states, and the United States. But Germany has committed to phasing out its dependence on Russia's gas and oil by 2024, necessitating a quicker transition to non-fossil fuel energy. The United States also plans to increase shipments of liquefied natural gas (LNG) to Europe.
Several proposals are also being discussed to mitigate skyrocketing energy costs, such as tax relief, subsidies, and a cap on gas prices. The Commission has proposed requiring that member states and energy providers fill gas reserves to at least 80 percent of storage capacity before November this year to have enough supplies for next winter. The Commission will be charged with purchasing gas on behalf of all member states, thus helping to get better prices.
Despite the impressive military coordination within NATO, the new consensus in Europe favors developing the European Union's own defense capacities, increasing its defense expenditures, and stimulating joint procurement. A rapid deployment capacity of 5,000 troops should be ready by 2025. All these steps were part of the Versailles Declaration and the Strategic Compass agreement, both adopted this March. Funding details are still unclear, despite French efforts to get EU member states to agree to joint bonds of the kind issued on behalf of the whole European Union to finance the post-pandemic economic recovery.
The challenges that remain
The European Union was just about to get a new start after the COVID-19 pandemic before the war started. Infection rates were going down, the economic outlook was positive, and the European Commission had just begun to pay out the national tranches of the common funding under the EU recovery fund. The optimism proved short-lived as war broke out, shifting priorities and budget allocations amid the high cost of sanctions, inflation, and energy. Questions related to food security and more European autonomy will dominate the agenda for a long time. French president Emmanuel Macron's proposal on European food supply could bring heavily subsidized agriculture back to the European Union.
The Commission also faces a dilemma over the question of judicial independence in countries such as Poland and Hungary, where such independence has eroded, along with academic and press freedom, and non-discrimination against LGBT people. These trends have been condemned by the European Court of Justice and other EU institutions. Similar threats to media freedom and politicization of the judiciary are flaring in other countries as well.
In February, the European Court of Justice ruled that the European Union can withhold common funds from countries violating the fundamental values enshrined in EU treaties. The Commission was about to publish a proposal on how to apply this ruling when the war broke out. It is hard to imagine that the Commission would now withhold funds from Hungary or Poland, as both countries are taking in hundreds of thousands of Ukrainian refugees--more than two million in Poland alone. The newly adopted Temporary Protection directive gives Ukrainian citizens protection in the European Union for at least a year, including the possibility to work and study. An escalated conflict between Warsaw and Brussels is unlikely. On the contrary, the Commission adopted on March 23 a new package of recovery fund support for countries receiving the biggest share of refugees.
But in light of the Ukrainian application to join the European Union, immediately followed by applications from Georgia and Moldova, the European Union needs to rethink its enlargement strategy. No country has joined since Croatia in 2013, even though negotiations have started (albeit slowly) with Serbia and Northern Macedonia. Negotiations with Turkey are suspended, and they are expected to start with Albania and Montenegro soon. Because of rule of law principles being challenged in some existing member countries, skepticism towards accepting new members is growing. On the other hand, the goal of enlargement is to build a European community of shared values and support for growth, prosperity, and democracy. The faltering progress toward that goal has led some countries to turn to Russia or China, increasing uncertainty and instability in the European neighborhood.
The European Union cannot loosen its membership criteria, but it could fast-track the process of giving Ukraine membership status. How to create an outer circle of close cooperation with Ukraine and other countries seeking full membership requires some fresh and innovative thinking. There is already an association agreement including ambitious free trade agreements (FTAs) with Ukraine, Moldova, and Georgia, but other opportunities for cooperation could also be explored.
The war is likely to accelerate European efforts to reduce economic dependence on Russia and China while developing local capacity to produce raw materials, semiconductors, and medical equipment.
Moving toward economic independence follows a trend that clearly risks more protectionism: The European Union has lately proposed further trade restrictions, such as the international procurement instrument, investment screening, mirror clauses (meaning that food or feed imported to the European Union should be produced under the exact same sanitary, welfare, and environmental standards as in the European Union), and a new anti-coercion instrument. These measures make sense on their own, but together they risk protectionism if not balanced with efforts to promote open trade. Several completed free trade agreements have still not been ratified, and negotiations with partners are stalled, hurting Europe's economy and credibility. In times of crisis, Europe needs friends and allies—and trade agreements can help.
A closer transatlantic alliance
The intensive contacts across the Atlantic over Ukraine may encourage more cooperation on trade. The German finance minister just called for a resumption of the Transatlantic Trade and Investment Partnership (TTIP) negotiations, which died when President Donald Trump took office in 2017. While an accord is not likely, the new Trade and Technology Council may speed up the development of joint standards. At the Council's meeting in Brussels in March, the European Union and the United States agreed to create a joint task force on energy security. At its next meeting in May, the Council could also seek increased cooperation on World Trade Organization reform, semiconductors, export controls, and artificial intelligence. The forum may also discuss a carbon tax and try to find a common way forward on the European efforts on establishing a carbon border adjustment mechanism in order to avoid transatlantic trade tensions. And now that the European Union and the Biden administration have declared that Putin is a war criminal, joint action should be taken to bring him to justice in the Hague.
Facing an uncertain future, the European Union has come to realize more strongly than ever that it has real economic and political clout when it acts and speaks with a single voice. A stronger security and defense policy will surely emerge. But a long war and continued high energy and commodity prices will put pressure on unity and public support for bold action.
Russia's brutal aggression has grossly undermined Europe's confidence in a world of rules and cooperation. An aggressive and interventionist Russia may continue to destabilize the world for a long time. But this could also be a moment for democracies to stick together and roll up their sleeves. If they succeed, the atrocities of 2022 would then also bring something good.