European Parliamentary Research Service Blog

Written by Clare Ferguson and Katarzyna Sochacka.

The highlights of the January I 2023 plenary session were debates on the conclusions of the European Council meeting of 15 December 2022 and the presentation of activities planned under the Swedish Presidency of the Council of the European Union. The session opened with a ceremony marking the 30th anniversary of the single market, followed by a debate with the Council and Commission on the matter.

Debates were held on the surge of respiratory infections and the shortage of medication in Europe; on the need to increase transparency, integrity and accountability in the EU institutions; on terrorist threats posed by far-right extremist networks; on criminalisation of humanitarian assistance, as well as on the Global Gateway. Members also debated foreign affairs issues, including the EU’s response to the appalling attack against civilians in Dnipro; strengthening action against the Putin regime and military support; and the establishment of a tribunal on the crime of aggression against Ukraine. The High Representative of the EU for Foreign Affairs and Security Policy, Josep Borrell, spoke on the EU response to the protests and executions in Iran, and on strengthening the EU‑Latin America partnership.

During question time, Members posed questions to Commissioner Janusz Wojciechowski on EU action to tackle food price inflation in Europe. Finally, Parliament elected Marc Angel (S&D, Luxembourg) to the post of Vice‑President of the European Parliament.

Thirtieth anniversary of the single market

In relation to EU freedoms, for 30 years, the single market has benefited Europeans through free competition under fair rules and the liberty to live, work, shop and retire anywhere in Europe. Estimates suggest the single market has added between 8 % and 9 % to EU gross domestic product. With 447 million consumers and 23 million companies, however, the single market is a constantly evolving entity, which needs to adapt to challenges such as the pandemic. Members adopted, by a large majority, a resolution, tabled by the Committee on the Internal Market and Consumer Protection (IMCO), which underlines the single market’s vital role in creating a European polity. The IMCO text seeks renewed Member State commitment to implementing and enforcing existing single market legislation correctly, and looks forward to renewed action to strengthen and modernise the single market.

Strengthening EU rules on waste shipments

Stronger rules on waste shipments would ensure that EU efforts to recycle waste do not lead to environmental degradation outside the EU. Members debated and adopted a report from Parliament’s Committee on Environment, Public Health and Food Safety (ENVI) calling for stronger European Commission proposals to this end, not least on monitoring what actually happens to waste exported outside the EU. The committee would like to see an assessment of waste management in non-EU countries that takes labour standards into consideration, as well as an end to EU exports of plastic waste. The vote sets Parliament’s position for negotiations on EU rules on waste shipments with the Council.

Unshell – Rules to prevent misuse of shell entities for tax purposes

While shell companies, or ‘shells’ (entities with no, or minimal, economic activity) may serve commercial or business functions, they are also used to evade taxes. In response to a European Commission proposal for an instrument to ‘unshell’ companies being used to abuse the tax system, Parliament debated and voted overwhelmingly in favour of a Committee on Economic and Monetary Affairs (ECON) report. Members support the ECON proposals to lower gateway thresholds to prevent EU shell companies from benefiting from tax advantages, impose shorter deadlines to address rebuttals, and review the rules to prevent misuse of shell entities for tax purposes after five years. The proposal now requires unanimity in the Council, where negotiations are ongoing, following consultation of Parliament.

Revision of the European Works Councils Directive

European works councils (EWCs) represent EU employees of large multinational companies, to ensure that their rights are protected. Despite an evident lack of effective consultation, however, the European Commission does not plan to revise the current EWC Directive. Members debated a legislative-initiative report from the Committee on Employment and Social Affairs (EMPL), which calls on the Commission to take action to ensure European works councils provide meaningful consultation, end exemptions, and introduce tougher penalties. The vote will take place in plenary on 2 February.

Human rights and democracy in the world

The consequences, particularly for the most vulnerable, of Russia’s war on Ukraine are highlighted in the response to the Commission’s 2021 annual report on human rights and democracy in the world, drafted by Parliament’s Subcommittee on Human Rights (DROI). The report calls for a strong approach to war criminals and human rights violators in the context of the war in Ukraine. It also condemns the increasing threats to freedom of expression in many countries, and welcomes EU action to protect the most vulnerable, wherever they live. In this respect, Members debated and adopted the Human rights and democracy in the world, 2021 report, which in particular favours integrating human rights values in trade agreements, and looks forward to greater cooperation between EU institutions on human rights issues.

Annual reports on the implementation of the common foreign and security policy (CFSP) and common security and defence policy (CSDP) in 2022

In a dynamic geopolitical situation, the EU can demonstrate its capacity to address external vulnerabilities in a robust manner – such as the unprecedented decision to mobilise funding for Member State weapons delivery to defend Ukraine against Russian aggression. Members debated and adopted the Committee on Foreign Affairs (AFET) 2022 annual report on implementation of the CFSP, which highlights the combined effects of Russia’s war against Ukraine and worsening climate and energy crises, with increasingly assertive authoritarian regimes such as China and Iran posing new risks to stability. In its report, AFET proposes that the EU redouble its efforts to strengthen international security through a military and defence union, by supporting qualified majority voting (QMV) in the Council on security issues, ensuring greater strategic autonomy, and stronger mitigation of climate change vulnerabilities.

Members also debated and adopted a second AFET report, on EU defence initiatives, its 2022 report on the EU’s CSDP. Noting the dramatic deterioration of the security situation resulting from Russia’s actions, the committee urges that the EU provide all necessary assistance to Ukraine. It welcomes progress made in 2022, such as on the Strategic Compass, and looks forward to proposals for stronger EU defence financing. Not limited to European soil, the report calls for stronger security partnerships in Africa and in the maritime sphere, particularly the Indo-Pacific. It also welcomes the climate change and defence roadmap, and underlines the need for more investment in ‘green’ defence.

Protection of the EU’s financial interests and combating fraud – Annual report 2021

Corruption is a major challenge for the EU – all Member States are affected by the problem to some extent – and this exposure to organised crime, undetected fraud and high-level corruption can seriously harm the EU’s budget. Combating fraud and protecting the EU’s financial interests is therefore crucial. Members debated and adopted a Committee on Budgetary Control (CONT) own-initiative report on these efforts, detailed in the European Commission’s 2021 annual report on the protection of the EU’s financial interests (known as the PIF report).

Opening of trilogue negotiations

Members challenged the mandate for negotiations from the Employment and Social Affairs (EMPL) Committee on the proposal for a directive on improving working conditions in platform work, and a vote on confirming the mandate is now scheduled in plenary on 2 February 2023.

Read this ‘plenary at a glance’ on ‘Plenary round-up – January I 2023‘ in the Think Tank pages of the European Parliament.

Written by Lasse Boehm with Chiara Scalamandrè.

The war in Ukraine has put Europe’s dependence on energy imports under the spotlight. The United States (US) has stepped in and pledged to increase its exports of liquefied natural gas (LNG) to Europe. While this helps address the shortfall in energy imports from Russia in the short term, it raises the question as to how far the EU wants to build an energy partnership with the US.

Closely intertwined with the energy challenge is the fight against climate change. With the European Union (EU) committing to more ambitious policies within the framework of the Green Deal, it has an interest in international partners also raising their level of ambition. Here, too, the US is a key partner. As one of the world’s largest CO2 emitters, the US also plays a key role in bringing the world closer to reaching the goals of the Paris Agreement.

The US Inflation Reduction Act, a huge investment bill pouring billions of dollars into the American economy by favouring US-made clean energy and technology, brings these considerations together. The EU will have to consider how to integrate its climate, energy and industrial policies, so as to contribute towards climate goals and energy security while at the same time retaining the global competitiveness of its economy. This, in turn, has far-reaching repercussions for related policy areas such as international trade, as well as for the ongoing debate over the future of the EU’s budget and its macroeconomic governance framework.

Read the complete briefing on ‘EU-US climate and energy relations in light of the Inflation Reduction Act‘ in the Think Tank pages of the European Parliament.

Written by David de Groot (1st edition).

On 25 November 2021, the European Commission put forward a proposal to modify Council Directive 94/80/EC on the right of mobile EU citizens to vote and stand as candidates in municipal elections. The proposal tied in with the Commission President’s priority for a new push for European democracy. The proposal was presented together with three others: a proposal to modify Directive 93/109/EC on EU citizens’ right to vote and stand as candidates in elections to the European Parliament; a proposal on transparency and targeting of political advertising; and a proposal to revise EU Regulation No 1141/2014 on the funding of European political parties and foundations.

Although Directive 94/80/EC gave EU citizens living in another Member State the right to vote and stand in municipal elections under the same legal provisions and procedures as citizens of that Member State, the procedures under which these rights are exercised are subject to national legislation and procedures, which vary between Member States. The Commission’s proposal has been designed to address some of the concerns raised during the years since the directive entered into force and, in particular, the fact that despite the measures in place, mobile EU citizens still face difficulties in exercising their electoral rights in municipal elections.

Versions

• January 2023: Revision of Council Directive 94/80/EC: Electoral rights of mobile Union citizens in municipal elections (1st edition)

Proposal for a Council Directive laying down detailed arrangements for the exercise of the right to vote and to stand as a candidate in municipal elections by Union citizens residing in a Member State of which they are not nationals (recast) Committees responsible:Committee on Civil Liberties, Justice and Home Affairs (LIBE)COM(2021)0733
25.11.2021
Rapporteur:Joachim Stanisław Brudziński (ECR, Poland)2021/0373(CNS)Shadow rapporteurs:Paulo Rangel (EPP, Portugal)
Domènec Ruiz Devesa (S&D, Spain),
Yana Toom (Renew, Estonia),
Damian Boeselager (Greens/EFA Germany), Konstantinos Arvanitis (The Left, Greece)Consultation procedure
(CNS) – Parliament adopts
a non-binding opinion Next steps expected: Vote in committee on draft report

Written by Giulio Sabbati.

The European single market celebrates its 30th anniversary this year. On 1 January 1993, the then 12 Member States abolished border controls between each other, launching free movement of people, goods, services and capital. This infographic celebrates the single market’s anniversary, looking at the history of the European Union (EU) in terms of macro-economic indicators as the number of Member States has grown. It shows exports of goods, services and investments; movement of people within the EU to live, study or work; and the digital single market, covering e-commerce sales of enterprises and online purchases by individuals. The final section looks at the EU in the world.

Although we are celebrating the 30th anniversary of the single market, the idea of a unified Europe began in the 1950s with the founding of the Communities. But to secure the single market, many steps were required. The timeline below highlights the major milestones needed to achieve the single market.

Read the complete infographic on ‘30 years of the European single market‘ in the Think Tank pages of the European Parliament.

Written by Marcin Szczepański.

The global investment gap between high-income and low- and middle-income countries has been widening in recent years, even more so in the aftermath of the double crisis caused by the pandemic and Russia’s invasion of Ukraine. This divergence and underfunding are also negatively affecting global connectivity, which requires substantial financial resources for both its expansion and its maintenance. This is important for recovery from the current crisis, as the modern world is based on multifaceted links between communities, economies and countries, and connectivity is known to contribute to economic growth, supply chain efficiency and resilience to shocks.

Since 2015, the EU has been making efforts to narrow this investment gap and support global connectivity, not least to counter the influence of China’s Belt and Road Initiative. However, experts considered EU assistance and investments to be fragmented, leading to inefficiencies, gaps and overlaps. Taking into account this and the growing importance of connectivity, made clear by the pandemic, the EU launched its Global Gateway strategy on 1 December 2021. Its worldwide scope is not limited to selected regions or countries.

The strategy promises to mobilise up to €300 billion in investment to boost smart, clean and secure digital, energy and transport links and strengthen health, education and research systems across the world. Perhaps the most significant initiative so far has been the launch of the first regional Global Gateway Africa-Europe Investment Package in February 2022. Other deliverables include the signing of international agreements and the inauguration of the first infrastructure projects.

Many think tanks and experts have welcomed the Global Gateway as an attempt to boost efficiency, coherence and strategic drive in the EU’s connectivity and investment policies. Opinions are divided, however, on whether sufficient funding can be mobilised and it remains to be seen if the Team Europe approach, bringing together the EU, financial institutions and Member States, will deliver.

Read the complete briefing on ‘The Global Gateway: Taking stock after its first year‘ in the Think Tank pages of the European Parliament.

Poorer countries attract less private investment in infrastructure and see a dip in the number of projects funded

Written by Sebastian Clapp (1st edition).

On 19 July 2022, the Commission put forward a proposal for a regulation on establishing the European defence industry reinforcement through common procurement act (EDIRPA). On 1 December 2022, the Council adopted its general approach. EDIRPA is a short-term joint defence procurement instrument worth €500 million. It seeks to address the most urgent and critical defence capability gaps and is aimed at incentivising Member States to procure defence products jointly. It does not prescribe what will be procured, as this is left up to the Member States that will need to fulfil the criteria set by EDIRPA.

The proposal follows the Russian invasion of Ukraine, which has reshaped the geopolitical environment in Europe dramatically and intensified discussions across EU capitals on defence investments and capabilities. Given a practical mandate at the Versailles Summit in March 2022, the Commission presented a defence investment gap analysis in May 2022, proposing the EDIRPA as one of a number of means to address defence-related investment, capability and industrial gaps

Versions

• January 2023: European defence industry reinforcement through common procurement act (EDIRPA) (1st edition)

Proposal for a regulation of the European Parliament and of the Council on establishing the European defence industry reinforcement through common procurement act Committees responsible:Industry, Research and Energy (ITRE) and Foreign Affairs (AFET) (jointly – Rule 58)COM(2022) 349
19.7.2022
Rapporteur:Michael Gahler (EPP, Gerrnany) and Zdzisław Krasnodębski (ECR, Poland)2022/0219(COD)Shadow rapporteurs:To be appointedOrdinary legislative procedure (COD)
(Parliament and Council on equal footing
– formerly ‘co-decision’) Next steps expected: Publication of draft report

Written by Monika Kiss.

After a series of relaxations of China’s zero-tolerance COVID measures at the end of 2022 (the country was practically closed for inbound travellers with most types of visas for almost three years), the Chinese government announced on 26 December 2022 that it would reopen its border to international travellers from 8 January 2023. This reopening means that China has dropped the requirements for five days quarantine in a hotel and three additional days of self-isolation at home that applied to international arrivals. However, travellers must still present a negative COVID‑19 test result obtained within 48 hours before departure. This measure applies to inbound travellers coming for business, employment, study and family visits. At the same time, the government declared its intention to increase international flights and to bring the schedule back to pre-coronavirus levels.

Following these announcements, bookings for international tickets for a date after 8 January 2023 increased by more than 85 % for both outbound and inbound travellers, according to International Air Transport Association (IATA) data.

Source: International Air Transport Association, 2023, ‘China to reopen border to international travelers’, All Rights Reserved. Available at IATA Economics page.

As early as mid-December 2022, just one week after the first mitigating measures, China has seen a significant outbreak of COVID‑19. The Chinese government has been criticised, among others, by the World Health Organization (WHO), for under-representing the real number of COVID‑19 cases and deaths. The Chinese National Health Commission takes a ‘narrow’ definition of COVID‑19 death, taking only deaths caused by pneumonia and respiratory failure after contracting the virus into account. The WHO intends to continue monitoring the situation and urged all countries to maintain vigilance.

In this context, some countries, such as the United States, the United Kingdom, Japan, India and Malaysia, have introduced measures for travellers arriving from China. Some EU Member States also started applying measures as well from the end of December 2022. Italy imposed mandatory tests for passengers from China upon arrival, after 97 positive results were registered from a sample of 212, and has called on the EU to follow suit. Spain decided to test, to carry out temperature checks, and to impose COVID certificates. France has required pre-travel negative tests from passengers from China, masks on planes and PCR tests on arrival for all passengers. Belgium has announced it will not require test results from travellers, but is testing the wastewater from planes and scanning the samples for new variants. Differing reasons were advanced for these diverging and uncoordinated responses: past experiences of COVID‑19, fear of new variants, concerns about the reliability of Chinese data, or economic reasons (for instance, Austria decided not to ask for tests, as China is the most important Asian source market for the coming tourism season). Following the European Union’s Integrated Political Crisis Response (IPCR) meeting on 4 January 2022, called by the Swedish Presidency of the Council of the European Union, EU countries agreed on a coordinated precautionary approach, including the following elements for Member States:

• recommendation to wear a mask or FFP2/N95/KN95 respirators on all passengers on flights to and from China,
• advice to incoming and outgoing international travellers, as well as to aircraft and airport personnel, regarding personal hygiene and health measures,
• recommended introduction for all passengers departing from China to Member States, of the requirement for a negative COVID‑19 test taken not more than 48 hours prior to departure from China,
• recommendation to complement these measures with:
  • random testing of passengers arriving from China on arrival in the Member States, as appropriate, and the sequencing of all positive results to strengthen surveillance of the epidemiological situation,
  • testing and sequencing of wastewater from airports with international flights and aircraft arriving from China,
  • continuing to promote vaccine sharing and the uptake of vaccines, including booster doses, particularly among vulnerable groups.

The EU Member States agreed to assess the situation and review the introduced measures by mid-January 2023.

This coordinated approach led to reinforced measures in several EU countries, Belgium, for instance requires a negative PCR test, valid for 48 hours, before boarding the plane as of 8 January 2023, as does Austria from 7 January 2023. Besides the Member States already mentioned, Germany, Latvia, the Netherlands, Portugal, and Sweden have so far stepped up rules on travellers from China in response to the rising cases.

Some stakeholders in the transport sector have been critical of the EU approach. In a joint statement, Airlines for Europe (A4E), International Air Transport Association (IATA) and ACI (Airports Council International) stated that the EU recommendation was not in line with the assessment published by the European Centre for Disease Prevention and Control (ECDC) on 3 January 2023. The ECDC has declared that the current surge of COVID‑19 cases in China is not expected to affect the epidemiological situation in the EU/European Economic Area (EEA), because the COVID‑19 variants circulating in China are already present in the EU/EEA, and the population has already acquired higher immunity. Systematic testing of travellers from China is not therefore considered a scientifically driven and risk-based measure.

The measures taken by EU Member States were also subject to criticism in China, stating that these are ‘attempts to manipulate the COVID measures for political purposes’. China also threatened to ‘take countermeasures based on the principle of reciprocity’.

China also declined an EU offer of help through vaccine donations, with the Chinese government insisting that the situation is under control and that the country has an adequate quantity of medical supplies.

On 10 January 2023, the European Union Aviation Safety Agency (EASA) and the ECDC published a joint statement as an addendum to the Aviation Health Safety Protocol. This document reiterates the recommendations of the Swedish Presidency, recommending airports and operators ensure:

• the use of masks or respirators for passengers and crew on flights,
• enhanced personal hygiene and health measures for both travellers and aircraft and airport personnel,
• the requirement for a negative COVID-19 test taken not more than 48 hours (RADTs) or 72 hours (NAATs) prior to departure,
• facilitated random testing of passengers upon arrival, and support for local health authorities in sampling wastewater from airports and aircraft.

Impact on the tourism sector

Before the pandemic, Chinese tourists represented an important share of the EU’s tourism sector. Statistics show the number of outbound journeys of Chinese tourists has grown steadily during the last decade. Of the nearly 170 million outbound trips from China in 2019, nearly all were for private purposes, rather than business trips. Chinese tourist spending on international tourism has also increased strongly over the last ten years, reaching a peak of over US$277 billion in 2018.

Some 28 % of trips made by Chinese tourists were to the EU, with a preference for larger cities. France was the EU country most visited by Chinese tourists in 2019, with more than 2.4 million Chinese visitors, who spent around €4 billion. Other popular EU destinations included Italy, Spain, Germany, the Netherlands, Greece and Austria. In 2021, arrivals from China in the European country totalled roughly 55 000, dropping from around 158 000 in 2020 and over 1.55 million in 2019. In 2020, due to the pandemic and the severe COVID‑19 measures in China, the number of outbound tourists fell to around 20.3 million

Travel figures are more moderate in the other direction. Before the pandemic, China was the 11th most popular destination outside the EU for EU citizens. In 2018, EU residents made 1.75 million trips to China. Trips to China represented close to 2 % of the total number of trips made outside the EU in 2018, 48 % of which were for professional purposes. The number of trips to China declined considerably because of the pandemic and the related measures, to 125 000 trips in 2020 and 26 000 in 2021, mostly for professional purposes.

Although China’s lifting of COVID‑19 measures does not signal a green light for international leisure tourists willing to visit China, the Chinese government plans to ease restrictions for tourists and to issue tourist visas, without indicating a timeline. This development could boost both aviation and tourism, presuming that China intends to ease travel restrictions gradually. It remains to be seen if the measures taken by the EU will impact this trend.

Written by Anita Orav(1st edition).

Most migrants arrive in Europe legally, to work, study or join family members. Over a million of the first residence permits granted to non-EU third-country nationals in 2019 were for work purposes. The EU shares competence on legal migration with Member States but can set conditions for third-country nationals’ entry into and legal residence in Member States. However, Member States retain the right to determine admission numbers for third-country nationals seeking work. The Single Permit Directive lays down a single application procedure for a combined work and residence permit, and a common set of rights for third-country workers legally residing in an EU country.

In its communication ‘Attracting skills and talent to the EU’, adopted on 27 April 2022, the European Commission announced an overhaul of the EU’s acquis on legal migration. It also proposed a recast of the Single Permit Directive, with the objective of simplifying the application process for living and working in the EU and improving rights for residents and their family members. In the European Parliament, the proposal has been assigned to the Committee on Civil Liberties, Justice and Home Affairs, which debated a draft report prepared by the rapporteur on 1 December 2022.

Versions

• January 2023: Revision of Directive 2011/98/EU on the single permit to reside and work (1st edition)

Proposal for a directive of the European Parliament and of the Council on a single application procedure for a single permit for third-country nationals to reside and work in the territory of a Member State and on a common set of rights for third-country workers legally residing in a Member State (recast) Committee responsible:Civil Liberties, Justice and Home Affairs (LIBE)COM(2022)0655
27.4.2022
Rapporteur:Javier Moreno Sánchez (S&D, Spain)2022/0131(COD)Shadow rapporteurs:Lena Düpont (EPP, Germany)
Jan-Christoph Oetjen (Renew, Germany)
Tineke Strik (Greens/EFA, the Netherlands)
Tom Vandendriessche (ID, Belgium)
Patryk Jaki (ECR, Poland)
Konstantinos Arvanitis (GUE/NGL, Greece)Ordinary legislative procedure (COD)
(Parliament and Council on equal footing
– formerly ‘co-decision’) Next steps expected: Awaiting Committee decision

Written by Clare Ferguson with Sophia Stone.

After a run of difficult years, Members of the European Parliament begin 2023 with a full agenda and some thorny issues to be grasped.

In a key debate on Wednesday morning, Members are scheduled to hear European Council and Commission statements on the conclusions of the European Council meeting of 15 December 2022. Earlier, on Tuesday morning, they are due to hear Council and Commission statements presenting the Swedish Presidency of the Council’s programme of activities for the next six months. Sweden’s priorities are: to protect citizens and freedoms; promote a new growth and investment model; a climate-neutral, green, fair and social Europe; and to promote Europe’s interests and values globally.

In relation to EU freedoms, for 30 years, the single market has benefited us all through free competition under fair rules and the liberty to live, work, shop and retire anywhere we like in Europe. Estimates suggest the single market has added between 8 % and 9 % to EU gross domestic product. That’s not to say that there is no room for improvement – 447 million consumers and 23 million companies mean that the single market is a constantly evolving entity, which needs to adapt to challenges such as the COVID‑19 pandemic. In addition to a ceremony to mark this noteworthy anniversary, Members are expected to debate a motion for resolution on Monday evening, tabled by the Committee on the Internal Market and Consumer Protection (IMCO). Underlining the single market’s vital role in creating a European polity, the IMCO text seeks renewed Member State commitment to implementing and enforcing existing single market legislation correctly and looks forward to renewed action to strengthen and modernise the single market. Members will also hear statements from the European Commission and Council.

While the single market has made it much easier to do business across borders in the European Union, wider globalisation sometimes causes issues when decisions affecting workers for multinational companies are taken far from their workplace. European works councils (EWCs) represent EU employees of large multinational companies, to ensure that their rights are protected. Despite an evident lack of effective consultation, however, the European Commission does not plan to revise the current EWC Directive. On Thursday morning, Members are due to debate a legislative-initiative report from the Committee on Employment and Social Affairs (EMPL), calling on the Commission to take action to ensure European works councils provide meaningful consultation, and an end to exemptions, tougher penalties and access to justice.

Please accept YouTube cookies to play this video. By accepting you will be accessing content from YouTube, a service provided by an external third party.

YouTube privacy policy

If you accept this notice, your choice will be saved and the page will refresh.

Accept YouTube Content

The EU is, above all, a peace project. However, in a dynamic geopolitical situation, the EU can demonstrate its capacity to address external vulnerabilities in a robust manner – such as the unprecedented decision to mobilise funding for Member State weapons delivery to defend Ukraine against Russian aggression. In a debate on Tuesday afternoon, Members are due to discuss annual reports for 2022 on implementation of the common foreign and security policy, implementation of the common security and defence policy, and human rights and democracy in the world.

Russia’s war against Ukraine has added to worsening climate and energy crises, and increasingly assertive authoritarian regimes such as China and Iran are posing new risks to stability. In its 2022 report on the implementation of the common foreign and security policy (CFSP), Parliament’s Committee on Foreign Affairs (AFET) proposes that the EU redouble its efforts to strengthen international security through a military and defence union, by supporting qualified majority voting (QMV) in the Council on security issues, ensuring greater strategic autonomy, and stronger mitigation of climate change vulnerabilities.

The AFET committee takes up the challenges triggered by Russia’s aggression, to focus on EU defence initiatives in its 2022 report on the EU’s common security and defence policy. (CSDP). Noting the dramatic deterioration of the security situation resulting from Russia’s actions, the committee urges that the EU provide all necessary assistance to Ukraine. It welcomes the new initiatives taken in 2022, such as progress on the Strategic Compass, and looks forward to proposals for stronger EU defence financing. Not limited to European soil, the report calls for stronger security partnerships in Africa and in the maritime sphere, particularly the Indo-Pacific. It also welcomes the climate change and defence roadmap, and underlines the need for more investment in ‘green’ defence. Following up on the Conference on the Future of Europe, the report calls for further discussion of using QMV in the Council for CSDP matters.

The consequences, particularly for the most vulnerable, of Russia’s war, are highlighted in a response to the European Commission’s 2021 annual report on human rights and democracy in the world, which details the greatly deteriorating environment. The report from Parliament’s Subcommittee on Human Rights (DROI) for the Committee on Foreign Affairs (AFET) calls for a strong approach to war criminals and human rights violators in the context of the war in Ukraine. It also condemns the increasing threats to freedom of expression in many countries, and welcomes EU action to protect the most vulnerable, wherever they live. In this respect, the Human rights and democracy in the world, 2021 report is particularly in favour of integrating human rights values in trade agreements, and looks forward to greater cooperation between EU institutions on human rights issues.

Peace and security: interactive infographic on Peace and Security.

Food price inflation is another consequence of the war, as well as other factors including extreme weather, affecting all EU citizens. Parliament strongly supports the measures to address the impacts of the Russian invasion on energy and food prices in the EU, particularly those aimed at reducing dependence on imports and increasing domestic production. Parliament has also called for measures to shelter citizens from the worst inflation in commodity prices and has encouraged EU countries to consider taking tax measures to ease access to essential goods. Members are expected to put their questions to representatives of the European Commission on EU action to tackle food price inflation in Europe on Tuesday afternoon.

Please accept YouTube cookies to play this video. By accepting you will be accessing content from YouTube, a service provided by an external third party.

YouTube privacy policy

If you accept this notice, your choice will be saved and the page will refresh.

Accept YouTube Content

Stronger rules on waste shipments are needed to ensure that EU efforts to recycle waste do not lead to environmental degradation outside the EU. A report from Parliament’s Committee on Environment, Public Health and Food Safety (ENVI) considers that European Commission proposals to this end could be strengthened, not least on monitoring what actually happens to waste exported outside the EU. The committee would like to see an assessment of waste management in non-EU countries that takes labour standards into consideration, as well as an end to EU exports of plastic waste. Members are expected to debate the report on Monday evening, with a subsequent vote setting Parliament’s position for negotiations on EU rules on waste shipments with the Council.

Corruption is a major challenge for the EU – all Member States are affected by the problem to some extent – and this exposure to organised crime, undetected fraud and high-level corruption can seriously harm the EU’s budget. Combating fraud and protecting the EU’s financial interests is therefore crucial. Members are due to debate a Committee on Budgetary Control (CONT) own-initiative report on these efforts, detailed in the European Commission’s 2021 annual report on the protection of the EU’s financial interests (known as the PIF report), on Wednesday afternoon. Noting the challenging context in 2021 due to the COVID‑19 pandemic, the CONT committee nevertheless underlines the need for timely parliamentary scrutiny of the spending of the extraordinary EU funds made available for the recovery.

While shell companies, or ‘shells’ (entities with no, or minimal, economic activity) may serve commercial or business functions, they are also used to evade taxes. In response to a European Commission proposal for an instrument to ‘unshell’ companies being used to abuse the tax system, Parliament is set to debate a Committee on Economic and Monetary Affairs (ECON) report on Monday evening. The report proposes lower gateway thresholds to prevent EU shell companies from benefiting from tax advantages, shorter deadlines to address rebuttals, and welcomes plans to review the rules to prevent misuse of shell entities for tax purposes after five years. The proposal requires unanimity in the Council, where negotiations are ongoing, following consultation of Parliament.

Parliament’s 14 vice-presidents replace the president in the discharge of his or her duties, among other duties, and sit as a Member of Parliament’s Bureau, responsible for financial, organisational and administrative decisions on Parliament’s functioning. On Wednesday lunchtime, Parliament will vote to elect a new vice-president, after voting last month to remove the vice-president subject to ongoing investigations by Belgian authorities for alleged wrongdoing.

European Parliament Plenary Session – January I, 2023 – agenda

• Ten issues to watch in 2023: https://www.youtube.com/playlist?list=PLPPfzoqPUImUT7HIcA7l34ieoAtU7GnWU
• Ten issues to watch in 2023
• State of play in the European Council in December 2022
• Priority dossiers under the Swedish European Council Presidency
• Thirtieth anniversary of the EU single market
• Revision of European Works Council Directive
• Report on the implementation of the common foreign and security policy (CFSP) in 2022
• Report on the EU’s common security and defence policy (CSDP) in 2022
• Human rights and democracy in the world, 2021
• Question time: Food price inflation
• Strengthening EU rules on waste shipments
• Protection of the EU’s financial interests and combating fraud: Annual report 2021
• Unshell – Rules to prevent misuse of shell entities for tax purposes
• Vacancy for a Parliament vice-president

Written by Krisztina Binder.

The European education area (EEA) is about promoting cooperation among European Union (EU) Member States to build more resilient and inclusive national education and training systems. The aim is also to improve access to quality education and lifelong learning for all across the EU.

EU leaders first endorsed the vision for a European education area at the Gothenburg Social Summit in 2017. Following the first initiatives, the overall approach to forming the EEA by 2025 was outlined in a 2020 European Commission communication and two 2021 Council of the EU resolutions.

On 18 November 2022, the Commission adopted its progress report on the achievement of the EEA by 2025. The report highlights the first results of the implementation of actions and reforms and points to some positive trends in education, such as the decreasing number of early school leavers and the rising tertiary educational attainment rate. It is estimated that overall EU spending on education and skills will triple between 2021 and 2027 compared to the previous budget period. However, warning signs suggest that more far-reaching, longer-term, efforts are needed to address inequalities in and improve the quality of education and training.

A mid-term review process informed by the Commission’s 2022 progress report will take place in 2023. In this context, an event with the European Parliament has also been scheduled. The Commission is expected to publish a comprehensive report on the achievement of the EEA in 2025.

While in its November 2021 resolution, Parliament expressed its belief that the EEA could and should play a unique role in improving access to and quality of education, it also underlined the need for a more holistic approach and suggested clear priorities and achievable targets for the actions. In its May 2022 resolution, Parliament welcomed the Commission proposals to develop a European approach to micro-credentials, individual learning accounts and learning for environmental sustainability as a step towards the EEA. These initiatives are considered an opportunity to make the possible benefits of the EEA more visible to European citizens.

Read the complete briefing on ‘Taking stock of progress towards the European education area‘ in the Think Tank pages of the European Parliament.

Written by Marcin Grajewski.

As Russia’s war on Ukraine has entered into its 11th month, Moscow’s forces have launched fierce attacks in the east of the country, hoping for gains after a series of retreats in the second half of 2022. In some of the most intense fighting since the invasion, Russia’s onslaught focused on the salt-mining town of Soledar, a stepping-stone in Moscow’s push to capture the entire Donbas region.

In the preceding weeks, Russia has been bombing Ukraine’s critical infrastructure, depriving many areas and people of electricity, heating and water supplies.

Ukraine is preparing to receive Patriot air defence missiles from the United States and Germany. Ukrainian troops were due soon to arrive in the United States to begin training on this advanced defence system.

Meanwhile, the EU has agreed to introduce a price cap for Russian oil at US$60 per barrel.

This note gathers links to the recent publications and commentaries from many international think tanks on Russia’s war on Ukraine. Earlier analyses of the war can be found in a previous edition of the ‘What Think Tanks are Thinking’ series.

Refugees must be central to the reconstruction of Ukraine
Brookings Institution, January 2023

European natural gas imports
Bruegel, January 2023

Germany must move past the crossroads
Carnegie Europe, January 2023

War in Ukraine bolstered EU solidarity: Will it last?
Centre for European Reform, January 2023

Expert insights: Russia and Ukraine
Clingendael, January 2023

The risk of ‘refugee fatigue’: Three ways European leaders can support Ukrainians fleeing the war
European Council on Foreign Relations, January 2023

Announcements of new military equipment for Ukraine: Day 315 of the war
Eastern Studies Centre, January 2023

L’Union européenne face à la guerre en Ukraine: La puissance libérale et ses limites
Fondation Robert Schumann, January 2023

Disinformation as a weapon of war: the case for prebunking
Friends of Europe, January 2023

The threat of war fatigue
German Marshall Fund, January 2023

In focus: Russian exports to the EU before the invasion of Ukraine
Hellenic Foundation for European and Foreign Policy, January 2023

Russian offensive campaign assessment
Institute for the Study of War, January 2023

The land war in Ukraine as winter takes hold
International Institute for Strategic Studies, January 2023

Belarus and Russia move to the next stage of integration
Polish Institute of International Affairs, January 2023

Ukraine and the new two war construct
Rand Corporation, January 2023

The myth of America’s Ukraine fatigue
Rand Corporation, January 2023

Proposals to seize Russian assets to rebuild Ukraine
Brookings Institution, December 2022

Supporting international accountability for Ukraine
Brookings Institution, December 2022

What lessons do past international efforts at rebuilding war-torn countries hold for organizing the reconstruction of Ukraine?
Brookings Institution, December 2022

The Russia-Ukraine war and its ramifications for Russia
Brookings Institution, December 2022

Ukraine is the victim: Negotiations should be Kyiv’s decision
Brookings Institution, December 2022

The impact of the Ukraine crisis on international trade
Bruegel, December 2022

Will the European Union price cap on Russian oil work?
Bruegel, December 2022

The war in Ukraine highlights European rifts
Carnegie Europe, December 2022

The risks of negotiating an end to the war in Ukraine
Carnegie Europe, December 2022

The $300 billion question: How to get Russia to pay for Ukraine’s reconstruction
Centre for European Policy Studies, December 2022

Feel free to talk about Ukraine, but don’t expect miracles
Centre for European Reform, December 2022

Now is not the time for Ukraine to negotiate
Centre for European Reform, December 2022

Are France and Germany wavering on Russia?
Centre for European Reform, December 2022

Open-source intelligence in Ukraine: Asset or liability?
Chatham House, December 2022

Russian imperial mindset must change for real victory
Chatham House, December 2022

Will an EU oil price cap limit Russian aggression?
Chatham House, December 2022

Putin and the Third Rome
Clingendael, December 2022

Three scenarios for the future of Russia-West relations
Clingendael, December 2022

The old is dying and the new cannot be born: A power audit of EU-Russia relations
Council on Foreign Relations, December 2022

Russia-proofing Europe
Council on Foreign Relations, December 2022

Aggression on trial: The tricky path towards prosecuting Russian war leaders
Council on Foreign Relations, December 2022

Russia’s response to Western oil sanctions
Eastern Studies Centre, December 2022

What news from the Ukrainian front: A net assessment
Egmont, December 2022

No security for Ukraine or Europe without a secure Black Sea and Mediterranean
Egmont, December 2022

Helping Ukraine survive the winter is a life-or-death imperative
European Policy Centre, December 2022

Les armes livrées à l’Ukraine depuis janvier 2022. Base de données et fiche d’information
Groupe de Recherche et d’Information sur la Paix et la Sécurité, December 2022

Les Kadyrovtsy en Ukraine: les limites de ‘l’arme psychologique’ de Poutine
Groupe de Recherche et d’Information sur la Paix et la Sécurité, December 2022

Population displacements in the Ukraine War: The challenge of first humanitarian assistance
Hellenic Foundation for European and Foreign Policy, December 2022

10 conflicts to watch in 2023
International Crisis Group, December 2022

Pour l’Ukraine: Les yeux ouverts
Institut français des relations internationales, December 2022

Soviet history shapes African attitudes towards the Ukraine War
Italian Institute for International Political Studies, December 2022

Ukraine: After winter, spring?
Italian Institute for International Political Studies, December 2022

EU foreign policy integration at times of war: From short-term responses to long-term solutions
Istituto Affari Internazionali, December 2022

The Ukrainian conflict and the energy crisis: Sustaining the energy transition
Istituto Affari Internazionali, December 2022

The EU’s latest bargain with Hungary’s Orban unlocks aid to Ukraine
 Peterson Institute for International Economics, December 2022

Russia’s war on Ukraine: A sanctions timeline
Peterson Institute for International Economics, December 2022

Zelensky visits the U.S. to rally support
Polish Institute of International Affairs, December 2022

Russian attacks may prompt increased refugee flows from Ukraine
Polish Institute of International Affairs, December 2022

EU development cooperation policy faces challenges amid the war in Ukraine
Polish Institute of International Affairs, December 2022

Responding to a limited Russian attack on NATO during the Ukraine war
Rand Corporation, December 2022

The trouble with Russian blacklisting
Rand Corporation, December 2022

The attack on Ukraine and the militarisation of Russian foreign and domestic policy
Stiftung Wissenschaft und Politik, December 2022

Read the complete briefing on ‘Latest on Russia’s war on Ukraine‘ in the Think Tank pages of the European Parliament.

Written by Angelos Delivorias.

This is the seventh edition of an annual EPRS publication aimed at identifying and framing some of the key issues and policy areas that have the potential to feature prominently in public debate and on the political agenda of the European Union over the coming year.
The topics analysed encompass the 2024 European elections, budgeting in times of crises and war, lessons for public investment in the EU from the EU recovery instrument, the fiscal and monetary policy mix, climate
and socio-economic tipping points, the impact of increasing fuel prices on transport, cyber-resilience in the EU, protecting media freedom and journalists, the future of Russia, and geoeconomics in an age of empires

For 30 years after the end of the Cold War, the US was the global military and economic hegemon. As the EU widened and deepened, and great powers such as Russia and China, but also emerging middle powers such as Brazil, India, and Turkey, used economic means to increase their global influence and pursue geopolitical aims, scholars argued that the world was becoming multipolar. The past decade, however, marked the limits of multilateralism (and need for reform), leaving room to growing power rivalry. Countries with regional or great power ambitions have used soft power, but also threats and the use of force, to alter the status quo in their favour. This brought supply chains, critical minerals and great power politics to the centre of conversations, and led some analysts and politicians to support the idea that the world has entered a ‘new Age of Empires’. The competition for power deriving from access to materials and influence through investment and economic advantage becomes particularly striking when narrowing the focus to regions of overlapping involvement of major and middle powers with aspirations of expanding influence. To illustrate this, it is interesting to compare the strategies of three different countries towards Africa, a key partner of the EU and a continent undergoing great changes and with great potential for growth, because of its critical raw materials and the opportunities it presents for infrastructure investments, as well as its vulnerability to food and economic crises. 

China has been Africa’s largest trading partner for 12 years and is its fourth-biggest investor. China’s trade with Africa, limited until the millennium, began increasing substantially around 2005 and has kept increasing ever since, reaching US$113 billion in exports and US$78 billion in imports in 2019. In 2019, total Chinese foreign direct investment (FDI) in Africa amounted to US$44 billion (vs US (the top investor) FDI of US$78 billion). One third of Chinese FDI in Africa is channelled to infrastructure and construction, while one fourth goes to mining and extraction of raw materials. Similarly, since the early 2000s, China has emerged as Africa’s largest bilateral lender (62 % of African bilateral debt). Chinese credits to Africa amounted to US$148 billion in 2019, with US$44 billion for investments in infrastructure, US$36 billion to energy, and US$18 billion to mining and extraction. These loans have helped finance large-scale investments but have also resulted in the build-up of debt-service burdens. They also contain clauses that make debt less transparent, making debt estimation, renegotiation and restructuring more difficult. Through its relations with Africa, China aims at accessing the continent’s natural resources, markets to export its manufactured goods, and allies in the diplomatic isolation of Taiwan. Its activities in Africa prioritise economic over political and security interests. Nonetheless, to support its interests, China has also offered military and law-enforcement assistance, and established a naval base in Djibouti. Xi Jinping’s third term should contribute to maintaining the trend. At the same time, the slowing down of the Chinese economy as a result of COVID-19, and the increasing tensions between the US and China may change the Chinese strategy. Similarly, the opaqueness of some Chinese loan deals with African governments and labour issues on the ground may increase African countries’ reticence towards increased ties.

If the 1990s post-Soviet turmoil ended many of Russia’s global ambitions, including in Africa, recent years have seen renewed Russian interest in the continent. Since 2010, Moscow’s strategy and activities have pursued the aim of strengthening its position in the intensifying struggle over access to commodities, transit routes and markets, by developing infrastructure connecting different regions and forging diplomatic and economic links across different continents. Efforts already intensified in the middle of the decade and culminated in 2019 with Russia’s co-hosting (with Egypt) of the inaugural Russia-Africa summit. Russia has modest trade with Africa, (US$20 billion per year), which is heavily imbalanced toward Russian exports of arms and grain (Russia controls 49 % of the overall arms market), and import of minerals, diamonds and oil contracts. Russia has also attempted to negotiate nuclear power deals with several African countries (including Egypt, Nigeria, Ghana and Kenya). Beyond the supply of weapons, Russia is involved militarily in Africa, through its military instructors, its private military companies such as the Wagner group, and through the role played by its navy and air force (deployments, military exercises, basing agreements). While the stated aim is to protect strategic resources and transit routes, there are also allegations (especially for private groups) that they also engage in smuggling and transnational crime. The country also uses credit policy channels (debt write-offs, export credits, credit from its state-owned companies, as well as unpaid USSR claims to African countries it inherited). Going forward, it is difficult to say whether the presence of Russia in Africa will grow or diminish. On the one hand, 25 African states chose not to condemn Russia’s invasion of Ukraine, acknowledging historic ties with the Soviet Union and the Russian presence on the continent. On the other hand, the fallout of food and energy inflation may change the perception of some African countries. Lastly, while scenarios for a post-conflict Russia are still unclear (see issue 9: Russia, quo vadis?), its strategy may change as a result of the significant blow to its economy and the evolution in public opinion, following its invasion of Ukraine.

The primary motivation of Turkey, an emerging middle power, for stronger relations with African countries is economic. Africa has natural resources that Turkey needs for its manufacturing and industrial sectors, including oil and gas. In that context, trade has grown from US$5.4 billion in 2003 to US$25.3 billion in 2021, and Turkey’s president promised in 2021 to double that amount. FDI has similarly increased from US$100 million in 2003 to US$6 500 million in 2021. To further increase trade and to counter the influence on the continent of the Gülen movement, accused of being behind the 2016 failed coup attempt in Turkey, the country also tries to expand Turkish cultural-religious influence on the continent, notably by investing a lot in education projects. Aside from trade and investment, Turkey uses soft power instruments such as humanitarian aid and development assistance programs (e.g. Turkish Red Crescent). Lastly, in 2017, Turkey opened its first military base in Africa, in Somalia. Turkey benefits from the fact that, contrary to some EU countries, it has no colonial past haunting its relations with Africa; in contrast with China, it has not been accused of debt trap diplomacy; and contrary to Russia, it maintains a pro-sovereignty narrative, which resonates in the area. Against possible expansion is the country’s economic crisis. Also, the presidential elections scheduled for June 2023 may result in a change in strategy.

In the aforementioned context, the EU, for which multilateralism is both a foundational principle and part of strategic operational guidance, has positioned itself in Africa through several initiatives, including the European Peace Facility and the Global Gateway strategy, which will mobilise up to €300 billion of investment (half of which has been pledged to Africa) in strategic sectors up to 2027. To maximise results on the continent, it has suggested using the Global Gateway to mobilise finance and tackle the root causes of food insecurity, merging the strategy with the European Green Deal, to mutually reinforce them, or considering debt-for-climate swaps with African countries.

The European Parliament has expressed its concern that, in many areas, Africa has become a new arena of great power competition. It has criticised human rights violations by private military and security companies in Africa, particularly the Wagner group. It called for human rights and the environment to be preserved in fossil fuels projects, stressed the benefits of multilateralism and concerted action at international level, and called for increased investment in Africa to realise the potential for EU-Africa partnership in agriculture and the environment, economic development and sustainable and inclusive growth.

  

Read the complete in-depth analysis on ‘Ten issues to watch in 2023‘ in the Think Tank pages of the European Parliament.

Written by Anna Caprile.

This is the seventh edition of an annual EPRS publication aimed at identifying and framing some of the key issues and policy areas that have the potential to feature prominently in public debate and on the political agenda of the European Union over the coming year.
The topics analysed encompass the 2024 European elections, budgeting in times of crises and war, lessons for public investment in the EU from the EU recovery instrument, the fiscal and monetary policy mix, climate
and socio-economic tipping points, the impact of increasing fuel prices on transport, cyber-resilience in the EU, protecting media freedom and journalists, the future of Russia, and geoeconomics in an age of empires

Russia’s unprovoked invasion of Ukraine has shaken the geopolitical foundations of Europe, opening a colossal security and identity rift in the Eurasian space. Its outcome will shape Europe’s and Russia’s futures, in seemingly drastically divergent directions. In 2023 and beyond, the EU will have consequential choices to make, which will determine when and how these paths converge again, no matter how difficult this might seem today.

The war seen from Moscow: An evolving narrative

The war Russia is fighting now is not the war the Kremlin prepared for. The ‘special operation’ in Ukraine, started on 24 February 2022, was planned as a necessary intervention to ‘fix’, at last, the ‘Ukrainian issue’ – a permanent source of trouble for Moscow practically since the auto-dissolution of the Soviet Union in 1991. As 2023 starts, nothing has gone ‘according to plan’ for the Kremlin, and the Russian army has suffered a series of humiliating defeats, to which Putin has responded by doubling down: mobilisation of 300 000 additional men, illegal annexation of 15 % of Ukrainian territory, and the less-than-subtle threat to resort to nuclear weapons. The Kremlin has changed the war narrative accordingly: it is no longer an intervention against a ‘puppet-Nazi’ government; it has become an existential fight against the ‘imperialist’ West and its attempts to ‘destroy Russia’. ‘The goal of that part of the West is to weaken, divide and ultimately destroy our country’ were Putin’s opening words at the solemn ceremony of the illegal incorporation of the four annexed regions, on 21 September 2022, addressing the whole Russian nomenclature.

The response of the Russian public has also evolved, under brutal suppression of anti-war movements and an increasingly controlled information environment. Levada Centre opinion polls, so far considered reliable, show majority support for the Russian army, but with growing concerns and an overwhelmingly pessimistic view of the future amongst Russians who have not fled the country. Most consequently, above the noise of the Kremlin’s professional pundits, there seems to be a decisive shift amongst influential Russian intellectual elites, including those who initially condemned the invasion, towards the belief that the vital interest of the Russian state are now at stake. As a showcase, the article published in May 2022 by Dmitri Trenin, director of the Carnegie Moscow Centre until early 2022, and now member of the Russian International Affairs Council (RIAC): ‘How Russia must reinvent itself to defeat the West ‘hybrid war’: Russia’s very existence is under threat.‘

Russia next: The way backward?

The retreat of the Russian army from Kherson, the only Ukrainian provincial capital they controlled, and allegedly part of the Russian Federation after the illegal annexation, is a crucial moment in the war. Different military scenarios are in view, with momentous decisions ahead for all parties. Yet, no matter how the conflict evolves, the path Russia has set itself appears dramatically clear already. The Russia that will emerge from this conflict, even if it manages to obtain something that it can depict as a victory at home, will be economically, militarily, and geopolitically weaker. Economically, the cumulative effect of the unprecedented sanctions is starting to mount, decoupling Russia from international finance, foreign investment and high technology components. The exodus of highly educated professionals has moved a vibrant part of the economy away, with GDP declining 3.2 % in 2022 and a similar forecast for 2023. With the progressive decoupling of EU countries from Russian oil and gas, Putin is turning towards other markets, such as China and India, where he has less negotiation space, to preserve his main source of revenue. Militarily, Russia has so far suffered an estimated 100 000 casualties, depriving itself of its best units and revealing its extraordinary weaknesses, and consumed a large arsenal of costly weaponry, difficult to replenish under the sanctions regime. Geopolitically, Russia has achieved the opposite of the declared objectives: NATO will become larger and closer to Russian borders with the incorporation of Sweden and Finland, Ukraine’s national identity has been reinforced and its European aspirations, alongside Moldova’s and Georgia’s, have been firmly consolidated. Meanwhile, Russia is rapidly losing space in what it considered a safe sphere of influence in the Southern Caucasus and Central Asia. Internationally, Russia finds itself increasingly cornered with the status of a pariah state: self-excluded from the Council of Europe, banned from cultural and sports events, condemned and held accountable by the UN General Assembly, designated a state sponsor of terrorism by the European Parliament, following similar resolutions by several EU national parliaments. The G20 meeting in Indonesia was a resounding diplomatic blow for Russia, which will find itself increasingly dwarfed by its alleged regional partner, China. The challenges ahead for the Kremlin are multiple, mounting and feeding each other. The immobility until 2036, which Putin assured for himself with the 2020 constitutional amendments, is less sure than before, and speculation on possible scenarios multiply.

Under a first scenario, already under way now, Putin’s regime evolves into a ‘boosted’ version of itself, towards an increasingly entrenched over-authoritarian, over-centralised, semi-totalitarian regime. Ever-harder political repression and, possibly, the full application of martial law allow federal and regional governments to meet war requirements, including a new mobilisation wave. In parallel, various existing indoctrination programmes, especially addressed to young people, would be accelerated and enlarged. Internal think-tanks have already anticipated a blueprint with different development models for this scenario, under self-explanatory titles: the most promising, according to the authors, appears to be ‘USSR 2.0’; the most controversial, ‘Nation Z’. Stretching further what is already an over-centralised and over-authoritarian regime could lead, however, to paralysis in Kremlin decision-making, with fatal consequences, especially on the battlefield. This leads to a second scenario:the meltdown. An accumulation of military setbacks and crises, and a growing sense of abandonment by disenfranchised groups of population and regions, would erode both regional and economic elites’ support, as well as popular confidence in the current regime, setting it in the direction of collapse. The outcome may be very different, also depending on the situation on the battlefield. The regime could try to avoid its collapse by replacing Putin with a new figure with more political space who could re-conduct Russia out of the impasse – through a timely manoeuvre blessed by the security services, either with Putin’s consent or on grounds of alleged or real Putin health problems. 2024 presidential elections, should they not be postponed under martial law, to avoid a Belarus-type scenario, could be the chosen moment for a change of ‘roof’, keeping safe the very same power elites under an appearance of legality. Putin’s replacement may, however, prove impossible, either because too many different clashing interests would block each other, or because by that time the war would have become untenable. The meltdown could then degenerate into a period of ungovernable chaos, where the para-military actors now boosted by the Kremlin (such as Yevgueniy Prigozhin and his Wagner group, and Ramzan Kadyrov’s Chechen militias), would have a reigning hand. From there onwards, the space for speculation would open up widely: it could, finally, be the moment for a true regime change, perhaps around well-known opposition leaders such as Alexey Navalny. However, a power vacuum could also bring the rise of far-right movements, increasingly empowered under the war rhetoric. And it could also lead, perhaps simultaneously, to the still unlikely, but extremely dangerous, fragmentation of the Russian Federation. Some analyst already see Russia as the next failed state. Whatever scenario unfolds, it will probably emerge, at least, as a failed empire.   

Read the complete in-depth analysis on ‘Ten issues to watch in 2023‘ in the Think Tank pages of the European Parliament.

Written by Maria Diaz Crego.

This is the seventh edition of an annual EPRS publication aimed at identifying and framing some of the key issues and policy areas that have the potential to feature prominently in public debate and on the political agenda of the European Union over the coming year.
The topics analysed encompass the 2024 European elections, budgeting in times of crises and war, lessons for public investment in the EU from the EU recovery instrument, the fiscal and monetary policy mix, climate
and socio-economic tipping points, the impact of increasing fuel prices on transport, cyber-resilience in the EU, protecting media freedom and journalists, the future of Russia, and geoeconomics in an age of empires

The year 2023 is expected to be marked by the adoption of innovative EU legislative proposals in the area of media freedom and pluralism, notably the anti-SLAPPs directive and the European media freedom act. The focus of EU institutions in this area in the run-up for the 2024 European elections has to be linked to the key role media play in contemporary democracies.

Media freedom and pluralism, entrenched as fundamental rights in both the Charter of Fundamental Rights of the EU and the European Convention on Human Rights, are indissociable from democracy as they protect the pluralism, tolerance and broadmindedness without which democratic societies cannot flourish. Media not only provide the information that citizens need to make sound political choices but they also play other important roles, such as: i) acting as ‘watchdogs’ of our democracies and increasing the accountability of our representatives; ii) providing analysis of what is happening and helping citizens to understand an increasingly complex world; iii) boosting inclusiveness and making the voices of minorities heard; and iv) acting as a public forum for dialogue among citizens and groups with diverse points of view.

For media to play an effective role in a democratic society, citizens must have ‘access to a variety of information sources, opinion, voices etc. in order to form their opinion without the undue influence of one dominant opinion-forming power’, as highlighted by the European Commission. Past and current battles for control of media outlets clearly show how powerful media can be when it comes to shaping the views of citizens, and how they can be used to ensure the survival of a specific regime by extolling its achievements and reducing critical comments to a minimum.

Figure 6 – Media freedom and pluralism in the EU

No European Union Member State is free from risks to media freedom and pluralism, although the extent and gravity of those risks varies greatly across Europe, as confirmed by the World Press Freedom index, the Media Pluralism Monitor and the Commission rule of law annual reports (see Figure 6). The 2022 editions of the latter two show a negative shift as regards the journalistic profession, due to an increase in the number of threats to journalists (two journalists were murdered in the EU in 2021, whereas none were in 2020) and in the number of strategic lawsuits filed against media for providing information on issues of public interest (also known as ‘strategic lawsuits against public participation’ or SLAPPs). Both 2022 reports highlight concerns relating to the high concentration of news media on the continent, as well as to the need for further transparency of media ownership in many EU Member States. Editorial autonomy, understood as the protection against undue external interference in the editorial news‑making process, and the risk of political control, especially as regards public media, are also considered indicators of particular concern for the EU area in both 2022 reports.

Action in the media sector, originally aimed at establishing a single market for media services, is not new to the EU and dates back to the 1980s and the adoption of the Television without Borders Directive, repealed by the current Audiovisual Media Services Directive. However, the focus of attention of EU institutions in this particular area seems to be changing and partly moving towards a policy more centred on fundamental rights and the protection of media freedom and pluralism as a prerequisite for the proper democratic functioning of our institutions.

In this vein, as committed in the European democracy action plan (2020), in November 2021 the Commission adopted a legislative proposal on political advertising. The proposal aims to establish safeguards against manipulative techniques in political advertising and ensure the political pluralism that allows democratic institutions to thrive. It would establish common European rules on transparency of political advertising, requiring publishers to clearly label political advertisements as such and include information such as who is the sponsor, who paid, and how much, for it, and the election(s) or referendum(s) to which the advertisement is linked. In addition, the proposal would include a partial ban on the use of targeting and amplification techniques for political purposes, and prohibit those that involve the processing of sensitive personal data. The ban seeks to address therisks of fragmentation of the political debate and manipulation of voters raised by some techniques of political (micro‑)targeting frequently used in political campaigns.  

To address challenges faced by journalists to inform independently and safely on issues of public interest, and respond to growing concerns over the prevalence of SLAPPs within the EU, the Commission presented a proposal on 27 April 2022 for an anti-SLAPPs directive that aims to protect not only journalists, but also anyone exercising freedoms of expression and/or information as regards issues of public interest, from abusive and manifestly unfounded lawsuits. As the proposal would apply to civil SLAPP cases with a cross-border dimension only, it was issued together with a recommendation setting out guidance for Member States to take effective measures to address purely domestic SLAPP cases, including in the area of criminal or administrative law.  

In September 2022, the European Commission adopted a proposal for a European media freedom act that aims to set common European rules ensuring media freedom and pluralism in different areas. It would protect journalistic sources, and media and journalists from the use of surveillance technologies. Moreover, it would focus on media ownership transparency and the editorial independence of media providers providing news and current affairs content, by requiring them to inform about their direct and indirect ownership and imposing on them an obligation to establish internal safeguards geared at guaranteeing the independence of individual editorial decisions, once the editorial line of the media outlet has been defined. As the proposal would leave a wide margin of discretion to media providers as to the internal safeguards to put in place, it is accompanied by a recommendation setting out a catalogue of voluntary best practice to strengthen editorial independence. Finally, the proposal would also establish common rules for transparent and non-discriminatory allocation of state advertising to media and to ensure further independence of public media, among other things by requiring that their funding is adequate and stable and their governing board and head of management is appointed in a transparent and non-discriminatory manner and cannot be dismissed before the end of their term except in specific cases defined by national law. These legislative initiatives are all currently being analysed by the co-legislators. If approved, they would definitively shape the media ecosystem of Europe and the way media exercise their watchdog function for years to come.

Read the complete in-depth analysis on ‘Ten issues to watch in 2023‘ in the Think Tank pages of the European Parliament.

Written by Polona Car.

This is the seventh edition of an annual EPRS publication aimed at identifying and framing some of the key issues and policy areas that have the potential to feature prominently in public debate and on the political agenda of the European Union over the coming year.
The topics analysed encompass the 2024 European elections, budgeting in times of crises and war, lessons for public investment in the EU from the EU recovery instrument, the fiscal and monetary policy mix, climate
and socio-economic tipping points, the impact of increasing fuel prices on transport, cyber-resilience in the EU, protecting media freedom and journalists, the future of Russia, and geoeconomics in an age of empires

As cyber-attacks proliferate, 2023 is expected to see progress on several EU legislative and non-legislative proposals aimed at protecting infrastructure, connected devices, and the whole information and communications technology (ICT) supply chain to counter the wave of cyber-attacks.

A changing cybersecurity threat landscape

Russia’s war against Ukraine has put cyber-resilience in the spotlight. Russia’s aggression includes massive cyber-attacks on Ukraine but also on Ukraine’s partners in the EU. Even before the war, cyber-attacks were a great concern for the European private and public sectors (such as the cyber-attack against the German Bundestag in 2021). A ransomware attack occurred every 11 seconds in 2021, expected to accelerate to every 2 seconds by 2031, costing US$10.5 trillion annually by 2025. Cybercrime is the fastest-growing wealth transfer worldwide, inflicting increasing costs on the world economy with malicious actors becoming increasingly sophisticated. Rapid digital transformation, accelerated by the COVID-19 pandemic and geopolitical tensions, has increased the playing-field for cybercriminals. The 2022 ENISA report on the threat landscape in the EU revealed that 10 terabytes of data are stolen every month. Ransomware, which scores highest on the list of cyber-attacks in the EU, is followed closely by distributed denial of service (DDOS) attacks, with the largest ever DDoS attack in Europe recorded in July 2022. The Cisco annual internet report estimates that DDoS attacks will double from 7.9 million in 2018 to 15.4 million globally by 2023. Health service providers, pipelines, airports, ministries, hotel chains, banks and digital service providers are just a few examples of entities that have suffered from cyber-attacks over the past few years. Russia’s aggression against Ukraine is also provoking the rise of hacktivism and a surge in disinformation. Of particular concern are the growing capabilities of malicious actors, now using attacks against complete supply-chains.

Protecting the critical infrastructure

Especially disturbing are attacks against critical infrastructure such as energy, health and finance, which increasingly rely on IT, becoming extensively vulnerable to cyber-attacks. Russia’s hybrid approach, merging physical and cyber-attacks, has demonstrated that disruption of essential services is a realistic threat to the EU. For example, the attack on the satellite communication provider just one hour before Russia’s attack on Ukraine affected internet services and wind farms across Europe. The Directive on the Resilience of Critical Entities (CER), together with the revised Directive on the Security of Network and Information Systems (NIS2), respond directly to this challenge. However, the fast-evolving threat landscape, and incidents such as the cyber-attack against the Danish railway network in November 2022, demand accelerated implementation of the new legal framework. Hence, the Council adopted a recommendation in December 2022, to step up efforts aimed at protecting critical infrastructure, and foster inter- and intra-EU cooperation. In particular, it would urge Member States to implement measures under the 5G cybersecurity toolbox, considering the high dependency of essential services on 5G and its importance for the development of digital services. The subsequent EU policy on cyberdefence aims to increase the EU’s cyberdefence capabilities and synergies between military and civilian cyber communities. The connectivity of critical infrastructure will be provided by the infrastructure for resilience, interconnectivity and security by satellite (Iris²), a sovereign space-based secure connectivity system, to be functioning in orbit by 2024

Advancing operational capacity

NIS2 formally establishes the EU cyber-crises liaison organisation network (CyCLONe), rapid crisis-management coordination in case of large-scale cross-border cyber-incidents while the Joint Cyber Unit (JCU) ensures a coordinated response between civilian, law enforcement, diplomatic and cyberdefence communities, and should be fully implemented by 30 June 2023. EU cybersecurity capacity-building will be done in the framework of the European cybersecurity competence centre (ECCC), which is to become operational by March 2023. The centre aims to improve technological sovereignty through strategic cybersecurity investments. Together with the network of national coordination centres (NCCs), it will form the cybersecurity shield for the EU, powered by artificial intelligence (AI) and complemented by EU supercomputing infrastructure developed by the European high-performance computing joint undertaking. The first six quantum computers are expected to be available by the second half of 2023.

Protecting connected devices

Connected devices, such as home security applications, toys connected to the internet and smart cameras, expected to amount to three times in number the global population by 2023, have the potential to open the door to malicious actors and impact the whole supply chain, if hacked. To address this threat, the cyber resilience act (CRA) proposal would impose cybersecurity obligations on a very wide range of digital products before they are placed on the market. The proposal would impose high fines for non-compliance and ban products that do not abide by the rules. This could have an impact beyond EU borders, becoming an international reference for the cybersecurity of digital products. Intensive negotiations are expected on this proposal in 2023.

Protecting the supply chain

The October 2022 Council conclusions on ICT supply chain security should be materialised in the creation of the ICT supply chain security toolbox, to complement the coordinated supply chain risk assessment for ICT products under NIS2. The 5G security toolbox criteria could serve as an example when defining high-risk vendors – such as Huawei – for the security of ICT supply chains.

Progress is expected too on domain name systems (DNS) resolver (converting domain names such as www.name.eu into computer friendly IP-addresses, e.g. 192.168.2.1). A public European DNS resolver service (DNS4EU) should develop in 2023 as an alternative to public (non-EU) resolvers prevailing on the market, which would enhance the EU’s cybersecurity abilities and contribute to its digital sovereignty. We can also expect the finalisation of the EU certification schemes for cybersecurity of ICT products (EUCC) and for cloud services (EUCS), where it remains to be seen if disputed sovereignty requirements will be comprised in the scope of the latter.

Bridging the cybersecurity skills gap

The EU response to cyber-threats will depend immensely on having a sufficient and sufficiently trained cybersecurity workforce. The European cybersecurity skills framework (ECSF) will play an important role in defining the cybersecurity profession. The cybersecurity skills academy, which the European Commission has announced for the third quarter of 2023, could address the cybersecurity gap.

Read the complete in-depth analysis on ‘Ten issues to watch in 2023‘ in the Think Tank pages of the European Parliament.

Written by Monika Kiss.

This is the seventh edition of an annual EPRS publication aimed at identifying and framing some of the key issues and policy areas that have the potential to feature prominently in public debate and on the political agenda of the European Union over the coming year.
The topics analysed encompass the 2024 European elections, budgeting in times of crises and war, lessons for public investment in the EU from the EU recovery instrument, the fiscal and monetary policy mix, climate
and socio-economic tipping points, the impact of increasing fuel prices on transport, cyber-resilience in the EU, protecting media freedom and journalists, the future of Russia, and geoeconomics in an age of empires Increasing fuel prices Figure 5 – Price without taxes – EU weighted average

The war on Ukraine and the subsequent uncertainties and sanctions have caused shortages and disruption in supply of resources, including for petroleum products. Furthermore, the sixth EU sanctions package of 3 June 2022 introduced a partial ban on the import of oil and petroleum products from Russia. Russian oil imports into the EU fell from 2.5 million barrels per day (bpd) in January 2022 to 1.4 million bpd in October 2022. An EU ban on Russian crude oil imports became effective on 5 December 2022, and one on refined petroleum products will do so on 5 February 2023. As a consequence, the increase in prices of diesel, petrol (Euro-super 95), as well as liquefied petroleum gas (LPG) has been exceptionally fast. After the decreasing prices during the pandemic, the contrast was strong.

Transport, a sector already in transformation

Europe’s transport sector is transforming due to the decreasing use of fossil fuels and the increasing use of greener transport modes, encouraged through financial incentives in Member States, and EU initiatives and legislation with binding targets and deadlines. Most transport modes (road, air, sea) are reliant on petroleum products, Only rail has been electrified to a large degree in the EU. In road transport, around 40 % of cars depend on petrol, and about 20 % on diesel, while more than 95 % of trucks still rely on diesel. The share of energy from renewable sources used for transport in the EU increased from under 2 % in 2005 to 10.2 % in 2020. Meanwhile, policymakers are increasingly focussing on greening transportation. As outlined in the European Green Deal and enshrined in the European Climate Law, the EU aims to achieve climate neutrality by 2050, and the transport sector has an important role to play in this. The sustainable and smart mobility strategy, presented in December 2020, outlines how the EU transport system can achieve a green and digital transformation and become more resilient to future crises. It aims to reduce dependence on fossil fuels by 2030 and encourage alternative choices, such as the use of high speed railway and inland waterways. The fit for 55 package is a set of proposals on climate, energy, transport and taxation policies aimed at reducing net greenhouse gas emissions to at least 55 % by 2030, compared to 1990 levels. It also promotes the growth of the market for zero- and low-emission vehicles and aims for zero emissions from new cars by 2035. Furthermore, it proposes to extend carbon pricing to the aviation and maritime sectors.

The multifaceted impact of rising fossil fuel prices on transport

As most transport modes rely on the use of petroleum products, a rise in fossil fuel prices impacts several dimensions of the transport system.

Possible structural impacts are, for instance, changes in usage levels – users limiting or rationalising their usage, for example by abandoning, postponing or combining their trips. Operators might also reduce service frequency. Modal shifts can occur – part of the traffic can shift to a more energy efficient mode that suffers less from increasing petrol fuel prices, for instance road freight transport to rail or inland waterways. Air transport might also be significantly impaired after the increase by 70 % of jet fuel prices during the first 6 months of 2022 and the already low profit margins. This might lead to a shift towards rail or maritime. New network configurations in terms of gateways, hubs, routing, and corridors are also among the consequences. Rising fuel prices will also impact different parts of supply chains – procurement, manufacturing, distribution) and a reconfiguration of the whole chain might become necessary.

The impact also has a temporal dimension: while at first passengers (or companies) could simply absorb the higher costs by reducing usage, trimming their profits or cutting their spending in other areas, in a subsequent phase, there would be changes in commuting patterns (like ridesharing or carpooling), attempts to use public transport, rapid adoption of vehicles with high fuel efficiency, and a search for other transport alternatives. Concerning the transport of persons, increasing fuel prices can lead to higher transport prices, causing an additional burden to households and possibly transport poverty, unless this is compensated at regional or national level. Low-income households that own a car, and rural households spending a higher share of their income on transport fuels, are particularly impacted.

In the domain of freight transport, companies have the choice to work at a loss or to increase their prices to compensate. Price increases will also have an impact on transport services and the prices of the goods transported, which can lead to further inflation. In both passenger and freight transport, there is an increasing number of strikes of transport providers and workers in all transport modes and this tendency will most probably continue, leading to further disruptions.

Increasing fossil fuel prices can also have important side effects., for example shortages in the production of AdBlue, a liquid used in diesel vehicles to neutralise nitric-oxide emissions. Because its production is not profitable due to high gas prices, some manufacturers have already stopped producing it, which could lead to the standstill of a huge number of trucks, and consequently job losses and logistical problems.

Another question is whether the increase in fossil fuel prices will have a favourable impact on the speed of transition towards greener transport modes or the use of more renewable energy, and if it will lead to a reduction in greenhouse gas emissions. As the majority of greenhouse gas emissions from transport are carbon dioxide (CO2) emissions from the combustion of petroleum-based fuels, reduced consumption of fossil fuels as a result of increasing prices could in fact lead to lower emissions of greenhouse gases. This could have the result that emissions targets can be reached more quickly. Emissions can also be reduced through the use of higher shares of advanced biofuels and a more ambitious quota for renewable fuels of non-biological origin such as hydrogen. This is encouraged at EU level in the proposed revision of the Renewable Energy Directive and the REPowerEU plan, aiming for a higher renewable energy target.

The use of fuels produced using renewable sources of energy (such as electricity produced from solar or wind energy), and the use of biofuels is less costly and leads to lower emissions. Nevertheless, this can be a solution only in the long or medium term, as it requires technical adaptation, or even the construction of new types of engines. Recent research also shows that the use of e-fuels – fuels in gas or liquid form that are produced from renewable (solar or wind power, for example) or decarbonised electricity – such as e‑methane, e‑kerosene and e‑methanol, costs 47 % more than battery-electric vehicles. In the long run, however, technological developments will make it possible to reverse this tendency and to advance on the road to greener transport.

Read the complete in-depth analysis on ‘Ten issues to watch in 2023‘ in the Think Tank pages of the European Parliament.

Written by Gregor Erbach.

This is the seventh edition of an annual EPRS publication aimed at identifying and framing some of the key issues and policy areas that have the potential to feature prominently in public debate and on the political agenda of the European Union over the coming year.
The topics analysed encompass the 2024 European elections, budgeting in times of crises and war, lessons for public investment in the EU from the EU recovery instrument, the fiscal and monetary policy mix, climate
and socio-economic tipping points, the impact of increasing fuel prices on transport, cyber-resilience in the EU, protecting media freedom and journalists, the future of Russia, and geoeconomics in an age of empires Climate tipping points

Climate tipping points have received growing attention, in the wake of an international conference dedicated to the issue, and new research results on the likelihood of tipping points being reached under current trends.

A tipping point is the critical point in a situation, process, or system beyond which a significant and often unstoppable, but not necessarily abrupt, effect or change takes place. Climate tipping points were first identified by the Intergovernmental Panel on Climate Change (IPCC) in 2001 and further analysed in a 2008 research paper. The latest IPCC assessment report identified 15 potential tipping points, among them global monsoon, tropical and boreal forests, permafrost carbon and the Greenland and Antarctic ice sheets. The Greenland ice sheet is an element in the climate system with a tipping point: its stability depends on its height, which reaches up to 3 200 metres and helps maintain eternal snow on top. As soon as it loses height, it may enter an irreversible decline.

Figure 4 – Tipping points and global warming

Late 2022 research estimates the temperature rise needed to trigger these tipping points (see Figure 4), and concludes that seven tipping points are likely at global warming of 1.5 °C, of which five might already be reached at current levels of global warming. The presence of climate tipping points increases the economic costs that result from emitting a tonne of CO2 by around 25 %.

Tipping points are often associated with cascading impacts, where one impact leads to another. An example is the melting of the Arctic ice sheets leading to sea level rise, which in turn triggers population movements and economic disruption. Crossing a tipping point may also lead to reinforcing feedbacks, for example the melting of permafrost leading to the release of methane, a powerful greenhouse gas that reinforces global warming and causes further permafrost melting.

Socio-economic tipping points

Research on socio-economic tipping points finds that even gradual climate change may alter and disrupt socio-economic systems, leading to major economic costs, especially at a more local level. Socio-economic tipping points identified in this EU-funded research include climate induced agriculture and food shocks, migration from coastal areas due to extreme sea level rise or major climate impacts, energy supply shocks, transport disruption, large macroeconomic and financial market impacts, and the potential collapse of insurance markets from extreme weather risks. The World Meteorological Organization warns that higher temperatures and humidity during hot spells could lead to physiological tipping points that make outdoor human labour impossible without technical assistance in some regions.

Policy implications

To avoid the crossing of tipping points, efforts to contain global warming must be reinforced. Every fraction of a degree may be decisive, even if the lower 1.5 °C target of the Paris Agreement is likely to be breached. The 2022 emissions gap report projects a temperature rise of at least 2.4 °C even with full implementation of all national pledges, which would trigger multiple tipping points. The sobering outcome of the COP27 climate change conference has not changed that picture. In light of the limited effectiveness of the Paris Agreement, complementary cooperative approaches, such as climate clubs, are of increasing interest. However, certain social tipping points may make it harder to achieve consensus on climate action, namely the geopolitical crisis accelerated by the war on Ukraine, the erosion of social consensus by social and synthetic media, a shift from climate mitigation to adaptation driven by faster and larger than expected climate impacts, and the demographic crisis that increases state burdens, reduces productivity and creates intergenerational tensions.

Impacts on Europe
Europe would be directly affected by a collapse of the Greenland ice sheet, leading to sea level rise, the loss of Alpine glaciers, the loss of permafrost peatland in Svalbard and Scandinavia, a northward shift of boreal forests, and a collapse of the Atlantic meridional overturning circulation, an ocean current that transports warm water from the tropics to the North Atlantic. The latter would lead to less warming in Europe, but also to prolonged Mediterranean drying. Research indicates that European forests have already reached a tipping point around the year 2000, induced by a temperature increase as low as 0.5 degrees. This has reduced forests’ resilience to fire, windfall and pest outbreaks, potentially affecting 33.4 billion tonnes of forest biomass.

Large-scale removal of carbon from the atmosphere through nature-based and technological approaches will be critical to keeping global warming well below 2 °C, the upper target of the Paris Agreement. This requires innovative financing mechanisms, such as advance market commitments that were used successfully for the development of vaccines. Moreover, it may be prudent to initiate a research programme into controversial solar radiation management techniques, in order to understand their potential and their risks relative to the risks of reaching certain climate tipping points, and to address the associated governance issues.

Although knowledge on tipping points has improved, more research (recommended in Parliament’s 2019 resolution on the environmental action programme), with involvement of the IPCC, is needed to correctly assess the likelihood and possible impacts and create an early warning system, which the Parliament called for in its resolution on COP25. A broader knowledge base would facilitate smart decisions about potentially costly and disruptive adaptation options such as managed retreat from coastal areas. Experts on geopolitics recommend that governments and relevant institutions strengthen their risk assessment and act to prepare for and preferably prevent the worst-case scenarios. The EU supports tipping points research through Horizon Europe, and the Bezos Earth Fund awarded a £1 million (€1.15 million) grant for research into ‘positive tipping points’ in socio-economic systems that would help accelerate the transition to a climate-neutral economy.

Positive tipping points are already happening, for example the switch to electric vehicles enabled by lighter and cheaper batteries, public opinion and policy support. Positive tipping points in the energy system may be triggered by the ever-falling cost of renewable energy together with advances in energy storage. Researchers apply system analysis to identify effective policy interventions by various agents that would enable a cascade of positive changes to rapidly and profoundly transform technology, economy and society, instead of improving incrementally.

Read the complete in-depth analysis on ‘Ten issues to watch in 2023‘ in the Think Tank pages of the European Parliament.

Written by Martin Höflmayr.

This is the seventh edition of an annual EPRS publication aimed at identifying and framing some of the key issues and policy areas that have the potential to feature prominently in public debate and on the political agenda of the European Union over the coming year.
The topics analysed encompass the 2024 European elections, budgeting in times of crises and war, lessons for public investment in the EU from the EU recovery instrument, the fiscal and monetary policy mix, climate
and socio-economic tipping points, the impact of increasing fuel prices on transport, cyber-resilience in the EU, protecting media freedom and journalists, the future of Russia, and geoeconomics in an age of empires

The Russian war of aggression against Ukraine has drastically reversed the dynamics of the unexpectedly strong economic recovery from the COVID-19 pandemic in Europe. Supported by decisive fiscal and monetary policies, the EU economy was already back to its pre-crisis output levels in the third quarter of 2021, though with large differences across Member States. The economic growth dynamic extended to the second quarter of 2022, firmly entrenched in a monetary and fiscal policy mix aligned in their goal to support the recovery. In 2023, the policy objectives of fiscal and monetary policy, like a Janus face with sharply contrasting characteristics, face significant trade-offs between taming inflation and mitigating the impact of high energy prices.

Why did we get two opposing faces? Figure 2 – Gross domestic product (GDP) growth in the EU Figure 3 – Change in annual inflation by item in the ECB inflation product basket

Alongside the humanitarian impact of the war, the EU has been hit by a substantial shock in import prices, in particular energy prices, which has severely dented the economic outlook since early 2022, prompting concerns about more persistent inflation, a cost-of-living crisis and public debt sustainability. As a result, since early 2022, economic forecasts have seen significant downward revisions (Figure 2). Analysis by the IMF serves as a stark illustration of the EU’s severe economic losses from the war. In 2023, Europe’s output will be nearly half a trillion euros lower than pre-war forecasts. According to the latest Commission forecast, the EU is expected to experience a ‘technical recession‘, i.e. two consecutive quarters of shrinking output. This forecast crucially hinges on the assumption that the EU can avoid crippling gas shortages, thus significantly tilted to the downside. Moreover, inflation has increased to record high levels worldwide so that central banks across the globe entered a synchronised monetary policy tightening cycle. In the EU, energy prices have been the main contributor to inflation, especially gas and electricity tariffs. However, price pressures are starting to translate into broader price dynamics as the share of items in the product basket above 2 % – the central banks’ inflation target – has increased significantly (Figure 3). At the same time, the current economic environment is underpinned by the strongest labour market in decades. Unemployment rates are at record low levels, while participation and employment rates are at record highs. Despite the looming recession, unemployment is expected to increase only marginally due to high vacancy rates and labour shortages.

How to synchronise contradictory voices

Against this backdrop of trend reversals, there is an increasing wedge between fiscal and monetary policy objectives. During the pandemic, both fiscal and monetary policies worked in tandem and complemented each other. In an environment of slowing growth, high inflation, elevated post-pandemic debt levels and eroding real incomes, fiscal and monetary objectives are diverging.

On the back of rising energy bills, eroding the purchasing power of households and companies, governments are trying to cushion the impact on real incomes and investment activity. The resulting expansionary fiscal policies, maintaining demand through measures that mitigate the impact of high energy prices, could undermine the disinflationary policy currently being conducted by central banks to bring down inflation through reducing support for demand. Monetary authorities could therefore be forced to increase policy rates even further at the cost of larger output and employment losses. According to the autumn forecast of the European Commission, Member States’ fiscal policy measures to mitigate the social and economic impact of high energy prices will amount to 1.2 % of gross domestic product (GDP) in 2022, and 1 % in 2023. So far, such measures have been implemented in a timely manner, however more than 70 % of them were untargeted. Resilient labour market conditions allow governments to focus on targeted cost-of-living policy interventions, as compensating for higher inflation is supporting wage growth while risks of a wage-price spiral have been contained so far. Furthermore, reducing energy dependence on imported fossil fuels can be expected to exert upward pressure on prices of a broad range of products during the transition period. Therefore, fiscal restraint can help to tackle inflation, and, as argued by the ECB, fiscal measures need to be temporary and tailored to the most vulnerable households and businesses, in order for fiscal policy not to stoke inflation.

The monetary side in the policy mix centres around price stability. To bring inflation back from record high levels to the 2 % target, the ECB has so far followed the synchronised tightening cycle of central banks around the world. On the one hand, it tackled inflation by front-loading four consecutive policy rate increases by a cumulative 2.5 percentage points; and on the other hand, the ECB countered fragmentation concerns by creating a new policy tool, the Transmission Protection Instrument. However, evidence suggests that simultaneous central bank measures change the trade-off between the growth and inflation impact of monetary policy tightening, as the negative impact on GDP is larger but the impact on inflation is smaller, due to the muted foreign exchange rate channel. Forceful monetary policy tightening would also have an effect on financial conditions. Rising borrowing costs could amplify existing financial vulnerabilities in the corporate sector. Increasing risk premia of sovereign debt and debt spreads across EU countries could raise the risk of financial fragmentation that has given rise to concerns about fiscal dominance. The policy dichotomy is further complicated by the fact that it is, as yet, unclear whether the supply shocks have durably depressed potential output. Evidence suggests that destroying demand also affects supply through scarring effects. Therefore, excessive monetary tightening could result in a permanent loss of output as productive capacity adjusts to persistently lower demand. To preserve productive capacity in a contractionary economic environment is the balancing act of targeted energy and fiscal policies on one side and a sufficiently large withdrawal of monetary policy accommodation on the other side. Thus, monetary authorities must tread a narrow path between taming inflation and averting an excessive decline in demand.

The economic outlook is heavily influenced by the evolution of the geopolitical situation and its reverberations in commodity markets. The impacts on growth and inflation are in opposite directions, which significantly complicates policy coordination. The challenges from COVID and the war on Ukraine pose formidable challenges to reconciling fiscal and monetary policy trade-offs.

Read the complete in-depth analysis on ‘Ten issues to watch in 2023‘ in the Think Tank pages of the European Parliament.

Written by Marin Mileusnic.

This is the seventh edition of an annual EPRS publication aimed at identifying and framing some of the key issues and policy areas that have the potential to feature prominently in public debate and on the political agenda of the European Union over the coming year.
The topics analysed encompass the 2024 European elections, budgeting in times of crises and war, lessons for public investment in the EU from the EU recovery instrument, the fiscal and monetary policy mix, climate
and socio-economic tipping points, the impact of increasing fuel prices on transport, cyber-resilience in the EU, protecting media freedom and journalists, the future of Russia, and geoeconomics in an age of empires

The swift execution of the Recovery and Resilience Facility (RRF) will remain vital in 2023, while the constant geopolitical and economic challenges will require new resources. These efforts will be supported by the revision of the EU fiscal framework, which is one of the major policy initiatives scheduled for 2023.

Lessons learned

With over 19 % of its resources disbursed, the implementation of the RRF is well under way, and the Member States are utilising the available funds to make their economies more resilient and future-proof by executing reforms and investments in key areas of European and national interest. The focus on the twin transitions has been particularly important, and the cumulative expenditure planning in all national recovery and resilience plans (NRRPs) exceeds the minimum thresholds for green and digital measures of 37 % and 20 % respectively. With regard to performance, 7 % of all milestones and targets embedded in the plans have been fulfilled thus far. Direct management of the facility by the European Commission in the implementation phase could reduce administrative burden and bureaucracy linked to the disbursement of funds, and thus improve overall effectiveness. Nevertheless, the audit of the only RRF payment in 2021 revealed weaknesses in the Commission’s assessment of milestones and targets linked to it. This was possibly due to the first-time application of the performance-based approach to such vast spending. The ongoing discharge procedure for the 2021 EU budget is examining the initial implementation of the RRF.

By combining the significant financial support with the implementation of measures established in the NRRPs, the RRF has the potential to effectively address key European as well as country-specific challenges and, as some analyses find, reduce the public investment gap. While a number of Member States had already witnessed under-investment trends even before 2008, the financial and economic crisis affected the EU as a whole and further amplified the investment lacuna. The average share of RRF grants in the overall investment by Member States is 14 %, which makes the significant additional growth projections realistic. Investments to address the challenges of the pandemic have been further facilitated through additional RRF loans, as well as the Stability and Growth Pact (SGP), namely the temporary departure from the usual budgetary requirements. Contrary to the low investment outcomes after the financial crisis, Member States managed to sustain public investment, without significant-pressures from breaching EU fiscal rules and having to endure the corrective procedures and market discipline.

Ongoing and new challenges

The RRF continues to be pertinent as there are outstanding structural challenges in the Member States that still need to be addressed, and substantial resources to be disbursed. Swift implementation of the planned measures enshrined in the individual NRRPs in the course of 2023 therefore remains vital. Notwithstanding the well-timed RRF funding to recover from the pandemic, a full economic recovery is already being hindered by new challenges, thus reaching a state of, what some analysts have dubbed as, ‘permacrisis‘. In particular, the energy crisis, caused by Russia’s war on Ukraine, exposed the EU’s considerable dependence on Russian fossil fuels. To differentiate the energy mix of the Member States, deal with high-energy prices and accelerate the green transition, the Commission proposed the REPowerEU plan under which part of the RRF is to be repurposed and its grant allocation increased by €20 billion. However, the energy challenges are expected to remain acute in the medium to long run and therefore surpass both the financing potential and the life span of the Facility, set to expire in 2026. The proposed grant envelope under REPowerEU, in addition to almost 18 % of the existing national allocations devoted to energy measures in all NRRPs, remains a relatively small source of funding compared to the private and public investment needs of the EU energy sector, which are estimated at €390 billion per year. The short horizon for investment and reform is also posing challenges both for the implementation of projects of strategic weight, which may need longer time, and for national authorities to run them properly.

Moreover, with the amassed €600 billion devoted to Green Deal actions, NGEU and the 2021-2027 multiannual financial framework (MFF) are an important source of funding, but still represent only a fraction of what is needed to fulfil all the climate goals for carbon neutrality of the EU by 2050. The RFF may also only partly deliver on the ambitious digital transformation set for 2030, due to the above-noted size and lifetime limitations. Besides this, there has been a relatively slow uptake of the RRF loans (around €165 billion out of €386 billion). One reason is that loan-based investment increases national public debt and can make countries non-compliant with the EU fiscal rules, especially after the deactivation of the general escape clause at the end of 2023. Another reason is reflected in better borrowing conditions for some countries compared to those linked to the RRF loans. Nonetheless, repayable RRF support can still be requested until the end of August 2023, while REPowerEU will put the allocations still available for loans at the disposal of those Member States that wish to pursue additional investment in energy measures.

Keeping investment in the EU alive

In the years to come, the investment needs in the EU will remain huge, predominantly in relation to the twin transitions, but also in the areas of common defence, security and other fields of interest for EU sovereignty and strategic autonomy. To address these long-term challenges, the EU economic governance framework will face revision in 2023. The revamped fiscal rules are to draw from the RRF model, particularly the positive interplay between investments and reforms and financing, to enable the Member States to stay on higher investment and growth paths while remaining fiscally prudent. The review should also support countercyclical fiscal policies for countries to build capital buffers during good times and utilise them during times of recession. In addition to this, a possible revision of the MFF will be discussed in 2023. In a December 2022 resolution, the European Parliament deemed the multiannual budget overstretched in financing various initiatives, and underlined that it should be made bigger and more flexible in order to ensure appropriate investment levels in the EU and to endure future crises. Such a budget should shy away from the juste retour principle. The Parliament is also advocating the introduction of new own resources needed to repay the recovery instrument and to finance common priorities.

Providing strategic sector-specific common public goods will require considerable resources and time for implementation. Some analyses stress that the RRF model, underpinned by common debt, could be continued to achieve these objectives. Still, the future instrument should be made larger and permanent, and continue to strengthen national ownership based on common EU priorities (as is the case with the current RRF). According to the International Monetary Fund, the size of such a fiscal capacity should range between 0.5 % and 1 % of EU gross domestic product (GDP) on a yearly basis. The investment capacity at EU level should be additional to national funding, as it would address challenges of a cross-border nature, thus being more effective and value adding. Any future fiscal instrument should also be fully integrated into the existing budget to provide a high level of public accountability and auditing. Further political debate is expected due to differing views on such an instrument.

Read the complete in-depth analysis on ‘Ten issues to watch in 2023‘ in the Think Tank pages of the European Parliament.

Written by Alina Dobreva.

This is the seventh edition of an annual EPRS publication aimed at identifying and framing some of the key issues and policy areas that have the potential to feature prominently in public debate and on the political agenda of the European Union over the coming year.
The topics analysed encompass the 2024 European elections, budgeting in times of crises and war, lessons for public investment in the EU from the EU recovery instrument, the fiscal and monetary policy mix, climate
and socio-economic tipping points, the impact of increasing fuel prices on transport, cyber-resilience in the EU, protecting media freedom and journalists, the future of Russia, and geoeconomics in an age of empires

Just as Next Generation EU (NGEU, see issue 3) launched, the EU budget has had to respond to the multiple new crises created by Russia’s invasion of Ukraine: security, humanitarian and energy crises, and high inflation. In 2023, attention will focus on how the EU employs various budgetary and off-budget financial instruments to address these crises while dealing with two major challenges: available revenue and flexibility in spending.

Budgeting designed for times of peace and stability

An investment budget, the EU budget is designed to implement long-term policies, to provide continuity and stability rather than flexibility. The long-term policy priorities and their scope of implementation (i.e. financial allocation ceilings on expenditure) are determined by the multiannual financial framework (MFF). This leaves limited possibility for flexibility, responsiveness and dynamism in the face of unforeseen circumstances, despite Parliament’s long-standing position in favour of strengthening flexibility. With the MFF’s seven-year duration, plus the time from the Commission’s initial draft to its final adoption, the expenditure framework at the disposal of policymakers might have been conceived as long as ten years before a crisis hits the Union.

According to Article 311 of the Treaty on the Functioning of the EU (TFEU), the EU shall provide itself with the means necessary to attain its objectives, i.e. to deliver on its policy commitments as well as to address emerging challenges. The reform of own resources in 1988 was the first, and only, major reform to date. However, the competences and therefore policies covered by the EU budget have grown significantly over that period. Even without crises, the sufficiency of EU budget revenue can become an issue of concern. In its 2017 resolution on the reflection paper on the future of EU finances, the European Parliament stressed that additional political priorities should be supported with additional financial means and not be financed to the detriment of existing EU policies.

Budgeting when crises comes

Although the EU budget is not designed to respond to crises and has only limited possibilities to respond to unforeseen events, it does do so, and citizens’ expectations are growing. On the one hand, regardless of the latter, EU policymakers and leaders can act only within the limitations of the EU Treaties and the competences they provide to EU institutions, which can be far below the challenges the crises create. On the other hand, when crises have global impact, responses are more efficient when executed at EU rather than national or regional level. Under the subsidiarity and proportionality principles, the EU budget provides European added value by supporting actions that can be more efficient, effective or synergetic than actions taken at national or lower level.

For slightly more than a decade, the EU budget had to provide financial means for policy responses to several major crises – the European debt crisis, the migration crisis, the COVID-19 pandemic and its economic consequences, as well as to act in the conditions of a worsening humanitarian situation across the world and changes related to Brexit.

Flexibility in spending

The agreed MFF provides tight expenditure ceilings under which annual budgets and their amendments are adopted. A more significant amendment to the MFF could be done in a mid-term review, but the mid-term review/revision of the 2014-2020 MFF did not provide adequate response to the crises back then. The President of the European Commission confirmed in her September 2022 letter of Intent that an MFF review will be done in 2023, as called for by some Members of Parliament. It remains to be seen how and to what extent it will provide a response to current crises.

Over the years, the flexibility instruments of the EU budget have developed after the insistence of the European Parliament, and have been used frequently due to the multiple crises facing the Union. They constitute a minimal share of the EU budget, which Commissioner Johannes Hahn, responsible for the budget, estimates to be around 1 % of the overall EU budget (not linked to pre-allocations), and experience has shown their insufficiency. Flexibility has been much debated but the views of the Commission, the Parliament and the Council vary significantly, with the Parliament repeatedly calling for more flexibility of the EU budget. Future needs might see incorporation of more flexibility instruments in the EU budget rather than, as currently, using a galaxy of off-budget instruments, which are not subject to democratic parliamentary scrutiny. 

Sufficient revenues

In its resolution on the 2021-2027 MFF and own resources, the European Parliament states that the 2014-2020 MFF had proven inadequate to finance the EU’s pressing needs and political priorities. Experts also doubt if the EU budget has been sufficiently expanded and reformed to reflect the deepening Union and its expanding competences. The currently pressing needs related to the Russian invasion of Ukraine and its consequences are expected to be even more significant than those resulting from previous crises. Unlike national budgets, the EU budget cannot run a deficit or fund expenditure through borrowing. It can increase expenditure only through an increase of its revenue, knowns as own resources. Borrowing, however, is a funding mechanism for off-budget instruments such as NGEU (although repayment of the debt it generates will come from the EU budget). The future €18 billion fund to support the reconstruction of Ukraine is again funded by borrowing – loans that will be guaranteed (but not repaid) by the EU budget.

An own-resource reform found interinstitutional agreement (IIA) as part of the package on the 2021‑2027 MFF and NGEU. One aim was securing resources to cover new budgetary expenditure such as on NGEU debt repayment. The first step was the Own Resources Decision (ORD), which entered into force in June 2021, introducing a new own resource based on non-recycled plastics. In December 2021, six months later than initially scheduled in the IIA roadmap, the Commission proposed a new own resources package, comprising part of the revenues deriving from an extended emissions trading scheme (ETS), a carbon border adjustment mechanism (CBAM), and a share of the reallocated profits of very large multinational companies (based on Pillar 1 of the OECD/G20 agreement). The proposal is to introduce the new own resources gradually as of 1 January 2023, but at the time of publishing, the proposal had still not been adopted by the Council. Over the 2026-2030 period, revenue for the EU budget then have the potential to reach up to €17 billion a year (in constant 2018 prices). The Commission committed to making a proposal with a further package of new own resources in 2023 (earlier than the deadline of June 2024 set in the IIA).

The progress of own resources reform will be a key issue to watch during 2023, because any delay to the already lengthy adoption and implementation might put in jeopardy the future stability, reliability and continuity of the EU budget. Even if the IIA is fulfilled as planned, there are still concerns whether the amounts generated will be sufficient due to the increased interest rates on NGEU repayments (the principal is due only at the end of the current MFF) and the additional funds needed to address the consequences of the Russian invasion of Ukraine. Insufficiency of resources might lead to a need to increase the own resource based on gross national income (GNI) and/or limiting the funding of existing programmes and MFF commitments.

Read the complete in-depth analysis on ‘Ten issues to watch in 2023‘ in the Think Tank pages of the European Parliament.