European Parliamentary Research Service Blog

Written by Sofija Voronova and Piotr Bakowski.

This paper is one of 11 policy responses set out in a new EPRS study which looks first at 15 risks facing the European Union, in the changed context of a world coming out of the coronavirus crisis, but one in which a war has been launched just outside the Union’s borders. The study then looks in greater detail at 11 policy responses the EU could take to address the risks outlined and to strengthen the Union’s resilience to them. It continues a series launched in spring 2020, which sought to identify means to strengthen the European Union’s long-term resilience in the context of recovery from the coronavirus crisis. Read the full study here. The issue in short: The challenge and the existing gaps

In a rapidly changing and increasingly interconnected world, the EU security landscape has become very complex and unpredictable. When commenting on the adoption of the July 2020 EU security union strategy, Commission Vice-President Margaritis Schinas described security as a cross-cutting issue, pointing to the ‘the false dichotomy between online and offline, between digital and physical and between internal and external security concerns and threats’.

Some of these threats are indeed of an external nature and their manifold impact on the bloc’s stability calls the distinction between internal and external security into question. The crisis at the EU’s eastern borders is one illustration of such a ‘hybrid threat‘, with the Belarussian regime seeking to destabilise the EU by instrumentalising migration flows and playing on the related insecurities of EU citizens. The current war in Ukraine is likely to have a major impact on the EU, extending well beyond the military and foreign relations spheres. Possible implications for internal security are already illustrated by reported attempts at trafficking for sexual exploitation, targeting persons fleeing Ukraine (mostly women and children), as well as cases of online fraud and cyber-attacks on critical infrastructure. They also include the risk of large-scale diversion of firearms, not least given Ukraine’s key role in the global arms trade, one that has only increased in recent years. Moreover, there is a possibility of criminals making use of the situation at the EU border with Ukraine to enter the EU territory using false identity documents.

Another set of security challenges relates to societies’ growing reliance on digital technologies and the internet. This ‘online dependency’ has raised the stakes regarding the potential impact of cyber incidents, in particular large-scale attacks targeting critical infrastructure and possibly leading to the disruption of essential services. While artificial intelligence (AI) can be used to tackle these threats, it is a double-edged sword as it can also be exploited for malicious ends. The proliferation of cybercrime and difficulties obtaining electronic evidence stored in foreign jurisdictions call for the modernisation of law enforcement and efforts to seek solutions at EU and international levels so that the work of crime-fighting authorities is not impeded by territorial boundaries.

The Covid-19 pandemic has impacted on the EU’s internal security in various ways. While many activities, such as working and schooling, moved online, so did criminal syndicates. According to Europol, the number of malware and ransomware attacks has surged, as has the availability of (mostly self-produced) child sexual abuse material. Moreover, extremist narratives and disinformation spread online may have fallen on fertile ground in the times of pandemic-related insecurity, potentially leading to further polarisation and radicalisation towards violent extremism.

The EU has gradually increased its capabilities in the field of internal security, developing an arsenal of bodies and instruments to address security threats, within the strict boundaries set by the EU Treaties. Nevertheless, issues remain regarding the extent of information sharing between Member States’ authorities and the use they make of EU judicial and police cooperation tools and agencies. As for the external aspects, while the as yet slow development of the common security and defence policy (CSDP) may present a range of obstacles to effective EU action, the Ukraine crisis seems to be providing impetus to overcome them.

Existing policy responses EU action

Whereas security is primarily within Member States’ remit, according to Article 67(3) of the Treaty on the Functioning of the EU (TFEU), ‘the Union shall endeavour to ensure a high level of security’ through a variety of measures. In this vein, the EU has developed the ‘security union’ concept, based on the idea that the EU and its Member States need to shift from cooperating to protect the national security of each of them to protecting the collective security of the Union as a whole.

The new security union strategy, adopted in July 2020, adopts an integrated approach, aimed at ensuring security in both the physical and digital environments and takes into account the interconnection between internal and external security. The strategy sets four main priorities: achieving a future-proof security environment, tackling evolving threats, protecting Europeans from terrorism and organised crime, and building a strong European security ecosystem.

A future-proof security environment. Whereas cybersecurity is a prerogative of the Member States, over the years the EU has developed a complex and multi-layered cyber ecosystem, spanning an array of policy areas, both internal (justice and home affairs, digital single market) and external (diplomacy and defence). Under the new EU cybersecurity strategy, the Commission put forward legislative proposals to update the network and information security directive (NIS2) and the rules on critical infrastructure protection, to enhance, respectively, the cyber and physical resilience of critical entities and networks. It also intends to propose an EU Cyber Resilience Act in 2022. Work has started on setting up an EU joint cyber unit – a platform for operational cooperation, bringing together civilian, diplomatic, law enforcement and defence actors. Under its external action, the EU will continue to use its cyber sanctions regime, as part of its cyber diplomacy toolbox. A Member States’ EU cyber intelligence working group is also planned.

Tackling evolving threats. Faced with hybrid threats that are unprecedented, in both scale and diversity, the EU set out its approach to counter hybrid threats in the 2016 joint framework and the 2018 joint communication on bolstering hybrid resilience. The 2020 security strategy announced a new EU approach based on mainstreaming hybrid threat considerations into all policy initiatives. Commission is also aiming to develop situational awareness, with the EU Hybrid Fusion Cell at the EU Intelligence and Situation Centre (EU INTCEN) being the focal point for hybrid threat assessments. Another important objective is to modernise EU law enforcement, enhancing its capacity to conduct digital investigations and to use adequate tools, including electronic evidence, AI and big data analytics. The proposed EU e-evidence framework would allow competent authorities to request electronic data needed for investigation and prosecution directly from service providers, while the future EU AI act should regulate the use of AI in law enforcement, classified as ‘high risk’. In 2022, the Commission is also intending to suggest a way forward for lawful and targeted access to encrypted information in criminal justice.

Protecting Europeans from terrorism and organised crime. Tackling the terrorism threat has long been and remains a priority, as illustrated by the adoption of the new EU counter-terrorism agenda in December 2020. The main EU instrument in this area is the Combating Terrorism Directive, which harmonised definitions and sanctions for terrorist offences across the EU. The EU has also taken initiatives to prevent violent extremism, especially online, such as the regulation on dissemination of terrorist content online, to apply as of 7 June 2022, or the recent proposal to add hate crime and hate speech to the list of serious crimes with a cross-border dimension under Article 83(1).

The EU has continued to reinforce its framework for combating money laundering (AML) and terrorist financing (CFT), with an ambitious AML/CFT package presented in July 2021. The package provides for the establishment of a new EU authority: a decentralised EU regulatory agency to be in charge of AML/CFT supervision and supporting EU financial intelligence units (FIUs). The package also includes measures on crypto-assets, extending to such assets the obligation to report suspicious transactions and introducing a ban on anonymous crypto-wallets.

In order to prevent terrorists and criminals from easily acquiring firearms or reactivating de-activated weapons, the directive on the control of the acquisition and possession of weapons started to apply from 2018, accompanied by an implementing regulation on deactivation standards. The new 2020-2025 action plan on firearms trafficking aims to address the ‘remaining legal loopholes and inconsistencies in firearms controls that hinder police cooperation’ and to step up international cooperation, focusing on south-east Europe (western Balkans, Ukraine and Moldova).

A number of recent initiatives address other specific forms of crime. They include strategies and action plans against trafficking in human beings, drugs, organised crime and child sexual abuse online. A renewed action plan on migrant smuggling develops, for instance, an EU response to the instrumentalisation of irregular migration by State actors. As to human trafficking, the Commission is conducting an evaluation of the 2011 EU Anti-Trafficking Directive with a view to its possible review. Regarding the EU’s preparedness and response to public health-related risks, such as chemical, biological, radiological and nuclear (CBRN) threats, the Commission is building up strategic reserves of response capacities through the EU Civil Protection Mechanism.

Figure 52: Consolidating EU internal security

A strong European security ecosystem. In a Europe with no internal borders, information sharing and data exchange between national authorities is of the utmost importance, in order to address complex cross-border threats. In December 2021, the Commission presented a police cooperation package, with proposals on information exchange between law enforcement authorities, on automated data exchange under a renewed Prüm framework, and on operational police cooperation. It complements and updates the already existing information exchange architecture, supporting border management and law enforcement cooperation and comprising a growing number of EU information systems, which rely increasingly on AI technologies. New legislation adopted in 2019 established interoperability rules between these systems, with technical solutions to be put in place by 2023 and to be managed by the eu-LISA. An important development was the decision to expand Frontex (transformed into a European Border and Coast Guard Agency) to include a standing corps of up to 10 000 operational staff by 2027. Improving management of the EU external borders (including in cases of health crises or hybrid attacks) is also one of the objectives of the ongoing Schengen reform.

The EU has continuously built on its institutional architecture, reinforcing the role of its agencies in the area of security and justice. In February 2022, the co-legislators agreed to strengthen Europol’s mandate, empowering the agency to cooperate more effectively with private parties, conclude international agreements, conduct research and innovation activities, and process big data sets. The Commission also made proposals on modernising the Eurojust case management system and on upgrading its Judicial Counter-Terrorism Register. It also took an initiative to extend the mandate of the newly created European Public Prosecutor Office (EPPO) to terrorism.

National level initiatives

The EU recognises the fact that in some areas, national, regional and local authorities may be best placed to address security threats. Radicalisation towards violent extremism and terrorism is one such area where the EU role has been limited to supporting the activities of various stakeholders, providing funding for research and collecting and disseminating best practices. This includes the activities of the Radicalisation Awareness Network (RAN), connecting frontline practitioners from across Europe with one another, as well as with academics and policymakers. The protection of public spaces is also mostly in hands of non-EU level actors, with the EU setting up forums for the systematic exchange of information, publishing guidance and providing funding. Regarding EU security-related funding, in the 2021-2027 multiannual financial framework (MFF), for the first time, a separate Heading 5 is dedicated to security and defence. The Internal Security Fund (ISF), allocated € 1.93 billion (current prices), is the main instrument aimed at ensuring EU internal security, by tackling terrorism and radicalisation, serious and organised crime and cybercrime.

EU action with external partners/international organisations

The transnational nature of many threats to EU internal security underscores the need for international cooperation. This could take form of international agreements between the EU and third countries and international organisations, as well as of agreements or working arrangements between EU agencies and their foreign partners. The 2001 operational agreement between Europol and the Interpol – allowing for the transfer of personal data – is one example of the latter. In April 2021, the Commission published a recommendation for a Council decision authorising the negotiations for a cooperation agreement between the EU and Interpol. The agreement, currently under negotiation, would be broader in scope and cover also other EU agencies, such as Eurojust, EPPO and Frontex. One of the principal benefits sought is the access of EU bodies to the whole range of Interpol’s databases.

Cross-border access to electronic evidence in criminal matters is an area regulated by a web of international agreements. The EU has been seeking to assert its role as a rule setter in this field: in parallel with the 2018 ‘e-evidence’ proposals, the Commission, on behalf of the EU, entered into negotiations on an agreement with the United States, where the largest service providers are based, and on the Second Additional Protocol to the Council of Europe Convention on Cybercrime (known as the ‘Budapest Convention’), devoted specifically to enhanced co-operation and disclosure of electronic evidence . Direct cooperation between foreign authorities and service providers is among the issues covered by these initiatives. As for the Protocol, the negotiations have been concluded and it is set to be open for signature in May 2022.

In 2019, the United Nations (UN) passed a resolution, introduced by the Russian Federation, with a proposal meant to serve as the baseline for developing a UN convention on cybercrime. The proposal largely extends the catalogue of cyber offences while making no reference to the protection of human rights and liberties (such as freedom of expression), thus raising issues with the UN members’ obligations under the existing treaties, such as the Budapest Convention. It has been strongly opposed by the EU.

Regarding hybrid threats, and cybersecurity in particular, since the Warsaw Joint Declaration of 2016, the EU has enhanced its cooperation with NATO and its agencies and related bodies (such as the Helsinki-based European Centre of Excellence for Countering Hybrid Threats). Countering hybrid threats and expanding coordination on cyber-security and defence are two of the seven areas for enhanced cooperation decided at the time. Exchanges of information and assessments, joint training and reciprocal participation in cyber-exercises are among ongoing activities in the cyber realm.

Obstacles to implementation

When the ‘security union’ concept emerged in 2016, some commentators called into question the achievability of such an ambition, pointing to the diversity and fragmentation of the ‘insecurity landscape’ among the Member States. One of the aims stated by the Commission was to close the gaps in cooperation and bring about a culture change, where information exchange is guided by the principle of the ‘need to share’ instead of the ‘need to know’. EPRS reports on the cost of non-Europe in the area of freedom, security and justice do indeed point to a lack of information-sharing among various EU and national information systems, and to the limited use made of the (analytical) support and coordination possibilities provided by EU agencies. The report on the fight against terrorism highlights the need for more and better impact assessments and evaluations of EU measures taken so far, as regards their effectiveness, efficiency and fundamental rights compliance.

While there is a wealth of EU instruments in the field of internal security, they are not always used to their full potential. The framework for police cooperation is fragmented and characterised by the coexistence of cooperation agreements between Member States with a range of EU instruments, such as the ‘Prüm Decisions‘ (currently under review). One consequence is uncertainty as to which rules national police should follow when intervening in another Member State. While information exchange between police forces has improved, Member States’ security and intelligence services are reluctant to cooperate through EU channels.

Similarly, in the area of cybersecurity, a 2019 EU Court of Auditors (ECA) report pointed to the fragmentation and complexity of the EU cybersecurity ecosystem. According to the ECA, there is a lack of measurable objectives, outcomes of EU action are rarely measured, and few policy areas have been evaluated. Among the challenges, the ECA points to the need to shift towards a performance culture with embedded evaluation practices and to develop a rapid detection and response capacity.

Another obstacle that can hinder the transposition of EU measures into national laws is the difference between national legal orders in general, and criminal laws in particular. For example, the recent evaluation of the Counter-Terrorism Directive showed that in some Member States challenges arose around classifying some types of conduct, e.g. violent extreme right-wing acts, as acts of terrorism.

Evaluations of the efficiency and effectiveness of the EU security-related measures have long been scarce. In 2017, the Commission issued a first comprehensive assessment of EU security policy. It concluded that EU intervention in this area has been relevant and appropriate. It stressed however the need for proper implementation of different instruments to ensure their effectiveness, as well as the necessity to update existing tools, adapting them to evolving threats. In 2020, Commission followed-up with a report taking stock of the implementation of internal security policies between 2017 and 2020, which points to a significant increase in the number of evaluations and reports conducted in this area and their positive impact on adapting the policy and legislative framework.

The ultimate challenge for EU security policy pertains to its very foundations, as it is supposed to be grounded in common European values, such as democracy, the rule of law and fundamental rights (including data protection). Many security-related instruments at both national and EU levels have been criticised for not respecting these values.

Policy proposals by experts and stakeholders

Given the primary role of decentralised agencies in EU internal security, many of the suggestions offered by experts and stakeholders focus on their desired evolution. For example, to address the problem of prosecutors and police having differing powers across the EU – which hampers their cooperation in the framework of Eurojust and Europol respectively – it has been proposed that the two agencies should be merged into a single EU criminal justice cooperation body. Less radical ideas for strengthening the links between them include relocating Europol and Eurojust to a single building, connecting them with a common IT system and creating a single data protection regime for these bodies.

Although Europol’s mandate is set to be further strengthened by the ongoing reform, the possibility of turning the agency into an FBI-type body, alluded to by the European Parliament in 2017, is not among options considered under the current negotiations. However, the idea has been repeatedly floated by political leaders and parties and the subject of academic debate. Such a development would entail granting the agency executive powers, such as to conduct its own investigations and make arrests, precluded though by the current legal framework (Article 88(3) TFEU provides for a supportive rule for Europol and stipulates that the ‘application of coercive measures shall be the exclusive responsibility of the competent national authorities’).

Likewise, calls have been made to form a ‘European intelligence agency’, with the academic world divided, however, on the issue of the feasibility of such a move and the best way forward for the EU to improve its intelligence capabilities. One author presented the idea of developing intelligence cells serving the president of the Council and the president of the Commission, rather than one central agency. Enhancing cooperation among existing European bodies is a less radical recommendation: a ‘transnational committee of politicians and security experts’ could be set up to analyse the necessary procedural and organisational changes.

Specific improvements have been proposed regarding cooperation between police and security and intelligence services. As first step, liaison officers could be seconded by Europol to the Counter-Terrorism Group (CTG) and vice versa. If successful, cooperation could then develop along the lines of the German Joint Counter-Terrorism Centre (GTAZ): Europol and the CTG would jointly recommend measures on persons of interest to national security and intelligence services whose refusal to act on such recommendations would need to be justified.

In the area of common foreign and security policy (CFSP), in 2018, before the process leading to the adoption of the Strategic Compass was launched, there was a suggestion to make use of enhanced cooperation under Article 329(2). The participating Member States would commit to a division of labour between their respective intelligence services that would work on jointly agreed thematic and regional priorities. A European circle of intelligence analysis would thus be set up whereby the planning and prioritisation of intelligence resources would be coordinated at EU level, the collection and initial processing of raw intelligence would remain at national level, and the EU-SIAC would provide the final evaluation, leading to the dissemination of intelligence reports to decision-makers and feeding into the next cycle. In parallel, political forums could be strengthened to streamline the use of intelligence by policy-makers (e.g. a European Security Council could be established, as proposed by former German Chancellor Angela Merkel).

Position of the European Parliament

In its 2020 resolution on the EU security union, the Parliament welcomed the new strategy, while emphasising the need to fully implement and evaluate existing EU legislation in this area, such as the interoperability of EU information systems. It also called for proper funding and staffing of EU agencies and bodies in the field of justice and home affairs (JHA) and reiterated its calls for the assessment of a potential extension of the European Public Prosecutor’s Office’s (EPPO) mandate, once it was fully operational.

In its 2018 resolution setting out the recommendations of the Special Committee on Terrorism, Parliament had already advocated strengthening the specialised EU agencies and services and providing them with adequate means, as well as expanding EPPO powers to tackle terrorism and organised crime. On this occasion, Parliament also urged the Member States and EU institutions to work towards a common strategic culture, and called for efforts to step up international cooperation. It also called for the setting up of an EU joint intelligence academy, with common standards, in order to combine resources and develop synergies, trust and a common intelligence culture.

In 2017, the Parliament made several proposals to further consolidate the EU’s institutional framework in the JHA area. One possibility would be to provide Europol and Eurojust with genuine investigation and prosecution competences and capabilities, possibly by transforming them into a genuine European Bureau of Investigation and Counter-Terrorism, with due parliamentary scrutiny. Another would be to establish a European investigation and intelligence capacity within Europol, under the control of the judiciary. In this context, Parliament recommended making security a shared competence, considering that security would be better ensured if it were not an exclusive competence of the Member States. The Parliament also proposed to set up a European Intelligence Office to support the EU’s common foreign and security policy (CFSP).

The 2021 resolutions on AI in criminal law and the EU’s cybersecurity strategy attest to Parliament’s attentiveness to the evolution of threats and challenges linked to technological progress and digital transformation, including those of a ‘hybrid’ nature. In this context, in its 2022 resolution on foreign interference, Parliament called on the EU institutions to further develop and boost the important work of structures such as EU INTCEN and Hybrid Fusion Cell, among others, and welcomed the establishment of the EU cyber intelligence working group within EU INTCEN with a view to advancing strategic intelligence cooperation. Parliament also recommended the creation of a joint cyber unit, to close the information sharing gap and enable full use to be made of existing structures, resources and capabilities, in order to protect the EU from serious cross-border cyberattacks.

In focus: Intelligence cooperation in the European Union
Under Article 4(2) TEU, ‘national security’ – and thus intelligence activities – remains the sole responsibility of the EU Member States. Article 73 TFEU leaves it to them to organise ‘such forms of cooperation and coordination between the national security services that they deem appropriate’.
Until now, EU Member States have not gone far in sharing or pooling intelligence at EU level. National intelligence and security services have traditionally favoured (mostly bilateral) informal exchanges through other channels. These include the ‘Club de Berne’, composed of the heads of security services of the EU Member States, Norway and Switzerland, and the Counter-Terrorism Group (CTG). The CTG also acts as the interface between the Club de Berne and the EU, as illustrated by its cooperation with Europol.
There are currently three intelligence bodies within the EU structure: the EU Intelligence and Situation Centre (EU INTCEN), the EU Military Staff Intelligence Directorate (EUMS INT) – both forming the Single Intelligence Analysis Capacity (SIAC), which combines civilian and military intelligence – and the EU Satellite Centre (SatCen). INTCEN, a directorate within the European External Action Service, produces strategic analysis based on information provided on a voluntary basis by national intelligence and security services, diplomatic reporting, etc. Having no operational capabilities, INTCEN does not generate its own intelligence, with SatCen being the only EU body to do so, based on commercially available satellite images. Europol is yet another EU body dealing with intelligence and its growing role in counterterrorism could translate into more EU-facilitated intelligence sharing between police and secret services. However, the agency’s activities in this respect have met with mistrust and ‘bureaucratic resistance’ by the latter.
In her 2021 State of the Union address, President von der Leyen proposed to improve the EU’s ‘situational awareness’ as the foundation for collective decision-making, by setting up a ‘Joint Situational Awareness Centre’. The discussions on this idea were undertaken in the context of the EU Strategic Compass for the CSDP, adopted in March 2022. The Compass includes plans to boost the EU’s intelligence capacities, e.g. SIAC and SatCen, to enhance situational awareness and strategic foresight. At least once every three years, the SIAC is supposed to review – in concert with Member States’ intelligence services – the ‘EU threat analysis‘, i.e. a classified report providing a ‘comprehensive, 360-degree’ analysis of the full range of threats and challenges faced by the EU. Possible action

Written by Suzana Anghel.

This paper is one of 11 policy responses set out in a new EPRS study which looks first at 15 risks facing the European Union, in the changed context of a world coming out of the coronavirus crisis, but one in which a war has been launched just outside the Union’s borders. The study then looks in greater detail at 11 policy responses the EU could take to address the risks outlined and to strengthen the Union’s resilience to them. It continues a series launched in spring 2020, which sought to identify means to strengthen the European Union’s long-term resilience in the context of recovery from the coronavirus crisis. Read the full study here. The issue in short: The challenge and the existing gaps

The EU Global Strategy stressed that ‘in a more complex world of global power shifts and power diffusion, the EU must stand united.

Both the EU and the North Atlantic Treaty Organization (NATO) showed unity in the weeks preceding and following Russia’s invasion of Ukraine. With this ‘premeditated and unprovoked‘ attack, Russia did not only oppose Ukraine’s free choice and ability to determine its own destiny, but also aimed at breaking euro-Atlantic unity as well as at redefining the European continent’s security architecture. Ukraine’s resilience and resistance countered Russia’s plans, while NATO further affirmed its ‘open door policy’ and strengthened its eastern flank. In March 2022, in Versailles, the European Parliament President, Roberta Metsola, warned the EU leaders that ‘Putin will not stop in Kyiv, just as he did not stop in Crimea’, and urged them to ‘make the defence union a reality’.

The return of war on the European continent does not only confront the EU and its Member States with growing instability, but also with multi-faceted – both conventional and non-conventional – threats. To be able to rise to the self-imposed level of ambition set in the Global Strategy – protect EU citizens, respond to external crises and conflicts and build the capacity of partners – the EU needs to become a global security player, complementary to NATO, which remains the primary collective defence and deterrence tool for those 21 EU Member States that are also members of the alliance. The implementation of the Strategic Compass is key and could lead to a more robust EU in defence, allowing Member States to stand by the mutual obligation of ‘assistance’ deriving from Article 42(7) of the Treaty on the European Union (TEU), which the recently adopted Versailles declaration recognises as being the fundament of their solidarity.

Deep geopolitical shifts where already under way prior to the 2022 invasion of Ukraine, as big powers stepped up their game. Both China and Russia have long been questioning multilateralism and an international order based on rules, reviving the concept of ‘spheres of influence‘. Some interdependencies, particularly in the economic sphere, that for a while were beneficial, have proved, in the long term, rather disadvantageous, as they pointed to vulnerabilities. The most telling case in point is energy, which over the past three decades has been largely considered in economic terms as a commodity, and not from a security perspective as a strategic public good. The European Council President, Charles Michel, stressed that building a strategically autonomous EU is the challenge of a generation. It may also well be the opportunity to address vulnerabilities, bolster partnerships and strengthen the EU’s role in the world by acting simultaneously on internal and external polices, and in particular by building a genuine European defence union based inter alia on a yet to be shaped common strategic culture and joint capabilities able to contribute in a meaningful way to both European and transatlantic security.

Existing policy responses EU action

European defence cooperation is an area where a leap forward has been made over the past decade, owing to a political consensus reached in the European Council in 2013 that ‘defence matters‘. EU leaders agreed to step up defence cooperation along three lines: 1) crisis management, 2) the development of capabilities, and 3) the defence industry and market.

As regards crisis management, substantive progress has been achieved in recent years, in particular with the adoption of the civilian compact, intended to strengthen and streamline EU civilian missions. Only incremental progress has been regarding EU military operations, mainly reflected in the establishment of a military planning and conduct capability (MPCC) as a permanent command and control facility for ‘non-executive’ common foreign and security policy (CSDP) military operations. The Strategic Compass, endorsed by the European Council on 24-25 March 2022, called for a further strengthening of existing command and control structures, including the MPCC, in order to increase readiness and to develop an EU rapid deployment capacity of up to 5 000 troops by 2025. Furthermore, the modalities of flexible cooperation on CSDP missions and operations under Article 4 TEU are to be decided by 2023. Figure 50 shows both the Strategic Compass process and initiatives to be implemented.

In focus: Strategic Compass
On 24-25 March 2022, EU leaders endorsed the Strategic Compass at the end of a process they had been monitoring closely for over a year. The Strategic Compass provides a ‘shared assessment of the [Union’s] strategic environment’. It acknowledges that the world has become more dangerous, and that the EU is facing ‘strategic competition and complex security threats’ that it needs to address collectively and in a united manner, in close cooperation with like-minded partners.
The war in Ukraine has led to a shift in focus of the Strategic Compass and to the introduction of robust language on Russia. The EU condemned Russia’s military aggression, its breach of international law and, in particular, the threat of resorting to nuclear weapons. The EU reaffirmed its commitment to a European security order based on the respect of the rules enshrined in the United Nations Charter, the Helsinki Final Act and the Charter of Paris, including the principle of ‘the sovereign equality and territorial integrity of States’.
On China, the Strategic Compass reiterated previous language from the EU-China Strategy released in 2019, which referred to the country as ‘a partner for cooperation, an economic competitor and a systemic rival’. It acknowledged China’s interest in developing its ‘military means’ and in modernising its armed forces by 2035, stressing that it was important China continued to ‘uphold global security’ and a rules-based international order.
‘A quantum leap forward’ is needed to ensure that the EU is able to act in a more resilient manner while ensuring ‘solidarity and mutual assistance’. The compass offers a detailed plan with clear-cut deadlines aimed at strengthening security and defence at the 2030 horizon in four main areas. These cover the EU’s ability to ‘act’ when a crisis emerges; to ‘secure’; to ‘invest’ in capabilities and new technologies; and to cooperate with like-minded partners globally (the UN), regionally (NATO), and bilaterally (Canada, Japan, Norway, the United Kingdom and the United States).

Taboos were broken in recent years as key inter-linked tools such as the coordinated annual review on defence (CARD) and the European Defence Fund (EDF) have been introduced and permanent structured cooperation (PESCO) (Articles 42.6 and 46 TEU and Protocol 10) activated. The overall aim was to identify the defence capabilities of which Member States dispose, or which should commonly be developed and funded in jointly cooperative projects, in order to be able to respond united to the threats and risks the EU is facing.

CARD allows existing capabilities to be identified and national defence planning cycles brought closer together. It could facilitate their ‘gradual synchronisation and mutual adaptation’. A first CARD report was released in 2020, recommending a coordinated approach to ‘defence spending, defence planning and defence cooperation’ as the only way of overcoming fragmentation and duplication. A second CARD report is expected later in 2022.

Figure 50: Timeline of security and defence initiatives

The EDF, which has been preceded by the preparatory action on defence research (PADR) (€90 million for 2017-2019) and the European defence industrial development programme (EDIDP) (€500 million for 2019-2020), is the result of a progressive paradigm shift initiated in the European Council between 2013 and 2015. Then, EU leaders agreed to boost joint defence research and fund it from the EU budget, strengthening the Community method in the area of security and defence. The EDF benefits from an €8 billion envelope under the EU’s long-term budget, the 2021-2027 multi-annual financial framework (MFF). The fund comprises two windows, one dedicated to defence research, fully funded from the EU budget, and a second one dedicated to capabilities, which draws on EU budgetary means as well as on Member States’ funding. The EDF capability window allows the development of prototypes to be co-financed, with a maximum share of 20 % of the costs being supported from the EU budget. It also covers acquisition, with the caveat that this component – the most costly – remains for now fully financed by the Member States. President Metsola stressed that the EU ‘must go beyond the European Defence Fund and make the EU budget work for our security and defence policy whenever it adds value’.

PESCO is a Treaty-based mechanism allowing for differentiated integration in defence. It was activated in December 2017, when 25 EU Member States (except Denmark and Malta) notified the Council of their intention to participate. Obligations undertaken by the Member States are legally binding, and 60 projects have been developed thus far in areas such as ‘training, land, maritime, air, cyber and joint enablers’. The flagship project is the Dutch-led military mobility, which includes 24 Member States and aims to facilitate the rapid transfer of military capabilities – personnel and equipment – across the continent. In parallel, the European Commission has issued a joint communication on improving military mobility and an action plan, a dual-use initiative funded under the Connecting Europe Facility for an amount of €1.5 billion in the period 2021-2027. Military mobility is also a key component of EU-NATO cooperation, as the more rapid transfer of national capabilities can benefit both organisations in case of need. PESCO, along with CARD and the EDF, contributes to the progressive framing of a European defence union. President Metsola stressed that an EU ‘capable of countering new threats’ needs smart defence spending and would require a PESCO reform.

More recently, on 15 February 2022, in the run-up to the EU Strategic Compass, the European Commission presented a communication on European defence, in which it reaffirmed its commitment to supporting implementation of existing initiatives, including the EDF, and outlined ‘new measures and initiatives’ on, inter alia, investments, joint procurement and strengthening space cooperation. It has also recalled, among other things, that the Member States were yet to meet the 35 % collective defence equipment spending target. In response to a request formulated by the European Council, the Commission also presented a roadmap on critical technologies for security and defence, in which it committed to boost dual-use research, technology, development and innovation, ‘mitigate strategic dependencies from external sources’, and coordinate with the US and NATO. Furthermore, again at the request of the European Council, the European Commission is, in cooperation with the European Defence Agency, to present by mid-May 2022 an ‘analysis of the defence investment gaps’.

The European Peace Facility (EPF), an off-EU budget instrument that brings together the former Athena mechanism (common costs for CSDP military operations) and the African Peace Facility (mechanism to support peace and security in Africa), has been operational since 1 July 2021. The EPF consists of two pillars, namely ‘military operations’ and ‘assistance measures’. It benefits from an envelope of nearly €6 billion for the period 2021-2027, funded by the EU Member States (except Denmark)[i] on a gross national income (GNI) basis. Prior to the start of the war, the Council pledged to provide €31 million in assistance to support the Ukrainian armed forces under the EPF, and similar decisions targeted Bosnia and Herzegovina (€10 million), Georgia (€11.4 million) and Moldova (€6.3 million). After the start of the war, the amount for Ukraine was increased by €500 million, of which €450 million for lethal arms and €50 million for non-lethal supplies, and political agreements were reached for two further increases of €500 million (thus totalling €1.5 billion). As EPF implementation begins, the question of the accountability of the money spent could progressively arise; this issue could be addressed by bringing the EPF into the EU budget and hence under the scrutiny of the European Parliament.

National level initiatives

At the 2014 Wales NATO Summit, allies committed to dedicate a minimum of 2 % of their gross domestic product (GDP) to defence spending by 2024. The European Council shared this commitment by calling repeatedly for an increase in defence spending, a requirement enshrined in the legally binding commitments to which Member States agreed under PESCO.

Prior to the war in Ukraine, only a few EU Member States, including the Baltic countries, France, Greece, Poland and Romania, were meeting the 2 % GDP defence spending criterion. In the meantime, the outbreak of the war led some of these countries to announce a further increase of their defence spending; the boldest move was made by Poland, which announced a level of 3 % of GDP in defence spending for 2023 to ‘increase the size of its armed forces, restore the reserve system and modernise its equipment’. Germany, which currently spends 1.5 % of its GDP on defence, has announced a one-off €100 billion special defence fund. It has thus opted for a tailor-made mechanism as opposed to a permanent increase of defence spending, which would have long-lasting doctrinal consequences and ‘would be harder to reverse’. Although spending is decided and implemented nationally, efforts need to be coordinated at the European level and in close cooperation with NATO to ensure best value for money, avoid duplication, foster interoperability, and stimulate the acquisition of those capabilities that would enable implementation of both the EU Strategic Compass and the upcoming NATO Strategic Concept.

EU-NATO cooperation

EU-NATO cooperation at the political and technical levels is running smoothly, and a new joint declaration is being prepared for June 2022. At the political level, the High Representative/Vice-President of the Commission (HR/VP), Josep Borrell, often attends the meetings of the North Atlantic Council, as did his predecessor, Federica Mogherini, while the European Council regularly invites the NATO Secretary General, Jens Stoltenberg, for an exchange of views. The outbreak of the war in Ukraine allowed the European Council President, Charles Michel, the European Commission President, Ursula von der Leyen, and the NATO Secretary General, Jens Stoltenberg, to stress the unity and complementarity of the EU and NATO, two organisations that joined efforts in supporting Ukraine. At the technical level, cooperation focuses on the implementation of the seven priorities identified in the 2016 and 2018 joint declarations with NATO: hybrid threats, cyber-security, operational cooperation, capacity-building, defence capabilities, research and industry, and training.

Member States maintain a single set of forces, which, whenever needed, they can commit either to the EU or to NATO. Their (joint) efforts to strengthen existing capabilities and develop new ones, undertaken in the EU framework following the introduction of CARD, PESCO and the EDF, can only strengthen both organisations, and thus, transatlantic unity and security. Building a strong European pillar within NATO is not only about sharing the financial burden of transatlantic security by meeting the 2 % GDP commitment to defence spending by 2024, but also about stepping up the ability of European allies to act, at a time when European security is under threat and EU budgetary means remain under-explored when it comes to funding security and defence.

Obstacles to implementation

Member States’ sensitivities and limitations in political will remain the main obstacle for yet another leap forward in security and defense. Within the framework of Article 42(2) TEU, the EU can progressively frame ‘a common Union defence policy’. The existing policy responses, examined above, contribute to the progressive shaping and strengthening of the European defence union called for by the European Parliament and the European Commission. The European Council has not used the term European defence union in its conclusions thus far. It has nonetheless maintained security and defence as a ‘rolling’ item on its agenda, and has been a staunch supporter of strengthening European defence cooperation. Article 42(2) TEU allows the boundary between defence cooperation and integration to be pushed even further by moving towards a ‘common defence’, but this depends entirely on the European Council.

As outlined above, technical instruments to foster joint procurement of capabilities are already in place and could be further developed should Member States break away from existing patterns. Indeed, EU Member States have committed collectively not only to increase defence spending, but also to procure 35 % of defence equipment through joint collaborative projects. Nevertheless, European Defence Agency data show that only 11 % of equipment was procured jointly by EU Member States in 2020. The data also show that defence equipment procurement continues to be conducted on a national basis, despite the adoption in 2009 of the Defence Procurement Directive, which aims to foster joint procurement. In the long term, there is potential for ‘a profound change in procurement practices’ if EU Member States are willing to commit fully to the implementation of the EDF capability window, and more importantly, to go beyond the EDF and maximise the output that the EU budget could offer in support of security and defence.

The specialisation of national armed forces is another sensitive issue. This would require Member States to increasingly trust each other with their security, specialise their forces, share capabilities and adapt their procurement patterns to the needs identified as a result of the collective CARD exercise. It would allow for genuine economies of scale, reduce waste, and ensure better value for money. For that purpose, a new political consensus on defence would be needed in the European Council.

Policy proposals by experts and stakeholders

There is a rich and rapidly growing body of academic and think tank literature on the topic, which for the most part acknowledges the need to further step up European defence cooperation. In some cases, the focus is on individual mechanisms – CARD, PESCO and/or the EDF – and the challenges encountered when implementing them. In others, it is on institutional aspects, with proposals including the introduction of a European Security Council, a ministers’ of defence Council configuration, or the upgrading of the European Parliament’s Sub-Committee on Security and Defence to a full parliamentary committee. Decision-making is another area where multiple proposals have been put forward, including moving towards qualified majority voting for civilian CSDP missions. A large body of literature continues to focus on crisis management and on the over 35 civilian and military missions and operations launched to date, which represent the most tangible EU contribution to peace and security.

Russia’s attack on Ukraine will, most likely, have deeper and long-lasting effects on tomorrow’s international order, which not only Russia, but also China, wish to reshape. HR/VP Josep Borrell stressed that the survival of the post-war multilateral acquis with ‘the UN, international law and universal rights’ at its core was at stake. Analysts argue that the US and their European and Asian allies need to ‘develop a free world defence strategy‘ to counter the revisionist views that look to revive a world based on spheres of influence. Furthermore, the EU could step up its game and use its ‘soft power tools’ – trade, development, sanctions and diplomacy – more assertively. At the same time, it could move towards becoming a ‘smart power‘ by relying on its existing ‘soft power tools’ whilst developing ‘hard power tools’ allowing it to respond to the full spectrum of threats and to be a more reliable transatlantic partner.

The EU could go beyond the existing fragmentation and duplication of defence capabilities and build tomorrow’s military capabilities by fully embracing the scholarly enunciated principle of ‘pooling, sharing and specialisation’. Furthermore, a reviewed PESCO could give more space to projects such as the EUFOR crisis response operation core, which in case of clarification of the modalities of activation of Article 44 TEU could offer participating Member States the possibility of pledging forces on permanent bases, something which scholars argue would move the entire EU beyond interoperability towards integration.

Position of the European Parliament

In a February 2022 resolution, the European Parliament stressed that ‘the Strategic Compass was a starting point for implementing a common European defence in line with the provisions laid out in Article 42(2)TEU’ and ‘should constitute a major step towards a genuine European defence union’, which is part of the EU’s ‘objective of achieving strategic autonomy’. It underlined that the European External Action Service (EEAS) ‘must closely monitor and ensure the traceability and proper use of the material delivered to our partners under the EPF’. It also noted that several bodies, including the EU Satellite Centre (SATCEN) and the European Security and Defence College ‘should benefit from structural Union funding’.

Cooperation with partners, in particular the UN and NATO, is one of the elements most emphasised by Parliament, which reiterated the view that European NATO member countries needed ‘to take on more burden-sharing responsibilities in protecting the transatlantic space and respond to new hybrid threats’. Parliament has also stressed that it ‘expects the final draft of the Strategic Compass and the NATO Strategic Concept to be coherent with one another to ensure strengthened collaboration and burden sharing, and to identify ways to reinforce EU-NATO cooperation’. It considered Russia’s aggressiveness ‘as a major security threat for the European continent’, and warned of ‘severe economic and financial sanctions’ the EU was prepared to adopt in close cooperation with the US and other partners in response to the invasion of Ukraine. Parliament has also called to ‘assess and develop options for the establishment of EU standing multinational military units financed both from the European Peace Facility and the EU’s budget by making full use of the current possibilities offered by the EU Treaties’.

Possible action

Written by Marcin Grajewski.

The European Union’s governments, the European Parliament and European Commission have agreed on key regulations that will overhaul the EU’s digital market and increase the Union’s digital sovereignty in a field dominated by big US companies. The Digital Markets Act and Digital Services Act aim to make the digital market in Europe more transparent, safe and accountable. The planned legislative changes will introduce new rules for online digital players, such as intermediary services, hosting services and large online platforms. Big Tech companies – those designated as ‘gatekeepers’ – will have to moderate their content more actively, stop targeting minors with manipulative advertising and give more access to their systems to smaller competitors. The reforms, which still need final sign-off by the EU’s co-legislators, would force the companies to make their terms and conditions easily understandable. Other debates in this field include cyber-security, digital currencies and artificial intelligence.

This note gathers links to the recent publications and commentaries from many international think tanks on the European digital market.

Buy now, pay later: The age of digital credit
Bruegel, May 2022

Insights for successful enforcement of Europe’s Digital Markets Act
Bruegel, May 2022

Digital product passports: What does the Sustainable Products Initiative bring?
European Policy Centre, May 2022

The EU’s experimental approach in overhauling competition rules
Brookings Institution, April 2022

Resolving gender gaps in ICT is critical for a more sustainable future
Brookings Institution, April 2022

Measuring the intangible economy to address policy challenges
Bruegel, April 2022

The dark side of artificial intelligence: Manipulation of human behaviour
Bruegel, April 2022

What is the metaverse?
Chatham House, April 2022

Two worlds apart? Harmonizing digitalization and the environment
Chatham House, April 2022

After the DMA, the DSA and the New AI regulation: Mapping the economic consequences of and responses to new digital regulations in Europe
European Centre for International Political Economy, April 2022

Strategic autonomy tech alliances
Foundation for European Progressive Studies, April 2022

Regulating the digital future: A centre-right approach to crypto assets and digital currencies
Wilfried Martens Centre for European Studies, April 2022

Next-generation technology and electoral democracy: Understanding the changing environment
Centre for International Governance Innovation, March 2022

Cybersécurité et protection des données en Europe: Menaces et perspectives
Jacques Delors Institute, March 2022

Advancing European internal and external digital sovereignty
Stiftung Wissenschaft und Politik, March 2022

Can a cybercrime convention for all be achieved?
Chatham House, March 2022

The fight for Europe’s digital future
European Council on Foreign Relations, March 2022

Growing stronger together: Towards an EU–ASEAN digital partnership?
Clingendael, February 2022

Facebook shadow profiles
DIW, February 2022

The EU Digital Markets Act: Assessing the quality of regulation
European Centre for International Political Economy, February 2022

The platform economy in Europe: Results from the second ETUI Internet and Platform Work Survey
European Trade Union Institute, February 2022

Russia’s quest for digital sovereignty ambitions, realities, and its place in the world
German Council on Foreign Relations, February 2022

The European Union renews its offensive against US technology firms
Peterson Institute for International Economics, February 2022

How the Digital Markets Act will challenge consumers
Centre for European Reform, January 2022

No pain, no gain? The Digital Markets Act
Centre for European Reform, January 2022

Innovative data collection methods for international development
Center for Strategic and International Studies, January 2022

Digital trade and digital technical standards
Chatham House, January 2022

Which platforms will be caught by the Digital Markets Act? The ‘gatekeeper’ dilemma
Bruegel, December 2021

‘In situ’ data rights
Bruegel, December 2021

Global gateway’s proof of concept: EU digital connectivity in Africa
Clingendael, December 2021

When internet governance meets digital cooperation
Hague Centre for Strategic Studies, December 2021

Competitors’ reactions to big tech acquisitions: Evidence from mobile apps
DIW, December 2021

The global digital skills gap: Current trends and future directions
Rand Europe, December 2021

Listening to different European voices is key for the green digital transition
Friends of Europe, November 2021

No digitalisation without representation: An analysis of policies to empower labour in the digital workplace
Foundation for European Progressive Studies, November 2021

The digital technology environment and Europe’s capacity to act
German Institute on Foreign Relations, November 2021

The Digital Markets Act (DMA): Between European autonomy and transatlantic cooperation
Hellenic Foundation for European and Foreign Policy, November 2021

Do robots dream of paying taxes?
Bruegel, October 2021

Correcting course: The 2030 digital compass
Foundation for European Progressive Studies, October 2021

Connected Europe: A digital brand for a just transition
Friends of Europe, October 2021

The green digital transition will fail without citizen participation
Friends of Europe, October 2021

The great transatlantic data disruption: The damage of data localization after Schrems II
Progressive Policy Institute, October 2021

Production and trade of ICT from an EU perspective
Wiener Institut für Internationale Wirtschaftsvergleiche, October 2021
Council on Foreign Relations, December 2021

Read this briefing on ‘The EU’s digital market‘ in the Think Tank pages of the European Parliament.

Written by Anna Caprile and Eric Pichon.

This paper is one of 11 policy responses set out in a new EPRS study which looks first at 15 risks facing the European Union, in the changed context of a world coming out of the coronavirus crisis, but one in which a war has been launched just outside the Union’s borders. The study then looks in greater detail at 11 policy responses the EU could take to address the risks outlined and to strengthen the Union’s resilience to them. It continues a series launched in spring 2020, which sought to identify means to strengthen the European Union’s long-term resilience in the context of recovery from the coronavirus crisis. Read the full study here. The issue in short: The challenge and the existing gaps

Over the past eight years, hunger and malnutrition have been rising steadily, reversing several decades of progress. According to the UN Food and Agriculture Organization (FAO), between 720 and 811 million people in the world faced chronic hunger in 2020, the highest level since 2014. Climate change and the Covid-19 pandemic have further exposed the challenges of the global food system to feed an increasing population in a sustainable manner.

Russia’s military aggression against Ukraine has raised a widespread international concern of a global food crisis similar, or worse, to the one the world faced in 2007-2008. Russia and Ukraine are key agricultural players which, combined, export nearly 12 % of the food calories traded globally, and are major providers of basic agro-commodities, including wheat, maize and sunflower oil. Russia is also the world’s largest exporter of fertilisers (see table 1). Several regions are highly dependent on imports from these two countries to ensure their basic food supply: Russia and Ukraine, combined, supply over 50 % of the cereal imports in North Africa and the Middle East, while eastern African countries import 72 % of their cereals from Russia and 18 % form Ukraine.

1. Impact on global food supply: factors and state of play

Global food supply will be negatively affected by three concomitant factors arising from the military aggression, namely:

• A significant reduction (or total halt) of exports and production of essential commodities from the countries at war;
• A global spike in prices of food supplies and inputs needed for agri-food production (fertilisers and energy);
• International responses to the above factors, which can either amplify the effects of the crisis (mainly by uncoordinated protectionist or speculative measures) or mitigate it (applying lessons learnt from the 2007-2008 food crisis).

The level of the war’s impact on global food supply, and the severity of the subsequent food crisis, will largely depend on the duration of the conflict itself and of the evolution of each of the factors mentioned above. Depending on all these variables, and of the measures taken to mitigate the impact of the crisis, different scenarios can be envisaged.

The situation, which is very fluid and evolving rapidly, can be summarised as follows at the moment of writing:

• Disruption of exports and production capabilities in Ukraine and Russia

The UN Food and Agriculture Organization so far expects that between 20 % and 30 % of Ukrainian land usually destined for cereals, maize and sunflower seeds will not produce crops for next year’s harvest. The Ukrainian Prime Minister confirmed that Ukraine’s 2022 grain harvest is expected to be 20 % less than last year. In March, Ukraine banned exports of a number of food products (rye, barley, buckwheat, millet, sugar, salt and meat) until the end of 2022.

In the case of Russia, although no major disruption to crops already in the ground appears imminent, uncertainty exists over the impact on exports. In the short-term, disruption of shipments of 10 % up to 30 % is expected, mainly due to the closure of the Azov Sea to commercial vessels. Black Sea ports are open for the moment, from where most cereals are shipped, although its designation as a ‘high risk’ area for shipping has pushed up insurance premiums in that industry. Russia started curbing exports of cereals as early as December 2021. In mid-March, Russia suspended its exports of wheat, maize and other cereals to Armenia, Kazakhstan and Kyrgyzstan. Although EU sanctions imposed on Russia and Belarus do not target agricultural commodities, they do affect fertiliser trade from Belarus (potash), and could be followed by counter-sanctions from Russia and Belarus, as happened in 2014. Russia has already banned ammonium nitrate exports and has threatened to impose further fertiliser exports bans to ‘non friendly’ countries.

Overall, the European Commission estimates that up to 25 million tonnes of wheat would need to be substituted in order to meet worldwide food needs in the current and next seasons.

• Food commodities and fertiliser inflation levels

The FAO Food Price Index, tracking monthly changes in international commodity prices, indicates an increasingly difficult situation: it averaged 140.7 points in February 2022, its highest point ever, and 3.1 points above the previous peak of February 2011. In the EU, food prices have increased 5.6 % compared to February 2021. Currently, sunflower oil and wheat are being traded at near-record highs. While sunflower-seed oil is highly substitutable with other vegetable oils, wheat is not. Wheat is a staple food for over 35 per-cent of the world’s population, and the lack of substitutability and dietary diversity will likely compound the pressure on wheat prices. Concerning fertiliser, prices were already on the rise before the war, reaching levels unseen since the global financial crisis, mostly due to higher gas prices. The FAO forecasts that the global reference price of fertiliser would undergo an additional 13 per-cent increase in 2022/23, relative to its already elevated baseline level, in response to the more expensive production inputs implied by the higher crude oil price, but also by higher crop prices. This increase would influence production costs for the 2022/23 growing seasons.

• Individual country measures in international markets

A number of countries, other than Russia and Ukraine, have already imposed or have announced their intention to impose some degree of control over the export of essential agricultural commodities. Egypt (the first importer of Ukrainian and Russian wheat), Argentina, Indonesia, Moldova, Serbia and Turkey are imposing export bans on staple crops, and more countries may follow. In the EU, on 4 March, Hungary announced export controls over wheat, rye, barley, oats, maize, soybeans and sunflowers, requiring preliminary registration of intended exports and giving the government a purchase priority for these goods until 15 May 2022. China has imposed export restrictions on phosphate fertiliser until June 2022.

Lessons learnt from the 2007-2008 food crisis indicate that protectionist trade restrictions were a significant driver in the near doubling of wheat prices at the time, since they caused further market distortions and exacerbated the crisis. G7 leaders stated on 24 March 2022 their determination to ‘avoid export bans and other trade-restrictive measures, maintain open and transparent markets, and call on others to do likewise, consistent with World Trade Organization (WTO) rules, including WTO notification requirements’.

2. Expected impact on EU food security

While food availability, at the moment, is not at stake in the EU, food affordability for low-income households might be at risk. Furthermore, EU agricultural production will be impacted by the EU’s strategic dependences on a number of key inputs.

The bloc is largely self-sufficient for key agricultural products, such as wheat and barley (net exporter), and maize and sugar (largely self-sufficient). The EU is also self-sufficient for a number of animal products, both diary and meat products, fruits and vegetables. However, the EU is a considerable net importer of specific products which may be difficult to substitute in the short term, such as sunflower oil and seafood. Moreover, the crisis has exposed the dependency of the EU on a number of key imported inputs: energy, animal feed and feed additives, as well as on agricultural fertilisers.

The EU vulnerability to market distortions in fertiliser trade (both in terms of prices and export restrictions) might be particularly acute, since fertilisers represent 18 % of the input costs for arable crops. For potassic fertilisers, the EU relies on Belarus and Russia for 59 % of its imports, while for nitrogen fertilisers (for which natural gas price is the main determinant), 31 % of EU imports come from Russia.

In terms of food affordability, inflationary tensions will disproportionately affect low-income house-holds, including refugees, putting them at further risk of food insecurity. According to the FAO,[i] a total of 6.9 million people in the EU were exposed to severe food insecurity over the 2016-2018 period, based on the food insecurity experience scale (FIES). The pandemic highlighted the vulnerability of groups of EU citizens, with food banks experiencing a sharp increase in demand. It also revealed the dependence of low-income households on social assistance programmes, such as subsidised school lunches, to cover their nutrition needs. In 2020, 8.6 % of the overall EU population were unable to afford a meal with meat, fish or a vegetarian equivalent every second day.

3. Expected impact on global food security

The current Russian war of aggression on Ukraine risks raising by 7.6 to 13.1 million the number of undernourished people in 2022-2023, the FAO estimates. Jordan, Yemen, Israel and Lebanon are among the most concerned countries, as they rely heavily on basic commodities imports, of which Russia and Ukraine have strong shares. African countries will have difficulties to face market disruptions and the rise in prices. Higher prices and shortages also seriously affect food assistance to fragile countries. In Ukraine itself, the UN World Food Programme (WFP) estimates that ’45 per cent of the population are worried about finding enough to eat’.

Existing policy responses EU action Figure 48: Safeguarding EU and global food security in times of crisis

Food security, defined as the access to sufficient, safe and nutritious food for all, has been one of the core objectives of the EU’s common agricultural policy (CAP) since its entry into force in 1962, as enshrined in the Treaties (Article 39 of the Treaty on the Functioning of the European Union TFEU). The CAP provides income support, market measures and rural development measures to safeguard farmers and increase agricultural productivity, while protecting rural landscapes and the environment. Over 60 years, and over successive CAP reforms, the EU has been developing its capacity to ensure a high degree of food security and self-sufficiency, now scoring as one of the most food-secure regions in the world, and evolving from a net food importer to becoming the world’s first exporter of agri-food products. The latest reform of the CAP, formally adopted on 2 December 2021 after three years of negotiations, will enter into force in January 2023 and will cover CAP interventions until 2027. The reform introduces a new delivery model, moving from compliance towards results and performance, with a new distribution of responsibilities between the EU and the Member States, and with renewed emphasis on environmental performance and sustainability. By January 2022 Member States had to present to the Commission their national strategic plans, i.e. how they intend to use, manage and monitor CAP instruments and tools to achieve the ambitious CAP objectives.

The common fisheries policy (CFP) was launched in 1983, as a structural policy to regulate the market for fisheries products and access to fishing waters, and to modernise EU fishing fleets. It subsequently added the objectives of conservation and management of the fisheries resources in EU waters and in the wider context of international fisheries agreements.

While the CAP and CFP regulate primary production, the first stage in ensuring availability of food supply, other policies and instruments have contributed to enhance other dimensions of the EU food security. The General Food Law Regulation, revamped in 2019, lays down general principles, requirements and procedures related to EU decision-making in food and feed safety, and establishes the European Food Safety Authority (EFSA) as an independent scientific advisory and monitoring body. The Fund for European Aid to the Most Deprived (FEAD) supports EU countries’ actions to provide food and basic material assistance to the most deprived. On 20 May 2020, the Commission unveiled its ‘A farm to fork strategy for a fair, healthy and environmentally friendly food system‘, with the ultimate objective of making the EU food system a global model of sustainability at all stages of the value chain, and setting ambitious sustainability targets to be reached by 2030: reducing the use and risk of pesticides by 50 %, reducing the use of fertilisers by at least 20 %, reducing sales of antimicrobials used for farmed animals and aquaculture by 50 %, and achieving a proportion of 25 % of agricultural land under organic farming.

In 2020, the coronavirus crisis sent shockwaves through food supply chains, affecting the EU too. The EU food system proved resilient, supported by a host of sectoral, national and EU policy measures. However, the disruptions shone a spotlight on some structural weaknesses in the EU’s food supply chain, as well as to affordability of safe and healthy food in the EU itself. Consequently, food security in the EU was put at the top of the agenda, and in November 2021 the Commission presented its communication on ‘a contingency plan for ensuring food supply and food security in times of crisis’, one of the actions envisaged in the ‘farm to fork strategy’ (see box below). Along the same lines, the French Council Presidency (January – June 2022) has highlighted sovereignty and food self-sufficiency as one of the main objectives of its programme in the agricultural sector.

EU contingency plan for food supply and food security and
the European Food security Crisis preparedness and Response Mechanism
Key to improving EU preparedness, this contingency plan embraces a collaborative approach between all public and private parties being part of the food supply chain. From the private sector, this includes farmers, fishermen, aquaculture producers, food processors, traders and retailers as well as transport and logistics sectors for instance. EU, national and regional authorities will also be central to this plan.
The plan itself will be rolled out by the European Food Security Crisis preparedness and response Mechanism (EFSCM), a permanent platform coordinated by the Commission, which includes Member States public authorities and relies on a dedicated group of experts (the EFSCM expert group). The EFSCM, which combines Member States’ and some non-EU countries’ representatives and actors from all stages of the food chain, met for the first time on 9 March 2020, and held a subsequent meeting on 23 March 2020. The group will meet periodically, and in the event of a crisis, at very short notice and as frequently as necessary.
It will focus on specific activities and a set of actions to be completed between mid-2022 and 2024:
– mapping of vulnerabilities and critical infrastructure of the food supply chain, including structural issues;
– foresight, risk assessment and monitoring: improve preparedness by making use of available data (including on weather, climate, markets);
– coordination, cooperation and communication: sharing information, best practices, national contingency plans; development of recommendations to address crises; coordination and cooperation with the international community.

The 24 February 2022 invasion of Ukraine by Russia has put, even more so, food security at the top of the EU political agenda. The 10-11 March Versailles declaration agreed by the EU leaders urged the Commission to present options to address the rising food and input prices and enhance global food security in the light of Russia’s war. The Commission swiftly presented a package of measures embedded in the 23 March communication on ‘Safeguarding food security & reinforcing the resilience of food systems’, including short-term and medium-term proposals to enhance food security in the EU and in third countries, including in Ukraine itself. The main actions at EU and Member State level (detailed in the boxes below) can be undertaken using existing instruments, without additional legislative changes. In parallel, the Commission announced the postponement of two highly anticipated Green Deal legislative proposals – on the sustainable use of pesticides and nature restoration targets in the EU – and put forward a package of crisis measures to support the EU fishery and aquaculture sectors in the context of Russia’s invasion of Ukraine.

The package of measures announced by the Commission on 23 March were promptly supported by the European Council at its meeting on 24-25 March 2022, as well as subsequently by the Agriculture and Fisheries Council, and they have been met with broad support from a large number of stakeholders and civil society organisations, with the notable exception of most environmental NGOs. The main subject of discussion is whether pursuing immediate food productivity gains should imply sacrificing the EU’s sustainability ambitions laid down in the Green Deal and Farm to Fork. The position of the Commission is that sustainability and food security are inextricably linked and therefore can, and should, be pursued at the same time.

National level initiatives

In the 2023-2027 CAP, Member States are in the driving seat for the design and implementation of their CAP National Strategic Plans (NSP) agreed upon with the Commission. In its 23 March communication, the Commission already announced a higher degree of flexibility in revising the NSP with a view to adapt them better to arising needs, and encouraged Member States to use it to enhance overall resilience of food systems (see box below).

Communication on ‘Safeguarding food security & reinforcing the resilience of food systems’
Main measures – EU level
– a €500 million support package, including mobilisation of CAP reserve funds, for EU farmers most affected by the crisis, which can be topped up to €1.5 billion through Member States’ national envelopes
– market safety net measures to support specific markets (i.e. pigmeat sector) and increased levels of advances of direct payments later this year
– new self-standing Temporary Crisis Framework (TCF) for State aid
– possibility for Member States to derogate from certain greening obligations in 2022 to bring additional agricultural land into production (i.e. use of fallow land under the Ecological Focus Areas (EFAs).
– preservation of the EU single market, avoiding export restrictions and bans
– support through the Fund for European Aid to the Most Deprived (FEAD) for EU countries’ actions to provide food and/or basic material assistance to the most deprived.
– possibility for Member States to apply reduced rates of value added tax and encourage economic operators to contain retail prices
Main measures – Member State level
The Commission encourages Member States to:
1. Use the new CAP strategic plans to prioritise investments that reduce dependency on gas and fuel and inputs such as pesticides and fertilisers, through:
– Investments in sustainable biogas production, reducing dependency on Russian gas.
– Investments in precision farming, reducing dependency on synthetic and mineral fertilisers as well as chemical pesticides.
– Support for carbon farming, reducing greenhouse gas emissions and providing a better income for farmers.
– Support for agro-ecological practices, reducing dependency on chemical inputs and ensuring lasting food security.
2. Ensure the effectiveness and coverage of social protection systems and access to essential services for those in need EU and Member State actions with external partners and international organisations

At the global level too, the EU is committed to ensuring access to affordable, safe, sufficient and nutritious food for all. This is enshrined in the EU policy framework to help developing countries address food security challenges (2010) and in the new European Consensus on Development (2017). Maternal and child nutrition are at the heart of a 2013 policy framework and of the 2014 EU action plan on nutrition – reducing the number of stunted children under five by 7 million by 2025. Council conclusions of 31 May 2021 reiterated the EU priorities on food security:

• strengthening sustainability and resilience;
• promoting healthy diets through sustainable food systems;
• strengthening food safety and public health;
• contributing to the sustainability and resilience of food systems through trade;
• introducing new finance solutions and business models;
• improving scientific knowledge and ensuring a strong science-policy interface.

For the 2021-2024 period, the EU has pledged over €2.5 billion for international cooperation related to nutrition. This includes providing direct food aid in crisis situations, together with supporting third countries in preventing and managing food crises, linking up humanitarian aid, development cooperation, and conflict management when appropriate. The EU toolbox to harness the fight against malnutrition in third countries includes the provision of nutritious products and treatment, and support to national nutrition programmes. In streamlining humanitarian aid and development programming, the EU ensures the main causes of under- or malnutrition are tackled in the longer term, notably for children and pregnant or lactating women, through better access to water, sanitation and healthcare facilities – a crucial challenge during the coronavirus pandemic. To improve resilience to food crises, the EU focuses on promoting diets adapted to the local circumstances and on supporting smallholder farmers, who run 80 % of the farms and 30-40 % of the land on average in low- and lower-middle-income countries. The EU promotes sustainable agricultural practices to make better profits from work on the land, while safeguarding resources and biodiversity. EU trade policies and negotiated trade agreements must take into account food security objectives, and the EU assesses their impact in this regard.

Development cooperation and humanitarian aid are shared competences between the EU institutions and Member States, which seek coherence between their respective policies in these matters. In the framework of the external investment plan (EIP), the European Fund for Sustainable Development (EFSD, now EFSD+) notably addresses the lack of financing mechanisms for smallholders, the main assets for food security. Joint programming with partner countries also includes food security and nutrition strategies, for example in Senegal, Laos and Nepal. A partnership to boost the African production of plant-based proteins was announced at the February 2022 EU-African Union summit. It will be supported, along with other EU and Member States’ initiatives, by the Global Gateway investment package on sustainable food systems.

EU support to food crisis preparedness and adaptation support includes initiatives such as DeSIRA (Development Smart Innovation through Research in Agriculture) and monitoring tools to identify risk and foster innovation. Research is often done in partnership with international partners, such as organisations and research centres in the Food Security Information Network (FSIN), funded by the EU and the United States Agency for International Development, and the Global Network Against Food Crises (GNFC), launched in 2016 by the EU, the FAO and the World Food Programme (WFP). The EU also supports CGIAR, an international research network in sustainable food systems and the fight against hunger, notably with a €140 million commitment announced on 25 September 2021.

The EU is committed to transforming global food systems and to promoting its Farm to fork strategy. To this aim, the Commission announced its participation in eight global coalitions on food security and nutrition, which gather together a variety of stakeholders.

The above-mentioned communication on Safeguarding food security and reinforcing the resilience of food systems commits to supporting Ukraine’s short- and medium-term food security strategy. In addition, the Food and Agriculture Resilience Mission (FARM) was launched on 24 March 2022 by the French Presidency of the Council in coordination with G7 countries and the African Union. FARM will aim at monitoring trade on agricultural markets, support Ukraine’s and the most affected countries’ agricultural capacity, and address the impact of expected drops in production levels on the most fragile countries. In an annex to a joint statement by President von der Leyen and President Biden (24 March 2022), the EU and United States made pledges to address food security and nutrition issues. On top of the €2.5 billion pledge for global food security and nutrition, the proposed €330 million EU Emergency Support Programme for Ukraine will aim to secure Ukraine’s access to basic goods and services, and to support its agricultural sector. The Commission, in conjunction with FAO, is supporting Ukraine to develop and implement a short-term and medium-term food security strategy (inputs for farmers, maintenance of transportation and storage facilities). Position of the European Parliament

In numerous resolutions, the European Parliament has expressed its concern about tackling food insecurity in third countries, notably in the framework of its cooperation with Africa. This in particular implies supporting the provision of basic services, including food security, with the involvement of local communities.

In its resolution on the farm to fork strategy, Parliament highlighted the need for food systems able to provide enough affordable and safe food for all, and stressed that ‘rapid population growth, climate change, the scarcity of natural resources and changing consumption patterns’ further challenge the achievement of the ‘Zero hunger’ sustainable development goal (SDG 2). In its opinion report for the resolution, Parliament’s Committee on Development (DEVE) called for comprehensive implementation of the farm to fork strategy, taking into account the needs of the most deprived, notably in conflict-affected areas.

On 24 March 2022, the European Parliament adopted a resolution calling for an ‘urgent EU action plan to ensure food security inside and outside the EU in light of the Russian invasion of Ukraine’. A large number of EP proposals to support EU farmers and consumers are reflected in the 23 March communication on safeguarding food security. The EP has called on the Commission to consider additional measures, such as extending the extraordinary rural development Covid-19 measures to address farmers’ liquidity problems, a proposal that has been supported by 12 EU Member States in the Council. The EP emphasises that European strategic autonomy in food, feed and the agricultural sector overall must be reinforced, in line with the Green Deal objectives. It notes, however, that the objectives set out in the Farm to Fork and Biodiversity strategies must be analysed on the basis of a comprehensive impact assessment on EU food security and the situation in neighbouring countries, maintaining as first priority that no food shortages arise. The EP also calls for the setting up of safe food corridors to and from Ukraine to deliver aid and goods, as well as for direct and urgent support to Ukraine with seeds, fuel, fertilisers to maintain its agricultural production.

Possible action

Written by Jaan Soone.

The European Commission’s ‘fit for 55’ package, adopted on 14 July 2021 under the European Green Deal, includes a proposal to revise the 2014 EU framework for the deployment of alternative fuels infrastructure.

The proposal puts forward binding targets for electric vehicle charging and hydrogen refuelling points, electric charging for stationary aeroplanes at airports, and on-shore power supply for ships at ports. It also includes rules on refuelling points for liquefied natural gas for heavy-duty vehicles and in maritime ports.

The European Parliament’s Committee on Transport and Tourism (TRAN) is responsible for the file, with the rapporteur Ismail Ertug (S&D, Germany). His draft report puts forward several amendments to strengthen the Commission proposal, including in terms of power output targets and implementation dates for electric charging infrastructure for cars and trucks, and targets for hydrogen refuelling stations and shore-side electricity supply in ports. The vote on the draft report in TRAN is tentatively scheduled for July 2022.

Read the complete briefing on ‘Alternative fuels in transport: Targets for deployment of recharging and refuelling infrastructure‘ in the Think Tank pages of the European Parliament.

Electrically chargeable cars: Global leaders, EU and top five EU countries, 2020 Public electric recharging points: Global leaders, EU and top five EU countries, 2020

Written by Clare Ferguson and Katarzyna Sochacka.

The highlight of the May II plenary session in Brussels was an address to a formal sitting of Parliament by Maia Sandu, President of the Republic of Moldova, followed by a debate on the Foreign Affairs (AFET) Committee’s annual report on progress to date with implementation of Moldova’s EU Association Agreement. Members then adopted a resolution calling for more strategic support for the country. Russia’s war on Moldova’s neighbour Ukraine again dominated the agenda. Members held two important debates: on the fight against impunity for war crimes in Ukraine, and on European solidarity and energy security in the face of Russia’s invasion and its recent refusal to supply gas to Poland and Bulgaria. Members also debated Council and Commission statements on prosecution of members of the opposition and detention of trade union leaders in Belarus.

2021 Rule of law report

The rule of law is a key element of democracy and is one of the founding values of the EU, binding on all its Member States as well as candidate countries. Parliament debated and adopted a report from the Civil Liberties, Justice and Home Affairs (LIBE) Committee, prepared in response to the European Commission’s 2021 rule of law report, which monitors the situation annually in EU countries. Covering four areas (justice systems, anti-corruption, media pluralism and freedom, and institutional checks and balances), this, the second such report, notes that there have been positive developments, despite the stress that the Covid‑19 pandemic placed on democratic systems. However, the committee repeats its view that the Commission should make country-specific recommendations and monitor their progress. The committee also criticises the latest rule of law report for failing to take account of Parliament’s previous recommendations that it should include monitoring of all key EU values: respect for human dignity, freedom, democracy, equality, the rule of law and respect for human rights, including for minorities.

Reports on North Macedonia and Albania 2021

Members also debated and adopted two AFET committee annual reports on the enlargement process for EU membership candidates North Macedonia and Albania – where the committee regrets the lack of progress within the Council on opening accession negotiations. North Macedonia is the more advanced candidate in terms of its accession process, and the AFET report highlights its positive record in its transition to democracy. However, Bulgaria continues to block the opening of accession negotiations due to a cultural dispute, and the report nevertheless calls for North Macedonia to continue its administrative and political reform. Negotiations on Albania’s EU membership bid have not yet begun. Indeed, Albania’s international standing on corruption has even fallen since its EU application in 2014. The AFET committee’s annual report on Albania‘s progress highlights persisting issues of judicial independence, corruption, freedom of speech and minority rights, and calls on the Albanian authorities to eliminate corruption and criminality in public life.

Minimum level of taxation for multinational groups

Parliament held a debate on a proposal in the areas of taxation of multinational companies in the globalised, digitalised world. In recent years, digitalisation has made it easy for large multinational enterprises to shift their profits to countries with preferential tax regimes, thereby putting their profit before the opportunity to pay fair taxes to the societies that host them. This strips countries of revenue on which they depend to fund social benefits, such as healthcare, and investment. Parliament has long demanded reform in this area, and the Organisation for Economic Co‑operation and Development (OECD) recently agreed a framework for a minimum corporate tax rate. Members adopted an Economic and Monetary Affairs (ECON) Committee report that introduces a clause in the proposals that will allow revision of the proposed minimum tax rate threshold of €750 million a year. Following this consultation of the European Parliament, the proposal to implement the agreement in the EU should now be adopted by the Council, where a unanimous vote is required.

Establishing the European Education Area by 2025

Members also debated the Commission’s and Council’s responses to oral questions on proposals concerning the right to education in the EU. To ensure that people in the EU have access to a quality, inclusive education for personal fulfilment, to enable them to participate fully as citizens, and to boost their employment chances, the Commission proposes to build a European education area by 2025. The aim would be to offer work-based learning to at least 60 % of recent graduates, and learning opportunities for adults up to 65 years old. Further goals should promote learning for a sustainable environment by 2030, such as ensuring a good level of education in mathematics, science and computer skills for all. Members adopted a resolution proposed by the Culture and Education (CULT) Committee supporting the proposals.

Opening of trilogue negotiations

Committee decisions to enter into interinstitutional negotiations were announced: from the Internal Market and Consumer Protection (IMCO) Committee on the proposal for a regulation on machinery products and from the International Trade (INTA) Committee on the proposal for a regulation on applying a generalised scheme of tariff preferences.

Read this ‘at a glance’ on ‘Plenary round-up – May II 2022‘ in the Think Tank pages of the European Parliament.

Written by Fearghas O’Beara.

Following the dissolution of the Soviet Union in 1991, Russia experienced a window of religious pluralism in the Yeltsin era, allowing western Christian missionaries to operate freely. The Russian Orthodox Church (ROC) resented this encroachment into its canonical territory and, when Vladimir Putin took office in 1999, worked closely with him to consolidate its power. Putin valued such close collaboration as a way to exert control over society, eliminate alternative sources of moral authority at home, and extend Russian influence abroad.

The Home Front: Consolidating Russian Orthodox Church dominance

Already in January 2000, Putin’s first National Security Concept as acting Russian President promoted ‘strengthening of society’s moral values, traditions of patriotism’ as part of what he called ‘spiritual’ national interests. During his first two terms, Putin facilitated the ascendancy of the ROC through laws returning properties seized in the Soviet era and introducing religious education in public schools, as well as tax breaks and financial advantages. In return, the ROC used its influence and resources to push Putin’s vision of Orthodox Christian national identity and gave unwavering support for a strong, militarised state, particularly after the election of Kirill as ‘Patriarch of Moscow and All Russia’ in 2009. By 2016, Putin had promulgated the ‘Yarovaya Law’ severely curtailing the activities of non-traditional churches, part of wider Kremlin propaganda efforts portraying the West as decadent and bereft of Christian values and what has been described as the ‘ethnicisation of religion‘. Kirill has proved a vital figure in ensuring support in Russian society for Putin’s invasion. This contrasts with his more neutral position following the annexation of Crimea and invasion of the Donbas in 2014 as he sought to balance his alliance with the Kremlin and his desire for ROC control of the Ukrainian church. As of May 2022, the European Commission proposed adding Kirill to the list of individuals under sanctions in the Putin regime, the EU External Action Service describing him as ‘one of the most prominent supporters of the Russian military aggression against Ukraine’.

The Eastern Campaign: Exercising influence over Orthodox churches

In partnership with the ROC, the Kremlin has sought to spread its influence in predominantly Orthodox countries in eastern Europe, including a number of EU Member States, constituting a complex landscape of autocephalous (self-governing) churches which view either Moscow or Constantinople as pre-eminent. These efforts are coordinated by the ROC’s Department for External Church Relations under Metropolitan Hilarion of Volokolamsk, working closely with the Russian Ministry of Foreign Affairs. The Department is responsible for ‘relations of the Russian Orthodox Church with Local Orthodox Churches, non-Orthodox churches and Christian associations, non-Christian religious communities, governmental, parliamentary, public organizations abroad, inter-governmental, religious and public international organizations’.

A February 2021 hearing of the European Parliament’s Special Committee on Foreign Interference in all Democratic Processes in the European Union, including Disinformation (INGE) highlighted how Russia builds links within EU near-neighbourhood countries, through ROC activities stressing religious affinity and shared goals, such as defending persecuted Christians in the Middle East, or preventing the ‘islamisation’ of Europe. Other analysts have identified a ‘highly nation-specific approach‘ to Kremlin propaganda, combining narratives of Orthodox affinity with pan-Slavic brotherhood, defence of ethnic/linguistic minorities, or preservation of Europe’s Christian values, depending on the national context.

The EU country with the largest number of Orthodox believers – 18.7 million – is Romania, followed by Greece and Bulgaria. In the EU’s near neighbourhood, among countries which aspire to EU membership, Ukraine is by far the most populous, with almost 35 million Orthodox Christians, followed by Serbia, Georgia and Moldova. A 2017 Pew Forum survey reveals a majority of Romanians support the view that ‘a strong Russia is necessary to balance the influence of the West’. The Orthodox vs. Western values – ‘freedom vs. morality‘ – narrative was used in the 2018 referendum to ban same-sex marriage, strongly supported by the Romanian church but which failed to reach the required threshold. According to some authors, many Orthodox websites within the EU covering such ‘culture battles’ portray Putin as a defender of Orthodox values. However, the Romanian Orthodox Church is not particularly close to the ROC, and there is evidence that Romanians clearly distinguish between shared Orthodox values and strategic interests, viewing Russia as the biggest threat. In Bulgaria, a key figure seeking to push the country closer to Russia through Orthodox networks was Putin associate and Russian oligarch Konstantin Malofeev, founder of the St Basil the Great Charitable Foundation. Malofeev promotes the ‘Orthodoxy vs. the Decadent West’ narrative through his Tsargrad TV channel, which portrays the EU as an imposer of satanist-globalist ideologies aimed at eliminating Christian values, and his Katheon ‘think tank’. However, Malofeev – who has been on the EU sanctions list since 2014 – was ultimately banned from entering Bulgaria for 10 years in 2010 for his involvement in corruption of Bulgarian politicians in an effort to influence that country’s foreign policy.

The nominally autocephalous Orthodox Church of the Czech Lands and Slovakia came increasingly under ROC control during the Putin era, leading to scandals in 2012 which revealed the extent of Russian infiltration. Even if the number of Orthodox believers across Czechia and Slovakia is less than 100 000, the Church has been active in seeking to shape public opinion and remains within the ecclesiastic orbit of the Moscow Patriarchate. In this sense, it forms part of a wider network of Kremlin-driven cultural and religious foundations and organisations such as the All-Slavic Union and the Coordinating Council of Russian Compatriots, as well as Putin’s chief ideological vehicle, the Russkiy Mir Foundation.

While the Orthodox Churches of Romania and Bulgaria are autocephalous, and can more easily distance themselves from the ROC, in other EU countries minority Orthodox Churches are directly under Moscow and face a more delicate balancing act. One case in point is the Latvian Orthodox Church, which formally remains under the Russian church, unlike its Estonian counterpart, which split with Moscow in recent years. The Latvian Church leader, Metropolitan Alexander, has tried to maintain that unity while condemning the Russian invasion of Ukraine: ‘We Russians in Latvia are not responsible for what other governments do’. Meanwhile, Patriarch Kirill grants this amount of leeway in order to avoid yet another church in the former Soviet sphere following a Western trajectory. Meanwhile, Greece and Cyprus are considered by some observers as vulnerable to Russian influence through both geography and shared cultural and religious histories. Russia has sought to leverage shared religious heritage with mixed results, in part due to the broader struggle for hegemony within Orthodoxy between the Patriarchates of Moscow and Constantinople, the latter based in Istanbul and strongly supported by Greece and Cyprus. Putin and Patriarch Kirill have visited Greek Orthodoxy’s holiest site at Mount Athos on various occasions, transmitting messages of ‘Orthodox values’. When Greek Prime Minister Alexis Tsipras visited Putin in Moscow in 2015, he also met with Kirill. Konstantin Malofeev has cultivated ultra-Orthodox political forces which ultimately failed to make an impact. The Cypriot Orthodox Church resisted ROC pressure and in 2020 recognised the independence of the Ukrainian Orthodox Church.

The Western Campaign: Building a network of influence in Christian groups

In EU countries with no significant Orthodox presence, the Kremlin strategy has been to infiltrate Western Christian associations and link them to Orthodox ‘allies’ to fight for a common cause to preserve ‘European civilisation’ in what have been termed ‘conservative Christian alliances‘. The agenda of this ‘new ecumenical cooperation’ is about ‘traditional values’, the ‘traditional family’, the ‘sanctity of life’ and ‘religious liberty’. A key NGO coordinating such links is the World Congress of Families, closely linked to the ROC since its creation in 1995. Its congresses are eclectic gatherings of European Christian organisations, Orthodox prelates, US Evangelicals and European political figures such as Italy’s Matteo Salvini and Hungary’s Viktor Orban; the most recent were held in Hungary (2017), Moldova (2018) and Italy (2019). Alliances were thus also built with political parties and leaders on the right who endorse strong ‘Christian values’ narratives, as in the case of Salvini and Orban, as well as Ataka in Bulgaria, or where it fits better with the local context of ‘defending Europe against Islam’, such as with Austria’s Freedom Party. Another ‘new ecumenism’ organisation is the Dialogue of Civilizations Research Institute headed by Putin associate Vladimir Yakunin, former head of Russian Railways. Yakunin’s World Public Forum conferences in Greece brought together Orthodox Church leaders with Western organisations and European politicians on the left such as Austria’s Alfred Gusenbauer and Germany’s Martin Schulz.

Read this ‘at a glance’ on ‘Russia’s war on Ukraine: The Kremlin’s use of religion as a foreign policy instrument‘ in the Think Tank pages of the European Parliament.

Written by Tambiama Madiega and Costica Dumbrava.

This paper is one of 11 policy responses set out in a new EPRS study which looks first at 15 risks facing the European Union, in the changed context of a world coming out of the coronavirus crisis, but one in which a war has been launched just outside the Union’s borders. The study then looks in greater detail at 11 policy responses the EU could take to address the risks outlined and to strengthen the Union’s resilience to them. It continues a series launched in spring 2020, which sought to identify means to strengthen the European Union’s long-term resilience in the context of recovery from the coronavirus crisis. Read the full study here. The issue in short: The challenge and the existing gaps

The last two decades have been marked by the unprecedented development of the online world, giving rise to new ways to work, shop, socialise and spend time online. This has provided new opportunities for citizens to access political information, discuss issues, and engage in politics, as well as new possibilities for political actors to influence public opinion, mobilise people and organise electoral campaigns. Online ecosystems are thus likely to have a great impact on democratic politics and on broader democratic institutions in societies in the EU and elsewhere.

Online environments and digital technologies underpinning them, such as algorithmic decision systems, pose several key challenges to democracy, including:

• Distortion of public opinion through online filtering, ranking and moderation of content and interactions (e.g. via newsfeed algorithms, de/prioritisation or removal of content, polarisation of views, suspension of accounts). This is, at least partly, an unintended consequence of the business models and technologies supporting online ecosystems.
• Manipulation of political views and preferences through online disinformation – the deliberate use of algorithms, bots, trolls, deep fakes, etc. to spread false content. Whereas disinformation is a result of a complex interaction between people and ecosystems, manipulative algorithmic systems play a key role in amplifying disinformation.
• Distortion of electoral competition through deceiving online messages and political adverts – the use of intrusive and covert techniques to persuade, confuse, or intimidate voters from casting their votes (political microtargeting). The speed and efficiency of online political campaigns that rely on extracting and analysing troves of data to target highly specific groups increases the negative impact of disinformation and manipulative ads.
• Weakening the integrity of elections though foreign interference and cyber-attacks – concerted campaigns to distort opinions, influence election results and undermine electoral institutions and infrastructure. Cyber threats and the manipulative influence of foreign governments and media on elections in the EU is becoming a destabilising factor for EU democracies.

The EU population is well aware of the magnitude of such challenges. A 2019 Eurobarometer survey showed that more than half of Europeans who use the internet say they have been exposed to or personally witnessed disinformation online. Nearly four out of ten Europeans have been exposed to content where they could not easily determine whether it was a political advertisement or not, and nearly six in ten Europeans are concerned about the possibility of ‘elections being manipulated through cyberattacks’.

A 2019 study for the European Parliament showed how major disinformation campaigns have, in recent years, interfered with democratic processes, particularly elections and referenda. The deployment of hybrid threats by Russia, with massive disinformation campaigns and cybersecurity attacks, including more recently during the ongoing war in Ukraine, provides a live example of the potential detrimental impact of such actions on democracy. To ensure that democratic debate and future elections take place under the highest democratic standards, the EU needs to build a healthier online environment. This would require measures to fill in existing policy gaps, including: safeguarding the integrity of elections in the EU; establishing an adequate regulation and institutional oversight of how algorithms are used for political purposes; equipping citizens with skills and tools to fend off online disinformation and manipulation; increasing cyber resilience of electoral processes and infrastructures; and promoting healthy online environment standards worldwide.

Existing policy responses EU action

In recent years, the EU has made active efforts to ensure a safer online environment. The EU approach builds on four axes: strengthening digital platforms’ self-regulation; imposing a set of mandatory rules on the biggest online actors to ensure a safer online environment; regulating online political advertising; and reinforcing EU capacities to tackle disinformation and cyber threats.

Strengthening self-regulation of online platforms. In 2018, the EU published an action plan against disinformation and adopted a Code of Practice on Disinformation asking online entities such as platforms, major social networks and advertisers to address the spread of disinformation. A wide range of companies, including Facebook, Google, Twitter, Microsoft and TikTok, have implemented the EU Code and committed, on a voluntary basis, to fight disinformation. In December 2021, the Commission presented its European democracy action plan to empower citizens and build more resilient democracies across the EU, to be gradually implemented until 2023 – a year ahead of the elections to the European Parliament. In this action plan, the Commission envisages revising the Code of Practice on Disinformation to introduce new measures, including reducing financial incentives for disinformation, empowering users to take an active role in preventing its spread, and cooperating better with fact-checkers across EU Member States. The revised Code is intended to serve as part of a co-regulatory framework with the Digital Services Act to help platforms mitigate risks stemming from disinformation.

Mandatory rules on online platforms. The Digital Services Act (DSA) proposal, tabled in December 2020, aims to create a safer and trusted online environment and set EU-wide rules to ensure transparency, accountability and institutional oversight of the EU online space. A set of new rules to be imposed on online platforms includes transparency obligations to mitigate the adverse effect of online advertising for citizens. Furthermore, it is proposed that very large online platforms (or VLOP) are subject to tighter obligations, given the particular impact they have on the economy and society and their potential responsibility regarding the dissemination of illegal content and societal harms. Such companies will be required to assess the systemic risks stemming from the functioning and use of their services, and especially the intentional manipulation of their services, for instance through the creation of fake accounts and the widespread dissemination of information having a negative effect (e.g. on electoral processes). The new set of rules constitutes a step towards more cooperative and regulatory mechanisms in line with the European democracy action plan. The DSA proposal is currently the subject of protracted negotiations by the co-legislators.

Regulation of on-line political advertising. The Commission adopted a Proposal for a Regulation on the transparency and targeting of political advertising in November 2021 as a follow-up to the European democracy action plan. This initiative covers both online and offline activities and complements the proposal for the DSA. The new rules would require any political advert to be clearly labelled as such and to include information such as who paid for it and how much. In addition, political targeting and amplification techniques would need to be explained publicly in detail and would be banned when using sensitive personal data without the explicit consent of the individual.

Reinforcing EU capacities to tackle cyber threats and disinformation in an international context. The 2016 EU framework on countering hybrid threats is being complemented by a number of initiatives to better protect democratic processes from manipulation by third countries or private interests. The EU’s East StratCom Task Force, created in 2015, has been reinforced since then to counter disinformation by the Russian Federation and its affiliates throughout Europe. In December 2020, the Commission and the High Representative of the Union for Foreign Affairs and Security Policy presented a new EU cybersecurity strategy aiming to bolster Europe’s collective resilience against cyber threats and ensure that all citizens and businesses can fully benefit from trustworthy and reliable services and digital tools. In this context, two legislative proposals – a Directive on measures for a high common level of cybersecurity across the Union (NIS 2) and a Directive on the resilience of critical entities – are being finalised. In addition, Cyber Rapid Response Teams and the European Digital Media Observatory have been set up to assist Member States in order to ensure a higher level of cyber resilience and to respond collectively to cyber incidents and disinformation. The EU has also shown its ability to adopt extraordinary measures with its sanctions, recently adopted in a Council decision, to suspend the broadcasting activities of the main Russian state-controlled media outlets in the Union. However, more action is being advocated, while the efficacy of such measures in tackling disinformation on a larger scale has been questioned and recent research shows how disinformation about the ongoing conflict in Ukraine is being funded by online advertising. Furthermore, the new EU cybersecurity strategy was launched in 2020 to better address cybersecurity challenges in the EU and make physical and digital critical entities more resilient. Against this backdrop, in March 2022 the Council called for more action at EU level to ensure resilience of electronic communications infrastructure and networks in Europe, including more cooperation at operational level, the adoption of the forthcoming Cyber Resilience Act and the creation of a cybersecurity emergency response fund.

Figure 46: Key measures to ensure a healthier online environment for healthy democracies Obstacles to implementation

The development of digital environments has inevitably challenged legal frameworks that were devised to tackle pre-digital issues, e.g. traditional media, ‘paper’ advertising, TV-based electoral campaigning. The consolidation of a business model based on the accumulation and monetisation of data, along with insights from digital interactions and growing concern about the negative impact of this model on users and society, has put tremendous pressure on legislators to intervene.

However, uncertainty persists about the extent of the problem, the type of interventions that would be suitable and their broader implications, and the right balance between competing rights and interests (e.g. freedom of expression versus protection of democratic institutions). A key issue is the limited access to data and the scarcity of systematic research (in particular outside the US context) on the impact of online platforms and algorithms on individuals’ rights, social interactions and political institutions.

Tackling online disinformation has proved to be particularly difficult, requiring concerted efforts by online platforms, regulators, civil organisations, users, etc. The EU’s self-regulatory approach to tackling disinformation – based on voluntary standards and commitments – has, as the Commission acknowledged, led to limited results. The process for revising the Code of Practice on Disinformation is quite slow and was not finalised in 2021 as expected.

Furthermore, there are continuing issues with efforts to protect the democratic process and to safeguard the integrity of elections. A key challenge is that the regulation of elections in the EU consists of a patchwork of EU and national rules, which makes it more difficult to adopt a coherent response to common challenges. Increased coordination at national level (e.g. through national elections networks of relevant competent authorities) and at EU level (e.g. via the European cooperation network on elections and the Rapid Alert System) has been helpful but more needs to be done to tackle foreign interference, cyber-attacks and electoral manipulation. Uncoordinated efforts by Member States to regulate political advertising may obstruct the exercise of fundamental freedoms, with a direct effect on the functioning of the internal market. The complexity of issues and the heterogeneity of rules also create enforcement challenges, as national competent authorities struggle to monitor, discover, and sanction transgressions of rules.

Another layer of complexity concerns the transnational and global nature of online environments, which may require regulators to carefully consider the global implications of proposed interventions and to engage with other legislators around the world.

Policy proposals by experts and stakeholders

Whereas many of the suggestions offered by experts and stakeholders have been taken up in recent EU actions and proposals (such as increasing the transparency and oversight of online platforms and better regulating online ads), there are several proposals that go beyond current discussions.

1. Safeguarding the integrity of elections in the EU

There are voices arguing for a tougher stance on targeted political advertising. According to the European Data Protection Supervisor (EDPS), data protection safeguards are also a prerequisite for fair and democratic elections. The authors of a 2019 study called on data protection authorities to step up their investigations into political microtargeting practices by advertisers, digital platforms and intermediaries. This could be part of a broader approach aiming to give users more power over their data collected online. In its 2022 Opinion on the Commission’s proposal on political advertising, the EDPS recommended a full ban on microtargeting for political purposes. Such a ban has been supported by other stakeholders, such as the European Partnership for Democracy.

Together with other transparency requirements, such as those included in the proposals on the DSA and on political ads, some argued that users should have access to a repository of political and public issue ads that they are targeted with. To minimise the impact of disinformation on European democracy, a 2021 study further recommends regulating political and issue-based advertising at EU level and granting the European Court of Auditors and the European Anti-Fraud Office (OLAF) powers to pursue the investigation of campaign finances, including sponsorship of social media advertisements. Another suggestion is to make contracts between political parties and platforms open for public scrutiny. These could be part of a ‘universal advertising transparency by default’ approach, which was advocated by a large group of NGOs.

Considering the negative effects of automated disinformation, some argued for a ban on the use automated accounts (bots) to disseminate political and public issue ads. To increase cyber resilience, the European Union Agency for Cybersecurity (ENISA) recommended imposing a legal obligation on political organisations to ensure a high level of cybersecurity in their systems, processes and infrastructure. It also suggested classifying election systems, processes and infrastructure as critical infrastructure, so that they become subject to stricter EU cybersecurity requirements.

2. Enhancing regulation and institutional oversight of algorithms used for political purposes

In recent years, there have been plenty of discussions about the kind and breadth of oversight mechanism needed to ensure a healthy online environment. A 2021 study suggested establishing an accountability framework (beyond the DSA proposal) that would include a new authority for online content platforms to supervise the process and organise relations with the various stakeholders, including the community of vetted researchers and relevant NGOs. Other proposals advocating for a specific institutional oversight mechanism include establishing a new EU agency for countering disinformation to better coordinate the EU’s counter-disinformation initiative, and creating a new regulatory body for political advertising.

3. Support citizens, civil society, and research

Another set of suggestions focus on empowering citizens and promoting tools to identify and mitigate online risks. Measures in this category include awareness-raising, improving media literacy, and supporting investigative journalism and fact-checking services. An important element in this strategy is also enabling researchers more broadly to access data to research on the impact of the online environment and automated tools on democracy. Another suggestion is to increase diversity of exposure to online information by promoting a diversity by design principle, where users are encouraged to explore different kinds of information to those they usually prefer. A further suggestion is to create a common European high-quality media service transmitted by contemporary technology, with a view to enhancing EU cohesion and offering a common European perspective. The Commission launched an expert group on disinformation and digital literacy to assist it in preparing common guidelines, to be published in Autumn 2022, for teachers and educators to tackle disinformation and promote digital literacy through education and training.

4. Promote EU standards worldwide

The question of how to address the challenges to democracy in an online environment is widely discussed around the globe, and the EU could help steer a common approach at international level. In this respect, a 2020 study from the Council of Europe recommends considering the establishment of an informal intergovernmental taskforce to facilitate the regular exchange of ideas, practices and legislative and regulatory measures on the influence of foreign media on national elections. Such a taskforce could also work on a common code on political advertising to be applied to licensed services. Achieving harmonisation of standards in this area beyond the EU could contribute to the cooperation between regulators and also help to combat problems of foreign interference. A 2019 study argues for enhanced transnational cooperation with a view to establishing a coherent global framework to regulate disinformation (including at G7 and OECD level). The intensification of the US-EU dialogue on technology governance could also lead to a global oversight framework, based on various public bodies and on a multi-stakeholder approach.

Beyond intergovernmental level, a 2021 European Parliament analysis suggested that the EU support the creation of a new ‘Transparency International for Disinformation’, a dedicated civil society organisation to independently monitor and provide comparable data about disinformation campaigns from target countries.

Position of the European Parliament

Parliament has long supported EU initiatives to regulate digital platforms and political advertising and reinforce EU capacities to tackle disinformation and cyber threats. In its 2018 resolution on the use of Facebook users’ data by Cambridge Analytica, Parliament called for a range of measures, including adapting the electoral rules on online campaigning (i.e. those pertaining to transparency on funding, election silence periods, the role of the media, and disinformation) and to monitor the transparency features in relation to political advertising introduced by the online platforms.

In its 2019 resolution on foreign electoral interference and disinformation, Parliament called on the EU to create a legal framework for counter-hybrid threats, classify equipment used for elections as critical infrastructure and turn the East StratCom Task Force into a permanent structure with more funding.

In the context of the ongoing DSA negotiations, Parliament asked for more transparency over algorithms to fight harmful content and disinformation and for more transparent and informed choices for the recipients of targeted advertising. Also, on 9 March 2022 Parliament’s Special Committee on Foreign Interference in Democratic Processes adopted its final report on malicious foreign interference, asking the Commission to propose a more coordinated European strategy to counter operations by foreign governments that use disinformation. Parliament recommends the creation of a European centre to tackle interference threats, as well as stronger measures to address disinformation on online platforms such as forcing social media platforms to stop boosting inauthentic accounts that drive the spread of harmful foreign interference. Furthermore, Parliament called for the introduction of new measures to ensure cybersecurity and resilience against cyber-attacks, deterrence and countermeasures, and for the protection of critical infrastructure and strategic sectors.

In focus: reinforcing internet capacity and security
To avoid the capacity crunch and keep ahead of the growth in internet traffic, the EU’s strategy is primarily directed at boosting investment in high-capacity broadband infrastructure. To that end, in 2021 the EU set connectivity targets in its Digital Decade strategy and adopted a range of new funding instruments including CEF Digital, which is designed to support the roll out of 5G networks throughout the EU. The Commission is also putting forward an ambitious plan for a space-based secure communication system and satellite traffic management to ensure secure and resilient connectivity across Europe in the years to come.
Furthermore, in 2020 the EU adopted the new EU cybersecurity strategy to better tackle cybersecurity threats that are at the core of internet outage and to safeguard a global and open internet. The amendment of the NIS Directive that is being finalised will impose new cybersecurity requirements on essential entities, including providers of internet services such as the Domain Name System (DNS).
In addition, the EU wants to lead discussions at international level to shape the development of the internet as a space of civic responsibility. The European Commission actively engages in multilateral discussions to shape a resilient, secure and robust internet and promote democracy and human rights. The European Global Gateway initiative launched in December 2021 aims, inter alia, to boost smart, clean and secure digital links around the world. Accordingly, the EU intends to work with partner countries to invest and deploy digital networks and infrastructure (such as submarine and terrestrial fibre-optic cables, space-based secure communication systems and cloud and data infrastructure) to plug vulnerabilities and provide trusted internet connectivity around the globe. Possible action

Written by Micaela Del Monte and Maria Margarita Mentzelopoulou.

Russia’s invasion of Ukraine has forced hundreds of thousands of people to flee the country and seek shelter, mostly in neighbouring EU countries, namely Poland, Romania, Hungary, Slovakia, Czechia and Moldova. Children and women are bearing the most adverse consequences of the war. According to UNICEF, almost half of those fleeing are minors and in need of enhanced protection, as they run a bigger risk of falling victim to trafficking and exploitation. In response to the plight of Ukraine’s civilian population, which is being subjected to shelling and violence, the international humanitarian community has quickly mobilised efforts and resources to provide support. As the humanitarian situation deteriorates, children are particularly vulnerable.

Children are at high risk of falling through the cracks of the system, going missing or being subjected to violence. This includes children in institutions, unaccompanied minors, children nearing the age of transition to adulthood, children from Roma or other minority groups or who are asylum-seekers, refugees or migrants and were residing in Ukraine and were stateless before leaving their countries of origin.

In and outside of Ukraine, children are in urgent need of protection, including access to psychosocial and social support, health, nutrition, education and housing, protection against trafficking, sexual and labour exploitation and abuse. The European Parliament, as well as its Coordinator on Children’s Rights, have been active in defending the rights of the children fleeing the war in Ukraine since its beginning.

This briefing updates and expands on an ‘At a glance’ note written by Maria Margarita Mentzelopoulou and Micaela Del Monte in March 2022.

Read the complete briefing on ‘Russia’s war on Ukraine: The situation of children in and outside Ukraine‘ in the Think Tank pages of the European Parliament.

Written by Jakub Przetacznik with Simona Tarpova.

Belarus’s involvement in Russia’s invasion of Ukraine has triggered EU sanctions targeting over 700 individuals and 50 entities, as well as critical economic sectors and products in this country. The new measures, namely the trade bans on potassium chloride, have affected both the Belarusian economy and EU and global food supplies.

Earlier sanctions targeting Belarus

Belarus has been subject to EU sanctions since 2004. Initial measures comprised individual sanctions and an arms embargo adopted in response to the disappearance of four people, including two opposition politicians, a businessperson and a journalist. The EU imposed further restrictions on Belarus’s presidential elections in 2020. Despite independent exit polls reporting a victory for Sviatlana Tsikhanouskaya, Belarus’s Central Election Commission announced that Lukashenka had won the election with over 80 % of the votes. Peaceful protesters were met with police violence and detention. Thousands were tortured and some died. The EU condemned the elections as ‘neither free nor fair’ and introduced sanctions packages in October, November and December 2020.

Further rounds of sanctions followed in June 2021, after the hijacking of a Ryanair flight in order to detain Raman Pratasevich, and in December 2021, in response to the government’s attempt to instrumentalise migrants arriving from the Middle East and its continued human rights abuses. By inciting illegal migrant crossings, the government sought to destabilise the EU and divert attention from Lukashenka’s continuous violations of human rights – among them falsifying elections, arresting protesters, crushing civil society, journalists and the opposition – by creating a crisis at the EU borders. The five rounds of sanctions in 2021 comprised individual sanctions, such as asset freezes and travel bans, as well as an embargo on arms and related materials, dual-use goods, technology for military use and communication interception equipment. Sanctions also included a ban on the provision of insurance or re-insurance to the Belarusian government, public bodies and agencies; partial trade restrictions on potassium chloride (potash), petroleum and gaseous hydrocarbon products; and a limit on the country’s access to EU capital markets.

Sanctions in response to Belarus’s involvement in the invasion of Ukraine

The most recent measures, adopted on 2 March, 9 March and 8 April 2022, are an expression of the EU’s condemnation of Belarus’ involvement in ‘Russia’s unprovoked and unjustified military aggression against Ukraine’. Belarus’s involvement includes participation in strategic planning and granting permission to the transport of Russian troops and military equipment through, and the firing of ballistic missiles from, Belarusian territory. Restrictions build on existing EU sanctions by closing loopholes and introducing exhaustive bans on targeted sectors. Specific sanctions are individual, financial or trade-related.

Individual sanctions( (imposed on 702 persons):

• asset freezes and travel bans targeting regime-connected officials and elites as well as individuals in the military sector (i.e. the defence minister and his assistants, members of the respective ministries, and military commanders).

Financial sanctions:

• financial restrictions on 53 entities operating in the defence and security sectors;
• a SWIFT ban on three Belarusian banks – Belagroprombank, Bank Dabrabyt, the Development Bank of the Republic of Belarus and their respective subsidiaries;
• a prohibition on transactions with the Belarusian Central Bank concerning the management of financial reserves, trade and investment;
• restrictions on financial inflows from Belarus to the EU, specifically ‘by prohibiting the acceptance of deposits exceeding €100 000 from Belarusian nationals or residents, the holding of accounts of Belarusian clients by the EU central securities depositories’; bans on financial transactions also apply to crypto assets;
  • a prohibition on the sale of transferable securities and banknotes denominated in any official currency of the Member States to Belarus.

Trade restrictions:

• further restrictions on trade in goods used for producing or manufacturing tobacco products, mineral products (expanding on petroleum oils and gaseous hydrocarbon products) and all potash products, and the removal of exceptions for pre-existing contracts;
  • a ban on all EU exports of dual-use goods and technology that could enhance Belarus’s security and defence capacities;
  • additional bans on the direct or indirect import of wood, cement, iron and steel products, rubber tyres and a wide range of machinery originating from Belarus and the removal of exceptions for pre-existing contracts;
  • a ban on Belarus-established transport undertakings from transporting goods by road in the EU.

Impact of sanctions on trade in potassium chloride

The 2021 sanctions targeted only 20 % of Belarusian potash. Total restrictions on potash under the new measures target it as a primary income source that is the country’s second-largest export commodity (8.7 % of national exports and 18 % of the global market share) and accounts for a substantial share of GDP. Due to previous sanctions (from 2021) and curtailed access to the Klaipeda port in Lithuania, Belarus’s global potash exports plummeted from over 10.3 million tonnes in 2019 and 11.8 million tonnes in 2020 to close to 5.1 million tonnes in 2021. Belarus is currently searching for alternative export markets, but payment and transport issues continue to be an obstacle. Sanctions appear to have made an impact on Belarus’s financing, as more than half of the potash mines have ceased working, foreign companies have relocated and the country has lost 70 % of exports to the EU. Traditional importers of Belarusian potash can no longer receive shipments and are in search of alternatives from countries like Canada, Israel and Jordan.

Repercussions will not be limited to Belarus. EU Member States produce a small amount of potash, with the majority of stock located in Spain and Germany. The unavailability of potash will influence European producers and consumers, as it is an essential ingredient for the fertilisation of crops and the preservation of canned food, fruits, vegetables and processed food.

The global price surge for potash is influenced by numerous factors – sanctions, limited supply and supply chain disruption, growing energy and transport costs, high demand and lack of competition. Soaring prices will predominantly impact the top European potash importers –such as Poland, Belgium and Norway – and Middle Eastern, African and Asian countries. According to estimates, EU fertiliser companies will have to find alternative supplies as early as June 2022. The most likely source is Canada – the world’s largest potash producer. Existing free trade agreements can be used to facilitate potash import from different locations. A European Commission communication of 23 March 2022 presented a set of actions to support EU farmers and strengthen food security amid the invasion. These include enhancing the resilience of supply chains and agriculture by substituting certain fertilisers and finding bio-based alternatives. With regard to national production, an Australian company has already started exploratory drilling in Thuringia, Germany. The EU-level association of farmers, COPA-COGECA, considers that while medium-term solutions do exist, substituting 1.7 million tonnes of Belarusian and Russian potash would be lengthy and expensive.

Position of the European Parliament

In its resolution of 1 March 2022 on the Russian aggression against Ukraine, Parliament condemned Belarus’s assistance to Russia in the invasion. It underlined the security risk posed by the fabricated referendum abolishing Belarus’s neutrality and allowing the presence of Russian nuclear weapons in the country, and called for extending the sanctions targeting Belarus, excluding it from SWIFT, prohibiting Belarusian goods and services from EU public procurement, and terminating its software licences.

On 24 March 2022, Parliament adopted a resolution on the need for an urgent EU action plan to ensure food security inside and outside the EU in light of the Russian aggression towards Ukraine. The text recognised Belarus as a significant exporter of potash-based fertilisers and warned about the likely disruption of supply, increasing fertiliser prices and impact on industries.

Read this ‘at a glance’ on ‘Russia’s war on Ukraine: Sanctions targeting Belarus‘ in the Think Tank pages of the European Parliament.

Written by Matthew Parry and Ionel Zamfir.

This paper is one of 11 policy responses set out in a new EPRS study which looks first at 15 risks facing the European Union, in the changed context of a world coming out of the coronavirus crisis, but one in which a war has been launched just outside the Union’s borders. The study then looks in greater detail at 11 policy responses the EU could take to address the risks outlined and to strengthen the Union’s resilience to them. It continues a series launched in spring 2020, which sought to identify means to strengthen the European Union’s long-term resilience in the context of recovery from the coronavirus crisis. Read the full study here. The issue in short: The challenge and the existing gaps

Democracy and the interests of democratic states face multiple threats. Increasing geopolitical competition among major powers has driven democratic and undemocratic governments apart, both in bilateral relations and in multilateral forums, and also created tensions between fellow democracies beset by the rise of populism and nationalism. Yet global military, economic, social, sanitary, environmental or other challenges require multilateral governance more than ever. After the severe blows dealt to international cooperation by the actions of then US President Trump and the 6 January 2021 attack on the US Congress, Joe Biden’s election opened a window of opportunity for democracies to work together in both informal coalitions and multilateral settings.  

The EU and other democratic players also face direct threats from non-democracies, chief among them Russia and China, which increasingly act in concert. Russia has begun a war to challenge the existing security order in Europe and democracy in its neighbourhood, and also in Africa, while China uses trade restrictions to bully democracies in Europe and elsewhere that criticise it or offer support for democratic Taiwan. Both Russia and China are leading sources of disinformation aimed at democratic societies in the EU and elsewhere. In developing economies, China challenges EU interests first by using its Belt and Road Initiative (BRI) to draw developing countries into debt traps in order to acquire rights to infrastructure and resources beyond its borders, and second by providing an alternative, authoritarian model of development. In a world in which hard power still matters and national self-interest prevails, the EU – which is centred around soft power and is bound to balance the pursuit of its own interests with respect for international values – has constantly aimed to better leverage its economic and diplomatic influence, coordinate more effectively among its members, and build strategic partnerships with other major democracies and international regional organisations such as the African Union and ASEAN, which commit to democratic principles in their founding treaties.

Existing policy responses

Cooperating with other democracies is an important axis of the EU’s engagement in multilateral settings. The EU action plan on human rights and democracy 2020-24 and the 2021 joint communication on strengthening the EU’s contribution to rules-based multilateralism highlight the need to build and strengthen coalitions of like-minded partners on key priorities in multilateral forums. The EU supports the strong pro-democracy orientation of G7 policies, as defined during the 2021 Summit and ministerial meetings. Given its weight as a trade bloc and its full membership in the World Trade Organization (WTO), the EU has an important role to play in preserving and reforming the multilateral trade system and continuing its values-based trade policy. EU cooperation with democratic partners, chiefly the United States, but also Japan, remains crucial in this respect.

Strengthening democracy is a key objective of EU bilateral engagement with both developing and industrialised countries. In 2021, the EU launched the new Global Europe Instrument for 2021‑2027. Its geographical programming covering the entire world includes an objective of strengthening good governance, democracy, rule of law and human rights in cooperation with partner countries’ governments. The thematic part – much smaller in financial terms – provides support to civil society globally, as well as direct support to democracy and human rights actions circumventing governments. In addition to this type of aid, the EU has provided substantial macro-financial assistance to fragile democracies in its neighbourhood encountering economic difficulties, such as Ukraine and Moldova, conditional on fighting corruption and respecting judicial independence. The recently upgraded European Peace Facility (EPF) provides funding to strengthen partners’ capacities in military and defence matters. The first measure adopted is directed at Ukraine. The EU includes democratic objectives in its human rights dialogues and political dialogues with partners.

The EU further cooperates with partner countries and international organisations such as the Council of Europe and its bodies, particularly the Venice Commission, as well as with the Organisation for Economic Co-operation and Development (OECD) to strengthen rule of law at home and in third countries, for example in the fight against corruption or tax evasion. Coordinated sanctions by the EU and major democracies are used to respond to human rights violations in authoritarian regimes, such as Belarus. In response to Russia’s attack on Ukraine, the EU has coordinated its massive financial and economic sanctions with its democratic partners in the world.

Under the Biden administration, the USA and the EU have together launched or revived vehicles for democracy-to-democracy cooperation on the pandemic, the climate, trade, security and democracy. A new EU-US Trade and Technology Council (TTC) met at ministerial-level for the first time in in September 2021 in Pittsburgh (USA), and is expected to meet again in France in May 2022. The TTC aims to achieve transatlantic consensus fit for the democratic world on common standards, resilient supply chains, tech regulation, global trade challenges, climate and green tech, as well as investment screening and export controls. A new EU-US dialogue on security and defence is set to launch in ‘early 2022’, while a EU-US high-level dialogue on Russia was announced in June 2021 (although has yet to meet formally, possibly superseded by events). Two high-level meetings of the EU-US dialogue on China were launched in the final months of the Trump Administration. The EU and NATO are also stepping up cooperation.

Figure 44: Key measures to consolidate strategic ties with democracies

The EU has also concluded free trade agreements (FTAs) with major democracies including Canada, Japan, South Korea and the Andean Community countries; is updating FTAs with Chile and Mexico; and is negotiating new FTAs with Mercosur, Indonesia, Australia and New Zealand. The EU is also exploring deeper trade and investment ties with Taiwan and India. Trade liberalisation with democratic partners could allow the EU to diversify its trading relationships, reducing its strategic dependence on non-democratic partners who may be unreliable and are less likely to share common interests. In Africa and the Indo-Pacific – two regions where Russia and China are increasing their influence over third countries – the EU has responded with a joint EU-Africa strategy launched in 2007, and an EU strategy for cooperation in the Indo-Pacific published in 2021. The latter strategy identifies cooperation on semiconductors with democratic Japan, Korea and Taiwan as a priority. The EU is also drawing lessons from Taiwan on combating disinformation, given Taiwan’s exemplary role in this struggle against China. In November 2021, a European Parliament delegation visited Taiwan to study its efforts to combat interference and manipulation campaigns. The Commission has also launched the ‘global gateway’ initiative to provide a source of investment in digital, climate, energy, transport, health, education and research infrastructure in developing countries, and an alternative to China’s BRI.

Obstacles to implementation

Supporting democracy in cooperation with like-minded partners in multilateral forums faces multiple obstacles. The universal values, including fundamental freedoms and human rights, on which the multilateral order is based are under virulent attack from authoritarian powers, while illiberal encroachments undermine the integrity of multilateral bodies and norms that defend human rights. To be an influential diplomatic actor, the EU needs to act as a coherent player and bring its Member States together behind the pursuit of a global liberal democratic agenda.

Global democratic alliances, such as the Summit for Democracy, must convince in terms of practical effectiveness and avoid strengthening authoritarian regimes’ resolve and coordination, particularly that of Russia and China, and endangering much-needed global collective action.

Difficult regional environments, state fragility, as well as internal polarisation and conflict, and protracted economic crises have been insurmountable obstacles in supporting transitions to democracy in Afghanistan, Mali and, to a lesser extent, in Tunisia (all countries to which the EU has provided extensive assistance). The EU makes its aid conditional on respect of democratic standards and has engaged with partners to incentivise reforms. However donors providing aid with ‘no strings attached’, such as China, undermine the effectiveness of the EU’s approach. Serious democratic backsliding in large democracies such as India and Brazil poses another obstacle to the EU’s ambitions to build values-based partnerships.

The EU-US TTC is perceived by some as a recognition of the failure of previous EU-US efforts to consolidate economic integration and set global standards jointly via the proposed Transatlantic Trade and Investment Partnership. Enduring regulatory differences between the two sides may hinder their ability to deliver ambitious common positions on such issues as data governance and technology platforms. Moreover, while the EU and the USA have made significant progress on ending or mediating disputes on the Boeing-Airbus subsidies issue, US Section 232 tariffs on EU steel and aluminium imports, and taxation of major US and EU companies, the TTC has yet to produce forward-looking deliverables from any of its sectoral working groups.

The EU has also shown itself willing to advance trade integration with democratic and non-democratic partners alike. In December 2020, a ‘political agreement’ was announced on a comprehensive agreement on investment (CAI) with China, shortly before the Biden Administration took office. Some observers argued that the CAI undercut transatlantic cooperation on the challenges China poses to the multilateral trading system. In addition, while the EU has successfully concluded FTAs with Japan and Canada (even if the latter awaits ratification by all Member States), progress on FTAs with other democratic partners is slower than might have been expected: negotiations with Australia were delayed by the diplomatic dispute between that country and France over the AUKUS announcement, while France reportedly sought to postpone the conclusion of negotiations with New Zealand and Chile until after its presidential election. Some analysts argue that the EU has taken a more protectionist turn since the failure of TTIP, just as the USA does the same.

The EU’s global gateway initiative may likewise fall short. Some have criticised its five-year €300 billion investment budget as a mere repackaging of existing initiatives, combined with ‘questionable’ assumptions about leveraging private investment. Others have compared the annual sum (€60 billion) unfavourably with China’s estimated €1 150 billion in foreign loans and outstanding export credits, and note that China has grown more sophisticated in its approach to investment in other countries, taking greater care to involve local workers in projects. If true, an overly confrontational approach to Chinese BRI lending may be less effective than allowing recipient countries to combine multiple sources of investment.

Policy proposals by experts and stakeholders

Proposals on formats of cooperation among major democracies include: extending the G7 to a G10 format, concluding a charter for an alliance of democracies, or creating a coalition of leading democracies on new technologies (a T‑12 Group). Such proposals include EU countries but not necessarily the EU itself. One area where democracies can do more together is the digital realm. Preserving a free and open internet and mainstreaming human rights in new technologies were among the priorities proclaimed at G7 ministerial meetings in 2021 and supported by the EU. Reducing EU dependency on energy imports from authoritarian states, especially Russia, has now become an urgent objective. Reaching it also presupposes reinforcing cooperation with democratic partners.

Rethinking EU democracy support after the recent democratisation failures appears unavoidable. Experts note that the EU needs to exercise self-criticism; draw lessons; better take local conditions into account; and make a realistic assessment of the situation on the ground when it provides democracy assistance. Improving the democratic record at home is also crucial for the EU’s global influence.

Stakeholders and think-tanks in the USA and EU are broadly supportive of transatlantic cooperation on multilateral trade policy reform and standards development. Many therefore welcome the EU-US TTC, though some would expand the scope of cooperation to other policy areas, such as space. Some suggest features that have not yet been incorporated in the TTC, such as structured involvement of the US Congress and the European Parliament, as well as NGOs and other stakeholders. Others stress that the EU should act with a sense of urgency, given the possibility of a less partnership-minded administration being voted into office in 2024.

On the broader EU trade agenda, observers recommend, inter alia, negotiating a new data transfer framework agreement with the USA, to help guard against nefarious data acquisition by authoritarian powers like China; and coordinating industrial policies and technology regulation with countries like the USA, Japan and South Korea, as well as with Taiwan. On the EU’s proposed global gateway, think-tank recommendations include combining new funding with addressing fragmentation in current EU development spending; integrating the global gateway with the external dimension of the European Green Deal; and downplaying the strategic aspects of the initiative, to avoid it becoming bogged down in geopolitical controversy.

Position of the European Parliament

In its 2022 resolution on the implementation of EU common foreign and security policy, the Parliament calls for the EU to promote an alliance of democracies worldwide, and insists on the need for better cooperation among democracies to counter malign interference and disinformation. The Parliament also recommends that the EU strengthens its cooperation on election observation with all relevant partners. In its 2022 resolution on human rights and democracy in the world, the Parliament calls on the EU and its Member States to ‘make more concerted efforts to address the challenges to human rights worldwide, both individually and in cooperation with like-minded international partners, including in the UN’. With regard to EU democracy assistance, in its 2019 legislative resolution on NDICI, the Parliament insisted on strengthening democracy promotion across EU aid, and on the consistent application of conditionality to beneficiary partner countries.

The European Parliament supports the establishment of a United Nations Parliamentary Assembly (UNPA) within the UN system, aiming to increase the democratic character of the global organisation, and has called for a stronger parliamentary dimension to the WTO.

In a resolution adopted on 6 October 2021, the European Parliament called on the European Commission and the High Representative of the Union for Foreign Affairs and Security Policy/Vice-President of the Commission for a Stronger Europe in the World (HR/VP) to reassert the relevance of the strategic transatlantic relationship, to reinvigorate multilateralism, strengthen democracy and promote human rights worldwide. Specifically, the Parliament called for the establishment of a transatlantic legislators assembly; regular meetings between the Parliament’s Foreign Affairs and International Trade Committees and their US counterparts; strengthened interparliamentary cooperation between Members of the European Parliament, Members of Congress, members of the national parliaments of the EU Member States and members of the 50 US State legislatures. It called for a coordinated approach in bilateral FTAs and at multilateral level to address forced labour and exploitative labour conditions and to improve respect for workers’ rights and environmental standards. The Parliament also reiterated its call to consider EU support at the WTO for a temporary waiver on the agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), in line with the US position (but not yet with the Commission’s).

The same resolution also calls for: a common EU-US offer of investing in global infrastructure initiatives; for the EU and the USA to jointly provide economic, political and operational support to the African Union, the G5 Sahel Force and the Economic Community of West African States; for the creation of a Transatlantic Political Council for systematic consultation and coordination on foreign and security policy, led by the VP/HR and the US Secretary of State; integration of a parliamentary dimension into the EU-US high-level strategic dialogue on China; and for collective economic defence via collaboration with like-minded democracies against China’s economic coercion. Parliament has consistently supported proposals to negotiate FTAs with democratic partners, while underlining that negotiations should be transparent and provide for parliamentary involvement. This position is reflected, for example, in the 5 July 2016 resolution on a forward-looking and innovative future strategy for trade and investment, which included a call to launch FTA negotiations with Indonesia; and in the 26 October 2017 resolution on the negotiating mandate for trade negotiations with Australia, and the 26 October 2017 resolution on the negotiating mandate for trade negotiations with New Zealand.

Parliament called for a deeper strategic relationship with India with a strong parliamentary dimension, in a 29 April 2021 resolution. In a 21 October 2021 resolution, Parliament also called on the Commission to begin a scoping exercise on a bilateral investment agreement with the Taiwanese authorities, and for the EU and Member States to deepen cooperation with Taiwan on confronting disinformation. Parliament’s 21 January 2021 resolution on connectivity and EU-Asia relations, encourages the Commission and the European External Action Service (EEAS) to create a global EU connectivity strategy aligned with regional policies, including the Eastern Partnership, the European Neighbourhood Policy. The joint communication on relations with Latin America and the Caribbean, and the Indo-Pacific strategy should be aligned with the strategy, and it should aim to strengthen partnerships with democracies around the world which share the EU’s values.

In focus: an EU global gateway to fund infrastructure development abroad
On 1 December 2021, the Commission published a joint communication on a ‘global gateway’ (GG) infrastructure funding initiative for developing countries. Building on existing EU development aid as well as previous external connectivity strategies, the initiative is meant to fund up to €300 billion in investments in 2022‑2027 in digital, climate and energy, transport, health, and education and research projects that are socially and economically sustainable, and run according to democratic and high-quality governance norms. With its focus on sustainability and social progress, the GG stands in explicit contrast to infrastructure funding originating from China via that country’s BRI, much of it apparently in the form of lending of dubious sustainability, motive and economic impact. The GG should be seen in the context of international efforts to construct a democratic-model alternative to the BRI.
The EU, collectively with its Member States, is already the world’s leading donor of official development assistance (ODA), but GG is intended to as an explicit counter-offer, not just to Chinese public and private money, but also to China as a rival authoritarian model of development in competition with the democratic model promoted by the EU and its democratic partners. Possible action

Written by Marcin Grajewski.

Russian President Vladimir Putin used his speech at the annual Victory Day over Nazi Germany, on 9 May, to mobilise support among the country’s citizens for its 11-week-old war on Ukraine, claiming that Moscow had to defend itself against imminent attack. Recently, Russia has shifted its military efforts towards the east and south-east of Ukraine, as well as to the bombing of critical infrastructure, after it failed to capture Kyiv, the capital. In some areas abandoned by the Russian forces, Ukrainian troops and journalists found many dead civilians and other evidence of war crimes. The United States and European Union countries have increased military aid to Ukraine. Finland and Sweden are to apply for membership of the NATO military alliance. Russia has cut gas deliveries to Bulgaria and Poland, escalating its conflict with the EU, which in turn is pondering an embargo on imports of Russian energy to deprive Moscow of funds needed to finance the war, on top of a wide range of existing sanctions.

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

Will Putin use nuclear weapons in Ukraine?
Atlantic Council, May 2022

A tariff on imports of fossil fuel from Russia
Bruegel, May 2022

A phase out of Russian oil may be less effective than a tariff at reducing Putin’s rents
Bruegel, May 2022

Marking the first Europe Day of the Brave New World
Centre for European Policy Studies, May 2022

European Union prepares to ban Russian oil
Center for Strategic and International Studies, May 2022

NATO and the south after Ukraine
Center for Strategic and International Studies, May 2022

Putin’s Eurasian dream may soon become a nightmare
Chatham House, May 2022

Putin’s long game in Ukraine: The Kremlin perspective
Council on Foreign Relations, May 2022

Inside the Russian geopolitical mind: Pseudo-justifications behind the war in Ukraine
European Council on Foreign Relations, May 2022

Stop feeding the bear: The case for a smart embargo on Putin’s oil and gas
Jacques Delors Institute, May 2022

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

Impact of the war in Ukraine on the debate on the future of agriculture in the EU
Polish Institute of International Affairs, May 2022

Ukraine’s great need for heavy artillery
Polish Institute of International Affairs, May 2022

Climbing the ladder: How the West can manage escalation in Ukraine and beyond
Atlantic Council, April 2022

The EU’s plans to replace Russian gas: Aspiration and reality
Atlantic Council, April 2022

Biden should deploy ‘great arsenal of democracy’ to defend Ukraine
Atlantic Council, April 2022

Putin’s unholy war
Atlantic Council, April 2022

Cutting Putin’s energy rent: ‘Smart sanctioning’ Russian oil and gas
Bruegel, April 2022

EU risks letting Putin’s gas divide-and-rule strategy win
Bruegel, April 2022

Repurposing the peace dividend
Bruegel, April 2022

A sanctions counter measure: Gas payments to Russia in rubles
Bruegel, April 2022

The European Union should sanction Sberbank and other Russian banks
Bruegel, April 2022

The decoupling of Russia: European vulnerabilities in the high-tech sector
Bruegel, April 2022

Cutting Putin’s energy rent: ‘Smart sanctioning’ Russian oil and gas
Bruegel, April 2022

Bold European Union action is needed to support Ukrainian refugees
Bruegel, April 2022

The EU without Russian oil and gas
Bruegel, April 2022

War on Ukraine: The day after
Bruegel, April 2022

Early Warning Brief: China’s contorted response to Russia sanctions
Bruegel, April 2022

How Russia benefits from ill-informed social media policies
Brookings Institution, April 2022

Putin just tested a new long-range missile. What does that mean?
Brookings Institution, April 2022

Germany has a special responsibility to stop Putin’s evil
Brookings Institution, April 2022

Terror, pacification, occupation: Russia’s actions in the occupied territories of Ukraine
Centre for Eastern Studies, April 2022

China’s challenges in the Indo-Pacific in the shadow of Russian aggression against Ukraine
Centre for Eastern Studies, April 2022

To make Moscow truly suffer, the sanctions screw must be tightened even further
Centre for European Policy Studies, April 2022

Opinion on Ukraine’s application for membership of the European Union
Centre for European Policy Studies, April 2022

Low-carbon technologies and Russian imports
Centre for European Policy Studies, April 2022

Russia’s war in Ukraine identity, history, and conflict
Centre for Strategic and International Studies, April 2022

How Ukraine will change Europe’s Indo-Pacific ambitions
Chatham House, April 2022

Saving Ukraine’s art and soul
Chatham House, April 2022

Ensuring Ukraine prevails is now the only moral choice
Chatham House, April 2022

Ukraine: Xi may come to rue his ties with Putin
Chatham House, April 2022

Global conflict tracker
Council on Foreign Relations, April 2022

Ukraine: Conflict at the crossroads of Europe and Russia
Council on Foreign Relations, April 2022

Can Russia be held accountable for war crimes in Ukraine?
Council on Foreign Relations, April 2022

Does Orban’s victory in Hungary change the EU’s calculus on Russia?
Council on Foreign Relations, April 2022

How Russia’s invasion of Ukraine will impact Africa’s energy transition
Council on Foreign Relations, April 2022

The world order holds, for now
Egmont, April 2022

Tanks versus banks: Russian military versus EU geo-economic power
Egmont, April 2022

The exaggerated death of European sovereignty
European Council on Foreign Relations, April 2022

Why advanced weapons can help Ukraine defeat Russia
European Council on Foreign Relations, April 2022

Ukraine: Time for the West to prepare for the long war
European Council on Foreign Relations, April 2022

Cold reality: How Europe is adjusting to China’s support for Putin
European Council on Foreign Relations, April 2022

Laws against slaughter: The crimes that shape Russia’s war on Ukraine
European Council on Foreign Relations, April 2022

War has returned to Europe: Three reasons why the EU did not see it coming
European Policy Centre, April 2022

Look at the war through Ukrainian eyes
European Policy Centre, April 2022

Wake up, EU! We are at war
European Policy Centre, April 2022

The EU should not turn a blind eye to Putinist methods at home
European Policy Centre, April 2022

The moral cost of ‘social peace’ in Germany
European Policy Centre, April 2022

Europe after Putin’s war: EU Foreign and Defence Policy in the new European security architecture
Hellenic Foundation for European and Foreign Policy, April 2022

Welcoming Ukrainian refugees in the EU: Preliminary insights on socio-economic consequences
Jacques Delors Institute, April 2022

Which countries help Ukraine and how? Introducing the Ukraine Support Tracker
Institut für Weltwirtschaft Kiel, April 2022

Investigation of Russia’s crimes in Ukraine: A turning point for the International Criminal Court?
Institute for National Security Studies, April 2022

The weaponisation of finance and the risk of global economic fragmentation
Istituto Affari Internazionali, April 2022

The war in Ukraine and studying the EU as a security actor
Istituto Affari Internazionali, April 2022

Ukraine: Putin’s war to change the world
Institut Montaigne, April 2020

From Sarajevo to Mariupol: What the Yugoslav wars can teach us about Ukraine’s fate
Institut Montaigne, April 2020

The Ukraine crisis: Women are fighting a different kind of war
Observer Research Foundation, April 2022

Fiscal support and monetary vigilance: Economic policy implications of the Russia-Ukraine war for the European Union
Peterson Institute for International Politics, April 2022

The United States should seize Russian assets for Ukraine’s reconstruction
Peterson Institute for International Politics, April 2022

Ukraine’s wartime information strategy
Polish Institute of International Affairs, April 2022

Franco-Russian economic relations in the face of the war in Ukraine
Polish Institute of International Affairs, April 2022

Failing to deter Russia’s war against Ukraine: The role of misperceptions
Polish Institute of International Affairs, April 2022

Maintaining mobility for those fleeing the war in Ukraine
Stiftung Wissenschaft und Politik, April 2022

Ukraine: The dangers in Russia’s new offensive
United States Institute for Peace, April 2022

Russia-Ukraine: A negotiated settlement will be difficult
Brookings Institution, March 2022

Phasing out Russian gas, UK-EU relations and Hungary’s response to the war
Centre for European Reform, March 2022

Can the West stay united on Ukraine, and what will China do?
Centre for European Reform, March 2022

Europe must stop paying for Russia’s war
Centre for European Reform, March 2022

Russia’s assault on Ukraine and European security
Centre for European Reform, March 2022

Russia may ditch the dollar, but it needs the euro
Centre for European Reform, March 2022

Ukraine: Is a chemical or biological attack likely?
Chatham House, March 2022

Lessons from the Ukrainian cyber front
European Policy Centre, March 2022

Vladimir Putin’s political and strategic failure
Groupe de recherche et d’information sur la paix, March 2022

Russia’s war is Europe’s moment to defend democracy and world stability
Peterson Institute for International Economics, March 2022

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

Written by Stefano Spinaci (1st edition).

Companies can play a key role in building a sustainable economy and society, and in furthering environmental goals. At the same time, their global value chains may pose risks to human rights and the environment. Civil society, governments and companies are increasingly aware of the issue.

A growing number of EU companies have taken initiatives to deploy due diligence processes, often using the existing international voluntary standards on responsible business conduct. Some Member States have started developing their own legal frameworks on corporate due diligence.

To avoid fragmentation and to provide legal certainty to business and citizens, the Commission has proposed a directive laying down rules on corporate due diligence obligations (including on climate change), directors’ duties, civil liability and protection of persons reporting breaches. Supervisory authorities designated by the Member States would be in charge of enforcing the new directive. It would be aligned with international standards on human rights and environmental protection. The Parliament had already called on the Commission to introduce mandatory due diligence legislation in a legislative-initiative resolution of March 2021. It will now examine the Commission proposal following the ordinary legislative procedure.

Versions

• May 2022: Corporate sustainability due diligence: Could value chains integrate human rights and environmental concerns? (1st edition)

Proposal for a directive of the European Parliament and of the Council on corporate sustainability due diligence and amending Directive (EU) 2019/1937 Committee responsible:Committee on Legal Affairs (JURI)COM(2022) 71
23.2.2022Rapporteur:Lara Wolters (S&D, the Netherlands)2022/0051(COD)Shadow rapporteurs:Axel Voss (EPP, Gemany)
Adrián Vázquez Lázara (Renew, Spain)Ordinary legislative procedure
(COD) (Parliament and Council
on equal footing – formerly ‘co-decision’) Next steps expected: Publication of draft report

Written by Marcin Szczepanski and Guillaume Ragonnaud.

This paper is one of 11 policy responses set out in a new EPRS study which looks first at 15 risks facing the European Union, in the changed context of a world coming out of the coronavirus crisis, but one in which a war has been launched just outside the Union’s borders. The study then looks in greater detail at 11 policy responses the EU could take to address the risks outlined and to strengthen the Union’s resilience to them. It continues a series launched in spring 2020, which sought to identify means to strengthen the European Union’s long-term resilience in the context of recovery from the coronavirus crisis. Read the full study here. The issue in short: The challenge and the existing gaps

European industry is central when it comes to achieving the twin green and digital transition of the EU’s economy and society, and making Europe the first climate-neutral continent by 2050. While European industry has strengths (for instance in green tech), it has lagged behind in some key strategic sectors, such as batteries. China provides 93 % of the EU’s supply of magnesium (key for aluminium production), while Turkey provides 98 % of the EU’s supply of borate (central to the electric motors used in electric vehicles and wind turbines). ASML, the world leader in the production of manufacturing equipment for leading-edge semiconductors, is the only European company among the global top 20 tech companies by market capitalisation. Common weaknesses in strategic European industrial sectors include high dependency on critical raw materials (CRMs) – for instance around half of the materials needed in aircraft production come from third countries. Other weaknesses are insufficient research and development funding, technology gaps, market fragmentation, underinvestment, and lack of skills. Enhancing the strategic autonomy of EU industry means tackling these issues and reducing dependencies on third countries. The pandemic has, meanwhile, highlighted the broader vulnerabilities of global supply chains, in which EU industry is highly integrated. Disruptions in these global chains may affect critical products and inputs for the EU. The complexity of the chains and the fact that they spread throughout the globe, makes them particularly vulnerable to unforeseen and/or rapidly unfolding occurrences such as natural disasters (more frequent in the global warming era), health crises (another pandemic cannot be ruled out), accidents (such as fires in manufacturing plants) and political developments (such as the war in Ukraine). Supply risks are compounded by the changing global landscape, characterised by rising tensions among the major powers, the weakened role of the WTO, the rise of protectionism, and the increasing deployment of the economy as a geopolitical tool. Rethinking supply chains and commercial routes is therefore high on policy makers’ agenda.

Existing policy responses Domestic measures

Boosting the strategic autonomy of EU industry requires a mix of coordinated domestic and external policy actions – going beyond the scope of this paper. The Commission adopted a new industrial strategy for Europe in March 2020, seeking to make EU industry more competitive globally and to reinforce Europe’s industrial and strategic autonomy. It introduced an ‘ecosystem approach’, based on the close monitoring of strategic dependencies in 14 sensitive industrial ecosystems (e.g. aerospace and defence, electronics) in order to mitigate them. As part of this framework, the Commission adopted a pharmaceuticals strategy, to support the competitiveness, innovation and sustainability of the EU’s pharmaceutical industry.

CRMs

Securing and diversifying supply of CRMs is among the top 10 strategic issues to be addressed to ensure the EU’s freedom and capacity to act in the decades to come. In this field, the EU seeks to take an approach mixing industrial, research and trade policies with international partnerships. The Commission presented an action plan on CRMs in September 2020, aiming to make Europe’s supply more secure. The action plan seeks to bolster internal EU capacity building (e.g. by developing viable industrial projects on CRM exploration, extraction, processing and refining), and to strengthen and diversify external sources of CRMs (e.g. by sealing strategic partnerships with resource-rich third countries). Also announced in the new industrial strategy, the action plan on synergies between civil, defence and space industries of February 2021 aims to encourage more effective use of resources and technologies in these sectors, and generate economies of scale. The EU’s security and defence capabilities are fragmented, which has increased strategic dependencies over the past few years. The Commission’s February 2022 roadmap on security and defence technologies focuses on ways to bolster research, technology development and innovation (RTD&I) and to reduce the EU’s strategic dependencies. It promotes an EU-wide strategic approach to improve coordination of EU and national RTD&I programmes and instruments for critical technologies.

The May 2021 update of the industrial strategy focused on addressing the impacts of the pandemic, the evolving global competitive context, and the acceleration of the twin transitions. It put forward a range of additional actions to address strategic dependencies. The Commission identified 137 products and raw materials used in sensitive ecosystems on which the EU is highly dependent (mainly in energy-intensive and health sectors). The technologies identified as strategic areas for Europe’s industrial future are active pharmaceutical ingredients, batteries, cloud and edge computing, cybersecurity, hydrogen, IT software, photovoltaic panels, raw materials, and semiconductors.

Industrial alliances

The Commission is also supporting new industrial alliances to develop Europe’s strategic capacities in key areas, and to facilitate the identification of potential investment projects. These alliances involve a wide range of partners in specific industries and value chains. In recent months, alliances of these kind have been forged in the areas of raw materials, clean hydrogen, industrial data, edge and cloud microelectronics and cloud technologies. Industrial alliances can include specific work strands to reduce strategic dependencies for the security and defence sectors. This is being considered in the alliances for industrial data and semiconductors.

IPCEIs

Important projects of common European interest (IPCEIs) have also gained in importance recently as a way to support strategic industrial projects. IPCEIs are a state aid tool designed to overcome serious market failures concerning breakthrough innovation and key infrastructure. Initiated by Member States, they bring together key European players The Commission has recently approved two IPCEIs concerning the battery value chain (in 2019 and 2021). A new IPCEI on microelectronics was put forward in December 2021 in the context of the EU’s recovery plan. Moreover, the French Presidency of the Council of the EU announced that it would support the development of IPCEIs on hydrogen, electronics, cloud computing, and the healthcare industry.

In December 2021, under the ongoing review of EU competition tools, aimed at enhancing the resilience of the single market and enabling EU industries to lead in the green and digital transitions, the Commission reviewed its criteria for assessing potential IPCEIs. The aim was to align the criteria more closely with EU strategies, making the setting-up of IPCEIs more transparent and making it easier for small and medium sized enterprises (SMEs) to take part.

Standards

Safeguarding the EU’s capacity to set standards is also key to increasing its industrial competitiveness and strategic autonomy. The Commission adopted a new EU standardisation strategy in February 2022, aiming to leverage the impact, size and integration of its single market to set global standards.

Regulatory frameworks for key industries

The Commission has also put forward a number of regulatory frameworks targeting key industries, for instance the semiconductor (microchip) sector. Microchips are the engines of the digital transition. They are critical technologies, meaning that they are needed across the civil (including security), defence and space industries. The ‘European chips act package‘ adopted by the Commission in February 2022 includes a proposal for a regulation setting up a framework of measures to strengthen Europe’s semiconductor ecosystem (the ‘chips act’). It is based on three pillars, each focusing on a different timeframe. The first pillar (long-term measures) builds on a ‘chips for Europe initiative’, bolstering technological capacity building and innovation. The second pillar (medium-term measures) sets up a framework to boost projects aimed at improving the EU’s security of supply, by attracting investments and enhancing production capacities. The third pillar (short-term measures) establishes a coordination mechanism between the Member States and the Commission to monitor the supply of chips. Importantly, in the event of supply disruptions and shortages, a ‘crisis stage’ may be activated, allowing the Commission to implement a range of emergency measures: the Commission will ask undertakings to provide information about their production capacities, or primary disruptions, in order to gain a better understanding of the market situation. Furthermore, the Commission may oblige some foundries to accept and prioritise an order of crisis-relevant products (‘priority rated orders’). The Commission may also decide to act as a central purchasing body on behalf of some Member States for the public procurement of some crisis relevant products for certain critical sectors. Moreover, it could introduce an export control regime in some circumstances. A Commission recommendation on a common toolbox to address semiconductor shortages and an EU mechanism for monitoring the semiconductor ecosystem includes possible crisis response measures that Member States could implement before the new regulation enters into force. The Commission has claimed that the chips act would mobilise more than €43 billion in public and private investments.

The December 2020 proposal for a regulation on a new regulatory framework for batteries aims to enhance circularity and resource efficiency with increased recycling and recovery of critical raw materials, to help enhance Europe’s strategic autonomy. It sets minimum levels of recovered cobalt, lead, lithium and nickel from waste for reuse in new batteries. In December 2021, the Commission proposed a hydrogen and decarbonised gas market package – key feedstock for industrial processes. The package aims to strengthen energy security, and global industrial leadership.

Funding

A wide range of EU programmes offer funding that can be used to improve the strategic autonomy of EU industry. More specifically, within the Next Generation EU (NGEU) recovery package, the Recovery and Resilience Facility (RRF, €724 billion (in current prices), i.e. 90 % of Next Generation EU funding), is expected to improve the resilience, crisis preparedness, adjustment capacity and growth potential of Member States, contributing to the strategic autonomy of the EU. It is up to the Member States to choose the reforms and investments to be included in their national recovery and resilience plans (NRRP). These reforms and investments should help make the EU more resilient and less dependent by diversifying key supply chains.

A range of measures are possible. Member States may decide for instance to fund cross-border and multi-country projects, in particular under European flagships – e.g. ‘Scale-up’ aiming to double the share of EU companies using advanced cloud services and big data by 2025. Each Member State must dedicate at least 20 % of the expenditure for its recovery plan to measures contributing to the digital transition (e.g. investment in digital-related industrial research and innovation). One year on from the introduction of the RRF, the first implementation report shows that 15 NRRPs include measures dedicated to the hydrogen sector. Many investments address the whole hydrogen value chain. Funding for new IPCEIs – on microelectronics (12 RRPs) and cloud technologies (6 NRRPs) are among the multi-country projects with the highest take-up in the NRRPs. Other EU programmes also allow targeted research and innovation efforts to reduce the gap with global competitors and thereby reduce strategic dependencies (Horizon Europe, Connecting Europe Facility, European space programme and European Defence Fund). The European Defence Fund aims to build an integrated EU defence industrial base, investing throughout defence industrial value chains (the EU defence industry being quite fragmented).

International dimension

A major development in the area of transatlantic cooperation was the establishment of the EU-US Trade and Technology Council (TTC) in June 2021, designed to strengthen the partners’ technological and industrial leadership. In its joint inaugural statement following the meeting held in Pittsburgh (US) on 29 September 2021, the TTC prioritised areas where it intended to achieve outcomes by the next meeting, scheduled for May 2022 in France. These include work on: standardisation, in particular in artificial intelligence (AI); reduction of strategic dependencies in semiconductor supply chains; and joint tackling of global trade challenges, such as industrial subsidies, unfair behaviour of state-owned enterprises and other trade and market distorting practices, as well as export controls, including in emerging technologies, (with legitimate concerns about forced technology acquisitions). Other strands of work are climate and clean technology, secure and resilient supply chains, active pharmaceutical ingredients and raw materials.

The international dimension of industrial policy focuses on issues such as improving integration of EU companies, not least SMEs, in international value chains; mutual conformity assessments; and influencing the rules and standards affecting industry globally. The EU is also striving to stay at the forefront of the future-oriented industrial technologies that are necessary for the digital transformation and technological sovereignty. It supports cluster collaboration with the third countries, for instance on industrial ecosystems and raw materials, having concluded administrative agreements with Canada, Singapore, South Korea and the US. Negotiations with New Zealand, the UK and South Korea have begun for associated participation (on a co-funding basis) in the Horizon Europe programme.

Autonomy also means establishing a level-playing field through legislative instruments such as the carbon border adjustment mechanism (CBAM) and international procurement instrument, as well as safeguarding the single market and industry against undesirable external influences, whether in the form of foreign investment, distortive foreign subsidies or coercive practices. Another significant initiative in this aspect is the proposal for corporate sustainability and due diligence. The EU has also added disciplines removing or reducing trade barriers and export restrictions of raw materials into many of its multilateral and bilateral trade agreements.

As part of its CRM action plan, the Commission is proposing to forge strategic partnerships with resource-rich countries. It has already established such partnerships with Canada and Ukraine, and commenced other international pilot partnerships with six African countries: Democratic Republic of Congo, Mozambique, Namibia, Gabon, Zimbabwe and Senegal. These efforts, in addition to the TTC, fit into a broader picture of diversifying supply chains and commercial routes important to the EU. Relevant policy tools include: supporting open trade through free trade agreements (FTAs), reinforced with the 2021 Enforcement Regulation; and seeking to reinvigorate and reform the WTO, as experts consider a robust international trade framework to be conducive to increasing industrial competitiveness and investment in knowledge-intensive industries.

The Versailles Declaration of EU Heads of State or Government of 11 March 2022 reiterated the urgent need to secure the EU’s supply of CRMs, chips, and digital technologies. It stressed the importance of research and innovation, IPCEIs and alliances to support strategic industrial sectors, and stressed that efforts would be made to complete the EU’s trade and competition policy toolbox.

Figure 42: Key measures to establish greater strategic autonomy for European industry Obstacles to implementation

EU industrial policy is developed and implemented at both EU and Member State levels, but with the main responsibility resting with the latter. As this policy is cross-cutting, and has both horizontal and sectoral dimensions, it is complex and difficult to monitor with clear targets, indicators, measures and time scales. The multitude of interests, and the complex and dynamic environment in which industry, technology and geopolitics are intertwined mean that picking winners is risky. Furthermore, the EU lacks strong competences in some areas crucial to the digital transformation of industry, with a shortage of digitally skilled workers, for instance. Reshaping and diversifying EU supply chains and commercial routes are predominantly decisions for the private sector.

Furthermore, some observers have highlighted that the contribution of the RRF to strategic autonomy is too vaguely addressed in the RRF Regulation and in the Commission guidance for Member States. Furthermore, the RRF impact on industry will be suboptimal as NRRPs are too nationally oriented. In addition, the incentive for Member States to set up cross-border projects is too weak. Some analysts consider that the participation of the EU in the global subsidy race in the chip sector is a mistake. The chips act has many flaws – it is too vague on the type of foundries that should be supported, and on the functioning of the security of supply mechanism. In addition, the involvement of Member States in a body advising the Commission entails the risk that they might choose to advance their own national priorities rather than European ones. It has been argued that the revision of the Commission guidance in November 2021 failed to address any of the IPCEIs’ major flaws, e.g. the lack of broad-based participation of Member States and SMEs, and the lack of transparency on the decision to invest public funds and on project governance. This situation risks undermining fair competition within the single market.

The TTC may fail to deliver on its ambitious cooperative agenda if the differences between the Member States on issues such as the creation of national industrial champions or a chips manufacturing ecosystem prevent the EU from speaking with one voice and as an equal with the US. Furthermore, important developments outside of the scope of the TTC, such as the EU’s ambitious efforts to regulate global digital markets, which sometimes cause concerns in the US, may make it harder to reach a transatlantic consensus. There are also important nuances on approach of both sides to China, which may diminish the TTC’s effectiveness. At this stage it is impossible to predict whether the TTC will establish meaningful cooperation – a sort of strategic interdependence of industries to create synergies – or if it will end up delivering only minimal results, such as making sure industrial projects on one side are not unintentionally hampered by another.

Attempts at forming meaningful alliances on raw materials may be hampered by a tightening of the commodities markets and global scarcities arising from Russia’s invasion of Ukraine.

Policy proposals by experts and stakeholders

On a conceptual level, strategic autonomy is not precisely and uniformly defined in EU industrial policy. Establishing a dedicated governance system based on common definitions and criteria would help to avoid national priorities from clashing with EU level priorities. To increase Europe’s strategic autonomy in rare earth elements, stakeholders have recommended: creating a level playing field with rare earth producers worldwide (such as China) that have lower production costs owing to state subsidies and lower social, labour, and environmental standards; encouraging downstream industry to diversify its supply chains, work with European and local suppliers, and support the development of capacities for a circular economy of electric motors; ensuring that end-of-life products and waste materials containing rare earths stay in Europe, by facilitating the re-processing and recycling of products through regulations and standards; and leveraging private investments in the emerging European rare earths value chain using all financial levers, including state aid tools (e.g. a dedicated IPCEI).

To increase EU industry’s resilience to shocks along its value chains, some analysts have stressed that it is necessary to improve the governance and transparency of strategic value chains. In addition, public-private partnerships (PPPs) could help to deliver on strategic projects. Importantly, it is necessary to ensure that measures taken at EU, national, regional and local levels to support industry are taken in a coherent way. Industry representatives have highlighted that better resilience of supply chains can be achieved through a combination of approaches, ranging from finding substitutes, encouraging diversification, forging strategic relationships with suppliers, stockpiling, or encouraging domestic production. Industrial strategic autonomy needs to be rooted in digital and green transformation. To boost the latter, the EU could consider establishing a European Climate and Sustainable Development Bank, aiming to export the European Green Deal policies. This would allow EU industry to enter new, rapidly growing markets, and use the gains to further improve its standing as a champion of environmentally-friendly manufacturing. To achieve meaningful breakthroughs in green technologies, global cooperation in research and development – particularly during pre-commercial phases – can produce cost advantages, allow risk-sharing and achieve greater efficiencies from the combination of complementary knowledge and synergies. The EU could also step up transatlantic research and innovation cooperation significantly by using the reenergised relationship with the US to push for its association with the Horizon Europe programme, more specifically within the digital, industry and space cluster. EU-US collaboration includes the defence sector. To monitor digital transformation of industry at national level, the EU could develop a system in which the Council, the Commission and the Parliament monitor progress made by each Member State and the EU. This could be aligned with the goals of the digital decade. After each country designs a plan to achieve concrete results – a national decade strategic roadmap – the Commission could report annually on progress. This could also include cooperation with like-minded partners from Asia or North America. In order not to leave European SMEs behind, a dedicated digital policy for SMEs may be necessary. It would comprise targeted use of digital innovation hubs, supporting the retraining and digitalisation of the SME workforce, and dedicated financing instruments.

Looking beyond the mapping of strategic dependencies carried out by the Commission, some experts suggest that the next step would be an in-depth analysis of the strategic value chains to identify the weakest links and find credible alternatives to offset their vulnerabilities. This exercise should also include identifying missing skills and professional profiles and lead to an action plan with timed targets and urgent measures to be taken at EU and Member State level.

Position of the European Parliament

Right from the beginning of the pandemic, the European Parliament stressed that the recovery package should improve the EU’s resilience and strategic autonomy. In its resolution of 25 November 2020 on a new industrial strategy for Europe, Parliament stressed that securing the EU’s sovereignty and strategic autonomy required an autonomous and competitive industrial base, and huge investment in research and innovation in key enabling technologies, innovative solutions, and key value chains. Parliament believes that investment should make it a priority to support the security, defence, climate technology, food sovereignty and health sectors. Supply chains should be strengthened, shortened, made more sustainable and diversified. Moreover, for Parliament, Europe’s strategic autonomy cannot be achieved without a competitive and sustainable EU ecosystem for CRMs. Europe needs to bolster its position in all stages of the raw materials value chain. Parliament also called on the Commission to devise a strategy for smart reshoring, to redeploy industries to the EU, increase production and investment, and relocate industrial manufacturing.

In its resolution of July 2021 on trade-related aspects and implications of Covid-19, Parliament called for incentives, including through state aid, for EU businesses to make their value chains more sustainable and to shorten or adjust their supply chains where it could benefit the EU’s economy, resilience, geopolitical objectives and strategic autonomy.

Parliament believes that an integrated approach throughout the CRM value chain, from waste collection and product design for recyclability to material recovery, is an essential strategy to increase the EU’s CRM supply, as explained in its resolution of 24 November 2021 on a European strategy for CRMs. An active industrial policy is needed to support the value chain, supporting for instance research and innovation on the recycling and substitution of CRMs, and product design. EU support and funding is required to improve efficiency, substitution, recycling processes and closed material cycles. Parliament also called on the Commission and the Member States to set up an IPCEI on CRMs to reduce criticality and dependence, dealing with recycling, reuse, substitution, reduction of material use and mining. The projects supported under the IPCEI should unlock the unfulfilled potential in CRM-rich EU countries. Furthermore, Parliament recommended that the Commission encourage Member States to carry out strategic stockpiling as a way to reduce CRM dependencies, and propose minimum recycled CRM content targets, CRM recycling targets and a monitoring framework. Concerning CRM sourcing in the EU, Parliament supports responsible and sustainable projects, and has stressed that awareness of the environmental footprints of imported CRMs from third countries should be raised. The EU should also diversify its supply sources of CRMs to reduce third country reliance.

In focus: Impact of the conflict between Russia and Ukraine on European industry
This paper was drafted just days after Russia invaded Ukraine. Without doubt the war will have far-reaching consequences for European industry and global supply chains. CRMs can be widely found in Ukraine, which holds deposits of 20 out of 30 such materials. Ukraine is home to half of the world’s neon gas production – critical for manufacturing semiconductors. In July 2021, the EU and Ukraine had launched a strategic partnership to enhance cooperation in the field of raw materials and batteries. The EU car industry has already been affected by the closure of small but important suppliers in Ukraine.
The sanctions and disrupted trade routes are also hindering car and parts shipments to and from Russia. Moreover, parts of the European industry rely on raw materials imported from Russia. For instance, 20 % of the EU’s supply of phosphate rock, which is on the EU’s CRM list and is used to produce mineral fertilisers, comes from Russia. Although Russia has not yet included raw materials in its sanctions, their prices are skyrocketing and some – including nickel, palladium (Russia represents 40 % of the world’s production) and platinum – will not be easy to source from elsewhere. The scarcity of these products will reverberate throughout industry as they are used in multiple products.
Furthermore, as energy costs are expected to skyrocket, energy-intensive industries, such as automotive and chemical, are expected to be hard hit. This may have grave consequences for the future of EU industry as many energy-intensive industries are embedded in strategic value chains. Around half the energy that powers EU industry is based on gas. On the other hand, the conflict is expected to further bolster the EU’s efforts to reinforce its defence industry. Commentators are divided on whether the conflict will accelerate or slow down the phasing out of fossil fuels – both possibilities having significant consequences for EU industry and its competitiveness. Possible action

Written by Clare Ferguson.

Members meet in Brussels for the second plenary session of May 2022, with the geopolitical situation dominating the agenda once again. Russia’s invasion of Ukraine has highlighted the need for strong alliances. However, Ukraine’s request for European Union membership comes at a time when several other countries are still grappling with the accession process.

Parliament sees stability in the EU’s eastern neighbourhood as crucial to countering possible Russian influence in the region. The session is scheduled to open on Wednesday with Maia Sandu, President of Moldova, addressing a formal sitting, followed by a debate on the Foreign Affairs (AFET) Committee’s annual report on progress to date with implementation of Moldova’s EU Association Agreement.

Members are then expected to debate two further AFET annual reports on the enlargement process for EU membership candidates North Macedonia and Albania – where the committee regrets the lack of progress within the Council on opening accession negotiations. North Macedonia is the most advanced candidate in terms of its accession process, and the AFET report highlights North Macedonia’s positive record in its transition to democracy. However, Bulgaria continues to block the opening of accession negotiations due to a cultural dispute, and the report nevertheless calls for North Macedonia to continue its administrative and political reform. Negotiations on Albania’s EU membership bid have not yet begun. Indeed, Albania’s international standing on corruption has even fallen since its EU application in 2014. The AFET committee’s annual report on Albania‘s progress highlights persisting issues of judicial independence, corruption, freedom of speech and minority rights, and calls on the Albanian authorities to eliminate corruption and criminality in public life.

Indeed, the rule of law is a key element of democracy and is one of the founding values of the EU, binding on all its Member States as well as candidate countries. On Wednesday, Parliament is scheduled to consider a report from the Civil Liberties, Justice and Home Affairs (LIBE) Committee, prepared in response to the European Commission’s 2021 rule of law report, which monitors the situation in EU countries. Covering four areas (justice systems, anti-corruption, media pluralism and freedom, and institutional checks and balances), this second report notes that there have been positive developments, despite the stress that the Covid‑19 pandemic placed on democratic systems. However, the committee repeats its view that the Commission should make country-specific recommendations and monitor their progress. The committee also criticises the rule of law report for failing to take account of Parliament’s previous recommendations that it should include monitoring of all key EU values: respect for human dignity, freedom, democracy, equality, the rule of law and respect for human rights, including for minorities.

Later on Wednesday, Parliament is expected to debate the thorny issue of taxation in the globalised, digitalised world. In recent years, digitalisation has made it easy for large multinational enterprises to shift their profits to countries with preferential tax regimes, thereby putting their profit before the opportunity to pay fair taxes to the societies that host them. This strips countries of revenue on which they depend to fund social benefits, such as healthcare, and investment. Parliament has long demanded reform in this area, and the Organisation for Economic Co‑operation and Development (OECD) recently agreed a framework for a minimum corporate tax rate. Members will consider an Economic and Monetary Affairs (ECON) Committee report, introducing a clause to the proposals to allow revision of the proposed minimum tax rate threshold of €750 million a year. Parliament’s opinion on the proposal to implement the agreement in the EU will then feed into the Council decision, where a unanimous vote is required.

Returning to human rights on Thursday morning, Members are scheduled to debate the Commission’s response to oral questions on proposals concerning the right to education in the EU. To ensure that people in the EU have access to a quality, inclusive education for personal fulfilment, to enable them to participate fully as citizens, and to boost their employment chances, the Commission has proposed to build a European education area by 2025. The aim would be to offer work-based learning to at least 60 % of recent graduates, and learning opportunities for adults up to 65 years old. Further goals will promote learning for a sustainable environment by 2030, such as ensuring a good level of education in mathematics, science and computer skills for all.

Written by Ann Neville (1st edition).

Financial information is vital for the investigation of serious crime and for the freezing of the proceeds of crime, but EU investigators often lack the tools for effective investigation, especially when dealing with cross-border crime. The proposed amendment to Directive (EU) 2019/1153 would allow designated competent authorities responsible for the prevention, investigation, detection or prosecution of criminal offences to access and search Member States’ centralised bank account registers through a single access point. This would enable them to establish almost immediately whether an individual holds bank accounts in other Member States and identify to which Member States they should make a formal request for additional information.

Versions

• May 2022: Proposal to amend Directive (EU) 2019/1153: Single access point to bank account registries (1st edition)

Use of financial and other information for the prevention, detection, investigation or prosecution of certain criminal offences: single access point Committee responsible:Committee on Civil Liberties, Justice and Home Affairs (LIBE)COM(2021) 429 final
20.7.2021Rapporteur:Emil Radev (EPP, Bulgaria)2021/0244(COD) – 20/07/2021Shadow rapporteur:Caterina Chinnici (S&D, Italy)
Fabienne Keller (Renew, France)
Damien Carême (Greens, EFA, France)
Tom Vandendriessche (ID, Belgium)
Joachim Brudziński (ECR, Poland)
Clare Daly (The Left, Ireland)Ordinary legislative procedure
(COD) (Parliament and Council
on equal footing – formerly ‘co-decision’) Next steps expected: Publication of draft report

Written by Luisa Antunes.

The recent coronavirus pandemic will not be the last public health emergency. To discuss future pandemic preparedness and response, the European Parliamentary Research Service (EPRS) and the European Cooperation in Science and Technology (COST) Association co-organised a roundtable on 11 May 2022. Etienne Bassot, Director of the EPRS Members’ Research Service, reminded participants of the link to the first edition of an annual EPRS publication on Future Shocks 2022, in particular the sections on ‘Another major pandemic’ and ‘Responding better to future pandemics’, written by Luisa Antunes and Clément Evroux.

Ronald de Bruin, Director of COST, introduced the association, its mission and actions. Funded by Horizon Europe, its network of researchers from 40 countries focuses on interdisciplinary, out-of-the-box thinking that transcends science and engages with policy-makers for long-term impact.

Kathleen van Brempt, Member of the European Parliament (S&D, Belgium) and Chair of the Special Committee on the COVID-19 pandemic (COVI), raised the importance of a coordinated, interdisciplinary approach to solving public health crises. COVI will base its work on four main pillars: health; socioeconomic impact; democracy and fundamental rights, and international cooperation. Preparedness for future pandemics involves rethinking vaccine production, worldwide supply, inequalities and hesitancy, finding a balance between health investment and containment strategies, and refocusing scientific advice at EU level.

Ilaria Capua, Director of the One Health Center of Excellence at the University of Florida, introduced the concept of ‘Circular Health’. This expands on the 1960s ‘One Health’ concept, which drew on the interconnectedness of animal, human and environmental health, by including macroscopic factors such as social sciences, policy, legislation and governance, food practices, conflicts, mobility and transport, population growth, refugees, international trade and gender equality, amongst others. While antimicrobial resistance (AMR) is a major threat, a possible roadmap solution could build from the United Nation’s Sustainable Development Goals (SDGs), not forgetting the importance of digitalisation and data sharing.

Jeremy Webb, Professor of Microbiology, University of Southampton, expanded on AMR as one of the major public health threats of the century. A silent pandemic, it leads to extended hospital stays, prolonged bacterial infections and 1.3 million annual deaths worldwide (equivalent to total joint HIV and malaria mortality). It is expected to kill 10 million people annually by 2050, exceeding cancer as second largest cause of death worldwide. Its causes are the misuse, overuse and spread of antibiotics in humans, agriculture and the environment. The dearth of investment in public health, including lack of rapid diagnostics and research and development (R&D) into new antimicrobials further aggravates the issue, in a context where, unlike cancer, antimicrobial R&D is not lucrative for the private sector. New models and reimbursement mechanisms are needed. The United Kingdom’s National Health Service (NHS) has developed a subscription model strategy as an incentive for the private sector to develop new antimicrobials. Multidisciplinary cooperation between academia, the industry and politicians is essential, as is education and changing the public perception.

Andrea Ammon, Director of the European Centre for Disease Prevention and Control (ECDC) introduced the importance of multisectoral and multidisciplinary crisis preparedness, acknowledging the ‘One Health’ approach and risks such as globalisation and climate change, and investing in public health and digitalisation. The amended ECDC mandate will extend the role of the agency in Member State-joint preparedness and strengthen its ties with the European Medicines Agency (EMA). Community engagement and citizens’ trust are essential and depend on good risk communication and collaboration between scientists and policy-makers.

Nicolas Collin, CEO of the Vaccine Formulation Institute (VFI), presented the VFI as an EU-funded non-governmental organisation (NGO) that develops open-source adjuvants for the benefit of the entire world. Adjuvants decrease costs, improve vaccine efficacy, prolong the immune response and augment the number of available doses in one vial. Fast vaccine development requires, ahead and in advance of a new pandemic, the existence of an established network of researchers, strong expertise and logistics, and human-validated technology. Funding is essential to maintain expertise, to ensure regular testing in clinical trials and to have many options ready prepared when a pandemic hits.

Sylvie Briand, Director at the World Health Organisation (WHO) introduced WHO’s International Health Regulations (IHR). First applied in response to the 2009 swine flu pandemic, they aim to accelerate the detection of new outbreaks and ensure global response coordination whilst minimising unnecessary economic and travel impact. The WHO is working on a new treaty for international collaboration that has so far received 131 panel recommendations, grouped in four areas: leadership and governance; systems and tools; finance, and equity. A white paper is open to consultation. Preparedness plans are, nevertheless, inadequate if not implemented; an impairment with the Covid-19 crisis was that a few countries had not consulted or updated their pandemic preparedness plans following the 2009 flu pandemic. Citizens’ trust also poses issues, especially when linked to privacy and data sharing, which require working together.

Clément Evroux, Policy Analyst at EPRS, presented the EU response to the Covid‑19 crisis, including health and economy instruments, such as the EU Health Union package and the SURE instrument to mitigate unemployment losses. EMA and ECDC mandates were updated, as well as the regulation on serious cross-border health threats. The European Health Emergency Preparedness and Response Authority (HERA) was created to carry out preparedness and decision-making on vaccines and medicines. Ways forward will involve joint efforts in public health, transport, the internal market, research, education and trade. A ‘One Health’ approach is essential to bring socio-economical stakeholders together and engage citizens, as well as to ensure a green transition and EU’s strategic autonomy in digital technologies applied to therapeutic countermeasures.

Alain Beretz, President of COST, summarised the event, identifying three transversal issues: time, multidisciplinarity and geopolitical context. A global approach to a future pandemic will have to include networking and data sharing. Scientific advice to politicians is key and strong emphasis should be placed on basic research, focusing on long-term sustainable goals and values, and addressing the technological and non-academic issues of science, including citizens’ trust.

Written by Magdalena Sapala, Alina Dobreva and Martin Höflmayer.

This paper is one of 11 policy responses set out in a new EPRS study which looks first at 15 risks facing the European Union, in the changed context of a world coming out of the coronavirus crisis, but one in which a war has been launched just outside the Union’s borders. The study then looks in greater detail at 11 policy responses the EU could take to address the risks outlined and to strengthen the Union’s resilience to them. It continues a series launched in spring 2020, which sought to identify means to strengthen the European Union’s long-term resilience in the context of recovery from the coronavirus crisis. Read the full study here. The issue in short: the challenge and the existing gaps

Following a deep recession in 2020 of -5.9 % and further contraction in the first half of 2021, the EU economy recovered faster than expected, with growth of 5 % in 2021. However, expectations are that Europe is at an early stage of an adverse economic shock to its economy – just when the recovery from the pandemic had become more firmly entrenched – as the economic implications of Russia’s invasion of Ukraine are likely to be significant. As a consequence, the post-Covid recovery will almost certainly be significantly delayed, with a clear downside risk. While the overall economic costs are still difficult to predict, they will differ between EU Member States, whose economic vulnerability to the invasion is very unevenly distributed.

At the time of writing, growth rates vary across EU countries, as the impact of the pandemic on economic activity continues to weaken over time and supply-side constraints ease. So far, the strong economic recovery has been aided by a rapid and substantial fiscal and monetary response. That response was possible through the activation of the general escape clause in March 2020 by the European Commission and the Council, allowing Member States to undertake appropriate budgetary measures in exceptional circumstances. The clause was extended by the Commission in March 2021, and is likely to be extended to 2023 in light of the conflict in Ukraine.

The severe economic impact from the pandemic led to a substantial shift in EU fiscal policy guidance. An unprecedented budgetary package was adopted, which combined the €1 210.9 billion multiannual financial framework (MFF) for 2021 to 2027 with the €806.9 billion Next Generation EU (NGEU) instrument. This package was made possible thanks to an agreement on an unprecedented scale on borrowing at EU level to fund it. The debt will be repaid through the EU’s own resources (OR), which necessitates an expansion of the OR portfolio. Even before the NGEU-related borrowing, there had been an ongoing debate on the reform of the EU system of own resources, a key goal being to limit the share of GNI based on own resources and to align the OR system better with EU policies. Making the NGEU a permanent instrument had been mentioned as a possible option even before the outbreak of the war in Ukraine; the debate on new joint borrowing to fund common strategic goods, such as energy security or defence, is now likely to intensify.

Existing policy responses

The European economy is undergoing unprecedented transformation towards a more sustainable, green economy, while at the same time driving the digital transition. Both require ambitious investments and reforms. The recovery from the Covid-19 pandemic has been supported by new EU instruments, including the European instrument for temporary Support to mitigate Unemployment Risks in an Emergency (SURE), the Coronavirus Recovery Investment Initiative (CRII), and NGEU. According to the 2021 stability programmes, a majority of Member States are planning to enhance the resources available for government investment as the share of public investment in GDP is set to surpass pre-pandemic levels in 2022.

The European Semester, with its broader scope and multilateral surveillance, will be at the heart of the EU’s fiscal, economic and employment policy coordination. In light of the policy changes after the Covid-19 crisis, the European Semester is being adapted to take into account new instruments and facilities to drive forward the Member States’ reform and investment agendas.

In July 2020, to help repair the immediate economic and social damage caused by the pandemic, and at the same time to bring lasting change and make Europe more resilient and sustainable, the Member States created NGEU as a temporary recovery instrument (€806.9 billion in current prices, to be paid out by the end of 2026). Together with the 2021-2027 MFF, it represents 1.8 % of EU GNI, the largest investment package ever implemented through the EU budget, and provides a much- needed catalyst for public investment. Furthermore, with the new, unfolding crisis caused by the war in Ukraine, the role of NGEU has been de facto extended, but within its agreed maximum financial capacity. The Member States were encouraged to use it as the ‘first line’ reaction, and to cover, in particular, the growing need for investment in energy security (see below).

The main advantage and innovation of NGEU is the way it is financed, and its focus on the climate and digital transformation. To finance the instrument, the Member States broke with a taboo that the EU cannot borrow on a larger scale to finance its expenditure, and agreed to base it on collective borrowing on the international capital markets. As a result, in the past 12 months the Commission has moved from being a small issuer, raising funds to finance relatively small lending programmes like the European Financial Stabilisation Mechanism (EFSM) and macro-financial assistance (MFA), to being one of the biggest issuers in euro.

The first assessments of the implementation of the Commission’s borrowing strategy were positive and recommended making it a permanent solution, mentioning among its benefits the enhancement of the international role of the euro. The optimistic views of the NGEU are amplified by estimates of its substantial macroeconomic impact. By 2024, it is expected to trigger at least a 1.5 % increase in the EU’s real GDP compared to a baseline scenario without NGEU investments, and to increase employment by up to 1 % during its period of operation.

The centrepiece of NGEU is the Recovery and Resilience Facility (RRF) (some 10 % of NGEU’s resources are channelled through six other budgetary programmes: React-EU, Just Transition Fund, InvestEU, Rural development, Horizon Europe, and RescEU). Worth €723.8 billion, the RRF is a mix of grants and loans, to be invested in line with six pillars representing policy areas of European relevance, in a package of reforms and investments based on national plans. These plans have to take into account the 2019 and 2020 country-specific recommendations of the European Semester. Thanks to the introduction of compulsory targets for spending on green transition and digital transformation under each national plan (at least 37 % and 20 % respectively) much of the RRF financing supports projects in the areas of decarbonisation, renewables, energy efficiency, resilience of key infrastructure, and sustainable transport.

At the beginning of March 2022 – i.e. less than a year since the first national recovery and resilience plans (NRRPs) were submitted for assessment – the Commission reported that RRF implementation was firmly underway. With 22 national plans approved, and with payments at the level of 18.6 % and 13 % of the approved grants and loans respectively, the Facility seemed to be operating according to the timeline agreed with the Member States.

The 2021-2027 MFF was adopted in a package that included NGEU and linked to the Own Resources Decision, whose application would secure sufficient revenues to continue existing EU programmes without limiting their funding under the next MFF and to repay the NGEU-related debt. The Own Resources Decision was ratified by all 27 Member States by 31 May 2021 and entered into force in June 2021. The Interinstitutional Agreement (IIA) that introduced the principles and criteria for new own resources confirmed the link to NGEU repayments and established an own resources roadmap with regular dialogue.

Figure 40: Ensuring economic recovery and resilience

With a delay to the roadmap established in the IIA, on 22 December 2021 the Commission proposed the next generation of own resources to establish some new resources, namely the revenues from emissions trading (ETS), resources generated by the carbon border adjustment mechanism (CBAM), and based on the recent OECD/G20 agreement on a re-allocation of taxing rights over multinational corporations (‘Pillar One’). If the proposal is adopted, the revenues included in it are projected to start flowing into the EU budget from 1 January 2023 and to generate up to €17 billion on average annually after the initial introductory period.

A proposal for a second basket of new own resources is currently planned by the Commission for the end of 2023. Other new own resources options are also included in the IIA. If these proposals are not adopted and implemented, or if they do not deliver the expected and needed revenues, some policy options are either to increase the GNI-based own resource, or to limit the funds of the next MFF compared to existing EU programmes. Furthermore, as the Russian war in Ukraine evolves, the option of further borrowing is also being discussed, including by the current French presidency.

Obstacles to implementation

In the context of heightened economic and geopolitical uncertainty, the relaunch of the review of the EU’s economic governance framework has put the spotlight on the underlying question of how the economic governance framework can ensure enough investment to support the twin transition while preserving public debt sustainability. For instance, to reach the targets set in the Green Deal and the digital transformation, the EU will need to increase annual public and private investment by around €650 billion in the coming decade (2021-2030), compared to the previous decade. As previously highlighted, the geopolitical ramifications of this investment gap, for instance through reducing the transition time towards renewable energy sources to reduce dependency on fossil fuel-based energy sources, are in a dynamic stage and will need to be reassessed.

While the economic consequences of the conflict in Ukraine are still unclear, the current fiscal framework compels Member States to adopt pro-cyclical fiscal policies. The underlying fiscal rules remain complex, rely on unobservable variables, lack transparency and have failed to sufficiently preserve the level of public investment during periods of fiscal consolidation. Furthermore, since the containment of the pandemic led to a heavy deterioration of public finances, the current framework does not sufficiently differentiate between Member States with markedly different fiscal positions, sustainability risks and other vulnerabilities.

The review of economic governance, launched in February 2020 and updated in October 2021, further raises the question of how ‘the design, governance and operation of the NGEU/RRF provide useful insights in terms of economic governance through improved ownership, mutual trust, enforcement and interplay between the economic and fiscal dimensions’. This is particularly pertinent, since potential obstacles to implementing NGEU can concern both financing and spending.

On the financing side, the provision of support under NGEU would not be possible without successful borrowing operations conducted by the European Commission on behalf of the EU. This is a relatively new and challenging role, particularly given the unprecedented scale of the issuing operations and the record time in which the infrastructure for it had to be set up. Therefore, any disruptions or delays to implementing the EU borrowing strategy could have an impact on achieving NGEU’s objectives. Although the borrowing has been successful so far, the situation could change if the war in Ukraine escalates, market conditions deteriorate, or if doubts arise regarding how NGEU funds are used and governed.

Another financing aspect, the repayment of NGEU-related debt, has been projected in the context of an upcoming reform of the OR system. Over the years, such reforms have proven to be a difficult process, which indicates there is a risk of a delay or blockage of the reform of the OR system this time as well. Apart from the complexity of the adoption process, the need for a unanimous decision by all Member States when negotiations happen in the spirit of juste retour, rather than that of common interest and European added value, makes the process inherently difficult and even more so when discussing projections of the impact of novel policies. A potential delay or blockage of the introduction of new own resources could threaten the EU’s investment and policy implementation capacity, especially at a time of additional demand for policy responses created by Russia’s war on Ukraine. It could also intensify political debates on the EU budget, as it could lead to an increase in the share of GNI-based contributions. A potential delay or blockage would be even more problematic in the event of increased interest rates on NGEU debt, considering its magnitude, or other unforeseen external shocks.

On the spending side, the risk is mainly related to the possibility of misusing or wasting resources under the NGEU. Concerns relate to the limited budgetary scrutiny over the borrowed funds, and to the transparency of the performance-based implementation and disbursement method of the RRF, which differs to the approach used for EU budgetary instruments so far. Analysts raise the issue that speedy implementation of such large amounts should not take place at the cost of quality of reforms and investments, and proper control of spending, also in the context of rule of law conditionality. They highlight a risk of fraud and corruption. These concerns are all the greater with the off-budget character of NGEU resources and, consequently, limited transparency and democratic scrutiny of spending. Treated as external assigned revenue, NGEU resources are not part of the usual budgetary procedures and are not subject to the same control as the MFF programmes. Moreover, the involvement of the European Parliament as the budgetary authority is restricted.

Policy proposals by experts and stakeholders

The required total investment levels will remain high (see ‘In focus’) to pave the way towards a green, digital and resilient economy (€650 billion a year until 2030 according to the European Commission). Hence, an effective policy framework that incentivises and enables investment is crucial to sustain the level of investment needed for the green and digital transition. The ongoing review of the European economic governance framework provides an opportunity to reform the EU’s fiscal rules to ensure that they enable Member States’ investment and reform policies, while safeguarding sound public finances.

Various reform proposals have been outlined, from simply increasing the debt ceiling to 100 %, to a country-specific debt anchor or a simplified two-tier framework that consists of an expenditure rule linked to a debt anchor, to abandoning fiscal rules entirely and instead suggesting a set of fiscal standards. Other proposals argue for a fiscal policy anchor related to government interest payments or emphasise the need for a ‘green golden rule‘ tailored towards necessary (green) public investment.

The successful launch of NGEU and the RRF is seen as a turning point for the EU. It has demonstrated that joint borrowing as a way of financing the EU’s common needs is politically and legally possible, and has added a new dimension to the debate on a fiscal capacity for the euro area, reforming the European Semester, and financing the EU’s common needs, for instance related to the green and digital transformations. Some analysts consider transforming NGEU into a permanent facility to be a key priority for reinforcing the EU’s economic policy framework. They see it as a way to solve many challenges that the EU is facing. Some experts offer scenarios on developing NGEU into a permanent instrument.

It is emphasised by some experts that a positive evaluation of the implementation of NGEU and the RRF, in particular, will be crucial for a decision on using it as a template for any future instruments. Among the aspects that need improving, analysts mention anti-fraud measures, transparency, control mechanisms, broadening the accountability of RRF management and better involvement of national parliaments, the European Parliament and social and regional partners.

The idea of extending NGEU to cover new objectives or even to resort to new joint borrowing gained even more momentum after Russia’s invasion of Ukraine put the EU on the path to a new crisis. Although controversial, and probably insufficient to cater for the needs, the issuance of new joint debt remains one of the options under consideration. In the meantime, NGEU’s unused loans (so far, only seven Member States have asked for them and some €200 billion is still available) can offer some immediate flexibility and support for action on energy security, defence, humanitarian aid or migration.

Position of the European Parliament

Whereas a substantial share of the investment will be borne by the private sector, public investment will have to increase as well. To mobilise private investment more efficiently, a functioning Banking Union and progress on the Capital Markets Union are crucial, including action on sustainable finance. On the fiscal side, the Parliament stressed in its own-initiative report on the Annual Sustainable Growth Strategy 2021 that ‘the focus should be on forward-looking policies and investments, especially in those Member States that have fiscal room for manoeuvre to invest’ and ‘that the RRF creates a unique opportunity for delivering the reforms and investments needed for the EU to get ready to cope with the present challenges’.

The European Parliament’s role in the overall management and scrutiny of NGEU is bigger than with other intergovernmental tools created in response to various crises over the last decade, such as the European Stability Mechanism. Still, it is rather limited due to the legal basis chosen for the creation of the recovery instrument (Article 122 of the Treaty of the Functioning of the EU), the treatment of the resources borrowed as external assigned revenue (see above), and in comparison with the role it has as the EU’s budgetary and discharge authority. As a result, although the Parliament is a co-legislator for the biggest part of NGEU, the RRF, the scrutiny and discharge functions over spending are compromised. The Parliament sees it as a risk to central budgetary principles and calls for more transparency in the implementation process, and for relevant changes to the financial rules applicable to the general budget, in particular making external assigned revenue an integral part of the budget.

Other key aspects discussed and monitored by Members of the European Parliament concern the quality of the reforms and investments included in the NRRPs, risks and delays in the implementation process, assessment of the payment requests and verification of the milestones and targets that are the condition for payments. Also under discussion are equal treatment of the Member States, application of rule of law conditionality, and involvement of national parliaments and regional and local authorities in implementing the RRF.

In the draft report on the borrowing to finance NGEU, the Parliament underlines that further investment in EU policies will be necessary to strengthen EU competitiveness and strategic autonomy, in particular regarding industry and climate action, and considers that NGEU is a good example of a viable architecture for funding above the MFF ceilings. Moreover, notwithstanding its reservations on the functioning and scrutiny of NGEU, as mentioned above, the Parliament calls on all EU institutions to ensure that this instrument is given a longer-term political vision.

The European Parliament has demonstrated long-term commitment to the reform of the own resources system. It has acknowledged the necessity to conduct such reform and has called consistently for the introduction of a basket of new own resources, which will diversify revenues, unload the pressure on the GNI-based resource and guarantee the EU’s capability to repay NGEU-related debt without risking limitation of existing EU policies. In its resolution on the reflection paper on the future of EU finances, the European Parliament stressed that additional political priorities should be coupled with additional financial means and not be financed to the detriment of existing EU policies. There is an ongoing debate in the Parliament over whether the revenues collected under the newly proposed types of own resources should be assigned to particular policies, or whether the fundamental principle of universality of the budget should be observed.

In focus: the European growth model
The European economy is undergoing unprecedented transformation in the context of major uncertainties linked to the global and security outlook. As outlined in European Commission’s Communication on the European Growth Model, the transformation relies on two equally important pillars: investments and reforms. On the one hand, investments are pivotal for sustained and sustainable growth. On the other hand, our economic structures and the regulatory framework, such as the fiscal framework, should support the economic transformation and be conducive to investment. Coherence between fiscal surveillance and economic policy coordination will be an integral part in this endeavour in order to align investment and reform policies in the Member States as well as national and EU instruments and objectives.
In an environment of geopolitical instability and rising global challenges, doubling down on the green and digital transition has become even more urgent to ensure the phasing out of EU dependency on Russian gas, oil and coal imports. The informal European Council in March 2022 in Versailles proposed a pathway to a new growth and investment model to make Europe independent from Russian fossil fuels well before 2030. The European Commission is invited to propose, by the end of May 2022, a REPowerEU plan that should reduce fossil fuel imports by two thirds within one year, building on the extensive work that has been done already on national recovery and resilience plans. Possible action

Written by Agnieszka Widuto.

Following Russia’s invasion of Ukraine, the EU is considering how it can rapidly reduce its dependence on Russian fossil fuels. The European Parliament has called for an embargo on Russian coal, oil and gas. The European Commission’s ‘RePowerEU’ plan will mark out the next steps.

Background

Russia’s war against Ukraine has wide-ranging implications for energy supply, with the EU dependent on Russia for approximately 45 % of its gas imports, 27 % of its oil imports and 46 % of its coal imports in 2021. Measures to address this dependency are already under way, with the EU agreeing to phase out Russian coal imports and discussing the same for oil, which is particularly lucrative for Russia.

The Commission’s RepowerEU plan, announced in a communication on 8 March 2022 (with details to follow in May), is geared towards freeing the EU from its dependency on Russian fossil fuels. This will be achieved by diversifying gas supply, e.g. by means of imports from non-Russian suppliers, and by increasing the use of liquefied natural gas (LNG). However, these steps alone will not be enough to replace supplies from Russia. The EU is therefore also aiming to bring about an accelerated shift away from fossil fuels by means of increased energy efficiency and use of renewables (wind and solar capacity, green hydrogen, heat pumps, electrification, and faster permits for renewable energy projects). The plan also suggests measures relating to energy pricing (taxes on windfall profits, price regulation, State aid) and gas storage (storage obligations, coordinated gas refilling and investigations into operators’ behaviour). The EU has meanwhile adopted a number of other measures to address energy challenges, building on the European Green Deal and the ‘fit for 55‘ package.

Current legislative proposals

Along with the RepowerEU communication on 23 March 2022, the Commission adopted a legislative proposal for obligatory gas storage rules (amending two other regulations). The proposed rules include the obligation for Member States to fill all gas storage sites to at least 80 % by November 2022 (and 90 % in subsequent years), new mandatory certification for storage system operators and a 100 % transmission tariff discount for gas storage facilities. The file is currently being negotiated by the co-legislators under an urgent procedure, so that it can take effect from summer 2022.

Already before the war, on 15 December 2021, the Commission had adopted a hydrogen and decarbonised gas markets package, modifying three key legislative acts: the 2009 Gas Regulation, the 2009 Gas Directive and the 2017 Security of Gas Supply (SoGS) Regulation. The recast proposal on the EU Gas Directive and the recast proposal on the EU Gas Regulation outline common rules for hydrogen, renewable and natural gas markets. They establish a new legislative framework for hydrogen networks, introduce new definitions for renewable gases and hydrogen, extend consumer rights, and contain new provisions on transmission and distribution systems operators, independent regulatory authorities, third-party access and integrated network planning. Furthermore, the regulation introduces a 75 % tariff discount for hydrogen and renewable gases accessing the gas grid (100 % in the first year after the regulation is adopted). Meanwhile, a targeted revision of the 2017 Security of Gas Supply Regulation would introduce a new definition of ‘strategic stock’, encourage cross-border cooperation on gas storage and LNG imports, allow a voluntary mechanism for Member States to jointly procure strategic gas stocks, and proposes a series of measures to counter cybersecurity threats to EU gas networks.

As part of the Green Deal, the European Parliament is also currently negotiating the revision of the Renewable Energy Directive (RED) and the Energy Efficiency Directive (EED).

Non-legislative initiatives

In order to tackle rising energy prices, on 13 October 2021 the Commission published a communication containing an energy prices toolbox, designed to mitigate the impact of rising prices on consumers and businesses. The immediate measures include income support for vulnerable consumers, temporary deferrals for bill payments, reduced taxation rates, and aid for companies and industries. The medium-term measures include boosting investment in renewables, energy efficiency and storage capacity.

On 23 March 2022, the Commission published a communication entitled ‘Security of supply and affordable energy prices: Options for immediate measures and preparing for next winter’, exploring options to tackle high energy prices and announcing that the Commission stands ready to establish a task force to develop common gas purchases at EU level. At the same time, the Commission adopted another communication outlining a temporary crisis framework for State aid measures following Russia’s invasion of Ukraine. In the field of energy, this enables Member States to assist companies affected by the sharply increasing gas and electricity prices, for instance through direct grants and liquidity support.

The EU has further strengthened its energy collaboration with the United States. On 25 March 2022, the Commission made a joint statement with the US on European energy security. More specifically, this EU-US energy cooperation will include increased delivery of LNG from the US, accelerate the roll-out of LNG infrastructure in the EU, pool demand through the newly established EU energy platform, and establish a joint task force on energy security. In addition, the EU-US Energy Council will continue its work on energy security, energy diversification, just transition and technology exchange.

Parliament’s position

In a resolution of 7 April 2022 on the conclusions of the European Council meeting of 24-25 March 2022, Parliament called for an immediate, full embargo on Russian imports of oil, coal, nuclear fuel and gas, and for complete abandonment of Nord Stream 1 and 2. It strongly advocated an EU plan on security of energy supply in the short term and highlighted the importance of diversifying energy resources, technologies and supply routes, including collaboration with non-Russian trading partners. Parliament also supported further investment in energy efficiency, renewable energy, gas and electricity storage solutions.

In its first resolution on Russian aggression immediately after the start of the war, on 1 March 2022, Parliament called for restrictions on Russian goods, including oil and gas, and emphasised the need to reduce dependence on Russian energy. It called for diversification of sources (e.g. by expanding LNG terminals), unbundling gas storage, increasing energy efficiency and accelerating the clean energy transition. It also called for abandonment of Nord Stream 2, monitoring of the stability of energy prices, an end to collaboration in the nuclear field and exploration of options to ensure uninterrupted gas supply.

Council and European Council position

At the European Council’s informal meeting on 10-11 March 2022, the Heads of State or Government adopted the Versailles Declaration, which focused, among other issues, on reducing the EU’s energy dependence on Russia. The declaration calls for diversification of supplies (e.g. through LNG and biogas), development of a hydrogen market, faster development of renewables, streamlined authorisation procedures for energy projects, improved interconnection of gas and electricity networks, reinforced contingency planning for security of supply, improved energy efficiency and promotion of more sustainable consumption patterns.

In its conclusions of 24-25 March 2022, the European Council reaffirmed its intention to phase out Russian gas, oil and coal imports as soon as possible and called for action to address high energy prices. It also stressed the importance of refilling of gas storage across the EU and improving interconnections.

On 2 May 2022 the extraordinary Energy Council met in Brussels, in the aftermath of Gazprom’s decision to halt gas delivery to Poland and Bulgaria. The ministers responsible for energy stressed their solidarity with Ukraine and the countries affected by Gazprom’s action. They discussed EU preparedness in the event of a supply crisis and potential emergency and solidarity measures, and welcomed the swift progress so far on the urgent gas storage regulation. They also agreed to continue their coordinated collaboration with international partners and to establish a European gas purchasing platform, with a view to guaranteeing energy supply at affordable prices.

Read this ‘at a glance’ on ‘Preparing for ‘RepowerEU’: Action for more secure, more affordable and cleaner energy‘ in the Think Tank pages of the European Parliament.

Written by Marie Lecerf.

Russia’s invasion of Ukraine has forced millions of people, amongst which Ukrainian Roma, to seek shelter in neighbouring countries. Roma fleeing Ukraine often face discrimination, segregation, deprivation and prejudice.

Risky humanitarian situation for Ukraine’s Roma

According to United Nations (UN) Refugee Agency (UNHCR) estimates, as of 10 May 2022 more than 5.9 million people, amongst whom Roma, had fled Ukraine to neighbouring countries – mainly to Poland but also to Hungary, Moldova, Romania and Slovakia. Even before the start of the invasion, Ukraine’s Roma population was already considered the country’s most vulnerable minority group, and one which also faced a high level of discrimination.

Since the beginning of the conflict, the Council of Europe (CoE) has reported discriminatory treatments against Roma when fleeing Ukraine. According to civil society organisations and the media, Ukrainian Roma have been facing increasing difficulties along the evacuation route, at border crossing points and on arrival in Europe. Not only have they had to cope with racial discrimination and segregation in transportation, humanitarian assistance and accommodation, but also with food and water deprivation and terrible living conditions as a result of this treatment. Moreover, around 10-20 % of the estimated 400 000 Roma living in Ukraine lack the documents they need to acquire or attest their Ukrainian citizenship and to prove their residence status (around 30 000 Ukrainian Roma have no form of ID). Civil society organisations have voiced concerns that this could result in additional difficulties for Roma fleeing the war. Media reports confirm the above situation, saying that Roma are often denied access to neighbouring countries because they lack the documents to prove their residence status. While the EU Agency for Fundamental Rights (FRA) has not observed incidents of discrimination or racism during its field visits, it is calling for vigilance.

International and EU response

UNHCR is working with partners and local organisations on the ground to reinforce vulnerability screening and referrals for people with specific needs, including Roma. The CoE, as well as humanitarian players and stakeholders, is stressing the need for safe and regular pathways to safety for all persons irrespective of their nationality, ethnicity and religion – including for stateless people and undocumented Roma people. The EU has stepped in to help civilians affected by the war in Ukraine with emergency aid programmes that cover some of their basic needs, and with operational guidelines on simplifying border controls for vulnerable groups at the EU borders. It has furthermore activated the Temporary Protection Directive, giving inter alia rights to a residence permit and to work. On 8 April, the Commission published a statement calling for the protection of Roma people fleeing Ukraine.

European Parliament position

Since the mid-1990s, Parliament has prioritised the fight against all forms of discrimination against Roma people. In a December 2021 resolution, Parliament stressed the need to focus on the situation of vulnerable groups at the Ukrainian border and in Russian-occupied territories of Ukraine. Parliament also recalled that when channelling its humanitarian aid, the EU must pay particular attention to vulnerable groups such as people with disabilities, minorities and other highly marginalised people. At its plenary session in April 2022, Parliament debated the situation of marginalised Roma communities in the EU with Commissioner Helena Dalli, highlighting the need for proper assistance to the Roma fleeing Ukraine.

Read this ‘at a glance’ on ‘Russia’s war on Ukraine: The situation of Roma people fleeing Ukraine‘ in the Think Tank pages of the European Parliament.