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A EU War Chest: the success and uncertain future of the European Peace Facility

Author(s): Łukasz Maślanka / Language(s): English

On 26 June the Council of the EU raised the ceiling for the financing of the European Peace Facility (EPF) for the second time this year, this time by €3.5 billion. It will now total €10.5 billion at 2018 prices or around €12 billion at current prices (adjusted for inflation). The EPF is designed as an off-budget mechanism for financing the common costs of the EU’s offshore military operations and missions as well as assistance to its partners. Since 24 February 2022, it has served predominantly as an instrument for providing indirect military support to Ukraine. This continuing repurposing of the EPF is beginning to raise concern among those member states which are focused on the EU’s southern neighborhood and which used to be the main supporters of the Facility. There is, moreover, a risk that some EU countries will treat support for further increases in EPF funding as a bargaining chip on issues that are important to them, or make it conditional on a stronger link between the EPF and initiatives to strengthen the EU’s Defence Technological and Industrial Base (EDTIB).

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EU Development Cooperation Policy Shifts from Charity to Self-interest

Author(s): Patryk Kugiel / Language(s): English

In recent years, the EU’s development cooperation policy has evolved, moving away from an approach based on poverty eradication and the needs of partner countries to focusing more on its own interests. This change is supported by the majority of EU members. This gives the EU the opportunity to exert strategic influence in the world but risks the loss of its unique identity as an altruistic donor and attractive partner in development cooperation. The change in the Union’s approach is consistent with the position of Poland, which can use it to reform and strengthen its development aid system.

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EU Still Limited in Cyberdefence Capabilities

Author(s): Aleksandra KOZIOŁ / Language(s): English

The EU has developed a new cyberdefence policy after Russia’s invasion of Ukraine increased the level of threats in the digital space. The policy guidelines emphasise defending against cyberattacks, as well asthe development of military capabilities and coordination with the civilian sphere. However, the high fragmentation between actors responsible for cybersecurity at the EU level and lack of incentives for Member States make it difficult to achieve the intended results.

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Sweden Focuses on Security Cooperation as It Works Through NATO Accession

Author(s): Kinga Dudzińska / Language(s): English

Despite intensified diplomatic efforts, Türkiye has still not agreed to start the ratification procedure for Sweden’s - nor Finland’s - NATO membership. The accession process may drag on until after Türkiye’s presidential and parliamentary elections in June 2023. During this time, Sweden, which is the target of increased hybrid attacks, should enhance the cooperation with NATO countries to strengthen resilience.

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The EU’s security and defence policy: in search of a compass

Author(s): Justyna Gotkowska / Language(s): English

In the EU, work is underway on the Strategic Compass, a security strategy that is intended to define the Union’s priorities in crisis management, capability development, partnerships and resilience for the next 5–10 years. It aims to define the EU’s role in an increasingly complex security environment where NATO and the US are redefining their priorities. The Strategic Compass is also intended to maintain the momentum of the EU initiatives launched in 2016, such as the Permanent Structured Cooperation or the European Defence Fund. The process of developing the document, and the EU’s security and defence policy in general, has been marred by the member states’ conflicting threat perceptions and interests. Nevertheless, under pressure from France and the European Commission, the EU has been making some progress in this area. The Strategic Compass will set the framework for Union’s future actions. However, implementing the strategy will depend on the member states’ commitment to the means and goals agreed, and thus cannot reflect the interests of one group of EU countries alone.

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Lignite in the Czech Republic and Germany: controversies and prospects

Author(s): Michał Kędzierski,Krzysztof Dębiec / Language(s): English

Lignite still plays an important role in the Czech and German power industries, remaining one of their key sources of electricity. These countries, together with Poland, are the largest producers and consumers of this fuel in the EU. The share of lignite in both countries’ energy mix is trending downward under the influence of the EU’s climate policy ambitions, particularly the rising costs of CO2 emission allowances. The lignite industry in the Czech Republic and Germany is also linked to capital, with some mines in Eastern Germany being owned by Czech corporations. The activity of lignite-fired mines, power plants and heating plants in both countries has caused a number of controversies, including environmental ones. Local communities affected by the negative impact of the mines’ operation have engaged in protests, and the significance of environmental issues in national politics is also rising. Both Berlin and Prague are planning to stop mining and burning lignite. Germany has already set a coal exit date of 2038, and the debate in the Czech Republic is approaching a conclusion of setting the same date, or even five years earlier. The decision to give up using this fuel is posing socio-economic challenges for the coal regions, which face numerous structural problems.

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More EU, less Russia. Transforming gas transmission rules in Central and South-Eastern Europe

Author(s): Agata Loskot-Strachota / Language(s): English

In recent months, the rules for gas transmission through the countries of Central and South-Eastern Europe have been changing at an ever faster rate. There has been much talk about opening new routes for exporting Russian gas to the European Union along routes which would bypass this region, which has led to a decline in its transit importance. The ongoing expansion of the network of interconnectors and alternative connections is changing the routes of gas transmission on the Central European market. No less important, although still somewhat less noticeable, are the changing rules for the transport of gas from Russia to the EU. With the expiration of a succession of long-term transit contracts (Ukraine’s at the end of 2019, Poland’s in May 2020, and also those of Slovakia and Bulgaria over the next few years), it will be possible for all of the region’s gas transmission to operate on the basis of EU regulations, namely the Third Energy Package, including its network codes. As a result, there is an increase in transparency and competition, and access to the infrastructure is becoming more attractive, which encourages European companies to use it. At the same time, however, gas transmission from Russia is becoming more unpredictable. This is illustrated by the changes this year in the flow of gas through the Yamal gas pipeline, Ukraine’s main lines and the Trans-Balkan route. The future of gas transmission in the region will also depend on external factors: the processes taking place in Ukraine, the actual physical levels of Russian gas transit, and the situation in the European gas market.

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Northern Kosovo Dispute Escalates Again

Author(s): Filip Bryjka,Tomasz Żornaczuk / Language(s): English

Extraordinary by-elections in the north of Kosovo scheduled originally for 18 and 25 December of this year are now not due to take place until 2023. Both the original announcement and the postponement of the elections are iterations of the ongoing Serbia-Kosovo dispute. It was exacerbated by Kosovo’s progress in European integration, including its 15 December application for EU membership, and Serbian favouritism of Russia in its war with Ukraine. Failure to effectively resolve the dispute increases the risk of destabilisation in the Balkans, including in connection with this war.

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Prospects for Deeper Economic Relations between the EU and the U.S.

Author(s): Paweł Markiewicz,Melchior Szczepanik / Language(s): English

The EU wants to use the election of a new U.S. president to seek an improvement in bilateral economic relations that would go beyond settling trade disagreements and also involve the Union’s priorities - climate policy and the digital transition. Shared interests in relation to China, the president-elect’s intention to strengthen the transatlantic bond, and his ambitions on climate create favourable conditions for cooperation. Regulations regarding American companies that dominate the digital sector, along with the U.S. deficit in bilateral trade will remain a source of contention.

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Towards Implementation of the Recovery Fund: Portuguese Presidency of the EU Council

Author(s): Melchior Szczepanik / Language(s): English

The Portuguese presidency’s key goal will be to secure EU Council approval of national recovery plans. This will enable the Member States to receive grants from the pandemic-related recovery fund. In addition, Portugal will conduct negotiations of legal acts crucial for the future of the EU on climate policy, the digital market, migration, and common agricultural policy. In its programme, the presidency emphasises the necessity to share the burden of planned actions fairly.

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Digital (R)Evolution: Germany on Plans to Introduce an E-euro

Author(s): Sebastian Płóciennik / Language(s): English

A single e-currency is seen by Germany as an opportunity to create more effective payment systems, accelerate the digital transformation, and strengthen the economic and political position of the European Union. However, possible side effects for the banking sector and concerns about the extent of protection of citizens’ privacy will lead Germany to introduce the e-euro as a complement rather than an alternative to cash, and to strictly regulate it.

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Slovakia’s New Security and Defence Strategies

Author(s): Łukasz Ogrodnik / Language(s): English

The Slovak parliament has adopted the government’s revised security and defence strategies. These are the first new versions in 16 years. They emphasise the key role of NATO and the EU in Slovakia’s security architecture and define Russia and China as challenges. Such analysis, supported by changes in Slovakia’s foreign policy, creates better conditions for cooperation with Poland in the field of security, even though the Slovak strategies pay little attention to its regional dimension

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The EU’s Digital Decade: Goals and Challenges

Author(s): Marta Makowska / Language(s): English

The “2030 Digital Compass” sets the goals of the broadly understood digitisation of the EU economy. Their implementation is to increase the technological potential of the Union and prepare citizens and companies for socio-economic changes. Financial resources for it will come from the long-term budget negotiated last year and from the Recovery and Resilience Facility. The challenge will be effective use of the EU funds and achieving planned goals across the Union.

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Challenges to the Intensification of EU Cooperation with Latin America and the Caribbean

Author(s): Bartłomiej Znojek / Language(s): English

At the end of 2020, the EU undertook to reinvigorate relations with the countries of Latin American and the Caribbean (LAC). It intends to strengthen economic ties and work with the region to achieve sustainable development goals, including climate protection, and on the digital transformation, among others. The success of these aims depends on productive cooperation in combating the COVID-19 pandemic and tackling its socio-economic effects. Challenges include differences in approach to the Venezuela crisis and the need for the EU to compete for influence in LAC with China, in particular.

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Lessons from the Pandemic: Update of the EU Industrial Strategy

Author(s): Marta Makowska,Melchior Szczepanik / Language(s): English

The update of the EU industrial strategy confirms the intention strongly accented in its original version to strengthen the Community’s position in the global economic competition. At the same time, the EU remains an advocate of openness and free trade. However, it wants to modify the rules, favouring equal competition and sustainable development. Participation in existing and planned EU projects can facilitate the technological modernisation of Polish enterprises, necessary for achieving the objectives of the green and digital transformations.

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Strengthening the EU’s Role in Cybersecurity

Author(s): Aleksandra KOZIOŁ / Language(s): English

The ongoing pandemic has increased the use of digital technologies and intensified the threats they pose. Therefore, the EU faces the need to strengthen its ability to detect and respond to hostile cyber activities. New initiatives should, above all, improve the cooperation of EU institutions with Member States and private entities. However, their effectiveness will be limited by low and dispersed financing.

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Tax Ambitions in the EU and Their Global Context

Author(s): Marta Makowska / Language(s): English

Along with the effects of the COVID-19 pandemic and digitalisation of the economy, there is growing political pressure from several Member States to communitarise EU tax policy. The ambitious plans outlined by the European Commission (EC) for the coming years must be placed in the wider global context, including the agreement reached in July at the OECD/G20 on establishing a common framework for taxing multinationals. However, the lack of support for this project from Estonia, Ireland, and Hungary in particular puts into question the possibility to implement the EC proposals.

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The EU Economic and Investment Plan for the Eastern Partnership Countries: Prospects and Challenges

Author(s): Elżbieta Kaca / Language(s): English

The economy of the Eastern Partnership (EaP) countries has been strongly affected by the COVID-19 pandemic, and the low level of vaccination of their populations hampers its recovery. Before the upcoming EaP summit in December this year, the EU has proposed the Economic and Investment Plan (EIP) to help its partners. The plan has the potential to develop the digital economy and support enterprises, but infrastructure investments may be limited by prevalent corruption in the region. Its success also will depend on the acceleration of vaccination, which could be facilitated by an increase in the vaccine supply from the EU.

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Canada’s Transatlantic Agenda

Author(s): Paweł Markiewicz / Language(s): English

Canada is strengthening its economic and security relations with Europe. The search for new areas of cooperation with the European Union (EU) is linked to Prime Minister Justin Trudeau’s plans for rebuilding the economy in the wake of the COVID-19 pandemic. This is an element of a broader strategy that seeks to tighten transatlantic relations and assist democratic partners in their long term rivalry with China and Russia. Common positions on climate issues, technological development, and defending civil rights will foster deeper strategic cooperation.

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EU Humanitarian Aid in Afghanistan: Needs and Challenges

Author(s): Elżbieta Kaca,Aleksandra KOZIOŁ / Language(s): English

The Taliban offensive in Afghanistan has deepened the humanitarian crisis in the country. Afghans are struggling now with forced displacement as well as a food and health crisis. The EU will increase its humanitarian aid, but its effectiveness will be limited by dangerous working conditions for NGOs. This requires an agreement with the Taliban to respect humanitarian law.

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