EconomyEU leaders gather for ‘geopolitical summit’

EU leaders gather for ‘geopolitical summit’

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EU leaders are gathering in Brussels today for the first day of their regular summer council, in what could mark at least a partial revival of the bloc’s dormant enlargement policy. We’ll explore what this decision will mean not just for Ukraine and Moldova, which are set to become EU candidate countries, but potentially also for the Balkan countries whose leaders are meeting with their EU counterparts later this morning.

Lithuania is enforcing sanctions on the transfer of goods from Russia to the Baltic exclave of Kaliningrad, so we’ll explore why both Vilnius and the European Commission are standing their ground despite retaliatory threats from Moscow.

In climate policy news, the European parliament yesterday finalised its negotiating position ahead of talks with member states and the commission on measures including carbon allowance trading and the adoption of a carbon border tax on certain imports from heavy polluting countries.

Not everyone’s a winner

It is being billed as a “geopolitical summit”, in the words of one senior EU diplomat. As EU leaders gather in Brussels today, the central outcome from their meetings is charged with political symbolism given the war raging to the east, write Valentina Pop and Sam Fleming in Brussels.

Both Ukraine and Moldova are expected to win EU candidate status — a landmark moment, even if both will have to meet tough conditions before moving to the next stages. This is no small feat, given that just a few years ago, Ukraine was specifically told it had no EU membership perspective and Moldova was barely registering on anyone’s radar in Brussels.

Georgia, which also applied for membership within days of the Russian invasion of Ukraine, will still have to pass more reforms before being given candidate status. But leaders will at least give Tbilisi the consolation prize of having its European aspirations acknowledged.

Leaders are also making the effort to revive the European perspective for western Balkan nations, though that is difficult to agree upon. The day will kick off with an informal, and potentially “quite heated” session between EU leaders and their six western Balkan counterparts, according to a second EU diplomat.

The prospects for Albania and North Macedonia to advance to the next stage on their EU path (the formal start of EU membership talks) briefly lit up yesterday, when one of the opposition leaders in Bulgaria signalled support for that step.

But hopes were squashed later in the evening after the Bulgarian prime minister, Kiril Petkov, lost a vote of confidence in the national parliament.

Petkov had been in favour of dropping his country’s veto on starting accession talks with North Macedonia, but that decision was fiercely fought over in the Bulgarian parliament, which has now put the country on the path for early elections — the fourth in little over a year.

Diplomats and EU officials are not giving up, and will continue to press Sofia to finally unblock Albania and North Macedonia’s forward movement. While some are advocating for decoupling the two, given that Albania is basically held hostage by Bulgaria’s history and education-related issues with North Macedonia, most EU capitals would not favour such a move.

“The negative impact of being seen as abandoning North Macedonia would be greater than the positive news of opening talks with Albania,” said the second senior EU diplomat.

Leaders in the evening will also discuss the ideas put forward by France’s Emmanuel Macron and European Council president Charles Michel about a new structure, called the “European political community” that in addition to aspiring EU members could include other non-EU countries that do not want to join, such as the UK or Switzerland.

“It’s a first discussion: it’s not very concrete. One thing that is clear to everyone is that this structure is not replacing the enlargement process,” the diplomat said.

Kaliningrad guidance

EU capitals are becoming increasingly worried about the escalating feud with Russia over its shipments of goods to the Baltic exclave of Kaliningrad, write Sam Fleming and Henry Foy in Brussels.

This week Lithuania began implementing sanctions that ban the transit of certain goods through EU states. The checks have triggered a furious response from Moscow, which has accused the EU of starting a “blockade” of the Russian territory of Kaliningrad and has threatened Lithuania with serious consequences.

Some EU officials and diplomats questioned the breadth and intensity of Lithuania’s efforts to check Russian trains, people briefed on the discussions told Europe Express. Others questioned the wisdom of clamping down on movements of goods between two parts of Russia — even if the products move through an EU territory.

The European Commission has made it clear it believes that Lithuania is correctly executing the sanctions that were unanimously agreed by the 27 member states. But the commission, which drafted the measures, is planning to issue guidance on the topic as soon as today, giving it the opportunity to clarify how tight the checks need to be in practice.

Vilnius has additionally asked for the issue to be formally discussed in the summit, but some capitals have pushed back against that initiative, for fear of further inflaming tensions over the topic.

Lithuania denies it has imposed any kind of “blockade” on Russian goods, saying “the transit of passengers and non-sanctioned goods to and from the Kaliningrad region through Lithuania continues uninterrupted”.

“Lithuania is complying with the sanctions imposed by the EU on Russia for its aggression and war against Ukraine,” Prime Minister Ingrida Šimonytė said yesterday.

The EU sanctions regime “means that Lithuania has to apply additional checks on road and rail transit”, agreed EU commission spokesman Eric Mamer. “Of course, these checks are focused, proportionate and effective. They will be based on smart risk management, to avoid sanctions evasion while allowing free transit.”

Mamer added that the commission was in touch with the Lithuanian authorities and that it would provide “additional guidance as we go along”.

The railway line across Lithuania and Belarus is Russia’s primary supply link to Kaliningrad. Trade in key products such as iron and steel has already been hit by the EU measures. A wider range of Russian goods such as cement will be affected as the grace periods for later rounds of sanctions lapse.

While there may be scope to narrow the focus of border checks being done by Lithuania, some diplomats insisted they were not expecting the overall scope of the sanctions to be changed.

“The assumption is that the commission and its legal service have studied the matter before actually coming out with it,” said one EU diplomat. “Those goods that are sanctioned should not transit through EU territory.”

Chart du jour: Small free traders

Read more here about a paradox in trade policy: the countries that matter most in trade are the ones to which trade matters least. Smaller countries are more dependent on trade than the US or big EU countries, which set the tone on global trade rules.

Back on track

It has taken somewhat longer than expected, but the EU parliament yesterday approved its negotiating position on the bloc’s flagship climate policy, writes Alice Hancock in London.

Earlier this month, an unlikely coalition of socialists, greens and far right lawmakers rejected revisions to the EU’s emissions trading system, which allows polluters to trade permits for carbon output. They also rejected the introduction of a carbon border tax known as CBAM, designed to charge importers for their carbon emissions.

The dramatic rebellion by MEPs at parliament’s plenary pushed the proposals back to the committee stage where lawmakers worked (almost) through the night last week to agree a compromise deal, which was retabled yesterday.

One element of the compromise — and a key sticking point — means that the carbon border tax will not start to be phased in until 2027 — later than 2025 as originally proposed by parliament’s environment committee, but one year earlier than the commission had suggested.

Esther de Lange, vice-president of the European People’s party, said that the group was “happy with the current compromise” and that it was “a reasonable deal that keeps the same level of climate ambition and provides breathing space for EU industry”.

Bas Eickhout, a member of the European Green party, said: “It’s good to see that our hard ‘no’ two weeks ago, together with other progressive parties, on the watered down climate plans resulted in a lot of pressure on other parties to come up with an improved proposal”.

He voiced concerns, however, that parts of the deal on CBAM still needed to be improved to be compliant with World Trade Organization rules.

What to watch today

  1. EU leaders meet Western Balkan leaders in Brussels before reconvening for the European Council

  2. President of Zambia, Hakainde Hichilema, speaks in European parliament

Notable, Quotable

  • Split stars: Italy’s Five Star Movement, the largest party in Mario Draghi’s national unity government, is splitting after its leaders fell out over Russia’s invasion of Ukraine and Rome’s provision of military aid to Kyiv.

  • Drone attack: A fire broke out at an oil refinery in southern Russia’s Rostov region after a drone attack, state media said, in what military experts suggest could be part of apparent Ukraine-backed strikes behind enemy lines.

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