Institut Montaigne - Written Evidence (RUI0023)

House of Lords European Affairs Committee’s Inquiry on the Implications of Russia's Invasion of Ukraine for UK-EU Relations

Written evidence by Georgina Wright[1], Louise Chetcuti[2], Enora Morin[3] and Cécilia Vidotto Labastie[4]

The following contribution was submitted to the House of Lords European Affairs Committee by Institut Montaigne, an independent think tank based in Paris. It looks at the measures the EU has taken to respond to Russia's illegal invasion of Ukraine – and highlights some of the ways the UK has been working closely with its European neighbours since the start of the war. It was submitted in October 2023.

Context

Russia’s illegal invasion of Ukraine on 24 February 2022 sent shockwaves through Europe. Since the invasion, we have seen Sweden and Finland apply to join NATO; increased defence spending across Europe, including Germany’s Zeitenwende moment; stronger transatlantic cooperation, including between the US National Security Council and the EU Commission Secretariat General; and renewed dynamism in the EU’s and NATO’s enlargement processes. The need for Europeans to improve their foreign policy and defence cooperation has become more prescient.

The UK has shown itself to be a valuable partner to the US and European countries. For many Europeans, it was the confirmation that despite Brexit, the UK has not turned away from Europe and remains committed to European security.

Resident Senior Fellow and Deputy Director for International Studies;

Project Officer - United States and Transatlantic Affairs, Institut Montaigne; Research Assistant, Europe Program; Former Project Manager

1.      The EU’s support to Ukraine

1.1 The European Union’s response to the war in Ukraine is unprecedented and multifaceted. It includes a strong, early and united condemnation of Russia’s invasion; a mix of financial, humanitarian and even defence assistance to Ukraine; and 11 packages of sanctions against Russia and Belarus, with a 12th package currently in discussion. Not all of the EU’s response was without hiccups, but it is the first time that the EU has responded so quickly, so efficiently and with such unity to a foreign policy crisis. It shows that the EU can act with unity with regards to a foreign policy crisis. However, as the EU’s response to the Hamas-Israel conflict shows, the EU still has some work to do to make sure it always speaks with one voice.

1.2 The EU has contributed around €77 billion[5] worth of financial assistance to Ukraine: €38.3 billion in economic assistance; €17 billion to support refugees fleeing the war; €21.16 billion in military support; €670 million under the EU Civil Protection Mechanism (in the form of macro-financial assistance with loans and grants). In addition, the European Investment Bank (EIB) has disbursed €1.7 billion in emergency relief to Ukraine. Several Member States also committed over €400 million to the EIB’s EU for Ukraine initiative, a fund dedicated to the reconstruction of the country.

1.3 Ukraine is the top beneficiary of EU military assistance under the European Peace Facility (EPF). Today, military assistance from the EU and individual member states to Ukraine has totalled €15 billion. In July 2023, the EU High Representative, Josep Borrell, suggested increasing EU military assistance to Ukraine under the EPF to €20 billion. This decision is currently under review in the Council, the grouping of the 27 EU governments. The EPF is also open to third-country contributions. Norway has contributed twice to the European Peace Facility: first in October 2022 (€14.5 million6) and then in July 2023 (€22 million)[6]. So far, the UK has chosen not to contribute to it.

Under the EPF, the EU has also provided the Ukrainian Armed Forces with one million rounds of artillery ammunition[7]. Missiles could soon be jointly procured by EU Member States through the EPF. Finally, the EU set up the EU Military Assistance Mission[8] to help train the Ukrainian army.

1.4 The EU has granted Ukraine preferential access to the EU Single Market. This is the first time the EU has used the Temporary Trade Liberalisation measure to remove import duties on all Ukrainian exports to the EU, including on products that were not granted preferential trade access under the 2014 Deep Comprehensive Free Trade Area between the EU and Ukraine (DCFTA). The Temporary Trade Liberalisation measure will be in place until June 2024[9] and could be extended. In May 2022, the EU set up EU-Ukraine solidarity lanes to speed up imports of Ukrainian grain and other goods, though some lanes have experienced difficulties, including those to Poland, Slovakia and Hungary.

1.5 The EU has welcomed over 4.8 million refugees from Ukraine[10]. The war in Ukraine triggered the largest and fastest refugee movement in Europe since WWII.[11] The EU activated the Temporary Protection Mechanism[12] on 4 March 2022 – it is the first time it has been activated since its creation in 2011. This measure enables EU governments to grant residence permits to Ukrainian refugees, which give them the right to live and work in the EU. The Mechanism has been extended until March 2025.[13] This mechanism also includes additional measures such as free-of-charge exchange rates, temporary access to EU roaming and technical and financial support to hosting countries. By July 2023, 4.1 million Ukrainian refugees were benefiting from this mechanism.[14]

1.6 The EU has taken steps to reduce its energy dependence on Russia and has reduced its business presence in Russia. By the end of 2022, Russian gas accounted for roughly 9% of EU gas imports, down from 40% in early 2022. The war also accelerated the EU’s energy transition: the EU’s RepowerEU strategy has helped to diversify the EU's supply of oil and gas. Since the invasion, the EU has struck 122 new energy deals with 32 partner countries.16

However, long-term energy provision remains a concern, especially in Germany. Some countries have reopened coal plants to compensate for the lack of Russian gas.

Not all member states have ended imports of Russian gas. The Russian energy giant Gazprom is still supplying gas to Hungary. (Hungary receives 4.5 billion cubic metres of gas per year from Russia under a 15-year deal signed in 2021). Austria also continues to import Russian gas. Before the war, Austria was getting 80 percent of its gas from Russia — that percentage fell to 57 percent in February 2023. Finally, EU imports of Russian liquefied natural gas (LNG) have increased. The largest importers of Russian LNG in 2022 were France, Spain, Belgium, and the Netherlands. This made Russia the EU’s second-biggest LNG supplier after the US.

1.7 The war in Ukraine has revitalised EU enlargement. Most member states, including formerly enlargement-sceptic countries such as France, now back EU enlargement to Ukraine, Moldova and the Balkans. However, the Council of the EU, the grouping of the 27 governments, also believes that EU internal reforms will be necessary to prepare the EU for enlargement – the EU is expected to discuss the size of the EU budget, the number and size of EU institutions and voting procedures over the coming years. At present, member states still do not yet agree on what reforms are necessary. The former Polish Prime Minister Mateusz Morawiecki, in his March 2023 Heidelberg speech said Poland was against any proposals favouring tighter political integration and that would replace unanimity with majority voting. The EU is also planning to hold discussions on how to associate candidate countries to EU decisions and discussions during the enlargement process, which could take years.

1.8 However, support to Ukraine across Europe has been unequal. Germany and the UK are the largest contributors to Ukraine in military, humanitarian and financial terms (Germany has given €20.88 billion and the UK has given €13.77 billion). However, the three Baltic countries have given most in GDP per capita terms[15] (between 1 and 1.4% of their GDP). In the words of Latvian Defence Minister Artis Pabriks: “If other countries did as much as we are doing, the war would be over”[16]. Similarly, most Ukrainian refugees are located in Central and Eastern Europe.

1.9 Strains in the EU’s support to Ukraine are beginning to show. The EU will continue to support Ukraine, though some member states could choose to reduce their bilateral support. Since the start of the conflict, Hungarian Prime Minister Viktor Orbán has refused to send arms (or let weapons transit through its territory) to Ukraine.[17] Hungary has also delayed EU sanctions negotiations and the delivery of aid to Ukraine. For example, it was the only member state to veto an 18€ billion loan to Kyiv on 6 December 2022 (which it eventually agreed to, a week later, on 12 December 2022. On 26 October 2023, in a statement in front of the Slovakian Parliament, Slovakia’s new Prime Minister Robert Fico announced that Slovakia would also end its military support to Ukraine.

2.      The EU has worked closely with allies, including the G7.

2.1              Coordination with Washington has been essential. Since February 2022, the EU has imposed 11 packages of sanctions and is currently negotiating a 12th package, in close coordination with the US and other G7 partners. There were also other forms of US-EU coordination. The former Chair of the US Federal Reserve, Janet Yellen and former head of the European Central Bank, Mario Draghi agreed on a plan[18] to freeze a large part of Moscow’s $643 billion of foreign currency reserves.[19] The EU Commission and the Biden administration set up a joint task force on energy security to increase EU imports of liquefied natural gas (LNG).22 However, there is growing frustration in the US about Europe’s apparent inability and unwillingness to lead on European security. Many Americans, on both sides of the political spectrum, are calling on Europe to do more for its security.

2.2              Working with the G7 has been incredibly important. The [20] G7 Hiroshima Leaders' Communiqué was the opportunity for the G7 to project a united front against Russia. Task forces such as the G7 Sanctions Enforcement Coordination Mechanism have been particularly important to share information between allies and to make sure sanctions are working effectively. The UK, like the EU, the US and Canada, have all banned Russia from SWIFT.23 The UK and EU’s lists of Russian-sanctioned entities are closely aligned.[21]

2.3              The war in Ukraine has brought the EU and the UK closer together. The Ukraine war was transformative for the UK’s relations with the EU and with individual member states. Diplomatic relations have vastly improved, as has UK-EU defence cooperation. In November 2022, the UK joined the EU’s PESCO Military Mobility project, which seeks to accelerate mobility of military equipment across Europe. It represents the first post-Brexit formal engagement between the UK and the EU's Common Security and Defence Policy (CSDP). In March 2022, the then UK Foreign Secretary Elizabeth Truss also attended the EU’s Foreign

Affairs Council, together with her US and Canadian counterparts, Antony Blinken and Mélanie Joly, as well as NATO Secretary General Jens Stoltenberg. In her plenary speech in front of the European Parliament in March 2022[22], EU Commission President Ursula von der Leyen mentioned the importance of close cooperation with partners, including the UK. Similarly, the EU Parliament recognised that the UK and EU were aligned in their response towards Russia's

aggression.26

3.      The UK should work with the EU on Ukraine’s recovery.

3.1              The reality is that allied countries cannot wait until the end of the war to start rebuilding Ukraine. The EU is looking to increase its budget to support Ukraine. As part of the mid-term revision of the Multiannual-Financial Framework (MFF), the European Commission asked Member States to increase the budget by €65.8 billion.[23] In June 2023, the EU created a new financial instrument with 3 pillars to support Ukraine recovery, which will be valid from 2024-2027.[24] Most EU member states are in favour of increasing the EU budget to support Ukraine, but on condition that more EU money also goes to support migration controls, re-industrialisation and the green transition. However, few member states want to increase their national contributions. The EU may need to look at a common debt system (France’s proposal) or reduce funding for other EU policies, for example the EU’s cohesion funds or common agriculture policy. Countries like Germany and the Netherlands are opposed to joint borrowing for several reasons.

Received 17 November

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[1] Resident Senior Fellow and Deputy Director for International Studies, Institut Montaigne

[2] Project Officer - United States and Transatlantic Affairs, Institut Montaigne

[3] Research Assistant, Europe Program, Institut Montaigne

[4] Former Project Manager - European Union, Institut Montaigne

[5] European Council, “Infographic - EU solidarity with Ukraine”, Consilium.europa (29 Sept. 2023), https://www.consilium.europa.eu/en/infographics/eu-solidarity-ukraine/, accessed 17 Nov. 2023. 6

Council of the EU, EU and Norway sign an agreement in support of EUMAM Ukraine [Press release] (6 Dec. 2022), https://www.consilium.europa.eu/en/press/press-releases/2022/12/06/eu-and-norway-sign-an-agreement-i n-support-of-eumam-ukraine/, accessed 17 Nov. 2023.

[6] Council of the EU, Norway: second Norwegian financial contribution to the European Peace Facility

[Press release] (25 July 2023), https://www.consilium.europa.eu/en/press/press-releases/2023/07/25/norway-second-norwegian-financial -contribution-to-the-european-peace-facility/, accessed 17 Nov. 2023.

[7] Swedish Presidency of the Council of the European Union, Delivery and joint procurement of ammunition for Ukraine [Press release] (20 March 2023), https://swedish-presidency.consilium.europa.eu/en/news/delivery-and-joint-procurement-of-ammunition-fo r-ukraine/, accessed 17 Nov. 2023.

[8] Council of the EU, Ukraine: EU launches Military Assistance Mission [Press release] (15 Nov. 2022), https://www.consilium.europa.eu/en/press/press-releases/2022/11/15/ukraine-eu-launches-military-assista nce-mission/, accessed 17 Nov. 2023.

[9] Council of the EU, Ukraine: Council adopts renewal of temporary trade liberalisation and other trade concessions [Press release] (25 May 2023), https://www.consilium.europa.eu/en/press/press-releases/2023/05/25/ukraine-council-adopts-renewal-of-t emporary-trade-liberalisation-and-other-trade-concessions/, accessed 17 Nov. 2023.

[10] According to Eurostat, 4.2 million people fleeing from Ukraine are currently benefiting from the EU temporary protection status but this number has decreased : in February 2022, there were 4,8 million people benefiting from it. At most, in February 2023, there were more than 8 million Ukrainian refugees in the whole of Europe, a number reduced to 5,8 million in October 2023.

[11] A.J. Semotiuk, “Looming Ukrainian Refugee Crisis Presents Challenge Not Seen Since World War II”,

Forbes (28 Feb 2022), para. 1, https://www.forbes.com/sites/andyjsemotiuk/2022/02/28/looming-ukrainian-refugee-crisis-presents-challen ge-not-seen-since-world-war-ii/?sh=3984dffcbd0e, accessed 17 Nov. 2023.

[12] DG HOME, “Temporary protection”, europa.eu, https://home-affairs.ec.europa.eu/policies/migration-and-asylum/common-european-asylum-system/temp orary-protection_en, accessed 17 Nov. 2023.

[13] European Commission, “2023 State of the Union Address by President von der Leyen”, europa.eu (13

Sept. 2023), para. 23, https://neighbourhood-enlargement.ec.europa.eu/news/2023-state-union-address-president-von-der-leye n-2023-09-13_en, accessed 17 Nov. 2023.

[14] Council of the EU, “Infographic - Refugees from Ukraine in the EU”, consilium.europa (27 Oct. 2023), https://www.consilium.europa.eu/en/infographics/ukraine-refugees-eu/, accessed 17 Nov. 2023. 16 L. Limb, “Les "récidivistes" : voici les 10 centrales électriques les plus polluantes d'Europe”, euronews

(23 May 2023),

https://fr.euronews.com/green/2023/05/23/les-recidivistes-voici-les-10-centrales-electriques-les-plus-pollu antes-deurope, accessed 17 Nov. 2023.

[15] P. Bomprezzi et al., “Ukraine Support Tracker”, Kiel Institute for the world economy (7 sept. 2023), https://www.ifw-kiel.de/topics/war-against-ukraine/ukraine-support-tracker/, accessed 17 Nov. 2023.

[16] P. McLeary et al., “Big wars take a lot of bullets”, Politico (28 Sept. 2022), para. 8, https://www.politico.com/newsletters/national-security-daily/2022/09/28/big-wars-take-a-lot-of-bullets-0005 9210, accessed 17 Nov. 2023.

[17] L. Bayer, “Hungary refuses to allow weapons transit to Ukraine”, Politico (28 Feb. 2022), https://www.politico.eu/article/hungary-foreign-minister-peter-szijjarto-weapon-transit-ukraine/, accessed 17 Nov. 2023.

[18] Bank of Russia, “International Reserves of the Russian Federation (End of period)”, Bank of Russia (10.

Nov. 2023), https://www.cbr.ru/eng/hd_base/mrrf/mrrf_7d/?UniDbQuery.Posted=True&UniDbQuery.From=01.2014&U niDbQuery.To=03.2022, accessed 17 Nov. 2023.

[19] V.Pop, S. Fleming & J. Politi, “Weaponisation of finance: how the west unleashed ‘shock and awe’ on Russia”, Financial Times (6 April 2022), para. 6, https://www.ft.com/content/5b397d6b-bde4-4a8c-b9a4-080485d6c64a, accessed 17 Nov. 2023. 22 European Commission, “Joint Statement between the European Commission and the United States on

European Energy Security”, europa.eu (25 March 2022), https://ec.europa.eu/commission/presscorner/detail/en/statement_22_2041, accessed 17 Nov. 2023. 23 DG ECFIN, “Sanctions adopted following Russia’s military aggression against Ukraine”, europa.eu (23

Oct. 2023), https://finance.ec.europa.eu/eu-and-world/sanctions-restrictive-measures/sanctions-adopted-following-rus sias-military-aggression-against-ukraine_en#timeline-measures-adopted-in-2022-2023, accessed 17 Nov.

[20] .

[21] K. Kwapińska & Pr. R. Whitman, “UK and EU responses to the war in Ukraine”, UK in a changing

Europe (30 May 2023), para. 8, https://ukandeu.ac.uk/explainers/uk-and-eu-responses-to-the-war-in-ukraine/, accessed 17 Nov. 2023.

[22] European Commission, “Speech by President von der Leyen at the European Parliament Plenary on the Russian aggression against Ukraine”, europa.eu (1 March 2022), https://ec.europa.eu/commission/presscorner/detail/es/speech_22_1483, accessed 17 Nov. 2023. 26 M. Szczepański,”UK support to Ukraine: Stimulating EU-UK relations?”, European Parliamentary

Research Service (May 2023), https://www.europarl.europa.eu/RegData/etudes/ATAG/2023/747890/EPRS_ATA(2023)747890_EN.pdf, accessed 17 Nov. 2023.

[23] K. Kowald & M. Pari, “Revision of the EU's long-term budget for 2021 to 2027”, European Parliamentary

Research Service (Sept. 2023), https://www.europarl.europa.eu/RegData/etudes/BRIE/2023/753924/EPRS_BRI(2023)753924_EN.pdf, accessed 17 Nov. 2023.

[24] European Commission, “Recovery and reconstruction of Ukraine. European Commission”, europa.eu, https://eu-solidarity-ukraine.ec.europa.eu/eu-assistance-ukraine/recovery-and-reconstruction-ukraine_en, accessed 17 Nov. 2023.