Editor's Note: Greetings from Brussels, where a day-long protest by farmers has just concluded, and a special EU summit has approved a significant 50-billion-euro aid package for Ukraine. This edition of the CCCEU Weekly Update aims to keep you informed about the ever-evolving dynamics in the EU bubble as well as Sino-EU ties. Enjoy your read and have a restful weekend. 

▶︎ Focus    

EU leaders on Thursday solidified a consensus on a €50 billion aid package for Ukraine, strategically designed to provide vital budgetary support over the next four years. Charles Michel, President of the European Council, emphasized on social media that the agreement ensures "stable, predictable, and long-term funding for Ukraine." Ukrainian President Volodymyr Zelensky welcomed the funding, foreseeing its positive impact on the country's economic and financial stability.

As outlined in the Council's conclusions, EU member states commit to augmenting their multiannual financial framework by €64.6 billion. Of this, €50 billion is allocated to Ukraine, encompassing €17 billion in grants and €33 billion in loans. The European Council underscores the importance of offering "stable, predictable, and sustainable financial support" to Ukraine from 2024 to 2027, facilitating the nation's recovery, reconstruction, and gradual integration into the EU.

While the United States maintains its role as Ukraine's primary supporter, the recently pledged $61.4 billion (approximately €56.4 billion) in aid faces delays in Congress. EU officials express concern, highlighting the urgency of additional financial assistance to prevent Ukraine from depleting its funds by March.

For Ukraine, the EU aid agreement arrives as timely support, with the first installment of €4.5 billion expected in March.

Amid the ongoing Ukraine crisis entering its third year, the nation confronts a critical shortage of weapons. German Chancellor Olaf Scholz urges EU countries to intensify arms deliveries to Ukraine, recognizing the inadequacy of current plans.

The utilization of EU budget funds to assist Ukraine encounters a significant obstacle, requiring unanimous consent from all 27 member states. Hungary's veto in December prompted a standoff with the EU. In an effort to gain support from Hungarian Prime Minister Viktor Orbán, the EU crafted a proposal partially aligning with Orbán's demands, while also considering bypassing Hungary in aiding Ukraine.

A draft proposal for the summit reveals the EU's approach to satisfy Orbán's demands, proposing an annual debate on EU aid to Ukraine without granting Hungary veto power. Hungary's earlier compromise proposal, submitted on January 27, expresses a willingness to support a €50 billion aid package for Ukraine using the EU budget, contingent on unanimous approval from member states for annual fund disbursement.

According to the Financial Times, the EU is prepared to sabotage Hungary's economy if it obstructs new aid to Ukraine at the summit. A confidential plan outlines strategies to exploit Hungary's economic vulnerabilities, impacting its currency, investor confidence, and ultimately "jobs and growth." Despite the EU member states' agreement on aid to Ukraine, Hungary receives no assurances of unfreezing the funds, as reported by Reuters.

▶︎ Hot Topics

>>Commission seeks to boost EU EV Production

On January 30, European Commission Vice-President Dombrovskis addressed a MEP's enquiry by mentioning the bloc's anti-subsidy probe into Chinese electric vehicles (EVs). Launched on October 4, 2023, this investigation aims to consider the overall EU interest, ensuring measures do not disproportionately affect EU importers, users, and consumers, he wrote.

Dombrovskis highlighted recent EU measures promoting the development of the European value chain for electric vehicles (EVs), covering research, charging infrastructure, battery production, raw materials processing, and skills. The EU aims to enhance EU-manufactured vehicles' price competitiveness and affordability, with member states offering purchase premiums, tax incentives, and infrastructure investments to attract EV manufacturing with competitive prices.

>>EU Agriculture Commissioner's Visit to China Aims to Boost European Exports

EU Agriculture Commissioner Wojciechowski is set to lead an EU agri-food business delegation to China from April 21-26, 2024, coinciding with the 2024 World Food (Shenzhen) Expo. The visit aims to facilitate European agricultural food and beverage exports to China, covering a diverse range of products. The EU delegation expects to expand its presence in the Chinese market, encompassing meat, chocolate, cereals, pasta, confectionery, bakery, dairy products, wine, beer, spirits, olive oil, vegetable oils, infant food, baby milk powder, geographical indication products, grains, oilseeds, animal feed, pet food, fruits, and vegetables.

>>EU and US Struggle to Reach Agreement on Critical Battery Minerals

The EU's top trade official reported a failure to reach an agreement at the fifth ministerial meeting of the US-EU Trade and Technology Council. The EU's objection to the US's Inflation Reduction Act, perceived as discriminatory against foreign suppliers, resulted in no joint statement. Both parties plan a sixth ministerial meeting in Belgium in April, with expectations that it will be the last meeting before the EU and US national elections later this year.

>>Potential Protective Measures for EU Solar Industry as Concerns Rise

Due to the threat of significant imports from China. Industry data indicates that EU manufacturers are on the verge of collapse, with recent factory closures. Potential EU measures include an anti-dumping investigation against China or incentives to governments to keep factories operational. However, industry representatives caution against protectionist measures, emphasizing China's competitiveness in both price and quality, urging the EU to adopt a long-term industrial strategy.

>>Farmers Protest Across Europe Amidst Economic Challenges

Protests by farmers in multiple European countries highlight concerns over the dumping of Ukrainian agricultural products, perceived as unfair competition. Farmers, facing challenges such as climate change, increased competition, rising fuel prices, and higher environmental standards, express worry about decreased incomes and difficult living conditions. These protests, observed in countries like France, Belgium, Italy, Germany, Poland, Romania, Spain, and Greece, underscore the urgent need for addressing fundamental issues affecting the agricultural sector.

>>EU Red Sea Naval Mission to Launch in Mid-February

The EU plans to launch a Red Sea naval mission by mid-February, as announced by the EU's High Representative for Foreign Affairs and Security Policy, Borrell. Discussions among defense ministers aim to finalize details, including participating member states, the command center's location, and equipment contributions. Greece has expressed interest in commanding the naval mission and proposes setting up a command center in Larissa, central Greece.

▶︎ What are experts talking about？

EU Mulls Further Expansion, with Ukraine as the Focus

Source: Shi Jie Zhi Shi (World Affairs Knowledge)

Author: Lang Jiaziren 

(Assistant Research Fellow at the Institute of European Studies, Chinese Academy of Social Sciences)

Against the backdrop of profound geopolitical changes, the EU's concerns have shifted from whether and when to expand to how to achieve expansion. Especially after Ukraine became the focus of the European geopolitical vortex, a significant shift has occurred in the strategic perceptions of European leaders. They believe that Ukraine should no longer be trapped in a "grey zone" of geopolitics but should actively integrate into the EU. When the EU summit unanimously agreed to initiate negotiations for Ukraine's accession, European Council President Michel described it as a "historic moment," witnessing "the commitment and strength of the EU." European Commission President von der Leyen called it a "strategic decision." Ukrainian President Zelensky stated that it was not only "a victory for Ukraine" but also "a victory for all of Europe."

Although Ukraine is still far from becoming an EU member state, the decision to start accession negotiations will have far-reaching geopolitical implications. This time, the EU agreed not only to initiate negotiations for Ukraine's accession but also to proceed with the decision-making process faster than expected.

The EU's ambitions: scale, strategic investments and skills

Source: Bruegel

Author: Maria Demertzis

Brussels has entered pre-election mode, and over the next few months, there will be a lot of talk about the priorities and objectives the new EU leadership should pursue over the second half of the 2020s. However, given the underlying trends in climate, global governance and digitalisation, priorities should be thought of over a much longer period. The EU needs to fundamentally rethink three issues: scale, strategic investments and skills.

Scale

In an increasingly fragmented world, the EU can only defend its interests if it can operate at and maintain scale. From a single market to a single currency and single positions on the big issues, the EU and its member states always do better if they speak as one, as seen during the pandemic. But the reality is that the EU speaks with one voice very rarely.

Strategic investments

The EU is known for having large investment gaps. The European Commission states that €481 billion is needed to advance until 2030 with the EU's climate and digital objectives only. But there are other objectives, including defence, health and energy, that also merit attention.

Skills

In the world of two main competing economic models, capitalism versus state capitalism, the one thing that is certain is that those with the right skills will prevail. The economies that adapt to the skills of the future are also those that will have the right basis for competing. This entails flexible primary and secondary education systems that can anticipate future labour market needs, but also the necessary skills that will sustain people's financial well-being.

Please note: the English version of this issue is slightly different from our Chinese one. The views and opinions expressed in this article do not necessarily reflect the official position of the CCCEU.

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