On Tuesday, 8 March, as the Russian invasion of Ukraine enters its second week of operations, the European Commission will take stock of the resources mobilised and available to deal with the massive influx of refugees fleeing their country. Ahead of the EU summit in Versailles on Thursday 10 and Friday 11 March, it will initiate discussions among EU leaders on how to reduce Europe’s dependence on Russian fossil fuels. The question of a possible European mechanism to cushion the consequences in the European Union of these upheavals and the sanctions against Russia could also be addressed by the EU27.
On Tuesday, the EU institution will summarise, in a communication, all the initiatives taken and possible to help people fleeing Ukraine who are taking refuge in the EU and Moldova by the hundreds of thousands (see EUROPE 12905/3). In addition to the mobilisation of the civil protection programme, the reprogramming of structural funds for the period 2014-2020 and granted under the REACT-EU initiative, a budgetary extension incorporated in the negotiations on the Multiannual Financial Framework 2021-2027, will be authorised (see EUROPE 12903/5). Ten billion euros will be available through REACT-EU to feed this CARE initiative.
Guidelines should be developed as well to structure Member States’ reception efforts through the creation of a digital portal at European level. This tool would also allow refugees to communicate their needs.
Reduce energy dependency. The unprovoked Russian military invasion of Ukraine, the emotional distress of Ukrainian civilians affected by bombing and the untenable situation whereby the EU27 are helping to finance the Russian war effort through their energy bills are leading Europeans to completely rethink their energy mix in order to reduce their dependence on Russian fossil fuels.
On Tuesday, the Commission will propose a new version of its communication on the tools available to the EU to respond to soaring energy prices and better prepare for possible restrictions on Russian supplies (see EUROPE 12901/13). This will include a minimum level of gas storage and measures, including fiscal measures, to relieve vulnerable citizens and companies most exposed to this fossil fuel. The Commission will recall that Member States can regulate energy prices, even set price ceilings and raise tax revenues to capture part of the profits of gas suppliers.
The aim is to feed into European Council discussions on what can be done to disconnect from Russian gas and oil by 2030, an EU source said on Monday 7 March.
Meeting with Italian Prime Minister Mario Draghi in Brussels, Commission President Ursula von der Leyen outlined three ways in which the EU could “get rid of Russian gas, oil and coal”: - diversification of supply sources by turning to “reliable” suppliers, especially those of LNG; - invest massively in renewable energy by accelerating the implementation of the European Green Deal targets; - increase “energy efficiency” by renovating the existing building stock and inventing intelligent industrial processes. She mentioned work on a fourth package of EU sanctions against Russia.
Should there also be a discussion on the continued use of fossil fuels or controversial energy such as nuclear? On Monday, a third of the heads of EU Commissioners’ cabinets reportedly raised the issue.
German Chancellor Olaf Scholz said Russian gas imports were “essential” for Europe’s supply.
Activate all budgetary levers
In addition to the mobilisation of uncommitted cohesion policy envelopes already allocated, discussions could start on a reorientation or even an increase of the 2021-2027 Multiannual Financial Framework (MFF) and allow the EU to further assert its strategic autonomy.
Anything is possible, according to this source, who believes that if the war in Ukraine drags on, some ‘frugal’ countries, which are now very exposed to the Russian threat, may reconsider their positions.
At the current pace of events, the mid-term review of the MFF in 2024 still seems a long way off.
Last week, Commission Vice-President Valdis Dombrovskis did not rule out the possibility of Member States modifying their national recovery plans under the Next Generation EU Recovery Plan in order to redirect investments according to changing priorities.
The EU institution also postponed until spring any decision on deactivating the general escape clause of the Stability and Growth Pact from 2023, in order to take into account the evolving macroeconomic and security situation in Europe (see EUROPE 12902/18). This caution was welcomed by the European Finance Ministers.
On the issue of European fiscal rules, several countries could also put forward the idea of excluding certain expenditure from the calculation of the public deficit, such as defence expenditure.
The Commission is also ready to relax the rules on State aid. “The Commission is closely monitoring the situation and is ready to use the full flexibility of its State aid toolbox in order to enable Member States to support companies and sectors severely impacted by the current geopolitical developments”, said Arianna Podesta, a Commission spokeswoman, on Monday. “We are looking at all the tools at our disposal - permanent and temporary”, the source added.
The Commission will consult the EU countries before implementing any measures. From airlines to banks to car manufacturers, thousands of European companies are expected to be hit hard by the sanctions, as they have to close their operations in Russia and reduce their relationships with Russian companies.
Finally, this weekend, the French press reported that the French Presidency of the Council of the EU is considering a European protection mechanism against the negative repercussions of international sanctions against Russia on the European economy.
“A political consensus should emerge on the need for additional common resources in three areas: energy, defence and food”, the French Secretary of State for European Affairs, Clément Beaune, told Les Echos newspaper.
Building on the experience of the European response to the Covid-19 pandemic, the creation of a European facility, perhaps financed through a new European loan, could be used to cushion the economic shockwave caused by the Russian invasion of Ukraine. (Original version in French by Mathieu Bion with Lionel Changeur)