The EU heads of state and government will debate measures to strengthen the EU’s strategic autonomy in Versailles on Friday 11 March, with the Russian invasion of Ukraine reinforcing the urgency of making progress in this area.
“If there was no Versailles summit, we would have organised an extraordinary European summit”, an EU source said on Wednesday 9 March, underlining the urgency for the EU27 to reaffirm their support for Ukraine (see EUROPE 12907/1) and to speed up discussions on their common strategic future in terms of security, energy and economy.
“In recent years, in the face of multiple crises and challenges, we have embarked together on an ambitious strategic agenda. In light of recent events, it is more urgent than ever that we take decisive action to strengthen our sovereignty, reduce our dependencies and design a new growth and investment model“, says European Council President Charles Michel in his letter of invitation to EU leaders.
He hoped that in Versailles, the EU27 would focus on three issues which would be the subject of regular progress reports at future European Council meetings, namely: - strengthening the EU’s defence capabilities; - reducing its energy dependence, in particular on Russian gas, oil and coal; - the establishment of a more solid economic base.
Defence. The heads of State or government will discuss the strengthening of the Member States’ defence capabilities on Thursday evening.
“The need that arises with the war in Ukraine to be more reactive and to have the capacity to make a strategic shift quickly”, explained a French source at the Elysée, adding that a collective evaluation of the means to be developed in the coming years was necessary.
According to a draft Versailles declaration dated Tuesday 8 March (see EUROPE 12906/3), confirmed on Wednesday by a European source, EU leaders will commit to substantial increases in national defence spending. They are also expected to look at ways to boost military collaboration between Member States, with the aim of funding joint capability programmes to fill gaps.
In recent years, the EU has set up the European Defence Fund, which for the first time will be used to supply arms to a third country at war (see EUROPE 12900/1), and permanent structured cooperation, which strengthens cooperation between Member States. This discussion also comes days before the expected approval by EU leaders of the ‘Strategic Compass’ (see EUROPE 12905/8).
Energy. Energy will be a central element in the European leaders’ discussions.
“We agree to phase out our dependence on Russian gas, oil and coal”, says the draft Versailles Declaration (see EUROPE 12906/3).
The EU imports from Russia between 40 and 45% of its gas consumption, 46% of its coal consumption and 27% of its oil consumption.
To overcome this dependence as quickly as possible, the EU27 will consider short-term actions such as strategic gas storage, diversification of supplies, increased LNG imports, increased energy savings, accelerated investment in renewable energy and even nuclear power.
Some leaders are likely to raise the possibility of establishing an embargo on Russian fossil fuel imports, echoing the decisions of the United States and the United Kingdom on this issue. However, as the starting points are very different in each Member State, it is unlikely that such a radical measure will be endorsed at EU level.
On Tuesday, the European Commission estimated that dependence on fossil fuels from Russia could be reduced by two-thirds as early as this year, and it hopes to achieve independence well before 2030 (see EUROPE 12906/4). According to the Elysée, there will “probably be national deadlines” that will be set.
In addition, in order to limit the impact of soaring energy prices on businesses and individuals, EU leaders will consider measures to cushion the impact, such as the possibility of capping gas prices and levying surpluses on European gas operators. They will also bear in mind the impact of the war in Ukraine on production and prices of agricultural commodities (30% increase in wheat prices), with some already raising the spectre of a global food crisis.
Strategic sectors. On Friday, the EU27 will identify five strategic areas for strengthening the EU’s autonomy vis-à-vis foreign powers, for which operational targets will be set: - critical raw materials; - semi-conductors (target: produce 20% of global production in the EU by 2030); - health; - digital markets and technologies; - food, in particular the production of plant proteins).
Given these observations on the EU’s energy dependence and the need to strengthen its sovereignty, the question of fiscal and financial resources, whether of public or private origin, will inevitably be raised. EU leaders will discuss the appropriate European economic governance framework to facilitate the massive investments needed.
The debate on the reform of European fiscal rules is “less prominent than it was in the past” and is expected to “probably” be “postponed”, the French source said.
In Paris on Wednesday, Dutch Prime Minister Mark Rutte said that highly indebted countries could be allowed to reduce their public debt at a slower pace in exchange for a reform programme.
The European Commission is giving itself a few months to confirm, or deny, the deactivation of the general clause of the Stability and Growth Pact at the end of 2022 (see EUROPE 12902/18). It will unveil its proposals on the reform of European fiscal rules before the summer, with guidelines to be applied in the interval between the renewed application of the Pact and the entry into force of a future reform.
However, according to the Elysée, “initial discussions on the possibility, at European level, of having a resilience and investment plan to accelerate the climate transition” will take place in Versailles. France, which highlights defence and energy as potential beneficiary sectors, acknowledges that “these discussions are in their early stages” and are not expected to be concluded by the end of the week, given that it took several months to set up the Next Generation EU Recovery Plan activated to tackle the Covid-19 pandemic.
If the French authorities put forward the idea of pooling the costs of strengthening the EU’s strategic autonomy, “it will not be for today”, said this European source.
A majority of Member States are of the opinion that all available budgetary means should first be mobilised through the European Recovery Plan since Next Generation EU can cover investment projects in the climate and digital transitions. (Original version in French by Mathieu Bion with Camille-Cerise Gessant)