- Current political and economic issues succinctly explained.
As winter neared, many observers were concerned about the resilience of European democracies during Russia’s war against Ukraine. The triple pressures of economic downturn and inflation, energy crisis, and millions of Ukrainian refugees seemed to provide fertile ground for populists and for a faltering of European support for Ukraine. In reality, that scenario has not materialized. Europe is more resilient than expected.
European gas storages are filled for the winter, and European Union leaders have agreed to a gas price cap across the European Union (EU). The cap will reduce the gas bills for individual households in all EU member states. At the same time, the European Union has radically reduced its dependence on Russian gas from 40 percent at the beginning of 2022 to 17 percent in August. Russian gas is primarily replaced by liquified natural gas from the United States.
The European Union is also catching up on support for Ukraine after lagging behind the United States throughout the summer and early autumn of 2022. It has agreed to an eighteen-billion-euro macro-financial assistance package, which will help to keep Ukraine’s budget afloat in 2023. It also increased the European Peace Facility, an off-budget fund that reimburses member states for arms donations to Ukraine, by an additional two billion euros.
Overall, the combined financial, humanitarian, and military aid of all EU member states and institutions amounts to fifty-two billion euros (as of November 20, 2022). The forty-five-billion-dollar support package for Ukraine agreed upon in Congress on December 24, 2022, will once again put the United States far ahead of the EU. However, it is a welcome sign that EU member states made more and larger contributions than usual during summer and autumn.
Public support for Ukraine remains strong. According to a Bertelsmann survey, 50 percent of the EU population (on average) support weapon deliveries to Ukraine, and 67 percent want to become more energy independent, even at higher costs for themselves (as of September 2022). A YouGov poll concluded that the public in core European countries continues to back sanctions on Russia. The outliers in that survey are Greece, Hungary, and Italy.
The case of Italy seems to justify concerns that populism is on the rise in Europe in the wake of the war in Ukraine. Indeed, a study by the Pew Research Center confirmed that populists on the right have increased their vote shares in recent European elections. A new far-right coalition formed in Rome after elections in September 2022 with the pro-Russian politicians Silvio Berlusconi and Matteo Salvini in power. At the same time, elections in Sweden led to a new coalition backed by the far-right Sweden Democrats.
Nevertheless, those election victories do not necessarily represent a direct response to the war and a change in approach toward Ukraine. In Sweden, domestic concerns about migration and crime were high on the agenda for a long time. In Italy, the elections reflect the general volatility in Italian politics and disappointment with left-wing parties in the past. The new Italian government remains committed to Ukraine and has agreed to deliver weapons throughout 2023. Sweden’s new government also remains firm on Ukraine support and is primarily focused on its NATO accession.
Hungary, the EU’s arguably least democratic member state, has lifted its blockade of Ukraine support after the European Commission announced a de-freeze of some of the financial funds withheld from Hungary out of rule-of-law concerns. It is an uneasy compromise, but the example of the EU’s approach toward Hungary helps illustrate why the European Union is more successful than expected.
First, by its nature, the EU is a compromise machine. The process by which the EU reaches a joint position is tedious and imperfect, but—as many EU leaders like to underline—it is the outcome that matters. The EU’s success in achieving compromise also has to do with the distant shadow of the future in EU policymaking—that using a veto option today could harm negotiations in the future. In short: Burning bridges in the EU is not a successful strategy. If the stakes are high, as they are in Ukraine, the EU will find a way to achieve a creative compromise.
Second, the EU has learned from its past crises. During the COVID-19 pandemic, the initial lack of solidarity weakened the EU as a whole. Later on, the EU agreed for the first time to a joint borrowing mechanism to cushion the economic damage of the pandemic. The lesson was that solidarity is more successful than going it alone. That knowledge has also guided the EU’s response toward the energy crisis, after initial controversies among member states about energy subsidies.
Despite the positive balance sheet so far, Europe is not yet out of the woods. Inflation is expected to remain at 7 percent in 2023, according to the European Commission. Gross domestic product (GDP) growth will stagnate at 0.3 percent in 2023. The EU’s gas storages will have to be refilled toward the end of the winter, and right-wing populists are preparing for the next elections, such as in Slovakia’s in 2023. However, the greatest danger to European democracies will be a Russian success in making Ukraine uninhabitable and destroying its infrastructure.
A new wave of Ukrainian refugees caused by Russian missile attacks could overwhelm Europeans at a time of dire economic outlook. So far, Europe’s response has been formidable. More than 4.8 million refugees were registered in Europe and received immediate residency rights and working permissions in the EU. As of June, 3.1 million have exited the EU back to Ukraine. They will likely return if Russia continues its attacks. Moscow is betting that time is on its side. It does not believe in European democracies, and undermining European support for Ukraine is part of its new theory of victory.
As Jean Monnet, one of the founding fathers of the EU, once argued: “Europe would be built through crises, and it would be the sum of their solutions.” Refuting Russia’s new theory of victory will be an important litmus test for the EU’s strength in crisis.