Wider Europe

Welcome to Wider Europe, RFE/RL's newsletter focusing on the key issues concerning the European Union, NATO, and other institutions and their relationships with the Western Balkans and Europe's Eastern neighborhoods.

I'm RFE/RL Europe Editor Rikard Jozwiak, and this week I am drilling down on two issues: NATO's new spending targets and why the EU is waiting for the United States when it comes to more Russia sanctions.

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NATO Set To Agree On New Defense Spending Targets

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Briefing #1: NATO's New Targets

What You Need To Know: NATO defense ministers meet on June 5 in a last ministerial meeting before the big annual NATO summit on June 24-25, when the military alliance's 32 heads of state and government, including US President Donald Trump, gather at The Hague.

The meeting is about one thing only: cash. This is when officials are set to agree on the next NATO spending target.

As most alliance members now spend 2 percent of GDP on defense, the next goal is 3.5 percent in so-called hard spending, meaning military capabilities such as tanks, rockets, and ammunition.

According to NATO officials who spoke to RFE/RL, only Spain seems to have problems with the 3.5 percent headline, but it's expected to relent at the ministerial.

Spain is one of only a few countries still not clearing the 2 percent baseline, having only reached 1.28 percent last year; the budgeted military spending increase it was hoping for appears to be stuck for now.

The issue in Madrid is related to the center-left government's long-held promise to coalition partners to get Catalan, Basque, and Galician to become official EU languages -- something that requires unanimity among EU member states, which Spain failed to secure when it came up on the agenda in Brussels on May 27.

While the issue hasn't been entirely dismissed yet, no date has been set for a potential decision on the issue.

Deep Background: The 3.5 percent target is not the only thing that needs deciding. There should also be a 1.5 percent of GDP spending goal on what could be called soft targets, bringing total defense spending up to 5 percent of GDP.

One of the big issues now, with negotiations likely to continue right up till the summit, is what can be included in that 1.5 percent. It would certainly include boosting civil preparedness and cyberdefense, but allies are lobbying to put pretty much anything in there -- rumor has it Germany wants to include financing for its Deutsche Welle media broadcasting.

There are two more questions that may not be resolved anytime soon: the timeline for reaching the target and how exactly to do so. The year 2032 has been mentioned, but that may well be pushed back to 2035, with officials saying it's unrealistic for every country to boost defense spending before then as there are low growth and considerable budget deficits to contend with.

There is a real discussion on the method of how to reach the target with NATO officials pushing for a 0.2 percent spending increase every year. Most countries, however, don't want such a detailed plan and prefer spending in spurts when money is available. This would mean their defense spending could jump considerably during a year when they place a major order of tanks or airplanes, for example -- and ideally this would come nearer the 3.5 percent target deadline.

Drilling Down:

• So where does the United States stand in all of this? It's been Trump, after all, who's hammered home to European NATO allies that they need to spend more. European diplomats I have spoken to say Washington simply wants the 3.5 percent in writing in The Hague and doesn't really care what the other 1.5 percent involves.
• But there's also a grand transatlantic bargain to be had. The United States would like for a potential European defense splurge to benefit American weapon manufacturers. But with supply chains stretched in North America, it could make sense to set up more American production in Europe. In other words: buy American, in Europe. Think of the Patriot systems that will be made in Germany or F-35 aircraft production in Italy.
• So what about Ukraine? There will at least be a session of the NATO-Ukraine Council at the defense ministerial on June 5, something that seems unlikely at the Hague summit with the presence of the Ukrainian President Volodymyr Zelenskiy still unconfirmed.
• The day before the ministerial meeting, the Ukraine Defense Contact Group (also known as the Ramstein group), an alliance of 57 countries, will meet to coordinate military aid for Kyiv. With the United States no longer in the lead, Germany and the United Kingdom are now co-chairing the group with more announcements of military aid expected.
• NATO allies provided 50 billion euros to Ukraine in 2024, and the goal is to provide another 40 billion this year. More than 20 billion euros have been pledged so far, but there is still a fear that target won't be reached as countries will be prioritizing their own defenses and the United States signaled it might not send more arms to Kyiv as it seeks a negotiated end to the fighting.

Briefing #2: The EU's Next Sanctions On Russia. What's Next And When Can They Be Expected?

What You Need To Know: When the European Commission started briefing EU states last month on the next sanctions package expected to be imposed on Russia, the 27 member nations expected concrete written proposals to follow.

They're still waiting.

Normally these sorts of documents -- in this case the potential 18th round of restrictive measures since the Kremlin's full-scale invasion of Ukraine was launched more three years ago -- are provided only a few days after the briefings, or "confessionals" as they are known in Brussels.

The documents outline details of what the commission is considering about targeting. In turn, EU members provide red lines as to what they are willing to agree on since all sanctions require unanimity.

Deep Background: So what's the holdup? Two things. The first is that some EU member states -- including larger ones such as Germany and France -- wanted to wait and see how June 2 peace talks in Istanbul between Russia and Ukraine proceeded.

Several EU officials told RFE/RL on the condition of anonymity that they don't believe Moscow is serious about making progress in negotiations with Kyiv and wanted to wait and see the results.

Aside from agreeing to swap thousands of their dead and seriously wounded troops, the two sides made no progress toward ending Europe's longest and deadliest conflict since World War II.

Then there is the United States. So far, President Donald Trump has refrained from targeting Moscow with sanctions even though he has threatened to do so on numerous occasions.

The reason given is the same as the Europeans: he wants to give the Russia-Ukraine negotiations every chance possible to succeed.

Brussels is desperate to have Washington onboard on for any new sanctions. European diplomats say they are relieved the US hasn't, at least so far, accepted "a rushed, bad peace deal," or that the Americans simply haven't walked away from the issue despite threatening to. And while they admit that sanctions are no longer synchronized like they were during the Biden administration, they are still keen to coordinate any coming round of measures to maximize their impact and message.

Sanctions from Washington may also help coax some EU countries such as Hungary -- run by Trump ally Viktor Orban -- to go along with another wave of measures despite voicing concerns over their effectiveness.

Drilling Down:

• So, what would the 18th package contain? EU diplomats familiar with the file note that one particular item would require American consent: lowering the G7 Russian oil price cap to $45.The cap has held at $60 for years even though oil prices have traded below that level.
• The idea is that the leaders formally will agree to decrease the price cap to at least $50 when they meet at the G7 Summit in Canada on June 15-17. The group's finance ministers couldn't reach an agreement in May as Washington resisted the move. Some EU officials told RFE/RL that they believe there could be movement on the issue soon.
• Much like the EU's 17th package that was adopted on May 20, the new measures include blacklisting more individuals and targeting the Russian shadow fleet. On the latter, the EU has targeted more than 300 vessels that the bloc believes Moscow uses to circumvent sanctions, notably the export of oil.
• With an additional 600 boats believed to be part of the fleet, the goal of the upcoming measures is to add as many as those as possible even if European diplomats admit it is a challenge to find evidence that stands up in court proving that the Kremlin is financing the ships.
• More visa bans and asset freezes are also expected, with the EU looking to add another 100 individuals and companies to a sprawling list of those sanctioned that exceeds 2,400 entries.
• The European Commission also could propose reintroducing those previously removed from the blacklist. Another move could be to hit Russian diplomats who have been posted in various European countries and are suspected of spying on behalf of Moscow.
• The proposal also includes sanctions on the Nordstream pipelines connecting Russia with Germany. No gas is flowing through them at the moment, but Berlin has indicated that it wants formal measures to apply as some talks have resurfaced in the country about using them again in case relations with Moscow improve.
• There is also an idea to cut more than 20 Russian banks from the SWIFT international payments system, even though most of the country's big banks already have been targeted.
• The Russian foreign direct investment fund could also be hit, and the bloc is planning to introduce trade restrictions that would prevent European companies from exporting various industrial components that Russia may use to fuel its war machine.

Looking Ahead

On June 4, the European Commission and the European Central Bank (ECB) are set to give the green light to Bulgaria to introduce the euro on January 1, 2026. Bulgaria is then set to become the 21st EU member state out of 27 to adopt the common currency. You can read more about what Sofia still needs to do and why not everyone in the country is happy about this move here.

That's all for this week!

Feel free to reach out to me on any of these issues on X @RikardJozwiak, or on e-mail at jozwiakr@rferl.org .

Until next time,

Rikard Jozwiak

If you enjoyed this briefing and don't want to miss the next edition subscribe here .

Welcome to Wider Europe, RFE/RL's newsletter focusing on the key issues concerning the European Union, NATO, and other institutions and their relationships with the Western Balkans and Europe's Eastern neighborhoods.

I'm RFE/RL Europe Editor Rikard Jozwiak, and this week I am drilling down on two issues: the EU’s attempt to ramp up its defense and the bloc finally hitting Russian fertilizers.

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The EU Boosts Its Defense And Targets Russian Fertilizers

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Briefing #1: Brussels’ $170 Billion Plan To Boost European Defense Capabilities

What You Need To Know: On May 27, the European Union will formally approve its 150 billion euro ($170 billion) scheme to boost defense spending in the bloc.

The so-called SAFE (Security Action For Europe) regulation was first proposed in March by the European Commission in response to calls from member states for financial and political support to meet new defense targets pushed by NATO -- and to potentially step in for Ukraine, should the United States shift its focus elsewhere.

The final regulation, seen by RFE/RL, spells out clearly that “the threats posed by Russia and Belarus are of particular urgency and relevance,” and need to be countered quickly.

Due to the time required to develop defense products and scale up industrial production capacity across the EU, the regulation also says it will be “vital” for the union to start supporting member states “as soon as possible so that they can place orders very rapidly.”

Brussels first responded to the member states’ calls by triggering the EU’s national escape clause for military spending, meaning that expenditure for items like weapons and ammunition won’t be accounted for in the bloc's punishment mechanism for countries breaching EU spending limits.

Deep Background: That created fiscal leeway -- but member states also need the cash as soon as possible. With several capitals keen to access the proposed funds quickly -- and with no need for unanimity or consent from the European Parliament -- EU ambassadors approved the new legislation on May 21, with only Hungary going against it.

The new scheme functions the same way as the EU’s recent COVID-19 recovery program, which was worth 800 billion euros ($920 billion).

For SAFE, the bloc will use its triple-A credit rating to raise the required 150 billion euros on the markets and then loan it to member states. In this sense it will be much cheaper than having most EU members trying to generate the funds themselves by borrowing separately.

Five EU countries -- Denmark, Germany, Luxembourg, the Netherlands, and Sweden -- currently enjoy a triple-A rating, so they most likely won’t need to participate in the scheme, leaving more of the potential loans for poorer members.

The fact that the loans have a maximum duration of 45 years, don’t need to be serviced in the first decade, and countries won’t have to pay VAT on the equipment purchased are other advantages that Brussels hopes will trigger a European defense splurge.

Drilling Down

• But there are, of course, some strings attached to all this. First of all, many indebted southern member states complain that -- unlike the COVID recovery scheme, which also included a grant component -- this initiative is exclusively a loan, which will place an even bigger burden on already strained public finances.
• SAFE is also supposed to stimulate joint defense procurements between countries, with the European Commission keen to use the instrument to create a proper European defense market instead of the nationally fragmented one that largely exists today.
• Countries can apply for loans without teaming up with another state during the first year only. After that -- from late 2026 to 2030 (when the scheme expires) -- two or more countries must apply jointly.
• In order to ensure the money is fairly distributed, the share of loans granted to the three member states getting the biggest allowance should not exceed 60 percent of the entire 150 billion euros allocated to the scheme.
• But the big issue in the past month has been who can participate in SAFE -- balancing various member states' desire to boost domestic production with the reality that not every component can be made in the EU.
• For starters, the countries in the European Free Trade Association (EFTA) -- Iceland, Liechtenstein, Norway, and Switzerland -- are included in the scheme. The same is true of EU candidate country Ukraine.
• The regulation justifies their inclusion by citing “those countries’ close partnership with the Union in industrial defense production” and the fact that “Ukraine is directly faced with Russia’s ongoing war of aggression.”
• Even so, there have still been grumbles. The United States, in particular, has complained about being locked out of this process. And many EU member states -- still keen to maintain transatlantic military links while also keeping other close partners involved in aspects of SAFE -- have also lobbied hard to open up the scheme to further outside participation.
• In the end, a “65-35 rule” was settled on. That means that 65 percent of the value of the weapon acquired has to be generated in the EU, the four EFTA countries, or Ukraine. The other 35 percent can be produced elsewhere, such as the United States, for example.
• But it gets a bit more complicated. If a country has a Security and Defense Partnership (SDP) with the EU, 65 percent of the value of the weapon can come from that state. The United Kingdom recently penned such a deal with the bloc -- and Albania, Japan, Moldova, North Macedonia, and South Korea also have similar deals in place.
• Ultimately, as one EU official who spoke to RFE/RL put it, the upshot is “a classic Brussels compromise” -- a rather big deal has been struck but the money won’t start flowing until everyone, including many outside the family, gets their fair share.

Briefing #2: The EU Finally Hits Russian And Belarusian Fertilizers

What You Need To Know: On May 22, the European Union took a major step toward getting rid of Russian and Belarusian nitrogen-based fertilizer imports in the bloc.
In a European parliament session in Brussels, EU lawmakers overwhelmingly voted to introduce gradual duties on such products, starting on July 1.

But Moscow and Minsk won’t feel the pain immediately.

The current 6.5 percent tariffs on fertilizers from the two countries will remain but what will be added are duties of 40 to 45 euros ($45-50) per ton up to mid-2026.

This is still not too much of a hit, and trade is still expected to happen. But then the duties will become gradually higher, rising to 60 euros ($68) per ton from mid-2026 and then to 80 euros ($90) per ton in 2027 before finally going up to 350 euros ($398) and 430 euros ($486) per ton by 2028, essentially making it economically unviable to buy the products from Belarus and Russia.

Deep Background: The move comes amid rising concerns about Europe's increasing dependence on fertilizers from Russia, where an abundance of cheap energy makes production -- and consequently the end product -- substantially cheaper.

In 2023, the bloc imported 3.6 millions tons, worth 1.28 billion euros ($20.4). This constituted 25 percent of total EU imports, making Russia the single biggest exporter of fertilizer to the EU.

Last year, this upward trend continued with 4.4 million tons of Russian fertilizers entering the European Union, taking the import share up to around 30 percent.

The fertilizer trade with Belarus is small -- worth just 30 million euros ($34 million) last year, but Brussels has decided to target it as well due to the close political and economic ties between Minsk and Moscow and the fear of Russian fertilizers entering via Belarus if the duty regime isn’t synchronized.

The proposal also increases EU tariffs by 50 percent on the value of Russian and Belarusian agricultural products such as sugar, vinegar, flour, and animal feed.

The bloc had previously been reluctant to hit Russian agricultural products with sanctions given accusations from poorer countries in Asia and Africa that such moves cause food shortages.

The situation has been somewhat alleviated over the past year with Ukraine resuming exports of its food produce via the Black Sea.

The European Union has also pledged that the transit of Russian and Belarusian agricultural exports through the bloc to the rest of the world is still possible.

Drilling Down

• The hope is that EU fertilizer producers can now step up to compensate for the shortfall caused by reduced Russian imports. While high energy prices may increase production costs, the proposal notes that the European industry still has about 20 percent spare capacity -- approximately 3 million tons -- despite some facility closures due to energy costs. In addition to the 9.5 million tons of nitrogen fertilizers exported in 2024, this unused capacity “could almost completely compensate for the shortfall of reducing Russian imports into the EU.”
• The EU is also hoping that the measures will mean a diversification of supplies with increased imports from countries like Algeria, Egypt, Morocco, and Oman, places Brussels is keen to forge closer relationships with.
• It has also not escaped the bloc’s attention that the United States wants to export more fertilizers. Following the suspension of US President Donald Trump’s April tariffs on the EU, some sort of larger transatlantic trade deal is possible, and this could very well be part of any potential package.
• All this means that the proposal has met with minimal opposition after being presented by the European Commission in late January. The 27 EU member states left the regulation completely untouched, which is quite rare, and in the vote in April only Hungary voted against it, with Belgium and Bulgaria abstaining.
• As this is a trade regulation, unanimity is not required -- only a qualified majority (55 percent of member states representing 65 percent of the EU population) and a simple majority in the European Parliament.
• This relatively new approach by Brussels -- using trade regulations to target Russian exports instead of sanctions, which require consensus -- may become a more frequent strategy for the EU to circumvent potential vetoes.
• In June, the European Commission is due to present several legislative proposals to phase out imports of Russian gas, nuclear materials, and oil over the next two years, using the same method as with the fertilizers.

Looking Ahead

On May 28, the European Commission will present its strategy for the Black Sea region -- an effort by Brussels to strengthen ties with countries such as Azerbaijan, Armenia, Georgia, Moldova, Turkey, and Ukraine amid growing Russian influence.

The document is expected to be short on concrete proposals and financial commitments, but will likely emphasize promises of closer cooperation on trade, security, and environmental protection.

That's all for this week!

Feel free to reach out to me on any of these issues on X @RikardJozwiak, or on e-mail at jozwiakr@rferl.org.

Until next time,

Rikard Jozwiak

If you enjoyed this briefing and don't want to miss the next edition subscribe here.