A weakened Ukraine, a war-fighting Russia and a narcissistic Donald Trump are the biggest challenges for the European Union in the coming year. There are also internal problems, such as a slowing economy, high debt and limited ability to operate in the two largest member states – Germany and France.
What's next for the renovated team? Brussels? The President of the European Council, Antonio Costa, and the EU High Representative for Foreign and Security Policy, Kaja Kallas, have been performing their new functions since December 1. Ursula von der Leyen remained in office, but her European Commission was completely reorganized. According to Steven Everts of the European Institute for Security Studies in Paris, the new team is at least a chance: “This is the moment when we can rethink, adapt and revitalize EU foreign policy.”
Aid for Ukraine
At the top of the list of urgent tasks is financial and military assistance for Ukraine. Next year The EU will transfer €1.5 billion every month from the Community budget to an account in Kiev. Additionally, Ukraine will receive a loan of EUR 50 billion from the G7 countries, which will be repaid from profits from frozen Russian assets. Moreover, to help Ukraine, which is a candidate for the EU, European countries will have to finance large amounts of ammunition and weapons.
The bill could rise significantly if new US President Donald Trump follows through on his threats and reduces or cancels generous US aid to the country. So far, the US has financed almost half of the aid to Ukraine. How much money would be needed is currently the subject of intense speculation Brusselsaccording to EU diplomats. Nobody knows exactly what will happen in 2025. “We'll wait and see. We're not really prepared for Trump,” one of them said unofficially.
Armaments
Apart from the issue of support for Ukraine, in 2025 the EU is focused on its own defense against Russia. An EU Commissioner for Defense and Space has been appointed for the first time. However, Andrius Kubilius' task is not to create a European army, but to better coordinate the arms and purchasing policies of EU member states. Budgets in many countries are too small to quickly buy new weapons or increase the number of soldiers. The pressure may increase if US President Donald Trump decides to reduce European defense spending and demands that Europeans increase their contribution.
Where the billions for the army will come from is a great unknown for many EU politicians. Germany alone is short of EUR 230 billion in its defense budget in the medium term, estimates the Ifo Institute for Economic Research in Munich. In Italy it is 120 billion and in Spain 80 billion. The idea of some countries to finance military spending through additional common EU debt was immediately blocked by the new German Finance Minister Jörg Kukies (SPD).
Debt management
In 2025, it will be necessary to finance not only new military spending, but also investments in climate-friendly economic restructuring to support not only the economic recovery, but also reconstruction in Gaza, Lebanon and Syria. Former President of the European Union Bank Central, Mario Draghi, in a dramatic report on the competitiveness of the EU economy, talks about the need for investments of EUR 800 billion. Therefore, it recommends pooled debt to finance startups to attract private investors.
France and Italy have already faced EU deficit proceedings. Spain may soon join them. Although Germany remains below the EU debt limit, due to the new elections it is fiscally incapable of action. Only in July or September will the new Minister of Finance present the federal budget for 2025. Due to the formation of the German government, negotiations on the new EU financial framework will also be delayed.
Prevent a trade war
In terms of trade policy, 2025 is likely to be a relatively difficult year. A trade war with China regarding electric cars is brewing. There may be a dramatic conflict with the USA in connection with the punitive tariffs that Donald Trump wants to impose on Europe, China, Mexico and Canada. EU Commissioner for Economic Affairs, Valdis Dombrovskis, wants to make it clear to the advisers of the new US president that they will only harm themselves with tariffs.
– The trade war won't help anyone. We need to present Trump with hard data. Fragmentation of global trade will not benefit anyone. The tariffs would destroy seven percent of global economic output. There would be a situation similar to that of the 1930swhen isolationism was very fashionable, Dombrovskis said, referring to the great economic crisis of those years and the rise of national socialism in Germany.
The trade agreement just signed with the Mercosur group in South America gives some hope. However, the EU still needs to approve it within its ranks in the coming year.
Maintaining unity
EU expert Janis Emmanouilidis from the European Policy Center (EPC) think tank is not very optimistic about the New Year. – The EU has always been a guarantor of compromises, but it has lost this ability – said Janis Emmanouilidis during one of the events in Brussels in early December, referring to the challenges in foreign and military policy, which in Germany are referred to in the Chancellor's words as a “time of breakthrough”.
– The EU is no longer the answer to a number of issues. Politics has become more nationalistic, says Janis Emmanouilidis. According to an EU expert, many people, including in candidate countries in the Western Balkans, have lost hope that the EU will actually fulfill its promises.
France and Germany will now be needed as leading powers in the EU. France is weak because of the government crisis. Germany is only able to act to a limited extent due to new elections in February. Also, a minority government in Spain may collapse because of the budget. Italy is ruled by the far right. Belgium and Austria only have provisional governments. The situation in Romania is unclear.
Eurosceptics rule in the Netherlands, Hungary and Slovakia. Prime minister Hungarian Viktor Orban argues that he increased the chances for peace in Ukraine by getting closer to Russia during his presidency of the EU Council. He is looking forward to meeting his soul mate, Donald Trump, in the White House. 2025 will be a turbulent year for the EU, but at least it will be a very interesting one.
The article comes from the website Deutsche Welle