Last week I wrote about the President of the EU Commission, as well as the Security Conference held in Munich. At EU level things are quite uncertain. If you want my honest opinion, matters are not looking good.
The way the US and the Trump administration are approaching the war in Ukraine, is not proportionate to what has been happening on the ground during the past 11 years. I am saying 11 years because the war in Ukraine started way before 2022. True, the US spent billions on the war. The US provided unprecedented military support, as well as other humanitarian aid to Ukraine. In fact, Donald Trump reminded Emmanuel Macron that the US gave, not loaned, money to Ukraine. President Macron clarified that the EU money that was given to Ukraine, part of it is on loan, and the rest were grants and military aid, too. For the benefit of my readers, the president of France travelled to Washington for an official meeting with President Trump. The joint press conference looked a little clumsy, with Trump slapping or better grabbing Macron’s lower left limb and knee. At some point Macron grabbed Trump’s hand and tapped him on his right knee. Macron appeared a little uncomfortable on how to handle President Trump during the handshake. The body language expressed it all. Well, let’s see how it goes with the prime minister of the UK, today. President Trump referred to him as a nice guy.
Clearly, the EU is caught in a difficult political situation and Macron’s visit sent a message to Merz in Germany. On one hand they must appease Trump to avoid trade tariffs, but on the other hand they are tempted to tell him off. Their faces expose the reality. For instance, it is evident that the EU do not want the war in Ukraine to end the way Trump and Vladimir Putin want to. The EU wants to set the terms of how to end the war and to not give in to Putin’s snatching of territory. However, they seem to be completely out of the equation. And this is being done on purpose. Indeed, when I was invited to a local TV discussion programme, I said that it is evident that the US needs the minerals that are currently sitting in Ukraine’s occupied territory. And this can only be executed if Trump and Putin tacitly share such minerals between them. The US needs those minerals, rare earths and other raw materials to compete with China. On the other hand, for Russia it would be a win, because Trump would indirectly legitimise the occupied territory that Putin managed to snatch over the past years.
Alas, Ukraine is sandwiched between the US and Russia, and the EU is completely paralysed. What I am finding unfair though is that the US are intimidating Ukraine and President Zelenskyy to sign a deal on minerals and to bow to their subjective demands. True, in life there is no free lunch. And this is what we are taught in our elementary economics. Trump is quite transactional. However, they must exercise proportionality. The satellite that is providing internet to Ukraine from space must be retained. Elon Musk has a role to play. Ukraine cannot fall for Russia’s demands either, while our greatest ally must not allow Ukraine to capitulate to Putin. The problem is that the EU is without a strategy. There is a whole lot of confusion. The war in Ukraine, and the re-election of Trump exposed the longstanding real crises of the EU. The President of the EU Commission is running around like a headless chicken. Blunt as it may sound, the presence of the college in Ukraine looked a little bit staged.
To me, it would have been more beneficial for Ukraine to join the EU and then see how to advance about its security when changing the Treaty. The EU must be very tactful. The problem with the European Commission is that they miscalculated the impact of this war, not just militarily but also economically. The problem is that most EU member states are not able to match the US’s military stock and aid. Simultaneously, EU member states are required to spend more on their defence, bowing to Trump’s demands. If EU member states spend 5% of their GDP on defence, the EU 27, plus the United Kingdom, would require an average of €620 billion to match the 3% gap if we assume they are spending a minimum of 2% of their GDP. Somehow, many indebted member states would be required to cut down on social spending, healthcare, as well as education, unless this defence spending is matched through Common and Foreign Security debt. However, the problem is that the EU budget cannot finance military. The treaty is clear about it. And the EU needs to start paying for the pandemic recovery plan from 2028 onwards. This is common debt agreed as part of the 2021-2027 MFF.
Meanwhile, the European Commission’s preceding term was just about decarbonisation, regulations, green deal, banking regulations, and multiple complex regulations that choked competitiveness including businesses. Hardly a year passed since the introduction of some reporting directives, including the CSRD, and the EU Commission is proposing a simplification with some saying it is a deregulation. They want to undo what they had just pushed for in the past months. Now it is not about decarbonisation and reporting any longer. It is about military, defence spending, competitiveness, deregulation and an assortment of chaos in Ursula’s head. In truth, they do not know where to start from. Certainly, whoever pushed towards the direction of heading straight into a war, whatever the cost, has no knowledge of game theory. The way it was handled, was simply messy and missed in finding any Nash equilibria. Now, the member states, and the EU Commission might propose to use over €200 billion of frozen Russian assets in aid of Ukraine. The funds are frozen and held at Euroclear. Well, Euroclear falls under the authority and jurisprudence of the Belgian government. Any permission to transfer those assets shall be given by the Belgian authorities. The current Belgian government is still forming, and the new prime minister is the former mayor of Antwerp, Bart De Wever.
Europe must be tactful on how to deal with Trump’s administration. Certainly, citizens mustn’t pay the price of wrong decisions. And here in Malta, politicians must pay closer attention to what is happening behind closed doors. We do not afford it!
