NO MEMBERSHIP BUT SUPPORT

The main intrigue of the NATO summit held in Vilnius was the decision of NATO on Ukraine's membership in the alliance. Even the participation of Ukrainian President Vladimir Zelensky in the summit depended on this decision. But Türkiye's unexpected agreement to admit Sweden to NATO left the main intrigue in the shadows for a while. So, regardless of the outcome, the summit cannot be regarded as a mediocre one.

Obvious progress

Meanwhile, both the conflicting sides admit the escalation of the situation on the front. During the counter-offensive operation, the Ukrainian army is fighting hard to gain control over some territories occupied by Russians, but the latter is trying to exhaust the Ukrainians and inflict damage as much as possible.

Ukrainians are trying to break through the thick Russian defence line made of a series of engineering barriers and teeming with anti-personnel and anti-tank mines. This prevents them from advancing quickly. It is reported that since the counter-offensive Ukrainians have regained 253 sq. kilometres of territory, predominantly frontline areas.  Obviously, the Ukrainian leadership would like to attend the NATO summit with a more tangible result, but a war has its own logic and laws.

In addition, it appears that the Ukrainians are trying to change their military tactics in line with the current situation. For example, in Zaporozhye, Ukrainians have switched from a massive offensive to small-scale attacks over a long stretch. The goal is to capture the enemy's forward positions and to gain a foothold there. The tactic seems to be productive, but it is not yet clear how long it will last and what effect can be expected from it in the long term.

It is believed that a successful Ukrainian counteroffensive will play an instrumental role in continuing Western support for Kiev. In the absence of progress on the battlefield, those who call for a peaceful settlement, even on terms unfavourable to Ukraine, may gain support in the public debate. Given the upcoming elections both in European countries and in the US, this can benefit political parties less inclined to support Ukraine "for as long as it takes".

Nevertheless, the military and economic support to Kiev will not be reduced radically. Ukraine's defeat can be viewed as the defeat of the Western political forces, which had been increasing their assistance to Ukraine all this time. So they will never go for it.

More support, more uncertainty

Western countries increasingly provide Kiev with modern and complex means of warfare. The US announced the possibility of providing Ukraine with cluster bombs, while France and Germany decided to transfer long-range missiles and new Leopard tanks and other assistance worth €700m, respectively.

On the eve of the Vilnius summit, France, Germany, the UK and the US led the talks on bilateral security agreements to provide Ukraine with long-term funding, military supplies, military training, etc. to continue an effective military campaign.

But this looks like a temporary measure to reassure Kiev in the West's continued support. Meanwhile, Ireland, Malta and Austria, neutral EU member states, demanded clarity on the outcome of "commitments" to support Kiev.

Thus, Irish Prime Minister Leo Varadkar said: "We support (Ukraine) financially and politically. We are happy to make permanent security commitments, but what we cannot promise as a country is mutual defence because that would violate our policy of neutrality".

In the meantime, amid military, political and economic uncertainty, Europe needs to prepare for several scenarios at once.

Ukraine's success on the battlefield can lead to a final settlement by fully restoring its former borders. However, the EU is considering a more realistic scenario for this protracted war. This requires sustained political efforts to support public opinion in a permanently complex and volatile economic and political environment.

Since the end of 2022, the Eurozone, which covers 20 countries, entered a recession that is still ongoing. During the six-month period, the total GDP of the Eurozone fell by 0.1%, while the recession covered 7 of 20 countries.

According to S&P Global's economic forecast for the third quarter of 2023, the risk of recession in the Eurozone is still significant. The expected impact of higher interest rates on demand and the potential reduction in employment due to the economic downturn can extend this process.

Experts do not make long-term forecasts, as the ongoing Russian-Ukrainian war brings uncertainty to the situation, with a still valid potential for further economic shocks. Unfavourable developments in the gas market and the risk of shortages, especially in the winter of 2023/2024, pose a certain threat, too.

Moods change, time to hurry up

Difficult economic situation in the Eurozone affects the EU's military and economic assistance to Ukraine.

We can observe some tendency in many countries to reduce public support for Ukraine as the cost and economic impact of the war has begun to affect EU households, particularly through inflation. Given the austerity measures as the war continues and the rising costs of supporting the Ukrainian army and economy, EU leaders are exploring the possibility of appropriating frozen Russian assets estimated at €200b.

However, some countries fear that the legal basis for doing so is too shaky. Plus, the European Central Bank warned that confiscating these assets or the profits derived from them could pose a serious risk to the reputation of the Euro. It is these concerns that largely impede the adoption of the final decision on the seizure of Russian assets. According to some European officials, a number of states are proposing an additional contingency fee to be used to rebuild Ukraine, which also irritates the European population.

There are concerns that public support for helping Ukraine may decline in the future, if news from the battlefield points to a protracted conflict.

These fears were also confirmed by Czech President Petr Pavel, who noted just before the Vilnius summit that the window of opportunity for Ukraine to achieve a military result on the front "will more or less close by the end of this year". He reasoned this to the upcoming elections in the US and other countries, after which the support for Kiev can decline.

Not admitted but supported

This mood has definitely affected both the course and decisions of the NATO summit in Vilnius.

In his keynote address to the summit participants, US President Joe Biden welcomed the agreements on Sweden's accession to NATO, but noted that there was still a lot of work to be done to define the contours of the path that would ensure Ukraine's membership in the alliance. As a goodwill gesture, the US leader suggested that Ukraine be exempted from the NATO Membership Action Plan. However, the US administration emphasised that Ukraine's accession to NATO would be relevant only after the Ukrainian conflict is over.

Meanwhile, just before the summit, the Ukrainian President Vladimir Zelensky called the absence of a timetable for Ukraine's accession to the alliance "absurd". He also expressed his disappointment with the way the negotiations were going on: "It is unprecedented and absurd when no deadlines are set either for the invitation or for Ukraine's membership".

The NATO leadership believes that the proposal made by NATO Secretary General Jens Stoltenberg could be a compromise. He proposed a package of multi-year support and strengthening of political ties through the NATO-Ukraine Council and cancellation of the country's Membership Action Plan.

For Kiev, this meant very little. In the final declaration, the Vilnius summit endorsed Stoltenberg's proposal and said the alliance would help Kiev make progress on military interoperability, as well as additional democratic and security reforms.

Zelensky's speech at the summit was listened to sympathetically by the participants, perhaps even supported by some of them mentally. But by the time he delivered his address, all the important proposals had already been made and the main decisions had been taken. As a result, NATO once again expanded thanks to Finland, which for the first time took part in the summit as a full member. Sweden is next in line. We do not see Ukraine in this queue, though.