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Assessing the Wagner Group’s Aborted Run on Moscow: What Comes Next?
Assessing the Wagner Group’s Aborted Run on Moscow: What Comes Next?
International Crisis Group, 29 June 2023
On 24 June, President Vladimir Putin faced his biggest challenge in over two decades at Russia’s helm: a mutiny by a mercenary group fighting alongside Russian forces in Ukraine. In this Q&A, Crisis Group experts explore the implications for Putin’s rule and Russian foreign policy.
What happened?
On 24 June, mercenaries belonging to the Wagner Group, a private military company founded by Yevgeny Prigozhin, advanced to within less than 200km from Moscow before turning back. It was an enormous shock to the nation – one that has left Russians of every stripe and the Kremlin reeling.
For one thing, the challenge came from an unexpected quarter. Prigozhin owed his fortune to Russian President Vladimir Putin, and the president has relied on him for some of his dirtiest and toughest fights. Perhaps even more surprising was just how swiftly Wagner was able to seize ground and mount an apparent run on the Kremlin. Prigozhin threw down the gauntlet in a Telegram post on the evening of 23 June. By the next morning, the group’s forces had taken control of the defence ministry’s headquarters in Rostov-on-Don, a city of a million people and a main staging ground for Russia’s all-out invasion of Ukraine, and a column was rumbling through Voronezh, another major regional city, headed toward Moscow. The Wagner forces downed six helicopters and an Ilyushin IL 22M plane, killing at least thirteen people, but faced virtually no resistance on the ground.
Prigozhin vaingloriously called it a “march for justice”. He claimed his blitz was the culmination of a drawn-out feud with Russia’s top military brass, whom he has long claimed are not doing enough for the war effort. This time, however, he went further – accusing them of misleading the president about the basis for the war and how it has unfolded. If he was expecting Putin to take his side, however, that was not on the cards. Putin clearly saw Prigozhin’s power play as a threat to his leadership, dubbing it a “mutiny” and a “betrayal”. The Russian leader’s angry televised speech on the morning of 24 June contrasted starkly with his carefully curated, confident appearances since launching Russia’s all-out invasion of Ukraine on 24 February 2022. In it, Putin vowed that those involved would be punished.
By all accounts, Prigozhin and the Kremlin were locked in a high-stakes negotiation up until the point of no return – when Wagner’s troops were poised to enter Moscow, where security forces had reportedly set up defences. They cut a deal to head off a worse crisis. The Kremlin announced on the evening of 24 June that Putin’s ally, Belarussian President Aleksandr Lukashenka, had brokered an agreement under which Prigozhin won amnesty for Wagner personnel who had joined the insurrection, the opportunity to join the regular army for those who had not and exile for himself to Belarus.
The Kremlin’s account of the deal left more questions than answers. Whatever Putin’s motives, giving Lukashenka credit for saving the day strains credulity and would seem an embarrassing narrative for the Russian leader. It suggests a level of weakness and lack of options on the latter’s part. It may never be clear who actually brokered the deal or what kind of threats were paired with the ostensible reprieve Prigozhin was granted. In a sign of one possible lever Putin held over Prigozhin, in the wake of the upheaval the Russian president admitted for the first time that the state had long been funding Wagner and hinted that the group may have misappropriated money. It seems difficult to fathom that, with Putin’s track record of silencing his enemies, anyone he has branded a traitor will be able to live out their days in peace. But it is also possible that the Kremlin may value or fear Prigozhin and his fighters sufficiently to let them survive. On 27 June, Lukashenka confirmed that Prigozhin was in Belarus but that Wagner’s mercenaries are still at their bases in Russia and Russian-controlled territory in Ukraine.
What spurred Prigozhin to take such dramatic action?
Prigozhin said his goal was to prevent Wagner’s disbanding: revealing his actions as those of a man cornered, gambling it all. Prigozhin had been sparring publicly (and increasingly belligerently) with Russia’s military leadership for months, claiming that they had provided Wagner with insufficient weaponry and were incompetent in their planning and operations. He may have hoped to convince Putin – who had been silent during the months of infighting – to back him against Russian Defence Minister Sergei Shoigu and Russia’s top general, Valery Gerasimov. It was a fight he was losing: a 1 July deadline loomed on a new defence ministry order, signed by Putin, requiring all volunteers (that is, fighters not already affiliated with government forces) to sign contracts with the military. This order would have essentially folded Wagner into the army’s regular chain of command.
On the evening of his uprising, Prigozhin said he was spurred to take control of Rostov after Russian missiles struck a Wagner base in Russian-occupied Ukraine. But it is unlikely that an operation on the scale of the 23 June march was planned in a day. Questions linger about how such a shrewd court navigator was pushed to such extreme action: did he lose Putin’s ear? Did he feel he had support from other quarters? Did he harbour bigger ambitions?
How did Prigozhin morph from Putin’s fixer into his biggest problem?
Over the last ten years, Prigozhin – a petty criminal turned successful caterer under Putin’s patronage (earning him the nickname “Putin’s chef”) – has transformed himself into the go-to person for operations that the Kremlin preferred to disavow. In 2013, he ran the Internet Research Agency, a so-called troll farm based in St. Petersburg that employed hundreds of people to engage in influence operations online, including in the United States in the run-up to the 2016 presidential election. Then, in 2014, when Russia occupied Crimea and sponsored a revolt in eastern Ukraine, fighters under his command – the precursor to Wagner – battled the Ukrainian army while the Kremlin denied involvement.
The Wagner Group came into its own over the course of Russia’s military intervention in Syria starting in 2015. There again, as Putin sought to avoid an unpopular deployment of Russian soldiers that risked evoking the Soviet Union’s bloody, ignominious war in Afghanistan, Moscow relied on Wagner’s ground forces to fight alongside Syrian and Iranian troops on the Syrian regime’s behalf, supported by a Russian air campaign. As Russia sought to expand its influence in Africa, Wagner contracted its services to autocrats facing down rebellion and other opposition in the Central African Republic, Libya, Mali, Mozambique and Sudan, sometimes accepting stakes in mines and other businesses as payment.
But nowhere was Prigozhin clearer in demonstrating his utility to Putin than during the most recent phase of operations in Ukraine. As the regular Russian army met stiff Ukrainian resistance, dashing the Kremlin’s expectations of a quick “special military operation” to topple the government in Kyiv, Wagner entered the scene, quickly earning a reputation for tenacity and barbarity. Recruiting widely, including from among convicts, Prigozhin took the lead in the most grinding battle to date, for the Ukrainian town of Bakhmut. The town eventually succumbed to Russian control, at the cost of tens of thousands of lives and Bakhmut’s utter devastation.
As Prigozhin’s importance to the Russian war effort grew, so did his public profile. Prigozhin has both cultivated and exploited his notoriety, bypassing state-controlled media to reach Russians on social media. With unvarnished tirades accusing the Russian military of incompetence and corruption, Prigozhin built his own brand as a patriot. In so doing, he became the face of a new faction in Russia, the so-called party of war, who blame the military’s lack of stomach for a full-fledged fight, including martial law and widespread mobilisation, for Russia becoming bogged down in Ukraine. By arguing not for peace, but for more forceful action in the face of Russia’s military setbacks in Ukraine, he staked out a position to the right of Putin.
What are the implications for Putin’s grip on power in Russia?
Putin and his propagandists will be hard pressed to turn the Wagner uprising to his advantage. While the failure of Russia’s military to secure a quick victory in Ukraine eroded the perception of its strength, this crisis has raised questions about the very stability of Putin’s rule.
One of the pillars of this stability is Putin’s presumed control of Russia’s strongmen and oligarchs, even as they compete for his czar-like favour. The scale of Prigozhin’s challenge seems both to shatter that narrative and to underscore the difficulties of governing Russia through a matrix of ad hoc, non-transparent and highly personal relationships. Indeed, the Kremlin’s longstanding acceptance of Prigozhin’s verbal attacks on the regular army (something few others could have gotten away with) may be part of the reason the Russian security system failed to predict Wagner’s insurrection. It may also have contributed to the security forces’ failure to do much to prevent Prigozhin’s men from thundering toward the capital. Perhaps some were unsure, even after Putin’s 24 June statement, that Prigozhin was not somehow still operating under Kremlin orders.
Perhaps even more concerning for Putin are the alternative explanations. Some Russian troops may have been supportive of Wagner’s project or frustrated enough with the system to welcome anyone seeming to defy it. Russian security services were aware of Prigozhin’s plans, according to The New York Times, which cited U.S. intelligence sources. If so, those in the know may have discounted the plans as unlikely to come to fruition, but some may have been complicit. In a sign that support for Prigozhin may have been broader than his own mercenaries, Russia has reportedly detained the military’s air and space force commander, Sergei Surovikin. None of this bodes well for Putin or the Kremlin.
As long as Prigozhin was seen as the Kremlin’s man, his growing popularity arguably bolstered Putin’s. Prigozhin’s macho, profanity-laced image-making took a page from Putin’s own playbook. When he first came into the limelight, Putin’s swagger – he famously threatened to kill terrorists in “outhouses” – had wide appeal. The president fashioned a persona as a tough-talking man of the people. But more than two decades on, in contrast to Prigozhin, Putin appears out of touch. Critics have disparaged him as a grandpa hiding in a bunker, while Prigozhin appears in social media videos alongside his soldiers, backlit by the horrors of war. In one case he is standing in a field of corpses.
How Putin responds in the coming days and weeks to this challenge may prove pivotal for his grip on power. More than any other event since 2012, when he reclaimed the Kremlin from Dmitry Medvedev’s placeholder presidency, the past week’s chaotic events have focused minds on who and what might follow him should he relinquish his role. Russian social media channels were rife with rumours as the political elite grappled with the possible fallout. This chatter even included speculation that Putin might not stand or might designate a successor ahead of the 2024 presidential election (a prospect suggested by a figure as prominent as Nezavisimaya Gazeta editor-in-chief Konstantin Remchukov).
The days following the end of Prigozhin’s march saw the Kremlin engaged in damage control. After Putin’s 24 June speech, and no doubt at the Kremlin’s behest, regional leaders recorded messages of support. In a televised appearance in Red Square before his security forces, Putin tried to project strength, thanking the military for heroically halting a civil war – though it is unclear that they did much, if anything, toward that end. He also warned of consequences for officials who had helped Prigozhin enrich himself at Russia’s expense.
As for what lies ahead, Putin could well pursue a mix of coercive measures intended to ensure the loyalty of Russia’s political and security elite (such as Surovikin’s reported detention, if true) and personnel changes. Replacements in the defence ministry’s upper echelons would be an obvious way for Putin to at least appear to address security failings and a darkening public mood. Wagner’s rebellion put military shortcomings front and centre. Since May, the Russian public has been anxiously watching the war come ever closer to home. Manifestations include incursions across the border from Ukraine, a drone attack on the Kremlin and Ukrainian artillery fire forcing the evacuation of Shebekino, a town of 40,000. Against this backdrop, one rumour circulating in Moscow holds that Alexei Dyumin, the head of the Tula region who was once Putin’s bodyguard and then a deputy defence minister, could succeed Shoigu as defence minister. Thus far, however, the palace intrigue has remained opaque to outsiders. While Shoigu appeared at a meeting Putin held with his top brass on Tuesday, General Gerasimov has not been seen in public since the mutiny.
The challenge Putin is facing highlights the risks that a long war of attrition with Ukraine poses to his rule. But that is unlikely to mean that Putin will suddenly sue for peace. The president has staked his reputation on winning this conflict and has shown no sign – despite the high casualty counts and economic costs – of backing down from his goal of subjugating Ukraine. That the challenge cannot easily be blamed on Western meddling, but instead emanates from voices even more hawkish than his own, will play into his calculations. The higher probability is that he instead doubles down on military victory, veering onto a more radical path ironically charted by Prigozhin and others in the so-called party of war.
How will these events affect Russian external relations and power projection?
As Putin faced the toughest challenge to his rule yet, few friends and allies reached out to offer support. Indeed, the attitude among partners and adversaries alike was mainly to stay out of the fray.
The slow trickle of outreach to the Kremlin from world leaders shows a Putin perhaps more isolated than before, at least during his momentary loss of control. From among the neighbours that once formed part of the Soviet Union, he spoke only with the heads of Kazakhstan and Uzbekistan, as well as Belarus’ Lukashenka. Farther afield, only Türkiye, Iran and Qatar extended offers of support to the Kremlin as events unfolded.
President Recep Tayyip Erdoğan said he was ready to help seek a “peaceful resolution” and spoke of the importance of “acting with common sense”. Notably, China – which Putin has increasingly relied on as a trade partner and ally in the UN Security Council – waited until Prigozhin had turned his men around to weigh in. Eventually, Beijing reaffirmed its support for Russia as a “friendly neighbour and comprehensive strategic partner”. But even then, the outreach did not come from Chinese President Xi Jinping, who had not spoken with Putin at the time of writing.
All of this suggests that the Kremlin will feel more pressure than ever to maintain influence in what it views as its backyard and to deal on an equal footing with key trade and political partners, namely China and Türkiye. Despite the swiftness with which the Kremlin averted a larger upheaval, the uprising will have planted seeds of doubt about Russia’s future and encourage more hedging in global affairs. That said, any foreign policy shifts are likely to be slow and subtle. Countries which have maintained trade and political ties with Russia, despite Western efforts to peel off support for Putin, have their reasons for doing so and are unlikely to shift policies in a day.
Amid the turmoil, Ukraine’s Western backers kept quiet to avoid giving Moscow cause to claim they were involved. In the aftermath, however, they were more forthcoming. U.S. President Joe Biden told the press that Putin had become a “bit of a pariah” and had been weakened by the clash with Wagner. European leaders, from German Chancellor Olaf Scholz to NATO chief Jens Stoltenberg, said the events had exposed the fissures in Putin’s grip on power. Estonian Prime Minister Kaja Kallas went a step further, saying they showed cracks in Russia’s resolve in its war with Ukraine. But Western leaders were still trying to parse the implications as they met for an EU summit in Brussels on 29 June.
What next for Wagner?
With Wagner’s future hanging in the balance, so, too, is its role as an instrument of Russian power in the far-flung regions where it operates. The exodus of Prigozhin and those who may follow him to Belarus, coupled with the demand that the rest of Wagner go home or join the army, seems likely to be the death knell for Wagner’s engagement as an independent fighting force in Ukraine.
But it is unclear whether the same instructions will apply to Wagner forces in other conflict arenas. There, the group has been a channel for Russian power projection, including in resource-rich countries that have long suffered instability and where the influence of former colonial powers is on the wane. On 26 June, Russian Foreign Minister Sergey Lavrov said Wagner’s actions in Russia will not affect its operations in Africa.
He added that the work of Wagner’s “military instructors” in the Central African Republic and Mali (both of which rely heavily on the group as a security provider) will continue, perhaps from a new base in Belarus. But, in a sign that Moscow’s purges may reach further, on 27 June, the Saudi-owned news channel Al-Hadath reported that three high-ranking Wagner Group commanders were detained at Syria’s Khmeimim air base, and that police visited Wagner headquarters in the cities of Damascus, Deir al-Zour and Hama.
How will the aftermath of Wagner’s rebellion affect Ukraine’s counteroffensive?
The timing of Prigozhin’s putsch could not have been better for Kyiv, as Ukrainian forces probe for vulnerabilities along the 1,000km front in their counteroffensive, launched in late May. Battle-weary troops, who have thus made only incremental progress, could only have welcomed news that some of the most vicious forces in the enemy’s ranks were facing off with their would-be brothers in arms on Russian soil.
There were other benefits for Ukraine besides. By calling into question Russia’s internal stability, Prigozhin’s march undermined the Kremlin’s narrative that it can easily outlast Ukraine’s military capacity and the will of Kyiv’s Western supporters. “Russia long masked its weaknesses with propaganda”, wrote President Volodymyr Zelenskyy on Telegram. “But now the chaos has gotten too big to cover it in lies”. The Russian infighting also cast Ukraine’s costly, months-long defence of Bakhmut – a town of questionable strategic importance – in a more favourable light. Ukraine has said its largely symbolic stand would help exhaust Russia’s fighting strength. Now it seems also to have fuelled the internecine conflict between Wagner and the Russian military.
Ukraine will be hoping the turmoil translates into gaps in Russia’s deeply dug defensive lines, where Wagner forces played a critical role even after redeploying from Bakhmut to other sectors of the front, and corresponding opportunities to advance. Perhaps seeking to create the impression of momentum as events unfolded in Moscow, Ukrainian forces announced they had recaptured a tenth settlement from Russia and established a foothold on the Russian-controlled left bank of the Dnipro river across from the city of Kherson. Zelenskyy boasted on Telegram on the evening of 26 June that Ukrainian forces had advanced in all areas along the front.
Ukraine also will be seeking to capitalise on the humiliating episode for Putin in its efforts to drum up international support. Debates among Ukraine’s Western backers on the future of their support for Ukraine will be at the top of the agenda as leaders meet at the NATO summit on 11-12 July. These countries will discuss how much they are willing to commit to Ukraine – and for how long – as the fighting rages. The allies are likely to be at least somewhat divided. Some, particularly Ukraine’s strongest backers in the Baltic states and Poland, will argue that Putin’s seeming retreat in the face of Prigozhin’s threat makes the case for pushing harder. Others could highlight concerns about the risks of instability in Russia as a reason to eschew support that could lead to escalation.
Whether or not it bears on Western support under consideration, the prospect of escalation is real. Ukrainians now are likely to perceive that they have every reason to push and probe for further weakness on the Russian side – looking to see what gains they can make on the battlefield, as Russian soldiers absorb the past week’s news, and hoping that Prigozhin’s bold move fuels further unrest in Russia. At the same time, Putin, needing to repair his damaged reputation, may seek ways to up the temperature in Ukraine, for instance, ramping up missile attacks in an effort to demonstrate strength at home. If that happens, the recent turmoil in Russia could push the prospect of a negotiated solution even farther away than it was before.
Strategic approach to European energy cooperation with Gulf states
Renewable relations: A strategic approach to European energy cooperation with Gulf states
By Cinzia Bianco, European Council on Foreign Relations, 16 June 2023
Summary
- Russia’s war on Ukraine prompted a frenzy of energy deals between EU member states and countries in the Middle East and North Africa, but their implementation is slow.
- The EU needs a new approach to energy cooperation with states in the Middle East and North Africa that serves both its energy security imperative and its climate goals.
- The Gulf monarchies represent a good test case for such an approach, due to their green ambitions, abundant resources, and significance to the fight against climate change.
- Political and ideological differences are currently the greatest obstacle to long-term, strategic energy cooperation between the regions. But this year’s COP28 in Dubai is an opportunity for both sides to focus on practical ways to accelerate the green transition.
- Europeans should emphasise four promising areas of energy cooperation with the GCC states: energy efficiency and electrification, renewable energy, and the circular carbon economy.
Introduction
Floods in Italy, landslides in Pakistan; ice storms in Texas, wildfires in Canada. The climate devastation of 2023 is a reminder, as if another were needed, that time is running out to address global warming. Yet, the March 2023 report from the United Nations Intergovernmental Panel on Climate Change indicates that current emissions reduction pathways and technologies remain insufficient to limit that warming to below 2°C compared to pre-industrial levels. Instead, it warns of more weather-related disasters to come and the catastrophic degradation of the global ecosystem.
Russia’s all-out invasion of Ukraine in February 2022 exacerbated this lack of progress. To meet shortfalls of Russian fossil fuels, Europeans have turned towards countries in the Middle East and North Africa. But this comes with obvious difficulties, not least the continued use of fossil fuels in light of the climate crisis. Europeans are already in a weak geopolitical position vis-à-vis their partners in the region. This could deteriorate further if their status as energy demandeurs takes root, thereby diminishing their leverage on issues such as human rights. Europeans are also wary of simply replacing a problematic and geopolitically risky dependency on Russia with problematic and geopolitically risky dependencies on other countries in the world.
It is therefore crucial for Europeans to develop a new approach to energy relations with the Middle East and North Africa that does not entrench their dependence on states in the region. This approach should reinforce shared interests of peace, stability, and prosperity within a sustainable, long-term, and diversified strategy. It needs to serve Europeans’ energy security goals, but also its climate goals, and should maintain a strong focus on accelerating the move beyond fossil fuels. This should take place not only through the development of green energy relations, but also – more broadly – through the implementation of industrial decarbonisation and a comprehensive green transition in both regions.
The Gulf Cooperation Council (GCC) monarchies represent a good test case for such an approach. The monarchies – especially Qatar – have become protagonists in European efforts to diversify away from Russian energy. And if Europeans want to achieve their domestic and international climate goals, they will have to engage with the GCC states, which are home to almost one-third of the world’s proven crude oil reserves and around one-fifth of its natural gas reserves. Domestic CO2 emissions in GCC states account for just 2.4 per cent of the global total, but the export of huge quantities of fossil fuels means these countries also export huge volumes of CO2 emissions.
Yet, the GCC states also harbour green ambitions. They have the financial resources to make the substantial investments required to enable the energy transition, as well as an abundance of technical expertise in the energy industry and access to the cheapest solar energy in the world.
The monarchies have also recently intensified their efforts to address climate and environmental challenges. Their societies – especially young people – are becoming more vocal about issues such as air quality.
GCC leaders have noted the opportunities linked to the energy transition – including the economic benefits of efficiency, electrification, renewables, and the circular carbon economy – and the political value of embracing climate diplomacy. Later this year the United Arab Emirates (UAE) will host the United Nations climate conference (COP28), while the UN’s regional Climate Week for the Middle East and North Africa will take place in Saudi Arabia.
Moreover, Europeans should be partners of choice for the Gulf monarchies. This is due to the competitive edge of Europe’s know-how around the energy transition, but also existing industrial and technological ties between the regions and geographic proximity. Some European actors have sought to explore these complementary energy interests through increased engagement with the GCC over the past year. But the reality beyond the media hype is that the European approach has been scattered and short-sighted. The European Union has not devoted enough energy to advancing a coordinated policy; the most ambitious projects from member states, which centre around the energy transition, still face several technical, market, and political obstacles.
This policy brief examines some of these obstacles by analysing existing and potential energy cooperation between EU and GCC states in the context of the run-up to COP28. It also highlights the opportunities for the EU in a new approach to climate relations with the GCC states, especially regarding its climate goals and energy security imperatives. Finally, the paper sets out how Europeans can build partnerships with the Gulf monarchies that could also serve as a launching pad for efforts in industrial decarbonisation and the energy transition farther afield. It focuses on four promising domains of cooperation between Europeans and the Gulf monarchies: energy efficiency and electrification, hydrogen, and the circular carbon economy.
Welcome to the future of Europe-Gulf state energy relations
As well as being top oil and gas producers, the Gulf monarchies are potential sources of green energy for the EU and likely frontrunners in the global energy transition. Yet, as I set out in a paper for ECFR in 2021, the EU initially underwhelmed in its engagement with these states as part of the European Green Deal. GCC capitals, in turn, were broadly hostile to a policy that they viewed as revolving around carbon taxation and threatening their economic survival, by focusing on a rapid phase-out of fossil fuels.
But Russia’s all-out invasion of Ukraine changed the dynamics of energy geopolitics. The pressures of an imminent energy security crisis forced Europeans to become more attuned to GCC arguments that the energy transition should take place without major socio-economic instability. At the same time, while the GCC states intensified energy cooperation with Russia following the invasion, they also started to see more clearly that strategic energy relations with the EU presented opportunities – since it would be the only major market able and willing to absorb meaningful quantities of green energy in the short term.[1] Trade with the EU in the energy sector also serves the purpose of reducing GCC dependence on the Chinese market, which Russia has aggressively targeted.
Unsurprisingly, energy engagement between EU member states and the Gulf monarchies has intensified since February 2022. ECFR’s Energy Deals Tracker found that Austria, France, Germany, Greece, Hungary, Italy, the Netherlands, and Poland have signed deals with Bahrain, Oman, Qatar, Saudi Arabia, and the UAE. Most of these agreements are short term and simply focus on diversifying supplies of fossil fuels to Europe. But some of them stand out for their ambition and their efforts to combine key EU member states’ short-term energy security with long-term goals linked to the green transition and decarbonisation.
In September 2022, the German chancellor, Olaf Scholz, visited Qatar, the UAE, and Saudi Arabia. Two months later, Berlin signed a 15-year deal to buy 2m tonnes of liquefied natural gas (LNG) from Qatar, with deliveries starting from 2026. That same year, Qatar and Germany signed an energy partnership with working groups on hydrogen, LNG, and energy efficiency. Berlin and Abu Dhabi have had an energy partnership since 2017. To build on that, they signed the Energy Security and Industry Accelerator Agreement that aims to, as Scholz put it, “enable the rapid implementation of lighthouse projects [small-scale but big-picture initiatives] in the priority areas of renewable energy, hydrogen, LNG and climate protection”.
Germany’s largest power company RWE, signed an initial agreement with Abu Dhabi National Oil Company (ADNOC) for a delivery of 137,000 cubic metres of LNG. But another deal followed for, initially, “blue hydrogen” – hydrogen produced using natural gas and storing carbon emissions – and its derivative “blue ammonia”. This deal includes an aim of quickly replacing this with the cleaner “green hydrogen”. In Saudi Arabia, the German foreign office has opened a Riyadh-based hydrogen diplomacy office.
Its aim is to implement a 2021 memorandum of understanding that foresaw Germany providing electrolysis systems for the production of hydrogen at the Saudi flagship hydrogen project, NEOM Green Hydrogen Company, in exchange for green hydrogen exports to Germany. Finally, during the historic first visit of Sultan Haitham bin Tariq to Berlin in the summer of 2022, Germany signed a declaration of intent with Oman for closer cooperation in green hydrogen and its derivatives; smart grids and energy efficiency in industry, buildings, and transport; and regulatory frameworks.
France has also been active. In July 2022, the UAE and France inked a comprehensive strategic energy partnership, reinforced by a 2023 UAE-France-India tripartite cooperation initiative focused on the energy transition. Moreover, Paris signed a memorandum of understanding with Riyadh to work together on nuclear energy; hydrogen; electricity interconnection; energy efficiency, storage, and smart grids; and oil and gas and their derivatives. The last of these focuses especially on carbon capture, utilisation, and storage (CCUS) technologies, which capture carbon emissions at source to sequester them underground or to transform and use them as alternative marketable products. The memorandum also promotes cooperation on cross-cutting issues such as the localisation of materials, products, and services in the energy supply chain, and joint scientific research and training.
Italy has emerged as the third active member state. Alongside LNG cooperation, Italian energy multinational Eni signed a memorandum of understanding with Saudi Arabia’s minister of investment in September 2022 that covers sustainable mobility, the circular economy, and the chemical industry. The Italian government promoted the first pre-COP28 event in Abu Dhabi, which followed a declaration of intent between the two governments to enhance cooperation in the COP28 framework.
The intention is to build upon longstanding connections between Eni and ADNOC by increasing efforts in the areas of renewable energy, blue and green hydrogen, energy efficiency, carbon capture and storage (CCS), greenhouse gas reduction, methane gas emissions, and routine gas flaring. Eni is principally involved in enhanced oil recovery and gas extraction in the multi-billion-dollar Ghasha natural gas field, and has signed a memorandum of understanding with the state-owned Mubadala Petroleum to work on joint energy transition projects in the Middle East and North Africa, south-east Asia, and Europe. A 2021 memorandum of understanding between Italian firm Snam and Mubadala had agreed to assess the feasibility of piping green hydrogen to Europe.
Deals such as these have substantial potential to advance the energy transition in the GCC states. However, to move from paper to practice, the sides will have to confront and overcome some key obstacles including: the resilience and sustainability of the green supply chain; the development of necessary infrastructure; technological and scientific problems related to green energy production; and challenges linked to market development and financing. The later sections of this paper cover how they can begin to do so.
Yet, the greatest barrier to realising the potential of energy relations between European and GCC states is not technical, but political. This becomes most apparent at the EU level. In the months after the publication of my 2021 research, and in line with the paper’s recommendations, the EU elaborated a roadmap for its energy relations around the world to accompany the transition from fossil fuels to green energy. Importantly, this “REPowerEU” decarbonisation strategy clearly indicates the scale of the opportunity for exporters such as the GCC states.
The EU’s External Action Service also included energy as a domain of its proposal in May 2022 for “A strategic partnership with the Gulf”, which the Council of the European Union strongly endorsed in June that year. In the framework of COP28, some EU-UAE engagement has taken place at the level of meetings between senior officials. And European Commission vice-president Frans Timmermans, who leads on the European Green Deal, and Kadri Simson, the energy commissioner, took much-anticipated trips to the UAE in January 2023 and Saudi Arabia in March 2023.
However, the EU appears to be actively de-prioritising the Gulf monarchies regarding the energy transition. The REPowerEU document only mentions the GCC explicitly in one sentence. The EU-GCC Clean Energy Technology Network, which brought together stakeholders and experts from the two regions to foster clean energy partnerships, reached the end of its mandate in June 2022; its replacement – the EU-GCC Cooperation on the Green Transition and De-Carbonisation – has not yet come to fruition, leaving a most untimely vacuum. NEOM is one of the few fully financed hydrogen projects in the Middle East and North Africa, and a rare realistic source for the EU to fulfil its ambitious objective of importing 10m tonnes of green hydrogen by 2030.
But a hydrogen partnership between the EU and Saudi Arabia remains embryonic, while the EU’s directorate-general for energy has signed hydrogen partnerships with countries that are far behind Saudi Arabia’s production schedule with NEOM. It is unclear whether the EU has even begun conversations about hydrogen with Oman and the UAE, which are two other promising producers.
At the core of the EU’s reluctance seems to be uncertainty about how to deal with entrenched views – on all sides – over how to undertake the green transition. COP28 will therefore be a crucial catalyst to explore opportunities to bridge some of those gaps. As such, Europeans should ensure that they arrive in Dubai with a clear awareness of their host’s priorities.
Horizon COP28: What Europeans should know
Climate change has a significant impact on GCC countries, but hydrocarbon revenues contribute between 60 per cent (UAE) and 90 per cent (Kuwait and Qatar) of government budgets. GCC governments previously viewed climate policies as a bigger threat than climate change, as these policies posed a direct threat to their economic wellbeing.[2] In this sense, they historically aligned with other emerging economies – such as China, their indispensable client in international negotiations. Moreover, GCC countries have long focused on adaptation rather than mitigation in relation to climate change, since their high-income status allows them to invest in high-tech resilience.
However, climate change is slowly becoming more relevant for policymakers in the region. All GCC states except Qatar have now introduced net-zero targets. As discussed, GCC governments also increasingly see green energy as an economic opportunity. According to a report from the International Renewable Energy Agency, an increase in the use of renewable energy in the GCC region of 80GW by 2030 would allow the monarchies to conserve about 11 trillion litres of water, as well as 400m barrels of oil, per year. This would also create more than 200,000 jobs.
The green transition will be a given in the region, but the GCC states want that transition to be slow and gradual.[3] They would first scale up their renewable energy capacity to deploy it domestically, freeing up more fossil fuels for export. (All the GCC countries are currently investing in more fossil fuel production capacity.) Later, they would diversify their exports by adding green energy. This would allow them to preserve their political-economic systems based on the redistribution of externally derived rents a little longer, guarding against potential economic and political instability. This is the fundamental context to the green transition thinking in the UAE and other Gulf monarchies.
Like its predecessor in Egypt, COP28 is thus unlikely to result in commitments to phase out fossil fuel production. The UAE is designing COP28 around the approach of accelerating the energy transition without fossil fuel producers having to compromise their hydrocarbons-funded economic growth. This thinking very much reflects the contradictions of having a major fossil fuel producer host the conference – and choosing as the president of that conference Sultan al-Jaber, who runs ADNOC as well as Masdar, one of the country’s largest and most active renewable energy investment funds. This point has been the source of much controversy over the UAE presidency in Europe and the United States, and will complicate the signing of an agreement at the meeting.
The UAE and other fossil fuel producers saw the scramble for energy security after the Russian invasion of Ukraine as an opportunity to argue, as Jaber has, that fossil fuels are still necessary: “[we] cannot unplug the current energy system before we have built the new one,” he said at India Energy Week in February 2023. At this year’s CERAWeek energy conference, Jaber added, “Let’s scale up best practices and aim to reach net-zero methane emissions by 2030. We must electrify operations, equip facilities with carbon capture and storage, and use all available technologies to increase efficiency across the board.” He also advocates investing in only the least carbon-intensive oil barrels which, incidentally, are to be found in the GCC.
Indeed, with some of the lowest carbon footprints and production costs for oil in the world, the Gulf monarchies might even increase their market shares in the medium term; they could be subject to up to 50 per cent less in EU carbon tariffs than most competitors, making them the last men standing in fossil fuels. ADNOC and the Saudi Arabian Oil Group (ARAMCO) both plan to have expanded their oil production by 2027, by when Qatar also aims to have increased its gas production by 64 per cent. Doha considers gas the transition fuel par excellence.
The UAE will direct COP28 to move from fighting the hydrocarbons industry to working with it to promote technological solutions to limit emissions, such as CCUS. The UAE already deploys CCS technologies at a commercial scale, in part thanks to strategic cooperation with European energy industry operators. But the percentage of CO2 the GCC states capture is still critically insufficient. As of August 2022, there were only three large and active carbon capture plants in the GCC region, capturing 3.7m tonnes a year of CO2 – which is 10 per cent of global capture capacity: Uthmaniyah in Saudi Arabia, Al-Reyadah in the UAE, Ras Laffan in Qatar.
The UAE will also use COP28 as a platform to boost investments in green energy production globally as it works to become a key actor in this space. The UAE already has the world’s most cost-effective solar energy production system and the Middle East and North Africa’s highest percentage of renewable energy in its mix, with 3.058 megawatts of capacity. Accelerating green energy industrial development is central to the UAE’s Net Zero by 2050 strategy, and the country has to date invested over $16.8 billion in 70 green energy projects worldwide.
Yet, neither the UAE nor any other GCC country, despite some sizable pledges and large-scale projects, are yet on track to meet their self-declared green energy targets. Saudi Arabia, the UAE, and Oman aim to generate between 20 per cent and 50 per cent of their domestic energy needs from renewable sources by 2030, and have significant ambitions to produce and export green hydrogen. This would require almost 40-60GW of renewable energy capacity by 2030, compared to a current installed capacity of around 4,000MW. Qatar, Kuwait, and Bahrain do not have comparable or noteworthy renewable energy targets.
Finally, the UAE is setting high expectations on progress over climate finance at COP28. Jaber has criticised the availability and affordability of this finance, advocating an increase from “billions into trillions” in such a way that would not exacerbate the debt crisis in poorer countries. He has also argued for improved accessibility to climate finance by removing some bureaucratic obstacles that hinder access to funds. Abu Dhabi has pledged to complete negotiations at COP28 on the compensation fund for climate change-related loss and damage in developing countries, agreed after some discord at COP27.
Indeed, there is a global shortage of dedicated climate finance frameworks, including in the GCC monarchies. Some promising initial projects include the 2021 Sustainable Finance Framework in the UAE, which has pushed dozens of financial institutions to lend and invest in environmentally sound activities; a 2019 scheme from Oman’s Bank Muscat to encourage renewable energy installation; and Saudi Arabia’s 2022 Green Finance Framework through its Public Investment Fund – the country’s sovereign wealth fund – which has released two tranches of green bonds aimed at supporting the local green agenda. The EU, for its part, has a diversified portfolio of climate finance instruments and frameworks (such as the European Hydrogen Bank and several environmental, social, and governance investment models) which could serve as inspiration for the UAE’s goals on climate finance at COP28.
In fact, the EU could even encourage the GCC states to see its forthcoming carbon border adjustment mechanism (CBAM) as a financial product and – as with its emissions trading system (ETS) – a new source of climate financing. Europeans could discuss this with their GCC counterparts at COP28 while offering technical assistance to draw up a carbon-pricing framework, which is currently absent in the GCC. Given the relatively low-carbon content of GCC industry, detailed carbon pricing could be more convenient than standard emissions metrics and increase acceptance of the CBAM in the region.
Make it happen: Pathways to decarbonisation
All of this suggests that there will likely continue to be significant divergences in the parties’ perspectives at COP28. However, there is also a substantial convergence of interests in several domains that could advance the green transition. The most effective way to address this challenge is to look beyond the ideological divide and focus on technical barriers to progress in the following areas: energy efficiency and electrification, the circular carbon economy, and hydrogen.
Energy efficiency and electrification
Energy efficiency and electrification have been part of GCC policymakers’ discourse for decades. Per capita energy consumption rates in the GCC are among the highest in the world, exacerbated by economic growth based on energy-intensive industries, a development and construction boom, and growing populations. GCC countries score low on energy efficiency, both in absolute terms and compared to other oil producers and high-income countries; they fare better on electrification. Over the past ten years, GCC policymakers have started pushing more vigorously to improve both, including in cooperation with the EU, which they recognise as having significant expertise to share on both topics.
Energy efficiency and electrification, alongside the development of renewable energy sources and emissions reduction, have been at the core of several EU-GCC projects. These include: the 2010 joint action programme for the implementation of the GCC-EU Cooperation Agreement; a policy document covering 2010-2012 followed by scientific diplomacy project INCONET-GCC from 2014-2017; and the EU-GCC Clean Energy Technology Network, which ended last year. These frameworks encouraged and facilitated the participation of Europe’s private sector in energy transition projects across the GCC, including in electricity interconnections – the core infrastructure that enables efficiency and electrification.
European and GCC producers, transmission system operators, and distributors need new frameworks for dialogue on interconnections. This needs especially to address the prospect of linking the GCC-wide transmission grid to, for example, its European counterpart ENTSO-E. Plans for such an interconnection have gained momentum since a 2021 deal between Egypt and Saudi Arabia to link their grids, and another signed in 2023 between the GCC and Swiss company, Hitachi Energy, to boost the existing exchange capacity of the GCC grid by upgrading the Al-Fadhili high-voltage direct current converter station. The latter is a necessary preliminary step to further extending connectivity towards the Mediterranean.
Alongside changes in consumer behaviour, electrification is fundamental to improving energy efficiency in high-emissions sectors such as construction, transport, and cooling (air conditioning and refrigeration, for example). The UAE, Qatar, Kuwait, and Saudi Arabia are starting to put in place guidelines for the construction industry on building codes, insulation, and glazing; efficiency criteria are often included in urban development planning. But there is still considerable scope for improvement. EU directives represent the highest standards in this sense.
The EU has previously organised a webinar to engage its GCC counterparts on energy efficiency in construction and urban development. This brought together policymakers and representatives from the private sector – including industrial and building operators, architects, engineers, and smart technology providers – to discuss solutions in “green buildings”, a core theme of the European Green Deal. EU leaders should ensure that that was not a one-off exercise.
A key sub-theme in the green buildings domain is cooling. In most GCC cities, cooling can account for up to 60 per cent of local energy consumption. Over the past few years, GCC countries have increased their use of “district cooling”, which improves efficiency by consolidating supplies of cold air to distribute across densely populated areas. But governments need to do more to encourage this through specific regulatory frameworks and urban planning. At the same time, GCC markets are still overflowing with cheap and energy-inefficient air conditioning units. The race is now on to replace fixed air conditioning units with more efficient inverter units, which consume 40 to 50 per cent less energy.
The GCC states could now encourage the replacement of other cheap and energy-inefficient “Made in China” appliances, that have flooded the local markets. Energy subsidies have for decades been at the core of the government-society ruling contract in the monarchies. It would therefore be easier for them politically to promote more efficient alternative goods than try to influence consumer behaviour by reducing subsidies. At the same time, lowering subsidies and raising tariffs – both for water and for electricity – are tools that some GCC governments have gradually introduced, and seem necessary given the amount of wasted energy in the region.
The circular carbon economy and decarbonisation
Gulf states have long treated CCUS as a silver bullet solution. The EU cautions against the GCC countries’ overreliance on technology, and continues to stress the need for behavioural change.[4] However, the European Green Deal also recognises CCUS as a key tool to aid decarbonisation.
Saudi Arabia centred its 2020 presidency of the G20 around CCUS and other measures to create a “circular carbon economy ” based on the reduction, reuse, recycling, and removal of CO2. Over the past 12 months, Saudi Arabia has pledged to only build power generation plants that incorporate carbon capture technology and to work through its Middle East Green Initiative to cut emissions by 60 per cent by 2030 – by when the country aims to be capturing 44m tonnes of CO2 a year. ARAMCO is currently building a new plant in Jubail with the capacity to capture 9m tonnes per annum by 2027. Qatar and the UAE target, respectively, a total capacity of 7m tonnes per annum and 5m tonnes per annum by the same year.
However, as discussed, the share of CO2 captured in the GCC countries is still critically insufficient. The GCC’s three carbon capture and storage facilities in Saudi Arabia, Qatar, and the UAE sequester just 3.7m tonnes per annum. The three other GCC fossil fuel producers – Oman, Bahrain, and Kuwait – lag even farther behind. In the International Energy Agency’s global scenario for net zero by 2050, the world needs to be capturing 1,200m tonnes per annum by 2030, with CO2 transport infrastructure and storage capacity increasing at the same rate.
As part of their CO2 strategy, the Gulf monarchies have also bet on nature-based solutions, such as: restoring wetlands, conserving mangrove forests, protecting salt marshes, restoring forest habitats, and planting trees. In March 2021, as part of its Green Initiatives, Riyadh announced that it aimed to plant 50 billion trees across the Middle East over the coming decades, including 10 billion trees in Saudi Arabia.
All the other monarchies have launched similar, albeit smaller, tree-planting campaigns. However, environmental experts cast doubt on the feasibility of planting so many trees in such a water-stressed region. They point instead to other promising nature-based solutions such as “mineralisation” – a process that permanently captures (that is, mineralises) CO2 within peridotite rock formations. The UAE and Oman have already studied the potential of this solution in a pilot project, which found it could be cost-competitive and compatible with the GCC environment, where peridotite is abundant. The EU recognises mineralisation as a permanent sequestration method, which can be excluded from the obligation to report emissions under the ETS.
Going one step further, EU member states are undertaking several projects to permanently lock CO2 into building materials. These projects include some that have even reached the commercialisation stage: for example, the first pavement made out of CO2-based bricks was installed in Belgium in 2020. To date, concrete products containing reused CO2 are only available in the form of blocks and bricks, which cannot be used as building foundations due to their higher than normal acidity. But in the future, these CO2-based materials could potentially replace carbon-intensive products such as cement, significantly reducing the carbon footprint of building materials globally.
Incorporating CO2 into building materials could become one way to make CCUS commercially viable. And commercial viability is how CCUS can become a credible tool in fighting climate change. The main obstacles to achieving this viability are the cost of the equipment needed to capture and pressurise CO2, as well as to transport and store it. The bulk of CCUS technology currently in use remains substandard, with the least efficient plants capturing only around 60 per cent of emissions. There is also a high risk of CO2 leaks contaminating aquifers.
Today, the only form of large-scale, permanent, and profitable carbon sequestration is enhanced oil recovery (EOR), whereby the captured carbon is reinjected to extract more oil or gas. In fact, nearly 70 per cent of CO2 captured globally is currently used for EOR. This is clearly not sustainable, and the global focus should be on more innovative solutions.
Another example of commercially viable use of CCUS is CO2-based synthetic fuels, such as “electrofuels” or “e-fuels”. These use captured CO2 and electricity to produce “drop-in” diesel or gasoline, methanol, and similar fuels that can power vehicles, aeroplanes, and ships. EU policies have incentivised CO2-based synthetic fuels, in particular through the recast Renewable Energy Directive to 2030. Although the EU should still phase out emissions-producing cars and vans by 2035, it should also continue to support e-fuels – especially to help decarbonise aviation. Some European companies have committed to net-zero flights by 2050, and the Dutch airline KLM operated its first e-fuel powered flight in 2021. E-fuels are considerably more expensive than conventional fuels, but the technology is progressing fast and some companies have already pledged to match and beat the price of conventional fuels within a decade.
The Gulf monarchies – where aviation is a major business – have also shown interest in e-fuels. In 2021, the UAE’s Ministry of Energy and Infrastructure and the World Economic Forum, along with the Clean Skies for Tomorrow coalition, collaborated on a white paper called “Power-to-Liquids Roadmap: Fuelling the Aviation Energy Transition in the UAE”. In this, they announced the launch of a roadmap to produce 11m tonnes of sustainable aviation e-fuel by 2050 and clearly identified aviation e-fuels as an opportunity for decarbonisation, job creation, and GDP growth.
One highly innovative idea to commercialise the use of CO2 is using it to power batteries. The Italian start-up Energy Dome has already launched its first CO2 battery facility and entered the commercial scaling phase, including through projects in the Middle East and North Africa. The company uses liquefied CO2 in a process that allows storage of power generated from the sun and wind in a closed-loop system that generates no emissions. The project obtained EU funding via the European Innovation Council, due to its potential to make cost-effective renewable energy that can be dispatched around the clock and the fact that the technology neither relies on lithium-ion batteries nor on any rare earth minerals such as cobalt.
The potential for a viable commercial reuse of captured CO2 for major fossil fuels producers is substantial. GCC states would have a very strong strategic interest in funding similar innovative research in pursuit of the necessary technological breakthroughs. A partnership with the EU and member states would act as a much-needed accelerator.
Hydrogen beyond the hype: Storage, transport, and uses
Hydrogen has emerged as a shared interest between European countries and the Gulf monarchies. European policymakers believe that hydrogen could be a solution to decarbonise hard-to-electrify sectors, including heavy industries, shipping, and aviation; or for long-term energy storage for electricity production. The booming availability of cheap renewable energy – particularly in places such as the Gulf monarchies – could make even the most expensive green hydrogen cost-competitive. Other hydrogen types – such as blue or pink (produced using nuclear energy) – are also appealing and feasible options for the Gulf monarchies.
Additionally, the GCC states could redeploy, to some extent, existing infrastructure for the hydrogen business, such as port facilities, LNG export and import terminals and gas pipelines, and salt domes for storage. This could enable the long-term economic survival of oil and gas firms after the energy transition is complete.
Indeed, some GCC countries (for example, Saudi Arabia, the UAE, and Oman) have accelerated their hydrogen plans over the past year, in order to be early movers. The EU would be their most important market, as the bloc – alongside key European countries such as Germany, Italy, Spain, the United Kingdom, and France – has officially identified hydrogen as key to the energy transition. In the REPowerEU initiative and External Energy Strategy, the EU reiterated its strategic interest in hydrogen: its preference is for green hydrogen but it also has a pragmatic approach to other types.
The EU has proposed comprehensive energy partnerships that begin with fossil fuels and accompany the transition towards hydrogen, clearly laying out an intention to import 10m tonnes of hydrogen by 2030 from a number of sources, including the Gulf monarchies. The GCC states also cooperate closely with European energy giants, medium-sized companies, and even start-ups in the hydrogen production process.
Among the GCC capitals, Muscat, Abu Dhabi, and Riyadh are particularly active on hydrogen. In 2022, Oman published its Hydrogen Strategy, seeking $140 billion in investment to target an annual production of 1-1.25 megatonnes of green hydrogen by 2030 – mainly at HYPORT Duqm, led by the Belgian company DEME. This would rise to 3.25-3.75 megatonnes by 2040 and 7.5-8.5 megatonnes by 2050. The UAE has also taken significant steps to develop green hydrogen, within its borders and abroad. In 2021 the UAE inaugurated the largest hydrogen plant in the Middle East and North Africa, a joint initiative between Siemens Energy and Dubai Electricity and Water Authority, and started building the region’s first dedicated export terminal in Fujairah.
ADNOC targets 1 megatonne of green hydrogen output by 2030. Saudi-based firm ACWA Power is building the world’s largest utility-scale, commercially based hydrogen facility powered entirely by renewable energy at NEOM. By 2025, this will produce up to 650 tonnes per day of green hydrogen and 1.2 megatonnes of green ammonia for export.
ACWA Power announced this year a plan to build two more hydrogen facilities in the area adjacent to NEOM. In addition, Saudi Arabia and the UAE have unveiled several blue hydrogen projects, including a facility near the Saudi Jafurah gas field, which will go online in 2024; and an Emirati large-scale blue ammonia plant at Ruwais, starting production in 2025. Qatar has been slower to embrace green hydrogen, but it has launched a project for the world’s largest blue ammonia facility. This will produce 1.2 megatonnes of blue ammonia by 2026, with electrolysers contracted to German manufacturer ThyssenKrupp Uhde. Qatar’s sovereign wealth fund is also evaluating green ammonia projects elsewhere in the region, such as in Egypt.
But risks and challenges remain. For starters, a surge in demand for hydrogen, solar panels, electric vehicles, batteries, and other components critical to the EU’s green transition will increase competition over the raw materials needed to scale up production, such as nickel and platinum. Global suppliers of these raw materials are located mostly in countries such as China, Russia, Indonesia, and the Philippines, as well as in Africa (especially South Africa but also Zimbabwe).
In its 2023 Critical Raw Materials Act, the EU proposed a number of solutions to address this, most notably a diversification of supply sources. Given the abundance of hydrocarbons in the GCC monarchies, it is conceivable that there are also some reserves of critical raw materials in the region. Saudi authorities, for example, have suggested that substantial mineral reserves exist in the kingdom, including bauxite, aluminium, coal, copper, zinc, phosphates, uranium, and gold.
The production of green hydrogen also demands huge quantities of water. GCC countries rely heavily on desalination for their water needs, including for renewable energy production. Desalination plants are usually energy-intensive and often powered by fossil fuels. In most cases, a by-product of desalination is brine, which increases the salinity of the coastal waters into which it is discharged. This disrupts the marine environment, leading to a proliferation of toxic algae that, in turn, threatens to disrupt desalination processes.
In fact, if water in the Gulf reaches what experts call “peak salt”, desalination may become unfeasible. In this sense, NEOM’s desalination plant, which is designed to dispose of brine sustainably using technology from French company Veolia, could be particularly valuable. In fact, GCC states are showing increasing interest in the latest desalination technologies that, in the near future, could enable “brine-mining” – or the extraction of chemical components from brine for use in industrial processes.[5]
Finally, new types of hydrogen infrastructure – including fuelling systems, pipelines, port upgrades, and ammonia synthesis and shipping systems – will ultimately have to be developed to scale up hydrogen use globally. Without pipelines, hydrogen needs to be converted into derivatives such as ammonia or synthetic fuel, or could be used to produce materials such as zero-carbon steel on site, but every conversion comes with significant added cost and a further efficiency loss.
The scale of the required investment and development is so large that – notwithstanding the EU’s preference for southern Mediterranean countries, where the hydrogen business can spur growth and curb migration – the Gulf monarchies are the realistic interlocutors for Europeans in the Middle East and North Africa in the short term. The Gulf states offer strong financing capacities, pre-existing (export) infrastructure, short construction times, and advanced know-how in the hydrogen sector, thereby allowing them to implement pilot projects quickly.
Their location, in the centre of the heavily travelled EU-China transport corridor, is ideal for the production of hydrogen derivatives, especially those that can be used as maritime fuel. If this enables them to benefit directly from clean energy trade with the EU, Gulf monarchies would likely also contribute to Global Gateway investments in infrastructure to turn Mediterranean countries into transit hubs. Transit infrastructure can then be used in the longer term too, once Mediterranean countries are also ready to become producers and exporters.
Recommendations
Energy engagement between Europe and the Gulf monarchies accelerated after the energy security crisis triggered by Russia’s invasion of Ukraine. It now needs to move from conversations about tactical needs to strategic cooperation, which factors in climate imperatives. With its self-perceived position of strength, the UAE is clearly intent on delivering a successful COP28 that includes ambitious achievements and leadership.[6] Therefore, if Europeans overcome their uncompromising approach and focus on coalition-building, they could help secure meaningful outcomes. Decision-makers in the EU have several policy options to consider.
Promote energy efficiency and electrification
The EU should intensify its diplomatic efforts to promote energy efficiency in the GCC. It should focus specifically on: decarbonising transport networks; encouraging the introduction of enforceable norms in green buildings, especially on insulation and cooling; and sensitising consumers to the importance of energy efficiency.
Here, the EU-GCC Cooperation on Green Transition and De-carbonisation could become a particularly useful platform – once it is fully defined. The objective of this new action is to facilitate cooperation in research and business, and promote the uptake of green transition policies and technologies in GCC countries, by exchanging best practices and customised options for policy and practice. As a way to compensate for its delayed set-up, the EU’s engagement under this framework should focus on rapid delivery.
It could start by arranging dialogue on electrification between transmission system operators and distributors, as well as regulators. The EU could also use the initiative as a vehicle to offer specialised technical and policy assistance on green buildings to the relevant authorities in the GCC. On consumer behaviour, European and EU diplomats in GCC capitals should continue to invest in communication and awareness campaigns.
Focus on the circular in the circular carbon economy
Boosting the carbon economy’s circularity is dependent on developing the ‘remove, reuse, and recycle’ pillars of the concept. In the GCC states, carbon capture storage and transport infrastructure is significantly underdeveloped, and laws and regulations on CCUS frameworks often have gaps. Linkages already exist between GCC countries, so multi-user CO2 infrastructure could fit well in the region. The EU should offer a blueprint on how to approach this, and Denmark, Belgium, the Netherlands, and Norway are already actively working on transnational transport and storage.
More importantly, to harness the necessary investment and to give credibility to the concept of a circular carbon economy, the EU and GCC states could contribute to addressing the global need to develop commercial viability for captured or recycled CO2. This is very much in line with the “business mind-set” which Jaber has been advocating in the run-up to COP28. Yet, public sector involvement will be necessary to fund industrial research and development, especially in the GCC states – where this kind of investment is the lowest among OECD economies.
The EU should use its forthcoming CCUS strategy, due to be published at the end of 2023, to focus on the commercial viability of the captured or recycled CO2 by promoting research and development. For example, the EU should encourage the GCC countries to become much more involved in projects such as the Innovation Fund and invest meaningfully in the demonstration of commercial viability of innovative low-carbon technologies. European governments should encourage their GCC counterparts to make substantial investments in and rapidly deploy efficient, new-generation CCUS technology in the Middle East and North Africa.
The Innovation Fund has already supported the commercialisation of some creative ways to reuse CO2 – including mineralisation, CO2-based building materials, and CO2 batteries. Beyond the untapped advantages offered by more established technologies such as e-fuels, the GCC countries would benefit greatly from supporting these other potential applications. Crucially, the EU’s CCUS strategy should also aim to overcome inconsistencies and lack of clarity on standards for CCUS certification.
Accelerate green hydrogen deployment
The key to unlocking hydrogen’s potential is to look at the challenges across the entire ecosystem. The EU could address these challenges in the context of hydrogen partnerships with key GCC producers, which the bloc’s directorate-general for energy should finalise as soon as possible.
As industrial actors start looking into operationalising existing cooperation agreements on hydrogen, the question of mutually agreed standards – covering safety, product quality, and carbon content, as well as systems of certification and accreditation – has become more prominent. Industry will have to account for carbon emissions across the entire process of producing hydrogen, including in the desalinisation of the water needed for green hydrogen production in the GCC. The EU and member states should lead on developing mutually agreed standards and incentivise the use of renewables-powered desalination plants that employ innovative technology for the sustainable disposal of brine in green hydrogen production.
Another crucial aspect is the provision of adequate opportunities for training and education at various levels. This should start from vocational training for industry operators, targeting the fossil fuels industry too, and extend to formal education that supports scientific advances in energy studies. The EU should focus on these through Erasmus+ and Erasmus Mundus activities with GCC participants, which would be welcome in the GCC as part of their drive to attract know-how.
A longstanding challenge in the hydrogen ecosystem is the required upgrade of existing energy infrastructure and the construction of new infrastructure. These span from hydrogen-ready pipelines and a refuelling network in ports and import terminals, to tank storage systems and salt caverns. GCC hydrogen exports to Europe will likely take place via tankers to start with, given the continent’s limited reception capacity and options for use, the absence of pipelines, and the presence of ready-to-use export infrastructure for ammonia and synthetic fuels along the GCC coast. Tanker-based trade also fits with alleviating European concerns about creating new patterns of dependency.
In the longer term, the EU’s and member states’ energy security imperatives would be better served by more durable import infrastructure, including pipelines. The EU should propose co-investment with GCC governments through the Global Gateway initiative to map out a future energy hub in the eastern Mediterranean. This would be especially useful for diversifying import routes to Europe by bypassing bottlenecks in Egypt. Longstanding tensions between GCC states and Turkey are currently de-escalating, which adds (previously lacking) credibility to this proposal.
Build resilient green supply chains
Last but not least, a core issue that cuts across the green transition and decarbonisation is the sustainability of green supply chains. The past few years have seen frequent supply-chain disruptions, due to covid-19, Russia’s war on Ukraine, and Western tensions with China. Strategic energy ties between Europeans and the Gulf monarchies therefore require a certain level of reciprocal trust in the supply and value chain.
The EU should consider launching talks with their GCC counterparts on a preferential trade agreement for decarbonisation and the circular economy. A comprehensive EU-GCC free trade agreement is likely to run into the same obstacles that have plagued these discussions for the past 30 years, further complicated by the CBAM. But a specific agreement to liberalise trade on products and services linked to the green transition would have multiple economic benefits and should face fewer political obstacles. It could increase the advantage of “Made in the EU” technologies for desalination, hydrogen, CCUS, or even energy-efficient household appliances.
It could also encourage European investment in mining, which GCC policymakers and experts have identified as key to economic diversification in the GCC countries, with a view to enhancing access to extracted critical raw materials.[7] The EU should look more specifically at the GCC countries as a potential source of raw materials, while maintaining a critical approach and guarantees to safeguard the rights of the required labour force.
Conclusion
Europeans should view the summits taking place in Saudi Arabia and the UAE over the coming months – the second Middle East Green Initiative Summit, the UN’s Climate Week, and COP28 – as catalysts to upgrade their energy relations with the GCC monarchies into a more strategic engagement on green transition and decarbonisation. The focus of this should be tangible progress in technical and scientific cooperation related to the development of green energy trade and a circular carbon economy, as well reducing the financial and climate cost of the transition. That way, the EU and member states can go beyond ideological divides and engage these fundamental actors to respond to European imperatives of energy and climate security.
About the author
Cinzia Bianco is a visiting fellow at the European Council on Foreign Relations, where she works on political, security, and economic developments in the Gulf, as well as the region’s relations with Europe. She holds a PhD in Gulf studies from the University of Exeter. Between 2013 and 2014, Bianco was a research fellow on Sharaka, a European Commission project on EU-GCC relations. In the past, she worked as a non-resident scholar at the Middle East Institute. Her previous publications for ECFR include “Gulf of difference: How Europe can get the Gulf monarchies to pursue peace with Iran”.
Acknowledgments
This paper’s objective was always to bridge the gap between conversations among experts and the debate in the non-expert policy and business communities. The author could not have done this without the work, advice, and support of many prominent technical experts from both Europe and the Gulf monarchies. The author would also like to thank the officials, diplomats, and industry executives in both Europe and the Gulf for devoting some of their time to the discussions that form the basis of this paper. Finally the author wishes to thank her ECFR colleague Kim Butson for the editing work.
Notes
[1] Author’s interviews with officials and experts from all GCC countries, 2023.
[2] Author’s interviews with officials and experts from all GCC countries, 2023.
[3] Author’s interviews with officials and experts from all GCC countries, 2023.
[4] Author’s interviews with EU officials, 2023.
[5] Author’s interviews with officials and experts from all GCC countries, 2023.
[6] Author’s interviews with officials and experts from the UAE, 2023.
[7] Author’s interviews with officials and experts from all GCC countries, 2023.
Disclaimer
The European Council on Foreign Relations and CEMAS do not take collective positions. Publications only represent the views of their individual authors.
Decarbonisation nations: How EU climate diplomacy can save the world
Decarbonisation nations: How EU climate diplomacy can save the world
By Susi Dennison and Mats Engström, European Council on Foreign Relations, 04 May 2023
Summary
- The EU’s decision to quickly decouple from Russian energy in response to the war in Ukraine and the US Inflation Reduction Act have shifted the dynamics around how the EU engages on climate action in its external relations.
- The EU and its member states need a new approach to climate diplomacy to respond to this reality. They should frame this approach around an understanding that decarbonisation is central to their economic security.
- In its relations with Africa, the EU should ensure that all relevant policy tools – including trade, industrial development, and energy deals – reflect the fact that economic security through decarbonisation brings mutual benefits.
- The EU needs to strengthen its climate diplomacy by rapidly putting together an offer for the global south that includes financing and innovation cooperation to counter negative reactions to its current regulation- and carbon pricing-led approach.
- The new European Commission and European Parliament from 2024 provide an opportunity to build the structures for greater coordination of investments and planning through Brussels. The EU will also need to increase its capacity and resources if it is to remain a global leader on climate action.
Introduction
The European Union has long played a leading role in global efforts to address climate change. In today’s fraught geopolitical environment, however, there is no inevitable logic of cooperation between global powers – on decarbonisation or on any other issue. Within the United Nations Framework Convention on Climate Change (UNFCCC), each country now assesses its national plans on climate action as part of its wider economic security, and builds alliances accordingly.
Last year’s conference of the parties of the UNFCCC (COP27) saw leaders from the global south finally succeed in putting on the agenda financial support from rich countries to address climate change-related loss and damage. Meanwhile, the EU’s focus on securing energy supplies from almost any source in the first year of Russia’s war on Ukraine underlined its reputation as a global player like any other: one that puts its own economic interests first. A lack of sufficient financing and accusations of double standards have therefore partly undermined the credibility of the EU’s claim to green leadership.
The Biden administration’s Inflation Reduction Act (IRA) has since put a new model on the table. Instead of the EU’s regulation- and carbon pricing-led approach to decarbonisation, it aims to spur investment in green technology mainly through tax breaks and massive subsidisation – resulting in the prospect of increasingly fierce green competition.
The war on Europe’s borders has thus enforced some gritty realism in EU member states. But that does not mean the EU has relinquished its ambition to lead on progress towards net zero. Climate change continues to feature prominently in public opinion polling on what most concerns Europeans; European leaders still understand climate security as central to the mission of EU institutions. They also recognise the economic benefits of capturing global market shares of emerging green technologies, something to which the EU can contribute – if its leaders create the right conditions. Even so, tensions have emerged over the past year around the West’s prioritisation of Russia’s war on Ukraine and the conflict’s impact on global supply chains and energy markets – which has made corralling cooperation in the international system far more difficult.
The EU needs an approach to climate leadership which is anchored in the realism that the events of the last year have forced upon the bloc. China’s and Russia’s economic diplomacy has put them in a competitive position in many of the EU’s neighbouring regions. It also gives them the opportunity to conduct the sort of pragmatic diplomacy that has prevented Western powers from pushing through common positions in international institutions – at least, in the way to which they had become accustomed in previous decades. Accordingly, EU climate diplomacy in these regions has also become challenging.
This paper will focus mainly on what a new approach to climate diplomacy could look like for Europeans’ relations with their partners in Africa. The new reality is affecting European relationships across the globe, but Africa – as one of the EU’s key neighbouring regions – is fundamental both to the external impact of the EU’s European Green Deal initiative and to member states’ own ability to transition away from carbon dependency. Many African countries, for example, could become sources of alternative energy and critical raw materials to aid Europe’s transition.
This research draws on a series of closed-door dialogues organised by the European Council on Foreign Relations between EU and African policymakers to unpack how they view their cooperation on the climate challenge. These discussions, which ran between summer 2022 and early 2023, included representatives from governments and international organisations as well as analysts from various countries on both continents.
Drawing on these insights and other sources, the paper argues that, to succeed, the EU and member states need to centre their climate diplomacy in a broader political and economic relationship with African countries and other regions. It then sets out how Europeans should increase institutional capacity and improve collaboration among EU entities, as well as within and between EU member states, to underpin these efforts. Finally, the paper shows how the new European Parliament and European Commission from 2024 could implement structural changes to strengthen the EU’s ability to deepen its climate diplomacy worldwide as part of a broader sustainable security.
A decarbonising Europe in a weaponised world
The war in Ukraine has ended Europeans’ complacency about an inevitable path towards peace on their continent. Moreover, the hybrid nature of Russian – and Ukrainian and Western – tactics in the context of the war has broadened Europeans’ definition of the types of power that can be weaponised: from technology and trade, to energy and narrative. Climate action is unlikely to prove an exception. Just as Russia has held other global goods such as food security hostage in this conflict, there is every reason to assume the fraught international order will see cooperation on climate goals form part of the bargaining around positioning and power in the global system.
European citizens’ two biggest concerns are currently their physical security and the rising cost of living. The case within the EU for making the necessary trade-offs to decarbonise the European economy – and bearing the interim cost of investment – needs to form part of a broader narrative on how climate fits into European security. The West’s hybrid toolkit to help defeat Russia encompasses not only military and humanitarian aid for Ukraine, but crucially also economic sanctions of many types.
This has resulted in a more focused concept of economic security replacing the notion of sovereignty in the way European policymakers speak about defending their interests and values in the international arena. At the heart of this concept is an understanding that the ability to wield economic power, both defensively and to compete with other global players, will be central to how the EU and member states defend their interests in the new global order.
European policymakers cannot and should not separate decarbonisation from their thinking on economic resilience. The urgency of the climate threat is pushing even key global players previously resistant to the idea to further their climate commitments – though implementation remains a challenge. The Biden administration has thrown the United States fully into the game with the IRA. The EU can no longer content itself with having brought to the table the first model for ‘whole economy’ decarbonisation with the European Green Deal: it now needs to compete with others. But, for European businesses to remain competitive as they decarbonise, they will need to avoid creating unmanageable dependencies on other global actors for the supply chains to support these changes.
This entails a new kind of European climate diplomacy, one which deepens and broadens the dialogues and relations with those countries Europeans depend on to build and sustain green technologies. Current climate diplomacy includes trade, industrial, and investment tools as well as dialogue. But this will fail in its objectives if it continues as a standalone channel of dialogue, and if European policymakers understand development and political reform as competing priorities rather than part and parcel of the same effort.
A new approach to EU climate cooperation with Africa
Building partnerships anchored in mutual economic security
The economic security of EU member states is dependent on their intricately networked trade relationships for critical raw materials and supply chains for goods and energy. For European policymakers, the challenge in the external dimension of the European Green Deal is therefore the need to simultaneously push partners to decarbonise and shore up their own energy supplies, including by using fossil fuels and gas as interim measures.[1]
However, for African interlocutors in ECFR’s dialogue series, this framing exposes a misrepresentation, or at least a misunderstanding, of the balance of interests in the EU’s relationships with its partner countries. Europeans are not the only ones experiencing a paradigm shift in their thinking on decarbonisation; African policymakers too are well aware of this global trend and their need to be a part of it. And, like Europeans, they are trying to balance decarbonisation with the need to remain or become more competitive during the climate transition.
The fundamental problem with the current European approach is that African policymakers often need to deal with different interlocutors from both EU institutions and from member states depending on whether the dialogue focuses on economic cooperation, energy cooperation, or climate cooperation. And African policymakers know that economic conversations are more likely to lead to opportunities for significant investment from the EU.
This implies that incorporating the common decarbonisation agenda into discussions focused on economic development would be more effective than isolated climate dialogue. Indeed, the authors’ many conversations with policymakers indicate that, from an African perspective, the very fact that the EU system ‘thinks’ in terms of climate diplomacy means it not only fails to take into account the primacy of economic development, but that its initiatives on decarbonisation actually run counter to it.
For example, African policymakers express significant concern about the effect of the EU’s carbon border adjustment mechanism (CBAM), which will impose higher tariffs on carbon-intensive goods entering the bloc. They also see the Green Deal Industrial Plan, part of the EU’s response to the IRA, as a direct threat to the emerging competitiveness of African export businesses – given that it specifically aims to scale up European manufacturing capacity for net zero technologies, as well as shore up supply chains for the green transition.
This compounds the lack of trust that resulted from the global south’s struggle to persuade OECD states to provide financial support for climate-change related loss and damage, not to mention the lack of clarity on when that support will appear. To counteract this mistrust, EU member states will have to step up financing at scale and press other OECD countries to do the same. European leaders should understand this as an investment in building partnerships that can genuinely contribute to their economic security.
The economic security narrative changes the dynamic of climate cooperation. European and African participants in ECFR’s dialogue series indicated that they understand security of supply and resilience against coercion to be deeply interlinked with confronting climate change. Europeans will therefore need to make explicit in their diplomacy that the economic security imperative is mutual, running through both sides of the discussion around decarbonisation. They can, for example, hone the considerable potential of collaboration on green research, development, and commercialisation to contribute to economic security in Europe, Africa, and beyond.
Moreover, the EU and its member states can learn from initiatives in Africa and the global south. Morocco is a key actor in ‘greening’ fertiliser production and use in Africa. Kenya and other countries in East Africa are moving quickly and increasing regional cooperation on renewable energy. South Africa is contributing to similar initiatives through its significant influence in the southern and eastern parts of the continent. Indeed, regional and subregional cooperation in Africa offers immense opportunities, for instance by better integrating electricity grids to promote renewables and reliability of supply.
Many developing countries will be paying close attention to Indonesia’s efforts to use its nickel resources for domestic industrial development and increase its share in electric battery production. Brazilian lithium production has soared since 2019, and Chile is implementing strong measures to benefit more from its own lithium resources. Regional cooperation is also under way in Latin America to develop value chains for green technologies based on raw materials sourced on the continent. But most African countries wield neither the power on the world market nor the industrial capabilities of Indonesia or Brazil.
The EU can be a partner in creating the conditions for economic development – and it needs to be if it wants to work with African states to develop resilient supply chains, including for energy and raw materials. If correctly designed, EU support can also bring benefits for European companies trying to ‘green’ their supply chains. But if the EU acts too slowly, others will take its place.
China is strongly promoting an image of itself as the partner of choice for Africa. The way Chinese companies operate has faced significant criticism for failing to create local jobs or add value to local industry, as it instead imports Chinese workers and invests largely in primary sector activity. Still, China’s offer of finance, skills, and infrastructure is attractive for several African governments. Turkey, India, Japan, and the Gulf Arab states are other important actors. Russia is aggressively promoting its interest on the continent.
China in Africa
Chinese infrastructure investment in Africa under the Belt and Road Initiative has attracted much attention. The benefits such Chinese-backed projects bring to African countries remains open to debate, but many African governments now see China as an attractive alternative to cooperation with the old colonial powers in Europe. China does not, for instance, impose as many conditions regarding human rights as the EU does. Chinese companies also often bring whole consortia of contractors, equipment, and other supplies – and make investment offers that can be completed in one election cycle. This gives them a crucial edge with many African elites.
China also engages in innovation cooperation and the processing of natural resources. Recent initiatives such as the China-Africa Cooperation Vision 2035 and the latest Dakar 2022-2024 action plan include cooperation on minerals processing, for example. Beijing is also developing specific initiatives with its African partners such as a China-Africa Green Envoys programme and the China-Africa Green Innovation programme, and South Africa and China are engaging in significant research and development cooperation, including joint research institutes financed partly by China.
For several African countries, newly discovered gas resources could provide significant economic opportunities. This has become a point of friction in EU-Africa relations and is a gap that the aforementioned actors are stepping into. On one hand, leaders such as Senegal’s president, Macky Sall, have accused the EU of hypocrisy in not providing economic support for gas investments while hunting liquefied natural gas (LNG) contracts and including some categories of gas projects in its green taxonomy framework.
On the other hand, European civil servants indicate that, though they recognise all countries’ sovereign right to decide their own energy policy, EU investment needs to prioritise renewable energy and electricity transmission because private capital is less readily available in these fields.[2] Europeans will need to demonstrate the value of other aspects of their offer in the coming years if they are to retain leverage in Africa to encourage a preference for clean fuels over gas exploitation.
Real and perceived conflicts of interest are significant here. Vested interests benefit from an ‘extractive’ approach, both in Europe and in Africa, with several companies (including in the mining and fossil fuels sectors) profiting from the export of raw materials from the African continent. Even so, this varies between countries and sectors and should not put European companies off striving to ‘green’ their supply chains. There are also obstacles linked to corruption, as with the state-owned South African energy company Escom, and various interest groups in countries such as Senegal benefiting from fossil fuels and complicating agreements on, for example, new Just Energy Transition Partnerships (JETPs) through which rich countries help finance green transitions.
Since the end of the colonial era, European countries and the EU have protected their perceived economic interests in Africa through trade and agricultural policies, based on their power. However, in a changing geopolitical and geo-economic landscape, this becomes more difficult and necessitates a different mindset. Partnerships based on mutual interest and the protection of global public goods such as a stable climate system are in the European self-interest.
Expanding green innovation partnerships for industrial development
As the EU’s response to China’s Belt and Road initiative, the Global Gateway aims to bring together support for climate, technology, and infrastructure development in third countries. Its existence will help make the European offer in Africa more comprehensive. Now, to provide a convincing alternative to China also in the green transition of industry, the EU needs to intensify its cooperation with African partners on green innovation and industrial development.
Research, development, and commercialisation
The co-development of green technologies should be an important mechanism in European climate diplomacy in Africa. This could help to secure decarbonisation while deepening interdependence in partnerships and increasing competitiveness on both continents. European countries lead in areas such as wind power and power transmission. But Africa has its own emerging green tech industry, and possible synergies exist with Europe. Better cooperation on research, development, and commercialisation could accelerate the climate transitions in both regions.
Such initiatives already exist: for example, the green transition is one of four priorities in the emerging innovation agenda between the African Union (AU) and the EU. This agenda is part of the Global Gateway initiative and aims, among other things, to strengthen innovation ecosystems, improve higher education, and intensify research and innovation partnerships.
However, Europeans will need to invest more to forge true green partnerships that are strong enough to really improve the capabilities for green industrial transitions. For example, the amount the EU has earmarked so far for green cooperation with Africa in its research and development programme, Horizon Europe, is insufficient. The bloc could formulate a long-term strategy to better build green research networks with the global south, including capacity building on the European side.
Through Horizon Europe “missions”, the EU coordinates efforts to meet societal challenges by pooling its and member states’ resources. These play an important role in current EU research and development policy, but are mainly intra-EU in character. Still, two current missions aim to address “climate neutral and smart cities” and “adaptation to climate change”. The European Commission could draw on the lessons and opportunities of these to strengthen the international dimension of research and development missions and better apply this to projects in Africa.
The lack of state capacity is a problem for energy and industry transitions in Africa, including for green research and development – as noted, for example, by the African Development Bank. Industrial research institutes in Africa need to be strengthened, given the important role that the Fraunhofer Institutes and others are playing in Europe. This is mainly an issue for African countries, but the EU and its member states can do more to support cooperation between European research institutes and their African counterparts, for example, by providing financial support to joint ventures such as “test bed” facilities that are open to a range of companies.
European and African policymakers can reinforce existing cooperation on capacity building, including institutions, and give it a more significant green component. One such example is the “twinning” of institutions in EU member states with similar organisations in partner countries, which the EU could expand in Africa.
A “Co-innovation and Green Tech Diffusion Fund” would be beneficial to advance financing specifically for innovation cooperation, as the authors advocated in a previous paper. The EU and member states, as part of an external green deal industrial strategy, could also consider creating a similar instrument to the US Development Innovation Venture or France’s Fund for Innovation in Development. Finally, multilateral institutions can play a role in strengthening cooperation.
The EU could better support cooperation on technology as part of the implementation of the Paris agreement, for example, through a donor conference for bridging green tech gaps and through a green technology licensing facility in the UNFCCC’s Green Climate Fund. The EU and its member states could also do more to empower the existing Climate Technology Centre and Network under the UNFCCC, and important efforts within the UN Industrial Development Organization, such as the Global Cleantech Innovation Programme. Moreover, the EU should be more flexible in the World Trade Organization on intellectual property rights and local content requirements in developing countries.
Green industrial transformations
Better cooperation on research and development is important, but Europeans could also strengthen partnerships on green industrial transformations more broadly. African countries have legitimate demands for support in combining climate action with economic and social development. The mere export of raw materials such as green hydrogen or critical minerals will not suffice. African countries will benefit more from the climate transition by developing their own manufacturing sectors to produce, for example, electric vehicles, battery cells, solar panels, and low-carbon steel. Improved infrastructure, such as electricity transmission grids and access to renewable energy sources, are important parts of this equation.
The EU should intensify cooperation on such transformations as a central element of its relations with Africa. It will need to implement a number of measures, including direct financing through the EU budget, de-risking of green investments through financial guarantees, and general capacity building (as the authors have outlined in previous papers for ECFR).
It is, for example, crucial for the EU to deliver on its statement at the EU-AU summit in February 2022 in which it set out plans to invest €150 billion in AU member states through the Global Gateway initiative. The initiative has to date suffered a lack of strategic coordination at the EU level. This is leading to post-hoc badging of national and European projects as ‘Global Gateway’ rather than planned coordination[3] – and the initiative is not yet serving the aim of transforming the EU into a competitive, strategic investor.
To improve coordination between member states and EU institutions, the bloc has promoted “Team Europe” initiatives. But these have so far mainly been about bundling existing plans, while bigger projects for strategic long-term change have been lacking.
Existing Team Europe projects mostly address energy transitions. These are important but should now expand to focus more on innovative industrial solutions such as the best use of green hydrogen, sustainable mining, and the refining of raw materials with as few negative environmental effects as possible. They should also turn their attention to electric mobility linked to information and communications technology. National initiatives through Germany’s ministry for economic cooperation and development, the Nordic Development Fund, the Austrian Development Agency, AFD in France, and others, such as on electric vehicles, including two- and three-wheelers in East Africa, could serve as inspiration for a more coherent and extensive EU approach, including with financing from the Neighbourhood, Development and International Cooperation Instrument – Global Europe programme and the European Investment Bank (EIB).
Although the EU budget is currently severely restrained because of support to Ukraine, the massive amount of state aid now dispersed to European companies for green technologies shows that more can be done. By pooling financial resources, and strengthening the EIB, the EU can give its green deal industrial strategy a crucial external dimension, countering accusations that climate ambitions are only beneficial to the continent’s own companies. Since many European companies rely on supply chains in which African countries have a central role, such partnerships will also bring considerable benefit to EU businesses.
The participants in ECFR’s dialogue identified, at least, the following areas as having strong potential for intensified cooperation, in the Team Europe format or through other means:
Renewable energy is a precondition for many green industrial transitions.For development in Africa, better access to affordable energy is a fundamental issue, with the population of sub-Saharan Africa that lacks access to electricity rising slightly to 77 per cent from 74 per cent during the covid-19 pandemic.
A common European-African agenda on expanding access to electricity through renewable sources could be a fruitful way to combine the economic development and climate goals in the relationship. The Africa-EU green energy initiative is one example of current cooperation that, if successful, could inspire future efforts. Many bilateral cooperation agreements and projects are also in place. But huge challenges remain, for example regarding investments in power transmission. Better inter-regional connectivity will be fundamental to bring renewable sources of electricity to consumers and reduce the risk of power shortages. The EU and its member states need to accelerate current programmes to de-risk investments in Africa. They should also support efforts to reform the global financial architecture to make more climate financing available.
Not only is a sufficient amount of renewable energy necessary for greener industrial processes and services, but the supply chains themselves offer opportunities for Africa and Europe. China’s renewable energy industry is already deeply involved in the New Africa Renewable Manufacturing Initiative. There are several possibilities for wider economic development in Africa, such as increased manufacturing of solar cells. The EU should supplement its Net-Zero Industry Act, which aims promote green industrial development in Europe, with similar projects in Africa. Otherwise, China will have a more credible offer.
There are clear links between renewable energy, digitalisation, 5G networks, consumer mobile banking, and electrification of transport that can bring competitive advantages to Africa. A previous ECFR policy brief showed how local green innovation ecosystems based on African assets such as abundant solar power and new mobile communication systems contribute to rapidly growing consumer markets. The EU and member states should promote such synergies through increased investments in infrastructure and skills.
Green hydrogen. There is both a ‘dash for LNG’ from EU countries to compensate for Russian gas, and a longer-term ‘dash for green hydrogen’. European and African partners alike seem to recognise the common challenge of hydrogen transport as a fruitful area of cooperation. However, deals with African countries cannot only be about exporting hydrogen to the EU, partly since a lack of commitment to domestic development will undermine trust and make offers from China and others look more attractive.
Producing green hydrogen requires massive amounts of renewable electricity and water. Europeans and their African partners will need to consider how best to manage existing or future water shortages and make difficult choices about how to use a limited amount of renewable electricity. African countries have valid demands for cooperation on the development of high-value products that can be made with green hydrogen, such as greener chemicals and low-carbon steel. Just exporting lower-priced green hydrogen or derivates such as ammonia would not permit enough development in Africa.
The EU and member states have already launched several projects to address these issues, and many more are under way, but they need to scale them up and improve their coherence. For example, the EU now has agreements with Egypt, Morocco, and Namibia on promoting green hydrogen, but so far the bloc has not made enough concrete commitments for innovation cooperation and investments in hydrogen-based steel production or similar full-scale industrial development projects.
Europeans will also need to manage conflicts of interests: ministries of industry in EU member states are already facing threats from energy-intensive domestic businesses that they will relocate abroad; at the same time, the ministries sometimes see promoting industrial development in Africa as counterproductive. For example, they may view support for the use of green hydrogen for low-carbon steel-making in Morocco or other parts of Africa as detrimental to similar production in Italy or Spain.
Yet, the EU and member states spend billions of euros to subsidise the production of low-carbon products in the EU, for example through the Hy2Tech scheme. Reasonable climate policies would require that multinational companies receiving such support present plans to ‘green’ their global activities, including through supporting skills development and research and development in developing countries. The use of green hydrogen in the steel sector is one such example.
Electrification of transport. For several African countries, the motor vehicles sector is important to economic development. One example is South Africa, where international companies such as Ford and Volkswagen have production facilities, including for exports to Europe. But the switch to electric vehicles requires skills, supply chains, and infrastructure. It is not clear that these major producers will continue to invest in South Africa unless there is a sufficient ecosystem to facilitate electrification.
The government in Pretoria is an economic giant in Africa, but it does not have access to funds to match the massive investments now under way in the US and Europe. Rich countries need to scale up their rather weak commitments in JETPs, for example, through more direct grants for skills development and local infrastructure such as research institutes and testing facilities. Currently, components and products often have to be sent to laboratories abroad to check if they fulfil requirements from customers or authorities.
In East Africa, there are successful examples of cooperation on the electrification of transport, including promising local development of two- and three-wheelers. Some EU member states have contributed to this through their development agencies, as noted above. They should expand this cooperation, including through more EU support for regional east African cooperation on green transitions.
Critical raw materials. In addition to the hunt for LNG and green hydrogen contracts, European countries and the US are also engaged in intense efforts to secure the supplies of minerals necessary for low-carbon technologies. African countries are looking to develop their own refining and processing capacity and analysing if this can be linked to parts of battery value chains.
In its recent Critical Raw Materials Act and communication, the European Commission emphasises both a need to increase self-sufficiency in Europe and for stronger partnerships with African countries and other parts of the world. This comes against the backdrop of strong Chinese dominance of global supply chains, including the refining of minerals.
Some agreements with partners are already in place, including with Namibia on increased production of raw materials and the development of value chains (as well as green hydrogen). But the EU and member states will need to transform such statements and agreements into many more concrete projects to build local capabilities. The Critical Raw Materials Act could become counterproductive for Africa if support for refining capacities in Europe is substantially higher than cooperation programmes with partnership countries: “The EU will never be self-sufficient in supply of critical raw materials,” notes the European Commission. Europe still has a long way to go to convince its African partners that the commitment to joint development is real. If this is not successful, it will be more difficult for the EU to reduce its dependency on China.
It is crucial to avoid capital flight from Africa on minerals and other natural resources. The EU and its member states should engage more in ongoing efforts to ensure income is used for productive investments in Africa and does not end up in secret bank accounts in tax havens.
Low-carbon and climate-resilient food production. Agriculture is a key economic sector in Africa, producing around one-third of the continent’s total GDP. Climate change severely affects food production in many places and ways. By contributing better to low-carbon and climate-resilient food production, the EU and member states can support both adaptation and new economic opportunities in key partner countries. Examples include synergies between solar power and agro-industrial processes, more resilient crops, and better weather forecasting.
Recommendations for a stronger European climate diplomacy
The lessons from Africa apply also to other parts of the world. Emissions of greenhouse gases are rising rapidly in fast-growing Asian economies. Latin America encompasses important carbon sinks such as the Amazon and several potential partners for stronger cooperation with the EU. The US remains a key partner, and Canada a progressive G7 country. The Western Balkans and Europe’s eastern neighbourhood should also be part of the EU’s external climate and energy strategies.
Spain’s EU presidency in the second half of 2023 presents an opportunity to move forward on several of the issues discussed in this paper. The Spanish government has good knowledge of and extensive networks in Africa and in other parts of the world, and is already preparing important initiatives. It is, for example, moving forward on the EU-Latin America relations agenda, which could help build green partnerships with resource-rich countries such as Brazil, Chile, Argentina, and Columbia.
But stronger European climate diplomacy will be necessary for the bloc to rise to the significant challenges ahead. In particular, the EU needs to make good on its promise at COP27 of a loss and damage fund to demonstrate to vulnerable countries in the global south that it is serious. Moreover, for the EU to build partnerships – in particular on low-carbon energy and industrial transitions – it will need to improve the institutional structures that underpin its climate diplomacy.
Bring the climate financing promise to life
The EU needs to rapidly put together an offer to the global south on financing and innovation cooperation to counter negative reactions to CBAM, the Net-Zero Industry Act, and the current energy, food, and debt crises. As discussed with reference to Africa, support for green industrial transitions should be an important element of that offer. The EU could launch an “EU-global south partnership for green industrial transitions”, reinforcing existing measures and developing new initiatives. This should involve building institutional capacity on green industrial transitions in EU delegations, national development agencies, and banks.
The bloc should also mainstream other parts of the ecosystem for partnerships on green industrial transformations in development cooperation programmes (as with renewable energy). Moreover, the EU should be flexible in its current multi-annual indicative programmes, in which it has defined its priority areas and specific objectives for the period 2021-2027 with each partner country and region, and the next phase of these programmes should contain more extensive strategies for ‘greening’ industry.
The EU also needs to better analyse how climate and energy proposals (including compromises that result from deliberations in the European Parliament and Council of the European Union) affect third countries. This should result in improved strategies for early dialogue with countries affected by new EU policies, which the bloc will then need to implement. Implementation will require sufficient resources in relevant directorates-general and in the European External Action Service (EEAS), and discussion in Council of the European Union working groups.
Several multilateral institutions and OECD governments provide economic support to developing countries so they can benefit from international trade through Aid-for-Trade programmes. One important component of these programmes is strengthening developing countries’ abilities to analyse and comply with legislation in other parts of the world, such as the EU. However, policymakers and experts in the global south have criticised aid-for-trade measures for often coming too late, when EU legislation is already in force.[4] Both climate action and mutual trust would benefit from the EU accelerating this support as it relates to ‘green’ legislation, and better coordinating efforts in a Team Europe approach. For instance, the EU could assist developing countries in capacity building for the reporting of carbon emissions, which is required to avoid punitive default values in the CBAM regulations.
To balance China’s influence, instead of today’s frequently piecemeal approaches, the EU and member states need to invest in economic development that contributes to decarbonisation in ‘package deals’ with partner countries worldwide. This will require the bloc to improve its country strategies and develop a more systematic approach to identifying joint interests between member states to facilitate the Team Europe approach.
The EU has undertaken important initiatives such as the Global Gateway; it now needs to make them deliver and operate as strategic tools. This will help to ensure the EU’s predictability as an economic actor – and as a competitor in the new international order. In addition, EU and member state policymakers on climate and development who are negotiating with third countries need to have more influence on financing decisions. Ministries of foreign affairs have the necessary understanding of the geopolitical dimension, but they do not always have levers on financing, and those with whom they are in climate dialogue know this.
National governments need to be more involved in the management of the Global Gateway initiative, and member states themselves should commit to more joint work instead of competing with one another in partner countries.
Improve institutional set-up and capacity
The EU’s Foreign Affairs Council has published several promising conclusions on climate diplomacy. But to make such ambitions a reality, the bloc needs to improve its institutional set-up and toolbox, including after the 2024 elections to the European Parliament and in connection with the formation of a new European Commission.
One key reform would be to strengthen international outreach at the political level by appointing an international climate relations commissioner. Such a member of the European Commission could focus on building political alliances at the highest levels, negotiating on behalf of the EU; another commissioner would then be responsible for internal EU climate policy (as, for example, the Biden administration has with Gina McCarthy for domestic policy and John Kerry for external relations). If a system with an executive vice-president in the European Commission remains after 2024, the international climate commissioner could report both to an executive vice-president for the green deal and to the high representative for foreign and security policy.
The international climate relations commissioner could, with the European climate law as a basis, be mandated to produce a multi-year global climate strategy aligned with the nationally determined contributions cycle under the UNFCCC process. The commissioner would also develop annual plans of action that would cut across the institutions and bring in the external dimensions of the sectoral policies and regulations, including for example energy, transport, and agriculture.
The new commissioner would be supported by current international climate diplomacy staff in the EEAS and the directorate-general for climate action (DG CLIMA), and chair an inter-agency working party to produce the multi-year strategy and annual plans, including monitoring their implementation. A small inter-agency secretariat could support this work, responsible for ensuring coherence between climate, energy, trade, and development in external relations. The international climate relations commissioner would have the authority to instruct EU delegations and work with member states on climate diplomacy and strategy by these means, both at the global level and in support of the negotiations.
At the same time, the leadership of the European Commission and the EEAS will need to ensure that responsibility for climate action is mainstreamed and understood as part of the key performance indicators of all externally facing commissioners. They will also need to ensure that all necessary stakeholders – including businesses, philanthropic actors, and civil society representatives – are engaged in the process.
There has been much discussion on how best to organise the European Commission with 27 members. One aspect is the role international outreach could play in that context. In the current organisation, some portfolios are rather small and not very significant. Since geo-economics and geopolitics are growing ever more significant, one option could be to give some members of the commission specific tasks for international outreach. A solution of this nature was discussed when the Juncker commission was formed in 2014 but never materialised.[5] An international climate commissioner would fit well in such an approach. Other members could have external responsibilities within sectors such as energy, transport, and industrial policy.
Moreover, EU institutions and member states need to improve cooperation to make the Team Europe approach the default working method. This is unlikely to happen without sufficient commitment from member states (especially the biggest ones). Stronger European climate diplomacy therefore starts in the capitals, where joint EU approaches should be priorities.
The EU should create a Council of the European Union working group for climate diplomacy. If combined with strong links to energy diplomats, such a working group could reduce the need for existing networks and groups and make the structure more transparent. The international climate commissioner could participate in regular debates in the Foreign Affairs Council at least twice a year, in addition to producing yearly conclusions on climate diplomacy.
The EU will need to expand the current staffing of the EEAS. The EEAS and the climate ambassador have succeeded in bringing more coherence to EU diplomacy with other countries, but they need more resources and horizontal integration. Regional green deal ambassadors could assist the climate ambassador.
In addition, the EEAS leadership should strengthen climate competence in EU delegations, including heads of mission, and pool resources more systematically with member states to increase expert staffing in key non-Western powers such as Indonesia, South Africa, Vietnam, and Brazil. These leaders should also insist on regular climate diplomacy reports from heads of missions and ensure they are discussed in the council’s relevant geographical working groups.
The aim should be not only to reach climate policymakers in a narrow sense but also, for example, finance and industry ministries in other countries. This will require the EU to involve domestic ministries and develop the external aspects of, for example, EU industrial policies. Within the European Commission, the directorates-general for internal market, industry, entrepreneurship, and small and medium enterprises (DG GROW); financial stability, financial services, and capital markets union (DG FISMA); and research and innovation (DG RTD) are among those that need to develop their international role for green transitions.
To counter misperceptions about the purpose of EU policies and to influence attitudes toward climate change policies, the bloc needs to improve public diplomacy towards partner countries. This will require a significant increase in public diplomacy staff, and mechanisms for better dialogue and listening on the EU side. EU institutions need to mainstream climate change into wider organisational public diplomacy thinking. They should aim to more clearly demonstrate the co-benefits of climate and environmental policies. Green deal diplomacy for water, air pollution, waste, and other issues that improve living conditions in the here and now can help build support.
Conclusion
Next year will be decisive for EU climate relations with other parts of the world. Trust in the global multilateral system will be in danger if there is not enough progress in the UNFCCC and in the run-up to the UN Summit of the Future in September 2024. Moreover, other parts of the world will be watching closely as a new European Parliament and European Commission are elected to see whether the European Green Deal survives into the new institutional cycle. If the new leadership does not reinforce the climate agenda, this will be understood outside the EU as a signal that the bloc has deprioritised climate in the face of other challenges. However, as this paper has set out, the new institutional cycle opens possibilities for reform.
Decarbonisation is part of the EU’s economic security agenda. European and African countries as well as partners further afield will benefit if this understanding feeds through into the way that the EU engages as a global actor. The EU is responsible for a small and diminishing proportion of global emissions; to lead and contribute constructively to the path to net zero it needs to make climate action central to its external relationships. The EU’s ability to lead on global climate action is in uncertain territory. But the debate in the run-up to the European Parliament elections in 2024 can pave the way for a new European Commission to reverse this. To do so, however, European leaders need to acknowledge that their current approach to climate diplomacy is not fit for purpose in the new geopolitical environment and take forward radical lessons in developing a new approach.
About the authors
Susi Dennison is a senior policy fellow at the European Council on Foreign Relations and the director of ECFR’s European Power programme. In this role, she explores issues relating to strategy, cohesion, and politics to achieve a collective EU foreign and security policy. Her most recent publications at ECFR include “Green peace: how the EU’s climate policy can survive the war in Ukraine”(June 2022); “Climate of cooperation: How the EU can help deliver a green grand bargain”, with Alex Clark and Mats Engstrom (October 2021); the climate chapter of “The Power Atlas”, with Alex Clark (December 2021); and the migration section of “The Sovereignty Index”, with various authors (June 2022).
Mats Engström is an analyst and writer based in Stockholm. He has been involved in EU policymaking and analysis since the 1980s, including as deputy state secretary at the Swedish Ministry for the Environment and as a political adviser to a foreign minister. In the latter capacity, his responsibilities included EU policy, security policy, and relations with Russia. His publications with ECFR include: “We’ll always have Paris: How to adapt multilateral climate co-operation to new realities”, with Anthony Dworkin (October 2022) and “Climate of cooperation: How the EU can help deliver a green grand bargain”, with Alex Clark and Susi Dennison (October 2021).
Acknowledgements
The authors would like to thank the many ECFR colleagues who helped to deliver the dialogue series that underpinned the research for this paper and provided thoughtful comments on earlier drafts – notably Jenny Soderstrom, Filip Medunic, Julien Barnes-Dacey, Kelly Petillo, Jeremy Shapiro, Theo Murphy, and Tobias Gehrke. We are also very grateful to the policymakers and experts who participated in both the dialogue sessions and our research interviews as we developed our thinking. Kim Butson’s editing has ensured that the messages of the paper came out much more clearly. Any mistakes of course remain the authors’ own.
NOTES
[1] ECFR dialogue series and authors’ discussions with European policymakers, Brussels and digital, 2022-2023.
[2] Authors’ discussions with European policymakers, Brussels and digital, 2022-2023.
[3] Authors’ interviews with member state officials, digital, 2023.
[4] Authors’ interview with trade experts, Geneva, February 2023.
[5] Authors’ interview with a former commission official, Brussels, 2022.
The European Council on Foreign Relations does not take collective positions. ECFR publications only represent the views of their individual authors.
World military expenditure reaches new record high
STOCKHOLM - Total global military expenditure increased by 3.7 per cent in real terms in 2022, to reach a new high of $2240 billion. Military expenditure in Europe saw its steepest year-on-year increase in at least 30 years. The three largest spenders in 2022—the United States, China and Russia—accounted for 56 per cent of the world total, according to new data on global military spending published today by the Stockholm International Peace Research Institute (SIPRI).
Invasion of Ukraine and tensions in East Asia drive increased spending
World military spending grew for the eighth consecutive year in 2022 to an all-time high of $2240 billion. By far the sharpest rise in spending (+13 per cent) was seen in Europe and was largely accounted for by Russian and Ukrainian spending. However, military aid to Ukraine and concerns about a heightened threat from Russia strongly influenced many other states’ spending decisions, as did tensions in East Asia.
‘The continuous rise in global military expenditure in recent years is a sign that we are living in an increasingly insecure world,’ said Dr Nan Tian, Senior Researcher with SIPRI’s Military Expenditure and Arms Production Programme. ‘States are bolstering military strength in response to a deteriorating security environment, which they do not foresee improving in the near future.’
Cold war levels of military expenditure return to Central and Western Europe
Military expenditure by states in Central and Western Europe totalled $345 billion in 2022. In real terms, spending by these states for the first time surpassed that in 1989, as the cold war was ending, and was 30 per cent higher than in 2013. Several states significantly increased their military spending following Russia’s invasion of Ukraine in February 2022, while others announced plans to raise spending levels over periods of up to a decade.
‘The invasion of Ukraine had an immediate impact on military spending decisions in Central and Western Europe. This included multi-year plans to boost spending from several governments,’ said Dr Diego Lopes da Silva, Senior Researcher with SIPRI’s Military Expenditure and Arms Production Programme. ‘As a result, we can reasonably expect military expenditure in Central and Western Europe to keep rising in the years ahead.’
Some of the sharpest increases were seen in Finland (+36 per cent), Lithuania (+27 per cent), Sweden (+12 per cent) and Poland (+11 per cent).
‘While the full-scale invasion of Ukraine in February 2022 certainly affected military spending decisions in 2022, concerns about Russian aggression have been building for much longer,’ said Lorenzo Scarazzato, Researcher with SIPRI’s Military Expenditure and Arms Production Programme. ‘Many former Eastern bloc states have more than doubled their military spending since 2014, the year when Russia annexed Crimea.’
Russia and Ukraine raise military spending as war rages on
Russian military spending grew by an estimated 9.2 per cent in 2022, to around $86.4 billion. This was equivalent to 4.1 per cent of Russia’s gross domestic product (GDP) in 2022, up from 3.7 per cent of GDP in 2021.
Figures released by Russia in late 2022 show that spending on national defence, the largest component of Russian military expenditure, was already 34 per cent higher, in nominal terms, than in budgetary plans drawn up in 2021.
‘The difference between Russia’s budgetary plans and its actual military spending in 2022 suggests the invasion of Ukraine has cost Russia far more than it anticipated,’ said Dr Lucie Béraud-Sudreau, Director of SIPRI’s Military Expenditure and Arms Production Programme.
Ukraine’s military spending reached $44.0 billion in 2022. At 640 per cent, this was the highest single-year increase in a country’s military expenditure ever recorded in SIPRI data. As a result of the increase and the war-related damage to Ukraine’s economy, the military burden (military spending as a share of GDP) shot up to 34 per cent of GDP in 2022, from 3.2 per cent in 2021.
US spending rises despite high inflation
The United States remains by far the world’s biggest military spender. US military spending reached $877 billion in 2022, which was 39 per cent of total global military spending and three times more than the amount spent by China, the world’s second largest spender. The 0.7 per cent real-terms increase in US spending in 2022 would have been even greater had it not been for the highest levels of inflation since 1981.
‘The increase in the USA’s military spending in 2022 was largely accounted for by the unprecedented level of financial military aid it provided to Ukraine,’ said Dr Nan Tian, SIPRI Senior Researcher. ‘Given the scale of US spending, even a minor increase in percentage terms has a significant impact on the level of global military expenditure.’
US financial military aid to Ukraine totalled $19.9 billion in 2022. Although this was the largest amount of military aid given by any country to a single beneficiary in any year since the cold war, it represented only 2.3 per cent of total US military spending. In 2022 the USA allocated $295 billion to military operations and maintenance, $264 billion to procurement and research and development, and $167 billion to military personnel.
China and Japan lead continued spending increase in Asia and Oceania
The combined military expenditure of countries in Asia and Oceania was $575 billion. This was 2.7 per cent more than in 2021 and 45 per cent more than in 2013, continuing an uninterrupted upward trend dating back to at least 1989.
China remained the world’s second largest military spender, allocating an estimated $292 billion in 2022. This was 4.2 per cent more than in 2021 and 63 per cent more than in 2013. China’s military expenditure has increased for 28 consecutive years.
Japan’s military spending increased by 5.9 per cent between 2021 and 2022, reaching $46.0 billion, or 1.1 per cent of GDP. This was the highest level of Japanese military spending since 1960. A new national security strategy published in 2022 sets out ambitious plans to increase Japan’s military capability over the coming decade in response to perceived growing threats from China, North Korea and Russia.
‘Japan is undergoing a profound shift in its military policy,’ said Xiao Liang, Researcher with SIPRI’s Military Expenditure and Arms Production Programme. ‘The post-war restraints Japan imposed on its military spending and military capabilities seem to be loosening.’
Other notable developments:
- The real-terms increase in world military spending in 2022 was slowed by the effects of inflation, which in many countries soared to levels not seen for decades. In nominal terms (i.e. in current prices without adjusting for inflation), the global total increased by 6.5 per cent.
- India’s military spending of $81.4 billion was the fourth highest in the world. It was 6.0 per cent more than in 2021.
- In 2022 military spending by Saudi Arabia, the fifth biggest military spender, rose by 16 per cent to reach an estimated $75.0 billion, its first increase since 2018.
- Nigeria’s military spending fell by 38 per cent to $3.1 billion, after a 56 per cent increase in spending in 2021.
- Military spending by NATO members totalled $1232 billion in 2022, which was 0.9 per cent higher than in 2021.
- The United Kingdom had the highest military spending in Central and Western Europe at $68.5 billion, of which an estimated $2.5 billion (3.6 per cent) was financial military aid to Ukraine.
- In 2022 Türkiye’s military spending fell for the third year in a row, reaching $10.6 billion—a decrease of 26 per cent from 2021.
- Ethiopia’s military spending rose by 88 per cent in 2022, to reach $1.0 billion. The increase coincided with a renewed government offensive against the Tigray People’s Liberation Front in the north of the country.
For the full publication, visit: https://www.sipri.org/sites/default/files/2023-04/2304_fs_milex_2022.pdf
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