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The February 24, 2022, Russian invasion of Ukraine has had tremendous implications for the transatlantic relationship.  The war has exacerbated two preexisting transatlantic challenges—rising inflationary pressures and congested supply chains—but it has also reinvigorated transatlantic cooperation, including on sanctions-related measures that have altered the economic landscape.  This is evident, for example, in the energy sector where challenges to reduce EU dependence on Russia-sourced fossil fuels have become increasingly urgent.  Accordingly, in March 2022, the United States and the European Commission announced the creation of a joint Task Force on Energy Security to reduce Europe’s dependence on Russian oil and gas.

This increased cooperation can also be seen in the U.S.-EU Trade and Technology Council (TTC), which held its fourth ministerial meeting in Sweden in May 2023.  Formation of the TTC was announced in June 2021 at a U.S.-EU Summit in which President Biden met with Charles Michel, President of the European Council, and Ursula von der Leyen, President of the European Commission, to set a joint transatlantic agenda.  Co-chaired by U.S. Commerce Secretary Gina Raimondo, U.S. Secretary of State Antony Blinken, and U.S. Trade Representative Katherine Tai for the United States, and Executive Vice President Margrethe Vestager and Executive Vice President Valdis Dombrovskis for the European Union, the TTC has presented an important opportunity to deepen integration between the United States and the European Union, especially in technology enabled sectors, including by supporting transatlantic supply chains, promoting the use of digital technologies by small and medium-sized enterprises, and exploring ways to avoid new and unnecessary technical barriers to trade.

Political Environment

For background information on the political and economic environment of the Member States, please consult the U.S. Department of State Countries & Areas website.

The European Union

In 1951, six European countries – Belgium, the Federal Republic of Germany, France, Italy, Luxembourg, and the Netherlands – created the European Coal and Steel Community to promote economic cooperation and political stability in Europe.  Under the threat of a more divided Europe during the Cold War, the Treaty of Rome was entered into by these six countries in 1957, which created the European Economic Community and further strengthened regional cooperation.  In 1973, the European Economic Community was enlarged to include Denmark, Ireland, and the United Kingdom; Greece joined the Community in 1981; and, in 1986, Portugal and Spain became Member States.

In 1993, the European Union was formally established by the Maastricht Treaty, which created a single market with freedom of movement of goods, services, people, and money between Member States.  In addition to budgetary commitments, new Member States needed to adhere to criteria requiring stable government institutions to guarantee democracy, a market economy, and commitment to the obligations of EU membership (i.e., observing the goals of a political, economic, and monetary union).  In 1995, Austria, Finland, and Sweden became Member States.  In 2004, the largest expansion of the European Union took place with Cyprus, Czechia, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia, and Slovenia become Member States.  Bulgaria and Romania became Member States in 2007, and Croatia become a Member State in 2013.

In 2016, the United Kingdom held a referendum to leave the European Union in which 52% of the participants voted in favor of leaving the European Union (Brexit).  In 2017, the United Kingdom formally triggered Article 50 of the European Union’s Lisbon Treaty (see below), creating a multi-year withdrawal process.  Officially, the United Kingdom left the European Union on January 31, 2020.  The European Union and the United Kingdom negotiated a Trade and Cooperation Agreement, which was provisionally applied as of January 1, 2021, and entered into force on May 1, 2021, averting the major negative economic impacts from Brexit.  Lisbon Treaty

In 2009, the Lisbon Treaty amended the Treaty of Rome and the Maastricht Treaty and revised the constitutional basis of the European Union.  In particular, the Lisbon Treaty recognized the European Council as an official EU institution, created an elected President of the European Council and established a High Representative for Foreign Affairs and Security Policy to head the European External Action Service, established in 2011.  The Lisbon Treaty significantly increased the influence of the European Parliament, including in the nomination of Commissioners for the European Commission and divided budgetary authority between the European Parliament and the Council of the European Union (distinct from the European Council).  The Lisbon Treaty enhanced the cohesion of the European Union as a global actor and empowered European Union institutions.

Under the Lisbon Treaty, decisions in most policy areas are now made under double majority, requiring the support of a minimum of 55% of members of the Council of the European Union, representing at least 65% of EU citizens.  At the same time, for legislation to pass, the European Parliament must have a simple majority of 50% of votes in favor.  This process requiring adoption by both the European Parliament and the Council of the European Union is called “ordinary legislative procedure” (formerly known as “co-decision”).

Russia’s War of Aggression Against Ukraine and EU Expansion

Russia’s war of choice against Ukraine, launched on February 24, 2022, significantly altered the economic and political landscape in the European Union, the European continent, and around the world.  Politically, the invasion moved the European Union closer to the United States with unprecedented sanctions against Russia and other measures to counter Russia’s aggression against Ukraine’s territorial integrity and sovereignty.  The invasion also led to two more EU members.  Finland and Sweden to seek accession to NATO.  The European Union also granted Ukraine and Moldova candidate status while Georgia received conditional candidate status.  It also led several EU Member States, including Germany, to reevaluate their military policies and bolster their defense industries.

Economically, the war affected Member States differently, exposing energy vulnerabilities and other concerns about economic links to Russia.  Higher fuel prices, supply chain disruptions, shortages of critical supplies, and soaring food prices stoked inflation.  The United States and European Union have coordinated to ease the economic impact of Russian aggression by increasing energy exports and ensuring that global food supply lines remain open.

European Union Institutions

The European Commission

Serving as the executive branch of the European Union, the European Commission holds the right to initiate and propose legislation and to present the budget to the Council of the European Union and to the European Parliament.  The European Commission is also charged with implementing decisions and enforcing the European Union’s treaties with Member States and foreign governments.  Each of the 27 Commissioners holds a different Member State nationality but they are obligated to remain neutral and above national politics.  The European Commission is headed by the Commission President, who represents the European Union at international summits with non-EU countries alongside the President of the European Council.

The Council of the European Union

The Council of the European Union, also known as the Council of Ministers, represents the governments of the 27 Member States in the European Union.  The Presidency of the Council of the European Union rotates every six months between the Member States.  In addition to the European Parliament, the Council of the European Union shares the main legislative role of the European Union.  From January through June 2023, the Council presidency was held by Sweden, followed by Spain for the second half of 2023.  Belgium will assume the Council presidency for the first half of June 2024, to be followed by Hungary in the second half of 2024.  In 2025, Poland and then Denmark will hold the presidency.  The President of the Council of the European Union is an elected official who also represents the European Union internationally alongside the President of the European Commission.

The European Parliament

The European Parliament’s role includes debating and passing European laws with the European Council once those laws have been proposed by the European Commission, scrutinizing the work of the European Commission and other European Union institutions, debating, and adopting the European Union’s budget with the Council, and vetting new Commissioner nominees.  Elections for the European Parliament take place every five years; the last national elections having taken place in May 2019.  Following Brexit, the total number of European Parliamentarians is 705.

The European Council

The European Council is made up of the heads of states or heads of government of the 27 Member States and defines the European Union’s overall policy priorities and political direction.  The European Council meets quarterly and includes the European Commission President and the President of the Council of the European Union.

The European Court of Justice

The European Court of Justice’s role is to interpret EU law to ensure that it is applied evenly across all Member States.  Additionally, the Court may engage in settling legal disputes between Member States and EU institutions.  Individuals, companies, and organizations can bring cases before the European Court of Justice if they feel their rights have been violated by an EU institution.

The European Central Bank

The European Central Bank is the main monetary authority of the euro area in Member States that have adopted the single currently.  All Member States use the euro except for Bulgaria, Croatia, the Czech Republic, Denmark, Hungary, Poland, Romania, and Sweden.  The European Central Bank intervened with non-standard monetary policy several times during the 2015 eurozone crisis and during COVID-19 by collectively assuming debt to support low interest rates during the pandemic.  The ECB recently set climate change risk analysis among its priorities using new asset purchases and an updated collateral framework to implement a more climate-friendly agenda.

The European Investment Bank

The European Investment Bank is the principal financing institution of the European Union and lends funds to projects furthering European Union policy objectives.  Among other aims, the European Investment Bank services loans to small- and medium-sized enterprises promoting foreign direct investment in EU candidate countries and the EU Eastern Neighborhood.