The EU in 2025: Balancing Global Ambitions and Domestic Pressures

2024 was a truly transformative year for Europe. The results of the European elections in May reflected deepening divisions across the Continent. And as the war in Ukraine entered its third year, pressure on European unity—as well as defence and security budgets—intensified. The incoming Trump administration and related uncertainty around future US support for Ukraine and NATO are likely to exacerbate these challenges this year.

What else will 2025 hold?

Stagnating economic growth; the race to secure access to critical raw materials for the green and digital transitions; and the pressing challenges of irregular migration have pushed geopolitics to the forefront of the European agenda. This is evident in the structure and portfolios of the second von der Leyen Commission, which places greater emphasis on the Mediterranean, the EU’s neighbourhood, defence and strategic autonomy. Development cooperation will come under more pressure, with aid budgets shrinking across key European donors. In this blog, we look at the key issues that will likely shape the EU’s approach to international partnerships, and opportunities and challenges for the bloc on development cooperation.

Trump, Ukraine, and defence: Dominating the agenda

With a new Trump presidency and changing political headwinds in Europe, ensuring sufficient and predictable support for Ukraine in 2025 will remain a critical concern. Figure 1 shows total bilateral commitments to Ukraine by type of assistance (financial, humanitarian and military). To date, the US remains the largest provider of military assistance to Ukraine by far, but this could of course change under the new administration. While the EU institutions are the largest provider of financial aid, the EU has little financial room to manoeuvre—let alone scale up to fill any potential void—with the current EU budget set until 2027. With lagging economic growth and fiscal pressures in member states, we will likely see the use of European development funding to support Ukraine increase in 2025, leaving less funding available for the poorest countries in the Global South.

Additionally, in light of Trump’s demand for NATO members to “pay their way”, scaling up European defence capabilities will require significant financial resources. The dual pressure to increase support for Ukraine while boosting domestic defense budgets will further diminish European donors’ capacity to assist partner countries in more distant regions. A looming trade war with the US and the ripple effects of Trump’s threatened tariffs on Chinese goods could further constrain the EU economy, narrowing policymakers’ scope for action.

Neighbourhood first: The EU’s narrowing development lens

Compared to when the last European Commission took office in 2019, the increasingly geopolitical environment has resulted in a paradigm shift in the EU’s development policy. Development cooperation is now directly linked to the EU’s interests and is more explicitly used as a tool to compete with others to achieve security, secure critical raw materials, and to combat migration. The emergence of the EU’s flagship Global Gateway initiative is illustrative of this, transforming the bloc’s approach to development cooperation into an investment-driven model that primarily focuses on funding physical infrastructure in partner countries. Beyond Ukraine, the war in Gaza; the overthrow of the Assad regime in Syria; and broader political instability in the Middle East will continue to dominate the European foreign and development policy agenda in 2025, risking leaving the Sustainable Development Goals in the dust.

The EU’s plans for enlargement with countries in Eastern Europe (notably Ukraine, Moldova, and Georgia) will also take centre stage, but will be fraught with difficulties. In Georgia, for instance, protests have spread across the country since the October presidential vote, which the opposition claimed was rigged and which escalated after the Georgian government decided to suspend the country’s EU membership negotiations. However, while the UK and the US have imposed sanctions on top officials of the ruling “Georgian dream” party, the EU has failed to impose such measures due to the lack of agreement between member countries, once again demonstrating its lack of coherence in foreign policy matters.

Then there is the matter of double standards. The EU’s response to the war in Gaza has drawn criticism from emerging powers, the UN, and also some member states for inconsistency with its support for Ukraine, calling for more principled positions on key issues of international law, rule of law and multilateralism. The perceived difference in the EU’s response to the two wars in its neighbourhood risks eroding its soft power and straining its relationships with countries in the Global South.

In addition, as conflicts, inequality and fragility continue to fuel displacement, migration is set to be another major issue. A tougher stance on immigration has become the norm across most member states and the European Commission. President Ursula von der Leyen has herself promised to get tough on migration, with development assistance increasingly tied to partner countries’ cooperation on repatriation and returns. As part of a growing trend of outsourcing border control to the Middle East and North African (MENA) region, the EU finalised its bilateral deal with Egypt in 2024, providing more than EUR 1 billion in macro-financial assistance. The EU-Egypt partnership has been criticised by human rights organisations, who view it as “another EU cash-for-migrant-control deal.” The significance of the Mediterranean for the EU’s new leadership is evident in the appointment of the EU’s first-ever Commissioner for the region. The model of third-country involvement in the EU’s border control, replicated across the wider Eastern and Southern neighbourhood, highlights Europe’s growing inclination to spend billions on deterring migration only, instead of also creating labour pathways to address critical labour shortages in European countries. And despite judicial roadblocks, Italy’s model of outsourcing processing asylum claims to third countries is likely to gain more traction in the EU.

MFF negotiations: balancing geopolitics, economic security and development goals in a fiscally constrained environment

2025 marks the year the EU kicks off negotiations over its next seven-year budget, the Multiannual Financial Framework (MFF) 2028-2034. EU institutions will have to balance geo-economic interests, such as in the neighbourhood and securing raw materials, with a sustainable and inclusive approach to development. A key challenge lies in distinguishing the EU’s development strategy, notably through the Global Gateway, from the competing offers of other key partners such as the US and China. The EU should ensure its infrastructure investments are paired with human development projects. Without a skilled and healthy workforce in partner countries, investments in green technologies and other hard infrastructure risk losing their transformative and long-term impact. This requires a distinctive approach that fosters fair and equal partnerships, aligns EU and partner countries’ interests, and prioritises sustainable and inclusive development.

The persistent challenge of climate change

With 2024 set to be the hottest year on record and climate-related disasters becoming increasingly frequent, the EU will need to confront the growing challenges of climate change, despite its limited priority among many senior policymakers. The second von der Leyen Commission faces a delicate balancing act: boosting the competitiveness of industries—many of which have historically relied on cheap energy—while meeting the requirements of the Net-Zero Industry Act and the ambitious goals of the EU Green Deal, all amid limited backing from several EU capitals. Adding to these internal challenges is the global fallout from the failure of COP29, which has left partner countries disillusioned, as the $300 billion per year pledged last year falls far short of what is needed to support vulnerable nations. Another challenge will be mitigating the negative externalities of two key EU legislative initiatives—the CBAM and the Deforestation Regulation—on partner countries.

A third way for the EU

A tense geopolitical environment, increased political polarisation in key member states, economic fragmentation and lagging innovation, war in Europe and the neighbourhood, and the re-emergence of migration as a dominant issue will make 2025 a challenging year for the new European Commission. Yet, it can also be a year of opportunity. A wider reset of the EU-UK relationship, a new High Representative for Foreign Affairs and Security Policy (HRVP), and the launch of the negotiations for the next MFF provide a chance to reshape Europe’s strategic direction and assert itself as a credible third way in the evolving international order.
Source: Center for Global Development