Before embarking on their coveted winter break, European leaders and policymakers face a month loaded with politically explosive decisions that are set to lay bare old-age divisions, and open up new scars.

Next week will begin the Schengen applications of Romania and Bulgaria, two countries that have been waiting at the doorstep of the passport-free area for more than a decade. For both, the question of joining Schengen is profoundly emotional as the persistent exclusion creates the impression of a two-speed, discriminatory Europe. The European Commission, the European Parliament, and a nearly unanimous majority of member states have thrown their strong support behind their joint bid.

But Austria’s notoriously inflexible opposition remains in the way. The country has clung to the idea that Schengen, due to the continued arrival of irregular migrants into the bloc and re-imposition of border controls, has ceased to function. Any expansion at this time is therefore undesirable in Vienna’s eyes.

The initial plan was to hold a vote on Tuesday (5 December) on the applications but the stagnant progress has drastically reduced the ambition. Instead, interior ministers will simply take note of the “state of play.” The lack of a formal vote, though, has the potential of stoking the flames. Romania has previously threatened to take legal action against Austria for its blockade, while Bulgaria has compared the impasse to being taken “hostage.”

“There’s no easy solution. Unanimity is unanimity. And it’s not there yet,” said a senior diplomat ahead of the occasion.

A few days later, economy and finance ministers will get together for a new attempt to wrap up the hard-fought reform of the EU’s fiscal rules. The make-or-break meeting was supposed to be preceded by a Franco-German compromise to pave the way for a breakthrough deal. But Germany’s three-party coalition is currently scrambling to contain a spiralling crisis after the country’s Constitutional Court struck down a €60-billion special fund for climate projects. An ominous preview for the money talks.

In the meantime, European Commission President Ursula von der Leyen and European Council Charles Michel are scheduled to fly to Beijing for their long-awaited EU-China summit. Both sides are keen to reset bilateral relations and diffuse the simmering tensions that stretch back to the COVID-19 pandemic. 

Bridging the chasm, however, will be an arduous task. Von der Leyen has warned about China’s becoming “more repressive at home and more assertive abroad” and has promoted the strategy of “de-risking” to decrease unwanted dependencies. In turn, Beijing has slammed “de-risking” as poorly concealed protectionism meant to cater to America’s hard-line interests.

Back in Brussels, EU leaders will be called in for a two-day summit where the stakes could not be any higher. Heads of state and government will be asked to decide whether they want open membership talks with Ukraine and Moldova, following the positive assessment released by the European Commission in October. The two countries are eager to start the process, which is extremely complex and can take years to reach a successful conclusion– if it ever does.

Also on the agenda will be the €100-billion review of the EU budget, which includes €50 billion in grants and loans to create the Ukraine Facility and provide the war-torn country with predictable, long-term support. This objective is becoming increasingly urgent as the country faces a nearly €40 billion deficit in next year’s budget, a massive hole that can only be filled with cash injections from Western allies. The bloc has so far supplied Ukraine with regular tranches of financial aid but the current envelope of €18 billion is set to run dry sometime between January and February, with no replacement in sight.

Agreeing on membership talks and a budget top-up in the same summit was never going to be an easy ride. But the latest developments suggest it might be insurmountable. 

In a letter recently addressed to Charles Michel, Hungarian Prime Minister Viktor Orbán threatened to derail the EU’s entire policy on Ukraine, including macro-financial assistance and sanctions against Russia, unless leaders agree to have a “strategic discussion” on the matter. (It’s important to note that EU leaders have been intensively discussing Ukraine since, at least, February 2022.)

Still, Orbán’s move was menacing enough to force Michel to fly to Budapest earlier this week and hold in-person talks with the prime minister, which lasted over two hours and included a “substantial” conversation about the letter, according to a senior EU official. While Orbán has in the past been accused of grandstanding and later backtracking, the language in the letter, coupled with a new Eurosceptic campaign directly targeting Ursula von der Leyen, signals an increasingly emboldened strongman who is determined to wield his veto power until all his demands are satisfied.

Quite coincidentally, the European Commission is preparing to adopt in mid-December a decision to unblock up to €10 billion in cohesion funds for Hungary, which the country has been denied over persistent rule-of-law concerns. The decision will be welcomed by Orbán, who has repeatedly attacked Brussels for what he calls “financial blackmail.” Hungary, however, will still have €11.7 billion in frozen cohesion funds, together with its paralysed €10.4-billion post-COVID recovery plan.

“Of course, the few euros they owe us will be collected,” Orbán said in November.

There’s more coming up: December will also see a new round of talks on the Artificial Intelligence Act and the New Pact on Migration and Asylum, two vital pieces of legislation that the bloc has vowed to conclude before the 2024 elections. Also coming up: a summit with the Western Balkans, the possible return of Donald Tusk as Polish prime minister and, possibly, the highly-anticipated proposal to tax immobilised Russian assets to finance Ukraine’s reconstruction.

A shorter version of this piece was originally published in The Briefing, Euronews’ weekly newsletter on European politics. Subscribe here.