Looks like a collision between EU and Apple policies. Not much we can do from here when the world’s largest trading group squabbles squabbles with the world’s biggest corporation.
Let’s hope for an early resolution.
Well this sucks… Oops, can I say that on the forum? 
In this case, yes. 
The EU and Apple continue to argue about this - let’s hope they find a solution.
Look like Apple will not do this after all…
Please allow me to throw some water on this.
Having once developed a number of non-classified apps for various government agencies, I’m somewhat familiar with this process.
Apple has pretty significant government contracts because it’s more secure than Android (not an argument I’m willing to have).
A part of this security is that large enterprise and government accounts have their own “app stores” where they specify which apps can be loaded and where they can post their own private apps that can only be seen and loaded by their authorized users. These accounts control what apps you can put on the phone they provide you. Some organizations are pretty permissive while some companies and many government agencies are not (ie NO Facebook etc).
Side loaded apps (PWA’s) bypass the first line of defense this mechanism creates. Here’s a link about this.