The EU is already struggling with how to get its largest-ever budget agreed, plug a massive financial hole for Ukraine and navigate geopolitical pressure from the U.S. and China. Now, it also faces being paralyzed by domestic political strife in the countries that collectively make up around 60% of its GDP and population.

“Everybody used to understand that we need to finish … a political agreement by the end of the year,” Cypriot President Nikos Christodoulides told POLITICO in an interview on the sidelines of last week’s European Council, referring to the bloc’s fraught budget negotiations.

But the Spanish election means that will no longer be possible, he said. And next year, “it’s going to be France, Italy” and others going to the polls, Christodoulides added, predicting even more complications for the bloc.

The EU is facing an unprecedented dilemma: Its four biggest economies are all heading into elections or political upheaval, potentially hamstringing the bloc’s ability to get anything done.

Spain will go to the polls next month, with the center right and far right on track to take power. France is changing presidents in April, with polls favoring far-right figurehead Marine Le Pen. The Alternative for Germany is ascendant, putting Friedrich Merz’s chancellorship in doubt. And Italian Prime Minister Giorgia Meloni’s unusually long-serving government is also heading to an election in 2027.

The consequences are already becoming clear.

The bloc’s latest summit offered an early taste of what lies ahead: After two days of talks, leaders failed to make headway on the €2 trillion budget and instead became embroiled in an unexpectedly bitter row on energy policy. The summit’s conclusions notably omitted any mention of finding consensus on the budget before the end of the year, with member countries resisting a push by European Council President Antonio Costa for an end-2026 deadline, although there are summits scheduled for November and December.

If those meetings fail to produce a deal, then the already fractious talks will spill over into 2027, when electoral battles are likely to loom even larger over negotiations — and governments may be increasingly reluctant to make the compromises needed to reach agreement.

Triple assault

The paralysis Brussels fears as Europe’s election cycle gathers pace is already beginning to take hold, with last week’s summit exposing how difficult it is becoming to forge the compromises the bloc needs.

Rather than strike any big deals (a Franco-German accord on cars was the one exception), the leaders used the gathering to dig in on entrenched positions and seek tactical advantages over rival camps.

The pessimism was palpable, according to six diplomats and officials POLITICO spoke to, with several warning the EU faces sharp headwinds in the coming months. All were granted anonymity to speak freely.

“Next year, it will be worse,” said one senior EU diplomat.

“It’s true, because of this calendar for the elections … in the next year it’ll be much more difficult in the member states and inside the [European] Parliament,” said Carla Tavares, a senior MEP with the Socialists and Democrats and co-lead on budget negotiations.

The bloc’s internal malaise could hardly come at a worse time.

From U.S. President Donald Trump’s undermining of the transatlantic alliance to an ever-widening trade imbalance with China, the EU is facing mounting geopolitical and economic pressures on multiple fronts.

“They seek our division. They want our division,” Belgian Prime Minister Bart De Wever told reporters at a late-night briefing during the summit, not mentioning names but referring to countries to the east and west of Brussels. “And they have, of course, points where they can hurt us.”

Former Lithuanian Foreign Minister Gabrielius Landsbergis, now a visiting fellow at Stanford University, was less circumspect. “Now we are under assault from three sides: from the U.S., Russia and China,” he said.

Washington is questioning the old alliances that have underpinned European security for generations. Moscow is waging a shadow war across Europe, from cyberattacks and sabotage to an attempted drone attack at Leipzig airport that Berlin blamed on the Kremlin. Beijing is tightening its grip on critical supply chains and flooding European markets with cheap exports.

Then there’s the Ukraine problem. The country is facing a budget shortfall of $30 billion to $35 billion next year, according to the IMF, with Russia battering its energy infrastructure ahead of a brutal winter. That’s despite the €90 billion the EU already agreed to stump up last year.

Landsbergis said the coming months are looking “extremely dire” for Kyiv. “Everything falls on European shoulders,” he said.

Ukrainian President Volodymyr Zelenskyy sounded a grim note at last week’s summit, telling reporters that if Ukraine falls, 20 million Ukrainians will flood into the EU. “Russia is killing us,” he said. “They don’t want to stop.”

One solution to Ukraine’s funding woes could be the €200 billion in Russian assets that have been immobilized indefinitely in Brussels-based financial depository Euroclear. But there is no sign of the EU finding common ground on that front either, with Belgium, which vetoed previous efforts to use the assets to help Ukraine, still refusing to budge.

“Nothing has changed,” Swedish Prime Minister Ulf Kristersson said as he exited last week’s summit early.

Other potential solutions, such as issuing more joint debt, will require messy compromises — just as Brussels finds itself with even less room to maneuver.

Who you gonna call?

The EU’s problems go beyond its budget or individual policy files. With the political futures of several of Europe’s most powerful leaders in question, Brussels risks losing the stable alliances and long-serving national heavyweights needed to broker compromises.

“We now have Europe with no obvious leader,” another EU diplomat argued. Commission President Ursula “von der Leyen is powerful. But we do not have a Merkel or Mitterrand.”

French President Emmanuel Macron cannot constitutionally serve a third consecutive term and will have to find new digs in Paris after leaving the Élysée Palace in April. During a closed-door discussion at last week’s summit, Macron admitted he wouldn’t have a political mandate to sign a deal on the budget in his final months in power, four European diplomats said.

Spanish Prime Minister Pedro Sanchez is on track for defeat after eight years in power, according to polls. Spaniards will vote on Nov. 29, meaning Sanchez will be in full election mode during EU leaders’ meetings on Nov. 13 and Nov. 26.

Costa, who has stressed the need to reach an agreement on the EU’s budget by the end of 2026 to make sure it’s ready to go by 2028, waved off fears that the bloc’s next spate of elections could get in the way.

“We are living in 27 democracies,” he said on Friday. “More or less every month we have one election. If it’s about elections, we never could approve a new budget.” 

Regardless of the result, Madrid is not expected to form a government until January, which could derail the budget talks, according to two EU diplomats.

It’s anyone’s guess how long German Chancellor Merz has left in office. While the next federal election is not scheduled until 2029, the AfD’s growing strength and his own nosediving popularity complicate how much Merz might be willing to compromise.

Italy, too, is set for elections in October 2027. Another EU diplomat said they did not expect Meloni to wait that long, arguing she could call a vote much earlier.

There could be a sweet spot in January to get the budget over the line, a senior EU official suggested. It may be the last chance to strike a deal before Europe’s political upheaval makes compromise even harder to come by.

So far, the EU’s leaders have simply been “too slow,” said Siegfried Mureșan, the European People’s Party’s co-lead on the budget. “Time is running out.”

Nicholas Vinocur contributed reporting.

Governments should not go back and forth on energy policy and decarbonization targets if they want to attract investors, said Catherine MacGregor, the CEO of French energy giant Engie.

“Without trust, we cannot invest,” MacGregor said at POLITICO’s competitiveness summit in Paris on Tuesday.

In the French government’s 2027 budget proposal, French Prime Minister Sébastien Lecornu proposed backtracking on a number of renewable energy contracts, arguing that subsidies for green energy projects, particularly solar panels, were a major financial burden for the state.

MacGregor said such a move could imperil future investments in France.

“A contract is a contract,” she insisted, adding that “trust is very important” for investors to be able to spend money on energy projects in the long term.

France’s deteriorating public finances have become a central political issue ahead of the country’s presidential election next year. President Emmanuel Macron’s embattled minority government has been looking for ways to cut costs in a bid to bring down a stubbornly high budget deficit projected to come in at 5.4% of gross domestic product.

At the European Union level, Ursula von der Leyen’s second term at the helm of the European Commission has been marked by political pushback against the bloc’s core green policies, including Brussels’ landmark ban on combustion engines by 2035 and its emissions trading scheme.

But the bloc’s commitment to decarbonization gives investors the framework they need to plan ahead, MacGregor argued.

“Europe has one advantage: It moves slowly and that offers a certain level of stability which is very interesting for investors,” she said.

MacGregor defended the competitiveness of renewable energy projects as a means to produce energy locally and quickly, especially with gas prices so high.

“Renewable projects, when we do them well, in an organized manner and at scale … we are able to be competitive,” she added.

The EU approved its biggest package of sanctions against Russia since the start of Moscow’s full-scale invasion of Ukraine, targeting the Kremlin’s ability to make missiles.

The bloc’s foreign ministers approved the package during a meeting in Luxembourg, adding 1,600 new listings “targeting Russia’s military-industrial complex,” the EU’s top diplomat Kaja Kallas said on X.

“This is the single largest expansion of our sanctions list since Russia started its war,” she added. “More than half are connected to the production chain for ballistic missiles.”

The new listings follow the removal of Alisher Usmanov and Mikhail Fridman, two of Russia’s wealthiest men, from the sanctions list last month after heated, down-to-the-wire talks between EU capitals.

Monday’s approval was a formality after EU countries agreed on the sanctions list in earlier talks.

“We are making it significantly harder, slower and more expensive for Russia to produce the weapons it uses to kill Ukrainians,” Kallas said.

The sanctions list will last for three years before it needs to be renewed.