BRUSSELS — The European Union is under pressure to keep Ukrainian troops fully online after Elon Musk’s Starlink was restricted amid volatile U.S. support for Kyiv.

“It was a very dangerous and unpleasant surprise,” Ukrainian President Volodymyr Zelenskyy told reporters after EU leaders met in Brussels, referring to Starlink speed limitations experienced by military troops in recent days. “We were using Starlink to intercept jet-powered Shaheds [combat drones] that are attacking our civilian infrastructure and killing our families … When the speed limits were lowered, we became incapable of shooting [them] down.”

Ukraine has long relied critically on Musk’s satellite constellation for wartime efforts. Reuters reported Friday that the order to slow Ukraine’s military-grade Starshield service came from the White House, days after Washington pressed Kyiv to halt strikes on Russian refineries, amid soaring energy prices and ahead of November’s midterm elections.

“It is unacceptable for Ukraine’s defense — and therefore Europe’s security — to depend on the goodwill of a single American billionaire or on Donald Trump’s decisions,” French centrist Member of the European Parliament Christophe Grudler told POLITICO.

Ahead of Thursday’s high-level meeting, European lawmakers had been calling on the EU executive to fast-track Kyiv’s access to satellite capabilities already pooled under the bloc’s Govsatcom program — which gives participating governments secure communications capabilities.

Negotiations between the EU executive and Ukraine over this access have been ongoing since March, with no breakthrough. Norway and Iceland secured such an agreement earlier this year.

“What I don’t understand is why the European Commission and the Member States have not done everything possible to quickly reach an agreement that would allow Ukraine to benefit from it,” added Christophe Grudler, who wrote to EU leaders.

He also called on them to speed up work on IRIS² — the EU’s in-house, planned satellite network and full-fledged match to Starlink, which is only expected to come online in 2030.

Commission spokesperson Thomas Regnier confirmed in a statement that it is “currently in talks with Ukraine to fully associate” the country with the EU’s Govsatcom program. “The war in Ukraine shows that our security also depends on space. And the EU has been doing quite a lot. We are ready to support Ukraine where we can support Ukraine,” he added.

Calls to crack down on dependence on foreign providers and boost alternatives to Starlink also come at a time when legislators are negotiating a series of laws that could tame Musk’s ambitions in Europe.

“Ukraine’s dependence on Starlink highlights the vulnerability of European defence systems that rely on U.S. technology, Another reminder that Europe must reduce its dangerous technological dependencies — ASAP,” center-right Finnish lawmaker Aura Salla said on social media.

Policymakers across Europe have been joining forces to curb Starlink’s dominance in low-Earth orbit, where satellites fly close to Earth to deliver faster connections.

“As legislators, we must ensure that European operators are well positioned in the market and limit the dominance of foreign players,” German center-left lawmaker Matthias Ecke said. In Brussels, lawmakers, including Ecke, are backing European telcos gunning for prized satellite frequencies, currently licensed to U.S. operators until next year and eyed by Starlink.

Meanwhile, Zelenskyy said Ukraine was working bilaterally with EU countries to secure more capabilities, citing France. He also expressed hopes that Starlink restrictions could be lifted. “My partners told me there were signals from the White House that they would return these capabilities.”

SpaceX — Starlink’s parent company — didn’t respond to POLITICO’s request for comment.

BRUSSELS — EU leaders will go back to the drawing board in November as they race to finalize a deal on the bloc’s next seven-year budget by the end of the year.

During the first day of a two-day summit in Brussels on Thursday, European Council President António Costa announced he was convening an additional gathering on Nov. 26 in a bid to overcome disagreements and lay the ground for a final deal in December. To bring the sides closer to an agreement, he will present new budget figures before the meeting, according to an EU official, who was granted anonymity to discuss the confidential planning.

Costa is pressing leaders to finalize negotiations by the end of the year — before elections in France, Italy and Poland in 2027 threaten to derail the talks.

In a speech to the leaders, Costa warned that going past the end-of-year deadline will delay EU payments to farmers and researchers past Jan. 1, 2028, when the new budget is scheduled to come into force.

If leaders fail to reach a deal in December, the electoral calendar might push an agreement to May or even October 2027, Costa warned leaders in his concluding remarks, according to two EU diplomats briefed on the discussions.

Pressure on governments

Costa’s plan received a major boost on Thursday from French President Emmanuel Macron, who told fellow leaders that he won’t have a political mandate to sign a deal close to the French presidential elections in April 2027.

This is a major reversal for France, which has previously been unwilling to commit to the end-of-year deadline.

Macron’s words put more pressure on governments to advance the talks over the coming weeks — although some cast doubt on his good intentions.

“There are so many elections next year. [French far-right leader Marine] Le Pen herself [said] it’s undemocratic if we were now to agree,” said one EU diplomat.

Just hours before the leaders’ gathering, Le Pen renewed calls to halve France’s contributions to the EU budget if she wins the presidential elections next year.

She said that rushing the budget agreement before the French elections would be “a democratic scandal.”

The new frugal

Costa is stuck between messy domestic politics across Europe and hardening stances among the EU’s 27 leaders.

The so-called frugal EU countries pushing for major budget cuts — Germany, Netherlands, Austria, Sweden, Denmark and Finland — have publicly said that an Irish proposal envisioning €159 billion cuts doesn’t go far enough.

On Thursday, the six hardliners were joined by Belgian Prime Minister Bart De Wever, who joked in a press conference after the summit that “I’m married to a Dutch person so I’m very frugal also in my personal life.”

However, behind closed doors the budget hardliners employed a more conciliatory tone.

German Chancellor Friedrich Merz — the unofficial leader of the frugal camp — said that the Irish proposal has achieved progress despite reductions still being needed, said two EU diplomats briefed on the discussions.

He pointed to EU payouts to poorer regions, as opposed to farmer’s subsidies, as an avenue for cuts.

On the other side of the spectrum, Spanish Socialist Prime Minister Pedro Sánchez — who will try to cling on to power in an election on Nov. 29 — insisted that the budget is way too small.

“It is a distribution of misery,” he told fellow leaders during the discussions, according to the diplomats. He was joined by Italy’s right-wing Prime Minister Giorgia Meloni — an ideological foe on most issues, but an ally of sorts in the budget battle. She insisted that no further cuts to the budget will be accepted.

To bring sides together closer to a deal, Costa promised to advance progress on EU-wide taxes, or own resources, to finance the next seven-year budget and reduce national contributions.  

He will explore the European Parliament’s proposed taxes on crypto firms, online gambling and tech giants as well as a Greek idea to funnel future national sales of 6G mobile spectrum to the EU budget.

But given the level of opposition, getting EU countries to agree to any of these options will no be no mean feat.

“It is time to be realistic and work on what is plausible and reasonable, instead of wishful thinking,” said another EU diplomat.

BRUSSELS — Ukrainian President Volodymyr Zelenskyy will make a direct pitch to European leaders for more help on Friday, amid a crisis of faith among allies over Donald Trump’s latest steps favoring Russia. 

At the second day of an EU summit in Brussels, Zelenskyy joins European prime ministers and presidents as they discuss Ukraine’s need for more weapons and cash, with concern growing that Kyiv faces a shortfall of billions of euros next year. 

The reality of the threat to European security from the four-year-long war penetrated the summit bubble after air drones hit two ships in or near Romanian waters, prompting emergency talks with NATO.

“We all in Europe want this war to end,” Zelenskyy said on social media as he arrived in the Belgian capital on Thursday. “And for that, signals of strength are needed — more real pressure on Russia and more defense support for Ukraine.”

It is especially important, Zelenskyy said, to “act together to protect lives.” But unity among European leaders is in short supply at a meeting already riddled with tensions. 

EU governments are pitted against each other in their own fraught negotiations over how much money to commit to the 27-country bloc’s budget. With populists surging, discontent raging and elections scheduled in major power centers across the continent, under-pressure leaders are a long way from approaching a deal.

That’s the combustible mix of financial discussions the U.S. president waded into.

Trump’s decision to open up American markets to previously banned Russian diesel — intended to ease price pressures in the U.S. — risks tilting the balance of an expensive war in Russia’s favor, three European officials warned. Putin’s war chest can now swell from additional fossil fuel exports, while Ukraine struggles for cash. 

As they arrived for the first day of the marathon two-day gathering on Thursday, EU national leaders began informally discussing options for how to help redress the balance. That discussion should to be picked up again around the summit table on Friday.

Russian assets

One idea rapidly rising back up the agenda is the fraught question of whether, or how, to make use of some hundreds of billions of euros of frozen Russian financial assets held in European banks. 

The bulk of these rest with the Euroclear depository in Brussels. A previous attempt to grab the funds and send them directly to Kyiv was blocked by the Belgian government ― and other countries less prominently ― over concerns it would be exposed to legal action. 

But Sweden, Finland and Germany want to take another look at the assets. The European Commission is to come up with a new detailed assessment of Ukraine’s funding needs and an options paper on how to help, including the use of assets, according to officials from these countries. 

As the summit began, German Chancellor Friedrich Merz said he had been urging his counterparts to “do everything we can to help Ukraine get through the winter and continue to support it next year as well.” 

“We will also have to increase funding once again in order to provide Ukraine with truly long-term assistance,” he said. “I remain firmly convinced that we are not only defending Ukraine’s territorial integrity, but also the political order of Europe, which is truly under pressure from Russia in every respect.” 

A German official earlier suggested that of the available options to help Ukraine, including a loan and direct grants from national governments, using the assets was the most viable way forward and should be “discussed.”

A U.S. proposal to unfreeze some of the Russian assets and transfer them to a U.S.-controlled entity so Washington could use them as leverage in peace talks with Moscow also attracted strong criticism.

Merz told reporters that the assets had been frozen in Europe and “should remain frozen in Europe … That is our business, and we will decide on it.”

‘Try again’

Finland’s Prime Minister Petteri Orpo told POLITICO as the summit began: “The best solution would be that we will have a solution on how to use frozen assets … We have to try again.” 

Sweden is also backing the move to re-examine options on using the assets to help Ukraine’s future funding needs. “Doing nothing is not an option,” Swedish EU Affairs Minister Jessica Rosencrantz told POLITICO. “The Commission is looking into different financial options, and we need to get them on the table quite soon,” she said. 

Leaders at this week’s summit should “be really honest that Ukraine needs increased financing” and that the EU “must really step up,” she added.

Zelenskyy met Belgian Prime Minister Bart De Wever, the main opponent to a deal on assets, for talks on Thursday and thanked him for his country’s support so far.

Speaking to reporters after the first day of the summit, De Wever said the assets should be looked at as part of a future peace agreement. “Are there people on this planet who maybe dream of doing it differently this time and operationalizing those assets earlier for certain purposes? The answer to that question is: Yes there are,” he said. “Are they in this building? They are. Are there outside this building? Yes there are. Do I want to talk about it? No, I don’t.”

For Finland’s Orpo, Trump’s “terrible deal” with Putin on diesel, and the apparent U.S.-imposed limits on Starlink technology to help Ukraine counter Russian attacks, are hard to understand.

“My message to [Trump] is that we are allies,” Orpo said in an interview. “We are in NATO. And what is the biggest threat against NATO? It’s Russia — and that is why there is no logic. I don’t have answers. I have many questions.” He said Trump may be focusing on winning votes ahead of next month’s midterm elections in the U.S. but he should remember that his real allies lie in Europe and he should not “trust” Putin. 

Election anxiety

Finland holds its election next year at the same time as what could be a seismic contest in France. Far-right leader Marine Le Pen is leading the polls for the French presidency and wants to cut aid to Ukraine and slash the EU’s budget. 

French President Emmanuel Macron, who is constitutionally barred from standing next year, warned EU leaders that they must get a deal on the bloc’s next budget by December, otherwise it will be too late. 

But the 27 leaders remain split and show no signs of bridging the gap between “frugal” countries like Germany, Sweden and the Netherlands, who want to limit the settlement, and others such as Italy and Romania, who are on the side of bigger pots of cash for regional development and farming. 

European Council President António Costa also sees the urgency. He believes a deal before the end of the year is not only necessary but achievable, according to two EU officials.

Costa, who is taking over the negotiations from Ireland in its role at the helm of the rotating presidency of the Council of the EU, believes failing to secure a deal by December would push the entire budget negotiating process beyond the electoral cycle. That would potentially delay a deal until October next year — perilously close to the new EU budget taking effect in January 2028. 

In an effort to make progress on the budget talks, EU leaders will return to Brussels for an extra summit next month.

Camille Gijs, Hanne Cokelaere and Gregorio Sorgi contributed reporting.

BRUSSELS ― António Costa is supposed to be the dealmaker who brings European leaders together. Increasingly, his efforts are going unrewarded.

At a summit of the bloc’s national leaders on Thursday, Costa — who, unlike most of the EU’s current big beasts, is a Socialist — suffered his most stinging criticism since taking the role of European Council president nearly two years ago. The ire centered on his handling of unrelated negotiations over curbing energy prices and the EU’s next seven-year budget.

Governments were looking for both debates to show signs of progress at the two-day gathering, which was scheduled to continue on Friday. What they got was, at best, stalemate ― at worst, mounting division. And a day of talking that dragged on for 14 hours with little to show for it.

The longer budget negotiations last, the “more difficulties we will have,” Finnish Prime Minister Petteri Orpo told POLITICO. “So we have to work to find a solution this year. I understand very well that it is difficult. A huge challenge.”

The stakes could barely be higher. The EU is desperate to ease the cost of living crisis and get a deal on the budget before national elections next year make finding an agreement much tougher. Disunity between the bloc’s 27 members looks even starker when Donald Trump makes moves to take Russia’s side in the Ukraine war, the economy is struggling to match the might of China and anti-EU nationalists get closer to power in Europe’s biggest capitals.

All 16 diplomats and officials who POLITICO spoke to for this article were granted anonymity to allow them to speak on a sensitive issue. They were all either in the summit room on Thursday or were immediately briefed by leaders who were. While most were critical of Costa, others spoke more positively.

Costa’s spokesperson declined to comment.

Bogged down

Costa, a former Portuguese prime minister, is appointed by leaders to chair their summits and corral them into agreement. As Brussels Playbook reported on Thursday, EU officials judge he’s entering a defining period of his presidency, racing against time to overcome huge divisions on the budget. He is widely expected to push for reappointment for a second two-and-a-half-year term next year, officials said.

Thursday’s summit was dominated by discussions unraveling on the second phase of the bloc’s carbon pricing regime, known as ETS2.

The showdown over the Emissions Trading System — both the current one, and the second iteration which is already legislated and will put a carbon price on heating and transport from 2028 — became so bogged down it forced Costa to cancel the summit’s planned press conference and delay further talks until after dinner, because they had become a “mess,” three EU diplomats told POLITICO.

With German Chancellor Friedrich Merz incensed by what Berlin saw as his Italian counterpart Giorgia Meloni’s intransigence, fiery negotiations pitted a coalition made up of Germany, Spain, France, Portugal, the Nordics and the Netherlands against a stubborn bloc of Italy with Hungary, Czechia, Slovakia and Poland (known as the Visegrád Four). Rome and the V4 group wanted the EU to postpone ETS2 because of the burden it would place on energy bills, according to five diplomats.

Leaders were fuming at Costa for allowing talks to go off the rails, two EU diplomats from different member countries said. While the pre-summit conclusions didn’t point to any rethink of ETS2, the countries tried to unpick the legislation in the summit room, leaving Costa flustered, one of them said.

Costa “wants to have conclusions ready from [pre-summit meetings of ambassadors] and not to open them during EUCO,” the diplomat said. “He is not a fan of drafting on the spot.”

Another said there was “huge frustration,” calling the tug-of-war over the wording of the energy policy “insane chaos.”

“They just went on with Italian drafts and disregarded texts that were handed in before by others, seemingly not understanding the political nuances of the whole ETS discussion,” they added.

Another accused Costa of “losing control of the room,” saying he had failed to keep track of proposed amendments and present them to EU leaders in time for the discussions. As a result, leaders were left debating without them, contributing to negotiations going on past midnight.

One diplomat and one EU official separately compared Costa with his immediate predecessors, Charles Michel ― who governments frequently criticized for a lack of dealmaking know-how ― and Donald Tusk, who enjoyed broad support throughout his term in office.

Costa performed “worse than Charles Michel” on Thursday, the diplomat said. The official said “there is frustration that things are not being dealt with a bit more Tusk-style.”

Honest broker

The annoyance went beyond the energy debate. While governments weren’t expecting a breakthrough on the EU budget on Thursday, they have started raising questions about Costa’s handling of that topic too.

Costa is determined to secure an agreement by the end of the year. In his job, the Council president must act as a honest broker and facilitate a deal among 27 governments.

Northern EU countries are worried he’s favoring southern countries, according to a further four EU diplomats.

One EU diplomat accused Costa of being two-faced and not acting as an honest broker in the budget negotiations.

Another diplomat, from a country that wants the budget to be smaller, said: “Costa personally and politically belongs to the other camp.”

“There is some skepticism on how he will take the process further from here,” they said. The so-called frugal countries are calling on Costa to propose further cuts ahead of a special EU summit on the budget that was confirmed Thursday for Nov. 26.

‘Superb deal maker’

Many governments still believe Costa may succeed over the long term. Even those who acknowledge that his honeymoon is over ― a period when he was roundly praised for being a safe pair of hands and avoiding diplomatic faux-pas ― retain faith in him.

Belgian Prime Minister Bart De Wever defended Costa as “capable” and “shrewd” after the first day of the summit — praising the Council president for largely avoiding drafting on the day, unlike Michel.

Costa “avoids negotiation about the wording on the table which happened all the time under his predecessor and which annoyed the hell out of everybody because then you are here until three o’clock to discuss about syllables, commas and words that the next morning you cannot see the difference anymore,” De Wever said. “You don’t even know anymore what you are negotiating about.”

Other diplomats said the disarray wasn’t Costa’s fault, and blamed the leaders who tried to unpick the energy legislation, notably Meloni. “He did not want to reopen the conclusions, it was the V4 and Italy who did so,” one said. “I don’t see what he could have done differently.”

Another EU official defended the sheer difficulty of the task faced by the Council president. “Discussing drafting at leaders’ level is not the most straightforward thing in general.” On energy, the official said leaders wanted to have “proper consideration” of the different proposals by countries, which had “opposing interests.”

One of the diplomats more critical of his political leanings on the budget said Costa was “impeccable” in his behavior. “He’s a superb deal maker.”

The next few weeks will show how true that turns out to be.

Hanne Cokelaere, Camille Gijs, Sebastian Starcevic, Gerardo Fortuna and Hans von der Burchard contributed to this article.

BRUSSELS — There is “no logic” to U.S. President Donald Trump’s recent moves to take Russia’s side in the Ukraine war, and he should remember his true allies lie in Europe, Finland’s prime minister said Thursday. 

In an exclusive interview with POLITICO, Petteri Orpo summed up the shock and dismay among Ukraine’s allies after Trump announced a diesel deal with Russia’s leader, Vladimir Putin, and reportedly imposed limits on Kyiv’s access to the military intelligence and technology needed to counter Russian attacks.

“My message to him [Trump] is that we are allies,” Orpo said on the sidelines of the European Council summit in Brussels. “We are in NATO. And what is the biggest threat against NATO? It’s Russia — and that is why there is no logic. I don’t have answers. I have many questions.” 

Trump alarmed European leaders and horrified Ukrainian President Volodymyr Zelenskyy this week by announcing a deal to release Russian diesel onto the market, apparently in an attempt to lower fuel costs for American consumers. Ukraine’s allies fear the move will boost Russia’s revenue from fuel sales, giving it more money to spend on war. 

Trump also said Ukraine should stop hitting Russian fossil fuel facilities — as part of what he said was a ceasefire on energy infrastructure — and should replace Zelenskyy. 

Finland is an influential voice among Ukraine’s European allies: The country has the EU’s longest land border with Russia, at 1,300 km, and its president, Alexander Stubb — a talented sportsman — won Trump’s respect on the golf course, giving him leeway to try to influence White House policy.

Orpo said if he were in Trump’s position “I would not trust Putin.” Zelenskyy has said he fears Ukraine is losing the U.S. to Russia’s side in the war, warning the Americans and their president are on “the wrong side of history”. Orpo said he agreed: “I think he is, and they are.” 

Ukraine now faces grave danger, he said. “The sky is open for Russia, there are missiles. They need more military support, air defense,” Orpo said. “Also, the situation is dangerous because of the latest deal between Trump and Putin.”

Midterms move

One possible reason Trump turned against Ukraine with that diesel deal is the U.S. midterm elections on Nov. 3. “I think it is because of domestic reasons — elections are coming,” Orpo said. “But we need to get them back.” Nonetheless, he said the amount of Russian diesel that could be sold to the U.S. is too small to make much of a difference for American consumers. 

Whatever happens, EU leaders must equip Ukraine with weapons and cash, whether or not they can rely on the U.S., he said. “Today, we need to find a solution [on] how to support Ukraine, how to finance Ukraine in this winter, but also in next year,” Orpo said. “It’s crucial.”

Finland and Sweden are among the countries pushing the European Commission to reopen the fractious debate over how to use Russia’s financial assets currently frozen in European banks, especially in Belgium, which blocked a deal to raid the funds last year over legal concerns. 

“The best solution would be that we will have a solution on how to use frozen assets,” he said. “We have to try again,” Orpo said. 

Finland has asked the Commission “to continue work with Belgium, and the other member states, to find a solution.” He said he hoped to hear an update from the Commission during the summit. “It’s a better solution than using our own money.”

Budget blues

European leaders are arguing this week over their long-term budget, which Brussels officials want to finalize by the end of the year. Many diplomats do not expect a deal this year, and some leaders say they’re in no hurry. 

But others want the budget, worth around €2 trillion, signed off by December because they fear next year’s European elections — especially if far-right leader Marine Le Pen wins the French presidency — will derail negotiations. 

The longer budget negotiations last, the “more difficulties we will have,” Orpo said. “So we have to work to find a solution this year. I understand very well that it is difficult, a huge challenge, but I cannot see how it would be easier next year, because in France elections are coming, for example.”

Finland also has an election coming up in April 2027. Orpo’s center-right National Coalition Party is struggling in the polls. “This time has been very difficult,” he said. “But, finally, our economy is growing.”

Orpo’s Swedish sister party, the Moderates, mounted a late surge in last month’s election. Although that seems unlikely to keep them in office, Sweden’s Moderates still have a slim chance, even though many commentators had written them off long before the vote.

“They did excellent campaign work, and in the end of the day, people vote Moderates, not populist or socialist,” Orpo said. “I would like the same in Finland.”

BRUSSELS — French president Emmanuel Macron warned fellow EU leaders they need to get a deal on the bloc’s seven-year budget by the end of the year because it’ll be too politically difficult after that, four European diplomats said.

His words rachet up the pressure on the EU to overcome their significant differences over the coming weeks.

During a closed-door discussion on Thursday evening, Macron said he wouldn’t have a political mandate to sign a deal close to the French presidential elections in April 2027, the diplomats, all briefed on the conversation, said.

Macron “said that, starting from January, there will be no political room” for concluding an agreement, one of the diplomats said.

The EU’s 27 governments are divided over the total size of the 2028-2034 budget. Leaders gathering in Brussels are discussing the Irish plan, which envisions cuts of €159 billion in current prices to the Commission’s nearly €2 trillion proposal. 

European Council President António Costa is pushing leaders to finalize negotiations during a summit in December — before elections in France, Italy and Poland in 2027 threaten to derail the talks — but some governments and EU officials have said such a timeframe is very unrealistic.

One EU diplomat dismissed Macron’s intervention as a threat to support Costa on the December deadline. “EU would be ungovernable if we were to take into account all the local elections,” they added.

French far-right leader Marine Le Pen, who is leading the polls to replace Macron, pledged to halve France’s contributions to the EU budget if she comes to power.

During a press conference in Brussels on Wednesday, Le Pen accused the EU of speeding up talks to prevent France’s next leader to have a say.

Several leaders are unwilling to commit to the end-of-year deadline, fearing that time pressure will undermine their leverage in the negotiations.

“We will not sign an agreement that is not beneficial to us just to meet a deadline,” Italian Prime Minister Giorgia Meloni told the country’s parliament on Wednesday. “We will sign an agreement only when it is right for Italy.”

BRUSSELS — It was meant to be a debate on how to curb Europe’s soaring energy prices.

But the first session of talks at an EU leaders’ summit in Brussels Thursday quickly descended into a three-hour fight over whether the EU should put a carbon price on driving cars and heating buildings.

The delay got so bad, the roast veal and fig tartlet lunch awaiting European leaders was driven well into the afternoon.

Countries including Italy, Poland, Czechia and Hungary called for ETS2 — an already-legislated law that will put a carbon price on heating and transport from 2028 — to be delayed for two more years. Estonia suggested it could be scrapped altogether.

The push was rejected by a majority of the bloc, with several EU diplomats telling POLITICO it was, as one put it, an “unacceptable” offer. Another said the ETS2 launch date would never be changed. But the debate reflects a growing sense from right-leaning governments that the EU’s ambitious green agenda runs against their push to bring down energy costs. 

While the main topic of today’s discussion was ETS2, its predecessor, the Emissions Trading System — which puts a price on carbon emissions from factories and power plants — was arguably the real target.

Put together, these two emissions trading schemes will be the EU’s most powerful policy tool for bringing down planet-warming emissions.

A proposed reform of the original ETS is currently being debated in the European Parliament and in the Council of the EU. Italy and Poland have been leading a gang of 10 member-countries which have been railing against the ETS since American and Israeli bombs started falling on Iran in March. 

What they want is for the European Commission’s July review of the ETS to be further weakened, even though the proposal already softens carbon restrictions over the next decade to give industry more time to invest in cleaner production methods.

But by framing the ETS as a scourge on household bills, both Warsaw and Rome have found ready audiences at home and abroad. On Monday, hours before a meeting of EU environment ministers convened in Luxembourg, Poland led a meeting of member countries with concerns on the ETS. Their gang, which originally counted 10 countries in March, had now grown to 16.

While Italy and Poland did manage to get Czechia, Slovakia, Hungary and Greece to back their ask for a “reassessment of the ETS2” and to “further postpone its entry into force until at least 2030,” inside the room of European leaders the position mostly fell flat.

Five EU diplomats granted anonymity to discuss the ongoing negotiations said Nordic countries and the Netherlands were firmly against changes to ETS2 — a position backed by France and Germany.

But Paris and Berlin’s long-term reliability as ETS defenders is in doubt. French President Emmanuel Macron and German Chancellor Friedrich Merz both face threats from the far-right, where the ETS has become a dirty word.

Germany’s far-right Alternative für Deutschland, which is no fan of the ETS, is politically ascendant, having won the largest share of votes in two regional elections in September. In France, with elections only months away in 2027, Marine Le Pen’s far-right National Rally is leading in the polls. 

How Le Pen would deal with the ETS isn’t certain, but Jordan Bardella, the French far-right lawmaker and rising star of National Rally, offered a clue  in recent comments.

“ETS: three letters, an acronym that reeks of detached bureaucracy, with one question that keeps coming up: who’s going to pay?” he said to European Parliament in May.

EU leaders meet today for their first chance to beef about the budget face to face.

On the show, Zoya Sheftalovich and Sarah Wheaton dive deeper into why leaders look increasingly unlikely to reach an agreement on the EU’s next money pot by December. Plus, Zoya obtained a document revealing deepening relations between Russia and Slovakia. Will that be a cause for concern around the Council table?

Next up, Zoya spoke with Defense Commissioner Andrius Kubilius on stage yesterday. His main message? Europe should boost its defense capabilities and stop relying so heavily on U.S. military support.

And finally, ECB President Christine Lagarde plugged her upcoming memoir at a press conference … is she allowed to do that? 

If you have a question or comment, don’t hesitate! message us on our WhatsApp here or at +32 491 05 06 29.

Articles mentioned in this episode:

• “How to watch the EU leaders’ summit like a pro.”
• “Slovakia deepening ties with Russia, document shows.”
• “Lagarde’s book plug raises questions about ECB ethics standards.”
• “Weakened Macron and Merz sink hopes of a quick EU budget deal.”

BRUSSELS ― Political pressure is leaving Emmanuel Macron and Friedrich Merz poorly placed to break the deadlock over the EU’s next seven-year budget.

As EU leaders gather for a two-day summit in Brussels from Thursday, the heads of the bloc’s two largest countries hold the keys to breaking the impasse between capitals that has persisted for months, as a Germany-led group advocating a smaller budget clashes with those like France which are resisting reductions.

“Delays and persisting divisions in the Council [representing EU governments] are worrying,” said Siegfried Mureșan, co-leading the European Parliament’s work on the MFF, the multiannual financial framework. “The EU budget can only be built through compromise … The faster we adopt the budget, the faster we can implement it and become more competitive, safer, help farmers and researchers and protect our borders and cyberspace.”

Sealing agreement on the EU’s long-term central budget, worth approximately €2 trillion, is the biggest challenge over the next few months facing leaders, all of whom must sign up to the final numbers. While it isn’t just up to Macron and Merz, getting the chiefs of the bloc’s two most powerful countries to overcome their differences would be a massive step in making all the pieces of the jigsaw slot into place.

But with Macron soon to leave office and Merz under severe pressure domestically, officials and diplomats in Brussels, Paris, and Berlin are playing down hopes of a Franco-German breakthrough this week.

“If the French and German leaders come hand in hand, I think that could change the game,” an EU diplomat, granted anonymity to speak frankly, said. “You need [Italian Prime Minister Giorgia] Meloni and [Polish Prime Minister Donald] Tusk, but it starts with Merz and Macron.”

While Merz and Macron may talk bilaterally during the summit, according to an Elysée official, there were no firm plans for a more formal sit-down, two EU diplomats said, adding they were expecting them to use the two-day meeting to hash out positions.

Domestic political weakness makes both leaders less likely to yield ground, three EU diplomats said.

Backfiring

For the French president, who leaves office next year, the fear is that making big concessions — like accepting cuts demanded by Berlin — could be weaponized by presidential candidates vying to replace him.

“Macron should not appear too conciliatory” in budget talks, said an ally of the French president. “It would backfire in the presidential campaign.”

Indeed, Macron may be wary of striking a deal that could lead to attacks from far-right leader Marine Le Pen or far-left rival Jean-Luc Mélenchon, both of whom argue that France receives too little value for its contributions to the EU pot.

During a press conference in Brussels on Wednesday evening, Le Pen accused negotiators of speeding up talks as “an attempt to stifle future democratic choices before they even take place” — effectively warning Macron against locking in an agreement before France’s April presidential election and votes in other major EU countries, such as Spain, which goes to the polls next month, and Italy, which is due to hold a poll next year.

“All this is not serious,” Le Pen told reporters on the 26th floor of The Hotel in Brussels.

It’s complicated

Merz faces similar political pressures.

Following humiliating state election defeats to the far-right Alternative for Germany party, the Chancellor is wary of concessions that could be framed as sending more taxpayer money to Brussels. Berlin prefers no deal at all to one that increases the overall budget, Merz said.

But Paris and Berlin’s positions may not be as far apart as public statements suggest.

“It’s complicated because France and Germany both need to step outside of their comfort zone,” said the Macron ally. “But it will end with a deal between France and Germany,”

France’s Europe minister Benjamin Haddad told reporters on Tuesday that discussions should focus on raising money via taxes, or “own resources” as they’re known in the EU —such as online gambling levies—rather than “massive cuts.”

However, Paris also wants to “stabilize national contributions” ― in other words, keep its own payments level.

Berlin was “open to examine new own resources, but we are more skeptical than the French that it will generate enough money,” a German official said.

France is betting that when push comes to shove, Merz will give in to pressure from other countries — and German captains of industry — to abandon his demands for far-reaching cuts.

“I see that there is also a real debate in Germany as well on the fact of having a position that would only be focused on cuts to the detriment of future policies,” an Elysée official said Wednesday. This week, Germany’s industrial lobby BDI and top industry groups urged their government to defend a more ambitious EU budget.

Macron and Merz showed unity earlier this month by jointly urging the European Commission to toughen its stance on China. But they still struggle to agree on another major deal—first reported by POLITICO in July—where Berlin accepts stronger “Made in Europe” rules in exchange for France backing relaxed car emission targets and the 2035 combustion engine ban.

EU Industry chief Stéphane Séjourné told POLITICO on Tuesday he supported the deal to finalize both files. Macron recently called the agreement “imminent,” suggesting progress depended on German coalition talks. But their failure to present an agreement at this week’s Paris car show confirms Paris and Berlin still disagree on terms, with the Elysée confirming negotiations remain ongoing.

BRUSSELS — Far-right leader Marine Le Pen pledged to turn the European Commission into a “secretariat” in the service of its member countries as part of her plan to slash the size and power of the European Union should she win France’s presidential election next year. 

“Over the past 10 years, France has seen the implementation of a European vision that is the exact opposite of the one I will champion,” Le Pen told reporters at a press conference in Brussels after a meeting with fellow European far-right leaders. “They wanted a powerful Europe. We got a powerless Europe. They wanted European sovereignty. All we’ve gotten is the dilution of national sovereignty.” 

Asked by POLITICO what downsizing the EU would look like in practice, the front-runner in the race to replace term-limited President Emmanuel Macron next year said the EU should pare back its operations in areas it has expanded in recent years such as foreign policy, security and public health.

Le Pen also promised to “stop” the bloc’s Green Deal, which she claimed was harming economic growth, and eliminate institutions like the European Committee of the Regions and the European Economic and Social Committee. 

“I’m not fooled by what the European Commission wants to do. The European Commission wants to turn itself into a state; we do not. And so we will stand in its way,” Le Pen said. 

Though Le Pen has abandoned her calls for France to leave the European Union, she remains deeply skeptical of the bloc and its ambition. 

She and her National Rally party last week said they would unilaterally slash France’s annual contribution to the EU budget by €11.1 billion as early as next year if Le Pen wins the presidency. 

Le Pen frames the move as necessary to help fix France’s disastrous public finances — she is proposing €140 billion in savings by 2032 — but her critics say such a move would set up a dramatic showdown with Brussels that could end with France leaving the bloc. 

Le Pen is in Brussels the day before EU leaders meet for key discussions over the bloc’s next seven-year budget, which Council President António Costa had hoped to get finalized before elections in France, Italy and Poland in 2027 that could derail the talks. 

But EU countries have weakened their commitment to wrap up negotiations by year-end amid a major split between frugal countries such as Germany, which want to further shrink the budget, and countries like France that support more EU spending.  

Le Pen once again reiterated her accusations that Brussels’ attempt to speed up budget talks — which would prevent France’s next government from having a say in the matter — is “a democratic scandal.” 

This developing story has been updated.

BRUSSELS — European governments have watered down a commitment to secure a deal over the bloc’s next seven-year budget by the end of the year, according to draft Council conclusions seen by POLITICO.

European Council President António Costa is pushing leaders to finalize negotiations during a summit in December — before elections in France, Italy and Poland in 2027 threaten to derail the talks.

But governments are unwilling to commit to the end-of-year deadline, fearing that time pressure will undermine their leverage in the negotiations.

Leaders are gathering in Brussels on Thursday and Friday to react for the first time to an Irish budget proposal that envisages €159 billion cuts. They will also discuss energy prices, enlargement, Ukraine and migration.

Several countries, including Italy and France, urged Costa’s team to drop a reference to “reaching a final agreement by the end of the year” from the Council conclusions, two EU diplomats who were briefed on the discussions told POLITICO on condition of anonymity.

During a parliamentary speech Wednesday, Italian Prime Minister Giorgia Meloni said that “we will not sign an agreement that is not beneficial to us just to meet a deadline,” adding “we will sign an agreement only when it is right for Italy.”

There are also lingering concerns that Spain’s snap elections on Nov. 29 could work against the end-of-year deadline.

The new draft conclusions from Tuesday evening merely call for a “timely agreement,” adding that reaching a deal by the end of the year would allow EU funding to start flowing when the next budget takes effect in 2028. This is the same wording used in the Council conclusions from last June.

In another significant addition, EU leaders condemned U.S. President Donald Trump’s decision to lift sanctions on Russian diesel in the conclusions.

They also expressed “regret” towards U.S sanctions against the International Criminal Court and pledged to engage with Washington to reverse these measures.

Mathieu Pollet contributed to reporting.

When Maroš Šefčovič set out his strategy for engaging with China to European Union ambassadors in July, he had a warning for governments urging tougher action on trade against Beijing.

“Sometimes, it’s even popular to start a trade war, but it’s very difficult to finish it,” the EU trade chief recalled later in an interview with POLITICO.

Three months on, Šefčovič has secured a first breakthrough, reaching a deal in Beijing last week to sharply reduce imports of Chinese hybrid cars. The symbolic win marks a small step toward stabilizing a trading relationship that Brussels believes has reached a dangerous tipping point.

The agreement, which will initially cap imports at 350,000 vehicles a year, marks a significant concession from Beijing, whose carmakers have been flooding the European market with increasingly competitive vehicles. 

For Šefčovič, who negotiated last year’s tariff truce with Donald Trump, the agreement suggests his strategy of engagement backed by the threat of tougher trade measures may be starting to pay off.

Šefčovič agreed to launch the trade dialogue at a meeting with Chinese Commerce Minister Wang Wentao in Brussels in late June.

By focusing initially on cars — an area where the EU has leverage as one of the few major markets still open to Chinese manufacturers — the Slovak commissioner hoped to secure a confidence-building win before tackling thornier questions, from critical raw materials to China’s vast industrial overcapacity.

At the same time, he worked to coalesce European governments behind a parallel effort to strengthen the bloc’s trade defenses, reinforcing his negotiating position with the threat of tougher action to bring down the EU’s €1 billion-a-day trade deficit with China.

The hybrid deal, however, is only the opening move in a much bigger contest.

EU leaders meet in Brussels on Thursday to take stock, weighing the benefits of continued engagement against demands for more aggressive action to protect European industry from a surge in Chinese imports.

The meeting will test whether a commissioner who has made a career of finding compromises with difficult partners can maintain Europe’s support for a strategy whose success is far from assured.

“You have to deal with the same partner across the table,” Šefčovič said of the risks of starting a trade war, in the interview with POLITICO in August. “So if you can avoid this, it would be much better.”

Market power

Šefčovič’s opening move was to focus on an area where Europe still has leverage: access to its market of 450 million people.

China’s fiercely competitive manufacturers have become global powerhouses, but they are struggling with weak demand at home. A prolonged property slump has weighed on consumer spending, while cutthroat competition has triggered price wars. Domestic sales of passenger vehicles fell 28% in September from a year earlier.

That makes overseas markets increasingly important. With the U.S. shutting out Chinese imports, Europe remains one of the most lucrative markets still open to Chinese manufacturers.

Šefčovič gambled that Beijing would prefer to accept limits on exports rather than risk losing access to the European market altogether.

He set his sights on the automotive sector, where Chinese manufacturers have been making rapid inroads. Chinese carmakers accounted for just 2% of both the European hybrid and plug-in hybrid markets in 2024; by the first half of 2026, their respective shares had risen to 14% and 25%, industry figures show.

The Commission was preparing to restrict hybrid imports even without an agreement. But a negotiated settlement also offered Šefčovič something valuable politically: evidence that engagement with Beijing could deliver tangible results.

The negotiations were intense, according to a person familiar with the talks on the Chinese side.

“It was very, very tough,” the person said, speaking on condition of anonymity to discuss the closed-door negotiations. “Both sides hadn’t seen such intensity in a long time. No summer break, no holidays. They worked around the clock even one, two days prior to Šefčovič’s trip to Beijing.”

While pursuing dialogue, Brussels also wanted to convince Beijing that it was prepared to take tougher action if the negotiations failed.

Šefčovič had earlier flagged plans for a new “diversification instrument” that would require businesses in critical sectors to source essential inputs from at least three suppliers — a move to reduce China’s ability to exploit Europe’s dependence on its critical raw materials.

Then, just three days before Šefčovič’s trip to Beijing, France and Germany raised the stakes.

President Emmanuel Macron and German Chancellor Friedrich Merz called for a powerful new trade weapon that would allow Brussels to restrict — or even shut off — access to the European market within days for countries deemed to have severely distorted the bloc’s single market.

The proposal did not explicitly name China, but Beijing was its obvious target. 

Keeping it together

EU leaders are expected to welcome the agreement but also press the Commission to act quickly to strengthen the bloc’s trade defenses, according to several diplomats. The understanding reached in Beijing has bought time, but hasn’t settled how far Brussels should go if Chinese exports keep rising or negotiations stall.

“We’re losing thousands of jobs in industry; olive oil and ice cream won’t solve the core issue,” said one EU diplomat after Šefčovič briefed ambassadors on Sunday, referring to reported deliverables from the talks.

A senior German official welcomed the Beijing deal as a first step in the right direction. “It’s a positive sign — which, of course, doesn’t fully solve the problem of the trade deficit with China,” the official said.

But Berlin’s support for a tougher line might prove short-lived.

Alicia García-Herrero, a senior fellow at the Bruegel think tank, argued that Beijing’s concessions had been calculated to assuage Berlin, given the importance of the automotive industry to the German economy.

“I’m just hoping Merz doesn’t turn away from the letter he sent to the Commission,” she said. With the German chancellor politically weakened at home, García-Herrero fears he may be reluctant to risk a prolonged confrontation: “I worry Merz will take this quick win and run.”

That leaves Šefčovič facing a balancing act: keeping EU governments on board with continued engagement with China while maintaining a credible threat of tougher action if the talks break down. 

“I expect [leaders] to give the Commission a nod to move ahead with other trade defense measures. China may see this as a betrayal. If that is the case, we could return to conflict very quickly,” said Noah Barkin, a senior adviser at the Rhodium Group’s China practice.

The battle ahead

For Šefčovič, the challenge now is to turn a limited breakthrough on cars into a broader rebalancing of trade with China — while buying Europe time to strengthen its defenses should the negotiations fail.

“There is an argument for doing to China what China had done to Europe for years — bogging Beijing down in dialogue and process while Europe gets its tools in place. But the EU needs to make full use of the time that these talks provide,” said Rhodium’s Barkin. 

The trade chief is expected to hold a video call with Wang in January, before the two meet again next March. Those talks will test whether Beijing is prepared to make further concessions in sectors where European industry is increasingly on the defensive, including chemicals.

Another priority is critical raw materials, where China has agreed to continue issuing export licenses for rare earths. Beijing’s grip on their supply gives it considerable leverage over European manufacturers, underscoring the limits of Šefčovič’s negotiating position.

The Commission is also preparing two proposals for December: the diversification instrument, aimed at reducing dependence on Chinese supplies, and a mechanism to shield European industries and regions from retaliation.

The scale of the challenge is daunting. Chinese hybrid imports were worth €6.7 billion in the first half of 2026, against an EU-China trade deficit of €360 billion last year. The agreement offers some relief to European automakers but does little to address the underlying imbalance.

Brussels hopes the hybrid safeguard can serve as a blueprint for protecting other industries facing a surge in Chinese imports.

“We hear our industry. That includes the chemical industry, the wind industry, the furniture industry. We know where there’s a surge, and we know what hits the hardest in terms of our deindustrialization,” a senior Commission official said on Monday.

Šefčovič acknowledged the limits of dialogue in his August interview, warning that negotiations would become harder to sustain without tangible progress.

“What would be very important is to come back to say there is acknowledgment of the issue and there are already some pilot schemes which we want to test and to see if they are working,” he said.

“But if simply there will be no action, then of course it will be much more difficult for us just to talk about these issues.”

Jordyn Dahl in Brussels and Hans von der Burchard in Berlin contributed reporting. 

PARIS — Conservative presidential candidate Bruno Retailleau said France should seek a rebate on its contribution to the EU budget ahead of a key European summit in Brussels this week.

France pays more in to the EU budget than it gets out, but it is struggling to reduce a severe budget deficit.

“It’s crazy,” Retailleau, the leader of the conservative party Les Républicains, said at POLITICO’s Competitiveness Summit in Paris. “Why should we contribute more when we know how dire our public finances are?”

European leaders are meeting in Brussels on Thursday and Friday to discuss the bloc’s long-term budget, the Multiannual Financial Framework, which is pitting the so-called frugal countries against those who want a bigger EU budget. France sits in neither camp.

Retailleau singled out structural funds — money that is invested in poorer European regions — as an area where savings could be made.

“We’ve given billions to countries so they would catch up with us. Well they have, and in a couple of years they’ll probably have a higher standard of living. Sorry, but stop,” he said.

However, Retailleau, who is trailing center-right presidential candidate Edouard Philippe and far-right front-runner Marine Le Pen in the polls, did not put a figure on the rebate he would demand if he came to power. Le Pen, who is the front-runner ahead of next year’s presidential election, and her party have proposed slashing France’s yearly contribution by €11.1 billion as early as next year.

Retailleau said he would seek “a negotiation,” rather than unilaterally impose a lower contribution, as Le Pen says she would do.

“I’m not going to behave like Marine Le Pen, I’m pro-European,” said Retailleau.

Retailleau argued that France’s defense and nuclear deterrence investments should also be included in the country’s contribution calculation, because the concept of forward deterrence benefits France’s European neighbors.

KYIV — Russia caught the Ukrainian capital off guard with its latest attack, hitting the country with over 100 drones and five ballistic missiles, President Volodymyr Zelenskyy said Tuesday.

“Intelligence on Russian ballistic missile launches helps save lives, and this is one of the most critical issues. This is precisely what helps prevent people from being killed — when there is an early warning about ballistic missiles,” Zelenskyy said.

He added: “Regarding this strike, unfortunately, there was no warning from partners.”

Kyiv usually receives a tip-off about impending Russian missiles via the Battlespace Command and Control Center system, which is operated and controlled by the United States’ military and NATO members, among others.

However, Ukrainian Foreign Minister Andrii Sybiha said at the Warsaw Security Forum Tuesday that intelligence sharing through the platform is ongoing.

“They [Americans] told Ukrainians no warning happened because of bad weather conditions, which is seen as not an adequate reason in Kyiv. Thus many are getting increasingly worried this might not have been the case,” an official familiar with the matter told POLITICO on condition of anonymity.

The missile warning system has malfunctioned before. “At times this information doesn’t get through. This isn’t the first instance … If there were specific technical issues this time, I think the specialists will sort it out. And they will resolve this problem together with our partners,” Ukrainian Air Force spokesperson Yurii Ignat said Tuesday.

The U.S. reportedly threatened to cut intelligence sharing once again last week if Kyiv does not stop stricking Russian oil refineries. Zelenskyy did not publicly confirm the threat, but has backed down.

“Ukraine has not carried out strikes on Russian oil refineries or the energy sector in general for the two days since the American President announced an energy ceasefire. But Russia did not heed the American President,” Zelenskyy said, appealing to the U.S. to lead peace negotiations.

“The Russians have attacked both our energy facilities and our critical infrastructure, sending absolutely clear signals that they have no intention of refraining from strikes on Ukraine. Nineteen regions of our country have come under attack in these two days alone,” he added.

U.S. President Donald Trump claimed Monday that both Russia and Ukraine had agreed to an energy ceasefire because he said so — “and if it was violated, they both violated it.”

“Actually [Russian President Vladimir Putin] wants to make a deal, and we have to get Zelenskyy to want to make a deal,” Trump said.

During a press briefing on Tuesday, Katie Zacharia, the president’s new press secretary, demurred when asked if the U.S. has stopped sharing intel with Ukraine.

“I’ll have to get back to you on that,” she said.

Speaking to reporters at the White House later on Tuesday, President Donald Trump said the U.S. has not stopped sharing intel with Ukraine.

“But we are really helping them get to a final answer,” Trump said. “We are helping them, and we are sharing intel. We want the war to end.”

He reiterated that he is helping to broker a deal between Putin and Zelenskyy. “There is a lot of hatred there between the two of them. They both want it to end, they don’t know how to get there. We’re gonna get them there,” he said.

Russia has not yet commented on the ballistic strikes, but issued a general statement saying it had struck military and weapons production facilities across Ukraine.

However, Russian Foreign Minister Sergei Lavrov said Monday that Zelenskyy did not deserve a pause in fighting in response to the energy ceasefire: “I don’t think that he deserves a break. I don’t think that we will buy assurances and promises again,” he said.

This article was updated with comments from the White House and Donald Trump. Elleiana Green and Casey He contributed reporting.

Germany has rejected Ireland’s proposal for the EU’s next seven-year budget, despite €159 billion in cuts. And it’s not alone: Governments are divided over where the cuts should fall, while the European Parliament is threatening to block the deal.

Zoya Sheftalovich and Nick Vinocur unpack the backlash and what it means for this week’s EU leaders’ summit.

Plus, Zoya interviews Migration Commissioner Magnus Brunner about Europe’s efforts to curb irregular migration and plans to tighten restrictions on Russian visitors and former soldiers.

And why the influencers expected at this week’s EU summit won’t be showing up after all.

Questions? Comments? Let us know on our WhatsApp here or at +32 491 05 06 29.

BRUSSELS — Germany and its allies rebuffed Ireland’s plan to downsize the bloc’s next seven-year budget, arguing that the proposed cuts are not enough.

On Saturday, the Irish presidency of the Council of the EU, which is steering the talks, proposed cutting around 8% from the bloc’s total budget from 2028 to 2034 in a bid to assuage a German-led camp demanding reductions of several hundred billions euros.

But Dublin’s hopes of facilitating a deal were immediately dashed by German Chancellor Friedrich Merz, one the key players in the negotiations as his country contributes to approximately one-quarter of the bloc’s common budget.

“We are still a long way from an agreement. The amount of the new proposal is not a basis for an agreement. The EU budget must be affordable for those who bear the brunt of the financing,” Merz wrote in a statement on Saturday.

Germany leads a group of six “frugal” countries — Sweden, Denmark, the Netherlands, Finland and Austria — which contribute 40% of the Union’s common budget.

Most frugal countries criticized Ireland’s proposed €159 billion in cuts in current prices from the Commission’s nearly €2 trillion proposal, saying they were insufficient.

Sweden’s Europe minister Jessica Rosencrantz described the negotiating document, or negobox, on X as a “wildly unaffordable increase,” as the overall amount would still be higher than the current budget.

Austrian Europe Minister Claudia Bauer echoed that criticism, saying that the new budget remained “miles away from an Austrian yes.”

Tensions will come to a head during a summit of EU leaders next Thursday and Friday, where they will discuss the negobox.

EU governments are racing to reach a budget deal among themselves by the end of the year — before elections in France, Italy and Poland in 2027 threaten to derail negotiations.

But Dutch Finance Minister Eelco Heinen warned on Saturday that “at this rate, there will be no deal by the end of the year.”

Ireland’s Minister of State for European Affairs Thomas Byrne, who leads the negotiations, dismissed criticism and described the proposal as a balanced compromise.

“The negotiating box acts to bridge the many differences between the Member states,” Byrne told reporters on Saturday.

Divided Union

The EU is split between frugal countries pushing for cuts across the board and a rival camp of southern and eastern states, the Friends of Cohesion, opposing reductions to farmers’ subsidies and regional payouts known as cohesion policy.

These areas account for almost half of the total budget and are politically sensitive because of pressure from farmers’ lobbies and regions.

In a concession to the 17 Friends of Cohesion, Ireland left the agriculture and regional budgets untouched and focused cuts on other priorities such as competitiveness, defense and development aid.

“There was a strong support for heading one [agriculture and cohesion] from almost all of the member states, including some of the countries who would be considered to be net contributors” to the budget, Byrne told reporters.

Reactions to the negobox from the Friends of Cohesion were more conciliatory than those of their frugal peers.

“It’s an excellent starting point to have recovered the money for the CAP [Common Agricultural Policy], but we’re still not satisfied,” said Italy’s Agriculture Minister Francesco Lollobrigida.

Poland’s Europe minister Ignacy Niemczycki welcomed the fact that his country “continues to receive the largest allocation,” but noted that the “change in the overall size of the budget does not match the EU’s ambitions.”

The frugals were also are disappointed that the cuts disproportionately target innovative policies such as defense and competitiveness, which they favor.

“They’re cutting the future to protect the past,” said one EU diplomat from the frugal camp.

BRUSSELS — The bloc’s next seven-year budget suffered a €159 billion cut from the Commission’s original proposal, according to a new plan unveiled Saturday.

The Irish presidency of the Council of the EU, which is steering the talks, proposed cutting around 8% to the bloc’s total budget from 2028 to 2034 to appease a German-led camp demanding major cuts.

The Irish negotiating document, or negobox, envisages cuts of €122 billion in current prices from the previous negobox presented by the Cyprus presidency in June. It sets the scene for fraught discussions among the EU’s 27 leaders during a summit next week.

The bloc is split between frugal countries demanding cuts of several hundred billions to the nearly €2 trillion proposal on the table and a rival camp of southern and eastern states, known as the Friends of Cohesion, opposing reductions.

In a concession to the Friends of Cohesion, Ireland shielded farmers’ subsidies and regional payouts, that account for half of the total budget and are politically sensitive, from any cuts.

Instead, the bulk of the reductions came from foreign aid which was cut by €38 billion; competitiveness which was axed by €75 billion and the EU’s administrative costs which were reduced by €10 billion.

Dublin also scrapped a rainy day fund, known as the “EU Facility cushion,” that allowed the European Commission to deploy cash to tackle unforeseen emergencies throughout the seven-year budget cycle.

Ireland’s Minister of State for European Affairs Thomas Byrne, who leads the negotiations, defended the proposal as a balanced compromise between 27 countries.

“We protected … the traditional policies of the Union, which are very important for the European Union and the single market. But we also very much look to the future,” Byrne told reporters.

However, Ireland’s proposal is unlikely to satisfy the frugals, who have warned against disproportionate cuts to new EU-wide priorities such as competitiveness, defense and development funding.

“The Irish proposal is a disappointment and not even close to a landing zone. The steep increase in MFF spending compared to today is unaffordable and financially not viable at all. By favouring policy priorities of the 20th century the proposal fails to prepare the EU for the 21st century,” an EU diplomat said.

They added: “This negobox is no basis for an agreement among member states. We urgently need more financial realism and less financial La La Land.”

Germany and its allies criticized the previous Cyprus Council presidency for cutting only €32 billion in the last negobox in June.

The new negobox will also be a hard sell to the European Parliament.

“The Irish Presidency has delivered little progress, no meaningful new solutions and a weaker budget,” the European People Party’s budget negotiator Siegfried Mureșan wrote in a statement shortly after the proposal was published.

He added: “Parliament is not bluffing: the budget proposed by the Irish Presidency will not receive our consent.”

The EU’s 27 ambassadors will react to the negobox during a meeting on Sunday, where they will also prepare the leaders’ discussion on Thursday.

Governments are racing to agree on a budget deal among themselves by the end of the year, before elections in France, Poland and Italy threaten to disrupt the negotiations.

Tax tweaks

The Irish presidency made no major changes to a package of five new EU-wide taxes, or own resources, that were proposed by the Commission last year to generate a total of €66 billion for the budget.

This comes as a disappointment for countries such as France, which had been pressuring Dublin to add the European Parliament’s proposed levies on digital giants, online gambling and crypto firms to the negobox to increase the potential revenue.  

Some of the Commission’s ideas — including a corporate tax, known as CORE, and a levy on polluting firms (ETS) — have been challenged by EU governments for more than a year of negotiations and are seen as unlikely to come to fruition.

Despite pressure to drop the most criticized options, Ireland has kept the five taxes on the table and merely suggested technical changes to overcome opposition.

It suggested phasing in ETS contributions for poorer countries that are overwhelmingly hit by the tax, and increasing EU budget contributions from a levy on carbon imports that is accepted by most governments.

Tensions on own resources will come to a head during Thursday’s leaders’ discussions. The president of the European Council, António Costa, said he intends to “fix” a package of potential taxes that are acceptable to governments during that meeting.

This article was updated.

BRUSSELS — European Trade Commissioner Maroš Šefčovič opened two days of talks in Beijing on Thursday aimed at rebalancing a gaping trade deficit, with failure to reach a deal likely to test Brussels’ resolve to impose tougher trade restrictions.

The meeting marks the final round of an effort launched in June to reset the lopsided trading relationship, and will hinge on whether China’s Commerce Minister Wang Wentao is prepared to make substantial concessions.

If no agreement can be reached to narrow the EU’s €1 billion-a-day goods trade deficit, Brussels and Beijing could find themselves on a collision course. EU leaders will review the outcome of the talks at a summit in Brussels next Thursday, where they will consider next steps.

Arriving in China, Šefčovič said his goal was to balance what he called an unsustainable trade deficit. Heading into a meeting with Wang, he said it was crucial that the talks deliver “tangible outcomes.”

The discussions have zeroed in on cars, with Chinese exports increasingly eating into the market share of European automakers. In August, one in eight cars bought in the bloc was Chinese, thanks largely to a boom in sales of plug-in hybrid electric vehicles.

European negotiators have been pushing China to commit to some form of export restraint — in particular for hybrids. Unlike Chinese-made battery-electric vehicles, which were hit with extra countervailing duties in 2024, plug-in hybrids are not subject to such measures.

Without meaningful commitments from Beijing, the Commission has warned it will resort to unilateral trade restrictions. For cars, it is considering safeguard measures that would mix import quotas and tariffs to protect European automakers.

Chemicals are next. Industry Commissioner Stéphane Séjourné said Thursday that the Commission plans to introduce targeted safeguards on plastics and composite materials, subject to a request from EU governments that Brussels do so.

Wind in his sails 

Šefčovič flew to Beijing with the backing of the leaders of Europe’s two biggest economies — France and Germany — to take a tougher approach to trade.

In a joint appeal on Monday, President Emmanuel Macron and Chancellor Friedrich Merz said the Commission should be given a freer hand to shut off access to the EU for goods from countries that distort the bloc’s single market.

While the two leaders did not mention China in their letter to Commission President Ursula von der Leyen, there was no mistaking the target of their proposed trade “kill switch,” which could be blocked only by a qualified majority of EU countries.

The EU already has a powerful trade weapon in its Anti-Coercion Instrument, designed to counter economic bullying by foreign powers. 

But Brussels has yet to muster broad support from member countries to deploy it, most recently in January when U.S. President Donald Trump threatened to seize Greenland, a Danish territory.

The EU’s difficulty in responding swiftly to trade threats has heightened concerns about a surge in Chinese exports that European officials say benefit from unfair government subsidies. With Trump hiking U.S. tariffs, ever more Chinese exports are heading to Europe — increasing pressure on industries that are already being forced to retrench.

Europe’s heavy dependence on China for processed rare earths and other critical raw materials also leaves it vulnerable to retaliation should relations deteriorate.

“If we aren’t willing to fix the way our model works, then we’ll be destroyed,” said one EU diplomat, summing up the concerns flooding Brussels.

“What’s the point of having [more tools] if the Chinese can shut down our strategic production in a matter of days?”

Low expectations

Although Šefčovič entered the talks strengthened by the Franco-German letter, a second diplomat said they didn’t foresee a deal with Beijing this week.

“He knows that a lot of member states are behind the Franco-German push,” the diplomat said, adding that this “has been seen in China.” 

But Beijing has little room to compromise, given its reliance on exports to sustain growth amid weak domestic demand and a prolonged property slump.

“The Chinese side is starting to recognize that there is a problem. But I don’t think they are ready to enter into a substantial deal,” said Gunnar Wiegand, a former head of the EU diplomatic service’s Asia-Pacific department.

Wiegand, now a visiting fellow at the German Marshall Fund, said Šefčovič had earned a reputation as a dealmaker in talks on Britain’s exit from the EU and in last year’s trade deal with Trump. This time, however, “both sides are bound by their own circumstances,” he said.

Europe is desperate to halt the erosion of its industrial base, while China remains heavily dependent on exports to sustain economic growth. 

“The Chinese are going to object to being singled out. Even if a deal with the EU would be the most rational solution, other important markets for Chinese exports, such as ASEAN countries, will start asking the same. It will undercut their global market,” he said. 

LONDON — The U.K. and Israel have stepped back from the diplomatic brink by securing a compromise to prevent the full closure of the British consulate in East Jerusalem.

Most diplomats will leave what will now be operating as a “U.K. Mission” in the occupied territory — but Israel has stopped short of closing it entirely ahead of Thursday’s deadline.

Both sides were presenting this as a good outcome Thursday, in a diplomatic tussle over the U.K.’s plans to impose sanctions on illegal settlements in the West Bank.

U.K. Foreign Secretary Ed Miliband said the diplomats and their families were being “temporarily withdrawn” to secure their safety, but he said the mission will remain independent, operational and continue to work with the Palestinian people.

“We will work in the coming months to build back up our presence, and we will not take reciprocal action while such discussions are underway and credible,” he continued, in a statement released as he was visiting Ukraine.

Israeli Foreign Minister Gideon Sa’ar set out a list of diplomatic actions taken against Britain, adding: “We established a clear principle: It is not possible to act against Israel without Israel taking appropriate measures in response.”

Sa’ar said the consulate would be “closing its operations today” and that the “sign of the British Consulate in Jerusalem has been removed.” Twenty British diplomats, including the consul general, will be leaving East Jerusalem.

But the British flag was still flying on Thursday afternoon. Seven diplomats remain.

The dispute over the consulate has been the latest marker of declining relations between Israel and the U.K. under its Labour government. Israel threatened to close the consulate within 30 days of Sept. 8, in retaliation against Andy Burnham’s government announcing a ban on trade with illegal settlements in the West Bank.

A person familiar with Israeli government thinking, granted anonymity to discuss a sensitive matter, told POLITICO the mission is “basically an empty shell” that cannot issue visas, renew passports or liaise with the Palestinian Authority. Britain does not tend to issue visas or passports in consulates. 

“The seven diplomats there, their work is basically to maintain the building and hold the Union Jack in place,” they said.

A British official presented the deal as a “good outcome” nonetheless. After three weeks of hard-fought negotiations, a feared spiral of tit-for-tat expulsions has been avoided.

The U.K. has told Israel it is keeping the possibility of retaliation open, however, after Israel threatened to expel British diplomats from Israel. The Israeli government had been demanding that the U.K. rolls back its pending package of sanctions on West Bank settlements, but British ministers are holding firm.

Miliband maintained Thursday that Britain does not accept Israel has a “legal right” to shutter the site that has been there for nearly 200 years, because East Jerusalem is deemed “occupied territory.”

The hope in the U.K. Foreign Office is that maintaining a presence will make it easier to build back up after elections in Israel on Oct. 27.

U.K. National Security Adviser Jonathan Powell traveled to Jerusalem last week as part of efforts to persuade the Israeli government not to shut the consulate, but a breakthrough wasn’t reached until Wednesday night.

This developing story is being updated.

MADRID — Spanish Prime Minister Pedro Sánchez has finally done something the far right approves of — calling a snap election on Nov. 29 that the anti-immigrant Vox party is hailing as “Spain’s last chance to be Spain again.”

Polling third in the race, Vox is Spain’s leading nationalist, euroskeptic force and it sees next month’s contest as its prime opportunity to remold the country after eight years of Sánchez’s socialist premiership by getting its people into top ministerial jobs.

Party leader Santiago Abascal greeted Monday’s election announcement as “excellent news.” His delight is hardly surprising given that polls suggest Vox is on track to make the biggest gains of any major party.

While the center-right People’s Party is expected to come first — with about 33% of the vote, according to POLITICO’s Poll of Polls — it will almost certainly have to team up with Vox, which commands support of about 18%, to build a stable coalition.

Abascal will then be able to demand the inclusion of key elements of Vox’s agenda as its price for that partnership. Its goals include deportations of undocumented migrants, a benefits preference for Spaniards over foreign nationals, slashing EU health and safety rules in the farming sector and rolling back support for gender equality and the LGBTQ+ community.

Vox secured 33 of the 350 seats in Congress in 2023, but is now set to double that. Under the PP’s coalition leadership, it should be able to form part of a comfortable majority.

“This time round, Vox is much stronger,” José Antonio Fúster, spokesperson for the party and a member of the Madrid regional parliament, said. “We are going into a very important election, not so much for us, as for Spaniards … This is the last hope for Spain to be Spain again.”

Fúster would not be drawn on which ministries his party has set its sights on, warning against “selling the bearskin before it has been hunted.”

Pointing to talks with the PP in recent months in four regions where the two parties now govern in coalition, he said the shaping of policy was being prioritized ahead of institutional power. “That is the last thing we negotiate because it is the least important,” he said.

Pet portfolios

In August, Vox MEP Jorge Buxadé told POLITICO that forming part of the government was not the only option open to his party, but that in a hypothetical coalition with the PP, his party would seek a number of ministries “in proportion to our vote share.”

That would amount to a significant percentage. If current polls translate into results in November, Vox would be in a position to claim about a third of ministerial posts.

Analysts expect Vox to press for portfolios that focus on its pet policies, such as agriculture, domestic policy, immigration and industry. The culture and education portfolios could also be of interest to the party, given their relevance in the hard right’s campaign against so-called wokeism.

The regions where the PP and Vox currently govern together — Andalusia, Aragón, Castile and León, and Extremadura — offer clues: The government departments that Vox controls are mainly linked to agriculture, welfare benefits and the family.

The party is heading into the election campaign espousing three main ideas: the concept of “national priority” — ensuring that Spaniards have access to public services and benefits ahead of foreign nationals — a clampdown on immigration and broad deregulation.

Although Vox’s rise to prominence was driven by its fierce stance against Catalan nationalism nearly a decade ago, that debate has faded from the political arena. Now, its focus is, like its European far-right counterparts, more firmly on immigration-related matters.

“Before, Vox talked about immigration, but it wasn’t the nuclear issue it has become,” said Guillermo Fernández Vázquez, a political scientist at Carlos III University and author of a book about the European far right. “Now, when Vox talks about social security payments, it talks about immigration; when it talks about the economy, it talks about immigration. Immigration is the issue that dictates everything.”

Vox also subscribes to the “remigration” policy being touted by many far-right parties, under which undocumented migrants and those who commit crimes would be deported. The PP has appeared to respond to Vox’s hard line by toughening its own stance, calling for the expulsion of foreign criminals and opposing a government migrant legalization program.

In each of the regions where the two parties are in coalition, Vox has ensured that its senior partner agreed to formally include the national priority principle in their governing agreement.

“But when it comes to national priority, the PP has added the caveat that it has to be implemented in line with the law,” said Miguel González, a journalist at the El País daily newspaper and author of a book about Vox. Legislation prevents discrimination against foreign nationals when it comes to accessing public benefits and services, meaning the policy is currently little more than symbolic in those regions. 

“In reality, in order to implement this properly, you’d have to change the immigration law,” González added.

Vox is eyeing an overhaul of that legislation to make it a workable policy.

“It’s very possible to change laws that are bad for Spaniards, so we have to roll them back and introduce new laws, making sure that Spaniards are not last in line,” Fúster said.

Deregulation nation

Deregulation also offers a platform from which to attack EU health-and-safety norms that are reviled by the farming sector, one of Vox’s main voter bases.

Fúster accepted that this could lead to clashes with the European Commission, but insisted that pressure from what he described as a rising tide of European parties sharing Vox’s values would “make sure that Brussels returns to the path of common sense.”

PP leader Alberto Núñez Feijóo has criticized phytosanitary restrictions on farmers but has shown little appetite for conflict with European institutions.

In social policy, González said Vox might use the broader notion of deregulation to dismantle funding for gender equality and LGBTQ+ departments and projects, as it has done on a local level. Fúster was reluctant to be drawn on this: “We believe in the equality of Spaniards,” he said. “We don’t believe that anyone should have privileges above others.”

Fernández Vázquez of Carlos III University said that the origins of Vox suggest a bumpy ride for the PP. Vox would be the first far-right party to enter government in half a century since the death of Francisco Franco in 1975 — and there would likely be clashes.

The far-right party formed in 2013 as a breakaway from the conservatives in frustration at what its founders saw as the pusillanimity of the PP in the face of Catalan separatism. 

“I think the relationship between Vox and PP [in government] will be a bad one,” the researcher said. “Abascal and his colleagues are going to enjoy showing up Feijóo whenever they can, portraying him as lukewarm and weak.”

Fúster accepted “it could be a difficult relationship,” adding that the PP “don’t see things the way we do and we don’t share their vision.”

“We’re not willing to make concessions, we’re willing to have a frank, open and reasonable negotiation.”

But for now, the priority is simply to remove the Socialists. In his traditionally combative style, Abascal insisted the election was a chance to hold on to “the peace, prosperity and freedom that a mafioso government wants to snatch from us forever.”

Max Griera contributed to this article.