The president who wasn't there
In today's edition: VDL is safe, and long gone
Race to run DG COMP
Budget digest
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Ursula von der Leyen is so chilled about today's motion of censure against her Commission that she's not even here. Rather than wait for a vote that will fail to topple her, von der Leyen left Strasbourg last night for the Ukraine Recovery Conference in Rome where she will also meet US Senator Lindsey Graham, whose tough sanctions bill against Russia is advancing through Congress.
But that wasn't before making two concessions to the Socialists in Parliament, who had been threatening to abstain from today's midday vote. Abstaining would not bring down the Commission but could expose how little support there is for von der Leyen and the EPP in the centre of the political spectrum, and feed a narrative that the German Christian Democrat is losing her grip on the Parliament.
Last night, after negotiating directly with von der Leyen, top Socialist MEP Iratxe García said she had got a cast-iron guarantee from the Commission that the European Social Fund+ – an instrument that funds things like job training and social inclusion schemes, and is projected to be worth around €150 billion over the next seven years – will be retained in the next EU budget. Until now, the Commission had been toying with the idea of simply earmarking money as societally friendly, an idea that was a non-starter for the centre-left, according to a Socialist official.
Renew Europe will also vote down the motion rather than abstaining, but said in a press release last night that the next key moment will be von der Leyen's annual State of the Union address in September. 'It must mark a shift in leadership style – from unilateralism to partnership,' the liberals said.
Fading Support for Ukraine
Ukraine opens a high stakes Recovery Conference in Rome today, with Volodymyr Zelenskyy aiming to secure energy deals and defence investment. But Western allies admit options are dwindling, and a €100 billion EU support plan remains blocked by Hungary.
A separate summit on security guarantees, chaired by France and the UK today, is also expected to deliver little. The resulting picture, a senior NATO official told Alexandra Brzozowski, is bleak. 'Ukraine continues to show a lot of innovative spirit,' they said. 'But we are in for a stressful and difficult summer.'
Parliament backs money laundering watchlist
On Wednesday, the European Parliament approved an updated list of high-risk third countries for money laundering and terrorist financing, choosing not to oppose the European Commission's proposal. The revised list removes the UAE, Barbados, Gibraltar, Jamaica, Panama, the Philippines, Senegal, and Uganda.
The move marks a shift from last year, when MEPs strongly opposed the Commission's bid to delist Gibraltar, Panama, and the UAE, citing evidence that the countries had failed to curb sanctions circumvention, particularly in relation to Russia.
The competition to lead DG COMP
The European Commission's powerful competition authority – responsible for slapping Google and Apple with billion-euro fines, probing Big Oil, and reining in corporate power across the EU – is facing a leadership vacuum. Oliver Guersent, the French civil servant who has led DG Competition since 2020, will step down on 31 July, setting off a scramble for one of the EU's most politically sensitive posts.
Names like Anthony Whelan – acting economics advisor in von der Leyen's cabinet – and DG Energy chief Ditte Juul Jørgensen are being floated in Brussels corridors, as first reported by the FT. Whelan is seen as almost too qualified for the job. 'The president won't let him go that easily,' one senior EU official told Euractiv. Jørgensen, a former chief of staff to Competition Commissioner Margrethe Vestager, brings the advantage of coming from a smaller member state – a factor that would ease tensions around nationality balance and reduce friction with major capitals.
A Frenchman, Guersent's exit also raises questions about the mix of nationalities at the top of the Commission. That also weakens the case for another French contender, Céline Gauer, who runs the Commission's Reform and Investment Task Force. She is widely seen as highly competent, having negotiated the recovery plans with EU capitals.
Still, there are signs that the Commission will go for a simpler option: a DG-level reshuffle rather than promoting someone still finding their feet. In that regard, Linsey McCallum is seen as a strong contender. With a proven track record as deputy director-general for antitrust, she's already navigating the most politically charged files in the building. 'She's extremely respected, has the courage to act when needed, and knows how to be political while remaining deeply respectful,' an antitrust economist noted.
MFF digest
Less than a week before the Commission presents the bulk of its 2028-2034 Multiannual Financial Framework, virtually all parts of the proposal have been leaked.
Our chief diplomatic correspondent Alexandra Brzozowski writes that the Commission will propose combining different external action programmes and funds into a single 'Global Europe Fund', divided between six regions. It will suggest, for the first time in a budget proposal, to directly link the EU's foreign aid to recipient countries' efforts in preventing migration into the bloc.
Another key element of the EU executive's proposal will be a Ukraine fund to be incorporated into the EU budget, to guarantee long-term financing for Kyiv from 2028 to 2034. Likelihood of success on a scale from 1 to Hungary: Unlikely. Read more here.
Chief defence correspondent Aurélie Pugnet writes that defence start-ups are to get a specific fund named "DARPA" under the Horizon Europe research programme. DARPA is the name of the US Pentagon's key agency channelling billions of dollars in defence innovation, which does not have an equivalent at EU level. A European DARPA (mimicking the US agency which invests in defence innovation) could help complete the EU defence fund currently marked at €8 billion.
Euractiv's Claudie Moreau writes that the Commission is preparing to merge the Creative Europe and Citizens, Equality, Rights and Values (CERV) funding programmes. The new proposal, obtained by Euractiv, would fund culture, media, audiovisual services, and projects aimed at supporting EU values. This is a hit for cultural industries that rely heavily on Creative Europe and feared combining it with other funding objectives may dilute their own share of the EU budget. Read more.
Meanwhile, Euractiv's Jacob Wulff Wold writes that there are few details so far on the two thirds of the budget reserved for farmers and the regions. The latter have been promised a "dedicated" budget with a preserved two pillar structure of direct farmer support and rural development funds.
A Monday German parliamentary cable, seen by Euractiv, suggests only the direct payments will be truly ring-fenced within the national partnerships, with the rest of CAP and cohesion subject to 'horizontal flexibility'. But the fight may last until the final whistle on Wednesday. Around the bloc
GERMANY | German Chancellor Friedrich Merz acknowledged trouble with France over the joint next-generation fighter jet project on Wednesday, but expressed confidence that the aircraft remains needed and will get back on track. Read more.
FRANCE | The European Court of Human Rights on Wednesday rejected French far-right leader Marine Le Pen's request to suspend a Paris Criminal Court ruling that bars her from holding public office. The court found that "no imminent risk of irreparable harm to a right protected by the European Convention on Human Rights or its protocols has been established".
ITALY | Italy's Tribunal of Ministers is weighing criminal charges against Prime Minister Giorgia Meloni and top officials over the government's controversial release of a Libyan general wanted by the International Criminal Court. Read more.
SPAIN | Spanish Prime Minister Pedro Sánchez ruled out resignation on Wednesday, unveiling a sweeping anti-graft strategy as his Socialist party faces mounting scrutiny over corruption allegations. Read more.
CZECHIA | Czech President Petr Pavel will present a plan for Ukraine's post-war reconstruction at Thursday's international recovery conference in Rome. The plan focuses on stabilising and modernising Ukraine's economy, attracting investment, facilitating the return of refugees, and accelerating Ukraine's EU accession path. Read more. Also on Euractiv
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Euractiv
2 hours ago
- Euractiv
Trump's tariffs could trigger EU-US decoupling, warns Brussels' trade chief
Donald Trump's threatened 30% tariff on European exports would "practically" end EU-US trade and could herald the end "as we know it' of the €1.6 trillion transatlantic economic relationship, Maroš Šefčovič said on Monday. Šefčovič said the US president's latest tariff threat, announced on Saturday, would have 'super negative' consequences if it enters into force on 1 August by disincentivising EU exporters from shipping goods to the US. "30% or anything above 30%... it has more or less the same effect: practically, it prohibits trade," Šefčovič told reporters ahead of a meeting of EU trade ministers in Brussels. "If it stays at 30%-plus, simply the trading as we know it will not continue," he added, noting that he would 'definitely do everything' to prevent the measure from taking effect. Šefčovič also stressed that the Commission remains prepared 'if necessary' to impose retaliatory countermeasures to 'restore the balance in our transatlantic relationship." He added that he would speak to his US counterparts later on Monday. Brussels has already drawn up a retaliatory package targeting €21 billion worth of US exports, which was originally set to take effect on Tuesday but whose imposition was delayed until the start of next month following Trump's threat over the weekend. The Commission has also prepared a separate €72 billion list that it will present to EU ministers on Monday, which could also be introduced on 1 August if no negotiated solution is reached. Trump has already imposed a 50% tariff on steel and aluminium, a 25% duty on cars, and a 10% blanket levy since returning to the White House in January, which collectively affect €370 billion worth of EU exports, or 70% of the bloc's total shipments to the US. The possibility of a protracted trade conflict with the EU's main ally was echoed on Monday by Danish Trade Minister Lars Løkke Rasmussen, who warned that a trade war with the US would have "devastating" consequences on both sides of the Atlantic. "We want the deal, but there's an old saying: 'If you want peace, you have to prepare for war'," said Rasmussen, whose country currently holds the rotating EU Council presidency and who will chair Monday's meeting. Some ministers, however, said that the EU was prepared for a prolonged trade conflict. Sweden's Trade Minister, Benjamin Dousa, said Brussels has "more tools in the toolbox" that it could use to hurt US exporters – a thinly veiled reference to the EU's 'anti-coercion instrument', which if invoked, could target US services and whose use is supported by French President Emmanuel Macron. "I think if the White House wants us to be tough, then we will be quite tough against the White House," Dousa said. (mm)
Euractiv
6 hours ago
- Euractiv
Trump escalates, Ursula hesitates
Welcome to the Capitals by me Eddy Wax, with Nicoletta Ionta. We welcome feedback and tips here . Sign up here. Enjoying The Capitals? Forward us to a friend. Today: EU-US trade talks analysis Rutte meets Trump Macron's defence splurge MEPs fight over migration files Around the bloc In the capital It's legacy time. Ursula von der Leyen now has 18 days to keep Donald Trump from slapping European exporters with a 30% tariff after he upped the ante over the weekend. Make no mistake: Failure to secure better terms by the 1 August deadline would be disastrous for the EU's economy. The fact that Trump's escalation triggered little more than a whimper from Brussels over the weekend illustrated the degree to which von der Leyen's 'don't poke the bear' strategy has failed. Instead of engaging with Trump directly, von der Leyen relied on her best man – Maroš Šefčovič, a Slovak-born former communist who has made a career in Brussels as his country's forever commissioner. Šefčovič is a nice guy by all accounts but he crashed and burned. Barring a last minute reversal by Washington, which seems unlikely, von der Leyen's decision to hand full negotiating power to Šefčovič looks to have been a massive fiasco. Which raises the question: Where was Ursula? Von der Leyen vowed to only to go go to Washington when a 'concrete' deal was ready. Well, it's ready alright. European trade ministers are due to meet in Brussels today, following a Sunday gathering of ambassadors, who strongly supported von der Leyen's decision to keep a €21 billion retaliation package in the freezer until August 1, Euractiv's Thomas Møller-Nielsen tells me. The Commission will also present ministers with a separate list of countermeasures targeting roughly €72 billion worth of US exports, EU diplomats said. "Both packages will be locked and loaded and ready to be used in early August, if negotiations don't yield an acceptable outcome,' said an EU diplomat. But if the EU isn't willing to use the smaller retaliation package now, how credible is the larger threat? And remember, that package – designed as a response to 25% steel and aluminium tariffs – did not change after Trump bumped up those tariffs to 50%, mid-negotiations. Trump, as ever, appears to have escalation dominance . The mood music before Trump's Saturday announcement signalled that a preliminary deal was close. Trump termed the EU 'very nice' and Brussels was preparing to swallow the 10% tariffs already in place. Some doubted a dreaded Trumpian letter would materialise. Now things are moving rapidly in the wrong direction but that seems to have triggered little soul searching in the Berlaymont. The EU is still sticking with diplomatic yoga, flattery and contortions with no sign of it working, Euractiv's Alexandra Brzozowski reports. The conflicting messages from Paris, Berlin and Rome haven't helped matters. France wants a more assertive, punchy approach – and has emphasised the need to hit back with tariffs. Germany wanted a quick and dirty deal to spare its car sector. In the end neither has happened and the EU is still sitting in self-imposed limbo. Calls for the EU to get real and retaliate are growing – American economist Paul Krugman, a vocal Trump critic, said the EU should hit back, and so do members of the European Parliament, like trade committee chair Bernd Lange. French MEP Marie-Pierre Vedrenne called for the EU's anti-coercion instrument to be put on the table for trade ministers today (it won't be). Enrico Letta is also fulminating. Still, Italy really, really doesn't want to escalate, as made clear by Giorgia Meloni last night. The Commission is at pains to show it has other options. Von der Leyen announced a trade deal (or rather, an agreement to agree one) with Indonesia over the weekend. EU-Indonesia trade is worth roughly 2% of what EU-US trade is worth. The good news is that the EU is in a better position than when Trump was threatening 50% tariffs; the bad news is that suddenly Brexit looks smarter: the UK escaped with just 10% tariffs. Trade is an area where the European Commission has the exclusive competence to act on behalf of EU countries. It's the one thing it's supposed to be good at. Which is why capitals around Europe have a very Trumpian question this morning: 'What in the hell happened, Ursula?' Rutte to meet Trump Some people, however, are getting a lot of facetime with Trump. NATO boss Mark Rutte will meet him in Washington today, their first meeting since the Hague summit where European countries agreed to hike their defence spending. Trump has teased a mysterious big announcement on Russia today. Trump has said he wants NATO countries to buy American weapons for Ukraine; in Brussels, EU defence commissioner Andrius Kubilius is encouraging countries to use their SAFE scheme loans to buy weapons for Ukraine. Listen to what Lindsey Graham said on Sunday: "Stay tuned about seized assets ... stay tuned about a plan to go after the seized assets more aggressively, stay tuned for a plan where America will begin to sell to our European allies tremendous amount of weapons that will benefit Ukraine." Will the former Dutch PM put in a good word for the EU on trade while he's there? Parliament migration fight Renew, the Greens, and the Left want to stop the ECR group from leading negotiations on a key migration bill. Those groups are calling for a vote in the Civil Liberties committee this week to overturn a controversial move by the EPP – backed by the far-right – that handed a key file to the ECR and broke Parliament rules on dossier distribution. Around the bloc GERMANY | Friedrich Merz and Keir Starmer will sign a friendship treaty on 17 July this week, as first revealed by Euractiv. The first bilateral deal of its kind, it will put a strong focus on security and touch on last year's Trinity House defence pact. FRANCE | Emmanuel Macron last night announced plans to raise defence spending by €3.5 billion in 2026, and then by a further €3 billion in 2027. More here. The €40 billion austerity plan for 2026 that Prime Minister François Bayrou will unveil on Tuesday is expected to be rejected by all opposition parties. This could lead to the fall of the government when parliament votes on the proposal in autumn. Read more. SPAIN | Plans for full fiscal autonomy for Catalonia will be announced by a joint committee comprising the national government and the regional government, as Pedro Sánchez comes under pressure from separatists to grant them control over taxation. Read more. CZECHIA & SLOVAKIA | Czech PM Petr Fiala wrote to his Slovak counterpart Robert Fico asking him not to block the EU's 18th sanctions package against Russia, invoking their nations' shared history of Soviet occupation. On Saturday, Fico said he hoped to reach a deal by Tuesday. Read more. Also on Euractiv
Euractiv
6 hours ago
- Euractiv
France walks a budget tightrope as Bayrou prepares 2026 austerity plan
PARIS – The €40 billion austerity plan for 2026 that French Prime Minister François Bayrou will unveil on Tuesday is expected to be rejected by all opposition parties. This could lead to the fall of the government when parliament votes on the proposal in autumn. At 16:00 on Tuesday, Bayrou will present his first budgetary orientations for 2026. For weeks, government ministers have taken turns to face media and prepare expectations, emphasising the catastrophic state of public finances and the urgent need to rein in public spending. According to figures released by the National Institute of Statistics and Economic Studies (INSEE) on 26 June, public debt rose by a further €40.5 billion in the first three months of the year, reaching €3,345.8 billion at the end of the first quarter – equivalent to 114% of gross domestic product (GDP). To reduce the deficit from 5.4% of GDP this year to 4.6% next year – and to fall within the European 3% limit by 2029 – the Prime Minister intends to propose a €40 billion adjustment to the 2026 budget. Stressing this will come without any 'indiscriminate tax hikes', the move will necessarily entail a reduction in public spending. Measures under consideration include reforms to unemployment insurance and a reduction in ministerial budgets across the board. At the same time, increased defence spending has already been announced, the cost of servicing debt will go up, and France's contribution to the European Union (EU) budget will also grow. The government is also said to be counting on a 'freeze year', which would see social benefits – including unemployment insurance and pensions – maintained at 2025 levels, despite an expected inflation of 1.6% in 2026. This freeze could save around €5 billion. In an effort to win support, the Prime Minister met last week with representatives of the various political groups in the National Assembly. But he knows he is walking a tightrope. Whilst the scale of financial challenge is almost universally acknowledged, there is no consensus on how to address it. A trench war in the making The supply-side economic approach championed by Bayrou – and by all of Emmanuel Macron's prime ministers before him – is denounced by the left-wing parties, who criticise the tax breaks granted to businesses. 'Since 2017, public spending has fallen relative to GDP, so it's not spending that has made the deficit worse – it's the tax cuts,' MP Éric Coquerel (LFI), who chairs the National Assembly's Finance Committee, told Euractiv. 'The trade war launched by Donald Trump calls instead for massive investment in industry, as the Germans are preparing to do,' Coquerel added. He fears a 'decoupling' of the French economy and an 'explosion' in inequality. LFI is expected to reject the proposed budget this autumn, which will leave the government no choice but to try, once more, to negotiate with the Socialists. The latter had agreed not to vote down the 2025 budget in exchange for reopening the file on pension reform. But the failed negotiations between trade unions and employers have put Bayrou's government on thin ice and the Socialists now plan a more combative stance towards the government's proposals. Socialist senator Patrick Kanner has pushed for a greater tax burden on higher-income individuals: 'If the effort demanded of the wealthiest is just a minor tax raising €1 to €1.5 billion, that won't be acceptable,' he warned. The far-right Rassemblement National (RN) has criticised the lack of 'structural savings'. 'Proposing a 'freeze year' is like saying 'I'm doing nothing, but it's less bad than doing something',' RN MP Philippe Lottiaux told Euractiv. RN favours 'reducing the cost of immigration' by tying social benefits to 'nationality and employment criteria'. Alongside this, the party calls to renegotiate France's contribution to the EU budget, due to rise from €23.8 billion in 2025 to €29.2 billion in 2026. Bayrou on borrowed time RN has warned that it will not hesitate to bring down the government this autumn if it insists on pushing through a budget that 'undermines the purchasing power of the French people'. As with the toppling of the Michel Barnier government last December, the far-right could be joined by all left-wing parties. 'The budgetary situation is concerning, but political instability is even more so, as it prevents any long-term planning of savings measures,' Mathieu Plane, Deputy Director of the French Economic Observatory (OFCE), told Euractiv. This is a particular concern as a long-term budget course is crucial to retain market confidence, he added. On 4 July, the yield on five-year Italian government bonds (BTPs) fell below that of French bonds (OATs), at 2.65% versus 2.67%, respectively. By contrast, experts observe the political stability in Italy, which boosts its credit rating.
