Jamie Dettmer is opinion editor and a foreign affairs columnist at POLITICO Europe. Over the past few days, Ukraine has been hitting Russia back as hard as it can with long-range drone strikes, and it has three objectives in mind: lifting Ukrainian spirits as the country suffers blackouts from Russia’s relentless air attacks; demonstrating to Western allies that it has plenty of fight left; and, finally, cajoling Moscow into being serious about peace negotiations and offering concessions. However, the latter is likely to be a forlorn endeavor. And at any rate, amid the ongoing diplomatic chaos, which negotiations are they aiming for? U.S. President Donald Trump’s negotiators have been talking up the prospects of a peace deal — or at least being closer to one than at any time since Russia’s invasion began nearly four years ago. But few in either Kyiv or Europe’s other capitals are persuaded the Kremlin is negotiating in good faith and wants a peace deal that will stick. German Chancellor Friedrich Merz certainly doesn’t think so. Last week, he argued that Russian President Vladimir Putin is just spinning things out, “clearly playing for time.” Many Ukrainian politicians are also of a similar mind, including Yehor Cherniev, deputy chairman of the Committee on National Security, Defense and Intelligence of Ukraine’s Rada: “We see all the signals they’re preparing to continue the war, increasing arms production, intensifying their strikes on our energy infrastructure,” he told POLITICO.  “When it comes to the talks, I think the Russians are doing as much as they can to avoid irritating Donald Trump, so he won’t impose more sanctions on them,” he added. Indeed, according to fresh calculations by the German Institute for International and Security Affairs’ Janis Kluge, Russia has increased its military spending by another 30 percent year-on-year, reaching a record $149 billion in the first nine months of 2025. The war effort is now eating up about 44 percent of all Russian federal tax revenue — a record high. And as social programs are gutted to keep up, some Western optimists believe that Russia’s anemic growing economy and the staggering cost of war mean Putin soon won’t have any realistic option but to strike an agreement. But predictions of economic ruin forcing Putin’s hand have been made before. And arguably, Russia’s war economy abruptly unwinding may pose greater political and social risks to his regime than continuing his war of attrition, as Russian beneficiaries — including major business groups, security services and military combatants — would suffer a serious loss of income while seeking to adapt to a postwar economy. The war also has the added bonus of justifying domestic political repression. War isn’t only a means but an end in itself for Putin, and patriotism can be a helpful tool in undermining dissent. Nonetheless, the introduction of Trump’s son-in-law Jared Kushner as a key negotiator is significant — he is “Trump’s closer” after all, and his full engagement suggests Washington does think it can clinch a deal with one last heave. Earlier this month, U.S. Special Envoy Gen. Keith Kellogg had indicated a deal was “really close,” with a final resolution hanging on just two key issues: the future of the Donbas and the Zaporizhzhia nuclear power plant. The negotiations are in the “last 10 meters,” he said. But again, which negotiations? Those between Washington and Moscow? Or those between Washington and Kyiv and the leaders of Europe’s coalition of the willing? Either way, both have work to do if there is to be an end to the war. Putin has refused to negotiate with Kyiv and Europe directly, in effect dispatching Trump to wring out concessions from them. And no movement Trump’s negotiators secure seems to satisfy a Kremlin that’s adept at dangling the carrot — namely, a possible deal to burnish the U.S. president’s self-cherished reputation as a great dealmaker, getting him ever closer to that coveted Nobel Peace Prize. Of course, for Putin, it all has the added benefit of straining the Western alliance, exploiting the rifts between Washington and Europe and widening them. All the frenzied diplomacy underway now seems more about appeasing Trump and avoiding the blame for failed negotiations or for striking a deal that doesn’t stick — like the Minsk agreements. For example, longtime Putin opponent Mikhail Khodorkovsky’s New Eurasian Strategies Center believes the Russian president remains “convinced that Russia retains an advantage on the battlefield,” and therefore “sees no need to offer concessions.” “He prefers a combination of military action and diplomatic pressure — a tactic that, in the Kremlin’s view, the West is no longer able to resist. At the same time, any peace agreement that meets Russia’s conditions would set the stage for a renewed conflict. Ukraine’s ability to defend itself would be weakened as a result of the inevitable political crisis triggered by territorial concessions, and the transatlantic security system would be undermined. This would create an environment that is less predictable and more conducive to further Russian pressure,” they conclude. Indeed, the only deal that might satisfy Putin would be one that, in effect, represents Ukrainian capitulation — no NATO membership, a cap on the size of Ukraine’s postwar armed forces, the loss of all of the Donbas, recognition of Russia’s annexation of Crimea, and no binding security guarantees. But this isn’t a deal Ukrainian President Volodymyr Zelenskyy can ink — or if he did, it would throw Ukraine into existential political turmoil. “I don’t see the Parliament ever passing anything like that,” opposition lawmaker Oleksandra Ustinova told POLITICO. And if it did, “it might lead to a civil war” with many patriots who have fought, seeing it as a great betrayal, she added. “Everybody understands, and everybody supports Zelenskyy in doing what he’s doing in these negotiations because we understand if he gives up, we’re done for.” Not that she thinks he will. So, don’t expect any breakthroughs in the so-called peace talks this week. Putin will maintain his maximalist demands while sorrowfully suggesting a deal could be struck if only Zelenskyy would be realistic, while the Ukrainian leader and his European backers will do their best to counter. And they will all be performing to try and stay in Trump’s good books.  

Top EU diplomat Kaja Kallas said Monday that financing Ukraine via a loan based on Russia’s frozen assets was now looking “increasingly difficult” ahead of a crunch European Council summit on Thursday. Kallas’ warning on the narrowing path to securing a deal on Russia’s immobilized billions came as European leaders gather in Berlin to try to influence the shape of a potential peace deal in discussions with Ukrainian President Volodymyr Zelenskyy and envoys from U.S. President Donald Trump. EU leaders including German Chancellor Friedrich Merz insist that using Russia’s frozen assets is the only credible method for Europe to keep Ukraine financially afloat from next year. But in the run-up to the summit in Brussels, fears are growing that the push could be derailed by opposition from EU states, who are under pressure from both Russia and the United States. While Belgian Prime Minister Bart De Wever has mentioned threats from Russia if Brussels seizes the assets — and Moscow has already taken steps to sue the Belgian bank where most of the cash is held — two senior European officials involved with the loan effort said the U.S. was also pressuring EU states to go against the scheme. “The Americans are not only demanding that Ukraine cede territories Russia did not manage to take, but are also pushing several European countries not to give Ukraine a €210 billion reparations loan,” said one of the senior European officials. According to a leaked U.S.-Russia draft peace plan, Washington intends to direct part of the assets toward U.S.-led reconstruction efforts, and the same European officials said the U.S. had not dropped its basic opposition to Europe using the assets to help Ukraine. Germany’s Merz has already insisted that the Russian assets should not be transferred to America’s economic advantage. Speaking on her way into a gathering of foreign ministers in Brussels, Kallas noted “significant pressure from all sides” over the reparations loan, which she called the “most credible option” to keep Kyiv financially afloat from next year. “This [reparations loan] is what we’re working on. We are not there yet and it is increasingly difficult, but we’re doing the work and we still have some days,” she said. Belgium has long been opposed to using Russia’s frozen assets to help Ukraine, arguing that this would imperil the peace process and expose Brussels to legal retaliation from Russia. In recent days, Italy, Bulgaria and Malta came out against the scheme, while Hungary and Slovakia have previously voiced opposition. Over the weekend, Czechia’s newly-installed prime minister, Andrej Babiš, came out against the loan, saying Prague would not provide any financial guarantees to back up Belgium. The EU doesn’t need unanimous backing to tap the assets following a decision last week to use emergency powers to immobilize the assets indefinitely. A vote by qualified majority could still pass even if all seven countries cited above oppose it, given that a blocking minority requires 35 percent of the EU’s population.  But Kallas said that it would “not be easy” to override Belgium, given that the bulk of the assets are in the country. “I think it’s important that they are on board with whatever we do.” The threats against Belgium appear to be ramping up. A joint investigation by EU Observer, Humo, De Morgen and Dossier Center stated that the chief executive of Euroclear, Valérie Urbain, has been the subject of threats and intimidation from a Russia-sympathizing French banker linked to Euroclear, requiring her to contract private security. In response, former Estonian Prime Minister Kallas said “some countries are more used to the threats presented by Russia than others — but I want to tell you these are only threats. If we keep united, we are much stronger.”

The College of Europe is hiring a new rector because the former holder of that role, Federica Mogherini, resigned after being mired in scandal earlier this month. In a vacancy notice posted Monday, the college said it’s accepting applications until March 2, with the new rector to start from June 2026 or soon after. The rector “holds the overall academic and administrative responsibility for the College as a whole,” the notice said.   Candidates must be European nationals, show “important academic qualities” and have management experience, as well as speaking English and French. “In executing their responsibilities, the Rector will live up to the high ethical standards and values of the College of Europe,” the notice said. The elite training ground for future EU civil servants may be hoping for a quieter selection process than last time around, when Mogherini, the EU’s former top diplomat, won the job even though she applied after the deadline and despite accusations of cronyism and not being qualified for the role. Mogherini resigned in early December after being questioned in a fraud probe over a public tender in 2021-22 for a diplomatic academy program. Mogherini’s former employer, the European External Action Service (EEAS), awarded the tender to the College of Europe, and Mogherini became the director of the diplomatic academy in addition to her job as rector of the college. The scandal also took down the former top civil servant at the EEAS, Stefano Sannino. The college has named Ewa Ośniecka-Tamecka as acting rector until a replacement for Mogherini is found. The rector’s job is for a term of five years and can be renewed once. The person will report to former European Council President Herman Van Rompuy, who is the head of the college’s administrative council.

BRUSSELS — The European Commission is considering introducing quotas to boost the number of staff from underrepresented nations such as Ireland and Denmark. The Commission has resisted taking specific measures to correct geographical imbalances but posts are highly sought-after, with candidates from all countries in the bloc vying for jobs in Brussels in highly competitive examinations. A Commission document, seen by POLITICO, shows that Denmark, Sweden, Germany, Ireland, the Netherlands and Finland are among those considered “under-represented” in the EU executive, meaning staffing levels are below a “guiding rate” based on countries’ populations. Meanwhile, staffers from Belgium, Italy, Bulgaria, Greece, Romania and France are considered “appropriately represented.” The document does not spell out which nationalities are overrepresented. A separate internal document, dating from early November, sets out a plan to address and correct these imbalances, which a Commission official — granted anonymity to speak freely — attributed to the fact that the institution’s salary and benefits package may be highly attractive in some countries and less so in others. These benefits include ironclad job security, flexible working arrangements, free access to European schools, and tax-free income. In the short term, starting in 2026, people recruiting staff to the Commission are instructed to monitor how these imbalances evolve by using “soft” methods that don’t amount to specific hiring targets or preferential policies. If these methods fail to produce the desired effect, then hiring officials will be asked to start implementing stronger measures. These include interviewing at least one suitable candidate from an underrepresented nationality for each job opening; giving preference to an underrepresented nationality if two people are deemed to be on the same level of competence; taking into account the Commission’s overall hiring needs when launching a recruitment drive; and applying nationality-based recruitment targets for the hiring of both permanent and so-called temporary agents (employees who don’t enjoy full civil servant status in the Commission). National capitals have long resisted hiring quotas in the Commission, arguing that it’s up to each country to promote work in the Brussels institutions and make sure there is a pipeline of candidates. But despite previous efforts to bolster candidacies from underrepresented states, including a 2022 plan to increase visibility of job vacancies and boost outreach by both the Commission and member states, efforts have so far failed to correct imbalances. The push is also a factor in an internal tug-of-war over resources, as the Commission’s former secretary-general, Catherine Day, undertakes a “large-scale review” that aims to streamline and modernize the institution. Staff unions are using the imbalance issue to argue against any changes to the Commission’s job status for civil servants, saying this could dissuade candidates from underrepresented states.

BRUSSELS — The EU aims to seal a free-trade agreement with India by late January instead of the end of the year as initially envisaged, Trade Commissioner Maroš Šefčovič told POLITICO. “The plan is that, most probably in the second week of January, that [Indian Commerce Minister] Piyush Goyal would come here” for another round of negotiations, Šefčovič said in an interview on Monday. “There is a common determination that we should do our utmost to get to the [free-trade agreement] and use every possible day until the Indian national day,” he added. India celebrates its annual Republic Day on Jan. 26, and both Commission President Ursula von der Leyen and Council President António Costa have been invited as guests of honor. Von der Leyen and Indian Prime Minister Narendra Modi pledged in February to clinch the free-trade agreement (FTA) by the end of the year — something even they recognized would be a steep target. But a number of issues keep gumming up the works, Šefčovič said, including that India is linking its objections to the EU’s planned carbon border tax and its steel safeguard measures with the EU’s own demand to reduce its tariffs on cars. Šefčovič traveled again to New Delhi last week in an effort to clear major hurdles to conclude the EU’s negotiations with the world’s most populous country. “The ideal scenario would be — like we announced with Indonesia — that we completed the political negotiations on the FTA,” Šefčovič said. “That would be my ideal scenario, but we are not there yet.” The EU and Indonesia concluded their agreement in September. “It’s extremely, extremely challenging,” he said, adding: “The political ambition of our president and the prime minister to get this done this year was absolutely crucial for us to make progress.”

BRUSSELS — The European Commission has done everything in its power to accommodate the concerns of member countries over the EU’s trade deal with the Latin American Mercosur bloc and get it over the finish line, Trade Commissioner Maroš Šefčovič told POLITICO. “I hope we will pass the test this week because we really went to unprecedented lengths to address the concerns which have been presented to us,” Šefčovič said in an interview on Monday.  “Now it’s a matter of credibility, and it’s a matter of being strategic,” he stressed, explaining that the huge trade deal is vital for the European Union at a time of increasingly assertive behavior by China and the United States. “Mercosur very much reflects our ambition to play a strategic role in trade, to confirm that we are the biggest trader on this planet.” The commissioner’s remarks come as time is running short to hold a vote among member countries that would allow Commission President Ursula von der Leyen to fly to Brazil on Dec. 20 for a signing ceremony with the Mercosur countries — Brazil, Argentina, Uruguay and Paraguay. “The last miles are always the most difficult,” Šefčovič added. “But I really hope that we can do it this week because I understand the anxiety on the side of our Latin American partners.”  The vote in the Council of the EU, the bloc’s intergovernmental branch, has still to be scheduled. To pass, it would need to win the support of a qualified majority of 15 member countries representing 65 percent of the bloc’s population. It’s not clear whether France — the EU country most strongly opposed to the deal — can muster a blocking minority. If Paris loses, it would be the first time the EU has concluded a big trade deal against the wishes of a major founding member. France, on Sunday evening, called for the vote to be postponed, widening a rift within the bloc over the controversial pact that has been under negotiation for more than 25 years. Several pro-deal countries warn that the holdup risks killing the trade deal, concerned that further stalling it could embolden opposition in the European Parliament or complicate next steps when Paraguay, which is skeptical toward the agreement, takes over the presidency of the Mercosur bloc from current holder Brazil. Asked whether Brussels had a Plan B if the vote does not take place on time, Šefčovič declined to speculate. He instead put the focus on a separate vote on Tuesday in the European Parliament on additional farm market safeguards proposed by the Commission to address French concerns. “There are still expectations on how much we can advance with some of the measures which are not yet approved, particularly in the European Parliament,” he stressed.  “If you look at the safeguard regulation, we never did anything like this before. It’s the first [time] ever. It’s, I would say, very, very far reaching.” 

A fair, fast and competitive transition begins with what already works and then rapidly scales it up.  Across the EU commercial road transport sector, the diversity of operations is met with a diversity of solutions. Urban taxis are switching to electric en masse. Many regional coaches run on advanced biofuels, with electrification emerging in smaller applications such as school services, as European e-coach technologies are still maturing and only now beginning to enter the market. Trucks electrify rapidly where operationally and financially possible, while others, including long-haul and other hard-to-electrify segments, operate at scale on HVO (hydrotreated vegetable oil) or biomethane, cutting emissions immediately and reliably. These are real choices made every day by operators facing different missions, distances, terrains and energy realities, showing that decarbonization is not a single pathway but a spectrum of viable ones.  Building on this diversity, many operators are already modernizing their fleets and cutting emissions through electrification. When they can control charging, routing and energy supply, electric vehicles often deliver a positive total cost of ownership (TCO), strong reliability and operational benefits. These early adopters prove that electrification works where the enabling conditions are in place, and that its potential can expand dramatically with the right support. > Decarbonization is not a single pathway but a spectrum of viable ones chosen > daily by operators facing real-world conditions. But scaling electrification faces structural bottlenecks. Grid capacity is constrained across the EU, and upgrades routinely take years. As most heavy-duty vehicle charging will occur at depots, operators cannot simply move around to look for grid opportunities. They are bound to the location of their facilities.  The recently published grid package tries, albeit timidly, to address some of these challenges, but it neither resolves the core capacity deficiencies nor fixes the fundamental conditions that determine a positive TCO: the predictability of electricity prices, the stability of delivered power, and the resulting charging time. A truck expected to recharge in one hour at a high-power station may wait far longer if available grid power drops. Without reliable timelines, predictable costs and sufficient depot capacity, most transport operators cannot make long-term investment decisions. And the grid is only part of the enabling conditions needed: depot charging infrastructure itself requires significant additional investment, on top of vehicles that already cost several hundreds of thousands of euros more than their diesel equivalents.  This is why the EU needs two things at once: strong enablers for electrification and hydrogen; and predictability on what the EU actually recognizes as clean. Operators using renewable fuels, from biomethane to advanced biofuels and HVO, delivering up to 90 percent CO2 reduction, are cutting emissions today. Yet current CO2 frameworks, for both light-duty vehicles and heavy-duty trucks, fail to recognize fleets running on these fuels as part of the EU’s decarbonization solution for road transport, even when they deliver immediate, measurable climate benefits. This lack of clarity limits investment and slows additional emission reductions that could happen today. > Policies that punish before enabling will not accelerate the transition; a > successful shift must empower operators, not constrain them. The revision of both CO2 standards, for cars and vans, and for heavy-duty vehicles, will therefore be pivotal. They must support electrification and hydrogen where they fit the mission, while also recognizing the contribution of renewable and low-carbon fuels across the fleet. Regulations that exclude proven clean options will not accelerate the transition. They will restrict it.  With this in mind, the question is: why would the EU consider imposing purchasing mandates on operators or excessively high emission-reduction targets on member states that would, in practice, force quotas on buyers? Such measures would punish before enabling, removing choice from those who know their operations best. A successful transition must empower operators, not constrain them.  The EU’s transport sector is committed and already delivering. With the right enablers, a technology-neutral framework, and clarity on what counts as clean, the EU can turn today’s early successes into a scalable, fair and competitive decarbonization pathway.  We now look with great interest to the upcoming Automotive Package, hoping to see pragmatic solutions to these pressing questions, solutions that EU transport operators, as the buyers and daily users of all these technologies, are keenly expecting. -------------------------------------------------------------------------------- Disclaimer POLITICAL ADVERTISEMENT * The sponsor is IRU – International Road Transport Union  * The ultimate controlling entity is IRU – International Road Transport Union  More information here.

Listen on * Spotify * Apple Music * Amazon Music * Sky News As the head of MI6 prepares to make her first public speech, is the UK facing a “new age of uncertainty?” Sam and Anne discuss the priorities for Blaise Metreweli – identifying where the perceived threats are coming from and how Britain is being targeted. Before he jets off to Berlin for more Russian-Ukraine peace talks, the prime minister will face the liaison committee as parliament begins to wind down for the year. Plus, Rishi Sunak makes another appearance at the Covid Inquiry.

Europe prides itself on being a world leader in animal protection, with legal frameworks requiring member states to pay regard to animal welfare standards when designing and implementing policies. However, under REACH — Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH) — the EU’s cornerstone regulation on chemical safety, hundreds of thousands of animals are subjected to painful tests every year, despite the legal requirement that animal testing should be used only as a ‘last resort’. With REACH’s first major revamp in almost 20 years forthcoming, lawmakers now face a once-in-a-generation opportunity to drive a genuine transformation of chemical regulation.  When REACH was introduced nearly a quarter of a century ago, it outlined a bold vision to protect people and the environment from dangerous chemicals, while simultaneously driving a transition toward modern, animal-free testing approaches. In practice, however, companies are still required to generate extensive toxicity data to bring both new chemicals and chemicals with long histories of safe use onto the market. This has resulted in a flood of animal tests that could too often be dispensed, especially when animal-free methods are just as protective (if not more) of human health and the environment.  > Hundreds of thousands of animals are subjected to painful tests every year, > despite the legal requirement that animal testing should be used only as a > ‘last resort’. Despite the last resort requirement, some of the cruelest tests in the books are still expressly required under REACH. For example, ‘lethal dose’ animal tests were developed back in 1927 — the same year as the first solo transatlantic flight — and remain part of the toolbox when regulators demand ‘acute toxicity’ data, despite the availability of animal-free methods. Yet while the aviation industry has advanced significantly over the last century, chemical safety regulations remain stuck in the past.   Today’s science offers fully viable replacement approaches for evaluating oral, skin and fish lethality to irritation, sensitization, aquatic bioconcentration and more. It is time for the European Commission and member states to urgently revise REACH information requirements to align with the proven capabilities of animal-free science.   But this is only the first step. A 2023 review projected that animal testing under REACH will rise in the coming years in the absence of significant reform. With the forthcoming revision of the REACH legal text, lawmakers face a choice: lock Europe into decades of archaic testing requirements or finally bring chemical safety into the 21st century by removing regulatory obstacles that slow the adoption of advanced animal-free science.   If REACH continues to treat animal testing as the default option, it risks eroding its credibility and the values it claims to uphold. However, animal-free science won’t be achieved by stitching together one-for-one replacements for legacy animal tests. A truly modern, European relevant chemicals framework demands deeper shifts in how we think, generate evidence and make safety decisions. Only by embracing next-generation assessment paradigms that leverage both exposure science and innovative approaches to the evaluation of a chemical’s biological activity can we unlock the full power of state-of the-art non-animal approaches and leave the old toolbox behind.  > With the forthcoming revision of the REACH legal text, lawmakers face a > choice: lock Europe into decades of archaic testing requirements or finally > bring chemical safety into the 21st century. The recent endorsement of One Substance, One Assessment regulations aims to drive collaboration across the sector while reducing duplicate testing on animals, helping to ensure transparency and improve data sharing. This is a step in the right direction, and provides the framework to help industry, regulators and other interest-holders to work together and chart a new path forward for chemical safety.   The EU has already demonstrated in the cosmetics sector that phasing out animal testing is not only possible but can spark innovation and build public trust. In 2021, the European Parliament urged the Commission to develop an EU plan to replace animal testing with modern scientific innovation. But momentum has since stalled. In the meantime, more than 1.2 million citizens have backed a European Citizens’ Initiative calling for chemical safety laws that protect people and the environment without adding new animal testing requirements; a clear indication that both science and society are eager for change.   > The EU has already demonstrated in the cosmetics sector that phasing out > animal testing is not only possible but can spark innovation and build public > trust. Jay Ingram, managing director, chemicals, Humane World for Animals (founding member of AFSA Collaboration) states: “Citizens are rightfully concerned about the safety of chemicals that they are exposed to on a daily basis, and are equally invested in phasing out animal testing. Trust and credibility must be built in the systems, structures, and people that are in place to achieve both of those goals.”  The REACH revision can both strengthen health and environmental safeguards while delivering a meaningful, measurable reduction in animal use year on year.  Policymakers need not choose between keeping Europe safe and embracing kinder science; they can and should take advantage of the upcoming REACH revision as an opportunity to do both.  -------------------------------------------------------------------------------- Disclaimer POLITICAL ADVERTISEMENT * The sponsor is Humane World for Animals * The ultimate controlling entity is Humane World for Animals More information here.

This article is part of the Cypriot presidency of the EU special report. Cyprus, one of the bloc’s smallest countries, takes over the rotating presidency of the Council of the European Union from Denmark at a tricky time for Europe. The EU’s next seven-year budget looms large on the presidency’s horizon and is sure to provoke some bitter disagreements as governments begin discussing how much money to allocate to different areas. Closely linked to it is the post-2027 Common Agricultural Policy, worth hundreds of billions of euros. The next six months will help set the tone for a reform that will define income support, environmental requirements and rural funding for the next decade. From chemicals to electricity grids via customs and access to medicines, here’s a rundown of some of the files the Cypriots will be shepherding through. The EU’s long-term budget Creating an EU finance watchdog Financial data sharing Rewriting Europe’s farm rulebook Improving animal welfare during transport Ensuring access to medicines Cutting tech red tape   Stopping child abuse online Bringing some order to space Turbocharging telecom network rollout  Boosting European competitiveness A road map for the single market Improving electricity networks Bringing some order to space Turbocharging telecom network rollout  A road map for the single market Reforming customs  Steel trade measures Migrant returns in full swing Revising rules on chemicals  Updating air passenger rights  THE EU’S LONG-TERM BUDGET Why it matters: The Cypriot presidency of the Council of the EU will have to steer a crucial phase in the negotiations over the EU’s next seven-year budget. In the coming six months, EU capitals will start discussing how much money to allocate to different areas — which is likely to prompt bitter infighting between countries. Tensions are likely to come to a head during a summit of EU leaders in June 2026.  State of play: The current Danish Council presidency is hoping to broker an agreement among EU countries on the structure of the new budget, without discussing the amounts allocated to each program. Cyprus faces an even more difficult task: It will have to finalize a counterproposal (or negotiating box, as it’s officially known) that includes figures by the end of its presidency in June.  Fault lines: The EU’s traditional divide between frugals and big spenders is still there — although the fault lines in Brussels have become more nuanced than they were in the past. Nordic countries such as Denmark that traditionally supported a smaller budget, are now in favor of greater spending on defense and competitiveness. Other countries such as Poland and Hungary want to maintain the focus of the budget on traditional priorities such as agriculture and payouts to poorer regions. The Cypriot presidency will have to broker a compromise between these different groups.  Likely progress: Author: Gregorio Sorgi check another policy CREATING AN EU FINANCE WATCHDOG Why it matters: The European Commission thinks creating a single top cop for the biggest finance industry players, like stock exchanges and clearinghouses, is key to unlocking the EU’s single market for investment — a must if the bloc stands any chance of keeping up with the U.S. and China economically. The trouble is, that watchdog would be in Paris, and the idea has been politically blocked for years as a glut of EU countries hate it.   State of play: The Commission pitched the idea in early December in the same legislative package as a major shake-up of rules for financial markets. Negotiations are in the very early stages, and are bound to be both long and messy. Multiple countries came out against the watchdog idea before the text was even published. Talks are likely to devolve into trench warfare, with France leading the pro-watchdog camp and small countries against. But Germany has been mysterious about whether it will support the watchdog or not — and it could swing the numbers in France’s favor if it decides to back the idea. EU fault lines: Small countries are skeptical of their finance industries — particularly significant ones like in Luxembourg or Ireland — relocating to Paris to be closer to the watchdog. Others just don’t want to hand over national powers to the EU level. Germany, with its federal system and coalition government, has views on both sides and can’t seem to make up its mind. Such a heated political issue will likely become a bargaining chip in other EU talks, so whether the watchdog plan is successful or not might depend on other political trade-offs between big countries.    Likely progress: The Commission is desperate to make quick progress in negotiations, but the legislative package is massive and there are plenty of countries in no hurry to move talks along. The Cypriots will have done well if they make some initial progress on the file, but no one’s expecting a full deal any time soon. Author: Kathryn Carlson check another policy FINANCIAL DATA SHARING Why it matters: Financial Services Commissioner Maria Luís Albuquerque considers the Framework for Financial Data Access, or FiDA, a key piece of the EU strategy to boost innovation in the financial sector. The proposal wants financial institutions, such as insurance firms or investment funds, to share their customers’ data with other businesses (with customers’ consent). The goal is to provide citizens with greater transparency on their financial choices and enable the creation of new financial products. State of play: FiDA’s legislative story is a weird one. On paper, negotiations between the European Parliament and Council of the EU kicked off last April. However, they immediately turned into an exercise in reducing the rules’ scope under massive pressure from the industry, especially the French and German insurance sector, and because of its complex design. The Danish presidency had included a deal on FiDA in its program, but due to a series of unfortunate events, including a bike accident involving the lawmaker leading work on the file, it disappeared from policymakers’ radars. For Cyprus’ presidency, even making negotiations happen would be a step forward.  Likely progress: EU fault lines: Lawmakers want tech giants to be excluded from the scope of the bill. The Council is divided between those who want a full or a partial exclusion. But the really hot issue is about data sharing: what categories should be shared and how. In the background, financial sector incumbents fiercely oppose the bill, considering it a threat to their business model, while consumer groups aren’t supporting it, fearing mismanagement of citizens’ data. Author: Giovanna Faggionato check another policy REWRITING EUROPE’S FARM RULEBOOK Why it matters: Few files will loom larger over the Cypriot presidency of the Council of the EU than the post-2027 Common Agricultural Policy — a political and budgetary monster worth hundreds of billions of euros that shapes how farmers make a living across Europe. The next six months will help set the tone for a reform that will define income support, environmental requirements and rural funding for the next decade. State of play: Brussels’ reform blueprint landed last summer, proposing to move from today’s two-pillar CAP structure to a single fund delivered through national and regional plans — a shift that leaves the core €300 billion for farmers intact but changes how any additional rural or agricultural money is allocated. Capitals are only now beginning to digest what the European Commission is asking of them. Cyprus will need all the cover it can get from bigger, better-staffed administrations just to keep the file moving. EU fault lines: Expect familiar divisions. Eastern countries want to close the gap with their Western neighbours on per-hectare payments. Several states with influential large-farm sectors, including France, Germany, Czechia and Slovakia, are likely to push back against any payment caps that would hit their producers. And while the core funding for farmers is protected, agriculture ministers across the bloc worry that any additional money that today goes to farming or rural development could face tougher competition from other national priorities like defense or industrial support. Likely progress: Cyprus can prepare the ground, but the real political horse-trading will fall to the Irish presidency later in the year. For now, success means avoiding gridlock and convincing bigger players to lend a hand — all while broader EU budget talks turn every euro into a fight. Author: Bartosz Brzeziński check another policy IMPROVING ANIMAL WELFARE DURING TRANSPORT Why it matters: The European Commission promised to beef up animal welfare standards after a “fitness check” back in 2022 found room for improvement in rules that, in some cases, date back over two decades. As part of this modernizing effort, the EU executive came up with a plan to update rules on the treatment of animals during transport in 2023 — think journey times, safe temperatures and how much space animals should have. State of play: That plan is now in the hands of the EU co-legislators — the European Parliament and Council of the EU — that each need to come up with their own suggested amendments to the text before everyone can get into a room to hash out an agreement on new standards. While the Danish Council presidency has pushed to bring countries closer to an agreement, there’s still a lot of work to do. Meanwhile, the file is stuck in political limbo in the Parliament. EU fault lines: In Parliament, a chasm separates the positions of the lead negotiators — with Green MEP Tilly Metz pushing for higher standards in the transport committee, and agriculture committee European People’s Party MEP Daniel Buda arguing for stricter enforcement of the status quo — while the file drowns under thousands of amendments. Meanwhile, member countries with different national contexts and climates struggle to agree on specific elements of the proposal like safe temperatures and journey times.  Likely progress: Cyprus, a small island nation with its own extreme temperatures, will have to try to tackle those tricky topics, while also managing work on huge agriculture files like the Common Agricultural Policy. Even if the Council is able to continue chipping away at sticking points, the file’s future in Parliament remains uncertain.  Author: Lucia Mackenzie check another policy ENSURING ACCESS TO MEDICINES Why it matters: The European Commission wants to ensure Europe never runs out of essential medicines again, but to do so it has to strengthen and diversify its supply chains and tackle manufacturing dependencies on countries such as India and China. This is the idea behind the proposed Critical Medicines Act, that sets out plans to overhaul medicines procurement rules and incentivize local drug production. State of play: With negotiations on the pharmaceutical legislation — the first major overhaul of the bloc’s medicines regulations in 20 years — nearing the finish line, the Critical Medicines Act is the next big piece of the puzzle that should help ensure Europeans have access to secure and affordable medicines. Denmark has done most of the groundwork to reach a compromise in the Council of the EU, and the European Parliament has also moved quickly, spurred by European Health Commissioner Olivér Várhelyi’s urgency. But now it will be up to Cyprus to lead countries through interinstitutional negotiations and navigate what are likely to be tough talks. EU fault lines: Joint procurement rules have dominated much of the discussions so far. Smaller countries with less market power see this as an opportunity to ensure innovative medicines for their patients, while industry has historically opposed it. The Parliament also wants more action on stockpiling — another tool countries are skeptical of. And changes to state aid rules and the impact on drug prices are also a concern for smaller countries. Likely progress : Várhelyi wants to wrap up the Critical Medicines Act as soon as possible, and the Parliament and Council seem to share this sentiment, particularly as the legislation is seen as complementary to the pharma package. Cyprus is likely to want to be the one getting this through to the finish line. Author: Claudia Chiappa check another policy CUTTING TECH RED TAPE   Why it matters: The European Commission wants to simplify the EU’s digital rulebook to make life easier for businesses, public authorities and citizens — and help the bloc compete with economic rivals like the U.S. and China. A key report published last year by former Italian Prime Minister Mario Draghi said the EU’s regulatory stance toward tech companies, with “around 100 tech-focused laws and over 270 regulators,” hampers innovation.   State of play: The Commission presented its two-part digital omnibus package on Nov. 19, with wide-ranging proposals to simplify everything from artificial intelligence to privacy rules. Now, the plans have to go to EU lawmakers and countries to hash out their views — and prepare for a lobbying storm as tech companies and digital rights advocates try to shape the debate.   EU fault lines: Countries are divided on whether, or how, to amend the EU’s key privacy rulebook (the General Data Protection Regulation). Germany is pushing for far-reaching changes, while others like France and Austria are firmly against reopening the law. The AI rulebook could be less contentious, with many already accepting that a key part of it will be delayed.  Likely progress: The plans are being pushed by the Commission through a fast-tracked process, and the Cypriots will be trying to keep up that momentum during negotiations — but some of the more controversial changes could present roadblocks.   Authors: Ellen O’Regan and Pieter Haeck check another policy STOPPING CHILD ABUSE ONLINE Why it matters: After three years of trying, EU countries in late November finally agreed on their version of legislation to combat child sexual abuse material online, paving the way for negotiations with the European Parliament. The law has been hotly contested, with the bloc trying to protect children from predators without opening the door to government surveillance.  State of play: The issue hanging over the negotiations is more about timing than substance: An exemption to the EU’s privacy rules allows companies to voluntarily scan for CSAM, but that expires in April. Negotiators will be well aware that they must reach an agreement before then and lawmakers will need to extend the exemption, too, to allow scanning to continue while the new law is implemented. That deadline should turbocharge negotiations. EU fault lines: The big bust-up in the Council of the EU was about whether companies like WhatsApp should be forced to scan for CSAM, or merely allowed to choose to do so. In the end, EU countries agreed on the latter, moving their position closer to the Parliament’s privacy-friendly proposal, agreed in 2023. That should make talks relatively simple, though privacy advocates still have some gripes.  Likely progress: The April deadline means both Parliament and Council are laser-focused on getting the deal over the line. Though the file itself is contentious, the motivation of the deadline should make Cyprus’ job relatively easy.  Author: Sam Clark check another policy BRINGING SOME ORDER TO SPACE Why it matters: Satellites are crowding the skies faster than ever — and so is the space junk they leave behind. To get a grip on the problem, the European Commission proposed a new law this year that would impose tighter rules on satellite operators: clean up their debris, curb their pollution, boost their cybersecurity. The Space Act also aims to bring some order to the EU’s mix-and-match national rules or, for countries without any space legislation, introduce some. State of play: EU capitals have so far reported little progress in negotiations, hampered by legal doubts and fears of regulatory overreach. They were quick to challenge the legal basis of the bill, arguing it would wrongfully allow the Commission to venture into their national competencies.  EU fault lines: Governments find the text too complicated and prescriptive. They’ve expressed concerns it would add unnecessary red tape on space companies and national authorities alike, as well as clash with existing cybersecurity rules. (The U.S. administration came out swinging against the “unacceptable” law — which will add a layer of rules for SpaceX and Amazon Leo constellations — calling for its removal.) Likely progress: The Cypriot presidency of the Council of the EU will nudge the negotiations along, but with this file hitting sensitive national nerves, a wrap-up is unlikely. Author: Mathieu Pollet check another policy TURBOCHARGING TELECOM NETWORK ROLLOUT  Why it matters: A plan to overhaul the EU’s telecom rulebook — and a pledged lifeline to the largest telcos, who warn they are facing a slow death by a thousand cuts due to fragmentation, red tape and lack of scale — has gone decidedly sour. The Digital Networks Act, which is set to land in January, will aim to boost investment in Europe’s digital infrastructure and make life easier for network operators, so they can keep rolling out 5G and fiber at pace. State of play: Despite its pending status, the future law has been widely debated over the past two years and faces headwinds from many corners of Europe — from smaller players and tech firms to regulators and, most importantly, national governments. Even the European Commission’s own scrutiny board had some negative feedback. EU fault lines: The bloc’s capitals have repeatedly expressed skepticism, if not full-fledged disapproval, of the EU executive’s ambitions for the law. There have been grumblings over the infamous “fair share” proposal, the push to dial down regulatory pressure on legacy operators and the plan to reform spectrum governance, despite heavyweight backing from former Italian Prime Ministers and authors of flagship reports for the Commission Enrico Letta and Mario Draghi. Likely progress: With the proposal trampling on multiple red lines, expect strong, blanket pushback at first — followed only later by slow progress as governments decide which battles to fight and which they can live without. Author: Mathieu Pollet check another policy BOOSTING EUROPEAN COMPETITIVENESS Why it matters: The Industrial Accelerator Act is one of the first concrete actions for the entire industry that the EU executive presented since it took office in December 2024. While it was first aimed at speeding up permitting for the decarbonization process, the European Commission decided to broaden it up to include a “Made in Europe” preference in public procurement and conditionalities for foreign investments in the EU.  State of play: The Commission is slated to present its proposal on Jan. 28. Cyprus will be in charge of negotiating the Council of the EU’s position before it goes into interinstitutional negotiations. EU fault lines: Made in Europe and conditionalities for foreign investments in the EU could be tricky topics for governments. France has been a fierce advocate of local content requirements, while other countries are wary. How can the local content requirements be designed without turning them into national favoritism? How should they go about sectors that are stronger outside the EU? Questions on whether this is in line with international trade rules will also come up. On conditionalities, the questions will be how far is the EU ready to go? Will it include mandatory technology transfers or will it be limited to make sure investments lead to job creation and creating value within the EU borders?  Likely progress: Everyone talks about the urgency to act and support European industry, but success will depend on how far the EU goes on local content requirements and conditionalities for foreign investments. Author: Aude van den Hove check another policy A ROAD MAP FOR THE SINGLE MARKET Why it matters: Announced by European Commission President Ursula von der Leyen during her State of the Union speech in September, the single market road map will lay out clear targets for 2028 to complete the European internal market in topics ranging from capital, services, energy, telecoms, the 28th regime and the fifth freedom for knowledge and innovation.  State of play: Governments have been calling for the Commission to act on the single market, while the EU executive has been playing the ball back into the countries’ court arguing that they are the ones keeping up barriers. In May, the Commission identified 10 of the most urgent barriers to tackle — dubbing them the Terrible Ten — and has been focussing its work on addressing them. Denmark has picked three — from labeling to company law — for EU countries to prioritize.  EU fault lines: Completion of the single market will depend on the political will of EU countries to let go of their particularities, while the Commission should step up enforcement of the rules. The EU executive has been slowly distancing itself from infringement procedures, saying these take up a lot of time and are often met with raised shields from EU governments. Industrial Strategy Commissioner Stéphane Séjourné says the EU executive is trying a more consensus-driven approach, but it can only do so much without the willingness of EU countries.  Likely progress: The desire to complete the single market has been gaining momentum, but progress will depend on the extent to which governments are able to let go of national barriers and stop going beyond EU rules.  Author: Aude van den Hove check another policy IMPROVING ELECTRICITY NETWORKS Why it matters: The European Grids Package is a plan to improve and expand the EU’s electricity networks. It was announced in February as part of the broader Clean Industrial Deal. Better transcontinental interconnection is crucial to the clean energy transition because it allows more new generators to be added and electricity to be transported from where it’s generated to where it’s consumed, often over thousands of kilometers. Interconnection is especially important in a renewables-dominated grid because it provides a form of insurance against the risk that the sun will stop shining and the wind will stop blowing simultaneously in a given region.  State of play: The package was made public on Dec. 10. The Cypriot presidency has told POLITICO that it will make it a priority. Perhaps ironically — or conveniently, depending on whom you ask — Cyprus is completely disconnected from Europe’s main grid and pays some of the highest prices for energy in the EU, according to Eurostat. It’s currently in the process of connecting its grid to those of Israel and Greece via what would be the longest subsea electricity cable in the world. But diplomats broadly trust that the Cypriots, who have taken on a seasoned Greek energy expert for the file, will make a good go of it.  Fault lines: Hard to tell given it’s early days. but there are some reliable tensions that we can expect to resurface. France, for instance, has historically resisted interconnectivity with Spain, worrying the country would flood its grid with cheap renewables. And Norway has long balked at Germany’s bottomless consumption of its energy to feed its industry, which drives up bills back home. Likely progress: Author: Ben Munster check another policy REFORMING CUSTOMS  Why it matters: The behemoth 265-article EU customs reform is essentially overdue maintenance of the bloc’s endlessly fragmented approach to customs. Hoping to tackle the rising flood of cheap and illegal packages, the customs reform also aims to help national agencies deal with other laws that increase workloads, like the forced labor product ban and the Ecodesign for Sustainable Products Regulation. The reform creates a new EU-level customs authority and a data hub to centralize risk profiles and facilitate cooperation. In the meantime, the EU is working on effectively ending the entry into the bloc of tax-free packages worth less than €150 by 2026, something the customs reform will deal with in a more in-depth manner from 2028. State of play: Almost there. Regardless of the outcome of the negotiations planned for Dec. 10, the European Parliament and member countries will need more time to hash out specifics. Among those: To what degree will EU countries allow the European Commission to implement the day-to-day operations of the new EU Customs Authority and where will it be located? EU fault lines: The final issues in the negotiations have focused on who has access to customs data and how broadly the law should list EU-wide penalties for companies. More deeply, the reform laid bare the ever-present tension between Commission wishes to further EU integration and capitals hoping to slow things down. Likely progress: Cyprus will oversee the vote on the seat for the new EU Customs Authority. This is expected in late February and should be the crowning decision in the package.  Author: Koen Verhelst check another policy STEEL TRADE MEASURES Why it matters: With the world producing more steel than it could possibly use, the almost freely accessible EU market is absorbing a lot of the so-called overcapacity. European steel producers also face high energy prices and the need to invest in lower-emission tech to produce low-carbon steel. Lower quotas and higher tariffs are meant to tackle at least the import problem. State of play: It’s early days. The Council of the EU needs to approve two things. Firstly, a mandate for the European Commission to renegotiate steel import quotas with major supplier nations like Turkey and Japan. Secondly, it needs to reach a compromise on the legal framework the Commission proposed to translate the trade measure into full-blown EU legislation. The European Parliament is expected to sign off on its compromise in the first quarter. Current quotas and tariffs expire by June, so there’s a clear deadline for the interinstitutional talks, which the Cypriots will need to lead on the Council side. EU fault lines: How World Trade Organization-proof is this measure? The Parliament will likely have different ideas about that than most EU countries. At the same time, there is broad consensus that the steel industry needs assistance and that the cliff edge in June cannot be left unattended. Likely progress: A cliff edge of no protection for the steel industry looms in late June if the institutions don’t agree in a timely manner. With the Parliament expected to complete its work in the first quarter, it will be up to the Cypriots to ensure quick negotiations. Author: Koen Verhelst check another policy MIGRANT RETURNS IN FULL SWING Why it matters: Cyprus has spearheaded a hard-line returns policy for migrants. Now, the country will use its role at the helm of the Council of the EU in Brussels, to push through reforms that would roll out migrant return plans across the bloc.  State of play: The Danish presidency, which lasts until Dec. 31, has concluded negotiations on the Common European System for Returns within the Council. Informal negotiations between the Council, European Parliament and European Commission are expected to start during the Cypriot presidency, which aims to reach an agreement during its six-month tenure. In order to do that, the European Parliament has to agree on its own position on the issue, so informal negotiations are expected to begin in March. EU fault lines: Big disagreements among member countries remain as there are concerns the system will lead to longer detention, fewer rights and increased risks of human rights violations for migrants and asylum-seekers. A new proposal on so-called return hubs in third countries is also hugely controversial. Likely progress: Author: Nektaria Stamouli check another policy REVISING RULES ON CHEMICALS  Why it matters: Next year is going to be a make-or-break moment for what the EU calls “the industry of industries.” The revision of the EU’s flagship chemicals law, REACH, is expected to land in the first quarter of 2026. The chemical industry in Europe is struggling and unable to compete with China and the U.S, but the question is whether simplification of chemical regulations will come at the expense of protecting human health and the environment. The chemicals omnibus is also expected to be finalized under the Cypriot presidency of the Council of the EU, amid a heated debate over whether cancer-causing chemicals in cosmetics should be automatically banned.   State of play: REACH has been delayed several times since the EU decided to revise it in 2020. The Commission’s internal watchdog, the Regulatory Scrutiny Board, shot down an impact assessment of the proposal in September, meaning the revision won’t land by the end of 2025, but early next year, according to the EU executive. The European Parliament and Council are preparing for a big fight over how to regulate chemicals. The chemicals omnibus is currently going through Parliament and is expected to be put to a vote in plenary in April before entering interinstitutional negotiations.  Fault lines: The Commission is very slow to phase out harmful chemicals. It takes 14.5 months on average to decide whether to allow companies to continue using banned chemicals, almost five times the legal limit, according to the European Ombudsman. The EU has to register a chemical on the market within 3 weeks, but it can take up to 20 years to restrict it. The main chemical lobby in Brussels, CEFIC, alongside its German counterpart, VCI, have even argued that it wasn’t necessary to reopen REACH in the first place.  Likely progress: REACH is like opening a can of worms. It’s been delayed often and some don’t see the point in its revision, making for a tough battle in the Council to find a position.  Author: Jakob Weizman check another policy UPDATING AIR PASSENGER RIGHTS  Why it matters: The rules governing consumer protection in the context of air travel date back to 2004 and have been reshaped by several court decisions, which has led to legal uncertainty and excessive paperwork for those seeking compensation. The European Parliament has repeatedly called for a higher level of passenger protection, but airlines have warned that airfares would increase along with the regulatory burden. State of play: The European Commission’s proposal to update the rules was presented in 2013 but has been stuck in the Council of the EU for over 10 years. In June, countries reached a common position by a slight majority, opening the unusual second reading procedure — which angered MEPs due to its tightened negotiating times. Diverging positions on key issues and a lack of willingness to compromise from the parties led to the failure of negotiations under the Danish presidency. According to the second reading procedure, Parliament can now amend the Council’s position and send the file back to the countries. If governments disagree with the amended text, the reform proposal may end up in conciliation.  EU fault lines: The countries’ proposal to expand the delay threshold for granting compensation from three hours to four or six hours, depending on the distance, is preferred by the airlines. The Parliament’s proposal to maintain the current threshold and introduce new rights, such as a 7-kilogram carry-on bag at no extra charge, is preferred by consumer rights organizations. If the co-legislators don’t move from their respective red lines, a deal will remain out of reach during the Cypriot presidency as well. Likely progress: Author: Tommaso Lecca BACK TO THE TOP

This article is part of the Cypriot presidency of the EU special report. BRUSSELS — Cyprus, a country without a car sector to speak of, has six months to negotiate a deal aimed at saving one of the European Union’s biggest industries while not gutting the bloc’s climate goals. The key is going to be managing the clash between France and Germany over cars and climate. The European Commission will present its automotive package on Dec. 16. It is slated to include a reform of the 2035 legislation that acts as a de facto combustion engine ban and a new initiative on switching corporate fleets — vehicles owned or leased by companies for business purposes — to greener vehicles. The Commission’s opening bid will kick off battles among member countries — and Cyprus, which takes over the six-month rotating presidency of the Council of the EU on Jan. 1, will have a key role in shaping the final position of national governments. With the EU’s most powerful capitals closely monitoring the files, and automotive lobbyists lurking in the hallways, that will be no easy feat. Cyprus is promising to be an honest broker. “The Cyprus presidency aims to reach a text where as many member states as possible can get behind,” a presidency spokesperson said. The potential for conflict is enormous because the stakes are so high. Responsible for 9 percent of the bloc’s gross domestic product, the automotive sector and its downstream suppliers are a critical economic pillar for the EU. It’s also facing multiple headwinds: a trade war courtesy of the U.S., stagnating sales in Europe and stiff competition from Chinese rivals. A wave of layoffs and intense lobbying has pressured the Commission to give leniency on this year’s emission targets and to reexamine the law mandating that only new zero-emission cars can be sold from 2035. Yet watering down the 2035 law clashes with the EU’s climate goals. The bloc aims to slash greenhouse gas emissions from transport by 90 percent by 2050 — a key part of its target of becoming climate neutral by mid-century. BATTLE LINES Talks three years ago on the original 2035 legislation saw France and Germany pitted against one another, with other capitals taking sides depending on their own industrial priorities. Berlin and Central European nations have maintained their anti-ban stance, with a coalition of countries — Bulgaria, the Czech Republic, Italy, Poland and Slovakia — calling on the Commission to include plug-in hybrids, alternative fuels and other carveouts in its reform of the 2035 legislation. Paris and its green-oriented allies, meanwhile, wanted more stringent action on climate change. When the combustion engine ban was passed in 2023, Cyprus voted in favor. Berlin was never much of a fan of the legislation, but did end up reluctantly signing on. But the politics around the issue have changed dramatically over the last three years. Climate legislation is out of vogue, becoming a favored target of right-wing and populist parties — pressing mainstream politicians to amend or scrap measures. German Chancellor Friedrich Merz campaigned on overturning the 2035 ban entirely but his coalition between the center-right Christian Democrats and center-left Social Democratic Party prevented him from adopting that stance in Brussels. Instead, the coalition agreed in November to a proposal that would allow hybrids and what Merz called a “highly efficient combustion engine.” Berlin later clarified that such an engine is, well, one that “is highly efficient.” “Our common goal should be to achieve innovation-friendly regulations that are open to all technologies and strike a balance between climate protection and industrial competitiveness,” Merz said in a letter to the Commission. France is also shifting its pro-climate stance under pressure from its own anti-2035 forces. In October, France and Spain put forward a proposal that would give automakers flexibilities on the 2035 target so long as they meet local content requirements. Both the 2035 reform and the corporate fleets measure are set to include some degree of “Made in Europe” quotas. Italy has continued its drumbeat for biofuels, which can power combustion engines but critics say is too costly to produce at scale and that it’s not as green as proponents claim. That sets up Cyprus and its diplomats, for whom the car industry isn’t a key issue, for the mother of political battles.

This article is part of the Cypriot presidency of the EU special report. BRUSSELS — Starting January, one of Europe’s smallest countries will be in charge of shepherding political powers to deal with some of the bloc’s biggest problems in decades. The European Union is handing the keys of its Council to Cyprus on Jan. 1, giving the tiny, militarily neutral state the job of leading diplomatic talks on hot-button issues ranging from responding to Russian aggression to saving flailing critical industries, crafting the EU’s long-term budget, and reforming large chunks of a body of law that its executive is seeking to cut. The scale of the challenges facing Nicosia is unprecedented — and the task falls one of the bloc’s smallest member countries and the furthest removed geographically from Brussels. “I always feel sorry for smaller countries taking on the presidency because it’s so much work and involves so many people. There are countries like Luxembourg that have done it many times and can dedicate resources to it, but Cyprus hasn’t historically been in that position,” said one European diplomat, granted anonymity to speak frankly about how the next presidency is perceived in Brussels. The Cypriot government and its permanent representation in Brussels have been scrambling in past months to overcome critical hurdles to get the job done. They’ve hired from far and wide to boost their numbers and even set up daily direct flights between Brussels and Nicosia to move diplomats around more speedily. Just weeks before its presidency kicks off, Cyprus embarked on a cabinet shuffle, pushing back a formal launch event for the presidency to Dec. 21, just days before Christmas. “There’s this narrative that the Cypriot presidency will be chaotic,” said a second diplomat from another EU country, “but honestly they are doing all the things they should be doing and that has reassured people.” HOT TO HANDLE In Brussels, envoys are bracing for the next six months. Hot-button issues like car greening rules and slashing red tape in tech regulations are high on the agenda. Governments are launching prickly debates on how to craft the bloc’s long-term budget. Above all, the continent’s security stand-off with Russia dominates the minds of politicians and voters. Nicosia is still shaking off a longstanding reputation for equivocation over where it stands on a continent divided by Russian aggression. Cyprus is one of just four EU countries that are not members of NATO, and has historically cultivated close ties with Moscow. Now, though, the country is determined to prove it’s on the same side as its Western allies. Cyprus has been keen to show, for example, that it is making progress by revoking hundreds of citizenships handed out to Russians under a “golden passport” scheme it shelved in 2020. Its governing center-left coalition wants to use the six-month rotating presidency of the Council to reset its reputation on the international stage, Marilena Raouna, Cyprus’ deputy minister for EU affairs, told POLITICO. “We are well aware of what is expected of us and of the challenges the EU is facing,” she said. The role is a chance not only to shape the bloc’s agenda but also “to showcase the country we are today — stable, resilient, with one of the strongest European economies — and our strengths as the only EU member state in our region.” The Cypriot presidency follows those of Poland and Denmark, two major players on hot-button issues like defense and competitiveness, each of which drew from a deep bench of diplomats. Nicosia’s diplomatic footprint has historically been smaller, and its outreach to foreign capitals has focused on its enduring conflict with Turkey. However, the war between Israel and Hamas, and the ensuing humanitarian crisis in Gaza, have thrust the country into the spotlight of international diplomacy. Nicosia was drafted to support EU and U.S. efforts to get aid into the besieged territory, and even proposed a sweeping peace plan to end the fighting. Those efforts helped put the island on the radar of senior politicians in Washington as well. GEOGRAPHY MATTERS The last Cypriot presidency (in 2012) failed to burnish the island’s diplomatic credentials. It came during the tenure of President Demetris Christofias, the first and only communist to serve as an EU head of state. Weak economic growth and a major financial crisis ultimately led to a showdown with Brussels in which Christofias rejected a Greece-like bailout that would have forced it to enact austerity measures, and instead turned to Russia for a loan. This time, Cypriot envoys want to prove European skeptics wrong. For the past two years it has been recruiting staff to its permanent representation at the heart of Brussels’ EU Quarter, figures seen by POLITICO confirm, with the headcount rising from 100 to over 250 — in line with other presidencies. Another 15 have been seconded from other EU institutions and other member countries to work alongside them. The previous (Denmark) and succeeding (Ireland) presidencies will step in to chair several technical committees where they have more expertise, such as on genetic resources and international chemical standards. That support is available to all presidencies but is particularly useful for smaller ones, and will free Nicosia up to focus on the political issues where it really wants to make an impact. And while the challenges are stiffer for countries less accustomed to the spotlight, the reputational boosts are all the greater if they can pull it off. But Cyprus has had to contend with other logistical challenges. Nicosia is the most distant capital from Brussels, meaning ministers, journalists and officials must fly some 2,900 kilometers to hold key working sessions. “It makes it harder when the host of dozens of informal meetings is four hours away by plane, rather than one or two,” a second diplomat said. “But that’s just a fact of life in the EU.” To soften the blow, for the duration of its presidency Cyprus has secured direct flights from Belgium, with Greek flag carrier Aegean flying to Nicosia five times a week under the arrangement. Its assumption of the presidency at a critical time for the EU “is a defining moment for Cyprus,” said Raouna, and an opportunity to prove that “Cyprus knows how to prioritize, and stay focused in order to deliver.”