Ivo Daalder, a former U.S. ambassador to NATO, is a senior fellow at Harvard University’s Belfer Center and host of the weekly podcast “World Review with Ivo Daalder.” He writes POLITICO’s From Across the Pond column. If you’ve had a hard time following the latest U.S. efforts to negotiate an end to the war in Ukraine, you’re hardly alone. It’s been a dizzying few months, with meetings in Moscow, Anchorage, New York, Washington, Miami, Kyiv and Geneva, and countless more informal calls between a large list of players. One reason for this rollercoaster is that U.S. President Donald Trump has set his camp a nearly impossible task: ending a war between two countries that are both determined to continue their fight for polar opposite goals: In Russia’s case, Ukraine’s subjugation; in Ukraine’s case, securing its sovereignty and independence. But there’s another reason for the chaotic scenes we’ve witnessed over the past few months — of summits announced then called off, deadlines declared then abandoned, plans set in stone then amended, all with an ever-rotating cast of characters leading negotiations — and that’s because the Trump administration lacks a formal process to develop policy, provide guidance, interact with foreign governments and set a clear direction. This absence of formal process is a unique feature — or bug — of this presidency. Of course, Trump is hardly the first U.S. leader to rely on a small coterie of aides to discuss critical foreign policy issues. Former President George H.W. Bush ran the Gulf War with seven top officials, while Trump’s predecessor Joe Biden made many national security decisions during his presidential daily intelligence brief, which was attended by just a few top aides. What’s different here is that top aides in other administrations relied on an interagency process led by their staff to discuss issues, develop policy options and oversee implementation. Trump, meanwhile, runs the U.S. government like he ran his family business — from behind his desk in the Oval Office, where he meets with everyone, calls anyone and then decides policy on a whim. And his aides operate almost entirely on their own. When it comes to Ukraine and Russia, there are literally only a handful of individuals within the president’s circle: Vice President JD Vance, Secretary of State and National Security Advisor Marco Rubio, Chief of Staff Susie Wiles, Presidential Peace Envoy Steve Witkoff and, since October, Trump’s son-in-law Jared Kushner. Not included as a matter of course are the defense secretary, the chairman of the joint chiefs of staff, or the heads of the CIA and national intelligence. Of these key players, only Rubio has a substantial staff at the State Department and National Security Council, but even then, there’s very little evidence to suggest he relies on them in the ways his predecessors did. Whatever interagency discussions are happening, their influence on policy development at the highest levels is scant — if it exists at all. And according to foreign interlocutors, including diplomats in Washington, officials in both departments are approachable yet largely in the dark about what is happening. Even more problematic is the fact that, besides Rubio, the other main players on the Ukraine file operate without staff or process. Witkoff, for example, attends meetings with Russian President Vladimir Putin and other Russian officials without a notetaker, and he’s been known to rely on Putin’s own interpreter. Kushner is deeply involved in talks but has no formal position in the administration. And Army Secretary Daniel Driscoll, who was drawn into discussions with Ukraine on very short notice last month, was only given a weekend to get up to speed on the war, its history and the negotiations before being sent off to Kyiv to present the latest plan. This absence of process also goes a long way toward explaining the extremely chaotic nature of the talks over the past few weeks and how everything all unfolded. Initially, in mid-October, Russia’s Minister of Foreign Affairs Sergey Lavrov sent Rubio a memorandum setting forth ideas on how to end the war. The plan was that Putin and Trump might agree on these points during their meeting in Budapest, which was planned for the end of the month. Even more problematic is the fact that, besides Rubio, the other main players on the Ukraine file operate without staff or process. | Chip Somodevilla/Getty Images The memo contained all the usual Russian demands: territorial concessions, severe limits on Ukraine’s armed forces, and no NATO troops in or membership for Ukraine. But when Rubio called Lavrov to discuss it, he found that Moscow’s position was set in stone and advised Trump not to go to Budapest. The U.S. president subsequently called off the talks, saying he didn’t want “a wasted meeting.” However, while Rubio and Trump were pivoting to increase pressure on Russia — including the announcement of the first new sanctions since Trump’s return to office — Witkoff was engaging other Russian interlocutors to get talks back on track. In a call with Yuri Ushakov, Putin’s top foreign policy advisor, Witkoff reportedly claimed: “The president will give me a lot of space and discretion to get to the deal.” Then, two weeks later, Witkoff and Kushner were sitting down in Miami with Kirill Dmitriev, another close Putin envoy, looking to sketch out a 20+ point plan to end the war, just as they had done for Gaza weeks earlier. Except unlike Rubio mere days before, Witkoff and Kushner largely accepted Russia’s position and made it their own. As Dmitriev told Ushakov after the meeting, as reported in another leaked transcript, he had passed along an informal paper as the basis for a final plan to make sure it was “as close to [Russia’s] as possible.” When Rubio was first presented with this 28-point plan drawn up by Witkoff and Kushner, he called it merely “a list of potential ideas,” reportedly telling U.S. senators that “it is not our recommendation [or] peace plan.” Trump, however, liked it and told Ukraine to sign on by Thanksgiving or be on their own. This then led Rubio to quickly reverse course and declare “the peace proposal was authored by the U.S.” Ultimately, what drives all these U.S. players isn’t a formal process or even a coherent assessment of what it will actually take to end the war in Ukraine. Rather, it is an unrelenting effort to satisfy Trump’s insistent demand to be recognized as the world’s peacemaker. As long as this continues, so will the chaos and confusion. And none of this will bring an actual end to the war any closer to reality.

Ivo Daalder, a former U.S. ambassador to NATO, is a senior fellow at Harvard University’s Belfer Center and host of the weekly podcast “World Review with Ivo Daalder.” He writes POLITICO’s From Across the Pond column. Three hundred days into U.S. President Donald Trump’s second term, how is the world faring? According to the president and his supporters, the answer is clear: never better — at least as far as the U.S. is concerned. This isn’t a judgement I personally share, but let’s take a closer look at the case that Trump and his defenders are making for the success of his foreign policy to date — and whether it tells the whole story. By forcing Europe and other allies to pay more for defense, to take on a bigger share of the burden of helping Ukraine, and to buy more weapons from the U.S., Trump has boosted the collective strength of America and its allies to unprecedented heights. Or so the argument goes. This year, the U.S. increased defense spending by about 13 percent to reach $1 trillion. And its NATO allies — perennial spending laggards — have now committed to spending 5 percent of their GDP on defense. That’s a bigger share than the U.S. will spend. Building on this growing strength, according to Robert O’Brien, Trump’s first-term national security adviser, the U.S. president has “positioned himself as the indispensable global statesman by driving efforts to bring peace to other, often far-flung and long-standing disputes.” Trump himself frequently touts this peacemaking prowess, boasting that he has “ended 8 wars in 8 months.” And to be fair, in some of these cases he did teach a masterclass in using leverage to get what he wants. Nowhere was this more evident than in the Middle East, where, as one seasoned diplomat told me: “No one can say no to him.” The result was the ceasefire in Gaza, the return of all living hostages to Israel, and an end to Israel’s longest, most devastating war. Finally, both Trump and his officials argue, he has remade the global trading order to the benefit of the U.S. He has used tariffs and threats to force open markets long closed to American goods, to reap revenues by charging for the privilege of access to the world’s greatest consumer market, and to strong-arm other countries into paying for America’s reindustrialization. Taken at face value, all of this adds up to quite a record — but an incomplete one, to say the least. Looking at the specifics, the picture becomes much more complicated, uneven and often quite different. Take alliances, for example. It’s true, of course, that many NATO allies have now committed to spending much more on defense. It’s even true that Trump “will achieve something NO American president in decades could get done” — as NATO Secretary-General Mark Rutte texted Trump shortly before the NATO summit last June where that commitment was agreed. Many NATO allies have now committed to spending much more on defense. | Andrew Caballero-Reynolds/AFP via Getty Images But what Rutte didn’t say is that this is because no other U.S. president has ever threatened to walk away from the alliance, or to abandon the solemn commitment to collective defense enshrined in Article 5 of the NATO charter. Led by Germany, NATO allies are boosting their defense spending, but the main reason is because they no longer believe they can rely on the U.S. ( Another one is that they fear Russia — an anxiety Trump doesn’t share.) Trump’s approach to Ukraine clearly underscores this change. He ended all military and economic assistance to the country, forcing it into an agreement to share its natural resources in return for U.S. aid that was previously provided cost-free. He then sought to force Ukraine’s president to sign a deal that would effectively mean Kyiv’s capitulation to Russian aggression, and only agreed to ship weapons if Europe paid for them. None of this is the behavior of an ally who believes their mutual alliance reflects shared interests or common threat perceptions. It’s the behavior of someone who has turned security alliances into a protection racket. As for Trump’s self-declared peacemaking prowess, there’s much less than meets the eye. Yes, the U.S. president skillfully maneuvered Israel and Hamas into a ceasefire and the return of hostages — but this is hardly the lasting peace he proclaimed. The divide between Israelis and Palestinians is deeper now than at any time in recent history, and the prospect of renewed violence is vastly greater than any enduring peace. Many of the other conflicts Trump claims to have ended suffer from similar shortcomings. India and Pakistan are one incident away from a return to cross-border fighting. Cambodia and Thailand suspended their agreement less than 30 days after Trump presided over its signing. And neither Rwanda nor the Congo are implementing the terms of the agreement they initialed in Washington earlier this year. Peace, it turns out, is not the same as stopping the shooting. As for trade, Trump has indeed upended the global system. But to what end? The escalating tariff war with China has settled into an uncomfortable truce akin to the situation that existed when he first returned to office. Meanwhile, many big agreements — including with the EU — have yet to be finalized, as Trump has always been more interested in declaring a win than in negotiating the details. In fact, it’s highly uncertain whether Europe, Japan or Korea will actually make the kinds of new investments Trump has touted. And just last week, Trump abandoned tariffs on hundreds of food and other items in order to address a growing domestic political backlash stemming from rising prices on groceries and other basics. Overall, Trump has been much more skillful at wrecking things than building them. He has destroyed a global order that was painstakingly built by his predecessors over many decades; an order that produced more prosperity, greater security and broader freedom for Americans than at any time in history. To be sure, the system had its flaws and needed reform. But to abandon it without considering what will take its place is the height of folly. Folly for which Americans, no less than others, will pay the ultimate price.

Ivo Daalder, former U.S. ambassador to NATO, is a senior fellow at Harvard University’s Belfer Center and host of the weekly podcast “World Review with Ivo Daalder.” He writes POLITICO’s From Across the Pond column. U.S. President Donald Trump loves the 19th century. His heroes are former presidents William McKinley who “made our country very rich through tariffs,” Teddy Roosevelt who “did many great things” like the Panama Canal, and James Monroe who established the policy rejecting “the interference of foreign nations in this hemisphere and in our own affairs.” These aren’t just some throw-away lines from Trump’s speeches. They signify a much deeper and broader break from established modern national security thinking. Trump is now the first U.S. president since Franklin D. Roosevelt to believe the principal threats to the U.S. aren’t in far-away regions or stem from far-away powers — rather, they’re right here at home. For him, the biggest threats to America today are the immigrants flooding across the country’s borders and the drugs killing tens of thousands from overdoses. And to that end, his real goal is to dominate the entire Western hemisphere — from the North Pole to the South Pole — using America’s superior military and economic power to defeat all “enemies,” both foreign and domestic. Of course, at the top of Trump’s list of threats to the U.S. is immigration. He campaigned incessantly on the idea that his predecessors had failed to seal the southern border, and promised to deport every immigrant without legal status — some 11 million in all — from the U.S. Those efforts started on the first day, with the Trump administration deploying troops to the southern border to interdict anyone seeking to cross illegally. It also instituted a dragnet to sweep people off the streets — whether in churches, near schools, on farmlands, inside factories, at court houses or in hospitals. Even U.S. citizens have been caught up in this massive deportation effort. No one is safe. The resulting shift is also expectedly dramatic: Refugee admissions have halted, with those promised passage stuck in third countries. In the coming year, the only allotment for refugees will be white South Africans, who Trump has depicted as genocide victims. Illegal crossings are down to a trickle, while large numbers of immigrants — legal as well as illegal — are returning home. And 2025 will likely be the first time in nearly a century where net migration into the U.S. will be negative. For Trump, immigrants aren’t the only threat to the homeland, though. Drugs are too. That’s why on Feb. 1, the U.S. leader imposed tariffs on Canada, Mexico and China because of fentanyl shipments — though Canada is hardly a significant source of the deadly narcotic. Still, all these tariffs remain in place. Then, in August, he called in the military, signing a directive that authorizes it to take on drug cartels, which he designated as foreign terrorist organizations. “Latin America’s got a lot of cartels and they’ve got a lot of drugs flowing,” he later explained. “So, you know, we want to protect our country. We have to protect our country.” And that was just the beginning. Over the past two months, the Pentagon has deployed a massive array of naval and air power, and some 10,000 troops for drug interdiction. Over the past five weeks, the U.S. military has also been directed to attack small vessels crossing the Caribbean and the Pacific that were suspected to be running drugs. To date, 16 vessels have been attacked, killing over 60 people. For Donal Trump, immigrants aren’t the only threat to the homeland, though. Drugs are too. | oe Raedle/Getty Images When asked for the legal justification of targeting vessels in international waters that posed no imminent threat to the U.S., Trump dismissed the need: “I think we’re just going to kill people that are bringing drugs into our country. Okay? We’re going to kill them. You know, they’re going to be, like, dead.” But now the U.S. leader has set his sights on bigger fish. Late last month, the Pentagon ordered a carrier battle group, Gerald R. Ford, into the Caribbean. Once that carrier and its accompanying ships arrive at their destination later this week, the U.S. will have deployed one-seventh of its Navy — the largest such deployment in the region since the Cuban Missile Crisis in 1962. If the target is just drug-runners in open waters, clearly this is overkill — but they aren’t. The real reason for deploying such overwhelming firepower is for Trump to intimidate the leaders and regimes he doesn’t like, if not actually force them from office. Drugs are just the excuse to enable such action. The most obvious target is Venezuela’s Nicolás Maduro, who blatantly stole an election to retain power last year. The White House has declared Maduro “an illegitimate leader heading an illegitimate regime,” and Trump has made clear that “there will be land action in Venezuela soon.” However, Maduro isn’t the only one Trump has his eye on. After Colombian President Gustavo Petro accused the U.S. of killing innocent fishermen, Trump cut off all aid to the country and accused Petro of being “an illegal drug leader,” which potentially sets the stage for the U.S. to go after another regime. All this firepower and rhetoric is meant to underscore one point: To Trump, the entire Western hemisphere is America’s. Leaders he doesn’t like, he will remove from power. Countries that take action he doesn’t approve of — whether jailing those convicted of trying to overthrow a government like in Brazil, or running ads against his tariffs as in Canada — will be punished economically. Greenland will be part of the U.S., as will the Panama Canal, and Canada will become the 51st state. Overall, Trump’s focus on dominating the Western hemisphere represents a profound shift from nearly a century’s-long focus on warding off overseas threats to protect Americans at home. And like it or not, for Trump, security in the second quarter of the 21st century lies in concepts and ideas first developed in the last quarter of the 19th century.

Ivo Daalder, former U.S. ambassador to NATO, is a senior fellow at Harvard University’s Belfer Center and host of the weekly podcast “World Review with Ivo Daalder.” He writes POLITICO’s From Across the Pond column. When U.S. President Donald Trump first met with then-German Chancellor Angela Merkel after his first term began, he told her that Germany’s lack of defense spending was a problem. It meant the U.S. had to spend too much. “Angela, you owe me $1 trillion,” he said. In the end, Germany never paid a penny. But this exchange set the tone for how Trump would approach the presidency in his second term. Whether a person, business, university, law firm, media company or country — Trump has used the power of the presidency to exact a price, often in dollar terms, from whoever he interacts with. It’s the unifying theme of his leadership and his approach to the world. Donald Trump is the “Shakedown President.” It started even before he won reelection. At a dinner in Mar-a-Lago with some 20 top oil executives in April 2024, Trump told attendees to raise $1 billion for his reelection campaign, which, he promised, would be a great “deal” because he’d cut red tape and lower their taxes on “Day One” of his presidency — and that was just the beginning. Since returning to the White House, Trump has turned the Oval Office into the pay-to-play room: It’s where he met the managing head of venerable New York litigation firm Paul, Weiss and twisted arms to get $40 million in annual pro bono work for causes he deems worthwhile. In return, he rescinded an executive order he’d signed, barring the firm from federal contracts and its employees from holding security clearances. Seeing the writing on the wall, eight other white-shoe law firms then followed in Paul, Weiss’s footsteps, signing deals with the administration that collectively promised more than $1 billion in pro bono services for Trump’s priorities. Smelling victory, the president soon set his sights on other industries, starting with big media: He sued ABC and CBS News when they broadcast interviews he didn’t like and got them to pay $15 million and $16 million, respectively. The president reached multimillion dollar settlements with tech companies Meta and X. And while his multi-billion-dollar suit against the New York Times was thrown out, the Wall Street Journal’s is still pending. Tasos Katopodis/Getty Images Aside from the steep monetary value, these shakedowns have also made media companies more adverse to reporting criticism of the president and his administration’s actions. Next came universities: Long the foundation of America’s scientific and technological supremacy, Trump cut off federal research funding for major universities in order to force them to adopt policies favored by his administration. Some institutions, like Columbia University, Brown University and the University of Pennsylvania, obliged, agreeing to pay eight-to-nine figure “fines.” Others, like Harvard University, resisted and have been financially squeezed, seeing their critical scientific research grants cancelled. Corporations haven’t escaped Trump’s crosshairs either, despite much of corporate America backing Trump in the latest election. He approved Nippon Steel’s takeover of U.S. Steel, but only after demanding a “Golden Share” in the company, which grants his administration extraordinary control and veto authority over operations and decisions. He also turned a government subsidy to Intel into a 10 percent stake in the company — with the option for another 5 percent down the road — and approved chip sales to China by Nvidia and AMD in return for a 15 percent levy on all sales. Then, there are America’s trading partners, which are, notably, some of its closest allies. Here, Trump brokered remarkably similar and extraordinarily one-sided deals with the EU, Japan and South Korea, after threatening to impose tariffs of 25 percent or more on all imports from America’s largest trading partners in the Europe and Asia. He finally “compromised” at a 15 percent levy that was still six times higher than before and, of course, his victory has left the U.S. public as the real losers, facing higher prices on a wide variety of goods. But that wasn’t all. Trump also exacted commitments from these governments to make large-scale investments in the U.S. — $350 billion by South Korea, $550 billion by Japan and up to $600 billion by European companies. Europe also agreed to purchase $750 billion in gas and other energy products over four years. And here’s the kicker: In most cases, Trump will control where the investment goes, and the U.S. will receive most of the profits — up to 90 percent in the case of Japanese investments. In the short term, the Shakedown Presidency works. Individuals, law firms, media companies, universities and even countries calculate they’re better off paying a little than fighting a lot. And once one of them does, others follow. Pretty soon, it’s a billion here, a few hundred billion there, and it all adds up to real money. But — and this is crucial — in the long term, this is bound to fail. These shakedowns create massive resentment among those who bear the consequences. Clients, partners and associates search out other firms to bring their business to; readers, listeners and viewers tune out media companies they can no longer trust; and countries begin to shift to markets and partners that won’t use their interconnectedness to serve the narrow, selfish ends of one man and his administration. So far, Trump has been able to shake down a good many individuals, succeeding as he picks off firms and countries one by one. But soon, everyone will get wiser and realize they have alternatives — and that when they unite, Trump will be unable to continue his shake down operations.

Ivo Daalder, former U.S. ambassador to NATO, is a senior fellow at Harvard University’s Belfer Center and host of the weekly podcast “World Review with Ivo Daalder.” He writes POLITICO’s From Across the Pond column. Russia is at war with Europe. It has been waging an overt war in Ukraine for over a decade now, and with increasing ferocity since its full-scale invasion in 2022. But the fighting in Ukraine is only part of Russia’s wider war against Europe as a whole. This month’s drone incursions on Poland and Romania and flying into Estonian airspace underscore Moscow’s broader intent: dividing Europe and the U.S., weakening public support for strong military action and ending the continent’s support for Ukraine. But until now, Europe hadn’t taken this threat seriously. It preferred to view Russia’s escalating operations — the assassinations, cyberattacks, sabotage of critical infrastructure, disinformation campaigns and more — as falling into a gray zone below the level of armed conflict. And its chosen response was to improve resilience while, at times publicly, condemning Russia for its actions. Essentially, Europe imposed no cost on Moscow for its covert agitation against the continent — and that’s a mistake. This failure is behind the significant escalation in the Kremlin’s attacks on Europe over the past three years. As a new report by the International Institute for Strategic Studies (IISS) underscores, the number of such attacks grew while the full-scale war got underway, and the reason is clear: Russia was stymied by Ukraine’s stubborn defense on the battlefield and the support it has received from Europe and the U.S. “Russia simply does not have the wherewithal to fully subjugate Ukraine by force,” Britain’s MI6 chief Richard Moore noted the other day. “Yes, they are winding forward on the battlefield, but at a snail’s pace and horrendous cost, and Putin’s army is still far short of its original invasion objectives,” he added. “Bluntly, Putin has bitten off more than he can chew.” The only way Moscow can now achieve its objectives is by weakening Europe’s support for Ukraine and exploiting divisions within and among NATO nations. This is what its covert war against Europe aims to do. The IISS report details just how many of Russia’s attacks on European infrastructure consist of facilities linked to the war in Ukraine. As the country’s military faltered in 2023, the number of attacks on Europe nearly quadrupled, and they increasingly targeted “bases, production facilities and those facilities involved in transporting military aid to Ukraine.” Then, in the first half of this year, the attacks declined significantly, likely reflecting Moscow’s assessment that U.S. President Donald Trump’s return to office would weaken support for Ukraine. And, indeed, it did — Washington ended its military and economic assistance to Ukraine and sought a diplomatic conclusion to the war that accepts many of Moscow’s conditions. But even as the U.S. shifted course, Europe’s commitment to Ukraine has remained steadfast — and even increased: Key European countries are now seriously discussing the deployment of a significant security force in Ukraine once fighting ends; European governments, led by Germany, are sending large amounts of weapons to Ukraine — including some bought from the U.S.; financial support for the country’s economy and rapidly expanding defense industry is growing; additional sanctions are in the offing; and the EU is seriously considering seizing Russia’s frozen assets. Faced with such staunch commitment, Putin is now pushing even harder. It’s probably no accident this all started after the Russian leader’s Alaska meeting with Trump, where he assessed the U.S. was unlikely to resist further escalation from Moscow. And clearly, escalation there has been: Since that meeting, Russia’s bombing of Ukraine has intensified— including the largest drone and missile attack of the war, which came in early September. And even as his military efforts inside Ukraine grew increasingly brazen, Putin decided to test Europe and NATO. Another action is to make clear that any further Russian incursion into European airspace, territory or maritime domain will lead to military action designed to destroy or disable the violating system in question. | Federico Gambarini/Picture Alliance via Getty Images First, Russia sent 19 drones across the Polish border on Sept. 10, followed by another drone crossing the Romanian border a few days later. Then, last week, three Russian MiG-31 warplanes crossed into Estonian airspace and loitered for 12 minutes (Though used as an interceptor, the MiG-31 is capable of carrying and launching the Kinzhal hypersonic missile that Russia has repeatedly used against Ukraine). In all three instances, European forces met the military test of effectively neutralizing the threat, including shooting down some of the drones headed toward an air base in Poland. But NATO countries failed the political test. The U.S. response to the repeated violations has been notably tepid, with Trump and other officials suggesting the drone attack on Poland might have been a mistake. The president also made clear that he’s “not gonna defend anybody.” NATO, for its part, convened twice for Article 4 consultations — first at the behest of Poland and then Estonia. It also announced a beefed-up military presence along the Eastern flank. But still, Putin has paid no price — and until he does, Russia will continue escalating, aiming to weaken European support for Ukraine and divide the alliance. What, then, could and should Europe do? One idea, supported by Polish Foreign Minister Radosław Sikorski, is to extend NATO’s defenses by intercepting drones and missiles over Ukrainian territory. This could be done with European fighters and air defense systems operating from European airspace or territory, or over the skies of Ukraine. It would be a defensive measure that directly contributes to Ukraine’s defense as well. Another action is to make clear that any further Russian incursion into European airspace, territory or maritime domain will lead to military action designed to destroy or disable the violating system in question. This, too, would constitute a defensive measure — one that would reduce the likelihood of Russia continuing to breach European territory. Finally, Europe should provide Ukraine with the capacity to strike critical logistical nodes and war-supporting facilities in Russia. Kyiv has produced long-range drones and is now finalizing the development of ballistic missiles that have already struck Russian energy and other facilities. The continent could help in that effort with more sophisticated weapons and support. Europe is at war with Russia, whether it likes it or not. It’s high time to recognize this reality and act accordingly.

Ivo Daalder, former U.S. ambassador to NATO, is a senior fellow at Harvard University’s Belfer Center and host of the weekly podcast “World Review with Ivo Daalder.” He writes POLITICO’s From Across the Pond column. When I traveled to India last February, I found a nation enthralled by America and its newly reelected president. It was a point of national pride that Prime Minister Narendra Modi was the first foreign leader President Donald Trump welcomed to the Oval Office after his inauguration. And in contrast to opinion in Europe and elsewhere, polls showed a majority of Indians had confidence in Trump doing the right thing. While traveling around the country, I met young people who yearned for the opportunity to study at American universities and build a better future for themselves and their families. Business leaders were on the cusp of expanding exports to the world’s largest consumer market and building a stronger industrial base to compete with China, having been promised a quick trade agreement. Meanwhile, diplomats and military officers believed that mutual animosity toward China would bring the U.S. and India into a new strategic partnership.  After 25 years of steady bipartisan effort to expand America’s relationship with India, Trump’s return to power was widely viewed as the dawn of a bright future for everyone. What could possibly go wrong? A lot, it turns out.  For all the optimism about a quick trade deal and stronger bilateral ties, things began to sour quickly after Modi’s return from Washington. In late February, Indians watched as their fellow countrymen were deported by the U.S. Then, amonth later, Trump announced his “Liberation Day” tariffs — socking India with a 26 percent duty on all imports into the U.S.  But the biggest blow to the relationship came in May, after India retaliated against Pakistan for a terrorist attack that killed 26 tourists in Indian-controlled Kashmir. The fighting between the two countries escalated quickly, and by the third day, India was targeting a military base near the army division that oversees Pakistan’s nuclear arsenal. This was hardly the first time the two countries came to serious blows — they have fought four wars in 75 years. But in the meantime, both nations have developed substantial nuclear arsenals, making any military confrontation that much more dangerous. At first, the U.S. feigned little interest in the conflict, with Vice President JD Vance telling Fox News: “We’re not going to get involved in the middle of a war that’s fundamentally none of our business.” But once the fighting escalated, both Vance and Secretary of State Marco Rubio got on the phone to both countries, and a ceasefire was quickly concluded. Trump immediately claimed credit for engineering the end to fighting, suggesting he used trade to bring both parties to heel. “We stopped a nuclear conflict,” the U.S. leader claimed. “I think it could have been a bad nuclear war, millions of people could have been killed, so I’m very proud of that.” But while Pakistan was quick to give the White House the credit it wanted, India insisted the deal had been reached bilaterally. Those in India who long warned about entangling alignments are now having a field day, and Narendra Modi himself is talking about the critical importance of self-reliance. | Antonio Lacerda/EPA Eventually, as trade talks between India and the U.S. continued to stall over agriculture and other issues, Trump and Modi spoke on the phone in June. I have been told that during this call, the U.S. president insisted Modi publicly give him credit for ending the fighting in May, and that he invited the Indian prime minister to the White House when the Chief of Army Staff of Pakistan Asim Munir would also be visiting.  Modi wasn’t about to consider either of these requests. India has always insisted its conflict with Pakistan is a purely bilateral issue, pointing to earlier agreements between the two countries that reject outside mediation. And as prime minister, Modi could never accept the idea of meeting with the Pakistani military chief as if they were equals. This was the last call between the two leaders. Washington’s stance in the trade negotiations hardened after Modi’s rejection of Trump’s entreaties, making a deal less likely. And Trump has been insisting that a final agreement be reached between him and Modi directly. However, the Indian leader knows what the U.S. president really wants — his public assent to the idea that Trump prevented a nuclear confrontation. This background helps partly explain why Trump decided to single India out for punishment for its purchase of Russian oil not long after. In early August, as the U.S. president indicated his growing displeasure with Russia over its war in Ukraine, he declared India a “dead economy” and announced an additional 25 percent tariff on the country for importing oil from Russia. Many countries buy Russian oil and other energy products — including the U.S., which buys enriched uranium for its nuclear reactors from Russia — but only India was punished. It was a confusing decision: The U.S. has long encouraged India to buy Russian oil, provided its purchases stay below the $60 oil cap agreed by Western countries. Without Russian supplies, oil prices would spike and fuel inflation. Plus, China is a far bigger buyer of oil and gas than India, yet no tariffs or sanctions were imposed on Beijing. So, after a quarter century of building a strategic partnership with the world’s most populous economy — its second-largest democracy and soon-to-be third-largest economy — why single India out? As commentators around the world were quick to note, it makes no economic, political or strategic sense. But the damage has already been done. The enrollment of Indian students in U.S. universities is down 40 to 50 percent from last year’s record high of 300,000. Businesses are looking for other export markets, aided by new trade deals with Britain and, soon, the EU. Indian officials are strengthening relations with Moscow, and Modi traveled to China for the first time in seven years. Those in India who long warned about entangling alignments are now having a field day, and Modi himself is talking about the critical importance of self-reliance. The U.S., meanwhile, is losing a strategic partner in an important part of the world. 

Ivo Daalder, former U.S. ambassador to NATO, is a senior fellow at Harvard University’s Belfer Center and host of the weekly podcast “World Review with Ivo Daalder.” He writes POLITICO’s From Across the Pond column. U.S. President Donald Trump’s quixotic quest to receive the Nobel Peace Prize has guided his foreign policy ever since returning to power. Unfortunately, his desire to be the world’s “peacemaker-in-chief” is based on a profound fallacy: that peace merely entails an end to fighting. As any student of Prussian general and military theorist Carl von Clausewitz knows, war and peace are not opposites — they’re the two ends of a continuum that defines relations between states. “War,” the general once famously remarked, is “the continuation of politics by other means.” It’s doubtful Trump has read Clausewitz, or that he even cares much about the actual details of war and peace. His goal is different: to be recognized as the person who ends wars. “I’ve stopped six wars,” he said last month. “I’m averaging about one a month” — a claim that, if true, would indeed be deserving of a Nobel. So, let’s take a closer look at his record as peacemaker thus far. The list of wars Trump professes to have ended starts with the clash between India and Pakistan last May. “They have been fighting for about a thousand years,” the U.S. president claimed, “but “I got things settled.” He also added that he may well have prevented a nuclear war. India, however, vociferously denies any U.S. involvement in bringing the fighting to a close. And even if Delhi needs to maintain that line for domestic purposes, the fact remains that a ceasefire is hardly the same as a lasting settlement to a conflict dating back to India’s independence and partition in 1947. Actual peace would mean settling the competing claims over Kashmir, which have resulted in violent clashes and wars between the two nations for decades — though, of course, way short of a millennium. And while the active fighting may have ended for now, the underlying conflict very much continues to mark relations between the two countries. Next on Trump’s list of peace deals is the clash between Israel and Iran. “Look,” he told a gathering of NATO leaders in June, “we just ended a war in 12 days that was simmering for 30 years.” That’s partly true — Trump’s decision to target core parts of Iran’s nuclear program did clearly play an important role in ending Israel’s bombing strikes and Iran’s counterstrikes. But that’s a far cry from achieving lasting peace. Instead, Iran will now likely intensify its effort to build a nuclear weapon, and Israel has made clear it reserves the right to strike at any time if Iran were to rebuild its nuclear or missile program and air defenses. Not long after, in late June, came a comparatively more substantial deal to end the fighting between Rwanda and the Democratic Republic of Congo (DRC). Brokered by the U.S. and signed in the Oval Office, the agreement requires Rwanda to withdraw its troops from the DRC within 90 days. In Gaza, the U.S. leader has essentially given the Israeli government a green light to occupy the strip. | Mohammed Saber/EPA “We just ended a war that was going on for 30 years with 6 million people dead,” Trump declared — though that number included the millions killed in civil wars within both nations. “No other president could do it.” But while this deal is, indeed, a real step toward ending the conflict, it’s important to remember that the key lies in its implementation. And on that front, news is much more mixed, as fighting between the Rwandan-backed M23 rebel group and the DRC continues unabated — in part because M23 didn’t sign on to the deal. The following month then saw Trump have a hand in securing a ceasefire between Cambodia and Thailand, after violent border clashes had erupted in late July. Facing pressure from China, Malaysia and the promise of trade deals with the U.S., the two countries eventually agreed to stop shooting and halt dispatching more troops to the region. Yet again, the underlying conflict that resulted in these armed clashes remains unresolved. Cambodia and Thailand have been fighting over the demarcation of their border, including for the crucial location of centuries-old Hindu temples along their 800-kilometer frontier, for decades now. And though Trump’s trade threats may have helped halt the shooting, that hardly justifies his subsequent claim “to be the president of PEACE!” Finally, earlier this month, the U.S. president presided over the conclusion of a major agreement ending the war between Azerbaijan and Armenia. Following major clashes over Nagorno-Karabakh — an enclave in Azerbaijan that Armenia had seized in 1992 and Baku regained in 2023 — much of the leg work on this agreement had been completed before Trump took office. But two sticking points remained: A demand from Azerbaijan that Armenia erase any claim to Nagorno-Karabakh from its constitution — which will require a referendum — and a transportation link between two parts of Azerbaijan that runs through Armenian territory. Under Trump, the U.S.-brokered talks did lead to an agreement, including a U.S.-leased roadway connecting the two areas of Azerbaijan — a substantial deal and a real accomplishment. But, again, implementation will be key. Nonetheless, Trump’s boast of ending six wars in six months is a lot less than meets the eye. The fact is, even if he had been completely successful in ending these wars, his record would still be overshadowed by his failure to end the two wars he actually vowed to solve— the wars in Ukraine and Gaza. Far from ending them in 24 hours, as he boasted he would do during his reelection campaign, the situation in both has worsened since Trump’s return: In Gaza, the U.S. leader has essentially given the Israeli government a green light to occupy the strip, washing his hands of any effort to secure an end to the fighting. Meanwhile, in Ukraine, he sought to move the peace process forward by meeting with Russian President Vladimir Putin in Alaska — only to come up empty-handed and seemingly more in sync with Moscow than Kyiv. Achieving peace — the resolution of conflict, not just an end to fighting — is hard. It takes more than a phone call or a meeting, no matter how charismatic and persuasive the peacemaker thinks they might be. It requires detailed knowledge, intensive negotiations, a search for compromise and carrots as well as sticks to get results. And even then, most efforts fail — not because the peacemaker is incompetent but simply because continuing to fight is often easier than finding a resolution both sides will accept.

Ivo Daalder, former U.S. ambassador to NATO, is a senior fellow at Harvard University’s Belfer Center and host of the weekly podcast “World Review with Ivo Daalder.” He writes POLITICO’s From Across the Pond column. In the competition between China and the U.S., China is winning. That isn’t a conclusion many would have drawn six months ago, but now it’s inescapable. What’s different today is that since taking office, the administration of U.S. President Donald Trump has taken many steps that play directly into its adversary’s hands, weakening its own ability to outcompete. And we will soon be at the point where this trend is irreversible. For decades, China followed Deng Xiaoping’s dictum to “hide your strength and bide your time.” Unfortunately, most Western countries, led by the U.S., ignored the latter part of this admonition — that Beijing was biding its time — and instead focused on China as a huge new market for Western goods, services and capital. Everyone could get rich from China getting rich, or so it seemed — a sentiment that Deng and his successors were absolutely fine with. Their purpose, however, wasn’t to get rich just for the sake of it, but to gain the necessary power to compete and win against the world’s sole remaining superpower. So, by the time Xi Jinping ascended to power in 2013, China no longer needed to bide its time, and it started to show its strength. In the past decade, China increased its military spending by 800 percent — the biggest military build-up in peacetime history. It now deploys more naval vessels than the U.S.; it is modernizing its nuclear arsenal, aiming to reach close to parity with Russia and the U.S. by the end of the decade; and it flexes military muscle in places that have long been under the sole purview of the U.S. However, while its military expansion and reach is impressive, China’s economic, scientific and technological advances are most worrisome. Seventy percent of the world’s countries now trade more with China than with the U.S., with over half of them trading twice as much with China. In Trump’s own words, America may be a big department store, but the products you can buy in its stores — and in those across the world — are made in China. Trade isn’t the only market Beijing’s cornered either. Following a clear and consistent strategy that was first outlined by Xi in 2015, today it leads the world in electric vehicles and batteries, robotics, quantum communications, renewable technologies and more. Indeed, according to one study, while 20 years ago the U.S. led China in 60 of the 64 frontier technologies key to defense, energy, computing, biotech and other sectors, China now leads in 57 of these technologies. This determination to win is particularly obvious in one area that has featured prominently in the news recently: rare earth elements and magnets that are critical for defense, electronics and green-technology manufacturing. As it stands, China holds almost 50 percent of the world’s rare earth reserves, controls 70 percent of rare earth mines and accounts for 90 percent of global rare earth refining capacity. It also controls over 90 percent of critical magnet production, and successfully used that near-monopoly to force the Trump administration into backing down from its escalating tariff war and chip export controls. Seventy percent of the world’s countries now trade more with China than with the U.S., with over half of them trading twice as much with China. | Alex Plavevski/EPA But even in the areas where the U.S. retains a lead — think AI and quantum computing — China is catching up. The release of DeepSeek, for example, shocked the AI community for its speed and sophistication, as it nearly equaled the vastly more expensive models developed by U.S. tech companies. And the next DeepSeek generation, I’m told by a top Microsoft AI official, may even exceed the most advanced models from OpenAI and other firms. All of this indicates China’s not only catching up but, in many ways, surpassing the U.S. America has many advantages in this race — which is how it has managed to stay ahead, even as Beijing embarked on its long-term strategy to overtake it. But in the past six months, the Trump administration has systematically begun to dismantle many of them. Let’s take partnerships: The biggest advantage for the U.S. is that it has allies, while China has clients. Collectively, the U.S. and its allies can outcompete, outspend, out-innovate, out-trade, out-finance and out-attract others to its side. But Washington’s allies in North America, Europe and Asia increasingly — and rightfully — fear that the current “America First” policy is putting them last. They’ve been told to defend themselves, to pay 15 percent or more in tariffs and, in the case of Canada and Denmark, to cede territory. As a result, they’re turning toward each other and reducing their military, economic and political ties to Washington. And that’s not all. The Trump administration is also pursuing funding policies around universities and immigration that directly undercut America’s ability to compete with China. For 80 years, federal research dollars funded scientific and technological breakthroughs like the internet, genetic sequencing, space exploration, vaccines, cancer cures and much more. The country’s modern research universities led the way in spurring these innovations, drawing talent from across the globe to benefit from and contribute to its ecosystem of innovation. But Trump has now cut federal funding for basic research by a third, blocked research grants to top universities for purely ideological reasons and tightened immigration for international students and scholars. One poll suggests that 75 percent of scientists in the U.S. today are looking to leave the country and work elsewhere. It’s hard to underestimate the damage these policies are doing to U.S. competitiveness. To give just one example, many of the country’s closest allies are now offering lucrative grants and research opportunities to entice the talent pool at the core of America’s success as a global innovation machine. This isn’t just shooting yourself in the foot — it’s shooting yourself in the head. And unless Washington rectifies the situation swiftly, it will find not just Beijing but other parts of the world passing it by.

Ivo Daalder, former U.S. ambassador to NATO, is a senior fellow at Harvard University’s Belfer Center and host of the weekly podcast “World Review with Ivo Daalder.” He writes POLITICO’s From Across the Pond column. As another tariff deadline fast approached, U.S. President Donald Trump once again decided to extend it — this time to Aug. 1. To many observers, this behavior has become the norm. Indeed, many commentators, analysts and even the markets seem to believe the new August deadline means no more than the ones that came before. “Over the last couple of months, we’ve seen the administration escalate, only to quickly de-escalate, and this could also just be another tactical escalation in some way,” said Wall Street analyst Nadia Lovell. They’ve even coined a name for it: TACO — Trump Always Chickens Out. Trump, meanwhile, aware of his reputation, insists this time is different. “TARIFFS WILL START BEING PAID ON AUGUST 1, 2025,” he declared. “No extensions will be granted.” So, what will it be? Will the U.S. leader blink again in a few weeks? Or will this time really be different? The difficulty in answering these questions is that there are two Trumps: One is Trump, the Dealmaker — the brash, promise-too-much and deliver-too-little, larger-than-life persona behind “The Art of the Deal.” It is the side of him that so effectively monetized his brand in “The Apprentice” and franchised his name to hotels, golf courses, steaks, wine — even meme coins and mobile phones. The other is Trump, the Tariff Man — railing against free trade for decades and believing other countries are “ripping off” of the U.S. “Countries like Japan, China, and others are laughing at us,” he told CNN’s Larry King in 1999. “They have huge surpluses, and we have huge deficits. I’d put a tax on their goods to level the playing field.” It is the side of him that 25 years later, proclaimed tariffs to be “the most beautiful word in the dictionary.” Yet, both in the run-up to the election and since taking office, many assumed the U.S. leader’s tariff threats simply reflected his penchant for dealmaking. Indeed, when Trump first extended his “liberation day” tariff deadline to July 9, his chief trade adviser Peter Navarro promised Trump would negotiate “90 deals in 90 days.” But those 90 days have come and gone. And in that time, Trump has finalized just two interim deals, one with Vietnam and one with the U.K., and most of their details are yet to be finalized let alone negotiated. (A third “deal” with China was really only a ceasefire in the escalating war of tariffs, export controls and sanctions, effectively returning the situation to where it was in early April). All the while, many countries are still scrambling to get a deal before the end of July, including the EU, Canada, Japan, Mexico, and all the other countries that have received a presidential letter indicating what their tariff levels will be as of the August deadline. But even if some deals are struck by then, they will likely be few in number and alarmingly short on details. The truth is, despite his reputation as a dealmaker, Trump is, above all, a tariff man. Even with the postponement of prior deadlines, he has effectively raised tariffs on imports into the U.S. to levels unseen in nearly a century. Trump views tariffs in three ways: He believes they are an efficient and cheap way to raise revenue, which is why his 10 percent “reciprocal tariff” minimum on all trading partners is likely to stay. Donald Trump believes he can win the tariff game, and that U.S. economic might means others will have to do his bidding. | David Ramos/Getty Images He also believes other countries have been stealing U.S. jobs and manufacturing capabilities, and he wants them back. His sectoral tariffs on automobiles, steel, aluminum, copper and soon likely on pharmaceuticals, semiconductors, lumber and other products are meant to strengthen U.S. capacity at home. Therefore, these, too, are likely to remain. Finally, he believes tariffs can compensate for, or even eliminate, bilateral trade deficits, and the deals he seeks are focused on addressing this long-standing concern. It doesn’t matter that bilateral deficits in goods tell us nothing about economic strength — as any economist will tell you. Trump sees deficits as a loss and surpluses as a gain. And he sees himself as a winner. Then, there’s the fact that Trump believes he can win the tariff game, and that U.S. economic might means others will have to do his bidding. “We are a department store, and we set the price,” he told Time Magazine. “I set a fair price, what I consider to be a fair price, and they can pay it, or they don’t have to pay it. They don’t have to do business with the United States, but I set a tariff on countries.” Of all his views on tariffs and the economy, it is this idea that the U.S. holds all the cards — that he has all the leverage and others will do his bidding — which will likely prove the most misguided. The president often forgets others have choices, including the choice to shop at another department store or not shop at all. And that is exactly what is happening. America’s allies in Asia, Europe and North America are increasingly looking to each other to reaffirm global trade rules and strengthen trading bonds. They are “derisking” their economies from Trump’s America. And the EU is looking to forge an agreement with the 11 Asia-Pacific countries that signed the Comprehensive and Progressive Agreement Trans-Pacific Partnership on new trading rules, which would exclude not only China but also the U.S. Other large economies, notably those in the BRICS grouping, are strengthening economic ties too — and often at the expense of the U.S. At their summit last week, they largely ignored Trump’s threat of additional tariffs and just moved on to discuss new areas of cooperation. Even countries in America’s own hemisphere, like Colombia and Brazil, are turning toward Beijing and away from Washington. And while Canada is still hoping for a deal, it is hedging its bets by strengthening ties with Europe and trying to redirect its economy’s north-south focus toward east-west instead. As more countries come to realize there is no fair deal to be made, they will likely look for economic opportunities elsewhere too, often no matter the short-term cost of transitioning. This is the new world Trump is helping to forge.

VATICAN CITY — The new American pope is looking to his MAGA compatriots to shore up the Vatican’s finances after decades of scandal and mismanagement. The conclave that brought Pope Leo to power was overshadowed by painful divisions within the Church, a war between modernity and tradition, and bitter reflections over his predecessor’s complex legacy. But more prosaically it was also plagued by angst over a serious fiscal squeeze that is forcing the spiritual leader of the world’s 1.4 billion Catholics to moonlight as a fundraiser. Despite the Vatican’s vaults of priceless masterpieces, Leo has ascended to the papal throne amid a steepening liquidity crisis aggravated by a major downturn in donations from the U.S., making it increasingly difficult for the city state to function. Leo needs to fix it — but to do so he needs to keep traditionalist U.S. Catholics on side. Insiders say that Leo was elected in part because as an American he exuded an Anglo-Saxon financial seriousness. He was also seen as well positioned to bring back donations that have dried up thanks to persistent scandal and the hemorrhaging of support from powerful American Catholic conservatives.  Already, the gambit seems to be working. “Talking to some of the biggest donors in the country, they’re absolutely thrilled,” said one conservative Catholic leader in the U.S., granted anonymity to speak candidly. “I don’t know that they’re already writing their checks. I don’t see that necessarily yet. But as far as their optimism and excitement, it’s a 10 out of 10 — absolutely.” A boost to donations is desperately needed. According to Reuters, the latest internal figures show the Vatican ran a deficit of €83 million in 2024, more than double the €38 million reported in its last-published financial report in 2022.  The annual shortfall adds to liabilities including half-a-billion in pension obligations to the Vatican’s superannuated beneficiaries and past losses from the Institute for the Works of Religion (IOR), the Holy See’s scandal-riddled investment vehicle, also known as the Vatican Bank. The Vatican’s income is mainly derived from property assets and donations including from bishops and Peter’s Pence, the annual June collection by churches for the pope’s “mission” and charitable works. But donation revenue has fallen with increasing secularism and financial scandals. Donors from the U.S., the number one contributing country, were put off by Francis’ more liberal teachings on LGBTQ+ and marriage as well as corruption scandals including a botched investment by the Vatican’s top financial institution in London real estate, said John Yep, president of Catholics for Catholics, a conservative NGO.   ‘VERY EQUILIBRATED’ The momentum behind Leo as a bridge-builder emerged in pre-conclave lobbying sessions, when cardinals began to envisage that Leo’s alignment on hot-button conservative issues would help appease U.S. Catholics. Leo went on to secure more than 100 votes in the conclave, two well-placed insiders say, indicating that his support was broad and included right-leaning clerics.  A man holds a US flag in St. Peter’s Square, Vatican City, 08 May 2025. | Angelo Carconi/EPA-EFE Pope Leo “is a very equilibrated person, and he can give something to the right, without shifting the pontificate to the right,” one cardinal told POLITICO.  According to the cardinal quoted above, his constituency even included several of the die-hard Francis critics led by the arch-traditionalist American cardinal Raymond Burke. Burke himself reportedly received Leo — then Cardinal Robert Prevost — in his Vatican-owned apartment before the conclave, and spoke with him again after, according to one person familiar with the matter. Burke’s office could not reached for comment. In turn, Leo has signaled a willingness to address traditionalist priorities, drawing particular praise for his decision to move back to the original papal residence from his predecessor’s basic lodgings, as well as for his penchant for singing in Latin. This year’s conclave also happened to coincide with an annual Vatican fundraising jamboree known as “America Week,” a week of lavish Rome parties, that saw €1 billion committed to the Vatican should the “right pope” be elected.  The upshot is — theoretically — more money from across the pond. “American philanthropists want to see that so they will open up their coffers again,” said Yep. Electing Leo “was a very smart choice because they absolutely need the American money. The church is in a terrible position financially,” said the Catholic leader in the U.S. quoted above. “They need the American money. And they were able to pick an American who’s not that American. It was kind of a perfect pick.” LEGACY OF CORRUPTION But restoring confidence will also require a credible overhaul of the Vatican’s financial plumbing and accounting after years of scandal that also tainted the Church’s international image. Insiders often blame the shoddy financial situation on the Vatican Bank’s alleged links to a sprawling money-laundering scandal in the 1970s that reportedly involved Italian freemasonry, the mafia, the CIA, anticommunist militias in Latin America and a Milanese banker who was found hanging dead under London’s Blackfriars Bridge in 1982. Creative accounting persisted over the years, and the shock resignation of Francis’ predecessor, Benedict XVI, was partly driven by a raft of financial scandals leaked to the Italian press. Under a transparency drive, Francis hired former Deloitte accountant Libero Milone to audit the Holy See’s finances. Milone’s first task was to draw up accounting for the various dicasteries that make up the Curia, the Vatican City government. What he found stunned him. “They created a proper framework to bring Vatican financial reporting into the 21st century,” Milone told POLITICO. “But when I was brought in to do the audit work, we were still operating in the previous century.” Newly elected Pope Leo XIV smiles from the central loggia of Saint Peter’s Basilica, Vatican City, 08 May 2025. | Ettore Ferrari/EPA-EFE Financial accounts were written in pencil by nuns on “pieces of paper” and stashed in drawers, Milone said. Theologians with rudimentary financial knowledge massively underestimated the future costs of the microstate’s pension obligations, he said. When Milone began to notice discrepancies in various ministerial budgets, he was accused of being a spy. He was eventually brought in for questioning and compelled to resign — then found that a resignation letter had already been prepared a month prior. Francis didn’t sit on his hands. The Vatican Bank is profitable again, after he ended some of its shadier practices, and he also presided over the conviction of Cardinal Giovanni Angelo Becciu, a powerful secretary involved in a €200 million scandal involving a botched London property investment in 2014. As well as a hiring freeze and salary cuts, Francis set up a new fundraising commission and centralized the Vatican’s budgeting.  But the broader reform effort was seriously derailed by the departure of Milone, as well as Cardinal George Pell, an Australian who had been brought in to head a new Secretariat for the Economy but was called back to Australia to face charges relating to the clerical abuse scandal. Officials describe an enduring lack of transparency as well as internal resistance to the slow-going reform efforts from entrenched interests in the Curia, with staffers complaining about the effort to mediate spending. Representatives for the IOR and the Holy See’s Secretariat for the Economy declined POLITICO’s requests for interviews. So far, Leo has hinted that he will prioritize fundraising over austerity, announcing a €500 bonus to curial staffers. He has also signalled that he wants to distance the Vatican from scandals of the past, sanctioning a new investigation into a key witness against Cardinal Becciu’s conviction which could help overturn his conviction at the appeal this fall. On top of that, he will look into ways to boost profits in the Holy See’s vast real estate portfolio, after prelates complained about underinvestment, said the cardinal quoted above.  How all this pans out will depend on not only American largesse but whether Leo can empower the growing caucus of Church pragmatists who recognize that even the Holy See must occasionally lower itself to earthly responsibilities like basic financial planning. For others, the divine mission still trumps all — whatever the cost. “There will always be a way to get money, just like there will always be the poor,” said one prelate in St. Peter’s Square last month. “Right now, my concern is lunch.”