Listen on * Spotify * Apple Music * Amazon Music Der EU-Handelsausschuss hat für den Zolldeal mit den USA gestimmt, doch das Tauziehen ist noch nicht vorbei: Zwei Abgeordnete kämpfen als Delegation aus Brüssel in Washington um letzte Garantien. Joana Lehner und Jürgen Klöckner sprechen über das Finale und beleuchten zusammen mit einem US-Kollegen, ob Donald Trump den Deal als politischen Sieg im Inland verkaufen kann oder ob die deutsche Industrie weiterhin Milliarden an Zöllen verliert. Im Policy Talk begrüßen die beiden VDA-Präsidentin Hildegard Müller. Sie spricht über das „weinende und lachende Auge“ der Branche, die aktuelle Milliardenbelastung durch US-Zölle und die schwindende Wettbewerbsfähigkeit des Standorts Deutschland. Müller warnt: Wenn Europa wirtschaftlich schwach wird, verliert es im Spiel der Großmächte an Relevanz. In Berlin tobt derweil ein Ökonomen-Streit: Neue Studien vom ifo-Institut und dem IW Köln werfen der Regierung vor, große Teile des bisher eingesetzten Sondervermögens für Haushaltslöcher statt für neue Investitionen zu nutzen. Rasmus Buchsteiner berichtet Off the Record über das anfängliche Kommunikationsdebakel im Finanzministerium und die Frage, warum die versprochenen Bagger in den Kommunen noch immer nicht rollen. „Power & Policy“ zeigt jede Woche, wo und wie die Entscheidungen in der Wirtschaftspolitik fallen. ⁠Jürgen Klöckner⁠ und ⁠Joana Lehner⁠ von POLITICO sprechen mit Top-Entscheidern und liefern Off-the-Record-Einblicke aus der Redaktion und Machtzentren. Präzise Analysen, lange bevor Gesetze beschlossen sind. Der Podcast für alle in Wirtschaft und Politik, die einen Wissensvorsprung brauchen — immer donnerstags. Für Policy-Profis: Abonnieren und die Pro-Newsletter ⁠Industrie & Handel⁠, ⁠Energie & Klima ⁠und ⁠Gesundheit⁠. Jetzt kostenlos testen. Fragen und Feedback gern an ⁠powerandpolicy@politico.eu⁠ POLITICO Deutschland – ein Angebot der Axel Springer Deutschland GmbH Axel-Springer-Straße 65, 10888 Berlin Tel: +49 (30) 2591 0 ⁠information@axelspringer.de⁠ Sitz: Amtsgericht Berlin-Charlottenburg, HRB 196159 B USt-IdNr: DE 214 852 390 Geschäftsführer: Carolin Hulshoff Pol, Mathias Sanchez Luna

BRUSSELS — The European Union and Australia are expected to conclude talks on a long-awaited trade deal early next week, with Commission President Ursula von der Leyen on Wednesday announcing she would visit from March 23-25.  Von der Leyen will meet Australian Prime Minister Anthony Albanese in Canberra, according to a Commission statement. Trade Commissioner Maroš Šefčovič is also expected to join the trip, although planning might yet change due to flight disruptions in the Middle East. Albanese confirmed the visit, saying in a statement that he would meet both von der Leyen and Šefčovič on March 24. Brussels and Canberra relaunched trade negotiations after Donald Trump’s return to the White House last year. They had collapsed amid acrimony at the end of 2023 amid disagreements over quotas on beef and lamb. The breakthrough comes as the EU looks to get closer to the Pacific-centered CPTPP trade bloc through its deepening bonds with Australia. In a letter to EU leaders shared Monday, von der Leyen said the EU and Australia were in “the final stretch towards concluding” their trade agreement.  “In addition to removing trade barriers, it will also facilitate access to critical raw materials — such as lithium, cobalt, rare earth elements, and hydrogen — and strengthen Europe’s presence in one of the world’s most dynamic economic regions,” she wrote, as part of a list on the Commission’s efforts to boost competitiveness. Negotiators had grappled in the home stretch to close the gap on access for Australian beef and lamb to the European market; EU trade protections on specialty foods; critical minerals; and an Australian tax on luxury cars. Canberra and Brussels are also looking to seal a security and defense partnership, which is finalized.  The EU top diplomat Kaja Kallas, who would be signing the defense deal, known as Security and Defense Partnership, is however not expected to be part of the trip. The pace would come on the heels of similar partnerships signed with the U.K., Canada and most recently India. Speaking last week at at the annual gathering of diplomats with the External Action Service, the EU’s diplomatic body, Kallas said that the deal was coming as she announced that “later this week, I will sign the tenth [SDP] with Australia and subsequent ones with Iceland and Ghana in the coming days.”     James Panichi, Zoya Sheftalovich, Sebastian Starcevic and Nette Nöstlinger contributed reporting.

Just three weeks after the Supreme Court handed President Donald Trump a stinging defeat over the sweeping tariffs he imposed last year, the legal battle over his first move to replace those import taxes is heating up. Democratic attorneys general and governors from 24 states and a libertarian group representing two small businesses filed their first legal briefs Friday asking a federal trade court to strike down the 10 percent tariffs Trump imposed on most U.S. trading partners in February. Trump promised to hike those tariffs to 15 percent, but hasn’t yet done so. Legal experts told POLITICO that Trump’s backup tariffs are probably on stronger legal footing than the “Liberation Day” taxes the high court struck down. Despite that, his challengers are exuding bravado about their chances. “We are 100 percent confident that we will be successful in the Court of International Trade,” New York Attorney General Letitia James told reporters last week. Trump is also projecting confidence, repeatedly claiming that the same Supreme Court went ahead and blessed his use of other authorities, like the so-called Section 122 tariffs he’s turned to as a short-term fix. That is not true. While the three justices who dissented from last month’s decision did cite Section 122 as one of the tools Trump could use to rebuild his tariff scheme, the court’s six-justice majority explicitly declined to embrace that position. “We do not speculate on hypothetical cases not before us,” Chief Justice John Roberts wrote. While Trump called his new approach “time tested,” that authority has never been invoked before and the high court has not given its blessing to Trump using that specific law in the current circumstances. Here’s a look at the key issues in the legal fight over Trump’s replacement tariffs: A NEW RATIONALE The Supreme Court resolved the earlier Trump tariff case by finding that the statute Trump invoked, the International Economic Emergency Powers Act, conferred no power on any president to impose tariffs. With that off the table, the court did not have to examine whether the global emergency Trump asserted existed. The new challenges could face a bigger hurdle because their arguments will require judges to second guess Trump’s conclusion that the U.S. faces a “large and serious balance-of-payments deficit.” “The bottom line here is: How much deference does the president get in determining … this sort of predicate condition — that there’s a large and serious payments problem?” said Matthew Seligman, a lawyer representing importers seeking refunds of the previous tariffs. “How much deference does the president get in his determination in deciding how large is large and how serious is serious?” “I think [it] will probably be the court’s instinct to defer to the president’s determination that, whatever it is ‘balance of payments’ means, that the requisite facts on the ground exist,” Duke University law professor Timothy Meyer said. DEFINING ‘BALANCE OF PAYMENTS’ The text of the law Trump invoked for his latest round of tariffs, Section 122 of the Trade Act of 1974, makes eight references to “balance of payments” issues. Yet, it offers no definition of the term. Some experts contend the phrase refers to a specific problem the U.S. faced in the years leading up to the law’s enactment, involving the U.S. government buying or selling foreign currency to adjust or maintain exchange rates. “A balance of payments deficit is a term of art incorporating into law a settled meaning from international financial accounting,” the blue states’ lawsuit says. “A trade deficit does not qualify, either as a matter of economics or of law, as a balance of payments deficit.” “The president has tried to pull a fast one by switching the term balance of payments to mean balance of trade, in other words, a trade deficit. But those two things aren’t the same thing,” said Jeffrey Schwab of the Liberty Justice Center. However, other experts say the lack of a definition may indicate that different lawmakers had different views of what “balance of payments” meant and what problem they were trying to fix. “They had a broader set of problems in mind … .They weren’t seemingly talking about just official payments,” said Brad Setser, a Treasury Department official under President Barack Obama and an adviser to the U.S. Trade Representative under President Joe Biden. One awkward aspect for the White House: during the pitched battle over the “Liberation Day” tariffs, the administration’s lawyers suggested that Section 122 wasn’t a viable option to address the trade deficit. “Trade deficits … are conceptually distinct from balance-of-payments deficits,” Justice Department attorneys told the Court of Appeals for the Federal Circuit last June. TRUMP’S CARVE-OUTS The law Trump invoked for the replacement tariffs says they should be “of broad and uniform application,” but the president’s approach seems far from that standard. Attached to the proclamation he issued are 88 pages of exemptions and exceptions. The fine print waives the new tariffs for Mexico and Canada and some goods coming from Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, or Nicaragua. Trump also carved out a slew of product categories where consumers regularly complain about higher prices, including many foods, cars and prescription drugs. “The exemptions and exceptions the President has made are in direct violation of the text of Section 122, which requires generally uniform treatment the President is declining to observe,” Liberty Justice Center argues in the lawsuit filed on behalf of two importers, Burlap and Barrel and Basic Fun! But the law does contain wiggle room to exclude some products or single out countries in some circumstances. Trump’s proclamation seeks to invoke those exceptions, although many dispute whether his assertions about the current state of global trade and “the needs of the United States economy” are actually true or are just parroting the language in the statute. It’s unclear whether judges will accept Trump’s claims at face value and whether they have time to dig into such factual disputes on the accelerated timetable the challengers have demanded. Another uncertainty is whether a court that strikes down the carve-outs would throw out the tariffs altogether or do what Trump’s proclamation urges in such a scenario: wipe out the exemption and keep the broader tariffs. CAN THE COURTS BEAT THE CLOCK? The law Trump used to deploy the new tariffs limits his move to 150 days, roughly five months. While that may weaken Trump’s hand in negotiations with trading partners and force him to look to other tools to sustain his tariff policies, the short fuse means that the courts are unlikely to deliver a final verdict on the legality of the president’s action before it expires on July 24. In the challenges to Trump’s earlier tariffs, lower courts ruled against the policies but allowed the administration to keep collecting the duties while the fight played out. If the pattern holds, it could take months for the lower courts to consider the issues and a year or more if the Supreme Court decides to weigh in. To actually halt the tariffs, opponents will likely have to persuade the trade court or the Federal Circuit to refuse to issue the stays that the White House won the last time around. The Court of International Trade has set arguments on the pending suits, including a request for a preliminary injunction, for April 10. But some expect these cases to take longer to decide than the last time. “I would expect, at every level, that the time to write an opinion would be longer than it was in the IEEPA case because the issues are just more complicated,” Meyer said. WOULD TRUMP DOUBLE DIP? Some trade experts have speculated that, if the courts don’t stop the new tariffs by the time they are set to expire in July, Trump could attempt to re-issue them for another 150 days, perhaps with a few tweaks to make them a bit different than during the first phase. The statute doesn’t directly prohibit re-upping, but does say it’s up to Congress to extend such tariffs beyond the 150-day period. “It’s arguably a little ambiguous, if he wanted to re-declare a balance of payments emergency right after,” said Stanford Law Professor Alan Sykes. “Certainly the statutory language, to me, implies that the Congress did not want to leave that loophole in place. If I were the judge, I would say that that’s not permissible.”

BRITAIN’S LABOUR PARTY STARES INTO THE ABYSS IN ITS WELSH HEARTLAND In the old coalfields of south Wales, Britain’s center-left establishment faces being crushed by a nationalist left and populist right. POLITICO went to find out why. By DAN BLOOM and SASCHA O’SULLIVAN in Newport, South Wales Photo-Illustration by Natália Delgado/POLITICO Eluned Morgan, the Welsh first minister, stood in a sunbeam at Newport’s Victorian market and declared: “Wales is ready for a new chapter.” Many voters agree. The problem for Morgan is: few think she’ll be the one to write it. This nation of 3 million people, with its coalfields, docks, mountains and farms, is the deepest heartland of Morgan’s center-left Labour Party. Labour has topped every U.K. general election here for 104 years and presided over the Welsh parliament, the Senedd, since establishing it 27 years ago. Yet Senedd elections on May 7 threaten not only to end this world-record winning streak, but leave Welsh Labour fighting for a reason to exist. One YouGov poll in January put the party joint-fourth with the Conservatives on 10 percent, behind Welsh nationalists Plaid Cymru on 37 percent, Nigel Farage’s populist Reform UK on 23 percent and the Greens on 13 percent. Other polls are less dramatic (one last week had Reform and Plaid equal, and Labour a closer third), but the mood remains stark.  The most common projection for the 96-seat Senedd is a Plaid minority government propped up by Labour — blowing a hole in Labour’s status as the default governing party and safe vote to stop the right, and echoing recent by-elections in Caerphilly (won by Plaid) and Manchester (won by Greens). POLITICO visited south Wales and spoke to 30 politicians and officials across Labour, Plaid and Reform. | Dan Bloom/POLITICO It would raise the simple question, said a senior Welsh Labour official granted anonymity to speak frankly: “What is the point in this party?’” POLITICO visited south Wales and spoke to 30 politicians and officials across Labour, Plaid and Reform, including interviews with all three of their Welsh leaders, for this piece and an episode of the Westminster Insider podcast. The conversations painted a vivid picture of a center-left establishment fighting for survival in an election that could echo far beyond Wales. While in the 1980s Welsh Labour could unite voters against Margaret Thatcher’s Conservatives, now it is battling demographic changes, a decline in unionized heavy industry and an anti-incumbent backlash. All have killed old loyalties and habits. Squeezed by Plaid and Greens to their left and Reform to their right, some in Labour see parallels with other mainstream postwar parties facing a reckoning across Europe. This week, Germany’s conservative Christian Democrats and center-left Social Democrats lost to the Greens in the car production region of Baden-Württemberg; the latter barely scraped 5 percent. In the recent Manchester by-election, the Conservatives lost their deposit. Welsh Labour MPs fear a reckoning. One said: “We will have to start again. We rebuild. We figure out, what does Welsh Labour mean in 2026? What do we stand for?” NEW CHAPTER, SAME AUTHOR It takes Morgan 20 minutes to walk the 500 meters from Newport Market to our interview. Some passers-by flag her down; others she ambushes. We pass a baked goods shop (“Ooh, Gregg’s! That’s what I want!”) and Morgan emerges with a latte, though not with one of the chain’s famous sausage rolls. She introduces herself to one woman as “Eluned Morgan, first minister of Wales.” Her target looks vaguely bemused.  After the Covid pandemic, people are simply more aware of what the Welsh government actually does — which means Labour, as the incumbent, gets more blame when things go wrong. | Matthew Horwood/Getty Images A peer and ex-MEP who joined the Senedd in 2016, Morgan is a fixture of Wales’ Labour establishment who became first minister unopposed in August 2024 after her predecessor, Vaughan Gething, resigned over a donations scandal. “I didn’t have a mandate really, because I was just kind of thrown in,” she tells POLITICO midway up the high street. “I thought, right, I need a program, so I went out on the streets and took my program directly from the public without any filter.”  She is selling a nuts-and-bolts offer of new railway stations, a £2 bus fare cap and same-day mental health care. Morgan casts herself as the experienced option to beat what she calls the “separatists” of Plaid and the “concerning” rise of populism. She means Reform, which wants to scrap net zero targets and cut 580 Welsh civil service jobs. Yet paradoxically, she also paints herself as a vessel for change. “[People] want to see change faster,” she said in John Frost Square, named after the leader of an 1839 uprising that demanded voting rights for all men. She wants to show “delivery” and “hope.” Dimitri Batrouni, Newport Council’s Labour leader, suggested an Amazonification of politics is under way. “Our lives commercially are instant,” he said. “I want something, I order it, it’s delivered to my house … people quite naturally want that in their governments.” But after 27 years, many voters are rolling the dice on delivery elsewhere. Welsh Labour is promising to end homelessness by 2034, but previously made the same pledge by 2026. Around 6,900 people are still waiting two years or more for NHS treatment (though this figure was 10 times higher during the Covid-19 pandemic). Education rankings slumped in 2023. At Newport’s Friars Walk shopping center, retired mechanical engineer Roy Wigmore, 81, said all politicians are liars. “I’ve voted Labour all my life until now,” he said, “but I’ll probably vote for somebody else — probably Nigel Farage.” ‘SHIT, WELL, HE DIDN’T CALL ME’ Much of this anger is pointed at Westminster — which is why Labour has long tried to show a more socialist face to Wales.  It was the seat of Labour co-founder Keir Hardie as well as of Nye Bevan, who launched Britain’s National Health Service in 1948. “Welsh Labour” was born out of the first Senedd-style elections in 1999, when Plaid surged in south Wales heartlands while Tony Blair’s New Labour appealed to the middle classes. For years, this deliberate rebranding worked; Labour pulled through with the most seats even when the Tories ruled Westminster. Yet in 2024, the party boasted of “two Labour governments at both ends of the M4” — in London and in Cardiff — working in harmony. The emphasis soon flipped back when things went wrong in No. 10; Morgan promised a “red Welsh way” last May. She is “trying to find our identity again,” said the MP quoted above. Morgan appeared to disown the “both ends of the M4” approach, while declining to call it a mistake. “Look, that was a decision before I became first minister,” she said. A peer and ex-MEP who joined the Senedd in 2016, Morgan is a fixture of Wales’ Labour establishment who became first minister unopposed in August 2024 after her predecessor, Vaughan Gething, resigned over a donations scandal. | Matthew Horwood/Getty Images She tries to be playful in distancing herself from Keir Starmer. “He came down a couple of weeks ago and I was very clear with him, if you’re coming you need to bring something with you. Fair play, he brought £14 billion of investment,” she said. “If he wants to come again, he’ll have to bring me more money.” But she has also hitched herself to Starmer for now — unlike Scottish Labour leader Anas Sarwar, who has called for the PM to go. As we sat down, Morgan professed surprise at news that Sarwar called several Cabinet ministers beforehand. “Did he! Shit, well, he didn’t call me,” she said. “Look at the state of the world at the moment; actually what we need is stability,” she added. “We need the grown-ups in the room to be in charge, and I do think Keir Starmer is a grown-up.” ‘ELUNED WASN’T HAPPY’ Morgan has mounted a fightback since Plaid won October’s Caerphilly by-election.  She has hired Matt Greenough, a strategist who worked on London Mayor Sadiq Khan’s re-election campaign last year, said three people with knowledge of the appointment. One of the people said: “During Caerphilly, it became quite clear there were a lot of problems. Eluned wasn’t happy with Welsh Labour or the way the campaign was running. She did a lot of lobbying and got the Welsh executive to basically give her complete power over the campaign.” Morgan “was angry that the central party [in London] took control of the Caerphilly by-election,” another of the people added. (A Morgan ally disputed this reading of events, saying she would always take a bigger role as the election drew near, and that a wide range of Labour figures are involved in the campaign committee such as a Westminster MP, Torsten Bell.) Morgan also has more support these days from Labour’s MPs — who pushed last year for her to focus less on Plaid and more on Reform. That lobbying may have been a mistake, the MP quoted above admits now. “We were quite naive in thinking that the progressives would back us,” this MP said. Privately, Labour politicians and officials in Wales say the mood and prospects are better than the start of 2026. Though asked if Labour would win the most seats in the Senedd, Batrouni said: “Let’s look and see. It’s not looking good in the polls but … politics changes so quickly.” IT’S NOT JUST ABOUT KEIR STARMER The harsh reality is that Labour’s base in Wales began slipping long before Starmer, rooted in deindustrialization since the 1970s and 80s. Newport, near England on the M4 corridor, has a measure of prosperity that other parts of Wales do not. The 137-year-old market has had a makeover, Microsoft is building data centers and U.S. giant Vishay runs Britain’s biggest semiconductor plant. Here Labour is mostly expecting a fight between itself and Reform. At Newport’s Friars Walk shopping center, retired mechanical engineer Roy Wigmore, 81, said all politicians are liars. “I’ve voted Labour all my life until now,” he said, “but I’ll probably vote for somebody else — probably Nigel Farage.” | Jon Rowley/Getty Images Wales’ west coast and north west are more Plaid-dominated, with more Welsh speakers and independence supporters. But support for nationalists is spreading in the southern valleys. “All across the valleys you’re seeing places where Labour has dominated for 100 years plus but is now in deep, deep crisis,” said Richard Wyn Jones, professor of Welsh politics at Cardiff University. “It has long been the case that a lot of Labour supporters have had a very positive view of Plaid Cymru — they just didn’t have a reason to vote for them until now.” Wyn Jones attributes the change to trends across northern Europe, where traditional left-wing parties have been “unmoored” from working-class occupations. A growing service sector has brought more white-collar voters with socially liberal values. Carmen Smith, a 29-year-old Plaid campaigner who is the House of Lords’ youngest-ever peer, said Brexit had unhitched young, left-leaning voters from the idea of British patriotism: “There are a lot more young people identifying as Welsh rather than British.”  And after the Covid pandemic, people are simply more aware of what the Welsh government actually does — which means Labour, as the incumbent, gets more blame when things go wrong.  All the while, a left-behind contingent of socially conservative ex-Labour voters is turning to Reform UK. At the Tumble Inn, a Wetherspoons chain pub in the valley town of Pontypridd, retired gas engineer Paul Jones remembered: “You could leave one job, walk a couple of hundred yards and start another job … it was a totally different world. I wish we could get it back, but I don’t think it’s going to happen.” He hasn’t voted for years but plans to back Reform. THEY’VE BLOWN UP THE MAP All these changes will be turbocharged by a new electoral map. A previous Labour first minister, Mark Drakeford, introduced a more proportional voting system which will see voters elect six Senedd members in each of 16 super-constituencies. The results will reflect the mood better than U.K. general elections (Labour won 84 percent of Wales’ seats on a 37 percent vote share in 2024), but create a volatile outcome. In the mega-constituency for eastern Cardiff, Wyn Jones believes the six seats could be won by six parties: Labour, Plaid, Reform, the Conservatives, Greens and Liberal Democrats. Ironically, said the Labour MP quoted above, Welsh Labour is now polling so badly that it could actually win more seats under the new system than the old one. Trying to win the sixth seat in each super-constituency will hoover up many resources. The size of each patch changes how parties campaign, said Plaid’s Westminster leader Liz Savile Roberts: “We’ve had to go to places that I’ve never been to.” And the scale means activists have a weaker connection to the candidates they campaign for — compounded in Labour by many Senedd members stepping down. Just six people turned up to one recent Labour door-knocking session in a heartland seat. A left-behind contingent of socially conservative ex-Labour voters is turning to Reform UK. | Huw Fairclough/Getty Images After May 8, the new system will make coalitions or informal support deals more necessary to command a Senedd majority. Morgan declined to say if she would support Plaid’s £400 million-a-year offer to expand free childcare (which Labour says is unfunded), rather than see it voted down. “I’m certainly not getting into hypotheticals,” she said. “I’m in this to win it.”  Her rivals have other ideas. THE PRESIDENT IS COMING On the hill above Newport, a two-story presidential-style image of Rhun ap Iorwerth filled a screen at the International Convention Centre above the words: “New leadership for Wales.” The former BBC presenter, who took over Plaid’s leadership in 2023, strained not to make his February conference look like a premature victory lap. Members could’ve been fooled. They struggled to find parking. There were more lobbyists; more journalists. It is a slow burn for a party founded in 1925, which won its first Westminster seat in 1966. Ap Iorwerth ramped up the anti-establishment rhetoric in his conference speech while Lindsay Whittle, who won Caerphilly for Plaid in October’s by-election, bellowed: “Rich men from London, we are waiting for you!” Yet he insists his success is more than a protest vote, a trend sweeping Europe or a mirror of Reform’s populism. “I’d like to think that we’re doing something different,” Ap Iorwerth told POLITICO. While Morgan accuses him of “separatism,” he said: “We have a growing sense of Welsh nationhood and Welsh identity, at a time when there’s deep disillusionment in the old guard of U.K. politics and a sense of needing to keep at bay that populist right wing.” Ap Iorwerth said there is a “very real danger” that Labour vanishes entirely as a serious force in the Senedd. “The level of support that they have collapsed to is a level that most people, probably myself included, could never have imagined would happen so quickly,” he said. INDEPENDENCE DAY? But Plaid faces three big challenges to hold this pole position. The first is its ground game, stretched thin to cover the new world of mega-seats. On the hill above Newport, a two-story presidential-style image of Rhun ap Iorwerth filled a screen at the International Convention Centre above the words: “New leadership for Wales.” | Matthew Horwood/Getty Images The second is to remain distinct from Labour and the insurgent Greens while running a broad left-leaning platform focused on energy costs, childcare and the NHS. The third is to convince unionist voters that Plaid is not simply a Trojan horse for Welsh independence. Independence is Plaid’s core belief, yet Ap Iorwerth did not mention the word once in his speech, instead promising a “standing commission” to look at Wales’ future. He told POLITICO he would rather have a “sustained, engaging, deep discussion … than try to crash, bang, wallop, towards the line.”  But opponents suggest Plaid will push hard for independence if they win a second term in 2030 — like the Scottish National Party did after topping elections in 2007 then 2011. One conference attendee, Emyr Gruffydd, 36, a member for 19 years, said independence “is going to be part of our agenda in the future, definitely. But I think nation-building has to be the approach that we take in the first term.” Savile Roberts accepted that shelving talk of independence (which is still supported by less than half the Welsh population) is part of a deliberate strategy to broaden the party’s reach and keep a wide left-leaning appeal. “I mean, we know the people that we need to appeal to — it is the disenchanted Labour voters,” she said. For some shoppers in Newport — not Plaid’s home turf — it may be working. One ex-Labour voter, Rose Halford, said of Plaid: “All they want to do is make everybody speak Welsh.” But she’ll consider backing them: “They’re showing a bit more gumption, aren’t they?” TAXING QUESTIONS FOR PLAID If Plaid does win, that’s when the hard part begins. Ap Iorwerth would seek urgent talks about changing Wales’ funding formula from Westminster — but cannot say how much this would raise. And Plaid has vowed not to hike income tax, one of the few (blunt) tax instruments available to the Welsh government. Strategists looked at the issue before and feared it would prompt taxpayers to flee over the border to England. So Plaid promises vague financial “efficiencies” in areas such as child poverty, where spending exceeded £7 billion since 2022, and health. Whittle said: “There’s an awful lot of people pen-pushing in the health service. We don’t need pen-pushers.” Labour’s attack machine argues that Plaid and Reform UK alike would cut services. Ap Iorwerth insists his and Farage’s promises are different: “We’re talking about being effective and efficient.” But he admitted: “You don’t know the detail until you come into government.”  Ap Iorwerth jettisoned any suggestion that Plaid would introduce universal basic income, saying it is “not a pledge for government.” He added: “It’s something that I believe in as a principle. I don’t think we’re in a place where we have anything like a model that could be put in place now.” Ap Iorwerth would seek urgent talks about changing Wales’ funding formula from Westminster — but cannot say how much this would raise. | Matthew Horwood/Getty Images The blame game between Cardiff and Westminster will run hot. Ap Iorwerth voiced outrage this week at a leaked memo from Starmer in December, ordering his Cabinet to deliver directly in Wales and Scotland “even when devolved governments may oppose this.” FARAGE’S WELSH SURGE And then there’s Reform. Farage’s party has rocketed in the polls since 2024; typical branch meetings have swelled from a dozen members to several dozen. Since February, Reform has even had its own leader for Wales — Dan Thomas, a former Tory councillor in London who says he recently moved back to the area of Blackwood, in the south Wales valleys. Some party figures have observed a dip after the Caerphilly by-election, where Reform came second. Thomas insists: “I don’t think we’ve plateaued” — and even said there is room to increase a 31 percent vote share from one (optimistic) poll. “There’s still a Labour vote to squeeze,” he told POLITICO.  “We’re targeting all of Wales.” It is a measure of Plaid’s success that Reform UK often now presents the nationalist party as its main competition. “It’s a two-horse race [with Plaid], that’s what I say on the doors,” said Leanne Dyke, a Reform canvasser who was drinking in the Pontypridd Wetherspoons. James Evans, who is now one of Reform’s two Senedd members after he was thrown out of the Conservative group in January on suspicion of defection talks, argues his supporters are underrepresented in polling because they are “smeared” as bigots. Evans added: “Very similarly to what happened in America when Donald Trump was elected, I think there is a quiet majority of people out there who do not want to say they’re voting Reform, who will vote Reform.”  Reform has its own custom-built member app, ReformGo, as it canvasses data on where its supporters live for the first time. It sent a mass appeal by post to all registered Welsh voters in late 2025 (before spending limits kicked in). Welsh campaign director David Thomas is recruiting a brand new slate of 96 candidates, booking hotels for training days with interviews, written exercises and team-building. Daytime TV presenter Jeremy Kyle has helped with media training. English officials cross the border to help; Reform still only has three paid officials in Wales. FARAGE HAS AN NHS PROBLEM Lian Walker, a postal worker from the village of Pen-y-graig, would be a prime target for Reform. “There’s people who I see on the databases, they don’t work,” she said in Pontpridd’s Patriot pub, “but they get everything; new windows, earrings, T-shirts, shorts.” She supports Reform’s plans to deport migrants. But on the NHS, she says of Reform: “They want it to go private like America.” Labour and Plaid drive this attack line relentlessly. The full picture is more nuanced — but still exposes a tension between Farage and Thomas. But Farage has an advantage; the right is less split than the left. | Ben Birchall/PA Images via Getty Images While Reform emphasizes it would keep the NHS free at the point of use, Farage has not ruled out shifting its funding from general taxation to a French-style insurance model, saying that would be “a national decision ahead of a general election.” Thomas, however, broke from this stance. He told POLITICO: “No, no. We rule out any kind of insurance system or any kind of privatization.” He added: “Nigel’s also said that devolved issues are down to the Welsh party, and I wouldn’t consider any kind of insurance-based or private-based system for the Welsh NHS.” Labour and Plaid are relying on an anti-Reform vote to keep Farage’s party out of power. Opponents have also highlighted the jailing of Nathan Gill, Reform’s former Welsh leader, for taking bribes to give pro-Russia interviews and speeches. But Farage has an advantage; the right is less split than the left. In Evans’ sprawling rural seat of Brecon and Radnorshire, two people with knowledge of the Conservative association said its membership had fallen catastrophically from a recent peak of around 400. On the other hand, the sheer number of defections makes Reform look more like a copycat Conservative Party. A former Tory staffer works for Evans; Thomas’ press officer is the Welsh Conservatives’ former media chief. Evans said last year that 99 percent of Reform’s policies were “populist rubbish,” but was allowed to see the policy platform in secret before he agreed to join (and has since contributed to it). While the long-time former UKIP and Brexit Party politician Mark Reckless led a policy consultation in the first half of 2025, former Conservative Welsh Secretary David Jones — who defected without fanfare last year — played a hands-on role behind the scenes working up manifesto policies, two people with knowledge of his work said. THE NIGEL SHOW Then there is Reform’s reliance on Farage himself.  The party deliberately left it late before unveiling a Welsh leader, said a Reform figure in Wales, and chose in Thomas a Welsh figure who would not “detract from Nigel’s overall umbrella and brand.” While Welsh officials and politicians worked on the manifesto, Farage himself was involved in signing it off — as were several others in London, said Evans, including frontbench spokespeople Robert Jenrick, Suella Braverman and Zia Yusuf. Thomas said: “Ultimately, it’s my decision to sign off the manifesto. Of course, Nigel was consulted because he’s our U.K. leader, and we want to ensure that what’s going on in Wales is aligned to the broader picture in the UK.” Reform’s Welsh manifesto promises to cut a penny off every band of income tax by 2030, end Wales’ “nation of sanctuary” plan to support asylum seekers, scrap 20mph road speed limits and upgrade the M4 and A55 highways. But costings have not been published yet — Reform has sent them to be assessed by the Institute for Fiscal studies, a nonpartisan think tank — and like other parties, Reform faces questions about how it will all be paid for. Asked if Reform would begin work on the M4 and A55 upgrades by 2030, Thomas replied: “We’d like to. But we all know in this country, infrastructure projects take a long time.” While Welsh officials and politicians worked on the manifesto, Farage himself was involved in signing it off — as were several others in London, said Evans, including frontbench spokespeople Robert Jenrick, Suella Braverman and Zia Yusuf. | Huw Fairclough/Getty Images ‘I’VE GOT TO FOCUS ON WHAT I CAN CONTROL’ These harsh realities facing Wales’ would-be rulers are a silver lining for Labour. Morgan avoided POLITICO’s question about whether she believes the polls — “I’ve got to focus on what I can control” — but insisted many voters remain persuadable. “People will scratch the surface and say [our rivals] are not ready,” she said. Alun Michael, who led the first Welsh Labour administration in 1999, said the idea that the Labour vote has “collapsed completely” is wrong. “It’s always dangerous to go on opinion polls as a decider of what will happen in an election,” he said. Whoever does win will deserve a moment of levity. If Ap Iorwerth wins the most seats on May 7, he will drink an Aperol spritz; Thomas will have a glass of Penderyn Welsh whisky.  As for Morgan? She would like a cup of tea — milk, no sugar. Perhaps survival would be sweet enough.

PARIS — Emmanuel Grégoire should have had an easy campaign to succeed his former boss, Paris Mayor Anne Hidalgo. But the pair’s very public political breakup is creating a major obstacle for the Socialist front-runner in the lead-up to the race to lead the French capital, which begins on Sunday. Since their clash, Grégoire has conspicuously distanced himself from Hidalgo, and that has meant losing the opportunity to win votes by boasting about the successful Paris Olympics or the transformation of the banks of the Seine into a popular pedestrian area with cafés and restaurants.   If Grégoire fails to extend the Socialists’ quarter-century rule of Paris, it would be a disaster for his party and further evidence of its weakness before the country’s presidential election next year. “She did everything she could to torpedo my candidacy. I’m not her candidate and I am not her heir,” Grégoire said in a February interview with franceinfo. That’s a spectacular rupture for the man who was her principal deputy from 2018 to 2024. The race is going to be close, giving the right its best opportunity in years to take control of the City of Lights — if it can unite around one candidate. Grégoire and conservative former Culture Minister Rachida Dati are running neck-and-neck for the top spot in the polls. But an unprecedented five candidates could make the runoff on March 22, which would trigger a mad scramble for alliances.  PARIS LOCAL ELECTION POLL OF POLLS All 3 Years 2 Years 1 Year 6 Months Smooth Kalman For more polling data from across Europe visit POLITICO Poll of Polls. A BUNGLED SUCCESSION So what happened between Hidalgo, the chief architect of the French capital’s green revolution, and Grégoire, her once-presumed heir?    Over the summer, Hidalgo spurned his candidacy to support a lesser-known senator to succeed her as mayor.  Grégoire still wound up winning the Socialist Party’s nomination, but the damage was done after Hidalgo publicly claimed that “the left would lose” Paris if her former deputy was its candidate.  Three people familiar with their relationship, all granted anonymity to speak candidly, said things started to turn sour after Hidalgo’s failed 2022 presidential bid, in which she won a dismal 1.75 percent of the vote.  With Hidalgo’s fortunes waning and Grégoire seemingly tapped as her replacement, things started to get “complicated,” an official in the Socialist Party said.   The pace of change and Anne Hidalgo’s disregard for her critics has not helped her popularity. | Ludovic Marin/AFP via Getty Images “She has an authoritarian streak and was really hard on him,” the official said.  This is a trait that has widely been remarked upon, and it earned her the nickname “Queen-Mayor.” It helped with short-term implementation of projects but now looks like it could have undermined her party in the long run, given some of the bad blood it has fomented.   “You need toughness to succeed in Paris and transform the city,” said Gaspard Gantzer, a former Paris City Hall advisor. “Her style was a bit brutal, a bit cutting with others.”  Hidalgo was then furious when Grégoire ran for and won a parliamentary seat representing Paris during the 2024 election, according to two of the three people familiar with the relationship. One of Hidalgo’s allies said “they were both at fault,” as Grégoire became less supportive of her political ambitions and started pursuing his own agenda after the last presidential race.  “It was a classic leader versus heir situation,” the Hidalgo supporter said.   ‘A DIFFERENT MAYOR’ Asked about the feud by POLITICO when unveiling his platform to reporters last month, Grégoire said he has fond memories of working with Hidalgo but stressed he would be “a different mayor” who would address “the new expectations” of Paris residents.  Grégoire has instead tried to take a page out of Zoran Mamdani’s New York playbook, focusing his message on housing shortages and bringing down the cost of living. He’s also promised to “break with [Hidalgo’s] method.”  While Grégoire hasn’t exactly broken through in the polls, the strategy could reap benefits given the Europe-wide anti-green backlash and Hidalgo’s reputation among resident of the capital.  A poll from Ipsos published in December found that Hidalgo leaves office with a legacy that splits Parisians, even if they have come to love biking to work or enjoying more open space.   The pace of change and Hidalgo’s disregard for her critics has made her divisive, even losing some support among those proud of the Olympics and Paris becoming a global showcase for urban transformation. Hidalgo’s missteps added to the resentment, whether that focused on ill-designed bike lanes, several abandoned urban forests or the endless redevelopment of the Eiffel Tower gardens.  “She would make a huge announcement and then wait for her teams to comply,” said Paris urban policy expert Stephane Kirkland, who has worked for firms involved in Paris city projects. “It was a my-way-or-the-highway approach.” Rachida Dati has tried to seize on public dissatisfaction with City Hall by linking Grégoire to Hidalgo. | Ludovic Marin/AFP via Getty Images Kirkland said that Grégoire’s campaign has clearly “internalized the new dynamic” against green issues and exasperation with Hidalgo.  Grégoire “isn’t talking about anything green, even if his coalition includes green parties. He is really focused on social issues, security and cleanliness,” Kirkland said.  Dati, the conservative challenger, has tried to seize on public dissatisfaction with City Hall by linking Grégoire to Hidalgo and accusing the duo of turning Paris into a dirty, disorganized, never-ending construction site.  There are limits to that strategy, though. Not even Dati wants to reverse course on pedestrian zones like those on the banks of the Seine.   Aitor Hernández-Morales contributed to this report. 

U.S. President Donald Trump’s trade war is putting Volkswagen’s globalization strategy — and profits — at risk. The danger was highlighted Tuesday when the German carmaker released its 2025 results, showing a sharp 53.5 percent drop in operating profit to €8.9 billion. CEO Oliver Blume blamed the firm’s worst result in a decade on the Trump tariffs, stiff competition in China, and a strategy reversal at luxury subsidiary Porsche. VW spent decades building a global supply chain, but the new era unleashed by Trump’s trade wars and the rapid decline of the carmaker’s Chinese market are calling that strategy into question. One example of how the old approach no longer works is the carmaker’s extensive production in Mexico, where costs are lower and a free trade agreement gave it access to the United States. Trump’s 27.5 percent tariffs on all goods from Mexico have now blocked that pipeline. “We have a strong localized footprint in Mexico. It’s no longer worthwhile to export them from Mexico into the U.S.,” Blume said in a call with media. Another setback is Porsche. The luxury cars are all made in Europe, exposing them to the full force of U.S. tarrifs. Volkswagen now expects revenue for this year to stay flat or grow by a mere 3 percent. “We are operating in a fundamentally different environment,” Blume said. The stagnating growth means Germany’s flagship automaker will continue to cut costs and jobs, including the politically fraught task of shuttering factories at home. The carmaker also has to battle to protect its key European market from Chinese encroachment. With the U.S. effectively blocking Chinese cars thanks to steep tariffs and a ban on connected cars, Beijing’s carmakers are on the hunt for new customers — and have set their sights on Europe. “We will need to do more because our costs are still too high in Europe, and we have to pitch ourselves against our competitors in Europe,” Blume said, adding that includes Chinese brands “because it’s a big business potential here for the Chinese in Europe so we have to fight back.” Volkswagen and its German peers have strong brand loyalty in their home market, but Blume warned it’s only a matter of time before Chinese automakers begin making inroads. It’s a war Volkswagen is already fighting in China, which was once its biggest market and revenue stream. However, the shift to electric vehicles and Chinese consumer preferences for domestic brands has chipped away at Volkswagen’s standing. VW is launching new EVs in China this year as it looks to regain its place as the country’s top automaker. But losing its place at the top of the podium in China has meant considerably less revenue is making its way back to Germany and helping to fund factories that have higher energy and worker costs. In 2024 Volkswagen announced cost-cutting measures that led to 35,000 lost jobs and the closure of German factories for the first time in its history. That number will now balloon to 50,000 jobs in Germany by 2030, with the cuts affecting all of its brands including Audi and Porsche. The EU’s rearmament push offers a potential silver lining, though, as arms-makers look to take advantage of slack demand in the auto industry combined with the sector’s mastery of mass production. “No solution has been taken,” Blume said in reference to VW’s Osnabrück factory, which could be shuttered. “We’re currently in talks with defense companies throughout the course of the year.”

Scattered among the candy shelves and freezer cabinets in Russian supermarkets across Germany are advertisements promoting a business with a service the government has tried to outlaw: a logistics company specialized in moving packages from the heart of Germany to Russia, in defiance of European Union sanctions. Trade restrictions have been in place since 2014 and were tightened just after the 2022 invasion of Ukraine, when Western nations began to impose far-reaching financial and trade sanctions on Russia. But an investigation by the Axel Springer Global Reporters Network, which includes POLITICO, has identified a clandestine Berlin-based postal system that exploits the special status of postal parcels to transport all kinds of European goods — including banned electronics components — into President Vladimir Putin’s empire. We know every stop and turn in the route because we sent five packages and used digital tracking devices to follow them — through an illicit 1,100-mile journey that undermines the sanctions regime European policymakers consider their strongest tool to generate political pressure on Russian leaders by weakening their country’s economy. LS Logistics said its internal controls make violations of EU sanctions “virtually impossible” but that it was not immune from customers making fraudulent declarations about the goods they ship. “Sanctions enforcement is whack-a-mole,” said David Goldwyn, who worked on sanctions policy as U.S. State Department coordinator for international energy affairs and now chairs the Atlantic Council Global Energy Center’s energy advisory group. “It’s a hard process, and you have to constantly be adapting to how the evaders are adapting.” THE UZBEK LABEL In late December, we packed five square brown parcels with electronic components specifically banned under EU sanctions and addressed the parcels to locations in Moscow and St. Petersburg. When we brought our parcels to the counters of Russian supermarkets in Berlin, we told salespeople the packages included books, scarves and hats. But they never checked inside the packages, which in fact held banned electronic components we rendered unusable before packing. Salespeople charged us 13 euros per kilogram, about $7 per pound, refusing to provide receipts. What makes these cardboard packages even more special is their disguise: The employee does not affix Russian postal stickers to the boxes, but rather those of UzPost, the national postal service of Uzbekistan. The former Soviet republic is not subject to EU sanctions. UzPost maintains close ties to the Russian postal service, according to a person familiar with the entities’ history of cooperation granted anonymity to discuss confidential business practices. Tatyana Kim, the CEO of Russian ecommerce marketplace Wildberries and reputedly her country’s richest woman, recently acquired a large stake in UzPost, according to media reports. “We work with partners, including private postal service providers,” the Uzbek postal service stated in response to our inquiry. “They can use our solutions for deliveries.” In Germany, registered logistics companies are permitted to provide postal services — including pick-up, sorting and delivery — for international postal operators. However, the Federal Network Agency, which is responsible for postal oversight, says the Uzbek postal service is not authorized to perform any of these functions in Germany. (The Federal Network Agency said in a response to our inquiry that it is “currently reviewing” the case and that it would pursue penalties for LS if it is found to be using Uzbek documents without authorization.) After our packages spent one to two days at the supermarkets, we saw them begin to move. Inside each package we had placed a small black GPS device, naming them “Alpha,” “Beta,” “Gamma,” “Delta” and “Epsi.” We could track their movements in real time in an app, watching them closely as they wound through Berlin’s roads to Schönefeld, site of the capital’s international airport. There they stopped, unloaded into a modern warehouse that has been repurposed into a Russian shadow postal service. COLOGNE, TECHNICALLY In 2014, a retired professional gymnast was tasked with launching a subsidiary of Russia’s national postal service, the RusPost GmbH, which would operate with official authorization to collect, process and deliver postal items in Germany, according to a former employee granted anonymity to speak openly about the business. For 18 years, the St. Petersburg-raised Alexey Grigoryev had competed and coached at Germany’s highest levels, winning three national championship titles with the KTV Straubenhardt team and working with an Olympic gold medalist on the high bar. But he had no evident experience in the postal business. RusPost’s German business model collapsed upon the imposition of an expanded sanctions package in the weeks after Russia’s invasion of Ukraine in February 2022. Much like American sanctions on Russia, the European Union blocks sensitive technical materials that could boost the Russian defense sector, while allowing the export of personal effects and quotidian consumer items. “The sanctions are accompanied by far-reaching export bans, particularly on goods relevant to the war, in order to put pressure on the Russian war economy,” according to a statement the Federal Ministry of Economics provided us. In March 2022, while conducting random checks of postal traffic to Moscow, customs officials discovered sanctioned goods (including cash, jewelry and electrical appliances) in numerous RusPost packages. The Berlin public prosecutor’s office launched an investigation of the company, concluding that a former RusPost managing director had deliberately failed to set up effective control mechanisms, in breach of his duties. He was charged with 62 counts of attempting to violate the Foreign Trade and Payments Act over an eight-month period; criminal proceedings are ongoing. The Russian postal network did not quite disappear, however. A new company called LS Logistics Solution GmbH was formed in December 2022, according to corporate filings. LS filled its top jobs, including customs manager and head of customer service, with former RusPost employees, according to their LinkedIn profiles. The new company listed as its business address an inconspicuous semi-detached house in a residential area of Cologne, across from a church. When we visited, we found an old white mailbox whose plated sign lists LS Logistics alongside dozens of other companies supposed to be housed there. But none of them seemed to be active. The building was empty during business hours, its mailbox overflowing with discolored brochures and old newspapers. The operational heart of LS is the warehouse complex in Berlin-Schönefeld, just a few minutes from the capital’s airport. The building itself is functional and anonymous: a long, gray industrial structure with several metal rolling doors, some fitted with narrow window slits. Through them, towering stacks of parcels are visible, packed tightly, sorted roughly, stretching deep into the hall. Trucks arrive and depart regularly, from loading bays lit by harsh white floodlights that cut through the otherwise quiet industrial area. Behind the warehouse lies a wide concrete parking lot where a black BMW SUV with a license plate bearing the initials AG is often parked. We saw a man resembling Grigoryev enter the car. The former head of RusPost officially withdrew from the postal business after authorities froze the company’s operations. Unofficially, however, the 50-year-old’s continued presence in Schönefeld suggests otherwise. According to one former RusPost employee, the warehouse near the airport serves as a collection point for parcels from all over Europe. Other logistics companies with Russian management have listed the warehouse as their business address, some of their logos decorating the façade. LS Logistics Solution GmbH has the largest sign of them all. THE A2 GETAWAY According to tracking devices, our packages spent several days in the warehouse before being loaded onto 40-ton trucks covered with grey tarps, among several that leave every day loaded with mail. They were then driven toward the Polish border, through the German city of Frankfurt (Oder). Without any long stops, the 40-ton trucks traversed Poland on the A2 motorway, past Warsaw. Two days after leaving Berlin, they were approaching the eastern edge of the European Union. They arrived at a border checkpoint in Brest, the Belarusian city where more than a hundred years ago Russia signed a peace pact with Germany to withdraw from World War I. Now it marked the last place for European officials to identify contraband leaving for countries they consider adversaries. In 2022, the European Union applied a separate set of sanctions on Belarus because its leader, Alexander Lukashenko, a close ally of Putin, has supported Russia’s presence in Ukraine. Yet despite provisions that should have stopped our packages from leaving Poland, they moved onward into Belarus, their tracking devices apparently undetected. What makes this possible is the special legal status that accompanies international mail. While a formal export declaration is required for the export of regular goods, such as those moving via container ship or rail freight, simplified paperwork helps speed up the departure process for postal items. At Europe’s borders, this distinction becomes crucial, as postal packages are examined largely on risk-based checks rather than comprehensive inspections. “International postal items are subject to the regular provisions of customs supervision both on import and on export and transit and are checked on a risk-oriented basis in accordance with applicable EU and national legislation, including with regard to compliance with sanctions regulations,” the German General Customs Directorate stated in response to our inquiry. Two of our tracking devices briefly lost their signal in Belarus — likely part of a widespread pattern of satellite navigation systems being disrupted across Eastern Europe — but after a journey of around 1,100 miles, they all showed the same destination. Our packages had reached Russia’s largest cities. Ukrainian authorities told us they were not surprised by our investigation. The country’s presidential envoy for sanctions policy, Vladyslav Vlasiuk, said at the Ukrainian embassy in Berlin that his government regularly collects intelligence on such schemes and shares it with international partners. “Nobody is doing enough, if you look at the number of cases,” Vlasiuk said. ONE STEP BEHIND After the arrival of the packages, we confronted all parties involved, including LS Logistics Solution GmbH, the mysterious shipper that helped transport the goods from Europe to Russia. We called Grigoryev several times, but he never answered; efforts to reach him through the company failed as well. An LS executive would not answer our questions about his role. “Our internal control mechanisms are designed in such a way that violations of EU sanctions are virtually impossible,” LS managing director Anjelika Crone wrote to us. “Shipments that do not meet the legal requirements are not processed further. We are not immune to fraudulent misdeclarations, such as those that obviously underlie the ‘test shipments’ you refer to.” Crone said she could not answer further questions due to data protection and contractual confidentiality concerns. This month, Germany took steps to strengthen enforcement of its sanctions regime, expanding the range of violations subject to criminal penalties. The law, passed by the Bundestag in January, amends the country’s Foreign Trade and Payments Act to integrate a European Union directive harmonizing criminal sanctions law across its 27 member states and ensure efficient, uniform enforcement. Germany was one of the 18 countries put on notice by EU officials last May for having failed to follow the 2024 directive. The Federal Ministry for Economic Affairs, which is responsible for implementing the new policy, argued in a statement to the Axel Springer Global Reporters Network that the very ingenuity of the logistics network we unmasked operating within Germany was a testament to the strength of the country’s sanctions regime. “The state-organized Russian procurement systems operate at enormous financial expense to create ever new and more complex diversion routes,” said ministry spokesperson Tim-Niklas Wentzel. “This confirms that the considerable compliance efforts of many companies and the work of the sanctions enforcement authorities in combating circumvention are also having a practical effect. Procurement is becoming increasingly difficult, time-consuming, and expensive for Russia.” According to those who have tried to administer sanctions laws, that argument rings true — but only partly. “It’s probably more fair to say that sanctions had a material impact and increased the cost of bad actors to achieve their goals. But to say that they’re working well is probably overstating the truth of the matter,” said Max Meizlish, formerly an official with the U.S. Treasury’s Office of Foreign Assets Control and now a research fellow at the Foundation for Defense of Democracies. “When there’s evasion, it requires enforcement,” Meizlish went on. “And when you need more enforcement I think it’s hard to make a compelling case that the tool is working as intended.” The Axel Springer Global Reporters Network is a multi-publication initiative publishing scoops, investigations, interviews, op-eds and analysis that reverberate across the world. It connects journalists from Axel Springer brands—including POLITICO, Business Insider, WELT, BILD, and Onet— on major stories for an international audience. Their ambitious reporting stretches across Axel Springer platforms: online, print, TV, and audio. Together, these outlets reach hundreds of millions of people worldwide.

BERLIN —  Germany’s pro-business Free Democrats, on the brink of political extinction, face a make-or-break state vote this Sunday that party leaders believe may well be their last chance to claw back relevance. Leaders of the fiscally conservative Free Democratic Party (FDP) — which was part of Germany’s previous, ill-fated coalition government under former Chancellor Olaf Scholz — have long pinned their hopes for a national revival on this Sunday’s election in the southwestern state of Baden-Württemberg, traditionally one of the party’s strongholds. Instead, the vote now may end up being a death knell for a party that long played a central role in postwar German politics, wielding outsized influence as a kingmaker between the two major centrist parties that once dominated the political landscape. With the FDP now hovering just above the 5 percent threshold of support needed to make it into the Baden-Württemberg legislature, according to polls, the party is at risk of crashing out of the state parliament for the first time in its history. That result would prove disastrous for a party that already failed to make it into the federal parliament in a snap national election last year, an outcome that sent then party leader, Christian Lindner — once deemed a wunderkind of European free-market liberalism — into early political retirement. In an unmistakable symbol of the party’s decline, Lindner, who served as finance minister in the previous government under Scholz, has since taken on a key management role at a national car dealership business. The FDP’s prospects of turning things around with a resurgence in Baden-Württemberg are looking next to impossible. Current polls show it losing almost half of its support in the state since the last election there, while Chancellor Friedrich Merz’s conservatives maintain a small lead in the state over the second-place Greens. “If we fail to enter parliament in Baden-Württemberg, it would be hard to explain why it would be different elsewhere,” Wolfgang Kubicki, the party’s deputy national leader, told POLITICO. DISAPPEARING CENTER The FDP’s decline can be seen as part of a larger hollowing-out of the political middle ground in Germany that is likely to be evident in numerous state and local elections set to take place this year across the country. This Sunday’s vote in Baden-Württemberg — a state of some 11 million people and the cradle of Germany’s increasingly troubled auto industry — is the first in a series of five state votes seen as key tests of the national mood, particularly as the far-right Alternative for Germany (AfD) vies for first place in many national polls. For most of Germany’s postwar history, national elections have been dominated by either the the center-right Christian Democrats or the center-left Social Democrats, with the FDP choosing at varying times to form coalition governments with both of these parties. It served as a junior coalition partner in 18 out of 25 federal governments since the founding of West Germany. As parties on Germany’s political fringes, including the AfD, have risen in popularity across Germany, the pro-business FDP has been particularly hard hit, seeing its support collapse to just 3 percent in national polls. The FDP’s new leader, Christian Dürr, is trying to revive the party’s fortunes with a policy platform he refers to as “radical centrism.” | Bernd Weißbrod/picture alliance via Getty Images Yet other classical liberal parties across Europe — which fuse market-oriented policies with libertarianism on social issues — have performed far better. In the Netherlands, Rob Jetten and his liberal-progressive D66 party came in first in a national election in October, edging out Geert Wilders’ far-right Party for Freedom (PVV). In Austria, the liberal NEOS take part in a three-party coalition with the conservatives and the Social Democrats. In Denmark, both the Venstre party and Liberal Alliance have maintained stable support for years, and are each polling at roughly 10 percent. Germany’s FDP, however, has been punished by German voters for their role in bringing down the previous, three-party government under Scholz. The party never recovered after details of its “D-Day” plot to blow up the coalition emerged in 2024. In the snap election that followed the Scholz government’s collapse, FDP voters defected in droves to German Chancellor Friedrich Merz’s conservative bloc as well as to the AfD. A similar trend can now be seen in Baden-Württemberg. While the FDP in the state has seen its support plummet, the conservatives boast a moderate increase in support. At the same time the AfD has nearly doubled its support in the state compared with the last election, according to polls, and may emerge as the clearest winner on Sunday in terms of vote share gained. ‘RADICAL CENTRISM’ The FDP’s new leader, Christian Dürr, is trying to revive the party’s fortunes with a policy platform he refers to as “radical centrism,” though the specifics of that agenda remain vague. “People expect real reform policy,” Dürr told POLITICO. “What drives them mad is that all debates are overlaid with ideology. They expect rational politics in the center.” The party says it wants to implement market-friendly reforms to boost Germany’s economy, including by easing access to the labor market for skilled migrants and reforming the state pension system to allow contributions to be invested in equity markets. These positions, however, don’t necessarily strike many voters as particularly fresh — nor sweeping enough to reverse Germany’s manufacturing decline. In Baden-Württemberg, it’s the car industry that has been particularly affected. Overall, around 100,000 positions or around 8 percent of jobs in the car sector are expected to disappear by 2030 in Germany, according to a 2025 study carried out for the economy ministry in Berlin. The FDP’s biggest problem is that voters’ have lost trust in the party’s ability to rectify this. “What’s really dramatic is that the economy has been a major, important issue — not only during the federal election — and now the FDP has very poor competence ratings in that area,” said Simon Franzmann, a political scientist at the University of Göttingen. As economic worries grow in the state, anxious voters are increasingly drawn not to the FDP’s “radical centrism,” it seems, but to other centrist parties — or the AfD’s plain radicalism. That’s just another reason the FDP, a fixture of German postwar politics, may well be on its last gasps. For transparency: The author of this article briefly worked for a FDP lawmaker in 2024.

STUTTGART — In this cradle of Germany’s automotive sector, anxiety is growing over the industry’s fading heyday — and the far right stands ready to capitalize. Germans in Baden-Württemberg — a southwestern state of some 11 million people that is home to Mercedes-Benz and Porsche — will go to the polls on Sunday in the first in a series of five important state elections and numerous local votes this year. The elections, in what Germans are dubbing a Superwahljahr (“super election year”), are widely seen as key tests of the national mood as the far-right Alternative for Germany (AfD) competes for first place in national polls with German Chancellor Friedrich Merz’s conservatives. While much attention has been paid to the AfD’s ascent in the former East Germany — where it is far ahead in polling ahead of two state elections in the region set for September — the party’s rising national popularity is due largely to the inroads it is making in the more populous western part of the country. That includes Baden-Württemberg, where the AfD is set to nearly double its support and come in a strong third behind the conservatives and the Greens, according to the polls. This could well establish the state as the far right’s most powerful base outside its traditional bastions in eastern Germany, illustrating how the AfD has been able to seize on rising economic anxiety to broaden its appeal. During the campaign in the lead-up to the vote, one of the AfD’s national party leaders, Alice Weidel, appeared in front of Mercedes-Benz’s biggest factory, outside Stuttgart, alongside the party’s top candidate in the state, Markus Frohnmaier, with the clear intention of drawing on the growing anxiety of workers in the auto industry.   “All these people are coming in and out, the employees, and they fear for their jobs,” Weidel said in an online video post. “Jobs are being cut here. Production is being scaled back. Why? Because the costs are too high here. And these costs are political and self-inflicted.” That message is proving increasingly effective in a state where half a million jobs are connected to the automotive industry, according to data from the state’s economy ministry. But increasing competition from China and a belated shift to electric vehicles has taken a toll, and carmakers are shedding jobs. Recent major layoffs in the industry include car supplier Bosch, which announced plans to cut 20,000 jobs by 2030, and Mercedes-Benz, which is offering severance packages to around 40,000 employees as part of a cost-cutting effort. Overall, around 100,000 positions or around 8 percent of jobs in the car sector are expected to disappear by 2030 in Germany, according to a 2025 study carried out for the economy ministry in Berlin. RISING ANXIETY Despite the AfD’s rise, the composition of Baden-Württemberg’s current government isn’t likely to change all that much following the election. Currently the state is governed by the Greens — who are decidedly more popular and more conservative in the state than elsewhere in the country — in coalition with Merz’s Christian Democrats. While the latter may well take first this time around, with polls showing they have a slight lead, they are likely to maintain their coalition with the second-place Greens. But no party has gained as much as the AfD — now polling at around 19 percent support in Baden-Württemberg — and that’s a worrying sign for centrist politicians in a state that has long been known for its affluence and high standard of living. Mercedes-Benz’s headquarters are in Bad Cannstatt, a Stuttgart district dominated by the automaker’s buildings, among car parks, a highway bridge and the city’s football stadium. | Ferdinand Knapp/POLITICO The AfD is also expected to perform relatively well in Bavaria’s local elections this Sunday. The party could triple its support to 14 percent, according to the latest poll, making it the largest party behind the state’s long-dominant conservatives, who lead with 33 percent. While the AfD has long been a one-issue party with an anti-immigration message, it is increasingly attacking mainstream parties for Germany’s manufacturing decline. In Baden-Württemberg the approach appears to be gaining traction, as support for the party is being driven by fear the future will not be as bright as the past, experts say. “Due to inflation, large sections of the population have the feeling that they work their whole lives, and these low wages, low pensions are what they are left with,” said opinion pollster Klaus-Peter Schöppner from Mentefactum. That resentment, he added, often mixes with the perception that immigrants come to Germany and “get everything for free.” Such anxieties were evident one recent afternoon as workers left the Mercedes Benz factory outside Stuttgart and hurried to their cars. Many said the mood inside was increasingly grim as the company sheds jobs — though they refused to give their names for fear of upsetting their employer. One man leaving the building said his top concerns were migration and the economy. Asked which party he’ll support in the vote Sunday, he replied: “I won’t tell you. But you can guess.” The AfD’s top candidate in the state, Frohnmaier, has repeatedly seized on the notion that mainstream parties have destroyed past glory days. “This promise that anyone who works hard will eventually own their own house or apartment, that you can perhaps work for the same company in the same business for 30 or 40 years, simply no longer exists,” said Frohnmaier in an online interview with a right-wing influencer last month. “For a long time, people could say: my house, my garden, my car, and my vacation. And if you had those four things, you were pretty apolitical. And now, suddenly, that no longer works.” That poses a challenge to Germany’s conservatives, who have long believed the best way to stop the AfD’s rise is to crack down on immigration, thereby removing the party’s core issue. But many now see a new front opening in their struggle to stop the far right: the economy. “We will not be able to stop the AfD’s current rise or reverse it if the economic situation in the country does not change,” said Yannick Bury, a conservative national lawmaker from Baden-Württemberg.