LONDON — Keir Starmer’s keeping Britain out of the war in Iran — but he can’t duck the conflict’s grave economic consequences. In a sign of growing fears about the impact of the war on Britain, the prime minister chaired a rare meeting of the government’s emergency COBRA committee Monday night, joined by senior ministers and Governor of the Bank of England Andrew Bailey. Starmer’s top finance minister, Rachel Reeves, will update the House of Commons on the economic picture Tuesday, as an already-unpopular administration worries that chaos in the Middle East is shredding plans to lower the cost of living and get the British economy growing. For Starmer’s government — headed for potentially brutal local elections in May — the crisis in the Gulf risks a nightmare combination of a rise in energy prices, interest rates, inflation and the cost of government borrowing that threatens to undermine everything he’s done since winning office. Economists are now warning that even if Donald Trump’s promise of a “complete and total resolution of hostilities” with Iran were to bear fruit, the effects on the British economy could still last for months. Already there are signs of a split within Starmer’s party over how to respond. Labour MPs want the government to think seriously about action to protect households — but Starmer and Reeves have long talked up the need for fiscal responsibility, and economics are warning that there’s little room for maneuver. Fuel prices displayed at a Shell garage in Southam, Warwickshire on March 23, 2026. | Jacob King/PA Images via Getty Images Jim O’Neill, a former Treasury minister who served as an adviser to Reeves, told POLITICO the government should “not get sucked into reacting to every external shock” and “concentrate on boosting our underlying growth trend.” WHY THE UK IS SO HARD HIT Just before the outbreak of war, there was reason for Starmer and Reeves to feel quietly optimistic about the long-stagnant British economy. The Bank of England had expected inflation to fall back sustainably toward its two percent target for the first time in five years, giving the central bank the space to carry on cutting interest rates.  With the Iran war in full flow, it was forced to rewrite those forecasts at the Monetary Policy Committee’s meeting last week — and now sees inflation at around 3.5 percent by the summer. The U.K. is a big net importer of energy and also needs constant imports of foreign capital to fund its budget and current account deficits. That’s made it one of first targets in the financial markets’ crosshairs. The government’s cost of borrowing has risen by more than half a percentage point over the last month. That threatens both the real economy and Reeves’ painstakingly-negotiated budget arithmetic. Higher inflation means higher interest rates and a higher bill for servicing the government’s debt: fiscal watchdog the Office for Budget Responsibility estimates a one-point increase in inflation would add £7.3 billion to debt servicing costs in 2026-2027 alone. The effect on businesses and home owners is also likely to be chilling. Britain’s banks are already repricing their most popular mortgages, which are tied to the two-year gilt rate. Hundreds of mortgage products were pulled in a hurry after the MPC meeting last week, something that will hit the housing market and depress Reeves’ intake from both stamp duty and capital gains. Duncan Weldon, an economist and author, said: “Even if this were to stop tomorrow, the inflation numbers and growth numbers are going to look materially worse throughout 2026. “If this continues for longer… it’s an awful lot more challenging and you end up with a much tougher budget this autumn than the government would have been hoping to unveil.” DECISION TIME The U.K.’s economic plight presents an acute political headache for Starmer, as he faces a mismatch between his own party’s expectations about the government’s ability to help people and his own scarce resources. Energy Secretary Ed Miliband has promised to keep looking at different options for some form of assistance to bill-payers hit by an energy price shock. A pain point is looming in July, when a regulated cap on energy costs is due to expire and bills could jump significantly. One left-leaning Labour MP, granted anonymity to speak frankly, said: “They [ministers] need to be treating this like a financial crisis. They need plans for multiple scenarios with clear triggers for government support.” A second MP from the 2024 intake said “it’s right that a Labour government steps in, particularly to help the most vulnerable.” Foreign Secretary Yvette Cooper and Chancellor of the Exchequer Rachel Reeves at the first cabinet meeting of the new year at No. 10 Downing St. on Jan. 6, 2026 in London, England. | Pool photo by Richard Pohle via Getty Images This demand for action is being felt in the upper echelons of the party too, as Culture Secretary Lisa Nandy recently argued Reeves’ fiscal rules — seen as crucial in the Treasury to reassure the markets — may need to be reconsidered if prices continue to rise and a major support package is needed.  One Labour official said there are clear disagreements with Labour over how to go about drawing up help and warned “the fiscal approach is going to be a massive dividing line at any leadership election.” The same official pointed to recent comments by former Starmer deputy — and likely leadership contender — Angela Rayner about the OBR, with Rayner accusing the watchdog of ignoring the “social benefit” of government spending. Despite the pressure, ministers have so far restricted themselves to criticizing petrol retailers for alleged profiteering, and have been flirting with new powers for markets watchdog the Competition and Markets Authority. The government said Reeves would on Tuesday set out steps to “help protect working people from unfair price rises,” including a new “anti-profiteering framework” to “root out price gouging.” But Starmer signaled strongly in an appearance before a Commons committee Monday evening that he was not about to unveil any wide-ranging bailout package, telling MPs he was “acutely aware” of what it had cost when then-Prime Minister Liz Truss launched her own universal energy price guarantee in 2022.  O’Neill backed this approach, saying: “I don’t think they should do much… They can’t afford it anyhow. The nation can’t keep shielding people from external shocks.” Weldon predicted, however, that as the May elections approach and the energy cap deadline draws nearer, the pressure will prove too much and ministers could be forced to step in. The furlough scheme rolled out during the pandemic to project jobs and Truss’s 2022 intervention helped create “the expectation that the government should be helping households,” he said. “But it’s incredibly difficult. Britain’s growth has been blown off-course an awful lot in the last 15 years by these sorts of shocks.” Geoffrey Smith, Dan Bloom, Andrew McDonald and Sam Francis contributed to this report.

BRUSSELS — America’s ambassador to the EU called on the European Parliament to back the trade deal struck with President Donald Trump, arguing it would unlock deeper transtlantic cooperation on energy, tech and AI. Speaking to POLITICO on Monday, Andrew Puzder cautioned that it would be a mistake to allow a further delay of the deal reached last July at Trump’s Turnberry golf resort in Scotland, but has still to be implemented on by the EU side. “All of the signals are good, but you never know. We’re hopeful, but we want to be careful and make sure that we don’t take anything for granted,” Puzder said in an interview at the U.S. mission in Brussels.  “It’s in the best interest of the European Union and the United States that it passes,” he added. “Some people might think that politically, it might give them an advantage to vote against. I hope that’s not the case. But economically, it’d be malpractice not to vote for this in the EU.” Puzder highlighted the importance of the EU’s commitment to spend $750 billion on U.S. energy under the Turnberry deal.  “Europe’s going to need that energy,” he said. “So we need to cut back on the regulatory restrictions to our shipping them the energy and also the regulatory restrictions that make that energy more expensive once it gets here.” IT’S BEEN LONG ENOUGH Puzder, a former fast food executive nominated by Trump, started the role last September and made an early impression in Brussels with his plain speaking. He told POLITICO in December that the EU should stop trying to be the world’s regulator and get on instead with being one of its innovators.  His latest remarks came amid mounting U.S. frustration over the EU’s slow pace in keeping its side of the bargain, under which it would scrap import duties on U.S. industrial goods. The enabling legislation is now up for a plenary vote in the European Parliament on Thursday. If it passes, talks between EU lawmakers, governments and the Commission would then begin on finally implementing the tariff changes. “We’re anxious to get this through the process. We understood they had to go through a process, but it’s been long enough. And hopefully we’ll get through it on Thursday and we can both move on to more economically beneficial endeavors,” Puzder stressed.  Trade lawmakers backed amendments at the committee stage to strengthen the EU’s protections in case Washington doesn’t respect its side of the deal.  They for instance introduced a suspension clause if Trump threatens the EU’s territorial sovereignty, as he did earlier this year when he pushed to annex Greenland. MEPs also added another provision that foresees that the deal would expire in March 2028.  Puzder declined to speculate on whether the deal could unravel altogether if the U.S. president were to launch any renewed threats.  “I hate to prejudge where this is going to go,” he said. “What everybody’s been saying on both sides is a deal is a deal. We had a deal; hopefully we still have a deal.” The ambassador stressed there had been a “very good two-way communication” between Trump’s team of Trade Representative Jamieson Greer and Commerce Secretary Howard Lutnick, and the European Commission, as well as with Bernd Lange, who chairs the European Parliament’s Trade Committee.   “I’ve also had a number of meetings with Bernd Lange and members of parliament on these issues. So the communication has been very good and very open throughout this process,” Puzder said.

YOKOSUKA, Japan — Germany is seeking to deepen defense ties with Japan, with Defense Minister Boris Pistorius proposing a new agreement to make it easier for troops from both countries to operate on each other’s territory. Speaking at Japan’s Yokosuka naval base after talks with Japanese Defense Minister Shinjirō Koizumi on Sunday, Pistorius said Berlin had floated a so-called Reciprocal Access Agreement — a framework designed to “ease the exchange of soldiers in each other’s countries and significantly reduce bureaucratic hurdles.” Such agreements allow partner countries to deploy troops on each other’s soil more easily for training, exercises or operations by streamlining legal and administrative procedures. Japan has signed similar deals with countries like the United Kingdom and Australia as it deepens its own security ties amid rising regional tensions. The proposal marks a step beyond Germany’s recent Indo-Pacific engagements, which have largely focused on joint exercises and short-term deployments. It signals a shift toward more structured military cooperation with Berlin’s partners in the region. Pistorius framed the move as part of a broader response to growing global instability. “How close our partnership is has become clear in light of the current developments in Iran and the Middle East,” he said, pointing to Japan’s heavy reliance on energy imports through the Strait of Hormuz. “The freedom of sea routes must be guaranteed and protected.” Germany and Japan share an interest in securing global trade routes, he added, stressing that both countries remain committed to the rules-based international order. “We are united by the conviction that the strength of the law must prevail,” Pistorius said. The initiative also reflects a broader strategic shift in Berlin and Tokyo. As both governments face rising pressure from authoritarian powers — from Russia’s war in Ukraine to China and North Korea in East Asia — they are increasingly treating their security challenges as interconnected, translating those shared concerns into closer bilateral defense cooperation.

European countries are being advised to lower gas storage filling targets and to start refilling gas stores early, as the conflict in Middle East drives up global energy prices. European Energy Commissioner Dan Jørgensen urged in a letter to national energy ministers, seen by POLITICO, that countries should be flexible in how they refill gas stores, to “help reduce the gas demand at times where the supply is tense and ease the pressure on gas prices in Europe.” Since the U.S. and Israel launched strikes on Tehran in late February, the ensuing conflict has caused global energy prices to spike, driven in part by Israeli strikes on Iran’s vast offshore gas field and Tehran’s effective closure of the Strait of Hormuz, a critical passage that facilitates a significant share of the world’s oil and natural gas trade. In the letter, Jørgensen asked EU countries to lower their gas storage refilling targets to 80 percent, 10 percentage points below normal targets. He also suggested that countries could start storage injections early to avoid an “end-of-summer rush to refill storages,” which would put upward pressure on prices. He also suggested that governments extend the deadline to meet filling targets to as late as December, two months later than usual. He said countries can take these measures under the EU Gas Storage Regulation, which provides for flexibility in difficult market conditions. The EU requires member countries to maintain gas reserves at 90 percent of capacity by the winter — a measure brought in after Russia’s 2022 invasion of Ukraine. But this year’s colder-than-average winter depleted those reserves to an average of under 30 percent as of March, the lowest since 2022. Anxiety has been growing in Brussels over whether the conflict in Iran, coupled with already low gas reserves, could spark a fight among countries over dwindling global energy supplies. Jørgensen said that the EU’s gas supplies remain “relatively protected” since the bloc only has “limited reliance” on gas imports from the region. But as a “net importer” of gas globally, “high and volatile global prices may also impact the EU gas storage injections,” he said. As developments in Iran and the wider region are “are significantly impacting global oil and gas markets,” there are indications that it could take longer for Qatari gas production to return to pre-crisis levels, Jørgensen said. The commissioner said he would support countries to make use of the allowed flexibilities, which should be discussed with the European Commission and other member states before being implemented. A Commission spokesperson confirmed that the letter was sent to energy ministers.

BRUSSELS — Norway should reapply to become a member of the European Union in light of their shared security challenges — namely Russia — the leader of the country’s conservative opposition party told POLITICO. The oil-rich Nordic nation applied to join the EU in 1992, but the bid was rejected in a referendum two years later. Since then, Norway has been a member of the European Economic Area, which means it adopts many of the EU’s rules and regulations, as well as being a member of NATO. But with wars and growing threats around the world, the arms-length relationship between Brussels and Oslo is no longer fit for purpose, argued Ine Eriksen Søreide, who was elected leader of Norway’s conservative party last month. “In my opinion, and my party’s opinion, we would be best served by being full members of the EU,” she said in an interview on Thursday as EU leaders were convening for a summit in Brussels. “I’ve been talking consistently about the need for a constructive debate based on the EU as it is today, not as it was in 1994 … and saying very clearly and loudly” that Norway’s interests lie inside the 27-member bloc, added Søreide, who was defense minister from 2013 to 2017 and foreign minister from 2017 to 2021. A recent spat between Oslo and Brussels over ferro-alloys (additives in steelmaking) had underscored the drawbacks of being outside the union, said Søreide. The spat, during which the EU imposed restrictions on imports from Norway, “very clearly illustrated that we are a part of the [EU] internal market … but that doesn’t help if something comes from the outside like these protective measures.” Iceland’s potential bid to join the EU is another spur for Oslo to seek membership in the bloc. “If Iceland then decides in a referendum to reopen negotiations, it’s a very different ballgame,” she said. “I’m not suggesting that what Iceland does will in itself change the view of Norwegians, but it can lead to certain institutional changes and also a kind of different approach for the EU, making it more difficult for us to be on the outside.” Beyond benefits on trade, Søreide listed defense, space, health and Arctic security as areas where Oslo would benefit from full EU membership. The fact that Norway isn’t part of the EU, but nevertheless transposes its laws, means that the country is “missing out in so many areas,” she said. While Norway had transposed some 14,000 legal acts from the EU into national law in recent years, the country nonetheless gets no say in setting the bloc’s agenda or weighing in on its strategic orientations. The ferro-alloy case shows how Oslo can be seen as “a second-tier member” of the club, Søreide added. ‘MORE OPEN’ TODAY The question of Norway’s EU membership has come up repeatedly during the past 30 years, with voters typically deciding not to join the bloc. Norway applied for EU membership in 1992 along with Finland, Sweden and Austria, but ultimately voted against membership in a referendum — with 52.2 percent against and 47.8 percent in favor — while the other three countries opted to join. In recent years, polls have shown that a majority remains against joining the bloc, with concerns about protecting Norway’s vast energy wealth outweighing the benefits of membership. Norway’s parliament has a majority of MPs opposed to membership. However, support for joining the EU has ticked up over the past 18 months amid tensions in the transatlantic relationship and U.S. President Donald Trump’s threats of seizing Greenland. A tense exchange of leaked messages between Trump and Norwegian Prime Minister Jonas Gahr Støre — in which the former criticized the latter for not granting him the Nobel Peace Prize — drove home concerns about the transatlantic relationship for many Norwegians. On the prospect of EU membership, Søreide said it was unlikely to materialize “immediately.” Indeed, Norway’s current government has not shown interest in launching a national debate about membership, and the next parliamentary elections aren’t until 2029. But Søreide said that attitudes toward membership were shifting. “I do sense … there is a more open approach to the issue in Norway,” she said. “Now when you hear debates among everything from the business sector to large private sector organizations to people on the street, there is a difference in tone.” The conservative party leader also criticized Norway’s Labour Party minority government, which is backed by a center-left coalition, for making the subject of EU membership taboo. “I’m very disappointed and also quite surprised that the government, a Labour government, has kind of put even the debate off for the next four years,” she said, adding she found the approach “very strange in this situation.” Søreide’s Høyre party is currently the third most popular in Norway, with about 18 percent support, according to POLITICO’s Poll of Polls. But that share has been inching up in recent months. Asked about her own plans, she said she aimed to make her party “significantly bigger than we did in the last election, which was a very poor election for us,” and would seek to become prime minister in 2029.

President Donald Trump is demanding that the Federal Reserve immediately lower borrowing costs. But the war in the Middle East has now made any interest rate cuts much less likely in 2026 — not just in the U.S. but around the world. With oil prices surging past $100 a barrel and Gulf shipping routes disrupted by Iran, governments and investors are bracing for a repeat of the 2022 energy shock from Russia’s invasion of Ukraine. And from Washington to Frankfurt, and London to Tokyo, the world’s central banks are likely to strike a more wary tone on inflation while assessing the fallout during a flurry of policy meetings taking place this week. The effective closure of the Strait of Hormuz, a channel through which roughly a fifth of global oil passes, is pushing up costs not only for energy and transportation, but also for other key goods that are shipped through the waterway. The result could be a toxic mix for central banks: higher prices and lower employment, two problems they’re not equipped to address simultaneously. “My best guess, but spoken with no conviction at all, is that this gets sorted out somehow in the next few weeks, and by the middle of the year, oil prices have come back down a fair amount,” said William English, a former top staffer at the Fed who is now a professor at Yale University. “But there’s a real risk, of course, that things go on for longer and are more damaging. And in that case, all bets are off.” The specter of a prolonged global energy crunch could dash the hopes of consumers, businesses and investors worldwide for rate cuts this year — and in some cases, throw those plans in reverse. No immediate moves are likely except in Australia, which raised its target rate by a quarter-point on Tuesday. But markets have already repriced their bets on what comes next from monetary policymakers. Indeed, if the Fed does cut rates later this year, it might be one of the few major central banks that does so, given that other economies like Europe are more exposed to higher energy costs than the U.S. Before the war, investors saw a chance of cuts from the Fed, the European Central Bank and the Bank of England. Now they’re pricing in an altogether tighter policy stance: at least one ECB rate hike this year, a 60 percent chance of a BoE increase, fewer and later cuts from the Fed and more urgency in raising rates from the Bank of Japan. Central bankers will prefer to wait until they get a better gauge of the economic repercussions from the conflict because “the shock could turn out to be negligible or very large,” said EFG chief economist Stefan Gerlach. But few doubt the need for strong messaging as central banks are wary of repeating 2022, when energy price shocks combined with the after-effects from Covid and fiscal stimulus to morph into the worst inflation spike in half a century. “There will be a significant contingent worrying about upside inflation risks in light of the 2022 experience,” J.P. Morgan economist Greg Fuzesi said ahead of the ECB’s policy-making council’s meeting on Thursday. The Iran conflict is further complicating efforts by Trump to demonstrate to voters that the GOP is addressing cost-of-living concerns before this year’s midterm elections. Already, the war has caused a surge in politically salient gas prices and erased some of the progress toward more affordable mortgage rates. And it’s further muddied the picture for a central bank that the president has been pressing hard to take decisive action toward rate cuts. Now, when Chair Jerome Powell and other Fed officials meet on Wednesday, they’re expected to be more open to the idea of rate increases later this year, though that’s still not the likeliest outcome. As Yale’s English pointed out, higher costs might ultimately increase the case for rate cuts if they slow the economy significantly. “With the higher oil prices and the shock to the global economy, the likelihood of overheating seems reduced now, so that’s one of the reasons you might be comfortable waiting through some period of higher inflation,” rather than hiking rates in response, English said. “This might be enough to push the economy into real weakness, and in that case, they might well have to cut.” But if households and businesses start to worry about a new acceleration in inflation and start expecting higher prices, that dynamic can be self-fulfilling and might call for rate hikes. Hawkish policymakers are already signaling the ECB won’t hesitate this time. “A reaction by the ECB is potentially closer than many people think,” Peter Kažimír, Slovakia’s central bank governor, told Bloomberg last week. “We will be ready to act if needed.” President Christine Lagarde pledged to ensure that consumers “don’t suffer the same inflation increases like those we saw in 2022 and 2023.” Back then, the ECB was slow to react, helping inflation surge past 10 percent. Economists say today’s backdrop looks very different: In 2022, rates were near or below zero, balance sheets were bloated and fiscal policy was highly expansionary. “When inflation rose, it did so in an environment of strong demand supported by both fiscal and monetary stimulus,” said Gerlach. Now, tighter monetary and fiscal policy should limit the risk of energy shocks spilling through the economy into second-round effects. Still, Barclays analyst Silvia Ardagna says that if medium-term inflation expectations “deteriorate significantly,” she expects “the ECB to act more swiftly than in 2022, but to tighten policy gradually.” Nick Kounis, of Dutch bank ABN AMRO, also sees a more hawkish tone. “Uncertainty on the conflict is high, but if the current situation persists through to the April meeting, a hike becomes a distinct possibility,” he said. Many analysts say the first obvious central bank casualty of the war is likely to be the Bank of England, which was widely expected to cut this week but is now seen firmly on hold. That’s because the U.K. still hasn’t quite gotten on top of the inflation that was unleashed four years ago. Andrew Benito, an economist with hedge fund Point72 in London, reckons that the inevitable increase in fuel prices and household energy bills alone will add a full percentage point to headline inflation by summer, with “second-round” impacts on other prices pushing it even further away from the BoE’s target. That, says Deutsche Bank’s Sanjay Raja, will force the bank into some “uncomfortable trade-offs”: The U.K. economy has already slowed over the last year due to global trade uncertainty and various government tax hikes to close the budget deficit. Hiking rates when the economy is already struggling could risk needlessly making things worse. But any sign of complacency could be disproportionately punished by the markets, given that the BoE performed worse than any other major central bank during the last inflation shock (the headline rate peaked at over 11 percent). Raja expects BoE Governor Andrew Bailey to highlight the differences with 2022 — when inflation was accelerating rather than slowing — as one reason not to overreact to today’s price spike. However, he expects that Bailey, like the ECB and others, will talk tough about not letting business and households develop an inflationary mindset again. More important will be the Bank of Japan’s decisions and press conference on Thursday, due to the outsized influence of Japanese interest rates on global financial markets. For decades, Japan kept interest rates low and printed money furiously to escape deflation. As long as it did so, Japanese and foreign investors borrowed yen cheaply to throw at higher-yielding markets such as the U.S. Now, however, the BoJ’s concerns have finally switched from deflation to inflation, and BoJ Governor Kazuo Ueda is now in a hurry to “normalize” policy. Its key interest rate, at 0.75 percent, is the lowest in the developed world outside Switzerland. But Japan, too, faces a big headwind from higher energy prices because of its dependence on imports, and Gregor Hirt, chief investment officer for Multi Asset at Allianz Global Investors, argues that the BoJ will hesitate before raising rates again. The trouble with waiting and seeing is that the yen has already lurched lower, prompting alarm in Washington and sparking rumors of possible intervention to support it. “In order to stop further weakness, the BoJ may have to move up a rate hike to stabilize the currency,” Hirt said. Meanwhile, the war has presented the Swiss National Bank, which has kept interest rates at zero since June 2025, with a different kind of conundrum. One risk is that a global “flight to safety” drives the Swiss franc to even greater heights against the euro and others. That could make so many imports cheaper that the overall inflation rate could turn negative. Alternatively, the boost in energy prices could have the same malign impact on inflation as it will elsewhere. “The SNB will probably prefer to wait and see which of the two effects will have the greater impact on inflation prospects before acting in one direction or the other,” said ING economist Charlotte de Montpellier, who expects the Swiss central bank to stay on hold. That response, shot through with varying degrees of nervousness, looks likely to be the dominant one this week. But things will look very different if the war situation hasn’t improved by the next round of meetings.

President Donald Trump has often frustrated European allies with his overt entreaties to Russian President Vladimir Putin and harsh words for Ukrainian President Volodymyr Zelenskyy. But behind the seeming imbalance is a longer-term strategic goal – countering China. The Trump administration believes that incentivizing Russia to end the war in Ukraine, welcoming it back economically and showering it with U.S. investments, could eventually shift the global order away from China. It’s a gamble – and one Ukrainians are concerned with – but it underscores the administration’s belief that the biggest geopolitical threat facing the United States and the West is China, not Putin’s Russia. While countering China isn’t the only reason the administration wants a truce, it does help explain why after more than 15 months of fruitless talks and multiple threats to walk away, the president’s team – special envoy Steve Witkoff and son-in-law Jared Kushner – keep looking for a breakthrough. A Trump administration official, granted anonymity to discuss ongoing negotiations, said finding a “way to align closer with Russia” could create “a different power balance with China that could be very, very beneficial.” The administration’s desire to use Ukraine peace negotiations to counter China has not been previously reported. But many observers believe this plan has little hope of succeeding – at least while Putin and Chinese leader Xi Jinping remain in charge. And the idea of giving Russia economic incentives to grow closer to the U.S. is concerning for Ukraine, said a Ukrainian official, granted anonymity to discuss diplomatic matters. “We had such attempts in the past already and it led to nothing,” they said. “Germany had [Ostpolitik, Germany’s policy toward the East], for that and now Russia is fighting the deadliest war in Europe.” And when it comes to banking on breaking apart China and Russia, the Ukrainian official noted that both countries “have one [thing] in common which you can not beat – they hate the U.S. as a symbol of democracy.” Still, the strategy is in keeping with the administration’s broader foreign policy initiatives aimed at least in part in countering Chinese influence. Taking out Venezuelan leader Nicolás Maduro and pressuring Cuba’s government to the brink of collapse all diminishes China’s influence in the Western Hemisphere. The administration threatened Panama, which withdrew from Chinese leader Xi’s Belt and Road Initiative a month after Trump took office and called Peru’s deal with China surrounding its deepwater port in Chancay a “cautionary tale.” And striking Iran shifted China’s oil import potential, as Tehran supplied Beijing with more than 13 percent of its oil in 2025, according to Reuters. Indeed, the Trump administration official noted that between Venezuela, Iran and Russia, China was buying oil at below-market rates, subsidizing its consumption “to the tune of over $100 billion a year for the last several years.” “So that’s been a massive subsidy for China by being able to buy oil from these places on the black market, sometimes $30 a barrel lower than what the spot market is,” the person said. Even as there are reports that Russia is sharing intelligence with Iran, the U.S. and Russia keep talking. Witkoff and Kushner met with Kirill Dmitriev, a top adviser to Putin, last week. The Russians called the meeting “productive.” Witkoff said they’d keep talking. These negotiations and the broader efforts to counter China now take place under the spectre of Trump asking several countries, including China, for help securing the Strait of Hormuz. The National Security Strategy, released in November, spilled a fair amount of ink on China, though it often doesn’t mention Beijing directly. Many U.S. lawmakers — from both parties — consider China the gravest long-term threat to America’s global power. “There is a longstanding kind of U.S. strategic train of thought that says that having Russia and China working together is very much not in our interests, and finding ways to divide them, or at least tactically collaborate with the partner who’s less of a long term strategic threat to us,” said said Alexander Gray, Trump’s National Security Council chief of staff in his first term. Gray, who is currently the CEO of American Global Strategies, a consulting firm, compared the effort to former Secretary of State and national security adviser Henry Kissinger, who spearheaded President Richard Nixon’s trip to China during the Cold War in an effort to pull that country away from the Soviet Union. The State Department declined to comment for this report. However, a State Department spokesperson previously told POLITICO that China’s economic ties with Latin American countries present a “national security threat” for the U.S. that the administration is actively trying to mitigate. The White House declined to comment. Fred Fleitz, another Trump NSC chief of staff in his first term, noted that the president has “pressed Putin to end the war to normalize Russia’s relationship with the U.S. and Europe,” and wants Russia to rejoin the G8. “It is clear that Trump wants to find a way to end the war in Ukraine and to coexist peacefully with Russia,” said Fleitz, who now serves as the vice chair for American Security at the America First Policy Institute. “But I also believe he correctly sees the growing Russia-China alliance as a far greater threat to U.S. and global security than the Ukraine War and therefore wants to find ways to improve U.S.-Russia relations to weaken or break that alliance.” Others, however, remain skeptical. Craig Singleton, senior director of the China program at Foundation for Defense of Democracies, said the goal to break Russia and China is “appealing in theory, but in practice the partnership between Moscow and Beijing is iron-clad.” “Obviously there is nothing wrong with testing diplomacy and President Trump is a dealmaker. But history probably suggests that this won’t really result in much,” Singleton added. “The likely outcome [with Russia] is limited tactical cooperation with the U.S., not some sort of durable break with Beijing.” And China seeks to keep Russia as an ally and junior partner in its relationship as a counter to Western powers. Chinese Foreign Minister Wang Yi reaffirmed the relationship in a press conference this month, saying, “in a fluid and turbulent world, China-Russia relationship has stood rock-solid against all odds.” Secretary of State Marco Rubio, shortly after his confirmation, hinted at the broader strategy, saying in an interview, that “a situation where the Russians are permanently a junior partner to China, having to do whatever China says they need to do because of their dependence on them” is not a “good outcome” for Russia, the U.S. or Europe. But Rubio, like the Trump administration official given anonymity to discuss ongoing negotiations, both acknowledged that fully severing those ties would be a tough lift. “I don’t know if we’ll ever be successful at peeling them completely off a relationship with the Chinese,” Rubio said in February of last year. Adam Savit, director for China policy at the America First Policy Institute, argued that “Russia matters at the margins, but it won’t be a decisive variable in the U.S.-China competition,” and that the “center of gravity is East Asia.” “Russia gives China strategic depth, a friendly border, energy supply, and a second front in Ukraine to sap Western attention,” he said. “Getting closer to Russia could complicate China’s strategic position, but Moscow is a declining power and solidly the junior partner in that relationship.”

President Donald Trump says Cuba is on the brink of collapse and the U.S. may be “taking” the island nation. Trump, speaking to reporters Monday at the White House, issued what seemed like a cryptic warning to the communist leadership of Cuba as the country was gripped by an island-wide power outage amid a deepening economic crisis. The president said he believes he will have “the honor of taking Cuba,” and added he “can do anything I want with” the country, which has been running out of fuel after the U.S. forced Venezuela to end its critical support to the Caribbean island. “I think Cuba sees the end,” he said. “All my life I’ve been hearing about the United States and Cuba. When will the United States do it? I do believe I’ll be the honor of — having the honor of taking Cuba.” Asked to elaborate on what he meant by “taking” Cuba, which has been controlled by the current communist regime since 1959, Trump indicated the U.S. would intervene “in some form.” “Whether I free it, take it — I think I can do anything I want with it, you want to know the truth. They’re a very weakened nation right now,” he said. The comments mark a more foreboding tone shift from the president, who said on Friday that a “friendly takeover” of Cuba could be possible. The U.S. has placed renewed pressure on Cuba in January when it launched an operation to capture Venezuelan President Nicolas Maduro, setting off the most severe economic crisis on the island since the collapse of the Soviet Union. Cuba had heavily relied on Venezuela for fuel imports before Maduro’s removal. Trump told POLITICO’s Dasha Burns earlier in March the U.S. is “talking to Cuba” and that he believed intervening in Venezuela would put further strain on Cuba. “It’s because of my intervention, intervention that is happening,” Trump said. “Obviously, otherwise they wouldn’t have this problem. We cut off all oil, all money, … everything coming in from Venezuela, which was the sole source.” Cuban-American activists have encouraged Trump to put pressure on the communist government in hopes of triggering a change in leadership.

BRUSSELS — Europe’s message to Donald Trump on Monday was clear: We’re not helping you secure the Strait of Hormuz.  Foreign ministers from the 27 EU countries gathered in Brussels to discuss the American president’s call for European countries to help secure the narrow waterway, a vital oil shipping channel that Iran has largely blocked in retaliation for U.S. and Israeli airstrikes. Among the ideas floated was expanding the mandate of the EU’s naval mission — Aspides — to allow European warships to be sent to patrol the strait between the Persian Gulf and the Gulf of Oman. But after hours of closed-door talks about the war in Iran, Europe’s foreign envoys made clear they see this as America’s problem to solve. “Europe has no interest in an open-ended war,” EU top diplomat Kaja Kallas said Monday evening after the meeting. “This is not Europe’s war, but Europe’s interests are directly at stake.” Although there was a “clear wish” among ministers “to strengthen” the EU’s naval mission in the Middle East, “there was no appetite in changing the mandate,” Kallas said, referring to sending warships to the strait. “Extending this mandate to cover the Strait of Hormuz … there was no appetite from the member states to do that,” she repeated. “Nobody wants to go actively in this war.” RESPECT, PLEASE Trump told the Financial Times at the weekend it would be “very bad for the future of NATO” if European countries failed to respond to his call for help. He wrote on social media that he was in contact with seven countries about securing the strait, without naming which countries he was referring to. And on Monday, Trump told reporters that he was confident France would assist the U.S. “I think he’s gonna help. I mean, I’ll let you know, I spoke to him yesterday,” the American president said, referring to his French counterpart Emmanuel Macron. Trump also said he was “not happy” with the response from the U.K. and “very surprised” after Prime Minister Keir Starmer said he would not be drawn into a “wider war” over Iran. Trump was adamant that “we don’t need anybody” and “we’re the strongest nation in the world,” but his request for assistance was a test of solidarity, to see how European countries would react, as Iran’s closure of the strait drives up oil prices. “I’ve been saying for years that if we ever did need them, they won’t be there,” the U.S. president said. European capitals clearly don’t want to get involved, though — and wish Trump would stop asking. “The Americans chose this path, together with the Israelis,” German Defense Minister Boris Pistorius said. | Britta Pedersen/picture alliance via Getty Images “The Americans chose this path, together with the Israelis,” German Defense Minister Boris Pistorius said, adding that Germany’s main responsibility was to defend NATO territory. “We did not start this war,” Pistorius stressed. German Chancellor Friedrich Merz also poured scorn on the idea of committing Berlin to the conflict, triggered when the U.S. and Israel launched strikes on Tehran on Feb. 28 and killed the Iranian supreme leader. “NATO is a defensive alliance, not an interventionist one. And that is precisely why NATO has no place here at all,” Merz said. “I hope that we will treat one another with the necessary respect within the alliance,” Merz added, in an apparent rebuke to Trump’s grousing. Luxembourg’s Deputy Prime Minister Xavier Bettel went even further, stressing his country would not give in to “blackmail” from Washington. “Don’t ask us” to send troops, Bettel told reporters in Brussels. NOT EUROPE’S WAR U.S. ambassador to NATO Matthew Whitaker on Monday reiterated Trump’s call for allies to support the war in Iran, given they import limited volumes of oil from the Gulf region. “Ultimately that security of the Strait of Hormuz is in their interest,” he said. Trump “is absolutely right to suggest that our allies need to come, need to help us and support our efforts,” Whitaker added. The Strait of Hormuz, through which about one-fifth of the world’s oil is transported, remains effectively closed due to Iran’s threats to shipping, causing the price of a barrel of oil to surge past the $100 mark last week. Yet a full NATO mission in Iran remains improbable for now, according to four NATO diplomats who spoke to POLITICO, both because it’s unlikely to receive the necessary unanimous backing from allies and since it would add little compared to more rapid bilateral support allies could muster for the U.S. The diplomats were granted anonymity to discuss the sensitive security matter. So far, the U.S. hasn’t formally asked NATO countries for support as part of the alliance’s framework, two of the diplomats said. But “some allies won’t be steered into involvement there,” one of the diplomats said. “Plus, it’s not directly NATO’s area of responsibility.” That point was repeatedly underscored by Kallas and other top officials on Monday. “Europe is not part of this war. We have not started this war,” she said. “And the political objectives are unclear.” The EU’s leaders are holding a summit Thursday, and an early draft of the conclusions obtained by POLITICO, dated March 13, which has been worked on by national diplomats and will go through several revisions, says leaders will call for “deescalation and maximum restraint” in Iran and the wider region. Nicholas Vinocur and Rixa Fürsen contributed to this report.

LONDON — Trade Secretary Peter Kyle is expected to announce the U.K.’s steel strategy at Tata Steel UK’s mill in Port Talbot on Thursday. The strategy will set out new protections for Britain’s steel sector, slashing quotas on imports of many products from overseas while raising duties outside those caps to 50 percent, two people familiar with the announcement told POLITICO. “The tariff will be doubled to 50 percent in line with what the Europeans have done, the Canadians have done, the Americans have done,” a senior business representative familiar with the plans said. There will “be some exemptions” for products British steelmakers don’t make, they added. British officials have told both U.K. steel producers and downstream importers, who use steel in everything from construction to automotive manufacturing, to expect a 50 percent duty outside of new quotas in a move “likely to be similar to the EU,” said a second industry figure. Both industry figures were granted anonymity as they were not authorized to speak publicly. Last October, the EU announced plans to reduce its quotas on foreign steel imports by almost half and levy a 50 percent tariff on goods exceeding the cap. The move is part of an overhaul of so-called safeguard protections that expire in both the EU and U.K., under World Trade Organization rules, at the end of June. The U.K.’s strategy setting out the future of the sector has been repeatedly delayed. On Thursday, Kyle will set out a new scheme of trade protections to replace the so-called steel safeguards scheme. A Tata Steel UK executive told lawmakers in early February that the government “had eight weeks to save the British steel industry” by shielding it with new protectionist measures from a glut of cheap imports from countries like China. Steel importers, however, are unlikely to get the full gamut of exemptions under the scheme they had hoped for, said the second industry figure, noting they’re “prepared for the worst.” The government will “jeopardize downstream manufacturers if they make the import restrictions too prohibitive,” they said. “There will be some exemptions, but not as many as they hoped for,” said the senior business representative. “This government has been crystal clear in committing to a bright and sustainable future for steelmaking and steel jobs in the U.K., and we will publish a steel strategy shortly setting out how we can achieve a sustainable future for the sector,” said a government spokesperson.