BRUSSELS — Belgium on Monday pushed back against the European Commission’s proposed concessions to unblock a €210 billion loan to Ukraine funded by frozen Russian assets — dashing EU hopes of securing a deal in time for Thursday’s leaders’ summit. With two days to go, the Commission is making a last push to convince EU member countries to back the loan so that billions of euros in Russian reserves held at the Euroclear bank in Brussels can be freed up to support Kyiv’s war-battered economy. The EU’s 27 envoys will continue discussions on the scheme later Tuesday, as talks to end Russia’s almost four-year all-out war in Ukraine achieved some progress during a meeting of Western leaders and U.S. envoys in Berlin on Monday. After days of negotiations on the assets, the Commission on Monday suggested legal changes to its proposal to secure political buy-in from Belgium. It gave legal assurances that, under any scenario, Belgium could tap into as much as €210 billion if it faces legal claims or retaliation by Russia, according to the latest text seen by POLITICO. It also stated that no money should be given to Ukraine before EU countries provide financial guarantees covering at least 50 percent of the payout. In a further concession, the Commission instructed all EU countries to end their bilateral investment treaties with Russia to ensure Belgium isn’t left alone to deal with retaliation from Moscow. But Belgium said that the reassurances were not enough during a meeting of EU ambassadors on Monday evening, four EU diplomats told POLITICO. “There will be no deal until EUCO [European Council],” said an EU diplomat who, like others quoted in this article, was granted anonymity to speak freely. The Belgian government is holding out against using the Russian assets over fears that it will be on the hook to repay the full amount if Russia attempts to claw back the money. But in a further complication, four other countries — Italy, Malta, Bulgaria and Czechia — backed Belgium’s demand to explore alternative financing for Ukraine, such as joint debt. While France continues to publicly back the frozen assets plan — the country’s Europe Minister Benjamin Haddad said in Brussels on Tuesday that Paris supports it — a person close to French President Emmanuel Macron said Paris was “neutral” on whether Europe should tap Moscow’s billions, or turn to Eurobonds to keep Ukraine from going bankrupt. Supporters of the scheme — such as Germany — insist there is no real alternative to using the Russian assets. They say that joint debt isn’t feasible because it requires unanimity — meaning that Hungary’s Prime Minister Viktor Orbán, who has long been skeptical of support for Ukraine, could block the initiative. “Let us not deceive ourselves. If we do not succeed in this, the European Union’s ability to act will be severely damaged for years, if not for a longer period,” German Chancellor Friedrich Merz said Monday. But that isn’t convincing for all EU countries. Critics claim that Germany insists on using Russian assets because it is ideologically opposed to EU common debt. “The narrative is that Hungary is against common debt [for Ukraine]. The reality is that the frugals are against common debt,” said an EU diplomat. Clea Caulcutt contributed to this report from Paris.

PARIS — The French Senate laid the groundwork for a dramatic, consequential week of fiscal planning for 2026 on Monday by passing its own version of next year’s state budget rife with spending cuts.   The Senate and France’s more powerful lower house, the National Assembly, must now find a compromise in a process akin to a U.S.-style conference committee set to take place Friday. If that process fails it will considerably diminish the chances of France getting a new budget wrapped by the end of the year. One National Assembly official told POLITICO the meeting will be “make or break.” Political paralysis also prevented France from getting its 2025 state budget passed before the end of last year; Prime Minister Sébastien Lecornu warned in November that a repeat failure was a “danger that weighs on the French economy.” The country is highly unlikely to face a government shutdown similar to what happened in the United States earlier this year, however, as lawmakers can approve a measure carrying the 2025 budget over into next year. But such a stopgap would exacerbate the worrying financial outlook in the European Union’s second-largest economy.   Lecornu managed to secure a consensus on next year’s social security budget, but the state budget is proving more difficult. The National Assembly’s first attempt ended with all but one MP voting against a bill saddled with untenable and sometimes conflicting amendments. The opposition Socialist Party, which backed the social security bill and is in somewhat of a kingmaker position, is leaning toward voting against this version of the state budget because its members feel France’s wealthiest households won’t be subject to sufficient tax hikes, party leader Olivier Faure said last week. 

BRUSSELS — Italy is throwing its weight behind Belgium in opposing the EU’s plan to send €210 billion of Russia’s frozen state assets to Ukraine, according to an internal document seen by POLITICO. The intervention by Rome, the EU’s No.3 in terms of population and voting power — less than a week before a crucial meeting of EU leaders in Brussels — undermines the European Commission’s hopes of finalizing a deal on the plan. The Commission is pushing for EU member countries to reach an agreement in a European Council summit on Dec.18-19 so that the billions of euros in Russian reserves held in the Euroclear bank in Belgium can be freed up to support Kyiv’s war-battered economy.  Belgium’s government is holding out over fears it will be on the hook to repay the full amount if Russia claws back the money, but has so far lacked a heavyweight ally ahead of the December summit. Now Italy has shaken up the diplomatic dynamics by drafting a document with Belgium, Malta and Bulgaria urging the Commission to explore alternative options to using the Russian assets to keep Ukraine afloat over the coming years. The four countries said they “invite the Commission and the Council to continue exploring and discussing alternative options in line with EU and international law, with predictable parameters, presenting significantly less risks, to address Ukraine’s financial needs, based on an EU loan facility or bridge solutions.” The four countries are referring to a Plan B to issue joint EU debt to finance Ukraine over the coming years. However, this idea has its own problems. Critics note it will add to the high debt burdens of Italy and France, and requires unanimity — meaning it can be vetoed by Hungary’s Kremlin-friendly Prime Minister Viktor Orbán. The four countries — even if joined by pro-Kremlin Hungary and Slovakia — would not be able to build a blocking minority but their public criticism erodes the Commission’s hopes of striking a political deal next week. While Italy’s right-wing Prime Minister Giorgia Meloni has always supported sanctions against Russia, the government coalition she leads is divided over supporting Ukraine. Hard-right Deputy Prime Minister Matteo Salvini has embraced a Russia-friendly stance and endorsed U.S. President Donald Trump’s plan to end the war in Ukraine. EMERGENCY RULE Offering a further criticism, the four countries expressed skepticism toward the Commission seizing on emergency powers to overhaul the current sanctions rules and keep Russia’s assets frozen in the long-term. Despite voting in favor of this move to preserve EU unity, they said they were wary of then progressing to use the Russian assets themselves. “This vote does not pre-empt in any circumstances the decision on the possible use of Russian immobilised assets that needs to be taken at Leaders’ level,” the four countries wrote. The legal mechanism for long-term freeze is meant to reduce the chance that pro-Kremlin countries in Europe, such as Hungary and Slovakia, will hand back the frozen funds to Russia. Officials claim this workaround undermines the Kremlin’s chances of liberating its assets as part of a post-war peace settlement — and therefore strengthens the EU’s separate plan to make use of that money.   However, the four countries wrote that the legal clause “implies very far reaching legal, financial, procedural, and institutional consequences that might go well beyond this specific case.”

A minimum tax on the EU’s richest individuals will not discourage innovators and start-up founders from investing in the bloc, prominent economist Gabriel Zucman told POLITICO. “Innovation does not depend on just a tiny number of wealthy individuals paying zero tax,” Zucman said in an interview at this year’s POLITICO 28 event. The young economist has become a household name in France thanks to his proposal to have households worth more than €100 million paying an annual tax of at least 2 percent of the value of all their assets. Critics of the tax warned about the risk of scaring investors out of the EU and that tech entrepreneurs could leave the bloc as they would be forced to pay a tax based on the market value of shares they own in their companies without necessarily having the liquidity to do so. But Zucman rejected “the notion that someone […] would be discouraged to create a start-up, to innovate in AI because of the possibility that once that person is a billionaire, he or she will have to pay a tiny amount of tax” “Who can believe in that?” he scoffed. The “Zucman tax” was one of the key demands by left-wing parties for France’s budget for next year. But the measure has been ignored by all France’s short-lived prime ministers, and rejected by the French parliament during ongoing budget debates. But Zucman is not giving up and still promotes the measure, including at the EU level. “This would generate about €65 billion in tax revenue for the EU as whole,” Zucman insisted.

BRUSSELS ― Europe’s strategy for convincing the Belgians to support its plan to fund Ukraine? Warn them they could be treated like Hungary. At their summit on Dec. 18, EU leaders’ key task will be to win over Bart De Wever, the bloc’s latest bête noire. Belgium’s prime minister is vetoing their efforts to pull together a €210 billion loan to Ukraine as it faces a huge financial black hole and as the war with Russian grinds on. De Wever has dug his heels in for so long over the plan to fund the loan using frozen Russian assets ― which just happen to be mostly housed in Belgium ― that diplomats from across the bloc are now working on strategies to get him on board. De Wever is holding out over fears Belgium will be on the hook should the money need to be paid back, and has now asked for more safety nets. Nearly all the Russian assets are housed in Euroclear, a financial depository in Brussels. He wants the EU to provide an extra cash buffer on top of financial guarantees and increased safeguards to cover potential legal disputes and settlements — an idea many governments oppose. Belgium has sent a list of amendments it wants, to ensure it isn’t forced to repay the money to Moscow alone if sanctions are lifted. De Wever said he won’t back the reparations loan if his concerns aren’t met. Leaders thought they’d have a deal the last time they all met in October. Then, it was unthinkable they wouldn’t get one in December. Now it looks odds-on. All hope isn’t lost yet, diplomats say. Ambassadors will go line by line through Belgium’s requests, figure out the biggest concerns and seek to address them. There’s still room for maneuver. The plan is to come as close to the Belgian position as they can. But a week before leaders meet, the EU is turning the screws. If De Wever continues to block the plan ― a path he’s been on for several months, putting forward additional conditions and demands ― he will find himself in an uncomfortable and remarkable position for the leader of a country that for so long has been pro-EU, according to an EU diplomat with knowledge of the discussions taking place. The Belgium leader would be frozen out and ignored, just like Hungary’s Viktor Orbán has been given the cold shoulder over democratic backsliding and his refusal to play ball on sanctioning Russia. The message to Belgium is that if it does not come on board, its diplomats, ministers and leaders will lose their voice around the EU table. Officials would put to the bottom of the pile Belgium’s wishlist and concerns related to the EU’s long-term budget for 2028–2034, which would cause the government a major headache, particularly when negotiations get into the crucial final stretch in 18 months’ time. Nearly all the Russian assets are housed in Euroclear, a financial depository in Brussels. | Ansgar Haase/Getty Images Its views on EU proposals will not be sought. Its phone calls will go unanswered, the diplomat said. It would be a harsh reality for a country that is both literally and symbolically at the heart of the EU project, and that has punched above its weight when it comes to taking on leading roles such as the presidency of the European Council. But diplomats say desperate times call for desperate measures. Ukraine faces a budget shortfall next year of €71.7 billion, and will have to start cutting public spending from April unless it can secure the money. U.S. President Donald Trump has again distanced himself from providing American support. Underscoring the high stakes, EU ambassadors are meeting three times this week — on Wednesday, Friday and Sunday — for talks on the Commission’s proposal for the loan, published last week.   PLAN B — AND PLAN C — FOR UKRAINE The European Commission put forward one other option for funding Ukraine: joint debt backed by the EU’s next seven-year budget. Hungary has formally ruled out issuing eurobonds, and raising debt through the EU budget to prop up Ukraine requires a unanimous vote. That leaves a Plan C: for some countries to dig into their own treasuries to keep Ukraine afloat. That prospect isn’t among the Commission’s proposals, but diplomats are quietly discussing it. Germany, the Nordics and the Baltics are seen as the most likely participants. But those floating the idea have a warning: The most significant benefit conferred by EU membership to countries around the bloc is solidarity. By forcing some member countries to carry the financial burden of supporting Ukraine alone, the bloc risks a serious split at its core. Germany in future may not choose to prop up a failing bank in a country that doesn’t stump up the cash for Kyiv now, the thinking goes. “Solidarity is a two-way street,” a diplomat said. For sure, there is another way — but only in theory. De Wever’s fellow EU leaders could band together and pass the “reparation loan” plan via so-called qualified majority voting, ignoring Belgium’s rejections and just steamrollering it through. But diplomats said this is not being seriously considered. Bjarke Smith-Meyer and Gregorio Sorgi contributed reporting.

BRUSSELS — France and Italy can breathe a sigh of relief after the EU’s statistics office signaled that the financial guarantees needed to back a €210 billion financing package to Ukraine won’t increase their heavy debt burdens. Eurostat on Tuesday evening sent a letter, obtained by POLITICO, informing the bloc’s treasuries that the financial guarantees underpinning the loan, backed by frozen Russian state assets on Belgian soil, would be considered “contingent liabilities.” In other words, the guarantees would only impact countries’ debt piles if triggered. Paris and Rome wanted Eurostat to clarify how the guarantees would be treated under EU rules for public spending, as both countries carry a debt burden above 100 percent of their respective economic output. Eurostat’s letter is expected to allay fears that signing up to the loan would undermine investor confidence in highly indebted countries and potentially raise their borrowing costs. That’s key for the Italians and French, as EU leaders prepare to discuss the initiative at a summit next week. Failure to secure a deal could leave Ukraine without enough funds to keep Russian forces at bay next year. The Commission has suggested all EU countries share the risk by providing financial guarantees against the loan in case the Kremlin manages to claw back its sanctioned cash, which is held in the Brussels-based financial depository Euroclear. “None of the conditions” that would lead to EU liability being transferred to member states “would be met,” Eurostat wrote in a letter, adding that the chances of EU countries ever paying those guarantees are weak. The Commission instead will be held liable for those guarantees, the agency added. Germany is set to bear the brunt of the loan, guaranteeing some €52 billion under the Commission’s draft rules. This figure will likely rise as Hungary has already refused to take part in the funding drive for Ukraine. The letter is unlikely to change Belgium’s stance, as it wants much higher guarantees and greater legal safeguards against Russian retaliation at home and abroad. The biggest risk facing the Commission’s proposal is the prospect of the assets being unfrozen if pro-Russia countries refuse to keep existing sanctions in place. Under current rules, the EU must unanimously reauthorize the sanctions every six months. That means Kremlin-friendly countries, such as Hungary and Slovakia, can force the EU to release the sanctioned money with a simple no vote. To make this scenario more unlikely, the Commission suggested a controversial legal fix that will be discussed today by EU ambassadors. Eurostat described the possibility of EU countries paying out for the loan as “a complex event with no obvious probability assessment at the time of inception.”

Giorgia Meloni’s Brothers of Italy party is picking a fight with the country’s influential central bank over gold reserves, stepping up a conflict between the government and the country’s technocratic elite. Last month, Lucio Malan, who is chief whip for the Brothers of Italy in the Senate and a close ally of Meloni, introduced an amendment to the 2026 budget that would assert the Italian state’s ownership of close to €290 billion worth of gold reserves held by the Bank of Italy.  At first glance, it seems clear enough why this amendment came into being. Italy has a staggering amount of debt on its books, around 140 percent of the national gross domestic product, and is under strict EU orders to rein in its deficit, resulting in a perennial budget squeeze.  So it might seem logical to raid the world’s third-largest reserve of gold to pay down Europe’s second-largest debt pile. The temptation to do so has been getting stronger by the day: The value of the Bank’s hoard has risen 60 percent over the past year, thanks to a global rally driven largely by other central banks’ buying. But as usual in Italy, it’s not so simple. For one, the amendment doesn’t imply putting the gold to any specific use, but merely claims that the gold is property of the Italian people. “Nothing is going to be transferred,” Malan himself told POLITICO over the weekend. “That gold has always belonged to the Italian people, and that’s going to stay the same.” He pushed back at “even the most distant hypothesis that even the smallest part of the gold reserves are going to be sold off.”  Just as well. Three previous prime ministers — Romano Prodi, Silvio Berlusconi and Giuseppe Conte — have all had a sniff at similar schemes to bring the gold under more direct government control. But those schemes — the last of which was only six years ago — all foundered on the objections of the European Central Bank. The ECB published a withering opinion on the legality of the proposal on Wednesday, bluntly reminding Rome that the EU Treaty gives the Eurosystem exclusive rights over holding and managing the foreign reserves of those countries that use the euro (and pointing out that it said exactly the same thing six years ago). “This proposal has no chance of materializing,” said Lucio Pench, a professor specializing in economic governance and a fellow at the think tank Bruegel, pointing to the “clear conflict” with the EU treaty. But if the amendment is essentially just gesture politics, the question arises — what exactly is its purpose? A SHOT ACROSS THE BOW Some see in it a warning shot at the Bank of Italy, arguing that Malan, as Meloni’s chief Senate whip, is unlikely to have acted without the premier’s consent (Malan himself didn’t comment on whether Meloni approved the amendment). In the corridors of the Bank itself, behind its neoclassical facade on Via Nazionale in the heart of Rome, the move prompted consternation at the highest levels.  “I can tell you that people at the bank are furious,” fumed one official, adding that the proposal is illegal under EU law. “Our government — even if made up of thieves — cannot steal from the central bank, even if it writes it into a law.” Lucio Malan, a close ally of Meloni, introduced an amendment to the 2026 budget that would assert the Italian state’s ownership of close to €290 billion worth of gold reserves held by the Bank of Italy. | Simona Granati/Getty Images The Bank of Italy declined to comment on that point, but several Bank officials admitted privately that the move is consistent with a growing sense of antagonism from Meloni’s government. The Bank has always drawn the ire of the populist right, which blames it variously for the erosion of real wages over three decades and for the fall of the late Silvio Berlusconi.  But such antagonism is also consistent with a broader trend across the Western world, where deeply indebted governments are leaning on their central banks, as fiscal needs become more pressing and as dissatisfaction with the technocratic management of the economy grows. U.S. President Donald Trump’s attacks on the Federal Reserve this year have been the clearest example of that but, as one ECB official told POLITICO, the “independence of central banks is not only the problem of the U.S. — there is some encroachment globally happening.” There have been signs that the once close relations between Meloni the Bank’s governor Fabio Panetta — whom she brought home expressly from ECB headquarters in Frankfurt — have cooled. Indeed, Panetta was initially derided by some within the Bank for his apparent deference to the premier. However, some officials believe that relationship was strained when the Bank’s head of research, Fabrizio Balassone, criticized a government budget draft last month, suggesting that tax cuts aimed at the middle classes were more beneficial to wealthy Italians than poor ones. Bank officials maintained the analysis was purely technical and apolitical — “It was, like, two plus two,” one said in defense of Balassone — but it caused a storm in the right-wing, Meloni-supporting press.  The Bank’s leadership worried that the government was not respecting the 132 year-old institution’s “traditions of independence,” said another. Others see the amendment as being of a piece with a broader struggle against Italian officialdom: Francesco Galietti, a former Treasury official and the founder of political risk consultancy Policy Sonar, noted that in recent months, Meloni has pushed through a bill to rein in what she sees as a politicized judiciary, and also clashed with the head of state, President Sergio Mattarella, over an article that suggested he was plotting to prevent her from being reelected. Malan himself insisted that the gold initiative was not directed “against anybody at all.” He nevertheless described the move as emblematic of the Brothers of Italy’s “battle” — without elaborating. BROADER PLAY  Toothless though the bill is now, it still represents an interesting test case for how robustly the EU is willing to defend its laws against national governments who, across the continent, are becoming more and more erratic as they struggle with the constraints of economic stagnation and demographic decline. Earlier this year, the European Commission stood by while Meloni’s government strong-armed UniCredit, one of Italy’s largest banks, into abandoning a takeover that didn’t suit it. EU antitrust authorities only launched an infringement procedure after UniCredit dropped its bid in frustration. Reports also suggest that pressure from Rome is set to scupper a planned merger between the asset management arm of Generali, Italy’s largest insurer, with a French rival, out of fear that the new company would be a less reliable buyer of Italian government debt. If unchallenged, the latest initiative could soon become an existential challenge for the Bank of Italy, said a former official who maintains close connections to Bank leadership. “If you take the gold from the Bank of Italy, it no longer has any reason to exist,”he said. And while Governor Panetta collaborated happily with Meloni at first, “there’s always a limit,” the official said. “When it comes to independence, that’s where it ends — this is only the beginning of a war.” This article has been updated to include the ECB’s legal opinion.

LONDON — In February Britain’s cash-strapped Labour government cut international development spending — and barely anyone made a noise. The center-left party announced it would slice the country’s spending on aid down to only 0.3 percent of gross domestic income — from 0.5 percent — in order to fund a hike in defense spending. MPs, aid experts and officials have told POLITICO that the scale of the cuts is on a par with — or even exceeding — those of both the previous center-right Conservative government or the United States under Donald Trump. This leaves Britain’s development arm, once globally envied as a vehicle for poverty alleviation, a shadow of its former self. The move — prompted by U.S. demands to up its NATO spending, and mirroring the Trump administration’s move to gut its own USAID development budget — shocked Labour’s progressive MPs, supporters and backers in the aid sector. But unlike attempted cuts to British welfare spending, the real-world backlash was muted, with the resignation of Britain’s development minister prompting little further dissent or change in policy. There was no mutiny in parliament, and only limited domestic and international condemnation outside of an aid sector torn between making their voices heard — and keeping in Whitehall’s good books over slices of the shrinking pie. Some fear a return grab over the aid budget could still be on the cards — but that the government will find that there is little left to cut. Gideon Rabinowitz, director of policy and advocacy at Bond, the U.K. network for NGOs, warned that, instead of “reversing the cuts by the previous Conservative government, Labour has compounded them, and lives will be lost as a result.” “These cuts will further tarnish the U.K.’s reputation as it continues to be known as an unreliable global partner, breaking Labour’s manifesto commitment,” he warned. “The Conservatives started the fire, but instead of putting it out, this Labour government threw petrol on it.” ‘IT WAS THE PERFECT TIME TO DO IT’ When Prime Minister Keir Starmer announced the cut to international aid — a bid to save over £6 billion by 2027 — Labour MPs, including those who worked in the sector before being elected, were notably silent. The move followed a 2021 Conservative cut to aid spending — from 0.7 percent in the Tory brand-rebuilding David Cameron years down to 0.5 percent. At the time, Labour MPs had met that Tory cut with howls of outrage. This time it was different. Some were genuinely shocked, while others feared retribution from a Downing Street that had flexed its muscles at MPs who rebelled on what they saw as points of conscience. “No one was expecting it, so there was no opportunity to campaign around it,” said one Labour MP. “Literally none of us had any idea it was coming.” Remaining spending is largely mandatory contributions to organizations such as the World Bank. | Daniel Slim/AFP via Getty Images The same MP noted that there are around 50 Labour MPs from the new 2024 intake who had some form of development background before coming into parliament. Yet they were put “completely under the cosh” by Downing Street and government whips. “It was the perfect time to do it,” the MP said. A number of MPs who might have been vocal have since been made parliamentary private secretaries — the most junior government role. “They have basically gagged the people who would be most likely to be outspoken on it,” the MP above said. The department’s ministerial team is now more likely to be loyal to the Starmer project. “I just felt hurt, and wounded. We were stunned. None of us saw it coming,” said one MP from the 2024 cohort, adding: “They priced in that backlash wouldn’t come.” But they added: “If we were culpable so were NGOs, too inward-looking and focused on peripheral issues.” The lack of outcry from MPs would, however, seem to put them largely in step with the wider British public. Polling and focus groups from think tank More in Common suggest that despite the majority of voters thinking spending on international aid is the right thing to do in a variety of circumstances, only around 20 percent of the public think the budget was cut too much.  The second new-intake Labour MP quoted above said the policy was therefore an “easy thing to sell on the doorstep,” and “in my area, there’s not going to be shouting from the rooftops to spend more money on aid.” DIMINISHED AND DEMORALIZED The cuts to aid come at a time when Britain’s Foreign Office is undergoing a radical overhaul. While the department describes its plans as “more agile,” staff, programs and entire areas of focus are all ripe for cuts to save money. The department is looking to make redundancies for around 25 percent of staff based in the U.K. MPs have voiced concern that development staff will be among the first to make the jump due to the government’s shift away from aid. The department insists that no final decisions have been taken over the size and shape of the organization. Major cuts are expected across work on education, conflict, and WASH (Water, Sanitation, and Hygiene.) The government’s Integrated Security Fund — which funds key counter-terror programs abroad — is also looking to scale back work abroad which does not have a clear link to Britain’s national security. The British Council — a key soft-power organization viewed as helping combat Chinese and Russian reach across the world — told MPs it is in “real financial peril” and would be cutting its presence in 35 of the 97 countries it operates. The BBC’s World Service is seeing similar cuts to its global reach. The Independent Commission for Aid Impact (ICAI), the watchdog for aid spending, is also not safe from the ax as the government continues its bonfire of regulators. The FCDO did not refute the expected pathway of cuts. Published breakdowns of spending allocations for the next three years are due to be published in the coming months, an official said. A review of Britain’s development and diplomacy policies conducted by economist Minouche Shafik — who has since been moved into Downing Street — sits discarded in the department. The government refuses to publish its findings. Aid spending was spared a repeat visit by Chancellor Rachel Reeves in her government-wide budget last month — but that hasn’t stopped MPs worrying about a second bite. | Pool Photo by Adrian Dennis via Getty Images The second 2024 intake MP quoted earlier in the piece said that following the U.S. decisions on aid and foreign policy “there was an expectation that the U.K., as a responsible international partner, as a leader on a lot of this stuff, would fill the gap to some extent, and then take more of a leadership role on it, and we’ve done the opposite.” NOTHING LEFT TO CUT Aid spending was spared a repeat visit by Chancellor Rachel Reeves in her government-wide budget last month — but that hasn’t stopped MPs worrying about a second bite. While few MPs or those in the aid sector feel Britain will ever return to the lofty heights of its 0.7 percent commitment, they predict there will be harder resistance if the government comes back for more. “I don’t think they’re going to try and do it again, as there’s no money left,” the second 2024 intake MP said. But they pointed out that a large portion of the remaining aid budget is spent on in-country costs such as accommodation for asylum seekers. Savings identified from the asylum budget would be sent back to the Treasury, rather than put back into the aid budget, they noted. Remaining spending is largely mandatory contributions to organizations such as the World Bank or the United Nations and would, they warned, involve “getting rid of international agreements and chopping up longstanding influence at big international institutions that we are one of the leading people in.” The United Nations is already facing its own funding crisis as it struggles to adjust to the global downturn in aid spending. British diplomat Tom Fletcher — who leads the UN’s humanitarian response — said earlier this year that the organization has been “forced into a triage of human survival,” adding: “The math is cruel, and the consequences are heartbreaking.” The government still has a commitment to returning to 0.7 percent of GNI “as soon as the fiscal circumstances allow.” The tests for this ramp back up were set out four years ago. Britain must not be borrowing for day-to-day spending and underlying debt must be falling. The last two budgets have forecast that the government will not meet these tests in this parliament. FARAGE CIRCLES In the meantime, Labour’s opponents feel emboldened to go further. Both the Conservatives and Reform UK have said that they would further cut the aid budget. The Tories have vowed to slice it down to 0.1 percent of GNI, while Nigel Farage’s Reform UK is eyeing fresh cuts of at least by £7-8 billion a year. A third 2024 Labour MP said that there was a degree of pressure among some colleagues to match the Conservatives’ 0.1 percent pledge. Though no country has gone as far as Uganda’s Idi Amin in setting up a “save Britain fund” for its “former colonial masters,” Britain’s departure on international aid gives space for other countries wanting to step up to further their own foreign policy aims. The space vacated by Britain and America has prompted warnings that China will step in, while countries newer to international development such as Gulf states could try and fill the void. Many of these nations are unlikely to ever fund the same projects as the U.K. and the U.S., forcing NGOs to look to alternate donors such as philanthropists to fund their work. “There’ll be a big, big gap, and it won’t be completely filled,” the second new intake MP said. An FCDO spokesperson said the department was undergoing “an unprecedented transformation,” and added: “We remain resolutely committed to international development and have been clear we must modernize our approach to development to reflect the changing global context. We will bring U.K. expertise and investment to where it is needed most, including global health solutions and humanitarian support.”

BRUSSELS — European governments are accusing Belgium of making excessive demands for “blank check” protection in case the Kremlin sues over the deployment of €140 billion of frozen Russian assets held in Brussels. The governments’ reluctance could derail negotiations on an EU plan to lend those immobilized assets to Ukraine ahead of a crunch summit in December. The European Commission is on the verge of unveiling the legal framework for the loan in a race against time to ensure Ukraine’s war chest doesn’t run bare in April. EU leaders will have their say when they meet in mid-December. “We are advancing our work to meet Ukraine’s financial needs,” Commission President Ursula von der Leyen posted on X on Monday. “We have made good progress, and we plan to table our legal proposals this week.” The so-called reparations loan is hugely contentious with Belgium’s government, as it would use the cash value of frozen Russian state assets on Belgian soil to finance Ukraine. Amid fears of Russian retaliation, Belgian Prime Minister Bart De Wever insists that EU governments give Belgium cover with financial guarantees that exceed the €140 billion and that can be paid out within days. He also wants the lifespan of these guarantees to outlast the EU’s sanctions against Russia. Amid fears of Russian retaliation, Belgian Prime Minister Bart De Wever insists that EU governments give Belgium cover with financial guarantees that exceed the €140 billion and that can be paid out within days. | Emile Windal/BELGA MAG/Belga/AFP via Getty Images While European governments are open to guaranteeing a pre-agreed figure, they are reluctant to sign up to what they describe as a “blank check.” Four EU diplomats told POLITICO that they cannot accept De Wever’s request because it would put their country’s financial viability at the whim of a court ruling — potentially exposing them to billions of euros of repayments years after the war in Ukraine ends. “If [the guarantees] are infinite and without limits, then what are we getting ourselves into?” said an EU diplomat who, like others quoted in this story, was granted anonymity to speak freely. The question of how comprehensive the national guarantees should be is shaping up to be among the hardest in the negotiations. “For many member states, it’s politically difficult to give this blank check,” said a second EU diplomat. They cautioned, however, that it is unlikely that those safety nets will ever be used because the EU’s scheme is legally safe. In order to secure political buy-in, the Commission has shown some EU ambassadors sections of its legal proposal — but the specific amount of the guarantees was left blank. If there is no progress, the most likely alternative is to issue more EU debt to cover Ukraine’s budget shortfall. But the idea is unpopular among most EU governments because it involves using taxpayer money. Speaking to reporters on the margins of a meeting of EU defense ministers on Tuesday, the EU’s foreign policy chief, Kaja Kallas, showed understanding for Belgium’s predicament — but fell short of suggesting a way forward. “I don’t diminish the worries that Belgium has, but we can address those, shoulder those and work on a viable solution,” she said.

PARIS — France’s business community is rushing to make inroads with the National Rally, the far-right party tipped to win the Elysée Palace in 2027. Their goal is to establish a direct line with the likes of Marine Le Pen and Jordan Bardella, who have at times struggled to articulate a coherent economic vision for France, the eurozone’s second-biggest economy. The lobbying effort represents a marked change of heart for France’s entrepreneurial elite, who for years have been deeply suspicious of a populist party they saw as economically illiterate rabble-rousers. Give the National Rally’s robust showing in polls, France Inc. now feels it has little choice but to bend the ears of the anti-immigration party, pressing it to adopt more a market-friendly agenda. It’s a charm offensive that has played out both behind closed doors and at high-profile events like the Paris Air Show, the influential business lobby Medef’s conference on Roland Garros’ center court and at a lunch with the entrepreneurial association Ethic. The business community’s strategy offers a strong sign of how far France’s political fault lines have shifted. The National Rally is no longer a fringe player, so business leaders are now making a concerted effort to sound them out and, hopefully, influence their economic worldview, said a former government adviser now working in the private sector. And the party itself is keen to beef up its ties and bona fides with the business community. “The last year has been a real tipping point,” said a senior manager at a French firm listed on the benchmark CAC40 stock index who, like others quoted in this piece, was granted anonymity to candidly discuss private discussions. “Business leaders, industry lobbies suddenly thought they are on the threshold of power. Let’s meet them and perhaps convert them,” the manager said. Some entrepreneurs have pinned their hopes on Bardella, the National Rally’s plan B candidate for the 2027 presidential election for if an appeal court fails to overturn Le Pen’s ban from standing in elections after being found guilty of embezzlement. Bardella is seen as being more pro-business than Le Pen, even if his recent comments opening talks with the European Central Bank to buy French debt raised eyebrows. Last week, for the first time, a poll showed Bardella would win both rounds of a presidential election against any other candidate. BUDGETARY JEKYLL AND HYDE  Bardella may be doing his best, in the words of the former government adviser, to “polish” the National Rally’s muddled economic platform, but the business community’s concerns have been exacerbated by the party’s actions during France’s ongoing budget negotiations. At times, the National Rally has tried to play the role of conservative adult in the room during the messy legislative process by calling for spending cuts and lowering public debt, but it has also voted for billions in tax hikes and for lowering the retirement age. National Rally lawmakers on Thursday effectively helped pass a bill authored by the far left to nationalize steel giant ArcelorMittal by abstaining from the vote. And before budget talks began, both Le Pen and Bardella were calling for new snap elections that were anathema to the business community. This week, for the first time, a poll showed Bardella winning both rounds of the presidential election against any other candidate. | Carl Court/Getty Images “The National Rally is reckless,” said the chief executive of a French company listed on the CAC40. “What’s really important for us is stability.” The zigzagging of the far right reflects a deep split within the party. Though the National Rally has gone to great lengths to tamp down any hint of a rift, Le Pen and Bardella clearly represent different camps. Le Pen is the anti-immigration, protectionist champion of disaffected voters from France’s northern rust belt, while Bardella is the slick, polished, more economically liberal but equally anti-immigration option who appeals more to those on the French Riviera. “As the National Rally tries to make these two lines coexist, their position on the economics is not very clear,” said Mathieu Gallard, a pollster at Ipsos. The hope among some business leaders is that the National Rally is posturing ahead of the 2027 presidential election, but that once in power would take a less explosive course, following in the footsteps of Italy’s Giorgia Meloni or Greece’s Alexis Tsipras after he was elected on an anti-austerity platform in 2015. “The National Rally is reckless,” said the CEO of a French company listed on the CAC40. “What’s really important for us is stability.” | Jean-François Monier/AFP via Getty Images “What he [Tsipras] had defended during the campaign was untenable, and very quickly, he had to do a sharp U-turn,” said the boss of another CAC40 company.  The National Rally has proven similarly malleable at times, for example, dropping its support for exiting the eurozone after an election defeat in 2017. Figures like Renaud Labaye, a National Rally heavyweight and close ally of Le Pen, offer some suggestion that a French president from the National Rally would follow the Meloni model. “We need a balanced budget,” Labaye told POLITICO. “We want the lowest possible deficit because it’s good for the country and because our sovereignty is at stake.”  Influential figures like François Durvye, a financier who is the right-hand man of far-right billionaire Pierre-Édouard Stérin, and Le Pen’s chief of staff, Ambroise de Rancourt, a former far-left activist who flipped to the far right last year, have been facilitating behind-closed-doors meetings with the business world. According to the previously quoted senior manager at a CAC40 company, in some of those meetings, the National Rally tries to reassure the entrepreneurs that they would be economically reasonable in government.  But business leaders who think they’ll be able to influence the far right if it wins the next presidential election are going to be in for a rough surprise if Bardella or Le Pen win in 2027, respected political commentator Alain Minc warned. “They don’t grasp the sense of power that comes when 15 million people vote for you,” Minc said. Pauline de Saint Remy and Sarah Paillou contributed reporting.