BRUSSELS ― Ursula von der Leyen is facing the starkest challenge to the EU’s accountability in a generation ― with a fraud probe ensnaring two of the biggest names in Brussels and threatening to explode into a full-scale crisis. Exactly a year into her second term as Commission president, von der Leyen, already plagued by questions over her commitment to transparency and amid simmering tension with the bloc’s foreign policy wing, must now find a way to avoid being embroiled in a scandal that dates back to her first years in office. An announcement by the European Public Prosecutor’s Office that the EU’s former foreign affairs chief and a senior diplomat currently working in von der Leyen’s Commission had been detained on Tuesday was seized on by her critics, with renewed calls that she face a fourth vote of no confidence. “The credibility of our institutions is at stake,” said Manon Aubry, co-chair of The Left in the European Parliament. If proven, the allegations would set in motion the biggest scandal to engulf Brussels since the mass resignation of the Jacques Santer Commission in 1999 over allegations of financial mismanagement. Police detained former Commission Vice President Federica Mogherini, a center-left Italian politician who headed the EU’s foreign policy wing, the European External Action Service, from 2014-2019, and Stefano Sannino, an Italian civil servant who was the EEAS secretary-general from 2021 until he was replaced earlier this year. The European Public Prosecutor’s Office said it had “strong suspicions” that a 2021-2022 tendering process to set up a diplomatic academy attached to the College of Europe, where Mogherini is rector, hadn’t been fair and that the facts, if proven, “could constitute procurement fraud, corruption, conflict of interest and violation of professional secrecy.” The saga looks set to inflame already strained relations between von der Leyen and the current boss of the EEAS, EU High Representative Kaja Kallas, four EU officials told POLITICO. Earlier this year Sannino left his secretary-general job and took up a prominent role in von der Leyen’s Commission. An EU official defended von der Leyen, instead blaming the EEAS, an autonomous service under the EU treaties that operates under the bloc’s high representative, Kallas — who is one of the 27 European commissioners. “I know the people who don’t like von der Leyen will use this against her, but they use everything against her,” the official said. Police detained former Commission Vice President Federica Mogherini, a center-left Italian politician who headed the EU’s foreign policy wing, the European External Action Service, from 2014-2019. | Christoph Gollnow/Getty Images “Because President von der Leyen is the most identifiable leader in Brussels, we lay everything at her door,” the official added. “And it’s not fair that she would face a motion of censure for something the External Action Service may have done. She’s not accountable for all of the institutions.” Mogherini, Sannino and a third person have not been charged and their detention does not imply guilt. An investigative judge has 48 hours from the start of their questioning to decide on further action. When contacted about Sannino, the Commission declined to comment. When contacted about Mogherini, the College of Europe declined to answer specific questions. In a statement it said it remained “committed to the highest standards of integrity, fairness, and compliance — both in academic and administrative matters.” ‘CRIME SERIES’ The investigation comes as Euroskeptic, populist and far-right parties ride a wave of voter dissatisfaction and at a time when the EU is pressuring countries both within and outside the bloc over their own corruption scandals. “Funny how Brussels lectures everyone on ‘rule of law’ while its own institutions look more like a crime series than a functioning union,” Zoltan Kovacs, spokesperson for the government of Hungary, which has faced EU criticism, said on X. Romanian MEP Gheorghe Piperea, a member of the right-wing European Conservatives and Reformists group, who was behind a failed no-confidence vote in von der Leyen in July, told POLITICO he was considering trying to trigger a fresh motion. Russian foreign ministry spokesperson Maria Zakharova told state media that EU officials “prefer to ignore their own problems, while constantly lecturing everyone else.” The EU has struggled to shake off a series of corruption scandals since this decade began. Tuesday’s raids come on the back of the 2022 “Qatargate” scandal, when the Gulf state was accused of seeking to influence MEPs through bribes and gifts, as well as this year’s bribery probe into Chinese tech giant Huawei’s lobbying activities in Europe.  Those investigations implicated members of the European Parliament, and at the time Commission officials were quick to point the finger at lawmakers and distance themselves from the scandals. But the Commission hasn’t been immune to allegations of impropriety. In 2012, then-Health Commissioner John Dalli resigned over a tobacco lobbying scandal. Von der Leyen herself was on the receiving end of a slap-down by the EU’s General Court, which ruled earlier this year that she shouldn’t have withheld from the public text messages that she exchanged with the CEO of drug giant Pfizer during the Covid-19 pandemic. Tuesday’s revelations are far more dangerous for the Commission, given the high profile of the suspects and the gravity of the allegations they face. ‘DISASTROUS IMPACT’ After serving as a European Commission vice president and head of the EEAS, Mogherini was appointed rector of the College of Europe in 2020, amid criticism she wasn’t qualified for the post, didn’t meet the criteria, and had entered the race months after the deadline. In 2022 she became the director of the European Union Diplomatic Academy, the project at the heart of Tuesday’s dawn raids. Sannino, a former Italian diplomat, was the EEAS’s top civil servant and is now the director-general for the Middle East, North Africa and the Gulf department in the Commission. Stefano Sannino, a former Italian diplomat, was the EEAS’s top civil servant and is now the director-general for the Middle East, North Africa and the Gulf department in the Commission. | Pool Photo by Johanna Geron via Getty Images Cristiano Sebastiani, the staff representative of one of the EU’s major trade unions, Renouveau & Démocratie, said that if proven, the allegations would have “a disastrous impact on the credibility of the institutions concerned, and more broadly on citizens’ perception of all European institutions.” He said he had received “tens of messages” from EU staff concerned about reputational damage. “This is not good for EU institutions and for the Commission services. It is not good for Europe, it steers attention away from other things,” said a Commission official granted anonymity to speak freely. “It conveys this idea of elitism, of an informal network doing favors. Also, Mogherini was one of the most successful [EU high representatives], it’s not good in terms of public diplomacy.”

STRASBOURG — The United Arab Emirates embarked on a lobbying blitz in Strasbourg this week as the European Parliament prepared to vote on a resolution condemning ongoing atrocities in the Sudanese civil war.   The Emirati delegation held meetings with key MEPs to insist that the UAE is playing a constructive role in Sudan, despite accusations that Abu Dhabi actively backs the Rapid Support Forces (RSF), a notorious militia implicated in ethnic massacres and sexual violence.  Parliament lawmakers ultimately passed a resolution Thursday afternoon that decried Sudan’s devastating civil war, but without mentioning the UAE’s alleged interference in the conflict.   Human rights NGOs, independent media and Sudanese officials have said Abu Dhabi has fueled the conflict by transferring weapons to the RSF as it battles the Sudanese Armed Forces, which are supported by Egypt, for control of the country.  The UAE denies supporting the RSF or interfering in Sudan’s war. A UAE government spokesperson told POLITICO there is zero evidence of interference and rejected any link to the paramilitary group.  The Parliament text — backed by a broad coalition including the conservative European People’s Party (EPP), the center-left Socialists and Democrats (S&D), the right-wing European Conservatives and Reformists, the far-right Patriots, the liberals of Renew and the Greens — condemns the two-year conflict, which has killed tens of thousands of people and plunged 25 million into extreme hunger.   According to three Parliament officials familiar with negotiations between the political factions, language that criticized the UAE’s alleged role in Sudan proposed by the Socialists, Renew and Greens proved to be a red line for the EPP — which was, in turn, supported by groups to its right.   SUPPORTIVE SIGNAL  The resolution drew an unusually assertive diplomatic operation from the Gulf.   Lana Nusseibeh, the UAE’s envoy for Europe, traveled to Strasbourg with an entourage to meet with MEPs and argue that Abu Dhabi is working toward peace in Sudan rather than exacerbating the conflict.   Two officials familiar with the talks told POLITICO that Emirati representatives denied any link to the RSF, while insisting they only wanted peace in Sudan and to be a key mediator for the country.  Abu Dhabi’s delegation was provided a private room inside the European Parliament, next to the hemicycle, to conduct its meetings.   “When foreign dignitaries come to Parliament and ask for a room, we give it to them. Not everyone asks, but if they do and if a room is available, we do,” Parliament President Roberta Metsola’s spokesperson Juri Laas told POLITICO.  Despite the absence of a direct reference to the UAE’s alleged support for the RSF, the Socialists, Renew and the Greens ultimately agreed to support the resolution.   Three people involved in the process said the groups were satisfied with the language negotiated with the EPP and wanted to send a strong signal of support to Sudan.  The Parliament’s resolution eventually condemned the RSF’s “atrocities” in Sudan and says ethnically motivated killings, rape, sexual enslavement and the starvation of civilians could potentially constitute “acts of genocide.”  The text calls for sanctions on the militias involved in the civil war, plus penalties for “financiers and external enablers,” but without naming any other parties to the conflict.  POLITICO reviewed an unofficial document circulated by the UAE ahead of the vote, rejecting allegations that it provided material, funding or political backing to the RSF.  Marit Maij, one of the lead negotiators for the S&D, confirmed she met with the Abu Dhabi delegation “at the request of the UAE” inside the Parliament in Strasbourg.   “We discussed the horrific situation in Sudan,” she said. “During the conversation, I stated that we have information that the Emirates are fueling the war by supporting the RSF.”  The Greens’ negotiator on the file, MEP Nela Riehl, said “there’s nothing in the text that we oppose” but lamented that “things [are] missing,” including a clear mention of the UAE.  The resolution does name-check the UAE as a key party in mediation efforts to achieve peace, along the U.S., Egypt and Saudi Arabia.   SENSITIVE MOMENT  The Emirati lobbying push comes at a sensitive moment in EU-UAE relations.   Brussels is pursuing closer economic ties with the Gulf state and is deep into ambitious free-trade negotiations — which one senior Emirati official, who was granted anonymity to discuss the sensitive discussions, said are progressing at lightning speed.  The UAE downplayed the significance of Nusseibeh’s Strasbourg trip.   A government spokesperson told POLITICO it was part of a routine tour through France, the U.K. and Slovakia “to discuss bilateral relations and issues of mutual interest, including key regional developments.”  Gamaal El Attar, executive director of the Belgian human rights organization IFRD — which itself lobbied heavily on the resolution — characterized the UAE’s efforts as “damage control,” accusing Abu Dhabi of “heavy counter-lobbying” to avoid being singled out.  The Emirati foreign ministry said in a statement it “welcomed the European Parliament’s timely resolution” and praised the fact that it “endorsed the work of the Quad,” the regional grouping the UAE belongs to alongside the U.S., Egypt and Saudi Arabia, which has sought an end to the war. 

BRUSSELS — European governments struck a deal on Wednesday that clears the way for new rules protecting kids from child sexual abuse online. The agreement among countries puts an end to a years-long, heated lobbying fight that pitted privacy groups and even Elon Musk against law enforcement and child rights groups. The proposed law — which is now on track to pass by an April deadline, pending final talks with the European Parliament — would allow online messaging apps to scan content to stop the spread of child sexual abuse material (CSAM) and child grooming, and require platforms to do more to detect and take down content. Child rights groups say the deal struck by countries will go some way toward tackling the problem of child abuse online, even if it doesn’t go as far as they had hoped. To land an agreement, Danish diplomats who led negotiations in the Council of the EU softened their proposal to steer clear of a controversial “mandatory scanning” clause, which would have forced apps like Signal and WhatsApp to scan their services for illegal content. That idea — labeled “Chat Control” by privacy campaigners, who argued it would open the door to state surveillance — was also fought hard by end-to-end encrypted messaging apps. Signal had threatened to cease its services in Europe if the “Chat Control” proposal had moved forward. The compromise approved by EU ambassadors on Wednesday allows companies to decide voluntarily whether to scan their services, which is the current status quo under a temporary legal exemption that expires in April. It also places fresh obligations on platforms, including mandatory risk assessments. The deal clears the way for the Council to start negotiations with the European Parliament on a final text. Parliament reached its position on the law in 2023. Wednesday’s compromise doesn’t fully please either camp in the lobbying fight. Police and investigators fear illegal content will remain out of sight on end-to-end encrypted applications, while privacy activists say large-scale surveillance of communication will still expand. Privacy activists voiced concerns over the proposal, particularly over how targeted the scanning measures would be — a sign that they’ll continue to pressure negotiators in coming months. Andy Yen, CEO of the Swiss privacy-friendly tech maker Proton, said in a statement it is “vital we all remain vigilant” against attempts to introduce mandatory scanning “through the back door” during the negotiations. Ella Jakubowska, head of policy at digital rights group EDRi, said there’s “a lot still to fix in the Council’s text.” Meanwhile, ECLAG, a coalition of child rights groups, said it is “concerned by the absence of mandatory detection orders” in the Council compromise. Negotiators in the Council and Parliament have a hard deadline of April, when a temporary legislation allowing apps to scan for CSAM expires. The lead negotiator for the Parliament, Spanish lawmaker Javier Zarzalejos, said in a video posted on X that the negotiations are “urgent.” Cyprus will lead negotiations on behalf of the Council starting in January. A Cypriot official said it is “in full awareness of the April deadline.”

When Goldman Sachs boss David Solomon met with Chancellor Rachel Reeves in October, he was given a list of prepared talking points by colleagues to discuss with Britain’s top finance minister. With only one thing on his mind, he ripped up the notes and warned her: Don’t hike bank taxes in the budget. Six weeks on, after Reeves delivered her second fiscal statement on Nov. 26 with no such tax increases, he needn’t have worried too much. Taxing Britain’s mammoth lenders could have raised £8 billion for the exchequer, a huge amount which would have gone a long way to plug the £30 billion hole Reeves needed to fill to stabilize the U.K.’s finances. But while some in the ruling Labour Party would have loved to see financial institutions taxed more, Reeves was never actually going to pull the trigger. Publicly and privately, the lobbying efforts by banks were intense. The CEOs of Lloyds, HSBC, and NatWest all spoke out openly against the suggestion, while other leaders, such as Solomon, issued their warnings behind closed doors. Banks couldn’t rule out a tax hike, particularly after a leaked memo revealed that former Deputy Prime Minister Angela Rayner had urged Reeves to raise the bank surcharge, an extra tax paid by banks on top of corporation tax. Certain think tanks, too, called on Reeves to go big on fat cats. But behind closed doors, as the budget approached, City figures weren’t so concerned. Many cautioned against believing stories that a bank tax was imminent, while others said they simply hadn’t been told either way — therefore weren’t expecting a surprise in the budget. Ultimately, they believed their lobbying was hugely successful toward a government intent on achieving growth and fearful of sending wealth out of the country. One senior bank executive, granted anonymity to speak freely, said bank chiefs “care about two things: How easy is it to hire and fire people in the U.K, and how much tax do we pay in this country?” For banks, their winning arguments were twofold: One, lenders pay £43.3 billion in tax every year at a 46.4 percent tax rate, higher than any other global financial center, according to data from lobby group UK Finance. Two, Reeves has been on a mission of financial deregulation since her party entered No. 10 last year. Banks argued that giving with one hand, by loosening rules, but taking away with the other, by hiking taxes, was contradictory and wouldn’t achieve the growth she so desperately wants. “Reeves has been consistent with her messaging during her tenure,” said Benjamin Toms, bank analyst at RBC Capital Markets. “The government wants to stimulate growth, and Reeves realizes that U.K. banks are the conduit for that growth.” MOVING MARKETS The message appeared to get through to Reeves, even though she declined to publicly rule out hiking bank taxes. That left rumors to intensify over the summer. Two think tanks, Positive Money and IPPR, issued reports backing a tax hike, with both recommending a windfall-style levy on bank profits. The former delivered a petition with 68,749 signatures calling for the move to the chancellor earlier this week. The IPPR report, published at the end of August, was the most impactful, knocking £8 billion off the share prices of FTSE 100 banks the day it was published, with NatWest losing £2.5 billion alone in market cap. The Treasury worked hard to separate itself from the report, with a spokesperson saying afterward that “the chancellor has been clear that the financial services sector is at the heart of our plans to grow the economy,” but it wasn’t enough to quell rumors. “Ultimately, negative press around banks slamming a bank tax and its effect on growth is considered more damaging to the economy than the taxes collected from the banks would bring in,” said Niklas Kammer, equity analyst at Morningstar. Later, it emerged that Reeves “ripped into” members of the think tank after the report was published, per one person in the room at the time. She told the IPPR to think before they publish a report next time, in front of dozens of attendees at a meeting in No. 11 Downing Street in September. While it seemed that gossip around a surcharge hike quietened down after the summer, it was immediately thrust back into the spotlight after the chancellor’s decision to rule out any income tax hikes in the budget, as Reeves began searching around for sources of income to pad her fiscal headroom. Lobbying efforts intensified after the news on income tax broke, causing banks to panic that the move would be back on the table and warn that they’d move business elsewhere. “We suggested in our conversation with government that if the surcharge was to go up, we might be able to move things to the EU,” added the bank executive. After Brexit, banks have been forced to move more of their operations to the continent, buying new offices and hiring further staff, leaving greater possibilities to shift operations away from the U.K. “It’s much easier to move at the margins now than it would have been just five years ago,” they said. But the possibility of raising taxes on banks in Britain was officially ruled out after reports circulated in the days leading up to the budget that Reeves would let them off the hook — if they praise the chancellor’s decisions. Will Howlett, financials analyst at Quilter Cheviot, said it would be a “stretch” to see banks showering the budget with praise given the other tax rises that Reeves did pursue in the fiscal event, along with the cuts to cash ISA limits. But Toms said it was likely “more accurate” that the government was requesting banks not criticize the budget rather than actively praise it. For banks reeling from a huge win, staying quiet won’t be too hard.

Lawmakers in the European Parliament voted on Tuesday to pursue legal action against the European Commission for spiking a highly disputed bill to regulate the licensing of patents. After a lawsuit was filed earlier this month to the Court of Justice of the European Union, lawmakers today voted with 334 MEPs in favor of pursuing the legal action. There were 294 votes against and 11 abstentions. The standard essential patents (SEPs) regulation sparked a fierce lobbying war between patent holders — including Nokia, Ericsson, Qualcomm and Huawei — and the companies that license their tech, ranging from phone to carmakers. The Parliament had agreed a position on the file but the Commission said in February that it planned to scrap its proposal to regulate the licensing of certain patents, arguing there was no “foreseeable agreement” with the Council, where negotiations had become drawn out. The Parliament’s legal affairs committee voted earlier this month to sue the Commission. President Roberta Metsola put the lawsuit to a final plenary confirmation amid pushback from a right-wing majority. The case can now move ahead to the EU’s top court in Luxembourg, which will have to decide whether the Commission was within its rights to scrap the proposal or whether it overstepped its powers. “The Commission’s right to withdraw a proposal … cannot be used as a political instrument to short-circuit Parliament’s work or to enforce a deregulation agenda from above,” German Social Democrat René Repasi, who led the motion in committee, has said. “This is not in line with how the democratic processes in the European Union are meant to function.” The Commission didn’t immediately respond to a request for comment.

LONDON — U.K. Energy Secretary Ed Miliband was on the world stage last week demanding high-polluting fossil fuels are phased out of global energy systems.  “This is an issue that cannot be ignored,” he told the COP climate summit in Brazil.  Yet this week could see his own government water down commitments to phase out fossil fuels. Insiders say a drawn-out fight over the future of drilling in the U.K.’s Scottish oil and gas heartlands is finally reaching its conclusion.  It is a row which has split the governing Labour Party, pitted Miliband against the all-powerful Treasury, and will, some of Labour’s own MPs fear, undermine the government’s climate credentials and expose the party to even more political pain.  “If a progressive government with a big majority, in the country that started the Industrial Revolution, can’t hold firm on new fossil fuel drilling,” worried one Labour MP, “how can we expect developing countries to do what’s needed to tackle climate change?”  The MP, along with other officials and experts in this piece, was granted anonymity to give a frank view on sensitive political planning.  The decisions follow months of full-throated lobbying by fossil fuel companies, who argue tough action against high-polluting oil and gas firms will hit jobs and derail the wider economy — but also by green campaigners, desperate to hold Labour to its promises to make the U.K. a global climate leader.  And there is a growing risk for ministers that, as the government searches for a compromise to satisfy the party and balance fiscal demands with net-zero ambitions, it will land on a solution which pleases no one at all.  LICENSES, TAXES, ELECTIONS Two government figures and three figures from industry told POLITICO they expect minsters to announce a decision on North Sea licenses on Wednesday, to coincide with the Budget.  Labour swept to power last year on a promise to ban new oil and gas exploration licenses in the declining basin, as well as maintaining taxes on high polluters in the North Sea.  But there is likely to be a “pragmatic” shift on North Sea policy, one of the government figures said. Officials are looking at allowing oil and exploration on existing fields (so-called “tiebacks”) and potentially loosening rules on investment relief, they said.  Fossil fuel lobbyists argue that, without this sort of help, thousands of jobs and billions in investment are at risk.  “There is a sense that the industry are not crying wolf this time,” the same government figure said.  The tax is currently set to remain until 2030, but Chancellor Rachel Reeves is considering scrapping it earlier, in a bid to drive the U.K.’s stalling economy. | Pool photo by Leon Neal via Getty Images They added that ministers will likely be making decisions with Scottish elections in May firmly in mind — conscious that the future of the oil and gas sector is a priority for many Scottish voters already worried about the decline of the North Sea economy, embodied in the closure of Grangemouth refinery.  Approving tiebacks would allow Miliband to say he has stuck to his election pledge while still expanding opportunities for oil and gas producers.  The Treasury is also due to decide the future of the Windfall Tax on oil and gas companies before the end of the year — a levy on profits hated by the industry but used to fund Miliband’s rush to move the U.K. to a cleaner energy system.   The tax is currently set to remain until 2030, but Chancellor Rachel Reeves is considering scrapping it earlier, in a bid to drive the U.K.’s stalling economy.  Lobby group Offshore Energies UK (OEUK) claims the country could enjoy a £40 billion economic boost if the Windfall Tax was ditched as soon as next year.   A fourth industry figure said a decision on whether to approve drilling on the controversial Rosebank gas field — which already holds a license — could also come this week, although the field’s developers think it is more likely in the new year. Officials from Miliband’s Department for Energy Security and Net Zero summoned OEUK for a meeting Friday in Whitehall, according to two of the industry figures. ‘POLITICALLY STUPID’  The idea of softening fossil fuel policy is alarming some on Labour’s backbenches.  Referencing the pledge not to allow new drilling licenses, Barry Gardiner, an environment minister under Tony Blair and now a member of parliament’s Environmental Audit Committee, said: “It is a commitment that I am sure the chancellor will wish to honor, given that yet another broken promise or U-turn would be as politically stupid as it would be environmentally illiterate.”  The pledge, he said, had “sat happily with the U.K’s commitment at the last COP to phase out fossil fuels.” Fellow Labour MP Clive Lewis said any watering-down would be a “mistake.”   “It would signal that the government is more focused on reassuring fossil-fuel interests than giving the public a credible plan for energy security and climate stability. Voters aren’t blind to that,” he said.  But their views are not shared across the party.  Mary Glindon, a Labour MP in the former industrial city of Newcastle, hosted OEUK in parliament earlier this month.  “The truth is that our once proud North Sea energy industry is shedding about one thousand jobs a month. … Without renewed investment, I fear for our communities and the prosperity of our young people,” she told an audience of MPs, lobbyists and business leaders.  OEUK, in a letter to Prime Minister Keir Starmer this September, seen by POLITICO, said that “without fiscal reform, changes to the regulatory framework and licensing will be insufficient on their own to transform the outlook for the industry.” | Pool Photo by Henry Nicholls via Getty Images Policy in the North Sea must show workers “that we are on their side,” Scottish Labour MP Torcuil Crichton told POLITICO earlier this year.   Gary Smith, general secretary of GMB Union — traditionally a champion of Labour which represents thousands of oil and gas workers — told the same OEUK event: “This is a crucial moment in terms of the Budget, and if the government gets this wrong on the future that the North Sea, it will be a strategic, long-term disaster for this country.”   A DESNZ spokesperson said: “We will implement our manifesto position in full to not issue new licences to explore new oil and gas fields. “Our priority is to deliver a fair, orderly and prosperous transition in line with our climate and legal obligations, with the biggest ever investment in offshore wind and first of a kind carbon capture and storage clusters.” PRESSURE ALL AROUND Even if the government is willing to upset its greenest backbenchers, it still won’t be enough to win round the biggest backers of oil and gas.  OEUK, in a letter to Prime Minister Keir Starmer this September, seen by POLITICO, said that “without fiscal reform, changes to the regulatory framework and licensing will be insufficient on their own to transform the outlook for the industry.” Robin Allan, chairman of the lobby group BRINDEX, also argues potential changes to the industry’s fiscal and licensing regimes would do little to revive the industry.  “The tweaking and tinkering of existing policies will not make the North Sea an investable basin,” he said. To restore business confidence, he argued, “wholesale reform is needed.”  There is nervousness inside Labour that attempts to navigate these pressures will leave the government, already struggling with voters, even more vulnerable.  The Green Party, helmed by media-savvy new leader Zack Polanski, is rising in the polls.   Labour would be “wriggling out” of their climate commitments if they pushed ahead with tiebacks and Windfall Tax reforms, argued Green MP and the party’s Westminster leader Ellie Chowns. It would be “politically mad to allow new drilling licences when the Greens are surging in the polls,” argued the same Labour MP quoted at the top of this article.  “The growing support for the [Green Party] shows that people want honesty, consistency and a transition [to net zero] that protects workers and communities rather than corporate profits,” said Clive Lewis.  And the pressure would not just come from the left.   Nigel Farage’s poll-topping Reform UK has promised to let oil and gas companies drill the North Sea basin until it is dry.  The Conservatives, too, are staking out a much stronger line backing fossil fuels.  “Anything short of an overturn of the [Windfall Tax] and … a complete overturn of the [licensing] ban is going to fall far short of what the industry needs at this time,” said Tory Shadow Energy Minister Andrew Bowie.  Think tanks close to Miliband’s own left flank of politics are getting restless.   Softening the regime in the North Sea might appear to have political dividends by heading off the Tories and Reform, said Alex Chapman, senior economist at the New Economics Foundation, but Labour should resist it. “I think it would be a terrible, terrible decision,” he said. 

A major five-year effort to build a technology base for Europe free of U.S. influence foundered amid conflicting national strategies and powerful corporate lobbying. As Europe’s leaders once again discuss tackling American tech dependence, those involved in the project to build a European cloud warn against repeating past mistakes. The Gaia-X initiative was “a crushing failure, a colossal waste of time, and just as many years gained for the hyperscalers — in other words, an industrial disaster,” said Yann Lechelle, a former CEO of French cloud champion Scaleway and one of the founding members of the initiative who quit in frustration in 2021, describing it as the “best decision ever.” The industry-led project was born in 2019 from a Franco-German drive to forge a “European industrial policy fit for the 21st Century” — a rallying cry that brought German and French companies together with top political backing to create a data infrastructure. The endgame goal of Gaia-X, named after the Greek goddess of Earth, was to “establish data sovereignty in Europe” and “counteract monopolistic tendencies.” As political momentum once again swings behind digital sovereignty, leaders will gather in Berlin on Tuesday to talk about how to become less dependent on foreign-owned technology. POLITICO spoke to both current and former Gaia-X officials, both on and off the record, about the lessons they learned that could prove valuable. Those conversations illuminated an initiative that failed to help Europe’s own digital ecosystem take root because it was weighed down by politics, bureaucracy and the interference of precisely the American and Chinese tech titans it was meant to challenge. Despite a fast-growing market for cloud computing services that underpin the internet, the global share of European cloud providers has continued to fall, dwarfed by the dominance of Amazon, Microsoft and Google. One of Gaia-X’s initial success stories, called Agdatahub, which was touted as a triumph for farming data, went bankrupt last year. “I joined Gaia-X because I believed in the original mission. I left Gaia-X because I didn’t believe it was going in the original direction,” said its former CEO, Francesco Bonfiglio. FRANCO-GERMAN DIVIDES Misalignment among the founding companies on the mission of Gaia-X became apparent early on, consistent with the traditional divergence in Paris and Berlin over tech sovereignty. In Paris, sovereignty was about backing local champions and breaking reliance on the U.S., while Berlin focused on protecting Europe without severing important trade ties. “The influence of political happenings inside the association was evident. Sometimes they were clashing,” said Bonfiglio, describing how it pitted a “historically more protectionist” France against a “fluctuating” Germany. American cloud giants Amazon, Microsoft and Google, as well as Chinese tech giants Huawei and Alibaba, are all members of Gaia-X. | Jonas Roosens/Getty Images Everybody “interpreted” Gaia-X as they wanted to, he said. The former CEO described how this divergence in expectations and a lack of a “clear or common” definition of sovereignty — let alone a shared understanding of what it would take to get there — made his task extremely difficult. “France turned it into a very political issue, whereas the Germans treated it more as a technical matter,” said another founding member of Gaia-X, who is still part of the initiative and was granted anonymity to speak candidly. The interests were at odds from day one, founding member Lechelle recalled, which was part of the reason the initiative would never deliver “the fantasy of a European cloud Airbus.” The Germans came on board with the idea to create data sovereignty, by shielding the data of their citizens and industries from foreign snooping and legal control, he said, adding: “Atlanticist as they may be, they were totally fine with the idea of depending on Microsoft.” Meanwhile, the French pushed a more self-serving vision, hoping to see Europe become self-reliant, from infrastructure all the way to software. That’s how the mission to create a “federated cloud infrastructure” came to life. But that “staggering complexity” would soon turn into an “unmanageable mess,” said Lechelle. Current CEO Ulrich Ahle, who joined in 2023, pushed back — saying Gaia-X is far from a “failure.” It has united the industry — both large and small players — around tangible deliverables, such as federated data spaces and compliance labels, he said. “At the beginning, some people thought that Gaia-X would be the European hyperscaler as the competition to Amazon, Google, Microsoft, Alibaba and so on,” he said, but in fact, “it is more about creating a way to handle data in a European way.” “The results we’re providing and the real business benefits these interoperable data spaces are creating are more and more visible,” he said, highlighting the example of a data space based on Gaia-X standards that French energy company EDF will use to securely coordinate the construction of new nuclear sites. BACK-DOOR LOBBYING As Gaia-X grew and set out to define Europe’s blueprint for secure data sharing, it opened its doors to industry participants from beyond Europe in a bid to push new standards on the global stage. While board seats remained reserved for EU companies and industry groups, alarm bells grew louder that the project was being hijacked by the very players it was meant to take on. Those firms “steered the entire roadmap,” Lechelle said, throwing money and people at it. “The committees were drowning. They [global players] had the capacity, the bandwidth, but we were already underwater … Americans have full-time lobbyists and massive budgets. Their job is basically to derail any initiative they don’t like.” American cloud giants Amazon, Microsoft and Google, as well as Chinese tech giants Huawei and Alibaba, are all members of Gaia-X. In 2021, the annual summit in Milan was sponsored by Huawei and Alibaba, prompting backlash. Some interviewees expressed criticism that the European industry associations and companies on the board were representing the interests of business partners abroad. “I was struggling against many, many forces that were trying to dilute the rules of verification, dilute the efforts,” said Bonfiglio, stressing he was “the CEO of a consensus-based organization where consensus couldn’t be achieved most of the time.” Bonfiglio said he didn’t regret opening up the initiative to foreign players. “The problem is not America vs. Europe,” he said, but “trust” or lack thereof. Letting non-EU providers in was supposed to force them to become more transparent, he argued. “You think you’re good, show us what you have,” was his mantra at the time, he said. He now acknowledges the unavoidable influence of corporate giants in the cloud space. “You don’t need Microsoft, Amazon and Google on the board, because they would be represented by people sitting on the board from European companies. It’s an indirect lobby,” he said. The current member of the association interviewed for this story said the bylaws of Gaia-X should be changed to kick out industry associations from the board, as they play into the hands of tech giants. In response, Gaia-X’s Ahle said that “the strategic directions are given and the strategic decisions are taken in the board of directors.” He touted the initiative’s top-tier certification label — which excludes non-EU companies — as proof that it took decisions that went against U.S. interests. This was something “members like Amazon, Google and Microsoft didn’t like at all,” yet it happened. WHERE NOW As leaders prepare to meet at the high-profile summit in Berlin to debate how far to go in pivoting away from Big Tech, several of the people interviewed for this piece cautioned against repeating past mistakes. While European countries have not yet aligned on a common definition of digital sovereignty — something many see as crucial for real progress — there are signs that Paris and Germany are closer on positioning than they were five years ago. “I admit, I struggled with the term [digital sovereignty] before. I didn’t think it was necessary, but the global situation has changed so dramatically that we Europeans now have to become more sovereign,” German Chancellor Friedrich Merz said Thursday. At the summit, Merz said, “We’ll explore all the possibilities, together with industry representatives, of what we can do not only to become more independent from China, but also, for example, less dependent on the U.S., less dependent on the Big Tech companies. We want to catch up, we want to improve.” Friedrich Merz said, “We’ll explore all the possibilities, together with industry representatives, of what we can do not only to become more independent from China, but also, for example, less dependent on the U.S.” | Harald Tittel/Getty Images And yet — with Germany this month celebrating Google’s decision to invest more than €5 billion in building data centers in the country, a move that Finance Minister Lars Klingbeil described as “exactly what we need right now” — the reality of corporate interests may be hard to address. For Bonfiglio, the lesson from Gaia-X is that ”it is obvious that everybody sitting in the boardroom of an association with such a big and impactful objective tries to protect the interests of their own company.” While Gaia-X may have missed its shot at delivering on its big, original ambitions, Lechelle insists the upcoming Franco-German summit is “a chance to put a finger on the sore spots.” In the meantime, “those who wanted to maintain the status quo have won.”

BRUSSELS — Ursula von der Leyen hasn’t even published her plans to overhaul the EU’s digital laws yet and already the European Parliament is signaling: This shall not pass.   Political groups to the left of von der Leyen’s center-right European People’s Party are coming out against draft proposals for a digital omnibus legislation that reveal how the EU executive is looking to loosen privacy rules, amend its artificial intelligence law, and overhaul data legislation to the benefit of industry — not least American tech giants.   In letters to the European Commission, political groups from center to left barreled into the draft reforms, calling them “extremely worrying,” asking the executive to “reverse course,” and slamming it for what they see as a capitulation to U.S. demands. The backlash puts von der Leyen in a bind. She could opt to change her proposals ahead of the formal presentation next Wednesday, or else she’ll have to seek votes on the far right — yet again — to pass a key part of her political platform. The EPP is already expected to lean on right-wing support to pass its green rules simplification legislation on Thursday due to a lack of support in the center. The Commission also backed down on its budget plans to avert a rebellion of centrist groups in the Parliament, POLITICO reported Sunday.  The digital omnibus draft proposals, obtained by POLITICO last week, showed how the EU executive is looking to ease rules on AI firms under the flagship General Data Protection Regulation (GDPR). It’s looking to create exceptions for AI companies that would allow them to legally process data linked to people’s religious or political beliefs, ethnicity or health data to train and operate their tech, and also wants to redefine categories of personal data, which would relieve swaths of data from the privacy protections they currently enjoy. The proposals also envision tweaks to the EU’s landmark AI law, like delays on fines for watermarked content and exemptions for small businesses. The drafts drew the ire of the center and the left in the Parliament in recent days. Such outcries are exceptional: Parliament groups often refrain from taking a position until a proposal is formally presented. The Greens group, liberal Renew and Socialists and Democrats have all drawn up letters slamming the Commission. The Greens addressed von der Leyen and the Commission’s tech chief Henna Virkkunen, asking them to “reverse course and focus on actual simplification” of tech laws, in a letter shared with POLITICO.   Alexandra Geese, a prominent German member of the Greens group, said the Commission’s plans would “dismantle the protection of European citizens for the benefit of U.S. tech giants.” She said “the Commission should focus on real simplification and streamlining of definitions rather than bending their knee to the U.S. administration.”  The Renew group voiced “strong opposition to certain changes” and called some of the draft tweaks “extremely worrying.” “We would strongly ask you to remove and reconsider those proposed changes before presenting the official proposals,” the group wrote in its letter to von der Leyen and key commissioners, shared with POLITICO. The Greens addressed von der Leyen and the Commission’s tech chief Henna Virkkunen, asking them to “reverse course and focus on actual simplification” of tech laws, in a letter shared with POLITICO.  | Thierry Monasse/Getty Images Italian S&D MEP Brando Benifei, the Parliament’s lead negotiator on the AI Act, said he was “deeply skeptical of reopening the AI Act before it’s fully in force and without impact assessment.” Two dozen lawmakers from The Left, the Greens and S&D also backed a written question drawn up by French left-wing MEP Leïla Chaibi that will be filed this week. It follows the EU executive’s reportedly “engaging” with the Donald Trump administration in the lead-up to the omnibus proposal. In it, lawmakers said: “The European Commission’s apparent willingness to yield to pressure from the White House in this way raises serious concerns about the European Union’s digital sovereignty.”  The S&D came out swinging in a letter on Tuesday, warning the Commission that they’ll oppose “any attempt” to weaken the foundations of the EU’s privacy framework that would “lower the level of personal data protection, or narrow the GDPR’s scope.” The group said Europe’s digital laws at large have “inspired international partners and positioned Europe as a normative power in global tech governance.” RIGHT TO THE RESCUE?  Von der Leyen’s EPP hasn’t yet issued a united statement about the draft digital simplification plans.   Finnish center-right lawmaker Aura Salla — who previously led Meta’s Brussels lobbying office — said earlier she would “warmly” welcome the proposal “if done correctly,” as it could bring legal certainty for AI companies.  The center right, which holds the most seats in the Parliament, could seek support to its right with the right-wing European Conservatives and Reformists and the far-right Europe of Sovereign Nations (ESN) and Patriots for Europe. Piotr Müller, a Polish ECR member, welcomed the Commission’s draft texts: “After years of excessive legislation that has stifled progress, it is five to midnight: We need ambitious deregulation now.” Further to the right, French lawmaker Sarah Knafo from the ESN said it would be a “breath of fresh air for our businesses,” lamenting that “Europe has locked itself into absurd over-regulation in the technology sector, which stifles all innovation.” On the issue of privacy, though, some right-wing lawmakers could turn against the draft idea. The right has previously defended personal privacy and personal freedoms over industry’s interests in some legislative fights. “We need to let our tech players move forward, while remaining vigilant about sovereignty and control over our data,” Knafo said.  Lawmakers on both the left and right will be under fire from powerful privacy lobbyists. Civil society campaigners have sounded the alarm in recent days after the drafts leaked. The Commission is “secretly trying to overrun everyone else in Brussels,” Max Schrems, founder of Austrian privacy group Noyb and a prominent European privacy campaigner, said previously. The proposals also have to make their way through the Council of the EU, where countries are equally divided on whether to touch privacy rules.  Documents seen by POLITICO show that at least four countries — Estonia, France, Austria and Slovenia — are firmly against any rewrite of the GDPR. Germany, usually seen as one of the most privacy-minded countries, came out in favor of big changes to help AI blossom. 

LILLE, France — France’s plan for winning the race to host a European customs watchdog has become clear: Set the pace for the bidding war. POLITICO was among 20 officials from all over Europe on a trip to the northern French city on Tuesday for an in-person look at Lille’s bid to host the new European Union Customs Authority. In what felt like a joyful school trip, visitors toured the agency’s office, where the authority’s future 250 employees would work — a state-of-the-art white building adjacent to the train station and Lille’s Flemish old town. They then took a stroll in the multilingual European school where future officials could send their kids. Invitees even got a guided tour of the city center and tasted local delicacies during a lunch that one of the attendees described as “the heaviest of my life.” Though other cities like Warsaw, Málaga and Porto have made their candidacies official, no other potential host has started this early and campaigned so hard to date (bids are due Nov. 27). France is also likely to benefit from the fact that it has taken a leading role in one of the most pressing issues facing customs authorities today: the flood of cheap goods from China. French officials this week launched a high-profile fight against Shein, moving to suspend the platform in France following allegations that the Chinese fast-fashion e-commerce giant was selling childlike sex dolls. Authorities also took the extraordinary step of inspecting more than 200,000 parcels from Shein that had arrived at Paris’ Charles de Gaulle Airport.  Official from allover the EU got a taste of French hospitality as they visited Lille. | Giorgio Leali/POLITICO France led the charge to tax purchases made on platforms like Shein, Temu and AliExpress by proposing a €2 levy on any small parcel worth more than €150 coming from outside the bloc. The EU is considering following suit. “The advantage of hosting the authority in Lille is also that France is the country that has realized the most the danger coming from Chinese e-commerce platforms,” said Socialist member of the European Parliament François Kalfon as he walked through Lille city center. Hosting the customs authority would create “a favorable ecosystem” to make sure that French activism on customs control turns into a European approach, he said.  Kalfon added, the fact that France already hosts several other European Union agencies — there are five on French soil, plus the European Parliament in Strasbourg — shouldn’t count against the bid. Lille has some geographic advantages compared to those other three cities officially in the running. It is just over 100 kilometers from Brussels, and well connected to many major airports and harbors — a key asset for an authority charged with monitoring customs data from all over the bloc to keep out unsafe and illicit products. Still, Paris is taking no chances after two recent stinging defeats in bids to host the bloc’s anti-money laundering authority and its medicines agency. France wants to host the future authority in a state-of-the-art new building next to Lille train station. | Giorgio Leali/POLITICO Laurent Saint-Martin, who recently served as both trade and budget minister for France, along with former WTO Director-General Pascal Lamy, are leading the bid. Saint-Martin told POLITICO while walking down the steps of what he hopes will be the future customs authority HQ that the key was to get out of the starting blocks early, reaching out to other countries and MEPs — even if the exact voting procedure hasn’t been settled on yet. Italy, Germany, the Netherlands, Bulgaria and Croatia could soon launch their own bids for hosting the customs authority, according to several officials with direct knowledge of their plans who were granted anonymity because they were not authorized to comment. And candidate countries are lobbying to host the it in chats with officials from EU member countries. But France’s decision to get the jump out of the gate appears to be bearing fruit. Several non-French officials on the trip, likewise granted anonymity to discuss an ongoing competitive bid without official authorization, said the were impressed by the bid. “This is the right moment,” one of them said. “The others are still a few steps behind.”

BRUSSELS — European Union officials are ready to sacrifice some of their most prized privacy rules for the sake of AI, as they seek to turbocharge business in Europe by slashing red tape.  The European Commission will unveil a “digital omnibus” package later this month to simplify many of its tech laws. The executive has insisted that it is only trimming excess fat through “targeted” amendments, but draft documents obtained by POLITICO show that officials are planning far-reaching changes to the General Data Protection Regulation (GDPR) to the benefit of artificial intelligence developers.   The proposed overhaul will come as a boon to businesses working with AI, as Europe scrambles to stay economically competitive on the world stage. But touching the flagship privacy law — seen as the “third rail” of EU tech policy — is expected to trigger a massive political and lobbying storm in Brussels. “Is this the end of data protection and privacy as we have signed it into the EU treaty and fundamental rights charter?” said German politician Jan Philipp Albrecht, who as a former European Parliament member was one of the chief architects of the GDPR. “The Commission should be fully aware that this is undermining European standards dramatically.” Brussels’ shift on privacy comes as it frets over Europe’s waning economic power. Former Italian Prime Minister Mario Draghi namechecked the General Data Protection Regulation as holding back European innovation on artificial intelligence in his landmark competitiveness report last year. European privacy regulators have already been spoiling Big Tech’s AI party in recent years. Meta, X and LinkedIn have all delayed rollouts of artificial intelligence applications in Europe after interventions by the Irish Data Protection Commission. Google is facing an inquiry by the same regulator and was previously forced to pause the release of its Bard chatbot. Italy’s regulator has previously imposed temporary blocks on OpenAI’s ChatGPT and Chinese DeepSeek over privacy concerns. Those same tech giants are racing ahead in the U.S., without an equivalent blanket privacy law barring them from feeding AI with citizens’ data. UNLEASH THE LOBBYISTS The General Data Protection Regulation’s initial drafting in 2012-2016 triggered one of the biggest lobbying efforts Brussels has ever seen. Since taking effect in 2018, the EU has steered clear of amending it, fearing it would reignite the vicious lobbying war.  In past months, Commission officials have sought to preempt worries that it was overhauling the privacy rulebook. It insisted that its simplification proposals wouldn’t touch the underlying principles of the GDPR.  Now that draft plans are out, civil society campaigners have begun sounding the alarm. The Commission is “secretly trying to overrun everyone else in Brussels,” said Max Schrems, founder of Austrian privacy group Noyb — and Europe’s infamous privacy campaigner who was behind court cases that brought down major data transfer deals with the United States in the past. “This disregards every rule on good lawmaking, with terrible results,” he said. “Is this the end of data protection and privacy as we have signed it into the EU treaty and fundamental rights charter?” said German politician Jan Philipp Albrecht. | Heiko Rebsch/picture alliance via Getty Images One line of attack from privacy groups is to poke holes in what they say is a rushed omnibus process. While the GDPR took years to negotiate, public consultation on the digital omnibus only ended in October. The Commission has not prepared impact assessments to accompany its proposals, as it says the changes are only targeted and technical. The Commission’s tunnel vision on the AI race has resulted in a “poorly drafted ‘quick shot’ in a highly complex and sensitive area,” said Schrems. LOOSENING PRIVACY RULES The draft proposal obtained by POLITICO shows how far the European Commission is willing to go to placate industry on AI. Draft changes would create new exceptions for AI companies that would allow them to legally process special categories of data (like a person’s religious or political beliefs, ethnicity or health data) to train and operate their tech. The Commission is also planning to reframe the definition of such special category data, which are afforded extra protections under the privacy rules.   Officials also want to redefine what constitutes as personal data, saying that pseudonymized data (where personal details have been obscured so a person can’t be identified) might not always be subject to the GDPR’s protections, a change that reflects a recent ruling from the EU’s top court. Finally, it wants to reform Europe’s pesky cookie banner rules by inserting a provision into the GDPR that would give website and app owners more legal grounds to justify tracking users beyond simply obtaining their consent. The draft proposal could still change before the Commission officially unveils its plans on Nov. 19. Once presented, the omnibus package has to pass muster with EU countries and lawmakers, who are already sharply divided on whether to touch privacy protections.   But Finnish center-right lawmaker Aura Salla said she would “warmly” welcome the proposal “if done correctly,” as it could bring legal certainty for AI companies. | Alexis Haulot/European Parliament Documents seen by POLITICO show that Estonia, France, Austria and Slovenia are firmly against any rewrite of the General Data Protection Regulation. Germany — usually seen as one of the most privacy-minded countries — on the other hand is pushing for big changes to help AI. In the European Parliament, the issue is expected to divide groups. Czech Greens lawmaker Markéta Gregorová said she is “surprised and concerned” that the GDPR is being reopened. She warned that Europeans’ fundamental rights “must carry more weight than financial interests.”  But Finnish center-right lawmaker Aura Salla — who previously led Meta’s Brussels lobbying office — said she would “warmly” welcome the proposal “if done correctly,” as it could bring legal certainty for AI companies. Salla emphasized that the Commission will have to “ensure it is European researchers and companies, not just third country giants that gain a competitive edge from our own rules.”