Listen on * Spotify * Apple Music * Amazon Music European affairs ministers meet in Brussels to prepare this week’s EU summit — with discussions ranging from Ukraine and the war in Iran to the bloc’s next long-term budget and competitiveness. But there is also motion on enlargement. Ukraine and Moldova are receiving the remaining negotiating clusters in their EU accession talks, while Montenegro is set to provisionally close another chapter. Meanwhile the war with Iran is already testing transatlantic unity. After Donald Trump urged allies to help secure the Strait of Hormuz, EU foreign ministers made clear they have no intention of sending warships there, with several capitals warning they won’t be dragged into the war. And in the world of sport and geopolitics, EU Sports Commissioner Glenn Micallef is pressing FIFA President Gianni Infantino for clearer assurances that European fans travelling to the 2026 World Cup will be safe — as tensions rise following the U.S.-Israeli war in the Middle East. Host Zoya Sheftalovich is joined by POLITICO’s chief foreign affairs correspondent, Nick Vinocur. Send any questions or comments to us on our WhatsApp: +32 491 05 06 29. 

The European Union should not be pressured into admitting new members based on pressure from Russia, the United States or any foreign power, France’s Europe minister told POLITICO. “No power outside the EU should decide on enlargement in place of the Member States,” said Benjamin Haddad, who represents France at meetings on enlargement with other EU countries. Haddad’s comments coincide with a push by the European Commission and some EU states to bring Ukraine into the bloc on a much shorter timeline than has been normal for countries seeking membership in the bloc.  The push from Brussels is partly motivated by the fact that EU membership is a bargaining chip in ongoing U.S.-led peace talks between Ukraine and Russia, with Ukrainian President Volodymyr Zelenskyy seeking EU membership by 2027. Accession is a carrot for Ukrainians who may be called upon to accept difficult compromises in any peace deal. But Haddad’s comments suggest that France does not want the EU’s enlargement schedule to be dictated by foreign powers or geopolitical circumstances. “Neither the United States nor Russia” should have any influence over EU enlargement policy, he added. Paris is in favor of Ukraine joining the bloc. Ukraine, Moldova and Western Balkan countries — widely seen as part of a future enlargement wave — should not be left “in a gray zone, vulnerable to foreign influence and aggression,” added the centrist minister, whose office sits in the foreign ministry. However, France is less favorable to proposals to change the way Europe admits new members, for example by granting them fewer privileges upon entry and then building them up in a phased accession process. “This enlargement must remain demanding and merit-based to ensure its success and credibility,” said Haddad. BUY EUROPEAN The 40-year-old minister also weighed into a debate about how the EU should allocate resources as part of a push to bolster competitiveness, endorsing the idea of a “European preference” for future investments in the EU’s long-term budget, known as the Multiannual Financial Framework. “Why should we be more naive than the Americans, who have long implemented Buy American policies?” he asked. “European preference should be a cross-cutting rule of the MFF.” He also threw his weight behind the idea of EU countries borrowing money jointly to support innovation and back industrial champions — a subject of disagreement with so-called “frugal” countries, including Germany, which argue that investment needs can be met via the MFF. “We must … consider a new targeted common borrowing capacity focused on investment in disruptive innovation, in particular in defense or AI/quantum capabilities,” Haddad said, adding that joint borrowing would be an ideal way to get around fiscal constraints facing many EU states. “In a constrained budgetary context, this is a way to invest without immediately increasing national contributions,” he added, recalling that a landmark report by former European Central Bank chief Mario Draghi called for €800 billion per year in public and private investment to help Europe catch up with technologically-advanced rivals. Haddad also criticized European Commission President Ursula von der Leyen for moving ahead with the Mercosur trade deal, which is opposed by France. “This move disregards the members of the European Parliament and the interinstitutional agreement,” he said. “This is a bad signal from the Commission for both our farmers and European citizens at large.” 

Andrej Babiš built his fortune making fertilizer. But another, lesser-known arm of his business empire has helped bring more than 170,000 children into the world across Europe. The Czech prime minister’s name is rarely attached to FutureLife, one of Europe’s largest IVF clinic networks, spanning 60 clinics in 16 countries from Prague to Madrid to Dublin. But is just one part of a commercial empire that spans nitrogen-based fertilizers and industrial farms, assisted reproduction, online lingerie stores and more. And the Czech leader holds this portfolio while sitting at the table negotiating EU budgets, health rules and industrial policy. Yet in Brussels, nobody can answer a deceptively simple question: Which of the companies associated with Babiš receives EU money — and how much? “We might be giving him money and we don’t even know,” said Daniel Freund, a German Green lawmaker who led the European Parliament’s inquiries into Babiš during his first term as Czechia’s prime minister from 2017 to 2021. In 2021, the Parliament overwhelmingly adopted a resolution condemning Babiš over conflicts of interest involving EU subsidies and companies he founded. Under EU rules, member countries are responsible for checking conflicts of interest and reporting on who ultimately benefits from EU funds. But there is no single EU-wide register linking ultimate beneficial owners to all EU payments — making cross-border oversight difficult. The issue has resurfaced as Babiš returns to power and once again takes a seat among other EU heads of state and government in the European Council. In that exclusive body, he helps negotiate the bloc’s long-term budget, agricultural subsidies and other funding frameworks that shape the sectors in which his companies might operate. For years, debates over Babiš’s conflicts of interest have revolved around a single name — Agrofert, the agro-industrial empire that EU and Czech auditors found had improperly received over €200 million in EU and national agricultural subsidies. The payment suspensions and repayment demands continue: This week, Czech authorities halted some agricultural subsidies to Agrofert pending a fresh legal review of the company’s compliance with conflict-of-interest rules. Babiš has consistently rejected accusations of wrongdoing. His office said he “follows all binding rules” and that “there is no conflict of interests at the moment,” adding that Agrofert shares are managed by independent experts and that he “is not and will never be the owner of Agrofert shares.” In a parliamentary debate earlier this month, he dismissed the controversy as politically motivated, accusing opponents of having “invented” the conflict-of-interest issue because they were unable to defeat him at the ballot box. But critics argue that the renewed focus on Agrofert obscures a far broader commercial footprint. “Agrofert is only half of the problem,” said Petr Bartoň, chief economist at Natland, a private investment group based in Prague. “The law does not say ‘thou shalt not benefit from companies called Agrofert.’ It says you must not benefit from any companies subsidized by or receiving public money.” The concern, critics argue, arises from the sheer number of companies and sectors with which Babiš remains associated. THE INVISIBLE PILLAR Separate from Agrofert sits Hartenberg Holding, a private-equity vehicle Babiš co-founded with financier Jozef Janov in 2013. He holds a majority stake in the fund through SynBiol, a company he fully owns and which, unlike Agrofert, has not been transferred into any trust arrangement. With assets worth around €600 million, Hartenberg invests in health care, retail, aviation and real estate. Yet it has attracted only a fraction of the scrutiny directed at the agricultural holding, according to Lenka Stryalová of the Czech public-spending watchdog Hlídač státu. “Alongside Agrofert, there is a second, less visible pillar of Babiš’s business activities that is not currently intended to be placed into blind trusts,” she said. That pillar includes FutureLife, whose 2,100 specialists help individuals and couples conceive across Czechia, Slovakia, the U.K., Ireland, Romania, the Netherlands, Spain, Italy and Estonia. The clinics operate in a policy-sensitive space shaped primarily by national health reimbursement systems and insurance rules, rather than decisions taken directly in Brussels. Those systems, however, function within a broader EU regulatory framework governing cross-border care and state aid. Hartenberg owns 50.1 percent of FutureLife. The company said in a statement that Babiš has no operational role, no board seat and no decision-making authority. It added that FutureLife clinics operate like other health care providers and, where applicable, are reimbursed by national public health insurance systems under the same rules as other providers. Like thousands of other companies, some FutureLife entities received pandemic-era wage support under Czechia’s Covid relief programs. There is no evidence of any irregularity in those payments.  But health care is only one corner of the portfolio. Through Hartenberg, Babiš-linked capital also flows into everyday retail life. Astratex, a Czech-founded online lingerie retailer that began as a catalogue business before moving fully online in 2005, now operates localized e-shops across roughly 10 European markets and generates tens of millions of euros in annual revenue. Hartenberg acquired a controlling stake in 2018, marking one of the fund’s early expansions into cross-border digital retail. In Czechia, shoppers may also encounter Flamengo florist stands, a network of around 200 outlets selling bouquets, potted plants and funeral flower arrangements inside supermarkets and shopping malls. Hartenberg acquired a majority stake in the chain in 2019, backing its expansion and push into online delivery. Other online businesses linked to Babiš include sports equipment, and wool and textile retailers. Through Hartenberg, Babiš has also invested in urban development and real estate. Hartenberg was an early majority investor in the project company behind Prague’s Císařská vinice, a premium hillside development of villas and apartments near Ladronka park, partnering with developer JRD to finance construction. JRD Development Group said the project company is now 100 percent owned by JRD and that neither Babiš nor companies linked to him hold any direct or indirect ownership interest. The firm added that the development has not received EU funds or other public financial support. None of the Hartenberg businesses have ever been accused of misusing EU subsidies. But the long-running “Stork’s Nest” case, first investigated more than a decade ago and still unresolved, shows how difficult it can be to follow Babiš’s business web. The alleged fraud involved a €2 million EU subsidy provided in 2008 to the 31-room Čapí Hnízdo (Stork’s Nest) recreational and conference center in central Czechia, then part of Babiš’s Agrofert conglomerate. Prosecutors have accused Babiš and his associates of manipulating the center’s ownership and concealing his control of the business in order to obtain the subsidy. Babiš has always denied wrongdoing, telling POLITICO in 2019 that the case was politically motivated. He was acquitted in 2023, but an appeals court later overturned that verdict and ordered a retrial, which remains pending. Today, the resort itself is no longer part of Agrofert. It is owned by Imoba, a company fully controlled by Babiš’s SynBiol, the same holding that controls Hartenberg. Hartenberg itself holds no stake in Stork’s Nest. Taken together, Babis’ non-Agrofert portfolio spans health care reimbursement systems, online retail regulation, aviation safety oversight, real estate and city-planning decisions across multiple EU jurisdictions. In theory, a Czech consumer could encounter Babiš-linked companies at nearly every stage of life: the fertilizer on the fields that grow the wheat, the bread on the supermarket shelf, the bouquet for the wedding, the apartment in Prague and even the clinic that helps bring the next generation into the world. And at the end, perhaps, the flowers once more. WHY BRUSSELS CAN’T KEEP TRACK During Babiš’s previous term, the European Commission concluded that trust arrangements he put in place did not eliminate his effective control over Agrofert. A leaked legal document reported by POLITICO this month has since renewed accusations that his latest trust setup does not fully address those concerns either. Babiš rejects that interpretation, saying the arrangement complies with Czech and EU law and insisting he has done “much more than the law required” to distance himself from the company. The Commission said it does not maintain a consolidated list of companies ultimately owned or controlled by Babiš across member countries. Nor does it hold a comprehensive accounting of EU funds received by companies linked to him beyond Agrofert. Instead, responsibility for collecting beneficial ownership data lies primarily with national authorities implementing EU funds. The Commission can audit how member countries manage conflicts of interest and take measures to protect the EU budget if needed, but it does not itself aggregate that information across borders. The Commission confirmed to POLITICO that it has asked Czech authorities to explain how conflicts of interest are being prevented in relation to companies under Babiš’s control beyond Agrofert. Czech Regional Development Minister Zuzana Mrázová on Thursday acknowledged receiving the Commission’s letter earlier this month, saying it will be answered in line with applicable legislation and adding that, in her view, the prime minister has done everything necessary to comply with Czech and EU law. “From my perspective, there is no conflict of interest,” she said. Freund argues that the corporate complexity has become a problem in its own right. “The tracking of beneficial owners or beneficial recipients of EU funds is at the moment very difficult or sometimes even impossible,” said the EU lawmaker. Part of the difficulty lies in Europe’s fragmented ownership registers, which exist on paper across the EU but don’t speak the same language or even list the same owners. Freund described them as “inconsistent,” with some national databases listing Babiš in connection with certain companies while others do not. Babiš’s defenders argue that his steps regarding Agrofert go beyond what Czech law strictly requires. Critics counter that the law was never written with billionaires running multi-sector empires in mind and that resolving the conflict of interest identified by auditors in relation to Agrofert does not settle the wider concerns raised by the scale of his business interests. “For some reason, the perception has been created that once Agrofert is resolved, that resolves the conflict of interest,” Bartoň said. “As if the president were the arbiter of what needs and needs not be dealt with.” In reality, many companies owned through Hartenberg and Synbiol structures continue to operate in areas shaped by public spending, regulation and political decisions without being part of any divestment or trust arrangement. Those assets “still not only [pose] conflict of interest,” said Bartoň, but they are “not even in the process of being dealt with.” From fertilizer to fertility to funeral flowers, the structure is easy enough to trace in everyday life. It is far harder to trace on paper. Ketrin Jochecová contributed to this report.

BRUSSELS — The European Commission should scrap plans to add some 2,500 staff and increase administrative spending at a time when capitals are being asked to tighten their belts, according to ministers from nine EU countries. In a letter addressed to Budget Commissioner Piotr Serafin and led by Austria, the ministers commend plans by the EU executive to streamline the bloc’s next long-term budget, known as the Multiannual Financial Framework (MFF). But they criticize the Commission’s request for increased funding to hire new staff and expand its administrative headroom. The total funds the Commission has requested to hire an additional 2,500 civil servants, spread over the lifespan of the MFF (2028-2034), amount to an estimated €1.4 billion, the signatories told POLITICO. “We expect the Commission to present ambitious, quantified proposals as a direct input for ongoing negotiations on the next MFF, including on an EU administrative system that reflects the challenges of our times,” reads the letter, which was signed by ministers from Austria, the Czech Republic, Denmark, Germany, Estonia, Latvia, Sweden, Finland and the Netherlands. “In this context, the proposed increase [from the Commission] of 2,500 posts as well as the overall significant increase of heading 4 (administration) runs counter to the stated objectives of efficiency, restraint and reform, and risks undermining the credibility of the broader MFF proposal.” Heading 4 of the 2028-2034 MFF refers to administrative costs. EU countries are in the midst of negotiating their next long-term budget following an initial proposal from the Commission presented in July 2025. The complex process lasts for years and involves all three key EU institutions: the Commission, the Council and the Parliament. At the same time, the Commission is carrying out a large-scale review that aims to streamline its own processes. The signatories say the EU executive should apply the same principles it’s demanding of member countries to itself. “The pressure on national governments to increase the efficiency of public expenditure is increasing,” the letter reads. “The Member States, often at the request of the Commission, have responded with difficult reforms to increase efficiency, reduce staffing levels and generate savings.” The letter goes on to advise the Commission to “significantly raise its level of ambition in this exercise.” “The European Commission’s credibility in asking Member States for budgetary discipline very much depends on adhering to its own principles. If national administration all across Europe have to cut down on public expenses, we expect the same rigid rule to apply for the European Commission,” Austrian Minister for Europe, Integration and Family Claudia Bauer said in written remarks. “At a time when national governments are under immense fiscal pressure, a substantial increase in EU administrative posts risks sending the wrong message to citizens,” she added. The Commission did not immediately respond to POLITICO’s request for comment.

Listen on * Spotify * Apple Music * Amazon Music Die MSC geht jetzt in die Vollen. US-Außenminister Marco Rubio führt die amerikanische Delegation an. Er hat einen anderen Ton als Vizepräsident JD Vance, aber klar auf Trump-Linie ist er. Rixa Fürsen spricht mit POLITICO-Kollege Jonathan Martin darüber, welchen Kurs er verfolgt, wie realistisch ein Friedensplan für die Ukraine bis zum Sommer ist und welches Verhältnis Rubio zu Wolodymyr Selenskyj hat. Im 200-Sekunden-Interview erklärt die Grünen-Fraktionsvize Agnieszka Brugger, warum sie einen beschleunigten EU-Beitritt der Ukraine unterstützt, welche Reformen dort notwendig bleiben und wie Europa auf Spannungen mit den USA reagieren sollte. Danach geht es nach Israel. Bundestagspräsidentin Julia Klöckner hat als erste deutsche Spitzenpolitikerin seit dem 7. Oktober 2023 den Gazastreifen besucht. Rasmus Buchsteiner berichtet, wie es dazu kam, welche Kritik es gibt und was das für künftige Besuche deutscher Politiker bedeutet. POLITICO hat ein neues Podcast-Format: In „Power & Policy” geht es immer donnerstags um die wichtigsten wirtschaftspolitischen Entscheidungen in Deutschland. ⁠Das neue Format gibt es hier zu hören und auf allen Podcast-Plattformen⁠. Das Berlin Playbook als Podcast gibt es jeden Morgen ab 5 Uhr. Gordon Repinski und das POLITICO-Team liefern Politik zum Hören – kompakt, international, hintergründig. Für alle Hauptstadt-Profis: Der Berlin Playbook-Newsletter bietet jeden Morgen die wichtigsten Themen und Einordnungen. ⁠Jetzt kostenlos abonnieren.⁠ Mehr von Host und POLITICO Executive Editor Gordon Repinski: Instagram: ⁠@gordon.repinski⁠ | X: ⁠@GordonRepinski⁠. POLITICO Deutschland – ein Angebot der Axel Springer Deutschland GmbH Axel-Springer-Straße 65, 10888 Berlin Tel: +49 (30) 2591 0 ⁠information@axelspringer.de⁠ Sitz: Amtsgericht Berlin-Charlottenburg, HRB 196159 B USt-IdNr: DE 214 852 390 Geschäftsführer: Carolin Hulshoff Pol, Mathias Sanchez Luna **(Anzeige) Eine Nachricht von Netflix: Netflix – da klingelt was? Das Unternehmen hinter Film- und Serien-Hits wie Im Westen nichts Neues und Adolescence nimmt euch diese Woche im Berlin Playbook Newsletter mit ”behind the Streams”! Erfahrt, wie Netflix als fester Teil des Medienstandorts Deutschland mit Geschichten “made in Germany” weltweit begeistert und gesellschaftliche Debatten anstoßen kann. Eine ganze Woche für Fans von Politik und Popcorn. Aufmerksames Lesen lohnt sich – Gibt auch was zu Gewinnen!**

Lucas Guttenberg is the director of the Europe program at Bertelsmann Stiftung. Nils Redeker is acting co-director of the Jacques Delors Centre. Sander Tordoir is chief economist at the Centre for European Reform. Europe’s economy needs more growth — and fast. Without it, the continent risks eroding its economic foundations, destabilizing its political systems and being left without the strength to resist foreign coercion. And yet, despite inviting former Italian prime ministers Mario Draghi and Enrico Letta to discuss their blueprints to revive the bloc’s dynamism, member countries have cherry-picked from the pair’s recommendations and remain firmly focused on the wrong diagnosis. Europe, the current consensus goes, has smothered itself in unnecessary regulation, and growth will return once red tape is cut. The policy response that naturally follows is deregulation rebranded as “simplification,” with a rollback of the Green Deal at its core. This is then combined with promises that new trade agreements will lift growth, and ritual invocations of the need to deepen the internal market. But this agenda is bound to disappoint. Of course, cutting unnecessary red tape is always sensible. However, this truism does little to solve Europe’s current malaise. According to the latest Economic Outlook from the Organisation for Economic Co-operation and Development, the regulatory burden on European business has risen only modestly over the past 15 years. There has been no explosion of red tape that could plausibly account for the widening growth gap with the U.S. And even the European Commission estimates that the cost savings from its regulatory simplifications — the so-called omnibuses — will amount to just €12 billion per year, or around 0.07 percent of EU GDP. That isn’t a growth strategy, it’s a rounding error. New free trade agreements (FTAs) won’t provide a quick fix either. The EU already has FTAs with 76 countries — far more than either the U.S. or China. Moreover, a recent Bertelsmann Stiftung study showed that even concluding pending deals and simultaneously deepening all existing ones would lift EU’s GDP by only 0.6 percent over five years. From Mercosur to India, there’s a strong geopolitical imperative to pursue agreements, and in the long run they can, indeed, help secure access to both supply and future growth markets. But as a short-term growth strategy, the numbers simply don’t add up. The same illusion shapes the debate on deepening the single market. Listening to national politicians, one might think it’s an orchard of low-hanging fruit just waiting to be turned into jars of growth marmalade, which past generations simply missed. But the remaining gaps — in services, capital markets, company law and energy — are all politically sensitive, technically complex and protected by powerful vested interests. The push for a Europe-wide corporate structure — a “28th regime” — is a telling admission: Rather than pursue genuine cross-border regulatory harmonization, policymakers are trying to sidestep national rules and hope no one notices. But while this might help some young firms scale up, a market integration agenda at this level of ambition won’t move the macroeconomic needle. From Mercosur to India, there’s a strong geopolitical imperative to pursue agreements, and in the long run they can, indeed, help secure access to both supply and future growth markets. | Sajjad Hussain/AFP via Getty Images A credible growth strategy must start with a more honest evaluation: Europe’s economic weakness doesn’t originate in Brussels, it reflects a fundamental shift in the global economy. Russia’s invasion of Ukraine delivered a massive energy price shock to our fossil-fuel-dependent continent. At the same time, China’s state-driven overcapacity is striking at the core of Europe’s industrial base, with Chinese firms now outcompeting European companies in sectors that were once crown jewels. Meanwhile, the U.S. — long Europe’s most important economic partner — is retreating behind protectionism while wielding coercive threats. With no large market willing to absorb Europe’s output, cutting EU reporting requirements won’t fix the underlying problem. The continent’s old growth model, built on external demand, no longer works in this new world. And the question EU leaders should be asking is whether they have a plan that matches the scale of this shift. Here is what that could look like: First, as Canadian Prime Minister Mark Carney argued at Davos, economic strength starts at home — and “home” means national capitals. Poland, Spain and the Netherlands are growing solidly, while Germany is stagnating, and France and Italy are continuing to underperform. What is seen as a European failure is actually a national one, as many of the most binding growth constraints — rigid labor markets, demographic pressure on welfare systems and fossilized bureaucracies — firmly remain in national hands. And that is where they must be fixed. It’s time to stop hiding behind Brussels. Next, Europe needs a trade policy that meets the moment. Product-by-product trade defense can’t keep pace with the scale and speed of China’s export surge, which is threatening to kill some of Europe’s most profitable and innovative sectors. The EU must move beyond microscopic remedies toward broader horizontal instruments that protect its industrial base without triggering blunt retaliation. First, as Canadian Prime Minister Mark Carney argued at Davos, economic strength starts at home — and “home” means national capitals. | Harun Ozalp/Anadolu via Getty Images This is difficult, and it will come with costs that capitals will have to be ready to bear. But without it, Europe’s core industries will remain under acute threat of disappearing. Moreover, trade defense must be paired with a rigorous industrial policy. The Green Deal remains the most plausible growth strategy for a hydrocarbon-poor continent with a highly educated workforce. But it needs clarity, prioritization and sufficient funding in the next EU budget at the expense of traditional spending. “Made in Europe” preferences can make sense — but only if they’re applied with discipline. Europe must be ruthless in defining the industries it can compete in and be prepared to abandon the rest. That was the Draghi report’s core argument. And it boggles the mind that the continent is still debating European preferences in areas like solar panels, which were lost a decade ago. Finally, deepening the single market in earnest isn’t a technocratic tweak but a federalizing choice. It means going for full harmonization in areas that are crucial for growth. It means taking power away from national regimes that serve domestic interests. Any serious reform will create losers, and they will scream. That isn’t a bug — it’s how you know the reform matters. In areas like capital markets supervision or the regulation of services, leaders now have to show they’re willing to act regardless. And unanimity is no alibi: The rules allow for qualified majorities. EU leaders must learn to build them — and to live with losing votes. EU leaders face a clear choice tomorrow: They can pursue a growth agenda that won’t deliver, reinforcing the false narrative that the EU shackles national economies and giving the Euroskeptic extreme right a free electoral boost. Or they can confront reality and make the hard choices a bold agenda calls for. The answer should be obvious.

BERLIN — German Chancellor Friedrich Merz’s government rejected French President Emmanuel Macron’s call for a joint borrowing scheme ahead of an EU leaders summit on Thursday. In an interview with six European media outlets published Tuesday, Macron urged Europe to launch a plan for new common borrowing, or eurobonds, to boost investment in strategic sectors, framing it as an economic necessity if the continent is to keep up with the U.S. and China. Berlin strongly rejected the plan just hours after the interview was published, marking the latest in a series of clashes between Macron and Merz on everything from trade to how to deal with U.S. President Donald Trump. “We think that, in view of the agenda [at the EU leaders summit], this distracts a little from what it’s actually all about, namely that we have a productivity problem,” a senior German government official, who is close to the chancellor and was granted anonymity to speak candidly, said Tuesday. “It is true that we need more investment,” the official said. “But to be honest, this belongs in the context of the Multiannual Financial Framework,” the official added, referring to the bloc’s budget for 2028-2034, which is currently being negotiated. Berlin’s rejection of Macron’s proposal came ahead of an EU leaders retreat at a Belgian castle focused on competitiveness set for Thursday. Although the bloc’s 27 leaders are not expected to sign off on concrete outcomes, they aim to identify key priorities for a subsequent EU leaders summit in March in Brussels. Berlin is pushing for three key goals ahead of the summits: a deepening of the single market; more and faster trade agreements; and a push for less bureaucracy, the official said. On the issue of competitiveness, Merz has increasingly distanced himself from Macron, who favors more protectionist measures and an interventionist industrial policy. Merz has instead increasingly aligned himself with Italian Prime Minister Giorgia Meloni. The German government also called for far-reaching reforms of the EU budget. “It cannot continue as before, with two-thirds of the budget going exclusively to consumptive spending in the areas of agriculture and cohesion,” the official said. “We hope that the member states that are now calling for new funding will also participate in these reform efforts. It cannot be that people call for more money but then fail to tackle the reforms.” The official added: “European over-indebtedness does not come without a cost.”

BRUSSELS — The EU executive wants to cut Chinese firms out of lucrative EU public contracts at home and abroad by overhauling its budget rules, according to three European Commission officials. In March, the Commission will lay out new instructions to impose additional security requirements on foreign companies bidding for public contracts, targeting Chinese firms in particular. In the face of heightened geopolitical and trade tensions with the U.S. and China, Brussels is exploring measures that favor European businesses over foreign competitors. The rules would apply to its current and future €1.8 trillion long-term budget, which begins in 2028. The EU crackdown is part of a wider effort to limit Chinese influence in Europe. A parallel bill from Industry Commissioner Stéphane Séjourné aims to curb Chinese investment and force foreign companies to partner with local firms in a bid to revive the EU’s industrial sectors. Shunning foreign entities would dovetail with France’s push to extend a “Buy European” clause across the whole EU budget, which is currently being negotiated by national capitals. “You have to be able to take into account the fact that, at least in some sectors that are strategic, parts or products are made in Europe,” Finance Minister Roland Lescure told reporters on Monday. “The U.S. are doing it, China are doing it … We cannot be just the last baby in the yard that’s running around when everybody’s doing something else in the drawing room.” But critics warn that attaching too many strings to EU spending could raise costs and ignite trade retaliation, while penalizing poorer countries that receive the bloc’s development funds. A group of European commissioners focusing on economic security — including Piotr Serafin, Valdis Dombrovkis and Maroš Šefčovič, who are respectively responsible for the budget, economy and trade portfolios — will discuss the budget rules on Feb. 18. “There needs to be a link between our strategic priorities and the way we spend our money,” said one of the Commission officials, who were granted anonymity as they are not authorized to speak publicly. EU STRINGS ATTACHED The crackdown stems from a clause that the Commission introduced in the budget rules in 2024 that set out “security requirements” for certain EU public contracts that involve strategic assets. The Commission will outline what those requirements are and which sectors they’ll affect next month. The guidelines could, for example, go as far as restricting Chinese firms from producing inverters used in solar panels, one of the officials said. The rules will also apply to projects undertaken by the European Investment Bank, the bloc’s lending arm. Brussels will stop short of singling out the countries that’ll be cut off from EU public money, however. Under the new budget in 2028, the overhaul could narrow the access of foreign companies to the European Competitiveness Fund — a €410 billion cash pot to promote industrial development — and the Global Europe Fund, which is worth €200 billion and finances EU aid to developing countries. The crackdown stems from a clause that the European Commission introduced in the budget rules in 2024. | Nicolas Economou/NurPhoto via Getty Images The French may welcome the looming crackdown, as Paris pushes for a “European preference” across the whole budget. But the Commission’s pitch will meet resistance from a group of Northern European countries. In a joint letter, Estonia, Finland, Latvia, Lithuania, the Netherlands and Sweden warned that prioritizing European goods and services “risks wiping out our simplification efforts, hindering companies’ access to world-leading technology … and pushing investments away from the EU.” Joshua Berlinger contributed reporting from Paris.

BRUSSELS — EU ambassadors are close to a deal on a €90 billion loan to finance Ukraine’s defense against Russia thanks to a draft text that spells out the participation of third countries in arms deals, three diplomats said Wednesday. The ambassadors are scheduled to meet on Wednesday afternoon to finalize talks after a week of difficult negotiations. The final hurdle was deciding how non-EU countries would be able to take part in defense contracts financed by the loan. The draft deal, seen by POLITICO, would allow Ukraine to buy key weapons from such countries — including the U.S. and the U.K. — either when no equivalent product is available in the EU or when there is an urgent need. The list of weapons Kyiv will be able to buy outside the bloc includes air and missile defense systems, fighter aircraft ammunition and deep-strike capabilities. If the U.K. wants to take part in procurement deals beyond that, it will have to contribute financially to help cover interest payments on the loan. The text also mentions that the British contribution — to be agreed in upcoming negotiations with the European Commission — should be proportional with the potential gains of its defense firms taking part in the scheme.  France led the effort to ensure that EU countries — which are paying the interest on the loan — gain the most from defense contracts. In an effort to get Paris and its allies on board, the draft circulated late Tuesday includes new language which says that “any agreement with a third country must be based on a balance of rights and obligations,” and also that “a third country should not have the same rights nor enjoy the same benefits,” as participating member states. The draft also strengthens the control of EU countries over whether the conditions to buy weapons for Ukraine outside the bloc have been met, saying Kyiv will have to “provide the information reasonably available to it demonstrating that the conditions for the application of this derogation are met.” That will then be checked  “without undue delay” by the European Commission after consultation with a new Ukraine Defence Industrial Capacities Expert Group. The new body will include representatives from EU members countries, according to diplomats. The European Commission will raise €90 billion in debt to fund Ukraine’s war effort before Kyiv runs out of cash in April. After facing intense pressure from national capitals, the Commission agreed to deploy unused funds in its current seven-year budget to cover the borrowing costs. If that is not enough, member countries will have to pay the difference. Budget Commissioner Piotr Serafin will meet the European Parliament and the Cypriot presidency of the Council of the EU on Thursday in an attempt to solve disagreements on the repayment of the borrowing costs, said one official.