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.

BRUSSELS — The European Commission on Friday announced an investigation into Slovakia over the dismantling of its whistleblower protection office. In its latest rule-of-law spat with Bratislava, the EU executive criticized leftist-populist leader Robert Fico for trying to replace the office with a new institution whose leadership would be politically appointed. “The Commission considers that this law breaches EU rules,” it wrote in an official note on Friday. Brussels’ move comes amid strong pressure from lawmakers and NGOs to act against Fico’s crackdown against independent institutions and suspected fraud involving EU farm funds. Zuzana Dlugošová, the head of the whistleblower protection office, said that she had repeatedly warned Slovak officials that the plans were in contradiction with EU law. “If expert feedback had been taken into account, Slovakia could have avoided EU infringement proceedings. Still, we believe that this process itself can help foster a more professional and substantive debate on how whistleblower protection should be properly set up in Slovakia,” Dlugošová said. Slovakia’s permanent representation in Brussels and interior ministry did not immediately respond to POLITICO’s requests for comment. Brussels has given Bratislava one month to respond to its queries before taking further action — which could potentially include cutting EU payouts to Slovakia after a multi-layered process. Since returning to power in 2023 for a fourth term, Fico’s Smer party has taken steps to dismantle anti-corruption institutions, including abolishing the Special Prosecutor’s Office, which handled high-profile corruption cases, and disbanding NAKA, an elite police unit tasked with fighting organized crime. “The European Commission’s decision … sends a clear message: protecting whistleblowers is not optional — it is a core obligation of every EU Member State,” Czech MEP Tomáš Zdechovský said in written remarks to POLITICO. Before launching the probe, the EU executive had pressed Slovakia to roll back on its anti-democratic crackdown. EU Budget Commissioner Piotr Serafin encouraged Fico not to dismantle the whistleblower protection office during a meeting in Bratislava in December, according to two Commission officials with knowledge of proceedings who were not authorized to go on the record. Nevertheless, in December 2025, the Slovak parliament pushed through a bill that cut short the current director’s tenure and weakened protections for whistleblowers. It was set to enter into force in on Jan. 1 but Slovakia’s top court paused the disputed decision to review whether it complies with the constitution. German Green MEP Daniel Freund welcomed the Commission’s move but urged it to go even further. “The Commission needs to do more. Fico’s government has dismantled the special prosecutor for corruption, has dismantled the national crime agency and has changed the penal code to have hundreds of convicted corruption offenders walk free,” Freund told POLITICO. Slovakia is already subject to another infringement procedure, launched by the Commission in November, over a reform that enshrines only two genders in the constitution.

BRUSSELS — European Commission President Ursula von der Leyen’s plan to shake up how the EU spends its almost €2 trillion budget is rapidly being diluted. Von der Leyen’s big idea is to steer hundreds of billions in funds away from farmer subsidies and regional payouts — traditionally the bread and butter of the EU budget — toward defense spending and industrial competitiveness. But those modernizing changes — demanded by richer Northern European countries that pay more into the budget than they receive back from it — are difficult to push through in the face of stern opposition from Southern and Central European countries, which get generous payments for farmers and their poorer regions. A coalition of EU governments, lawmakers and farmers is now joining forces to undo key elements of the new-look budget running from 2028 to 2034, less than six months after the European Commission proposed to focus on those new priorities. Von der Leyen’s offer last week to allow countries to spend up to an extra €45 billion on farmer subsidies is her latest concession to powerful forces that want to keep the budget as close as possible to the status quo. Northern European countries are growing increasingly frustrated by moves by other national capitals and stakeholders to turn back the clock on the EU budget, according to three European diplomats. They were particularly irritated by a successful Franco-Italian push last week to exact more concessions for farmers as part of diplomatic maneuvers to get the long-delayed Mercosur trade deal with Latin America over the line. “Some delegations showed up with speaking points that they have taken out of the drawer from 2004,” said an EU diplomat who, like others quoted in this story, was granted anonymity to speak freely. The EU’s Common Agricultural Policy was worth 46 percent of the bloc’s total budget in 2004. The Commission’s proposal for 2028-2034 has reserved a minimum of roughly 25 percent of the total cash pot for farmers, although governments can spend significantly more than that. The Commission had no immediate comment when asked whether the anti-reform camp was successfully chipping away at von der Leyen’s proposal. THE ANTI-REFORM ALLIANCE The Commission’s July proposal to modernize the budget triggered shockwaves in Brussels and beyond. The transition away from sacred cows consolidated a ramshackle coalition of angry farmers, regional leaders and lawmakers who feared they would lose money and influence in the years to come. “This was the most radical budget [ever proposed] and there was resistance from many interested parties,” said Zsolt Darvas, a senior fellow at the Bruegel think tank. A protest by disgruntled farmers in Brussels during a summit of EU leaders on Dec. 18 was only the latest flashpoint of discontent. | Bastien Ohier/Hans Lucas/AFP via Getty Images The scale of the Commission’s task became apparent weeks before the proposal was even published, as outspoken MEPs, ministers and farmers’ unions threatened to dismantle the budget in the following years of negotiations. That’s exactly what is happening now. “The Commission’s proposal was quite radical so no one thought it could go ahead this way,” said a second EU diplomat.   “We knew that this would be controversial,” echoed a Commission official working on the file. A protest by disgruntled farmers in Brussels during a summit of EU leaders on Dec. 18 was only the latest flashpoint of discontent. The terrible optics of the EU’s signing off on Mercosur as farmers took to the streets on tractors was not lost on national leaders and EU officials. Commission experts spent their Christmas break crafting a clever workaround that allows countries to raise agricultural subsidies by a further €45 billion without increasing the overall size of the budget. The extra money for farmers isn’t new — it’s been brought forward from an existing rainy-day fund that was designed to make the EU budget better suited to handling unexpected crises. By handing farmers a significant share of that financial buffer, however, the Commission is undermining its capacity to mobilize funding for emergencies or other policy areas. “You are curtailing the logic of having a more flexible budget for crises in the future,” said Eulalia Rubio, a senior fellow at the Jacques Delors Institute think tank. At the time, reactions to the budget compromise from frugal countries such as Germany and Netherlands were muted because it were seen as a bargaining chip to win Italy’s backing for the Mercosur deal championed by Berlin. The trouble was instead postponed, as it reduces budget flexibility. Darvas also argued that the Commission has not had to backtrack “too much” on the fundamentals of its proposal as countries retained the option of whether to spend the extra cash on agriculture. In a further concession, the Commission proposed additional guarantees to reduce the risk of national governments cutting payments to more developed regions. | Nicolas Tucat/AFP via Getty Images ANOTHER MONTH, ANOTHER CONCESSION This wasn’t the first time von der Leyen has tinkered with the budget proposal to extract herself from a political quagmire. The Commission president had already suggested changes to the budget in November to stem a budding revolt by her own European People’s Party (EPP), which was feeling the heat from farmers’ unions and regional leaders. At the time, the EU executive promised more money for farmers by introducing a “rural spending” target worth 10 percent of a country’s total EU funds. In a further concession, the Commission proposed additional guarantees to reduce the risk of national governments cutting payments to more developed regions — a sensitive issue for decentralized countries like Germany and Spain. “The general pattern that we don’t like is that the Commission is continuing to offer tiny tweaks here and there” to appease different constituencies, an EU official said. The Commission official retorted that national capitals would eventually have made those changes themselves as the “trend of the negotiations [in the Council] was going in that direction.” However, budget veterans who are used to painstaking negotiations were surprised by the speed at which Commission offered concessions so early in the process. “Everyone is scared of the [2027] French elections [fearing a victory by the far-right National Rally] and wants to get a deal by the end of the year, so the Commission is keen to expedite,” said the second EU diplomat. Nicholas Vinocur contributed to this report.

Officially, the EU’s Mercosur trade deal is a defeat for Europe’s farmers. In reality, farm lobbies just can’t stop winning. EU countries endorsed the bloc’s long-delayed agreement with South American nations on Friday, clearing the way for European Commission President Ursula von der Leyen to fly to Paraguay later this week and close a deal that has haunted Brussels for more than two decades. The agreement is going through despite tractor protests, border blockades and fierce opposition from farm groups and capitals including Paris and Warsaw. But the price of getting Mercosur over the line was steep. In the run-up to the endorsement, Brussels quietly stacked the deck in farmers’ favor. Import safeguards were hardened. Controls tightened. And last week, the Commission unveiled a €45 billion budget maneuver allowing governments to shift more money to farmers under the EU’s next long-term budget. Taken together, the concessions mean Mercosur will enter into force wrapped in protections and paired with a farm budget settlement that leaves the sector stronger than before. “Other sectors complain,” said one Commission official involved in agricultural policy. “Farmers block roads.” The official, like others in this story, was granted anonymity to speak freely. The blunt assessment captures a familiar reality inside the EU institutions. Farmers may represent a shrinking share of Europe’s economy, but they remain one of its most powerful political constituencies, capable of reshaping trade deals, budgets and reform agendas even when they fail to block them outright. Ultimately, to get Mercosur over the line, Brussels had to back away from plans to loosen farmers’ grip on the EU budget and shift money to other priorities. PRESSURE THAT WORKS The leverage farm leaders wield rests on more than theatrics. Few officials in Brussels dispute that large parts of the sector are under real strain. Farm incomes are volatile. Costs for fuel, fertilizer and feed have surged. Weather has become harder to predict. Working days are long and isolation is common in hollowing rural communities. “I understand the anger,” Agriculture Commissioner Christophe Hansen told POLITICO in an interview last month, as Brussels prepared for tractors to roll into the EU quarter. Christophe Hansen said the Commission had “heard the concerns of farmers” and responded with “strong and unprecedented support measures.” | Photo by Omar Havana/Getty Images Sympathy for farmers runs high across much of Europe, tied not just to economics but to culture, place and identity. That has always made farm subsidies one of the most politically sensitive lines in the EU budget — and one the Commission knew would be hardest to touch. That sensitivity was on display again last week, when agriculture ministers traveled to Brussels for a hastily convened meeting outside the formal calendar, called in response to farmer protests only weeks earlier. Inside, the language was ritualistic. Praise for farmers. Assurances they were being listened to. Repeated references to unprecedented safeguards and financial backing. Hansen summed it up afterward, saying the Commission had “heard the concerns of farmers” and responded with “strong and unprecedented support measures.” REFORM MEETS REALITY This outcome marks a sharp reversal of earlier ambitions inside the Commission. It’s also a reminder of just how high the stakes are when farm subsidies are in play. The Common Agricultural Policy remains the single largest line in the EU budget, absorbing roughly a third of total spending and anchoring a political contract that dates back to the bloc’s postwar foundations. Public money, in exchange for food security and rural stability, has long been one of Europe’s core bargains. That bargain has survived decades of reform. The CAP has been trimmed, greened and made more market-oriented. But its central promise — that farming would be protected — has never disappeared. After von der Leyen’s re-election in 2024, officials quietly explored loosening how tightly farm spending is locked into the EU budget. Draft ideas for the post-2027 budget would have made farm funds more flexible and easier to redirect to priorities such as defense, climate transition or industrial policy. It was a technocrat’s answer to a crowded budget. It did not survive contact with politics. The proposal landed as farm incomes came under pressure from rising costs, climate volatility and disease outbreaks. Tractors returned to Europe’s streets. Agriculture ministers closed ranks, warning of political fallout in rural heartlands. Farm lobbies mobilized in force. Hansen spent much of his first year in office traveling to farms and meeting unions, describing agriculture as a strategic asset and warning of a “convergence of pressures” hitting the sector. Behind closed doors, he fought to keep large chunks of farm funding protected. Tractors park in front of the Arc de Triomphe during a demonstration of the French agricultural union Coordination Rurale (CR) in Paris, France, on January 8, 2026. | Jerome Gilles/NurPhoto via Getty Images Those efforts didn’t calm farmers’ anger. Instead, pressure became constant, feeding into a series of concessions that steadily narrowed the scope for reform. First came assurances that most farm spending would remain ring-fenced in the post-2027 budget. Then came a new rural spending target, designed to funnel more money back into countryside projects. Last week, to get the Mercosur deal over the line, the Commission went further, proposing that farmers get early access to up to €45 billion from a broader cash pot the EU would have been saving for a rainy day. In effect, much of the post-2027 EU farm budget is on track to be sealed at levels approaching today’s, before negotiations have even begun in earnest. LOSING THE TRADE FIGHT, WINNING THE POLITICS The €45 billion now being front-loaded was originally conceived as crisis insurance. After the Covid-19 pandemic and Russia’s invasion of Ukraine, Brussels concluded that future EU budgets needed more flexibility to respond quickly to shocks. Money reserved for incremental spending reviews was meant to be the first line of defense in the next crisis. If national capitals embrace the Commission’s proposal, much of that money would be locked in for farmers before the cycle even starts, leaving less for other priority areas. Mercosur became the perfect vehicle for that pressure. Long championed by industrial exporters, the deal turned into shorthand for everything farmers fear about global competition and loss of control. The reality is more uneven. Some EU farmers, particularly in high-end food, wine and dairy, stand to gain from better access to Mercosur markets. Others, especially in beef and poultry, face tougher competition. Yet even there, trade analysts have long dismissed fears of South American goods flooding the EU as exaggerated. But nuance rarely survives a protest banner, and even the unprecedented concessions haven’t stopped farmers from protesting. The EU’s largest farm lobby, Copa-Cogeca, said Friday that the process of getting the Mercosur deal across the line “erodes trust in European governance, democratic processes and parliamentary scrutiny at a time when institutional credibility is already under strain.” The group said it would continue mobilizing farmers. Privately, Commission officials express frustration about the farm lobbies’ hardening demands.  One said that even though Brussels bends over backwards to meet farmers’ demands, every concession still falls short for farm leaders. Another pointed to Commissioner Hansen’s efforts to engage in direct dialogue with farmers across the EU. “And still, they talk as if we had done nothing,” the official said, referring directly to Copa-Cogeca. For now, farm leaders are winning.  Von der Leyen might be boarding that plane to South America. But when she returns to Brussels, they will already be gearing up for the next fight, confident they can lose the trade battle and still bend Europe’s policy in their favor.

Europe’s biggest ever trade deal finally got the nod Friday after 25 years of negotiating.  It took blood, sweat, tears and tortured discussions to get there, but EU countries at last backed the deal with the Mercosur bloc — paving the way to create a free trade area that covers more than 700 million people across Europe and Latin America.  The agreement, which awaits approval from the European Parliament, will eliminate more than 90 percent of tariffs on EU exports. European shoppers will be able to dine on grass-fed beef from the Argentinian pampas. Brazilian drivers will see import duties on German motors come down.  As for the accord’s economic impact, well, that pales in comparison with the epic battles over it: The European Commission estimates it will add €77.6 billion (or 0.05 percent) to the EU economy by 2040.  Like in any deal, there are winners and losers. POLITICO takes you through who is uncorking their Malbec, and who, on the other hand, is crying into the Bordeaux. WINNERS Giorgia Meloni Italy’s prime minister has done it again. Giorgia Meloni saw which way the political winds were blowing and skillfully extracted last-minute concessions for Italian farmers after threatening to throw her weight behind French opposition to the deal.  The end result? In exchange for its support, Rome was able to secure farm market safeguards and promises of fresh agriculture funding from the European Commission — wins that the government can trumpet in front of voters back home. It also means that Meloni has picked the winning side once more, coming off as the team player despite the last-minute holdup. All in all, yet another laurel in Rome’s crown.  The German car industry  Das Auto hasn’t had much reason to cheer of late, but Mercosur finally gives reason to celebrate. Germany’s famed automotive sector will have easier access to consumers in LatAm. Lower tariffs mean, all things being equal, more sales and a boost to the bottom line for companies like Volkswagen and BMW. There are a few catches. Tariffs, now at 35 percent, aren’t coming down all at once. At the behest of Brazil, which hosts an auto industry of its own, the removal of trade barriers will be staggered. Electric vehicles will be given preferential treatment, an area that Europe’s been lagging behind on.  Ursula von der Leyen Mercosur is a bittersweet triumph for European Commission President Ursula von der Leyen. Since shaking hands on the deal with Mercosur leaders more than a year ago, her team has bent over backwards to accommodate the demands of the skeptics and build the all-important qualified majority that finally materialized Friday. Expect a victory lap next week, when the Berlaymont boss travels to Paraguay to sign the agreement. Giorgia Meloni saw which way the political winds were blowing and skillfully extracted last-minute concessions for Italian farmers after threatening to throw her weight behind French opposition to the deal. | Ettore Ferrari/EPA On the international stage, it also helps burnish Brussels’ standing at a time when the bloc looks like a lumbering dinosaur, consistently outmaneuvered by the U.S. and China. A large-scale trade deal shows that the rules-based international order that the EU so cherishes is still alive, even as the U.S. whisked away a South American leader in chains.  But the deal came at a very high cost. Von der Leyen had to promise EU farmers €45 billion in subsidies to win them over, backtracking on efforts to rein in agricultural support in the EU budget and invest more in innovation and growth.   Europe’s farmers  Speaking of farmers, going by the headlines you could be forgiven for thinking that Mercosur is an unmitigated disaster. Surely innumerable tons of South American produce sold at rock-bottom prices are about to drive the hard-working French or Polish plowman off his land, right?  The reality is a little bit more complicated. The deal comes with strict quotas for categories ranging from beef to poultry. In effect, Latin American farmers will be limited to exporting a couple of chicken breasts per European person per year. Meanwhile, the deal recognizes special protections for European producers for specialty products like Italian parmesan or French wine, who stand to benefit from the expanded market. So much for the agri-pocalpyse now.  Mercosur is a bittersweet triumph for European Commission President Ursula von der Leyen. | Olivier Matthys/EPA Then there’s the matter of the €45 billion of subsidies going into farmers’ pockets, and it’s hard not to conclude that — despite all the tractor protests and manure fights in downtown Brussels — the deal doesn’t smell too bad after all.  LOSERS Emmanuel Macron  There’s been no one high-ranking politician more steadfast in their opposition to the trade agreement than France’s President Emmanuel Macron who, under enormous domestic political pressure, has consistently opposed the deal. It’s no surprise then that France joined Poland, Austria, Ireland and Hungary to unsuccessfully vote against Mercosur.  The former investment banker might be a free-trading capitalist at heart, but he knows well that, domestically, the deal is seen as a knife in the back of long-suffering Gallic growers. Macron, who is burning through prime ministers at rates previously reserved for political basket cases like Italy, has had precious few wins recently. Torpedoing the free trade agreement, or at least delaying it further, would have been proof that the lame-duck French president still had some sway on the European stage.  Surely innumerable tons of South American produce sold at rock-bottom prices are about to drive the hard-working French or Polish plowman off his land, right? | Darek Delmanowicz/EPA Macron made a valiant attempt to rally the troops for a last-minute counterattack, and at one point it looked like he had a good chance to throw a wrench in the works after wooing Italy’s Meloni. That’s all come to nought. After this latest defeat, expect more lambasting of the French president in the national media, as Macron continues his slow-motion tumble down from the Olympian heights of the Élysée Palace.  Donald Trump Coming within days of the U.S. mission to snatch Venezuelan strongman Nicolás Maduro and put him on trial in New York, the Mercosur deal finally shows that Europe has no shortage of soft power to work constructively with like-minded partners — if it actually has the wit to make use of it smartly.  Any trade deal should be seen as a win-win proposition for both sides, and that is just not the way U.S. President Donald Trump and his art of the geopolitical shakedown works. It also has the incidental benefit of strengthening his adversaries — including Brazilian President and Mercosur head honcho Luiz Inácio Lula da Silva — who showed extraordinary patience as he waited on the EU to get their act together (and nurtured a public bromance with Macron even as the trade talks were deadlocked). China  China has been expanding exports to Latin America, particularly Brazil, during the decades when the EU was negotiating the Mercosur trade deal. The EU-Mercosur deal is an opportunity for Europe to claw back some market share, especially in competitive sectors like automotive, machines and aviation. The deal also strengthens the EU’s hand on staying on top when it comes to direct investments, an area where European companies are still outshining their Chinese competitors. Emmanuel Macron made a valiant attempt to rally the troops for a last-minute counterattack, and at one point it looked like he had a good chance to throw a wrench in the works after wooing Italy’s Meloni. | Pool photo by Ludovic Marin/EPA More politically, China has somewhat succeeded in drawing countries like Brazil away from Western points of view, for instance via the BRICS grouping, consisting of Brazil, Russia, India, China and South Africa, and other developing economies. Because the deal is not only about trade but also creates deeper political cooperation, Lula and his Mercosur counterparts become more closely linked to Europe. The Amazon rainforest  Unfortunately, for the world’s ecosystem, Mercosur means one thing: burn, baby, burn. The pastures that feed Brazil’s herds come at the expense of the nation’s once-sprawling, now-shrinking tropical rainforest. Put simply, more beef for Europe means less trees for the world. It’s not all bad news for the climate. The trade deal does include both mandatory safeguards against illegal deforestation, as well as a commitment to the Paris Climate Agreement for its signatories. 

PARIS — France’s inability to block the EU-Mercosur trade deal on Friday allows opposition parties to twist their knives into an already weakened Emmanuel Macron for the rest of his presidency. Hostility to the landmark agreement — largely over the vulnerability of farmers to exports from South America — unites French politicians across the spectrum, and they now need someone to blame. France’s Europhile president failing to stop the accord is a humbling reflection of the fading power of Paris in the EU, where it was long notorious for its exceptionalism and veto power. Jordan Bardella, head of the far-right National Rally and front-runner for the presidency in 2027, accused Macron of being a hypocrite by pretending to oppose the deal and “betraying French farmers” by not doing enough to stop it. Bardella said the National Rally would submit a motion of no confidence against the government. The far-left France Unbowed submitted its own motion Friday morning after France was “humiliated” in Brussels, party heavyweight Mathilde Panot said. While those efforts are unlikely to succeed, parliamentary debates on the trade deal will again remind the French public that Macron could not to stand up to Brussels. The more center-leaning political forces are calling on French authorities do to more in the coming days to stop the deal, rather than take down the government. Leaders from the conservative Les Républicains and the Socialist Party, ideological opponents, both urged Macron’s government to take the fight against the trade deal to the Court of Justice of the European Union. “We have abdicated, abandoned our food sovereignty,” Les Républicains leader Bruno Retailleau, another likely presidential hopeful in 2027, said Thursday. French farmers who descended Thursday on Paris to vent their fury parked tractors outside the Arc de Triomphe and the National Assembly, where they confronted both National Assembly President Yaël Braun-Pivet and Agriculture Minister Annie Genevard. One held a poster saying that European Commission President Ursula von der Leyen “really takes us for idiots.” Frédéric-Pierre Vos, a National Rally lawmaker who represents a rural district in northern France, stood alongside them and slammed the Mercosur deal as “a sacrifice of French agriculture to save the German car industry.” With the deep unpopularity of the agreement at home, Macron has been left in the uncomfortable position of having to oppose the deal, while trying to defend the concessions he obtained.   Writing on X, Macron said Thursday he was fighting for “farming sovereignty” and hailed pledges from the European Commission to increase the budget for the Common Agricultural Policy in the next EU budget.  An Elysée official on Thursday also told reporters that “a number of advances” had been made on the trade deal, including clauses that would protect European farmers and consumers from sudden floods of goods from Latin America. The French president also tried to strike a defiant tone, insisting “the signature of the agreement is not the end of the story” in his statement online.   But for Macron, the sting of this loss is likely to last.   His political opponents — especially the National Rally — are sure to seize on the vote as a public humiliation for France ahead of local elections in March and next year’s presidential race. Victor Goury-Laffont contributed to this report.

BRUSSELS — Ursula von der Leyen wanted her next EU budget to have a rainy-day fund in case of war, pandemic or competition from other world powers. Instead, the European Commission president is already raiding it to pay off farmers and nail down the Mercosur trade deal. National leaders — including those of Mercosur holdouts France and Italy — have rushed to claim credit for the offer to free up €45 billion for Common Agricultural Policy spending years ahead of schedule. Budget analysts and diplomats, however, called it a major step back from the Commission chief’s initial ambition to help the bloc spend more nimbly in response to global chaos. The concession is part of an attempt to make the EU-Mercosur deal palatable for the bloc’s farmers, who fear their products will be undercut by Latin American exports. The sense of urgency was on full display Wednesday as agriculture ministers made their way to Brussels through snowfall and travel disruption for an extraordinary meeting called in response to last month’s farmer protest in the EU capital. Inside, the exchanges followed a familiar script. Praise for farmers was paired with assurances they had been heard, alongside repeated references to safeguards, support measures and flexibility built into the EU’s draft budget. Yet farmers, in early reactions, seemed less than impressed. In a statement, the Irish Farmers Association said von der Leyen’s proposal “smacks of desperation.” TRADING AWAY THE BUDGET The European Commission’s additional money for farmers isn’t new — it’s been brought forward from an existing rainy day fund in the EU budget proposal, which is still being negotiated and will only come into force in 2028. The Commission set aside a financial buffer to tackle unforeseen emergencies during the mid-term review of the budget in 2030 in an attempt to make the EU’s common cash pot less rigid than it currently is. In order to lock in France and Italy’s support for the Mercosur trade deal, the Commission on Tuesday offered countries the possibility of immediately handing over €45 billion from that cash pot to farmers. Trade Commissioner Maroš Šefčovič said after the ministers’ meeting that the concessions were part of a broader effort to secure backing for the Mercosur deal, which he described as “the biggest free-trade agreement we have negotiated.” Brussels, he added, had gone “further than ever before” with safeguards to address agriculture fears. “We listened to the concerns of farmers and rural communities, and we acted,” Agriculture Commissioner Christophe Hansen said, arguing that the proposed €45 billion could be mobilized as soon as the next EU budget begins in 2028. While this will significantly increase the EU’s agricultural funding in the short term, it will empty the EU’s crisis fund further down the line. “Farmers are taking all the remaining flexibility in the budget,” said Eulalia Rubio, a senior fellow at the Jacques Delors Center think tank, noting that it will eat up EU spending on other areas.  The Commission is showing “its willingness to accept that member states use all flexibility in favor of agriculture [and] not in favor of cohesion [funding to poorer regions]” or other priorities, she said. In a further concession to farmers, the Commission also pointed to a vaguely defined “rural target” worth €48 billion, floated late last year to keep the European Parliament on side during budget talks, as a pot that could be used first and foremost for agriculture. “This comes at the expense of one of the key features of the reform — flexibility,” said an EU diplomat.  Ultimately, without new funding pots, farmers don’t see much to cheer at this point. | Tobias Canales/Hans Lucas/AFP via Getty Images CLAMORING FOR CREDIT Von der Leyen could be encouraged by the initial reactions from capitals: National leaders claimed victory, presenting it as a trophy they had personally scored for their farmers. French President Emmanuel Macron credited his “constant commitment to [France’s] farmers” for the win, while Greek Prime Minister Kyriakos Mitsotakis said it “shows Greece’s voice in Europe is heard more loudly and more clearly.”  And with Rome set to cast the tie-breaking vote on a Mercosur measure Friday, Italian Agriculture Minister Francesco Lollobrigida called the “good news” evidence of “the seriousness of the work carried out by Italy.” Not all ministers were quite so quick to celebrate. Speaking after the extraordinary meeting, Spanish Agriculture Minister Luis Planas described the €45 billion offer as “an interesting and important step forward,” but added that, evidently, discussions on the future CAP were far from over.  Farm lobbyists were more guarded in their praise, however. For Luc Vernet, secretary-general at Farm Europe, the move is “potentially an improvement.”  Vernet zeroed in on the fact that von der Leyen’s offers are merely optional for capitals, “not an obligation” to hand over the cash to farmers. In his view that could lead to disparate outcomes around the bloc, depending on the success that farmers enjoy in negotiating with their governments, “further undermining the C [Common] of the CAP.” Ultimately, without new funding pots, farmers don’t see much to cheer at this point.  “Bringing forward €45bn that has already been promised to Member States isn’t the same as an additional €45bn,” said the Irish Farmers Association. Nektaria Stamouli contributed reporting from Athens.  This article has been updated.

BRUSSELS — Brussels is making a final push to get the European Union’s long-awaited trade deal with the Latin American Mercosur bloc over the finish line this week. The European Commission is expected to issue a declaration aimed at reassuring countries that have held out against the deal before a decisive vote on Friday, five officials with direct knowledge of the discussions told POLITICO. While the substance of the declaration is still unclear some of the officials, speaking on condition of anonymity, suggested they could include reassurances on payments to European farmers. That would be critical for winning back the support of Italian Prime Minister Giorgia Meloni, who pulled the emergency brake before an EU leaders’ summit in Brussels last month under pressure from her country’s powerful farming lobby. Under the EU’s voting rules, a so-called qualified majority — of 15 out of the bloc’s 27 member countries representing 65 percent of its population — would be needed to back the deal that has been in the works for a quarter century. Italy, with its large population, effectively holds the casting vote. If the Commission can offer reassurances on some money for farmers under the EU’s next seven-year budget, which runs from 2028 to 2034, that would help soften the impact of a proposed one-fifth reduction in the Common Agricultural Policy, under which the bloc distributes subsidies to farmers. The new concessions may not win over France and Poland, the main opponents of the accord with Mercosur — which groups Argentina, Brazil, Paraguay and Uruguay. But, without Italy, they and their allies would lack the votes to block the deal on Friday. The agriculture ministers of France and Poland are expected to visit Brussels Wednesday to seek reassurances that supplementary safeguards agreed on by the EU institutions to prevent European farmers from being undercut by a possible glut of South American produce are strong enough. If the vote goes through, Commission President Ursula von der Leyen would finally be free to fly to Paraguay as early as next week to sign the deal, which has been under negotiation for over a quarter of a century and would create a free-trade area of more than 700 million people and abolish duties on 90 percent of EU exports. If the vote goes through, Commission President Ursula von der Leyen would finally be free to fly to Paraguay as early as next week to sign the deal. | Olivier Hoslet/EPA POLITICO has reached out to the European Commission for comment. Earlier on Monday, chief spokesperson Paula Pinho said: “We are on the right track to envisage a signing of the agreement and we do hope that will take place quite soon.” The Italian government did not immediately respond to a request for comment.

Top officials in Moscow gloated after the EU’s leaders failed to reach a deal to use Russia’s frozen assets to fund a massive loan to Ukraine.  The bloc’s 27 leaders convened Thursday and debated European Commission President Ursula von der Leyen’s proposal to send Moscow’s immobilized billions to Kyiv but ultimately failed to reach a consensus, instead opting for a €90 billion loan financed by joint debt to keep Ukraine solvent.   Kirill Dmitriev, one of the Kremlin’s top envoys, called the decision a “Major BLOW to EU warmongers led by failed Ursula [von der Leyen].”  “Voices of reason in the EU BLOCKED the ILLEGAL use of Russian reserves to fund Ukraine,” he added in a post on X. “Law and sanity win… for now.”  Grigory Karasin, chairman of the foreign affairs committee in the upper house of the Russian parliament, wrote on Telegram “for now, international law, not Ursula von der Leyen, is prevailing.”  The EU’s climbdown was “a moderately encouraging sign,” he added. “The remnants of a civilized approach to financial traditions have stopped those who were pushing the situation toward a major collapse.”  Thursday’s talks hit a wall after Belgian Prime Minister Bart De Wever refused to drop his objections to using the assets, which are housed in a Brussels-based financial depository and would, he argued, open Belgium up to a salvo of legal and other threats from Moscow.  Those assets will remain immobilized but will not be used to prop up Ukraine’s war-battered economy. Kyiv, which was set to run out of cash as early as next spring as Russia’s full-scale invasion grinds into a fifth year, will instead receive a €90 billion loan guaranteed by the common EU budget.  Ukrainian President Volodymyr Zelenskyy, who attended part of the summit Thursday to push for using the Kremlin’s frozen billions, said Friday morning he was “grateful to all leaders of the European Union for the European Council’s decision on €90 billion in financial support for Ukraine” and hailed the fact that “Russian assets remain immobilized.” 

BRUSSELS — “We have a simple choice,” said Donald Tusk, Poland’s grim-faced prime minister, as he entered one of the most consequential European Union summits in a generation. “Either money today or blood tomorrow. And I am not talking about Ukraine only. I am talking about Europe.” Tusk’s point was that Europeans’ own freedom is on the line in the muddy battlefields of Ukraine: EU countries can either pay to stop Vladimir Putin there now, or fight when his troops invade them next. Tusk’s equation — cash or casualties — exposes the conflict at the heart of all the EU’s struggles over supporting Ukraine. What exactly are the bloc’s 27 members ultimately willing to contribute to save Ukraine, and themselves?  Thursday night’s summit in Brussels offered an answer: ideally, someone else’s money. At 2:56 a.m. on a rainy Brussels night, EU leaders reached a deal to borrow €90 billion on the financial markets to keep Ukraine afloat for the next two years. “We committed, we delivered,” boasted the President of the European Council António Costa. Beyond the spin, the pattern is clear. A divided bloc of European states argued for months in public and private over who should pay the bill, and it’s probably not settled yet. Europe has relied on American military muscle for its defenses since World War II. It counted on American money for Ukraine’s defenses for three years since February 2022. After Donald Trump returned to the White House and ended U.S. funding this year, Europeans increased their contributions — but not by enough to fill the gap.  So the EU’s power players had to find another source to raise the money for Ukraine.  German Chancellor Friedrich Merz and European Commission President Ursula von der Leyen knew how they wanted to get the cash — by raiding Russian assets lodged in a Belgian bank. They spent the past two months trying to persuade fellow leaders to come on board with their plan to use Moscow’s frozen funds for a vast loan for Ukraine.  But Belgium’s Prime Minister Bart De Wever refused, fearing legal action and other reprisals from Putin if the sovereign assets were repurposed to help Kyiv.  Instead, a plan B, first reported by POLITICO last month, was quietly being drafted. When De Wever again rejected the assets idea, Merz backed down and the backup option to use joint EU borrowing gained last-minute support around the summit table.  Under this plan, the EU’s joint borrowing will be guaranteed by the EU budget, which is funded by member countries. Eventually, the Russian assets could be used to repay that loan, though it’s not yet clear. There is no question that Kyiv needs the cash. According to the International Monetary Fund, Ukraine was facing a funding shortfall of €72 billion next year. “There is no more important act of European defense than supporting Ukraine’s defense,” von der Leyen said on the eve of the summit. Unfortunately for the Commission president and others who want to do their best for Ukraine, many Europeans still don’t buy her argument.  The Kiel Institute has been tracking support for Ukraine since the start of Putin’s full-scale invasion in 2022. Its latest update reveals the holes that European nations are leaving in Kyiv’s finances. In a report earlier this month, Kiel analysts said new aid allocations in 2025 might drop to their lowest level since the outbreak of the war in 2022, and were on track to fall far short of what is needed to plug the gap left by America’s withdrawal.  At the same time, the split in contributions between European countries widened. While France and Germany and the U.K. significantly boosted their contributions to Ukraine, Nordic countries like Sweden, Norway and Denmark remained far ahead in terms of the percentages of GDP they spend.  Italy and Spain, however, “contributed very little,” the Kiel Institute said. That same dynamic was on display in the run-up to the summit. Southern EU countries joined Belgium in opposing the reparations loan plan, while Germany and the Nordics pushed hard for it to go through.  Under the terms of the final summit deal, Hungary, Czechia and Slovakia won’t contribute to the funding plan to Ukraine at all. An EU of 27 member states turned into a gang of 24. Arguably, it didn’t need to be so messy.  EU countries, on paper at least, represent a collective economic superpower compared to Russia. The total combined GDP of the EU’s 27 countries’ stands at €18 trillion while Russia’s GDP is €2 trillion.  Even without including Norway and the U.K., Ukraine’s European allies have the resources to beat Putin if they really want to. Perhaps most worryingly for Ukraine’s allies, voters in some of the EU’s biggest economies may be losing interest. A POLITICO Poll of 10,000 people in five Western countries found respondents in Germany and France were even more reluctant to keep financing Ukraine than people in the United States.  In Germany, 45 percent said they would support cutting financial aid to Kyiv, while just 20 percent said they wanted to increase financial assistance. In France, 37 percent wanted to give less and 24 percent preferred giving more. Faced with splits between northern nations that are tiring of spending endless billions on Ukraine and others that never have done, Europe’s leaders opted for the easiest answer this week. And even that was almost too hard.