LONDON — The U.K. will break China’s stranglehold over crucial net zero supply chains, Energy Minister Chris McDonald has pledged. McDonald, a joint minister at the Department for Energy Security and Net Zero and the Department for Business and Trade, told POLITICO he is determined to bolster domestic access to critical minerals. Critical minerals like lithium and copper are used in essential net-zero technologies such as electric vehicles and batteries, as well as defense assets like F35 fighter jets. China currently controls 90 percent of rare earth refining, according to a government critical minerals strategy published last week. McDonald said China’s dominance of mineral processing risks driving up prices for the net zero transition.  The U.K. has made a legally-binding pledge to reduce planet-damaging emissions to net zero by 2050. McDonald fears China has become a “monopoly provider” of critical minerals and that its dominant role in processing allowed China to control the costs for buyers. “We want to capture this supply chain in the U.K. as part of our industrial strategy. To do that … means, ultimately, we’re going to have to wrest control of critical minerals back into a broad group of countries, not just China,” he said. The government’s critical minerals strategy includes a target that no more than 60 percent of U.K. annual demand for critical minerals in aggregate is supplied by any one country by 2035 — including China. “So, if there is an investment from China that helps with that, then that’s great. And if it doesn’t help with that, or it sort of compounds that issue that isn’t consistent with our strategy, then we judge it on that basis ultimately,” McDonald said. Additional reporting by Graham Lanktree.

LONDON — In the corridors of Whitehall, armies of officials are working out how best to spend billions of pounds earmarked for defense equipment. However, they have yet to inform the people it concerns the most: Britain’s arms industry. Many in the sector now fear that they’ve wasted their own money developing cutting-edge gear, as the government drags its feet on awarding contracts. U.K. Prime Minister Keir Starmer’s Labour Party has made a lot of noise on defense since entering government last year, plundering the aid budget to get defense spending to reach 2.6 percent of GDP by 2027 and a promise of 3.5 percent by 2035.  Alongside the funding boost, Starmer asked George Robertson, a Labour Party politician who is a former NATO secretary-general, to lead a major inquiry into how the U.K. would meet geopolitical threats, known as the Strategic Defence Review (SDR). The SDR was well received across the defense industry and viewed as a statement of intent from the government to devote effort and resources to building up the sector, with an emphasis on resilience and innovation.  Those good intentions were supposed to be followed by a series of complementary announcements — including a defense industrial strategy, the appointment of a new national armaments director, and a defense investment plan.  The industrial strategy and armaments director both arrived late, while the defense investment plan is still missing in action. It is now expected after this week’s fall budget.  Six months since the SDR, many in the industry complain that they haven’t received the certainty they need about where the British government — in many cases, their sole buyer —plans to invest.  Business owners say this is limiting their ability to make long-term plans and risks skilled workers departing for other jobs.  One representative of a mid-sized arms manufacturer — granted anonymity like others in this piece in order not to damage commercial prospects — said the problem was that the “big, bold” prescription of the SDR has given way to “repeated deferral, which always happens with delivery plans of this complexity.” INNOVATING IN THE DARK The war in Ukraine has radically reshaped other countries’ understanding of what’s needed on the battlefield, and the SDR set out a clear expectation that innovation would be rewarded. At September’s DSEI — an industry jamboree held in London — it was plain to see that private companies had stepped up to deliver prototypes for novel weaponry and other equipment, from modular robots that can deliver materiel to a battlefield and can also serve as stretchers, to AI that can read and predict threats on the ground in real time.  Defence Minister Luke Pollard said:  “We need to move to war-fighting readiness, and the SDR gave industry a very clear direction of how an increasing defense budget will be spent on new technologies and looking after our people better.” | John Keeble/Getty Images Much of that research and development was done by companies drawing on their own budgets or taking out loans as they wait for news of any specific government contracts.  For small suppliers in particular, the lag could prove existential.  One small manufacturer based in England said: “We are ready to go; we have built factories that could start making equipment tomorrow. But we can’t until an order is placed.” Armored vehicle maker Supacat has said that while its business is stable, suppliers will suffer without a predictable path ahead. “This is about the wider industry and our partners in the supply chain that have been contributing,” Toby Cox, the company’s head of sales, told POLITICO. “Our assumption is we don’t get more [orders], some of these companies will have a downturn in their orders.” KEEPING PRODUCTION LINES WARM Andrew Kinniburgh, defense director general of manufacturers association Make UK, echoed those concerns. While the industry “warmly welcomed” the Defence Ministry’s commitment to boost SME spending, he said, “the MOD must give companies certainty of long-term demand signals and purchase orders, allowing businesses to make the private investments needed in people, capital, and infrastructure.” Mike Armstrong, U.K. managing director of German defense firm Stark, which has recently opened a plant in Britain, added: “Giving the industry a clear view of future requirements is the fastest way to ensure the U.K. and its allies stay ahead.” Even some bigger companies that deal with the government on components for aircraft and submarines have privately complained about putting money into research and development without knowing what the end result will be.  An engineer working at one of Britain’s largest defense firms said: “We have multi-use items that could be for both military and civilian purposes, but cannot invest until we know what government strategy is. If it’s bad for us, it must be so hard for SMEs.” Mike Armstrong, U.K. managing director of German defense firm Stark, added: “Giving the industry a clear view of future requirements is the fastest way to ensure the U.K. and its allies stay ahead.” | Andrew Matthews/Getty Images The issue is not only one of investment, but also of skills. Supacat’s Cox said that keeping production lines warm matters because the workforce behind complex fabrications is fragile. “The U.K. has a skill shortage, particularly around engineering fabrication. If we’ve got an employee in that sector, we absolutely don’t want to lose them in another sector,” he said.  NOT LONG TO GO The Ministry of Defence said it appreciates the need for clarity. Defence Minister Luke Pollard, speaking to POLITICO at DSEI, said:  “We need to move to war-fighting readiness, and the SDR gave industry a very clear direction of how an increasing defense budget will be spent on new technologies and looking after our people better.” He argued there was “a neat synergy” between the “duty of government to keep the country safe and the first mission of this Labour government to grow the economy.” An MOD spokesperson said the defense investment plan would “offer clear, long-term capability requirements that enable industry to plan and unlocking private investment.” They pointed out that £250 million had already been allocated for “defense growth deals” alongside a £182 million skills package, and that the MOD had placed £31.7 billion in orders with U.K. industry in the last financial year. A government official rejected claims that ministers were moving too slowly, pointing to Defence Secretary John Healey’s recent announcement on new munitions factories as exactly the kind of demand signal that industry is looking for.  The director of a large U.K. defense producer said the signs from the government were “encouraging,” specifying that Chancellor Rachel Reeves, having agreed to more money for defense, “wants to see a return on investment.” While most of the country will be braced for Reeves’s big moment on Wednesday when she announces the national budget, one sector will have to hold its breath a little longer. Luke McGee contributed to this report.

Disclaimer: POLITICAL ADVERTISEMENT * The sponsor is Polish Electricity Association (PKEE) * The advertisement is linked to policy advocacy on energy transition, electricity market design, and industrial competitiveness in the EU. More information here The European Union is entering a decisive decade for its energy transformation. With the international race for clean technologies accelerating, geopolitical tensions reshaping markets and competition from other major global economies intensifying, how the EU approaches the transition will determine its economic future. If managed strategically, the EU can drive competitiveness, growth and resilience. If mismanaged, Europe risks losing its industrial base, jobs and global influence.  > If managed strategically, the EU can drive competitiveness, growth and > resilience. If mismanaged, Europe risks losing its industrial base, jobs and > global influence. This message resonated strongly during PKEE Energy Day 2025, held in Brussels on October 14, which brought together more than 350 European policymakers, industry leaders and experts under the theme “Secure, competitive and clean: is Europe delivering on its energy promise?”. One conclusion was clear: the energy transition must serve the economy, not the other way around.  Laurent Louis Photography for PKEE The power sector: the backbone of Europe’s industrial future  The future of European competitiveness will be shaped by its power sector. Without a successful transformation of electricity generation and distribution, other sectors — from steel and chemicals to mobility and digital — will fail to decarbonize. This point was emphasized by Konrad Wojnarowski, Poland’s deputy minister of energy, who described electricity as “vital to development and competitiveness.”  “Transforming Poland’s energy sector is a major technological and financial challenge — but we are on the right track,” he said. “Success depends on maintaining the right pace of change and providing strong support for innovation.” Wojnarowski also underlined that only close cooperation between governments, industry and academia can create the conditions for a secure, competitive and sustainable energy future.  Flexibility: the strategic enabler  The shift to a renewables-based system requires more than capacity additions — it demands a fundamental redesign of how electricity is produced, managed and consumed. Dariusz Marzec, president of the Polish Electricity Association (PKEE) and CEO of PGE Polska Grupa Energetyczna, called flexibility “the Holy Grail of the power sector.”  Speaking at the event, Marzec also stated “It’s not about generating electricity continuously, regardless of demand. It’s about generating it when it’s needed and making the price attractive. Our mission, as part of the European economy, is to strengthen competitiveness and ensure energy security for all consumers – not just to pursue climate goals for their own sake. Without a responsible approach to the transition, many industries could relocate outside Europe.”  The message is clear: the clean energy shift must balance environmental ambition with economic reality. Europe cannot afford to treat decarbonization as an isolated goal — it must integrate it into a broader industrial strategy.  > The message is clear: the clean energy shift must balance environmental > ambition with economic reality. The next decade will define success  While Europe’s climate neutrality target for 2050 remains a cornerstone of EU policy, the next five to ten years will determine whether the continent remains globally competitive. Grzegorz Lot, CEO of TAURON Polska Energia and vice-president of PKEE, warned that technology is advancing too quickly for policymakers to rely solely on long-term milestones.  “Technology is evolving too fast to think of the transition only in terms of 2050. Our strategy is to act now — over the next year, five years, or decade,” Lot said. He pointed to the expected sharp decline in coal consumption over the next three years and called for immediate investment in proven technologies, particularly onshore wind.  Lot also raised concerns about structural barriers. “Today, around 30 percent of the price of electricity is made up of taxes. If we want affordable energy and a competitive economy, this must change,” he argued.  Consumers and regulation: the overlooked pillars  A successful energy transition cannot rely solely on investment and infrastructure. It also depends on regulatory stability and consumer participation. “Maintaining competitiveness requires not only investment in green technologies but also a stable regulatory environment and active consumer engagement,” Lot said.  He highlighted the potential of dynamic tariffs, which incentivize demand-side flexibility. “Customers who adjust their consumption to market conditions can pay below the regulated price level. If we want cheap energy, we must learn to follow nature — consuming and storing electricity when the sun shines or the wind blows.”  Strategic investments for resilience  The energy transition is more than a climate necessity. It is a strategic requirement for Europe’s security and economic autonomy. Marek Lelątko, vice-president of Enea, stressed that customer- and market-oriented investment is essential. “We are investing in renewables, modern gas-fired units and energy storage because they allow us to ensure supply stability, affordable prices and greater energy security,” he said.  Grzegorz Kinelski, CEO of Enea and vice-president of PKEE, added: “We must stay on the fast track we are already on. Investments in renewables, storage and CCGT [combined cycle gas turbine] units will not only enhance energy security but also support economic growth and help keep energy prices affordable for Polish consumers.”  The power sector must now be recognized as a strategic enabler of Europe’s industrial future — on par with semiconductors, critical raw materials and defense. As Dariusz Marzec puts it: “The energy transition is not a choice — it is a necessity. But its success will determine more than whether we meet climate targets. It will decide whether Europe remains competitive, prosperous and economically independent in a rapidly changing world.”  > The power sector must now be recognized as a strategic enabler of Europe’s > industrial future — on par with semiconductors, critical raw materials and > defense. Measurable progress, but more is needed  Progress is visible. The power sector accounts for around 30 percent of EU emissions but has already delivered 75 percent of all Emissions Trading System reductions. By 2025, 72 percent of Europe’s electricity will come from low-carbon sources, while fossil fuels will fall to a historic low of 28 percent. And in Poland, in June, renewable energy generation overtook coal for the first time in history.  Still, ambition alone is not enough. In his closing remarks, Marcin Laskowski, vice-president of PKEE and executive vice-president for regulatory affairs at PGE Polska Grupa Energetyczna, stressed the link between the power sector and Europe’s broader economic transformation. “The EU’s economic transformation will only succeed if the energy transition succeeds — safely, sustainably and with attractive investment conditions,” he said. “It is the power sector that must deliver solutions to decarbonize industries such as steel, chemicals and food production.”  A collective European project  The event in Brussels — with the participation of many high-level speakers, including Mechthild Wörsdörfer, deputy director general of DG ENER; Tsvetelina Penkova, member of the European Parliament and vice-chair of the Committee on Industry, Research and Energy; Thomas Pellerin-Carlin, member of the European Parliament; Catherine MacGregor; CEO of ENGIE and vice-president of Eurelectric; and Claude Turmes, former minister of energy of Luxembourg — highlighted a common understanding: the energy transition is not an isolated environmental policy, it is a strategic industrial project. Its success will depend on coordinated action across EU institutions, national governments and industry, as well as predictable regulation and financing.  Europe’s ability to remain competitive, resilient and prosperous will hinge on whether its power sector is treated not as a cost to be managed, but as a foundation to be strengthened. The next decade is a window of opportunity — and the choices made today will shape Europe’s economic landscape for decades to come. 

AI is intensifying the strategic rivalry between the European Union and the United States, reshaping models of industrial policy and regulatory sovereignty. Amid a flurry of investment announcements, the exposure of security vulnerabilities and the contest over global standards, one critical factor remains largely in the shadows — seldom acknowledged, scarcely quantified and rarely debated: its environmental footprint. The environmental blind spot of a strategic technology The silence surrounding the impact of AI is surprising. A study carried out by Sopra Steria and Opsci.ai analyzing over 3 million posts about AI on social media reveals that its environmental impact accounts for less than 1 percent of the global conversation.1 Worse still, among the 100 most influential AI personalities,2 ecological concerns are only eighth on the list of subjects they discuss most, far behind technological and economic issues. > A study carried out by Sopra Steria and Opsci.ai analyzing over 3 million > posts about AI on social media reveals that its environmental impact accounts > for less than 1 percent of the global conversation AI relies on energy-intensive infrastructure that consumes resources and water, the footprint of which remains largely underestimated, poorly measured and therefore little considered in industrial and political trade-offs. This misalignment can also be explained by the trajectory of the sector itself: driven by the rise of AI, the digital sector is one of the few areas whose environmental impact is continuing to grow, contrary to the climate objectives set out in the Paris Agreement. While American players are already crushing the AI market, technological dependence must not be compounded by a setback on Europe’s carbon trajectory. This omission undermines the credibility of any European industrial strategy built on AI. To serve as genuine drivers of transformation, the leading AI companies must bring full transparency to their environmental trajectory — one they are progressively shaping for Europe. © Sopra Steria Measuring for action: The need for transparency and rigor We must not rush to condemn AI, but we must insist on setting the conditions for its long-term sustainability. This means measuring its impact objectively and transparently, equipping stakeholders with the tools for informed debate, and guiding decision-makers in their technological choices. Recent research indicates that the environmental footprint of a given model can vary significantly depending on where it is assessed, the energy mix of the countries hosting the data centers,3 the duration of the training, the architecture employed and the extent to which low-carbon energy sources are used. Breaking through the methodological vagueness means providing developers, purchasers and decision-makers with common frames of reference, impact simulators, libraries of low-carbon models and low-carbon computing infrastructures. Numerous levers for action and choice exist, provided we have the necessary data and tools. This requirement is not a regulatory whim but a strategic steering tool. Sustainability must be given as much weight as performance or security in industrial and economic trade-offs, because it determines the very viability of Europe’s strategic autonomy. At a time when free international trade faces headwinds, and as the second phase of the AI Act — in force since August 2025 — continues to overlook environmental sustainability, transparency on environmental impact must become a prerequisite for access to European markets, financing and large-scale deployment. Making sustainability a central pillar of European competitiveness Europe has an opportunity to seize. It has a robust standards base that is a powerful lever for competitiveness and responsible innovation, provided that it is supported by targeted investment, shared standards and an industrial strategy aligned with our climate objectives. But Europe can rely on something even more decisive: its people. We have world-class researchers, visionary entrepreneurs, and thriving companies that embody the best of technological and industrial excellence. The recent strategic partnership between ASML, a key supplier to the world’s semiconductor industry, and Mistral, an AI start-up, illustrates Europe’s capacity to connect its industrial and digital strengths to shape a sovereign and sustainable future4. It would be dangerous to suggest that Europe’s technological strength could be built on deferred ecology. What is tolerated as a gray area today will be a competitive handicap tomorrow. Customers, investors and citizens will increasingly demand transparency. The emergence of responsible AI does not mean making it perfect, but making it readable, controllable and adjustable. In a technological landscape dominated by two superpowers that have hitherto favored efficiency and technological competitiveness to the detriment of ethical safeguards, Europe can chart a singular course. It has the means to assert itself by defending responsible AI, at the service of the common good and in line with its fundamental values: the rule of law, individual freedom, social justice and respect for the environment. This orientation is not a brake on innovation, but on the contrary a lever for differentiation, capable of inspiring confidence in a digital ecosystem that is often perceived as opaque or threatening. By betting on ethical, explainable and sustainable AI, Europe would not be giving up global competition, but it would be redefining the rules of the game. More than ever, it must give priority to clarity, stringency and rigor. Only then will AI cease to be a technological equation to be solved and become a genuine project at the service of our society, consistent with our democratic and ecological imperatives. -------------------------------------------------------------------------------- 1. AI & environment: breaking through the information fog – Sopra Steria 2. “The 100 Most Influential People in AI 2024”, Time Magazine 3. ADEME – Arcep study on the environmental footprint of digital technology in 2020, 2030 and 2025 4. https://www.politico.eu/article/dutch-asml-invests-in-french-mistral-in-huge-european-ai-team-up/

BRUSSELS — Call it a digital love triangle. When EU leaders back a “sovereign digital transition” at a summit in Brussels this Thursday, their words will mask a rift between France and Germany over how to deal with America’s overwhelming dominance in technology. The bloc’s founding members have long taken differing approaches to how far the continent should seek to go in detoxing from U.S. giants. In Paris, sovereignty is about backing local champions and breaking reliance on U.S. Big Tech. In Berlin the focus is on staying open and protecting Europe without severing ties with a major German trading partner. The EU leaders’ statement is a typical fudge — it cites the need for Europe to “reinforce its sovereignty” while maintaining “close collaboration with trusted partner countries,” according to a near-final draft obtained by POLITICO ahead of the gathering.    That plays into the hands of incumbent U.S. interests, even as the bloc’s reliance on American tech was again brought into sharp focus Monday when an outage at Amazon cloud servers in Northern Virginia disrupted the morning routines of millions of Europeans.   As France and Germany prepare to host a high-profile summit on digital sovereignty in Berlin next month, the two countries are still seeking common ground — attendees say preparations for the summit have been disorganized and that there is little alignment so far on concrete outcomes. When asked about his expectations for the Nov. 18 gathering, German Digital Minister Karsten Wildberger told POLITICO he wanted “to have an open debate around what is digital sovereignty” and “hopefully … have some great announcements.”  In her first public appearance following her appointment this month, France’s new Digital Minister Anne Le Hénanff, by comparison, promised to keep pushing for solutions that are immune to U.S. interference in cloud computing — a key area of American dominance.   CONTRASTING PLAYBOOKS   “There are indeed different strategic perspectives,” said Martin Merz, the president of SAP Sovereign Cloud. He contrasted France’s “more state-driven approach focusing on national independence and self-sufficiency in key technologies” with Germany’s emphasis on “European cooperation and market-oriented solutions.”  A recent FGS Global survey laid bare the split in public opinion as well. Most French respondents said France “should compete globally on its own to become a tech leader,” while most Germans preferred to “prioritize deeper regional alliances” to “compete together.” The fact that technological sovereignty has even made it onto the agenda of EU leaders follows a recent softening in Berlin, with Chancellor Friedrich Merz becoming increasingly outspoken about the limits of the American partnership while warning against “false nostalgia.” The coalition agreement in Berlin also endorsed the need to build “an interoperable and European-connectable sovereign German stack,” referring to a domestically controlled digital infrastructure ecosystem.  The fact that technological sovereignty has even made it onto the agenda of EU leaders follows a recent softening in Berlin, with Chancellor Friedrich Merz becoming increasingly outspoken about the limits of the American partnership while warning against “false nostalgia.” | Ralf Hirschberger/AFP via Getty Images Yet Germany — which has a huge trade deficit with the U.S — is fundamentally cautious about alienating Washington.   “France has been willing to accept some damage to the transatlantic relationship in order to support French business interests,” said Zach Meyers, director of research at the CERRE think tank in Brussels.   For Germany, by contrast, the two are “very closely tied together, largely because of the importance of the U.S. as an export market,” he said.   Berlin has dragged its feet on phasing out Huawei from mobile networks over fears of Chinese retaliation, against its car industry in particular.   The European Commission itself is walking a similar tightrope — dealing with U.S. threats against EU flagship laws that allegedly target American firms, while fielding growing calls to unapologetically back homegrown tech. STUCK ON DEFINITION  “Sovereignty is not a clearly defined term as it relates to technology,” said Dave Michels, a cloud computing law researcher at Queen Mary University of London.   He categorized it into two broad interpretations: technical sovereignty, or keeping data safe from foreign snooping and control, and political sovereignty, which focuses on strategic autonomy and economic security, i.e safeguarding domestic industries and supply chains.  “Those things can align, and I do think they are converging around this idea that we need to support European alternatives, but they don’t necessarily overlap completely. That’s where you can see some tensions,” Michels said.  Leaders will say in their joint statement that “it is crucial to advance Europe’s digital transformation, reinforce its sovereignty and strengthen its own open digital ecosystem.” “We don’t really have a shared vocabulary to define what digital sovereignty is. But we do have a shared understanding of what it means not to have digital sovereignty,” said Yann Lechelle, CEO of French AI company Probabl. Berlin isn’t the only capital trying to convince Europe to ensure its digital sovereignty remains open to U.S. interests.   Austria, too, wants to take “a leading role” in nailing down that tone, State Secretary Alexandre Pröll previously told POLITICO. The country has been on a mission to agree a “common charter” emphasizing that sovereignty should “not be misinterpreted as protectionist independence,” according to a draft reported by POLITICO. That “will create a clear political roadmap for a digital Europe that acts independently while remaining open to trustworthy partners,” Pröll said.   Next month’s Berlin gathering will be crucial in setting a direction. French President Emmanuel Macron and Merz are both expected to attend. “The summit is intended to send a strong signal that Europe is aware of the challenges and is actively advancing digital sovereignty,” a spokesperson for the German digital ministry said in a statement, adding that “this is not about autarky but about strengthening its own capabilities and potential.” “One summit will not be enough,” said Johannes Schätzl, a Social Democrat member of the German Bundestag. “But if there will be an agreement saying that we want to take the path toward greater digital sovereignty together, that alone would already be a very important signal.” Mathieu Pollet reported from Brussels, Emile Marzolf reported from Paris and Laura Hülsemann and Frida Preuß reported from Berlin.

BRUSSELS — EU countries have five years to prepare for war, according to a military plan that will be presented by the European Commission on Thursday and was seen by POLITICO. “By 2030, Europe needs a sufficiently strong European defence posture to credibly deter its adversaries, as well as respond to any aggressions,” says the draft plan, which will be discussed by defense ministers late Wednesday before being presented to the College of Commissioners on Thursday. It goes to EU leaders next week. The Defence Readiness Roadmap 2030 is a sign of the EU’s growing role in military affairs, a reaction to Russian President Vladimir Putin’s war on Ukraine and U.S. President Donald Trump’s unclear commitment to European security. “A militarised Russia poses a persistent threat to European security for the foreseeable  future,” says the document, which was first reported by Bloomberg. While EU countries are rapidly increasing their defense budgets, much of that spending “remains overwhelmingly national, leading to fragmentation, cost-inflation and lack of  interoperability,” says the 16-page document. The EU executive body is pushing capitals to buy weapons together and wants at least 40 percent of defense procurement to be joint contracts by the end of 2027 — up from less than a fifth now. The roadmap also sets targets for at least 55 percent of arms purchases to come from EU and Ukrainian companies by 2028 and at least 60 percent by 2030. SETTING PRIORITIES The document goes point by point through a series of priorities. One of its main objectives is to fill EU capability gaps in nine areas: air and missile defense, enablers, military mobility, artillery systems, AI and cyber, missile and ammunition, drones and anti-drones, ground combat, and maritime. The plan also mentions areas like defense readiness and the role of Ukraine, which would be heavily armed and supported to become a “steel porcupine” able to deter Russian aggression. It also includes timelines for three key projects: the Eastern Flank Watch, which will integrate ground defense systems with air defense and counter-drone systems and the “European Drone Wall” recently proposed by the Commission to better protect eastern countries; the European Air Shield to create a multi-layered air defense system; and a Defence Space Shield to protect the bloc’s space assets. The Commission hopes EU leaders will approve those three projects by the end of the year. To be ready by 2030, according to the draft roadmap, projects in all priority areas should be launched in the first half of 2026. By the end of 2028, projects, contracts and financing should be in place to tackle the most urgent gaps. The Commission also wants to map the industrial capacity ramp-up needed to fill the gaps and identify supply chain risks and bottlenecks in critical raw materials. That could prove controversial, as European industry has been traditionally reluctant to share too much information about production and supply chains with Brussels. FINDING THE MONEY The document says the EU will help mobilize up to €800 billion to spend on defense, including the €150 billion loans-for-weapons SAFE program, the €1.5 billion European Defence Industrial Programme — which is still under negotiation — the European Defence Fund and, once it’s adopted in 2027, the bloc’s next multi-year budget. It underlines that countries will remain in control, stressing that “member States are and will remain sovereign for their national defence.” Despite that careful language, some member countries are bridling at the EU’s playing a greater role in defense — traditionally an area reserved for national governments. “The overriding objective must be to prepare the conditions so that Member States can fulfil their national and international capability objectives,” Germany said in its official contribution to the EU’s Readiness 2030 Roadmap. Sweden’s contribution, circulated among diplomats, said that “indicators must be output oriented and focusing on measuring tangible results,” rather than demanding to what extent countries are using specific tools like joint procurement. The military plan, under preparation since the summer, makes an effort to address concerns from across the bloc, not just the countries that feel most threatened by Russia. In a nod to Southern European nations such as Italy and Spain, it says “Europe cannot afford being blind on threats coming from other parts of the world,” mentioning the Middle East and Africa. The draft also takes pains to insist that the EU will coordinate closely with NATO. The alliance and some national capitals are worried about Brussels setting up a parallel defense structure that will complicate war plans rather than smoothly integrating with NATO. The goal is to allow the EU to become more independent in a much more perilous world. “Authoritarian states increasingly seek to interfere in our societies and economies,” says the draft. “Traditional allies and partners are also changing their  focus towards other regions of  the world … Europe’s defence posture and capabilities must be ready for the battlefields of tomorrow.”

BRUSSELS — Two of Europe’s tech powerhouses tied the knot on Tuesday in a landmark deal that bolsters a push by politicians to reduce reliance on the United States for critical technology. Dutch microchips champion ASML confirmed it was investing €1.3 billion in French AI frontrunner Mistral, one of the few European companies that is able to go head-to-head with U.S. leaders like OpenAI and Anthropic on artificial intelligence technology.  It’s a business deal soaked in politics. Officials from Brussels to Paris, Berlin and beyond have called for Europe to reduce its heavy reliance on U.S. technology — from the cloud to social media and, most recently, artificial intelligence — under the banner of “tech sovereignty.”  “European tech sovereignty is being built thanks to you,” was how France’s Junior Minister for Digital Affairs and AI Clara Chappaz cheered the deal on X. Europe has struggled to stand out in the global race to build generative AI ever since U.S.-based OpenAI burst onto the scene in 2022 with its popular ChatGPT chatbot. Legacy tech giants like Google quickly caught up, while China proved its mettle early this January when DeepSeek burst onto the scene. European politicians can showcase the ASML-Mistral deal as proof that European consumers and companies still can rely on homegrown tools. That need has never been more urgent amid strained EU-U.S. ties under Donald Trump’s repeated attacks against EU tech regulation. But the deal also illustrates that while Europe can excel in niche areas, like industrial AI applications, winning the global consumer AI chatbot race is out of reach. EUROPE KEEPS CONTROL Tuesday’s deal brings together two European companies that are most closely watched by those in power. ASML, a 40-year-old Dutch crown jewel, has grown into one of the bloc’s most politically sensitive assets in recent years. The U.S. government has repeatedly tried to block some of the company’s sales of its advanced microchips printing machines to China in an effort to slow down Chinese firms.  Mistral is only two years old but has been politically plugged in from the start, with former French Digital Minister Cédric O among its co-founders.      When the company faced the need to raise new funding this summer, several non-European players were floated as potential backers, including the Abu Dhabi-based MGX state fund. There were even rumors Mistral could be acquired by Apple. Apple’s acquisition of Mistral would have been “quite negative” for Europe’s tech sovereignty aspirations, said Leevi Saari, EU policy fellow at the U.S.-based AI Now Institute, which studies the social implications of AI. “The French state has no appetite [for] letting this happen,” he added.  Getting financing from an Abu Dhabi-based fund, conversely, would have reinforced the perception that Europe can provide the millions in venture capital funding needed to start a company, but not the billions needed to scale it.  With this week’s €1.7 billion funding round led by ASML, Europe’s tech sovereignty proponents can breath a sigh of relief. “European champions creating more European champions is the way to go forward and it needs further backing from the EU,” said Dutch liberal European Parliament lawmaker Bart Groothuis in a statement. The deal is also what officials, experts and the industry want to see more of: one where startups are backed by an established European corporation rather than a venture capitalist. “A European corporation finally investing massively in a European scale-up from its industry, even [if] it [is] not directly tied to its core business,” said Agata Hidalgo, public affairs lead at French startup group France Digitale, on Linkedin. A French government adviser, granted anonymity to speak freely on private deals, said they felt “hyped” by the news after months of uncertainty due to Mistral’s refusal to publicly deny talks with Apple. The deal is also expected to avoid any close scrutiny from Europe’s powerful antitrust regulators, which in the past have intervened in mergers and deals to keep the market competitive. Tuesday’s deal is not a full takeover and does not need merger clearance. Nicolas Petit, a competition law professor at the European University Institute, said there was “nothing to see here unless the EU wants to shoot itself in the foot with a bazooka.” “It’s a non-controlling investment, and neither ASML [nor] Mistral AI compete in any product or service market,” he added. REALITY CHECK While the incoming Dutch investment goes a long way toward keeping Mistral in European hands, it also determines the path forward for the French artificial intelligence challenger.  Mistral had already been struggling “to keep up with the race for market share” with other large language models, Saari claimed in a blogpost published last week, in which he cited numbers suggesting that Mistral’s market share is “around 2 percent.”  “Mistral was known to face challenges both technically and in finding a business model,” said Italian economist Cristina Caffarra, who has been leading the charge for European tech sovereignty through the Eurostack movement. “It’s great they found a European champion anchor investor” that will, in part, “protect them from the [venture capital] model.” Tuesday’s deal could mean that Mistral will get more support to work on industrial applications instead of a consumer-facing chatbot that venture capitalists like to propagate.  “With Mistral AI we have found a strategic partner who can not only deliver the scientific AI models that will help us develop even better tools and solutions for our customers, but also help us to improve our own operations over time,” ASML CEO Christophe Fouquet wrote in a post on Linkedin.  ASML’s main customers are the world’s biggest microchips manufacturers, including Taiwan’s TSMC and America’s Intel. The company also has a wide network of industrial suppliers, which could be leveraged as well. For Mistral, catering to European industrial applications could strengthen its business. But it could also be seen as a tacit admission that in the global AI race, Europe has to pick its battles.  Francesca Micheletti and Océane Herrerro contributed reporting.

Mario Draghi has a message to the EU’s leaders: I did my bit, now you do yours. Member countries had praised his proposals for fixing the bloc’s sagging economy when he delivered them. One year on, they’re still dragging their feet on actually following the advice — and Draghi is taking on the role of agitator. Europe has introduced few of the recommendations from his European Commission-backed plan to boost competitiveness, which includes continental-scale investments in infrastructure, a revamped energy grid providing affordable power to industry, coordinated military procurement to wean the bloc off of U.S. arms, and a unified financial sector that can pour capital into EU tech startups. Only last month, Draghi warned that governments must make “the massive investments needed in the future,” and “must do it not when circumstances have become unsustainable, but now, when we still have the power to shape our future.” DRAGGING IT OUT   It’s not the first time that the ex-European Central Bank chief has issued dire warnings on Europe’s dimming prospects. When he first presented his report in Brussels, Draghi spoke of the “slow agony” of decline. At the time, EU leaders across the political spectrum heaped praise on the MIT-trained economist’s reforming vision.  French President Emmanuel Macron said that Europe needed to “rush” to deliver the Draghi agenda. Spanish Prime Minister Pedro Sánchez threw his weight behind the reforms to avoid what he called the risk of falling behind in the most “cutting-edge technological sectors.” Even Germany’s Friedrich Merz, who disagrees with Draghi on the key issue of joint EU debt, parroted the economist when he said that Germany would “do whatever it takes” to shore up its defense sector — a reference to Draghi’s now-famous dictum on the eurozone crisis. But while leaders say they agree on the need for a more cohesive EU, behind the scenes the reform agenda is stalling. “The Draghi report has become the economic doctrine of the EU, and everything we’ve proposed since has been aligned with it,” Stéphane Séjourné, the Commission executive vice president charged with industrial strategy, told POLITICO. Still, he admitted that the “’Draghi effect’ too often fades when legislative texts are discussed by member states.”    A report by the European Policy Innovation Council think tank found that only 11 percent of the Draghi report had been acted on. In the field of energy, no actions have been completed at all. “It’s national interests, it’s national policies, sometimes it’s party political,” said MEP Anna Stürgkh, who recently authored a European Parliament study on the electricity grid. Speaking at an event about the Draghi report one year on, the Austrian Renew Europe lawmaker explained that it often came down to individual countries not wanting to share cheap energy with their neighbors.  In the field of energy, no actions have been completed at all. | Hannibal Hanschke/EPA “If they interconnect with countries that have higher energy prices, their prices will go up,” she said. “That is a fact.”  “It’s not the Commission which is not doing the banking union,” Spanish economist and former MEP Luis Garicano said at the same event, referencing the push to break down the thicket of national rules and vested interests that keeps the banking sector fragmented and country-specific. “It’s the governments that don’t actually want to allow the capital to flow from one country to the next.”  That same parochialism comes up again and again, from common debt — vetoed by so-called frugal countries like Germany and the Netherlands — to defense or to financial sector integration. It doesn’t help that countries are tightening their belts after the Covid-era spending splurge, leaving little money to pursue strategic aims. THE BULLY PULPIT    Draghi is a man used to wielding power directly, having injected hundreds of billions of euros into the eurozone economy during his tenure as ECB president. Earlier this decade he served over a year and a half as the prime minister of Italy.  In his latest incarnation as Europe’s Jiminy Cricket — the unheeded moral advisor — Draghi only has persuasion at his disposal. If on the one hand the frantic pace of events has drawn attention and bureaucratic resources away from the reform program, it’s also served as a powerful validation of his thesis. Draghi has long been a proponent of pooled sovereignty — which is to say that the EU’s member countries are more powerful when they act as a bloc, even if they lose some freedom at the national level. The problem is that it’s up to governments to decide to act. By February, Draghi was already chiding governments for putting the brakes on meaningful change during an appearance in front of the European Parliament. “You say no to public debt, you say no to the single market, you say no to create the capital market union. You can’t say no to everybody [and] everything,” he said. Now, as an intransigent U.S. embarrasses Europe on the world stage, Draghi has warned the window for change may be closing. The way that President Donald Trump got the better of EU negotiators, who were under pressure from capitals to come to a deal, was a case in point.  This was a “very brutal wake-up call,” Draghi warned at a meeting in the Italian seaside town of Rimini last month.  “We had to resign ourselves to tariffs imposed by our largest trading partner and long-standing ally, the United States,” he said. “We have been pushed by the same ally to increase military spending, a decision we might have had to make anyway — but in ways that probably do not reflect Europe’s interests.” The Secretariat-General, which reports to President Ursula von der Leyen, has set up a special unit to work on it. | Jessica Lee/EPA EYES ON BRUSSELS If Draghi is the brain that dreamed up the EU’s economic reform program, then the Commission’s bureaucrats are the hands charged with implementing it. The Secretariat-General, which reports to President Ursula von der Leyen, has set up a special unit to work on it. It’s headed by Heinz Jansen, a German official previously in the Economic Affairs Directorate, and eight staff in total. Critics argue this is a paltry number of staff to be attached to the task force, and that the EU executive could have set up a dedicated directorate. “The president attaches great importance to the implementation of the Competitiveness Compass,” a Commission spokesperson told POLITICO, referring to the EU executive’s plans to implement Draghi’s recommendations. According to officials who spoke with POLITICO, the task force mainly works on delivering wins on the ground, pooling funds and channeling them into a handful of core projects that might give Europe a shot at competing with the U.S. and China technologically. The Commission merged several programs into a new €410 billion fund to finance common industrial aims in its budget proposal, and is issuing a recommendation to governments to coordinate their investments this fall. But here, too, that will inevitably trigger tensions. “Can you really imagine a big EU country funding an industrial plant in Slovenia with its own taxpayers’ money?” asked one EU official. “There is a lack of ambition … the EU executive is taken hostage by some big countries.” “For years, the European Union believed that its economic size, with 450 million consumers, brought with it geopolitical power and influence in international trade relations,” Draghi said. “This year will be remembered as the year in which this illusion evaporated.” Jacopo Barigazzi and Nicholas Vinocur contributed reporting to the article.

Mr. Marcin Laskowski | via PGE The European Union finds itself navigating an era of extraordinary challenges. From defending our shared values against authoritarian aggression to preserving unity in the face of shifting geopolitical landscapes, the EU is once again being tested. Covid-19, the energy crisis, the full-scale Russian war against Ukraine and renewed strains in international relations have taught us a simple lesson: a strong Europe needs capable leaders, resilient institutions and, above all, stable yet flexible financial frameworks. The debate on the next Multiannual Financial Framework (MFF) is therefore not only about figures. It is, fundamentally, a debate about Europe’s security, resilience and its future. From the perspective of the power sector, the stakes are particularly high. Electricity operators live every day with the consequences of EU regulation, carrying both the costs of compliance and the opportunities of EU investment support. Data confirms that European funds channeled into the electricity sector generate immense value for the EU economy and consumers alike. Why? Because electrification is the backbone of Europe’s industrial transformation. The Clean Industrial Deal makes it clear: within a few short years, Europe must raise the electrification rate of its economy by 50 percent — from today’s 21.3 percent to 32 percent by 2030. That means the future of sectors as diverse as chemicals, steel, food processing and high-tech manufacturing is, in reality, a debate about electrification. If this transition is not cost-effective, Europe risks eroding its global competitiveness rather than strengthening it. > That means the future of sectors as diverse as chemicals, steel, food > processing and high-tech manufacturing is, in reality, a debate about > electrification. Electrification is also central to REPowerEU — Europe’s pledge to eliminate dependence on Russian fossil fuels. It is worth recalling that in 2024 the EU still paid more to Russia for oil and gas (€21 billion) than it provided in financial support to Ukraine (€19 billion). Only a massive scale-up of clean, domestic electricity can reverse this imbalance once and for all. But this requires a fresh approach. For too long, the power sector has been seen only through the lens of its own transition. Yet without power sector, no other sector will decarbonize successfully. Already today, electricity accounts for 30 percent of EU emissions but has delivered 75 percent of the reductions achieved from the Emissions Trading Scheme. As electrification accelerates, the sector — heavily reliant on weather-dependent renewables — faces growing costs in ensuring security of supply and system stability. This is why investments must also focus on infrastructure that directly enhances security and resilience, including dual-use solutions such as underground cabling of electricity distribution grids, mobile universal power supply systems for high/medium/low voltage, and advanced cyber protection. These are not luxuries, but prerequisites for a power system capable of withstanding shocks, whether geopolitical, climatic or digital. > For too long, the power sector has been seen only through the lens of its own > transition. Yet without power sector, no other sector will decarbonize > successfully. The European Commission estimates that annual investment needs in the power sector will reach €311 billion from 2031— nearly ten times more than the needs of industry sector. This is an unavoidable reality. The critical question is how to mobilize this capital in a way that is least burdensome for citizens and businesses. If mishandled, it could undermine Europe’s industrial competitiveness, growth and jobs. The MFF alone cannot deliver this transformation. Yet it can, and must, be a vital part of the solution. The European Parliament rightly underlined that completing the Energy Union and upgrading energy infrastructure requires continued EU-level financing. In its July proposal, the Commission earmarked 35 percent of the next budget — about €700 billion — for climate and environmental action. These funds must be allocated in a technology-neutral way, systematically covering generation, transmission, distribution and storage. Public-good investments such as power grids — especially local and regional distribution networks — should be treated as a top priority, enabling small and medium-sized enterprises and households to deploy renewables, access affordable energy and reduce energy poverty. > The debate is not only about money, it is also about the way it is spent. The debate is not only about money, it is also about the way it is spent.  A cautious approach is needed to the “money for reforms” mechanism. EU funds for energy transition must not be judged through unrelated conditions. Support for investments in energy projects must not be held hostage to reforms not linked to energy or climate. This caution should also apply to extending the “do no significant harm” principle to areas outside the scope of the Taxonomy Regulation, where it risks adding unnecessary complexity, administrative burden and uncertainty. The focus must remain firmly on delivering the infrastructure and investments needed for decarbonization and security. Moreover, EU budget rules must align with state aid frameworks, particularly the General Block Exemption Regulation, and reflect the long lead times required for power sector investments. At the same time, Europe cannot afford to lose public trust. The green transition will not succeed if imposed against citizens; it must be built with them. Europe needs more carrots, not more sticks. The next EU budget, therefore, must be more than a financial plan. It must be a strategic instrument to strengthen resilience, sovereignty and competitiveness, anchored in the electrification of Europe’s economy. Without it, we risk not only missing our climate targets but also undermining the very security and unity that the EU exists to defend.

European Council President António Costa appeared to concede the war in Ukraine was a factor in the EU’s accepting its much-criticized trade deal with the United States, in a major break from the official line taken by the EU executive. “We certainly do not celebrate the return of tariffs. But escalating tensions with a key ally over tariffs, while our Eastern border is under threat, would have been an imprudent risk,” Costa said in a keynote speech at the Bled Strategic Forum in Slovenia on Monday. “Stabilizing transatlantic relations and ensuring U.S. engagement in Ukraine’s security has been a top priority,” he added. The surprisingly candid comments contradict the stance of European Commission President Ursula von der Leyen, who has insisted the unbalanced pact, which set a 15 percent base tariff on European exports, had nothing to do with maintaining U.S. President Donald Trump’s support for Ukraine. “There is no linkage between the two,” von der Leyen said during a press conference in Finland on Friday, when asked whether security concerns had swayed the EU to agree to the July deal. She defended the pact, which has been criticized in some European capitals as an embarrassing capitulation to American demands, as “a good trade deal.” But Costa, who represents the interests of EU governments in Brussels, acknowledged “the frustration felt by many Europeans, who perceive the Union as having been too passive in shaping this summer’s developments on trade, relations with the U.S. and Ukraine.” He also fired a warning shot at Washington, which has attacked the EU over its tech regulations, arguing they amount to regulatory overreach and censorship. Trump threatened last week to slap tariffs on nations whose digital rules “discriminate” against American firms.  “Our partners — including the U.S. — must know that the EU will always defend its sovereignty, its citizens, its companies and its values,” Costa said. “Diplomacy should never be mistaken for complacency.” A revolt has slowly been building inside the Commission as top officials voice their discontent at the EU’s response to American saber-rattling and Trump’s continued threats. Teresa Ribera, the European Commission’s executive vice president, told the Financial Times on Friday that the EU “cannot be subject to the will of a third country,” while Industrial Strategy Commissioner Stéphane Séjourné said last week that the EU-U.S. trade deal should be reviewed if Trump’s “intentions” turned into “declarations.”