WARSAW — President Karol Nawrocki said Thursday evening he intends to veto government legislation that lays out the how Poland should spend its €43.7 billion allocation under the EU’s loans-for-weapons scheme known as SAFE. Prime Minister Donald Tusk’s government lacks the necessary votes in the country’s parliament to override the veto. The standoff will inevitably escalate the political feud between Tusk and the president over Poland’s political orientation. Nawrocki, like the nationalist-populist opposition Law and Justice (PiS) party that supports him, views Brussels with skepticism, unlike the pro-EU Tusk administration. Poland is the only country where SAFE has become a political issue. European Commission President Ursula von der Leyen said in December that EU countries had already gobbled up the whole €150 billion from SAFE and were clamoring for more. “The President has lost the chance to act like a patriot. Shame!” Tusk posted on X shortly after Nawrocki announced his decision. The PM said the government will convene for an extraordinary session Friday morning to prepare a response. GOVERNMENT ALLEGES “NATIONAL TREASON” The EU program provides low-interest, long-term loans with a 10-year grace period for principal repayments. The funds are raised by Brussels on capital markets and offer significant savings compared to national borrowing — a crucial issue for Poland, which plans to devote 4.8 percent of its GDP to defense this year. Following Nawrocki’s veto decision, Poland’s SAFE allocation will remain guaranteed, but the rules for spending it will likely be less flexible than they would have been under the legislation Nawrocki blocked. The government had planned to use the money to boost financing for the Border Guard and the police or to upgrade infrastructure. Foreign Minister Radosław Sikorski said before the decision: “If the President vetoes SAFE and we still implement it … I will propose that a plaque with the inscription be placed on every rifle, tank, gun, drone, and anti-drone: ‘Dear soldier of the Polish Army, [President] Nawrocki did not want to give you this.’” Key figures in the Tusk government hammered Nawrocki in the media and online following the decision, calling it “national treason.” The veto also defies the military, whose top brass have spoken out in favor of the SAFE loans. Chief of the General Staff Wiesław Kukuła in February described SAFE as a “game changer” for the military. PRESIDENT RAISES SPECTER OF “MASSIVE FOREIGN LOANS” In his speech, Nawrocki reiterated the arguments he has been rolling out against SAFE for weeks now, claiming the Security Action for Europe loans would saddle Poland with long-term debt and expose the country to exchange-rate risks.  “The SAFE mechanism is a massive foreign loan taken out for 45 years in a foreign currency, with interest costs that could reach as much as PLN180 billion [€42 billion]. Poland would therefore have to repay an amount roughly equal to the value of the loan itself in interest, with Western banks and financial institutions standing to profit from it,” Nawrocki said. The president also argued the scheme could allow Brussels to attach political conditions to Poland’s defense financing and would benefit foreign arms-makers disproportionately.  “SAFE is a mechanism under which Brussels, through the so-called conditionality principle, could arbitrarily suspend financing while Poland would still have to continue repaying the debt. That’s why it must be said clearly: Security subject to conditions is not security. Poland’s security cannot depend on decisions taken elsewhere,” Nawrocki declared. “I have decided that I will not sign the law that would allow Poland to take out a SAFE loan. I will never sign legislation that strikes at our sovereignty, independence, and economic and military security.” Instead, Nawrocki renewed his proposal for a domestic alternative to SAFE that would mobilize money to finance arms purchases without loans or interest payments — by involving the National Bank of Poland’s vast gold reserves. With 550 tons of gold stored in domestic and foreign vaults, the NBP is one of Europe’s top gold hoarders. Central bank chief Adam Glapiński said last week that the NBP holds around 197 billion złoty in “unrealized gains resulting from the increase in the value of the bank’s gold reserves,” and is considering using part of that to support defense spending. The operations would involve transferring the profits generated by the NBP to a dedicated vehicle, the Polish Defense Investment Fund. Glapiński also said the gains would be realized by transactions reducing the share of gold in the bank’s portfolio. 2027 ELECTIONS ON HORIZON Tusk and his ministers have lambasted the gold idea as highly speculative and said it was inconsistent with the central bank’s role as the guardian of Poland’s financial stability. The government has also said that nearly all of Poland’s SAFE money will go to domestic manufacturers, creating jobs and stimulating economic growth. The clash over SAFE comes as Poland prepares for a parliamentary election next year in which PiS hopes to defeat Tusk’s pro-EU coalition. Polls suggest that Tusk’s party, the liberal Civic Coalition, might come first but could lack the votes to form a majority.  The PiS, meanwhile, could secure a majority if it allies with the far-right Confederation party and with the even-more-extreme, antisemitic Confederation of the Polish Crown.

BRUSSELS — The EU’s six largest economies have thrown their weight behind plans to centralize oversight of some of Europe’s biggest financial companies under a single supervisor, according to a document obtained by POLITICO. The finance ministers of France, Germany, Italy, the Netherlands, Poland and Spain — the so-called “E6” group — backed the idea in a six-page letter addressed to the European Commission, the Eurogroup and the Council of the European Union. The letter outlined multiple initiatives and deadlines that Brussels should pursue this year. The goal is to create a deeper financial market to “strengthen Europe’s growth potential, enhance its economic sovereignty and provide a stronger foundation for financing common priorities,” the letter said. Among the most contentious initiatives is introducing EU supervision of “the most systemic, relevant, cross-border financial market infrastructures” amid firm resistance from a group of small countries, led by Ireland and Luxembourg, which rely on their outsized finance sectors and are reluctant to cede control to the EU level. EU leaders are set to discuss how best to speed up Brussels’ decade-long plans to create a U.S-style financial market next week after years of lackluster results amid vying national interests. Ireland has already sounded the alarm of the E6 group, as smaller countries fret that their views will be sidelined if countries club together to integrate their financial markets. In the letter, the E6 ministers said creating a “savings and investments union … has become an urgent strategic necessity” and that they commit to “taking action at European as well as at national level.” Other targets in the letter include reviving the bloc’s market for resold debt, or securitization, minting virtual euro banknotes, and introducing an EU-wide one-stop shop for founding companies, dubbed the 28th regime. There are also calls for greater transparency in stock markets and a push for a legislative package this year to streamline the EU’s financial rules. SEEKING A MAJORITY The idea of a single market watchdog, which would play a role similar to the European Central Bank’s supervisory arm for banking, has long been blocked at EU level due to the opposition of small countries and the lack of Germany’s backing. The support of the major economies is a breakthrough in the likelihood of agreeing to the plan, which the European Commission officially proposed in December but has been informally discussed since the financial crisis. The E6 countries wouldn’t be able to do it alone. They would first have to seek a “qualified majority” across the bloc to pass the proposal. That threshold requires the support of 15 countries that represent at least 65 percent of the EU. Should that fail, nine countries can pursue “enhanced cooperation” together to achieve their aims. The supervision plan would centralize oversight of large, cross-border financial plumbing firms, such as stock exchanges and clearinghouses, under the Paris-based European Securities and Markets Authority. The six countries stop short of fully endorsing the Commission’s December proposal, instead saying it “provides a solid basis for further discussion and allows us to work out the best possible solutions in the coming weeks.” The ministers call for EU countries to reach a political deal on the Commission’s plan by this summer.

When David stepped onto the battlefield, he did not oppose order. He opposed imbalance. He did not reject authority. He rejected disproportionate power concentrated in the hands of a giant. Today, many European taxpayers feel cast in a comparable role. Across the European Union, a growing number of citizens sense that the balance between Brussels and the member states is shifting in ways that were neither clearly articulated nor democratically legitimized. What was conceived as a union of sovereign nations cooperating for peace and prosperity increasingly resembles a polity acquiring its own fiscal architecture — one that reaches directly into the pockets of Europeans. The StopEUTaxes campaign was born from this concern. It is not anti-European. It is not nostalgic. It is not isolationist. It is constitutional. Via Taxpayers Europe At the heart of the European project lies subsidiarity — the principle enshrined in the Maastricht Treaty that decisions should be taken as closely as possible to citizens. Taxation has always been among the most sovereign of competencies. It reflects national political choices, social contracts and economic priorities. It binds voters to governments through accountability. The current debate over new EU ‘own resources’ challenges that settlement. Since 2020, the European Union has entered new terrain. Joint borrowing under the NextGenerationEU program marked an extraordinary response to extraordinary circumstances. The pandemic demanded speed and scale. Member states agreed to mutualized debt to stabilize the single market and avoid fragmentation. But extraordinary measures risk becoming precedents. To repay common debt, the European Commission has proposed expanding EU-level revenue streams — carbon border adjustment mechanisms, digital levies, emissions trading revenues and other instruments framed as technical necessities. From the European Commission’s perspective, these are pragmatic tools to sustain shared projects without increasing national contributions. Yet the constitutional implications are far from technical. Once the union acquires permanent fiscal instruments independent of national treasuries, the nature of the EU changes. A supranational entity financed directly at EU level no longer depends solely on member-state transfers. It gains structural autonomy. Over time, fiscal capacity drives political capacity. The question is not whether these specific levies are justified. The question is whether Europeans have collectively decided to transform the union into something closer to a federal fiscal authority. That debate has not truly taken place. Under President Ursula von der Leyen, the European Commission has demonstrated ambition and managerial resolve. The Green Deal, industrial policy initiatives, capital markets integration, digital regulation and geopolitical positioning have given Brussels a new assertiveness. In moments of crisis, this decisiveness has reassured markets and partners alike. But strength without clearly defined limits generates anxiety. To critics, the cumulative effect of regulatory expansion, centralized borrowing and proposals for permanent ‘own resources’ signals a steady rebalancing of power toward the center. The European Union was never intended to become the United States of Europe through incremental fiscal evolution. It was constructed as a union of member states cooperating within defined competences. Taxation is not merely a revenue mechanism. It is the foundation of democratic accountability. National parliaments debate budgets, justify expenditures and face voters. When fiscal authority migrates upward, accountability chains grow longer and more opaque. Supporters of EU-level taxation argue that shared challenges require shared resources. Climate transition, defense coordination, industrial competitiveness and geopolitical resilience demand investment beyond the scale of individual member states. Fragmentation, they warn, would weaken Europe in a world of continental powers. There is merit in acknowledging those pressures. Yet, integration must follow consent, not precede it. The current trajectory risks creating fiscal facts before a political mandate is secured. Joint debt was justified as temporary. ‘Own resources’ were presented as targeted. Yet the logic of institutional development suggests permanence. Once established, revenue streams rarely disappear. This is where the David and Goliath metaphor resonates. The giant is not a person. It is a system — a structure that grows by incremental extension of competences. The David is not anti-European protest. It is the taxpayer who expects clarity about who taxes, who spends and who is accountable. European integration has historically advanced through treaty change, ratified by national parliaments. If the Union is to evolve into a fiscal entity with autonomous revenue capacity, that evolution deserves explicit political authorization. It should not occur through regulatory layering and budgetary creativity. President von der Leyen herself is no despot. She has navigated war, pandemic recovery and economic disruption with discipline. But leadership in times of crisis must also include restraint in times of normalization. The credibility of the European project depends not only on effectiveness, but also on constitutional integrity. There is a broader economic dimension as well. Europe faces stagnating productivity, deindustrialization pressures and rising budget deficits at national level. Households are experiencing the lingering effects of inflation and high energy costs. In such an environment, proposals for new EU-level revenue instruments — however rationalized — risk deepening the perception of distance between institutions and citizens. Political legitimacy is not measured solely in treaty articles. It is measured in trust. If taxpayers conclude that Brussels acquires fiscal powers without transparent consent, trust erodes. And when trust erodes, integration becomes fragile. The StopEUTaxes campaign is therefore less about any single levy than about drawing a constitutional line. It argues that the union should recommit to subsidiarity — not as rhetoric, but as operational principle. Shared challenges should be addressed through coordination, not quiet centralization. Fiscal sovereignty should remain anchored in member states unless explicitly transferred through democratic mandate. Europe does not need confrontation between capitals and Brussels. It needs clarity. The union’s founding promise was cooperation among sovereign democracies, not the gradual absorption of their core competences. If a federal fiscal Europe is the destination, that case should be made openly to voters across all member states. Until then, prudence is not obstructionism. It is constitutional responsibility. David’s victory was not about dismantling order. It was about restoring balance. In today’s Europe, the call from taxpayers is similar: pause, reflect and ensure that the architecture of integration remains anchored in democratic consent rather than institutional momentum. The future of Europe depends not only on ambition, but on proportionality. And proportionality begins with recognizing that power — especially the power to tax — must always be matched by clear and direct accountability. That is not resistance to Europe. It is defense of the Europe that was promised. Via Taxpayers Europe -------------------------------------------------------------------------------- Disclaimer POLITICAL ADVERTISEMENT * The sponsor is Taxpayers Europe * This political advertisement advocates for limiting the European Union’s fiscal autonomy, opposing the expansion of EU “own resources,” and reinforcing national control over taxation; by addressing joint borrowing under NextGenerationEU, EU revenue instruments such as carbon border mechanisms and digital levies, and the broader constitutional balance between Brussels and member states, it seeks to influence policymakers and public debate on EU fiscal governance and sovereignty, bringing it within the scope of the TTPA. More information here.

European Central Bank President Christine Lagarde has urged EU governments to rely on “coalitions of the willing” to push through long-stalled economic reforms, arguing the bloc doesn’t need all 27 countries on board to move forward. In an interview with the Wall Street Journal published Saturday, Lagarde pointed to the 21-country eurozone as proof that deeper integration can work without full unanimity of the EU member states. “We do not have the 27 around the table, and yet it works,” she said. Lagarde’s remarks come as EU leaders debate how to complete the bloc’s long-stalled capital markets union. The project, now dubbed the “Savings and Investments Union,” is intended to deepen cross-border financial markets and mobilize private savings. Frustration over slow progress has led several large EU member states, including France, Germany, Italy and Spain, to back a two-speed approach that would allow smaller groups of countries to integrate more quickly. European Commission President Ursula von der Leyen has said the EU could consider “enhanced cooperation” if unanimity cannot be reached. Lagarde, whose term as ECB president runs until October 2027 and who has faced speculation about a possible early departure, said Europe should focus on delivering concrete reforms. In a sign of growing impatience, Lagarde earlier this month sent EU leaders a five-point checklist of “urgently needed” measures under the subject line “time for action,” outlining measures on capital markets integration, corporate harmonization and research coordination. Even partial implementation of those measures would significantly boost Europe’s growth potential, she told the Wall Street Journal.

BRUSSELS — U.S. President Donald Trump’s threats to annex Greenland were the “epiphany moment” for Europe’s six largest economies to club together and speed up financial market reform, Spanish Economy Minister Carlos Cuerpo told POLITICO. The new group, dubbed “E6” in Brussels, is an exclusive club among the EU’s six largest economies — France, Germany, Italy, the Netherlands, Spain and Poland — designed to break political deadlocks that have hamstrung efforts to create a U.S.-style financial market over the last decade. Without action, the six countries fear that Europe’s economy will fail to keep pace with the U.S. and China, and be further squeezed in a geopolitical world that has become increasingly transactional. The goal is to put “politically difficult discussions on the table to be able to unlock files that have been locked so far,” said Cuerpo, who has long campaigned to make EU bodies better at delivering concrete policy decisions. “Building those bridges can then be a good first step towards an overall solution.” The club will also help the six countries coordinate ahead of G7 meetings with Canada, Japan, and the U.S. on strategic issues, such as securing access to critical rare materials, following China’s threat to restrict exports. The E6 club has only convened twice and is already aiming to present EU leaders with specific proposals at the next European Council summit in March. Critics, such as Ireland and Portugal, fear the six-country club could trigger a two-speed Europe, in which the biggest nations will sideline smaller countries that disagree with E6’s agenda — especially when it comes to creating a watchdog to supervise the bloc’s biggest financiers. European Commission President Ursula von der Leyen has suggested that EU countries should break off into smaller groups and pursue financial integration through “enhanced cooperation,” if the so-called Savings and Investments Union doesn’t progress by June. To focus minds, von der Leyen will produce a roadmap that the E6 hopes to contribute toward, complete with a list of reforms and deadlines for leaders to discuss. The Commission’s first significant policy will be a “28th regime,” an EU-wide legal framework due March 18 that’ll offer companies certain uniform rules to operate easily across the bloc. A SUPERGROUP IS BORN The spark that triggered E6’s emergence came during a ministerial breakfast of coffee and croissants in Brussels on a cold January morning, when Cuerpo’s frustration over EU inaction boiled over. Trump had thrown the NATO alliance into disarray with his renewed demands to “own” Greenland, right after removing the Venezuelan leader Nicolás Maduro from power. None of these topics had made it onto the ministers’ monthly Ecofin agenda, triggering an outburst from Cuerpo, who lamented the lack of political debate over Europe’s relationship with the U.S. His outburst couldn’t have come at a better time for the finance ministers of France and Germany. The two men, Roland Lescure and Lars Klingbeil, had met just 24 hours earlier to discuss how best to revive EU economic initiatives that had grown stagnant. Invitations for a virtual meeting among E6 countries arrived within a week. Roland Lescure (right) and Lars Klingbeil met to discuss how best to revive EU economic initiatives that had grown stagnant. | Bernd von Jutrczenka/picture alliance via Getty Images “Lars and Roland pushed to convene all six of us and that’s how it got started,” Cuerpo said.  Monday’s discussion focused on strengthening supply chains to critical rare materials and how to quickly progress on deepening the bloc’s financial markets. These included cutting red tape and introducing the so-called 28th regime. The next E6 meeting on March 9 will home in on promoting investment in defense and how to promote the euro on the international stage. MIXED RECEPTION The reception from outside the exclusive group has been mixed. Some believe the E6 could lead to meaningful change, while others fear their voices will be drowned out in the pursuit of swift progress. There’s a third group that believes the six countries will struggle to find common ground at all. Portugal’s finance minister, Joaquim Miranda Sarmento, urged the six countries to respect the EU’s treaties during the Eurogroup on Monday after Germany’s Klingbeil briefed his peers on E6 discussions — a transparency pledge that failed to appease all skeptical ministers and their aides. “EU supervision was the elephant in the room,” one diplomat who attended the Eurogroup said. “I’m surprised more people didn’t speak up.” Legally speaking, the E6 needs at least nine countries to pursue enhanced cooperation. Even then, the legal workaround is only possible once an initiative fails to muster enough support at EU level. Meanwhile, securing a qualified majority to push legislation through requires the backing of 15 countries that represent at least 65 percent of the total EU population. So, the E6 will need allies to advance its goals in any case. To assuage concerns over E6, Cuerpo is encouraging outside countries to join other discussion forums, such as the “Competitiveness Lab,” an open format launched a year ago, to develop common initiatives among governments seeking to deepen their capital markets. In the meantime, Cuerpo is urging skeptical countries to put their faith in something new, beyond Brussels’ creaking legislative machine. “There are no red lines in the discussions within this group,” Cuerpo said. “I think that should be for the benefit of everyone.” Bjarke Smith-Meyer contributed to this report from Brussels.

ANTWERP, Belgium — European leaders can’t just blame the red tape merchants in Brussels for the EU’s economic weakness and must slash back their own national bureaucracies and protectionist rulebooks. That’s the message European Commission President Ursula von der Leyen is delivering as she heads into Thursday’s European Council retreat in the castle of Alden Biesen in the Belgian countryside for a meeting dedicated to reviving flagging EU competitiveness. Fears about Europe’s waning industrial power relative to the U.S. and China are reaching fever pitch, but the EU institutions in Brussels are at loggerheads with national capitals such as Berlin and Rome over who to blame for bureaucratic overkill. Sensing Thursday’s Council meeting could turn into an ambush, with European leaders ganging up to bash Brussels for overburdening industry with rules on everything from chemicals to cattle, von der Leyen hit back in two pre-Council speeches on Wednesday. “We must also look at the national level … the extra layers of national legislation that just make businesses’ lives harder and create new barriers in our single market,” she said in her first speech, to the European Parliament in Strasbourg. She was identifying long-standing grievances that Europe is still awash with regulatory hurdles that prevent the 27 member countries from effectively working as one joint commercial zone. These complaints range from national barriers thwarting the formation of a Continent-wide capital market, through to non-recognition of professional qualifications across EU countries and labeling rules that prevent resale of products abroad. Offering one frustrating example of failure in the internal market, she explained that a truck can carry 44 tonnes on Belgian roads, but only 40 tonnes on French roads, creating problems for cross-border trade. “We proposed legislation to harmonize this. Almost two years later, it is still under discussion,” she complained. Von der Leyen has already introduced 10 omnibuses — legislation-slashing packages designed to reduce the burden of red tape, part of a plan to save €15 billion a year. But she is insistent that others aren’t doing their part. In her second speech, at an industrial summit in Antwerp, she tackled the same theme, underlining dysfunction among the national capitals. Offering one frustrating example of failure in the internal market, she explained that a truck can carry 44 tonnes on Belgian roads, but only 40 tonnes on French roads, creating problems for cross-border trade. | Sebastian Kahnert/picture alliance via Getty Images “Shipping waste from one member state to another should be efficient, easy, and quick. But different national practices … make it extremely complex. And some member states, for example, only accept correspondence by fax. It can take several months for traders to get a green light from the authorities depending on the different rules of the different member states,” she said. STILL BASHING BRUSSELS If you ask the capitals who’s to blame for overregulation strangling business, it’s Brussels. In the run-up to the Alden Biesen meeting, Germany and Italy drafted a document insisting the EU should “limit itself” in pursuit of new rules. “New legislative proposals that are expected to introduce [an] excessive additional administrative burden, should be withdrawn or not be tabled in the first place,” Rome and Berlin said in the joint paper. German Chancellor Friedrich Merz doubled down on that line, deflecting responsibility for his country’s sluggish growth onto Brussels in a speech Wednesday night. When it comes to cutting red tape, “I know that these institutions in the European Union are not as fast as they should be,” he said. “We are fighting against the machinery which is working and working, and producing and producing new regulations.” “The bottleneck for us is parts of the European Commission and unfortunately parts of European Parliament,” he continued. “I’m hearing that Ursula von der Leyen and others are making the way open to reduce red tape fundamentally. But we are frankly, we are not there where we should be. And this is hard work, but we are doing that work.” One European diplomat, granted anonymity to speak frankly, said capitals attacking Brussels “is a part of the game” — even if that “blame game” stood in the way of delivering concrete changes to improve the economy. German Chancellor Friedrich Merz doubled down on that line, deflecting responsibility for his country’s sluggish growth onto Brussels in a speech Wednesday night. | Nicolas Tucat/AFP via Getty Images “National policymakers want to stick to their very national solutions that are, of course, undermining the internal market,” said Georg Zachmann, an economic policy expert at the Bruegel think tank in Brussels. The result, he said, is “a power struggle that leads to this bureaucratization” as the EU and its member countries try to out-legislate each other. Merz’s arguments are indeed receiving short shrift in the Brussels institutions. One EU official was quick to point the finger at capitals: “Leaders need to give a clear signal to their capitals to work on bringing down barriers and cutting red tape. From the EU institutions’ side, it is important to see what else can be done to avoid different interpretations of our decisions. This will be part of the discussions in Alden Biesen.” LONG FRUSTRATION The frustration from the European Commission has been building for a long time. The EU’s industry commissioner, Stéphane Séjourné, has emerged as a key enforcer of closer internal market integration, coming up against skeptical national governments. In a letter sent to capitals late last year, seen by POLITICO, the French centrist politician warned the bloc’s actions “need to be complemented with urgent and concrete actions by all Member States to champion the Single Market and, not least, to address specific barriers at national level.” As part of that drive, Séjourné mapped out a list of the “Terrible Ten” barriers harming the single market and called on capitals to give prior notice of legislation that could create new obstacles. In addition, he said, governments should “name a high-level Single Market Sherpa” who can act as a point person for the critical policy area in Brussels amid fears it too often falls through the gaps between ambassadors and ministers. The EU’s industry commissioner, Stéphane Séjourné, has emerged as a key enforcer of closer internal market integration, coming up against skeptical national governments. | Thierry Monasse/Getty Images “Discussions on the single market have lasted long enough,” Séjourné told POLITICO ahead of Thursday’s talks. “The Commission has done its job identifying single market barriers, country by country, and sector by sector. But it is now for member states to take their responsibilities and actively remove those barriers. We will chase them as far, and fast, as we need to.” A second national diplomat said those pushing the Commission to act “have a bit of a point” because the bloc’s executive has powers to strengthen the single market it is not using. The reason it isn’t using them, though, the diplomat admitted, is because “they are afraid of political backlash if they touch some national holy cows, like Italian beaches or French skiing instructors,” referring to two notorious cases of alleged protectionism. “It’s a bit like this Spider-Man meme … The Commission will continue to propose legislation as the main solution to any problem they identify. But I’m not sure member states as a group are much better.”

EUROPE’S AUTONOMY PUSH EXPOSES OLD FAULT LINES The renewed drive to reduce reliance on Washington is bringing up familiar disagreements ahead of an EU leaders’ summit on Thursday. By NICHOLAS VINOCUR and GABRIEL GAVIN in Brussels While the meeting is not expected to produce binding commitments, it will set a broad political direction for the European Commission. | Sebastien Bozon/AFP via Getty Images EU leaders are gearing up for major fights over issues ranging from joint defense projects to economic reforms as a drive to loosen Europe’s dependence on Donald Trump’s America lays bare deep divisions among the bloc’s 27 countries. Ahead of an informal leaders’ retreat on Thursday focused on competitiveness, capitals had pledged to show unity and plot a path toward greater European autonomy after the U.S. president’s threats against Greenland set off the worst transatlantic crisis in decades. But as leaders prepare for their summit, that united front is already cracking — and long-standing disagreements are resurfacing over how to turn lofty ambitions for “strategic independence” into concrete action. While the meeting is not expected to produce binding commitments, it will set a broad political direction for the European Commission, which is due to draw up proposals ahead of a formal summit in late March. “Everyone around the table must … face a moment of truth,” said Manfred Weber, leader of the European People’s Party, whose members include German Chancellor Friedrich Merz and Commission President Ursula von der Leyen. Leaders should “not complain about each other” but do their “homework” to ensure reforms can be completed, he added. Estonian Foreign Minister Margus Tsahkna told POLITICO ahead of the summit that “Europe has lots of leverage. We just need to stick together and make decisions … instead of whining and complaining, we need to understand that through strength Europe will actually have [a firm] position.” A glaring example is the recent disagreement between EU powerhouses France and Germany, whose leaders clashed over Emmanuel Macron’s refusal to endorse the EU-Mercosur trade deal. In an interview published Tuesday by several European newspapers, the French president trumpeted the need for joint European borrowing to finance ambitious industrial and defense projects — a call that was promptly rebuffed by Germany.  “You will have seen the interview with the French president published today,” said a senior German government official, granted anonymity to discuss sensitive summit preparations. “We think that … this distracts a little from what it’s actually all about, namely that we have a productivity problem.” Other capitals were quick to chime in. “[It’s] good that Macron sees the need to invest in Europe’s future economy,” said an EU diplomat from a mid-sized country. But, the diplomat added, such a push amounts to “daydreaming” given the possibility to spend via the EU’s long-term budget. In his interview, Macron also threatened to suspend a Franco-German program to jointly develop a battle tank, after a blame game over the lack of progress on a joint fighter jet program. “You can imagine that, if the German partner questioned the future of the joint plane, we would have to question the joint tank.” Pool photo by Sebastien Bozon/AFP via Getty Images It’s one of dozens of fault lines being exposed ahead of Thursday’s retreat in a flurry of position papers from EU capitals. While France is advocating “Buy European” policies that would prioritize EU industries for subsidies and public procurement contracts, Nordic and Baltic countries have pushed back against the idea in a joint position paper, saying it would add unwanted complexity just as Europe is trying to deregulate. At the same time, Germany has joined forces with Italy to push back against French initiatives, instead promoting an agenda heavily focused on deregulation. In a joint discussion paper backed by Merz and Italian Prime Minister Giorgia Meloni, they call for an “emergency brake” on new EU legislation, granting capitals the right to stop Brussels from coming up with laws they don’t like. But diplomats from other countries argue that the Berlin-Rome push misses the larger point, which is that Europe needs to wean itself off foreign dependencies. “Simplification (deregulation) is important,” said a second EU diplomat. “But it cannot be the alpha and the omega of our European policy. Bureaucracy isn’t everything. We urgently need to think about supply chains and how to reduce our dependencies.” A third EU diplomat put the situation bluntly: “We have the diagnosis, we have the prescription, we haven’t gone to the pharmacy.” TRUMP IN THE ROOM If these disagreements are now emerging into the cold light of day, it’s because leaders who have long avoided difficult conversations about internal reforms can now no longer afford to do so. Trump’s threats against Greenland triggered a reckoning among leaders during an extraordinary Council gathering in January, at which von der Leyen said Europe must now take the path of independence. Several diplomats briefed on the leaders’ discussions described the summit as a Rubicon moment from which there was no turning back. “Without GDP growth we will be really vulnerable for external shocks,” said Polish Finance Minister Andrzej Domański. The Commission and other EU policymakers, he said, will have to “focus on growth, focus on deregulation and being more ambitious,” something that critics say has been too little, too slow. The problem is that translating that rhetoric into reality comes at huge political cost for leaders. Indeed, reforms to finalize the bloc’s fragmented single market or build up a true European deterrent capacity have been on the table for years, in some cases decades. Leaders have long opted to politely ignore them because following through on reforms would threaten national industries. Take the proposal to form a European capital markets union.  The idea of joining up the EU’s fragmented capital markets to create a far vaster pool of investable capital was first pitched more than a decade ago, and has won endorsement from former European Central Bank President Mario Draghi as a crucial step toward independence. But it has gone nowhere for years due to opposition from Berlin and Rome, among other capitals, which have blocked the initiative due to the threat it poses to regional banks. “Look at the Capital Markets Union,” said the EPP’s Weber. “The concept, the initiatives are on our table for years now.” The elephant in the room when leaders gather Thursday will be Europe’s relationship with the Trump administration. Despite consensus around the need for Europe to plot its own path, several countries are unwilling to risk alienating Washington — or seeing their companies prevented from selling into U.S. markets — due to protective EU policies. Relations between Brussels and Washington may well snap back to normal after the Greenland crisis, some diplomats suggest. But for some leaders, there is no turning back to the way things were before. “As we left the worst of the [Greenland] crisis, there was a cowardly form of relief,” Macron said. “There are threats and intimidation, then all of a sudden Washington retreats, and we think it’s over. But don’t think that for one single second … every day, there are new threats.” Max Griera and Nette Nöstlinger contributed reporting.

The European Union must implement an ambitious package of reforms covering labor mobility, capital markets and simplified bureaucracy by the end of 2026, a discussion paper backed by the governments of Germany, Italy and Belgium said. The one-page document obtained by POLITICO is meant to serve as the basis for discussions between 15 leaders to take place on Thursday before an EU summit later in the day in Alden Biesen, Belgium, where the focus will be on competitiveness. The paper urges the EU to complete the Single Market, slash bureaucratic red tape and chase further trade deals to “open new markets and opportunities for Europe’s economy.” It also spells out a desired timeline for carrying out these reforms. “Our objective is to reach agreement at the March EUCO (European Council gathering) and to anchor this agenda in its conclusions through concrete initiatives, mandates and deadlines, so as to fully implement it by the end of 2026,” the paper reads.

LONDON — Keir Starmer is off to China to try to lock in some economic wins he can shout about back home. But some of the trickiest trade issues are already being placed firmly in the “too difficult” box. The U.K.’s trade ministry quietly dispatched several delegations to Beijing over the fall to hash out deals with the Chinese commerce ministry and lay the groundwork for the British prime minister’s visit, which gets going in earnest Wednesday. But the visit comes as Britain faces growing pressure from its Western allies to combat Chinese industrial overproduction — and just weeks after Starmer handed his trade chief new powers to move faster in imposing tariffs on cheap, subsidized imports from countries like China. For now, then, the aim is to secure progress in areas that are seen as less sensitive. Starmer’s delegation of CEOs and chairs will split their time between Beijing and Shanghai, with executives representing City giants and high-profile British brands including HSBC, Standard Chartered, Schroders, and the London Stock Exchange Group, alongside AstraZeneca, Jaguar Land Rover, Octopus Energy, and Brompton filling out the cast list. Starmer will be flanked on his visit by Trade Secretary Peter Kyle and City Minister Lucy Rigby. Despite the weighty delegation, ministers insist the approach is deliberately narrow. “We have a very clear-eyed approach when it comes to China,” Security Minister Dan Jarvis said Monday. “Where it is in our national interest to cooperate and work closely with [China], then we will do so. But when it’s our national security interest to safeguard against the threats that [they] pose, we will absolutely do that.” Starmer’s wishlist will be carefully calibrated not to rock the boat. Drumming up Chinese cash for heavy energy infrastructure, including sensitive wind turbine technology, is off the table. Instead, the U.K. has been pushing for lower whisky tariffs, improved market access for services firms, recognition of professional qualifications, banking and insurance licences for British companies operating in China, easier cross-border investment, and visa-free travel for short stays. With China fiercely protective of its domestic market, some of those asks will be easier said than done. Here’s POLITICO’s pro guide to where it could get bumpy. CHAMPIONING THE CITY OF LONDON Britain’s share of China’s services market was a modest 2.7 percent in 2024 — and U.K. firms are itching for more work in the country. British officials have been pushing for recognition of professional qualifications for accountants, designers and architects — which would allow professionals to practice in China without re-licensing locally — and visa-free travel for short stays. Vocational accreditation is a “long-standing issue” in the bilateral relationship, with “little movement” so far on persuading Beijing to recognize U.K. professional credentials as equivalent to its own, according to a senior industry representative familiar with the talks, who, like others in this report, was granted anonymity to speak freely. But while the U.K.’s allies in the European Union and the U.S. have imposed tariffs on Chinese EVs, the U.K. has resisted pressure to do so. | Jessica Lee/EPA Britain is one of the few developed countries still missing from China’s visa-free list, which now includes France, Germany, Italy, Spain, the Netherlands, Switzerland, Australia, New Zealand, Japan, Saudi Arabia, Russia and Sweden.  Starmer is hoping to mirror a deal struck by Canadian PM Mark Carney, whose own China visit unlocked visa-free travel for Canadians.  The hope is that easier business travel will reduce friction and make it easier for people to travel and explore opportunities on the ground — it would allow visa-free travel for British citizens, giving them the ability to travel for tourism, attend business conferences, visit friends and family, and participate in short exchange activities.  SMOOTHING FINANCIAL FLOWS The Financial Conduct Authority’s Chair Ashley Alder is also flying out to Beijing, hoping to secure closer alignment between the two countries’ capital markets. He’ll represent Britain’s financial watchdog at the inaugural U.K-China Financial Working Group in Beijing — and bang the drum for better market connectivity between the U.K. and China. Expect emphasis on the cross-border investments mechanism known as the Shanghai-London and Shenzhen-London Stock Connect, plus data sovereignty issues associated with Chinese companies jointly listing on the London Stock Exchange, two figures familiar with the planning said. The Stock Connect opened up both markets to investors in 2019 which, according to FCA Chair Ashley Alder, led to listings worth almost $6 billion. “Technical obstacles have so far prevented us from realizing Stock Connect’s full potential,” Alder said in a speech last year. Alder pointed to a memorandum of understanding being drawn up between the FCA and China’s National Financial Regulatory Administration, which he said is “critical” to allow information to be shared quickly and for firms to be supervised across borders. But that raises its own concerns about Chinese use of data. “The goods wins are easier,” said a senior British business representative briefed on the talks. “Some of the service ones are more difficult.” TAPPING INTO CHINA’S BIOTECH BOOM Pharma executives, including AstraZeneca’s CEO Pascal Soriot, are among those heading to China, as Britain tries to burnish its credentials as a global life sciences hub — and attract foreign direct investment. China, once known mainly for generics — cheaper versions of branded medicine that deliver the same treatment — has rapidly emerged as a pharma powerhouse. According to ING Bank’s global healthcare lead, Stephen Farrelly, the country has “effectively replaced Europe” as a center of innovation. ING data shows China’s share of global innovative drug approvals jumped from just 4 percent in 2014 to 27 percent in 2024. Pharma executives, including AstraZeneca’s CEO Pascal Soriot, are among those heading to China, as Britain tries to burnish its credentials as a global life sciences hub — and attract foreign direct investment. | John G. Mabanglo/EPA Several blockbuster drug patents are set to expire in the coming years, opening the door for cheaper generic competitors. To refill thinning pipelines, drugmakers are increasingly turning to biotech companies. British pharma giant GSK signed a licensing deal with Chinese biotech firm Hengrui Pharma last July. “Because of the increasing relevance of China, the big pharma industry and the U.K. by definition is now looking to China as a source of those new innovative therapies,” Farrelly said. There are already signs of progress. Science Minister Patrick Vallance said late last year that the U.K. and China are ready to work together in “uncontroversial” areas, including health, after talks with his Chinese counterpart. AstraZeneca, the University of Cambridge and Beijing municipal parties have already signed a partnership to share expertise. And earlier this year, the U.K. announced plans to become a “global first choice for clinical trials.” “The U.K. can really help China with the trust gap” when it comes to getting drugs onto the market, said Quin Wills, CEO of Ochre, a biotech company operating in New York, Oxford and Taiwan. “The U.K. could become a global gold stamp for China. We could be like a regulatory bridgehead where [healthcare regulator] MHRA, now separate from the EU since Brexit, can do its own thing and can maybe offer a 150-day streamlined clinical approval process for China as part of a broader agreement.” SLASHING WHISKY TARIFFS  The U.K. has also been pushing for lowered tariffs on whisky alongside wider agri-food market access, according to two of the industry figures familiar with the planning cited earlier. Talks at the end of 2024 between then-Trade Secretary Jonathan Reynolds and his Chinese counterpart ended Covid-era restrictions on exports, reopening pork market access. But in February 2025 China doubled its import tariffs on brandy and whisky, removing its provisional 5 percent tariff and applying the 10 percent most-favored-nation rate. “The whisky and brandy issue became China leverage,” said the senior British business representative briefed on the talks. “I think that they’re probably going to get rid of the tariff.”  It’s not yet clear how China would lower whisky tariffs without breaching World Trade Organization rules, which say it would have to lower its tariffs to all other countries too. INDUSTRIAL TENSIONS The trip comes as the U.K. faces growing international pressure to take a tougher line on Chinese industrial overproduction, particularly of steel and electric cars. But in February 2025 China doubled its import tariffs on brandy and whisky, removing its provisional 5 percent tariff and applying the 10 percent most-favored-nation rate. | Yonhap/EPA But while the U.K.’s allies in the European Union and the U.S. have imposed tariffs on Chinese EVs, the U.K. has resisted pressure to do so. There’s a deal “in the works” between Chinese EV maker and Jaguar Land Rover, said the senior British business representative briefed on the talks quoted higher, where the two are “looking for a big investment announcement. But nothing has been agreed.” The deal would see the Chinese EV maker use JLR’s factory in the U.K. to build cars in Britain, the FT reported last week. “Chinese companies are increasingly focused on localising their operations,” said another business representative familiar with the talks, noting Chinese EV makers are “realising that just flaunting their products overseas won’t be a sustainable long term model.” It’s unlikely Starmer will land a deal on heavy energy infrastructure, including wind turbine technology, that could leave Britain vulnerable to China. The U.K. has still not decided whether to let Ming Yang, a Chinese firm, invest £1.5 billion in a wind farm off the coast of Scotland.

Listen on * Spotify * Apple Music * Amazon Music Donald Trump nutzt seine Rede beim World Economic Forum in Davos für eine klare America-First-Botschaft. Weniger eskalierend als befürchtet, aber ohne Zugeständnisse an Europa. Die zentrale Frage: Was folgt daraus für die transatlantischen Beziehungen – und was ist Europas Antwort? Gordon Repinski mit der Einordnung von Trumps Auftritt, die Erwartungen an Friedrich Merz und der wachsende Handlungsdruck auf Europa. Dazu im Gespräch: Jonathan Martin von POLITICO in Washington. Er ordnet ein nach welchen Mustern Trump agiert und warum Börsen und Märkte dabei eine größere Rolle spielen als diplomatische Appelle. Im 200-Sekunden-Interview spricht die stellvertretende SPD-Fraktionsvorsitzenden Siemtje Möller über Grönland, europäische Souveränität und die Frage, ob Europa mehr tut als nur zu reagieren.  Anschließend richtet sich mit Hans von der Burchard der Blick nach Brüssel: Beim EU-Sondergipfel treffen die Staats- und Regierungschefs aufeinander, um über Zölle, Sicherheitspolitik und die durch das EU-Parlament abgelehnte Mercosur-Ratifizierung zu beraten. Das Berlin Playbook als Podcast gibt es jeden Morgen ab 5 Uhr. Gordon Repinski und das POLITICO-Team liefern Politik zum Hören – kompakt, international, hintergründig. Für alle Hauptstadt-Profis: Der Berlin Playbook-Newsletter bietet jeden Morgen die wichtigsten Themen und Einordnungen. Jetzt kostenlos abonnieren. Mehr von Host und POLITICO Executive Editor Gordon Repinski: Instagram: @gordon.repinski | X: @GordonRepinski. POLITICO Deutschland – ein Angebot der Axel Springer Deutschland GmbH Axel-Springer-Straße 65, 10888 Berlin Tel: +49 (30) 2591 0 information@axelspringer.de Sitz: Amtsgericht Berlin-Charlottenburg, HRB 196159 B USt-IdNr: DE 214 852 390 Geschäftsführer: Carolin Hulshoff Pol, Mathias Sanchez Luna