LONDON — Victory is finally in sight for the Bank of England. But rate cuts aren’t. It’s taken Britain’s central bank longer to bring inflation under control than any of its peers on the global stage, but on Thursday economists expect forecasts to show that inflation in the U.K. will return to the government’s 2 percent target within the next two years, having overshot it for almost all of the last four. The pound surged to its highest level against the dollar in five years last month, as global confidence in the anchor of the world’s financial system appeared to fray due to the news flow out of the U.S. But there will be little else to set the pulse racing: Financial market participants are almost unanimous in expecting no change in the Bank rate from its current 3.75 percent. Even the extraordinary events of January, which saw the U.S. seize Venezuelan leader Nicolas Maduro and U.S. President Donald Trump threaten military force against his NATO allies over Greenland, seem unlikely to induce a shift in the Bank’s communication about the U.K.’s economic outlook. Extrapolating how these seismic events will translate into the U.K. economy has been hard. One of the more hawkish members of the Bank’s Monetary Policy Committee, Megan Greene, argued in a speech last month that while a stronger pound should help keep the cost of imports down, it could easily be offset by other factors, especially if the U.S. Federal Reserve were to be pressured by the White House into cutting U.S. interest rates more aggressively. Greene argued the MPC should focus on what is in its power to control. Here, the Bank is facing a familiar conundrum: growth is sluggish and unemployment is trending higher, but inflation is coming down — even if painfully slowly — and most business surveys suggest wage growth will continue to outstrip what is justified by productivity. Headline inflation ticked up again in December to 3.4 percent, still far above the 2 percent target. The latest data suggest that the economy is still more or less ticking along, growing at an annual rate of 1.4 percent in the three months through November. STILL ‘GRADUAL AND CAUTIOUS’ The narrow vote by the MPC to cut the Bank rate to 3.75 percent from 4 percent at its last meeting in December — and the unwavering message from the Bank that it will take a “gradual and cautious” approach to easing policy — means the committee will stay put on Thursday, according to Deutsche Bank economist Sanjay Raja. UBS economist Anna Titareva, meanwhile, reckons the vote will be split, with both Governor Andrew Bailey and Deputy Governor Sarah Breeden capable of voting again for a cut alongside Alan Taylor and Swati Dhingra, the two external members most concerned about the risks of a slowdown and an accompanying rise in joblessness. But that scenario would still leave Bailey in the minority against the remaining five of nine members in the committee. Most analysts still expect the Bank to cut interest rates twice this year. Inflation is set to fall from April as Chancellor Rachel Reeves’ decision to strip green levies off energy bills causes a drop in final prices for electricity. Deutsche’s Raja expects cuts in March and again in June, but says rates are unlikely to fall any further after that.

The Trump administration wants to work with traditional allies to secure new supplies of critical minerals. But months of aggression toward allies, culminating with since-aborted threats to seize Greenland, have left many cool to the overtures. While the State Department has drawn a lengthy list of participating countries for its first Critical Minerals Ministerial scheduled for Wednesday, a number of those attending are hesitant to commit to partnering with the U.S. in creating a supply chain that bypasses China’s current chokehold on those materials, according to five Washington-based diplomats of countries invited to or attending the event. State Department cables obtained by POLITICO also show wariness among some countries about signing onto a framework agreement pledging joint cooperation in sourcing and processing critical minerals. Representatives from more than 50 countries are expected to attend the meeting, according to the State Department — all gathered to discuss the creation of tech supply chains that can rival Beijing’s. But the meeting comes just two weeks since President Donald Trump took to the stage at Davos to call on fellow NATO member Denmark to allow a U.S. takeover of Greenland, and that isn’t sitting well. “We all need access to critical minerals, but the furor over Greenland is going to be the elephant in the room,” said a European diplomat. In the immediate run-up to the event there’s “not a great deal of interest from the European side,” the person added. The individual and others were granted anonymity to discuss sensitive diplomatic relationships. Their concerns underscore how international dismay at the Trump administration’s foreign policy and trade actions may kneecap its other global priorities. The Trump administration had had some success over the past two months rallying countries to support U.S. efforts to create secure supply chains for critical minerals, including a major multilateral agreement called the Pax Silica Declaration. Now those gains could be at risk. Secretary of State Marco Rubio wants foreign countries to partner with the U.S. in creating a supply chain for the 60 minerals (including rare earths) that the U.S. Geological Survey deems “vital to the U.S. economy and national security that face potential risks from disrupted supply chains.” They include antimony, used to produce munitions; samarium, which goes into aircraft engines; and germanium, which is essential to fiber-optics. The administration also launched a $12 billion joint public-private sector “strategic critical minerals stockpile” for U.S. manufacturers, a White House official said Monday. Trump has backed away from his threats of possibly deploying the U.S. military to seize Greenland from Denmark. But at Davos he demanded “immediate negotiations” with Copenhagen to transfer Greenland’s sovereignty to the U.S. That makes some EU officials leery of administration initiatives that require cooperation and trust. “We are all very wary,” said a second European diplomat. Rubio’s critical minerals framework “will not be an easy sell until there is final clarity on Greenland.” Trump compounded the damage to relations with NATO countries on Jan. 22 when he accused member country troops that deployed to support U.S. forces in Afghanistan from 2001 to 2021 of having shirked combat duty. “The White House really messed up with Greenland and Davos,” a third European diplomat said. “They may have underestimated how much that would have an impact.” The Trump administration needs the critical minerals deals to go through. The U.S. has been scrambling to find alternative supply lines for a group of minerals called rare earths since Beijing temporarily cut the U.S. off from its supply last year. China — which has a near-monopoly on rare earths — relented in the trade truce that Trump brokered with China’s leader Xi Jinping in South Korea in October. The administration is betting that foreign government officials that attend Wednesday’s event also want alternative sources to those materials. “The United States and the countries attending recognize that reliable supply chains are indispensable to our mutual economic and national security and that we must work together to address these issues in this vital sector,” the State Department statement said in a statement. The administration has been expressing confidence that it will secure critical minerals partnerships with the countries attending the ministerial, despite their concerns over Trump’s bellicose policy. “There is a commonality here around countering China,” Ruth Perry, the State Department’s acting principal deputy assistant secretary for ocean, fisheries and polar affairs, said at an industry event on offshore critical minerals in Washington last week. “Many of these countries understand the urgency.” Speaking at a White House event Monday, Interior Secretary Doug Burgum indicated that 11 nations would sign on to a critical minerals framework with the United States this week and another 20 are considering doing so. Greenland has rich deposits of rare earths and other minerals. But Denmark isn’t sending any representatives to the ministerial, according to the person familiar with the event’s planning. Trump said last month that a framework agreement he struck with NATO over Greenland’s future included U.S. access to the island’s minerals. Greenland’s harsh climate and lack of infrastructure in its interior makes the extraction of those materials highly challenging. Concern about the longer term economic and geostrategic risks of turning away from Washington in favor of closer ties with Beijing — despite the Trump administration’s unpredictability — may work in Rubio’s favor on Wednesday. “We still want to work on issues where our viewpoints align,” an Asian diplomat said. “Critical minerals, energy and defense are some areas where there is hope for positive movement.” State Department cables obtained by POLITICO show the administration is leaning on ministerial participants to sign on to a nonbinding framework agreement to ensure U.S. access to critical minerals. The framework establishes standards for government and private investment in areas including mining, processing and recycling, along with price guarantees to protect producers from competitors’ unfair trade policies. The basic template of the agreement being shared with other countries mirrors language in frameworks sealed with Australia and Japan and memorandums of understanding inked with Thailand and Malaysia last year. Enthusiasm for the framework varies. The Philippine and Polish governments have both agreed to the framework text, according to cables from Manila on Jan. 22 and Warsaw on Jan. 26. Romania is interested but “proposed edits to the draft MOU framework,” a cable dated Jan. 16 said. As of Jan. 22 India was noncommittal, telling U.S. diplomats that New Delhi “could be interested in exploring a memorandum of understanding in the future.” European Union members Finland and Germany both expressed reluctance to sign on without clarity on how the framework aligns with wider EU trade policies. A cable dated Jan. 15 said Finland “prefers to observe progress in the EU-U.S. discussions before engaging in substantive bilateral critical mineral framework negotiations.” Berlin also has concerns that the initiative may reap “potential retaliation from China,” according to a cable dated Jan. 16. Trump’s threats over the past two weeks to impose 100 percent tariffs on Canada for cutting a trade deal with China and 25 percent tariffs on South Korea for allegedly slow-walking legislative approval of its U.S. trade agreement are also denting enthusiasm for the U.S. critical minerals initiative. Those levies “have introduced some uncertainty, which naturally leads countries to proceed pragmatically and keep their options open,” a second Asian diplomat said. There are also doubts whether Trump will give the initiative the long-term backing it will require for success. “There’s a sense that this could end up being a TACO too,” a Latin American diplomat said, using shorthand for Trump’s tendency to make big threats or announcements that ultimately fizzle. Analysts, too, argue it’s unlikely the administration will be able to secure any deals amid the fallout from Davos and Trump’s tariff barrages. “We’re very skeptical on the interest and aptitude and trust in trade counterparties right now,” said John Miller, an energy analyst at TD Cowen who tracks critical minerals. “A lot of trading partners are very much in a wait-and-see perspective at this point saying, ‘Where’s Trump really going to go with this?’” And more unpredictability or hostility by the Trump administration toward longtime allies could push them to pursue critical mineral sourcing arrangements that exclude Washington. “The alternative is that these other countries will go the Mark Carney route of the middle powers, cooperating among themselves quietly, not necessarily going out there and saying, ‘Hey, we’re cutting out the U.S.,’ but that these things just start to crop up,” said Jonathan Czin, a former China analyst at the CIA now at the Brookings Institution. “Which will make it more challenging and allow Beijing to play divide and conquer over the long term.” Felicia Schwartz contributed to this report.

BERLIN — Friedrich Merz embarks on his first trip to the Persian Gulf region as chancellor on Wednesday in search of new energy and business deals he sees as critical to reducing Germany’s dependence on the U.S. and China. The three-day trip with stops in Saudi Arabia, Qatar and the United Arab Emirates illustrates Merz’s approach to what he calls a dangerous new epoch of “great power politics” — one in which the U.S. under President Donald Trump is no longer a reliable partner. European countries must urgently embrace their own brand of hard power by forging new global trade alliances, including in the Middle East, or risk becoming subject to the coercion of greater powers, Merz argues. Accompanying Merz on the trip is a delegation of business executives looking to cut new deals on everything from energy to defense. But one of the chancellor’s immediate goals is to reduce his country’s growing dependence on U.S. liquefied natural gas, or LNG, which has replaced much of the Russian gas that formerly flowed to Germany through the Nord Stream pipelines. Increasingly, German leaders across the political spectrum believe they’ve replaced their country’s unhealthy dependence on Russian energy with an increasingly precarious dependence on the U.S. Early this week, Merz’s economy minister, Katherina Reiche, traveled to Saudi Arabia ahead of the chancellor to sign a memorandum to deepen the energy ties between both countries, including a planned hydrogen energy deal. “When partnerships that we have relied on for decades start to become a little fragile, we have to look for new partners,” Reiche said in Riyadh. ‘EXCESSIVE DEPENDENCE’ Last year, 96 percent of German LNG imports came from the U.S, according to the federal government. While that amount makes up only about one-tenth of the country’s total natural gas imports, the U.S. share is set to rise sharply over the next years, in part because the EU agreed to purchase $750 billion worth of energy from the U.S. by the end of 2028 as part of its trade agreement with the Trump administration. The EU broadly is even more dependent on U.S. LNG, which accounted for more than a quarter of the bloc’s natural gas imports in 2025. This share is expected to rise to 40 percent by 2030. German politicians across the political spectrum are increasingly pushing for Merz’s government to find new alternatives. “After Russia’s war of aggression, we have learned the hard way that excessive dependence on individual countries can have serious consequences for our country,” said Sebastian Roloff, a lawmaker focusing on energy for the center-left Social Democrats, who rule in a coalition with Merz’s conservatives. Roloff said Trump’s recent threat to take over Greenland and the new U.S. national security strategy underscored the need to “avoid creating excessive dependence again” and diversify sources of energy supply. The Trump administration’s national security strategy vows to use “American dominance” in oil, gas, coal and nuclear energy to “project power” globally, raising fears in Europe that the U.S. will use energy exports to gain leverage over the EU. Last year, 96 percent of German LNG imports came from the U.S, according to the federal government. | Pool photo by Lars-Josef Klemmer/EPA That’s why Merz and his delegation are also seeking closer ties to Qatar, one of the world’s largest producers and exporters of natural gas as well as the United Arab Emirates, another major LNG producer. Last week, the EU’s energy chief, Dan Jørgensen, said the bloc would step up efforts to to reduce it’s dependence on U.S. LNG., including by dealing more with Qatar. One EU diplomat criticised Merz for seeking such cooperation on a national level. Germany is going “all in on gas power, of course, but I can’t see why Merz would be running errands on the EU’s behalf,” said the diplomat, speaking on condition of anonymity. ‘AUTHORITARIAN STRONGMEN’ Merz will also be looking to attract more foreign investment and deepen trade ties with the Gulf states as part of a wider strategy of forging news alliances with “middle powers” globally and reduce dependence on U.S. and Chinese markets. The EU initiated trade talks with the United Arab Emirates last spring. Gulf states like Saudi Arabia also have their own concerns about dependencies on the U.S., particularly in the area of arms purchases. Germany’s growing defense industry is increasingly seen as promising partner, particularly following Berlin’s loosening of arms export restrictions. “For our partners in the region, cooperation in the defense industry will certainly also be an important topic,” a senior government official with knowledge of the trip said.  But critics point out that leaders of autocracies criticized for human rights abuses don’t make for viable partners on energy, trade and defense. Last week, the EU’s energy chief, Dan Jørgensen, said the bloc would step up efforts to to reduce it’s dependence on U.S. LNG., including by dealing more with Qatar. | Jose Sena Goulao/EPA “It’s not an ideal solution,” said Loyle Campbell, an expert on climate and energy policy for the German Council on Foreign Relations. “Rather than having high dependence on American LNG, you’d go shake hands with semi-dictators or authoritarian strongmen to try and reduce your risk to the bigger elephant in the room.” Merz, however, may not see a moral contradiction. Europe can’t maintain its strength and values in the new era of great powers, he argues, without a heavy dollop of Realpolitik. “We will only be able to implement our ideas in the world, at least in part, if we ourselves learn to speak the language of power politics,” Merz recently said. Ben Munster contributed to this report.

KYIV — Russia broke an energy truce brokered by U.S. President Donald Trump after just four days on Tuesday, hitting Ukraine’s power plants and grid with more than 450 drones and 70 missiles. “The strikes hit Sumy and Kharkiv regions, Kyiv region and the capital, as well as Dnipro, Odesa, and Vinnytsia regions. As of now, nine people have been reported injured as a result of the attack,” Ukrainian President Volodymyr Zelenskyy said in a morning statement. The Russian strike occurred half-way through a truce on energy infrastructure attacks that was supposed to last a week, and only a day before Russian, Ukrainian and American negotiators are scheduled to meet in Abu Dhabi for the next round of peace talks.   The attack, especially on power plants and heating plants in Kyiv, Kharkiv and Dnipro, left hundreds of thousands of families without heat when the temperature outside was −25 degress Celsius, Ukrainian Energy Minister Denys Shmyhal said. “Putin waited for the temperatures to drop and stockpiled drones and missiles to continue his genocidal attacks against the Ukrainian people. Neither anticipated diplomatic efforts in Abu Dhabi this week nor his promises to the United States kept him from continuing terror against ordinary people in the harshest winter,” said Andrii Sybiha, the Ukrainian foreign minister. Last Thursday, Trump said Putin had promised he would not bomb Ukraine’s energy infrastructure for a week. Zelenskyy had said that while it was not an officially agreed ceasefire, it was an opportunity to de-escalate the war and Kyiv would not hit Russian oil refineries in response. “This very clearly shows what is needed from our partners and what can help. Without pressure on Russia, there will be no end to this war. Right now, Moscow is choosing terror and escalation, and that is why maximum pressure is required. I thank all our partners who understand this and are helping us,” Zelenskyy said.

BRUSSELS ― European governments and corporations are racing to reduce their exposure to U.S. technology, military hardware and energy resources as transatlantic relations sour.  For decades, the EU relied on NATO guarantees to ensure security in the bloc, and on American technology to power its business. Donald Trump’s threats to take over Greenland, and aggressive comments about Europe by members of his administration, have given fresh impetus to European leaders’ call for “independence.” “If we want to be taken seriously again, we will have to learn the language of power politics,” German Chancellor Friedrich Merz said last week. From orders banning civil servants from using U.S.-based videoconferencing tools to trade deals with countries like India to a push to diversify Europe’s energy suppliers, efforts to minimize European dependence on the U.S. are gathering pace. EU leaders warn that transatlantic relations are unlikely to return to the pre-Trump status quo. EU officials stress that such measures amount to “de-risking” Europe’s relationship with the U.S., rather than “decoupling” — a term that implies a clean break in economic and strategic ties. Until recently, both expressions were mainly applied to European efforts to reduce dependence on China. Now, they are coming up in relation to the U.S., Europe’s main trade partner and security benefactor. The decoupling drive is in its infancy. The U.S. remains by far the largest trading partner for Europe, and it will take years for the bloc to wean itself off American tech and military support, according to Jean-Luc Demarty, who was in charge of the European Commission’s trade department under the body’s former president, Jean-Claude Juncker. Donald Trump’s threats to take over Greenland, and aggressive comments about Europe by members of his administration, have given fresh impetus to European leaders’ call for “independence.” | Kristian Tuxen Ladegaard Berg/NurPhoto via Getty Images “In terms of trade, they [the U.S.] represent a significant share of our exports,” said Demarty. “So it’s a lot, but it’s not a matter of life and death.” The push to diversify away from the U.S. has seen Brussels strike trade deals with the Mercosur bloc of Latin American countries, India and Indonesia in recent months. The Commission also revamped its deal with Mexico, and revived stalled negotiations with Australia. DEFENDING EUROPE: FROM NATO TO THE EU Since the continent emerged from the ashes of World War II, Europe has relied for its security on NATO — which the U.S. contributes the bulk of funding to. At a weekend retreat in Zagreb, Croatia, conservative European leaders including Merz said it was time for the bloc to beef up its homegrown mutual-defense clause, which binds EU countries to an agreement to defend any EU country that comes under attack. While it has existed since 2009, the EU’s Article 42.7 mutual defense clause was rarely seen as necessary because NATO’s Article 5 served a similar purpose. But Europe’s governments have started to doubt whether the U.S. really would come to Europe’s rescue. In Zagreb, the leaders embraced the EU’s new role as a security actor, tasking two leaders, as yet unnamed, with rapidly cooking up plans to turn the EU clause from words to an ironclad security guarantee. “For decades, some countries said ‘We have NATO, why should we have parallel structures?’” said a senior EU diplomat who was granted anonymity to talk about confidential summit preparations. After Trump’s Greenland saber-rattling, “we are faced with the necessity, we have to set up military command structures within the EU.” At a weekend retreat in Zagreb, Croatia, conservative European leaders including Merz said it was time for the bloc to beef up its homegrown mutual-defense clause, which binds EU countries to an agreement to defend any EU country that comes under attack. | Marko Perkov/AFP via Getty Images In comments to EU lawmakers last week, NATO Secretary-General Mark Rutte said that anyone who believes Europe can defend itself without the U.S. should “keep on dreaming.” Europe remains heavily reliant on U.S. military capabilities, most notably in its support for Ukraine’s fight against Russia. But some Europeans are now openly talking about the price of reducing exposure to the U.S. — and saying it’s manageable. TECHNOLOGY: TEAMS OUT, VISIO IN The mood shift is clearest when it comes to technology, where European reliance on platforms such as X, Meta and Google has long troubled EU voters, as evidenced by broad support for the bloc’s tech legislation. French President Emmanuel Macron’s government is planning to ban officials from using U.S.-based videoconferencing tools. Other countries like Germany are contemplating similar moves. “It’s very clear that Europe is having our independence moment,” EU tech czar Henna Virkkunen told a POLITICO conference last week. “During the last year, everybody has really realized how important it is that we are not dependent on one country or one company when it comes to some very critical technologies.” France is moving to ban public officials from using American platforms including Google Meet, Zoom and Teams, a government spokesperson told POLITICO. Officials will soon make the switch to Visio, a videoconferencing tool that runs on infrastructure provided by French firm Outscale. In the European Parliament, lawmakers are urging its president, Roberta Metsola, to ditch U.S. software and hardware, as well as a U.S.-based travel booking tool. In Germany, politicians want a potential German or European substitute for software made by U.S. data analysis firm Palantir. “Such dependencies on key technologies are naturally a major problem,” Sebastian Fiedler, an SPD lawmaker and expert on policing, told POLITICO. Even in the Netherlands, among Europe’s more pro-American countries, there are growing calls from lawmakers and voters to ring-fence sensitive technologies from U.S. influence. Dutch lawmakers are reviewing a petition signed by 140,000 people calling on the state to block the acquisition of a state identity verification tool by a U.S. company. At the World Economic Forum in Davos, Switzerland, in late January, German entrepreneur Anna Zeiter announced the launch of a Europe-based social media platform called W that could rival Elon Musk’s X, which has faced fines for breaching the EU’s content moderation rules. W plans to host its data on “European servers owned by European companies” and limits its investors to Europeans, Zeiter told Euronews. So far, Brussels has yet to codify any such moves into law. But upcoming legislation on cloud and AI services are expected to send signals about the need to Europeanize the bloc’s tech offerings. ENERGY: TIME TO DIVERSIFY On energy, the same trend is apparent. The United States provides more than a quarter of the EU’s gas, a share set to rise further as a full ban on Russian imports takes effect. But EU officials warn about the risk of increasing Europe’s dependency on the U.S. in yet another area. Trump’s claims on Greenland were a “clear wake-up call” for the EU, showing that energy can no longer be seen in isolation from geopolitical trends, EU Energy Commissioner Dan Jørgensen said last Wednesday. The Greenland crisis reinforced concerns that the bloc risks “replacing one dependency with another,” said Jørgensen, adding that as a result, Brussels is stepping up efforts to diversify, deepening talks with alternative suppliers including Canada, Qatar and North African countries such as Algeria. FINANCE: MOVING TO EUROPEAN PAYMENTS Payment systems are also drawing scrutiny, with lawmakers warning about over-reliance on U.S. payment systems such as Mastercard and Visa. The digital euro, a digital version of cash that the European Central Bank is preparing to issue in 2029, aims to cut these dependencies and provide a pan-European sovereign means of payment. “With the digital euro, Europeans would remain in control of their money, their choices and their future,” ECB President Christine Lagarde said last year. In Germany, some politicians are sounding the alarm about 1,236 tons of gold reserves that Germany keeps in the Federal Reserve Bank of New York. “In a time of growing global uncertainty and under President Trump’s unpredictable U.S. policy, it’s no longer acceptable” to have that much in gold reserves in the U.S., Marie-Agnes Strack-Zimmermann, the German politician from the liberal Free Democratic Party, who chairs the Parliament’s defense committee, told Der Spiegel. Several European countries are pushing the EU to privilege European manufacturers when it comes to spending EU public money via “Buy European” clauses. Until a few years ago, countries like Poland, the Netherlands or the Baltic states would never have agreed on such “Buy European” clauses. But even those countries are now backing calls to prioritize purchases from EU-based companies. MILITARY INVESTMENT: BOOSTING OWN CAPACITY A €150 billion EU program to help countries boost their defense investments, finalized in May of last year, states that no more than 35 percent of the components in a given purchase, by cost, should originate from outside the EU and partner states like Norway and Ukraine. The U.S. is not considered a partner country under the scheme. For now, European countries rely heavily on the U.S. for military enablers including surveillance and reconnaissance, intelligence, strategic lift, missile defense and space-based assets. But the powerful conservative umbrella group, the European People Party, says these are precisely the areas where Europe needs to ramp up its own capacities. When EU leaders from the EPP agreed on their 2026 roadmap in Zagreb, they stated that the “Buy European” principle should apply to an upcoming Commission proposal on joint procurement. The title of the EPP’s 2026 roadmap? “Time for independence.” Camille Gijs, Jacopo Barigazzi, Mathieu Pollet, Giovanna Faggionato, Eliza Gkritsi, Elena Giordano, Ben Munster and Sam Clark contributed reporting from Brussels. James Angelos contributed reporting from Berlin.

BRUSSELS — Hungary says it has asked the European Union’s top court to annul a new law banning the import of Russian gas into the bloc, filing the challenge within hours of the new law taking effect. “Today, we took legal action before the European Court of Justice to challenge the REPowerEU regulation banning the import of Russian energy and request its annulment,” Hungary’s Foreign Affairs and Trade Minister Péter Szijjártó said on X. Member countries agreed to the outright ban on Russian gas late last year in response to the country’s ongoing invasion of Ukraine. The law passed despite Hungary’s opposition. Szijjártó said Hungary’s case was based on three arguments. “First, energy imports can only be banned through sanctions, which require unanimity. This regulation was adopted under the guise of a trade policy measure,” he said. “Second, the EU Treaties clearly state that each member state decides its choice of energy sources and suppliers. “Third, the principle of energy solidarity requires the security of energy supply for all member states. This decision clearly violates that principle, certainly in the case of Hungary.” Slovakia has also said it will challenge the law in court.

Yanmei Xie is senior associate fellow at the Mercator Institute for China Studies. After Canadian Prime Minister Mark Carney spoke at Davos last week, a whole continent contracted leadership envy. Calling the rules-based order — which Washington proselytized for decades before stomping on — a mirage, Carney gave his country’s neighboring hegemonic bully a rhetorical middle finger, and Europeans promptly swooned. But before the bloc’s politicians rush to emulate him, it may be worth cooling the Carney fever. Appearing both steely and smooth in his Davos speech, Carney warned middle powers that “when we only negotiate bilaterally with a hegemon, we negotiate from weakness.” Perhaps this was in reference to the crass daily coercion Canada has been enduring from the U.S. administration. But perhaps he was talking about the subtler asymmetry he experienced just days before in Beijing. In contrast to his defiance in Switzerland, Carney was ingratiating during his China visit. He signed Canada up for a “new strategic partnership” in preparation for an emerging “new world order,” and lauded Chinese leader Xi Jinping as a fellow defender of multilateralism. The visit also produced a cars-for-canola deal, which will see Canada slash tariffs on Chinese electric vehicles from 100 percent to 6.1 percent, and lift the import cap to 49,000 cars per year. In return, China will cut duties on Canadian canola seeds from 84 percent to 15 percent. In time, Ottawa also expects Beijing will reduce tariffs on Canadian lobsters, crabs and peas later this year and purchase more Canadian oil and perhaps gas, too. The agreement to launch a Ministerial Energy Dialogue will surely pave the way for eventual deals. These productive exchanges eventually moved Carney to declare Beijing a “more predictable” trade partner than Washington. And who can blame him? He was simply stating the obvious — after all, China isn’t threatening Canada with annexation. But one is tempted to wonder if he would have needed to flatter quite so much in China if his country still possessed some of the world’s leading technologies. The truth is, Canada’s oil and gas industry probably shouldn’t really be holding its breath. Chinese officials typically offer serious consideration rather than outright rejection out of politeness — just ask Russia, which has spent decades in dialogue with Beijing over a pipeline meant to replace Europe as a natural gas market. The cars-for-canola deal also carries a certain irony: Canada is importing the very technology that makes fossil fuels obsolete. China is electrifying at dizzying speed, with the International Energy Agency projecting its oil consumption will peak as early as next year thanks to “extraordinary” electric vehicle sales. That means Beijing probably isn’t desperate for new foreign suppliers of hydrocarbons, and the ministerial dialogue will likely drag on inconclusively — albeit courteously — well into the future. This state of Sino-Canadian trade can be seen as classic comparative advantage at work: China is good at making things, and Canada has abundant primary commodities. But in the not-so-distant past, it was Canadian companies that were selling nuclear reactors, telecom equipment, aircraft and bullet trains to China. Yet today, many of these once globe-spanning Canadian high-tech manufacturers have either exited the scene or lead a much-reduced existence. Somewhere in this trading history lies a cautionary tale for Europe. Deindustrialization can have its own self-reinforcing momentum. As a country’s economic composition changes, so does its political economy. When producers of goods disappear, so does their political influence. And the center of lobbying gravity shifts toward downstream users and consumers who prefer readily available imports. Europe’s indigenous solar manufacturers have been driven to near extinction by much cheaper Chinese products | STR/AFP via Getty Images Europe already has its own version of this story: Its indigenous solar manufacturers have been driven to near extinction by much cheaper Chinese products over the span of two decades. Currently, its solar industry is dominated by installers and operators who favor cheap imports and oppose trade defense. Simply put, Carney’s cars-for-canola deal is a salve for Canadian consumers and commodity producers, but it’s also industrial policy in reverse. In overly simplified terms, industrial policy is about encouraging exports of finished products over raw materials and discouraging the opposite in order to build domestic value-added capacity and productivity. But while Canada can, perhaps, make do without industry — as Carney put it in Davos, his ambition is to run “an energy superpower” — Europe doesn’t have that option. Agri-food and extractive sectors aren’t enough to stand up the continent’s economy — even with the likes of tourism and luxury goods thrown in. China currently exports more than twice as much to the EU than it imports. In container terms, the imbalance widens to 4-to-1. Meanwhile, Goldman Sachs estimates Chinese exports will shave 0.2 percentage point or more of GDP growth in Germany, Spain and Italy each year through 2029. And according to the European Central Bank, cars, chemicals, electric equipment and machinery — sectors that form Europe’s industrial backbone — face the most severe job losses from China trade shock. Europe shares Canada’s plight in dealing with the U.S., which currently isn’t just an unreliable trade partner but also an ally turned imperialist. This is why Carney’s speech resonates. But U.S. protectionism has only made China’s mercantilism a more acute challenge for Europe, as the U.S. resists the bloc’s exports and Chinese goods keep pouring into Europe in greater quantities at lower prices. European leaders would be mistaken to look for trade relief in China as Carney does, and bargain away the continent’s industrial capacity in the process. Whether it’s to resist an expansionist Russia or an imperial U.S., Europe still needs to hold on to its manufacturing base.

U.S. President Donald Trump’s increasingly overt attempts to bring down the Cuban government are forcing Mexico’s President Claudia Sheinbaum into a delicate diplomatic dance. Mexico is the U.S.’s largest trading partner. It is also the primary supplier of oil to Cuba since the U.S. seized control of Venezuela’s crude. Now, Sheinbaum must manage her relationship with a mercurial Trump, who has at times both praised her leadership and threatened to send the U.S. military into her country to combat drug trafficking — all while appeasing her left-wing party Morena, factions of which have historically aligned themselves with Cuba’s communist regime. That balance became even more difficult for Sheinbaum this week following reports that Mexico’s state-run oil company, Pemex, paused a shipment of oil headed for Cuba, which is grappling with shortages following the U.S. military action earlier this month in Venezuela. Asked about the suspension, the Mexican president said only that oil shipments are a “sovereign” decision and that future action will be taken on a “humanitarian” basis. On Thursday, Trump ramped up the pressure, declared a national emergency over what he couched as threats posed by the Cuban government and authorized the use of new tariffs against any country that sells or provides oil to the island. The order gives the administration broad discretion to impose duties on imports from countries deemed to be supplying Cuba, dramatically raising the stakes for Mexico as it weighs how far it can go without triggering economic retaliation from Washington — or worse. “It’s the proverbial shit hitting the fan in terms of the spillover effects that would have,” said Arturo Sarukhán, former Mexican ambassador to the U.S., referring to the possibility of a Pemex tanker being intercepted. Sheinbaum still refuses to hit back too hard against Trump, preferring to speak publicly in diplomatic platitudes even as she faces new pressure. Her posture stands in marked contrast to Canada’s Mark Carney, whose speech at Davos, urging world leaders to stand up to Trump, went viral and drew a swift rebuke from the White House and threats of new tariffs. But the latest episode is characteristic of Sheinbaum’s approach to Trump over the last year — one that has, so far, helped her avoid the kinds of headline-grabbing public ruptures that have plagued Carney, Ukrainian President Volodymyr Zelenskyy and French President Emmanuel Macron. Still, former Mexican officials say Trump’s threats — though not specific to Mexico — have triggered quiet debate inside the Mexican government over how much risk Sheinbaum can afford to absorb and how hard she should push back. “My sense is that right now, at least because of what’s at stake in the counter-narcotics and law enforcement agenda bilaterally, I think that neither government right now wants to turn this into a casus belli,” Sarukhán added. “But I do think that in the last weeks, the U.S. pressure on Mexico has risen to such a degree where you do have a debate inside the Mexican government as to what the hell do we do with this issue?” A White House official, granted anonymity to speak candidly about the administration’s approach, said that Trump is “addressing the depredations of the communist Cuban regime by taking decisive action to hold the Cuban regime accountable for its support of hostile actors, terrorism, and regional instability that endanger American security and foreign policy.” “As the President stated, Cuba is now failing on its own volition,” the official added. “Cuba’s rulers have had a major setback with the Maduro regime that they are responsible for propping up.” Sheinbaum, meanwhile, responded to Trump’s latest executive order during her Friday press conference by warning that it could “trigger a large-scale humanitarian crisis, directly affecting hospitals, food supplies, and other basic services for the Cuban people.” “Mexico will pursue different alternatives, while clearly defending the country’s interests, to provide humanitarian assistance to the Cuban people, who are going through a difficult moment, in line with our tradition of solidarity and respect for international norms,” Sheinbaum said. The Mexican embassy in Washington declined further comment. Cuba’s Foreign Minister Bruno Rodriguez, in a post on X, accused the U.S. of “resorting to blackmail and coercion in an attempt to make other countries to join its universally condemned blockade policy against Cuba.” The pressure on Sheinbaum to respond has collided with real political constraints at home. Morena has long maintained ideological and historical ties to Cuba, and Sheinbaum faces criticism from within her coalition over any move that could be seen as abandoning Havana. At the same time, she has come under growing domestic scrutiny over why Mexico should continue supplying oil abroad as fuel prices and energy concerns persist at home, making the “humanitarian” framing both a diplomatic shield and a political necessity. Amid the controversy over the oil shipment, Trump and Sheinbaum spoke by phone Thursday morning, with Trump describing the conversation afterward as “very productive” and praising Sheinbaum as a “wonderful and highly intelligent Leader.” Sheinbaum’s remarks after the call point to how she is navigating the issue through ambiguity rather than direct confrontation, noting that the two did not discuss Cuba. She described it as a “productive and cordial conversation” and that the two leaders would “continue to make progress on trade issues and on the bilateral relationship.” With the upcoming review of the U.S.-Mexico-Canada Agreement on trade looming, even the appearance of defying Trump’s push to cut off Cuba’s oil lifelines carries the potential for economic and diplomatic blowback. It also could undo the quiet partnership the U.S. and Mexico have struck on border security and drug trafficking issues. Gerónimo Gutiérrez, who served as Mexican ambassador to the U.S. during the first Trump administration, described Sheinbaum’s approach as “squish and muddle through.” “She obviously is trying to tread carefully with Trump. She doesn’t want to irritate him with this matter,” Gutiérrez said, adding that “she knows that it’s a problem.” Meanwhile, Cuba’s vulnerability has only deepened since the collapse of Venezuela’s oil support following this month’s U.S. operation that ousted President Nicolás Maduro. For years, Venezuelan crude served as a lifeline for the island, a gap Mexico has increasingly helped fill, putting the country squarely in Washington’s crosshairs as Trump squeezes Havana. With fuel shortages in Cuba triggering rolling blackouts and deepening economic distress, former U.S. officials who served in Cuba and regional analysts warn that Trump’s push to choke off remaining oil supplies could hasten a broader collapse — even as there is little clarity about how Washington would manage the political, humanitarian or regional fallout if the island tips over the edge. Trump has openly suggested that outcome is inevitable, telling reporters in Iowa on Tuesday that “Cuba will be failing pretty soon,” even as he pushed back on Thursday that the idea he was trying to “choke off” the country. “The word ‘choke off’ is awfully tough,” Trump said. “It looks like it’s not something that’s going to be able to survive. I think Cuba will not be able to survive.” The administration, however, has offered few details about what would come next, and Latin American analysts warn that the U.S. and Mexico are likely to face an influx of migrants — including to Florida and the Yucatán Peninsula — seeking refuge should Cuba collapse. There is no evidence that the Trump administration has formally asked Mexico to halt oil shipments to Cuba. Trump’s executive order leaves it to the president’s Cabinet to determine whether a country is supplying oil to Cuba and the rate at which it should be tariffed — an unusual deferral of power for a president for whom tariffs are a favorite negotiating tool. But former U.S. officials say that absence of an explicit demand to Mexico does not mean the pressure is theoretical. Lawrence Gumbiner, who served as chargé d’affaires at the U.S. embassy in Havana during the first Trump administration, believes Washington would be far more likely to lean on economic pressure than the kind of military force it has used to seize Venezuelan oil tankers. At the same time, the administration’s push on Venezuela began with a similar executive order last spring. “There’s no doubt that the U.S. is telling Mexico to just stop it,” Gumbiner said. “I think there’s a much slimmer chance that we would engage our military to actually stop Mexican oil from coming through. That would be a last resort. But with this administration you cannot completely discount the possibility of a physical blockade of the island if they decide that it’s the final step in strangling the island.”

The center-right European People’s Party is eyeing “better implementation” of the Lisbon Treaty to better prepare the EU for what it sees as historic shifts in the global balance of power involving the U.S., China and Russia, EPP leader Manfred Weber said on Saturday. Speaking at a press conference on the second day of an EPP Leaders Retreat in Zagreb, Weber highlighted the possibility of broadening the use of qualified majority voting in EU decision-making and developing a practical plan for military response if a member state is attacked. Currently EU leaders can use qualified majority voting on most legislative proposals, from energy and climate issues to research and innovation. But common foreign and security policy, EU finances and membership issues, among other areas, need a unified majority. This means that on issues such as sanctions against Russia, one country can block agreement, as happened last summer when Slovakian Prime Minister Robert Fico vetoed a package of EU measures against Moscow — a veto that was eventually lifted. Such power in one country’s hands is something that the EPP would like to change.  As for military solidarity, Article 42.7 of the Lisbon Treaty obliges countries to provide “aid and assistance by all the means in their power” if an EU country is attacked. For Weber, the formulation under European law is stronger than NATO’s Article 5 collective defense commitment. However, he stressed that the EU still lacks a clear operational plan for how the clause would work in practice. Article 42.7 was previously used when France requested that other EU countries make additional contributions to the fight against terrorism, following the Paris terrorist attacks in November 2015.  Such ideas were presented as the party with a biggest grouping in the European Parliament — and therefore the power to shape EU political priorities — presented its strategic focus for 2026, with competitiveness as its main priority.  Keeping the pulse on what matters in 2026  The EPP wants to unleash the bloc’s competitiveness through further cutting red tape, “completing” the EU single market, diversifying supply chains, protecting economic independence and security and promoting innovation including in AI, chips and biotech, among other actions, according to its list 2026 priorities unveiled on Saturday. On defense, the EPP is pushing for a “360-degree” security approach to safeguard Europe against growing geopolitical threats, “addressing state and non-state threats from all directions,” according to the document. The EPP is calling for enhanced European defense capabilities, including a stronger defense market, joint procurement of military equipment, and new strategic initiatives to boost readiness. The party also stressed the need for better protection against cyberattacks and hybrid threats, and robust measures to counter disinformation campaigns targeting EU institutions and societies. On migration and border security, the EPP backs tougher asylum admissibility rules, faster returns, and strengthened external borders, including reinforced Frontex operations and improved digital systems like the Entry/Exit System.  The party also urged a Demographic Strategy for Europe amid the continent’s shrinking and aging population. The text, initiated by Croatian Democratic Union (HDZ), member of the EPP, wants to see demographic considerations integrated into EU economic governance, cohesion funds, and policymaking, while boosting family support, intergenerational solidarity, labor participation, skills development, mobility and managed immigration.  Demographic change is “the most important issue, which is not really intensively discussed in the public discourse,” Weber said. “That’s why we want to highlight this, we want to underline the importance.” 

German industrial giant Bosch on Friday confirmed plans to cut 20,000 jobs after profits nearly halved last year, underlining the mounting strain on Germany’s once-dominant manufacturing sector and increasing the pressure on politicians in Berlin to find a solution. Official data released Friday also showed Germany’s unemployment rate, unadjusted for seasonal factors, rising to 6.6 percent — the highest level in twelve years. The number of unemployed people surpassed three million in January. “Economic reality is also reflected in our results,” Bosch CEO Stefan Hartung said, describing 2025 as “a difficult and, in some cases, painful year” for the company, which is a leading supplier of parts for cars. The move lands amid a deepening slump in the country’s automotive industry, long the backbone of German manufacturing. The sector has been shedding jobs rapidly: A 2025 study by EY found that more than 50,000 automotive positions were cut in Germany last year alone. Germany’s automotive downturn has become a wider political test for the government in Berlin and Europe more widely. Once the economy’s crown jewel, the industry is now being challenged by current policy on electric vehicles, energy costs and aggressive competition from Chinese manufacturers. As suppliers weaken, the risk is shifting from lower profits to a lasting loss of competitiveness. With layoffs rising and investment decisions being delayed, Chancellor Friedrich Merz’s government is coming under growing pressure from workers, unions and industry leaders to rethink Germany’s industrial strategy — as doubts spread domestically and across Europe about the country’s ability to remain an economic powerhouse.