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The question before MEPs is therefore deceptively simple: have the conditions really been met, or has Brussels simply found a convenient political moment to declare victory?
The answer matters well beyond Hungary. The original dispute was not some abstract quarrel over Brussels etiquette. In 2022, the EU suspended €6.3 billion in Hungarian cohesion funding after identifying deficiencies in public procurement, conflicts of interest, corruption controls and the effectiveness of prosecutorial action. The conditionality mechanism was deliberately designed to make access to EU taxpayers’ money dependent upon safeguards for the rule of law and the protection of the EU budget.
That principle is important. If membership of the EU means anything, it cannot mean that governments receive billions regardless of whether public money is properly administered.
But Hungary has changed politically. Viktor Orbán’s 16-year rule ended with Péter Magyar’s decisive election victory in April. Magyar campaigned partly on repairing Hungary’s relationship with Brussels and unlocking the billions frozen during the Orbán years. His government subsequently notified the Commission that it had implemented the required reforms.
The Commission has now accepted that argument — albeit partially. Its September 23rd proposal says Hungary has addressed the rule-of-law breaches affecting the EU budget, citing improvements in public procurement, the anti-corruption framework, prevention of conflicts of interest and prosecutorial effectiveness. If the Council approves the proposal, €4.2 billion in cohesion commitments will be reinstated and Hungarian students and researchers will regain full access to Erasmus+ and Horizon Europe.
That is a substantial political prize for Magyar, and a substantial test for the EU.
The danger for Brussels is obvious. Having spent years insisting that European money must not subsidise corruption or institutional capture, the Commission cannot now appear to have changed the rules simply because a more congenial government has arrived in Budapest.
There is, however, an equally serious danger on the other side. If Hungary has genuinely implemented the reforms demanded by Brussels, continuing to withhold money would make the conditionality mechanism look less like a defence of European values and more like a political punishment system. That would be profoundly damaging. Rules that apply only to governments Brussels likes are not rules at all.
This is why Monday’s debate matters – and the €4.2 billion is only part of the story.
The Commission has made clear that other Hungarian funds remain blocked. Around €3.5 billion is affected by a separate mechanism, including approximately €2.7 billion linked to horizontal conditions concerning the EU Charter of Fundamental Rights, including academic freedom, LGBTI rights and asylum.
Meanwhile, Hungary is still seeking access to roughly €10 billion under the Recovery and Resilience Facility. The new Hungarian recovery plan includes measures on anti-corruption, public procurement, transparency, judicial independence and stakeholder participation, with payments tied to the achievement of specific milestones.
So this is not a clean victory for either side.
For Magyar, the release of €4.2 billion demonstrates that his strategy of accommodation with Brussels is delivering tangible results. For the Commission, it provides an opportunity to demonstrate that conditionality can work: reforms are made, the Commission verifies them, and money is released.
But the real test will come afterwards. Brussels must monitor whether the reforms survive political pressure. Anti-corruption bodies must remain genuinely independent. Public procurement must be transparent. Prosecutorial safeguards must work in practice rather than merely on paper. And the judiciary must be capable of challenging the government when necessary.
That is where the European Parliament should concentrate its fire. The temptation will be to turn Monday’s debate into another referendum on Viktor Orbán. That would be yesterday’s argument. Orbán has gone. The more important question is whether Hungary’s new government has actually dismantled the machinery that generated the dispute.
There is a wider lesson here for the European Union.
Conditionality can only work if Brussels is prepared both to withhold money when standards are breached and to release it when standards are met. Anything else undermines the credibility of the entire system.
The Commission says Hungary has crossed that threshold. The Council must now decide whether it agrees.
MEPs should therefore resist both triumphalism and cynicism, if the reforms are real, Hungary should get its money.
If they are cosmetic, Brussels should keep the cheque in the drawer.
Brussels Moves to Release €4.2bn to Hungary as Magyar Unwinds Orbán-Era Dispute
The prohibition on so-called AI “nudifier” systems becomes applicable on 2 December 2026 following changes to the EU Artificial Intelligence Act approved earlier this year.
The legislation prohibits AI systems designed to create child sexual abuse material or realistic images, video or audio depicting an identifiable person’s intimate parts or sexually explicit activity without that person’s consent.
Providers cannot place systems intended for such use on the EU market. Systems capable of producing the material must have adequate safeguards intended to prevent it, while deployers are prohibited from deliberately using AI systems for that purpose.
The final agreement on the AI Act amendments gave companies until 2 December to bring their systems into compliance.
The latest intervention is intended to ensure that regulators are ready to enforce the prohibition rather than simply having the legislation on the statute book.
The letter supported by 119 MEPs was initiated by Green MEP Lena Schilling and Greens/EFA co-president Terry Reintke.
Its signatories include members from several political groups.
They want the Commission and member states to ensure that national authorities are designated to enforce the ban and that people targeted by non-consensual AI-generated sexual imagery know which authority to contact.
The letter also calls for stronger enforcement of the Digital Services Act against online platforms and search engines carrying or facilitating access to such material.
The initiative follows research cited by the organisers which identified 147 European politicians appearing on websites containing sexualised AI deepfakes.
Of those identified, 138 were women.
Schilling was among those affected and has used her own case to argue that the December prohibition needs an operational enforcement system from its first day.
The prohibition emerged during the EU’s broader revision of its AI legislation.
In March, the European Parliament adopted its negotiating position by 569 votes to 45, with 23 abstentions.
Parliament and Council subsequently reached agreement on the revised text, and the measure completed its formal legislative process in June.
EU Today reported at the time that the Council’s final approval combined delays to some high-risk AI requirements with new restrictions on non-consensual sexual imagery.
The issue is distinct from the wider transparency requirements applying to AI-generated content.
Under Article 50 of the AI Act, transparency obligations have applied since 2 August.
Providers of generative systems must in relevant cases make AI-generated or manipulated material machine-readable and detectable, while deployers face disclosure obligations covering deepfakes and some AI-generated material dealing with matters of public interest.
EU Today examined those changes when chatbot and deepfake disclosure rules entered into application in August.
There is, however, a transitional period for some AI systems that were already on the market before 2 August. Their machine-readable marking obligations take effect on 2 December.
That means the same date will bring both the new nudifier prohibition and the end of the transitional period for certain AI-content marking requirements.
Enforcement is divided between national regulators and EU institutions.
National market-surveillance authorities carry much of the responsibility for enforcing the AI Act. The Commission’s AI Office has direct enforcement responsibilities in more limited areas, including certain systems built on general-purpose AI models and systems integrated into very large online platforms or search engines.
The Commission’s guidance on Article 50 is intended to provide regulators and companies with a common interpretation of those transparency requirements.
The nudifier prohibition raises an additional problem because distribution of non-consensual intimate images also intersects with the Digital Services Act, national criminal and civil laws and EU legislation addressing violence against women.
The 119 MEPs are therefore seeking action beyond the AI Act itself.
Their letter asks for stricter use of the Digital Services Act against platforms and search engines, faster implementation of the EU directive combating violence against women and clearly identifiable national authorities able to respond to complaints.
The legal gap surrounding nudifier systems had previously been acknowledged by the Commission.
Its review of prohibited AI practices concluded that the original AI Act’s provisions on manipulation and exploitation of vulnerabilities did not adequately cover systems producing child sexual abuse material and non-consensual sexually explicit images.
That finding contributed to the explicit prohibition subsequently added during the Digital Omnibus negotiations.
The legislation is now settled. The immediate issue before the 2 December deadline is whether regulators across the 27 member states have the mechanisms in place to identify prohibited systems, investigate providers and respond when people report AI-generated intimate material produced without their consent.
The European Parliament has backed calls for an EU-wide strategy to tackle worsening shortages of healthcare professionals, including an ambition to increase the health workforce by one million, as doctors, nurses, pharmacists and dentists urged the European Commission to turn the recommendations into concrete action.
The own-initiative report, led by MEPs Loucas Fourlas (EPP, Cyprus) and Ruggero Razza (ECR, Italy), warns that shortages of doctors, nurses, carers and other professionals are becoming structural, driven by ageing populations, rising demand for care and persistent burnout...
Trade Commissioner Maroš Šefčovič and MEP Dirk Gotink (EPP, Netherlands) Photographer: Mathieu Cugnot © European Union
The European Parliament has approved a major overhaul of the EU’s customs system, tightening requirements on e-commerce platforms, introducing a new handling fee for goods ordered from outside the bloc and creating a central EU customs authority.
“This is the biggest reform of European customs since 1968, supporting trade and the enforcement of EU rules,” said MEP Dirk Gotink, (EPP, Netherlands) who steered the legislation through Parliament. Gotink said European customs authorities had been overwhelmed by a “tsunami of Chinese parcels” and that the reform would give customs officers stronger tools to enforce EU standards.
Under the new rules, e-commerce platforms and sellers shipping goods directly from non-EU countries to European consumers will be treated as importers. That will make them responsible for providing customs data, handling applicable charges and ensuring products comply with EU law.
The reform also introduces an EU-wide handling fee on goods ordered directly from non-EU countries, with member states required to begin collecting it no later than 1 November, 2026. The European Commission will determine the amount and review it every two years.
Companies that repeatedly breach EU customs rules could face fines ranging from at least 1% to as much as 6% of the value of goods they imported into the EU during the previous 12 months.
The overhaul will also establish an EU Customs Data Hub, designed to replace at least 111 existing customs IT systems. A new EU Customs Authority, based in Lille, France, will manage the hub and coordinate customs cooperation and risk management across the EU.
The Council has already given the reform its final formal approval, making Parliament’s vote the final step in the legislative procedure.
European Commission President Ursula von der Leyen at the podium Photographer: Dati Bendo © European Union
European Commission President Ursula von der Leyen used her State of the Union address on Wednesday (16 September) to make the case for a more independent Europe, confronting war, economic competition, AI disruption and climate change — while proposing Canada become the EU’s first associate member.
Opening her #SOTEU speech with Charles Dickens’ “best of times, worst of times”, von der Leyen described a Union stronger but also more exposed to external threats.
“The state of our Union is the strongest it has ever been,” she said, while acknowledging it could feel “as precarious as it has ever been”. “Europe has chosen to forge its own path. And a stronger, independent Europe is now emerging.”
Competitiveness and energy
Von der Leyen called kickstarting Europe’s economy her “number one priority”, promising faster permitting, less red tape and further integration of the Single Market.
The Commission will propose a new Banking Package and create a European Corporation on Critical Raw Materials to secure supplies needed for chips, batteries, clean technology and defence.
With high energy costs weighing on European industry, von der Leyen called for faster electrification and investment in grids, renewables and nuclear power to reduce dependence on imported fossil fuels.
Climate after a 'summer of truth'
After a summer of fires, drought and extreme heat, von der Leyen promised a climate resilience framework focused on 100 of Europe’s most vulnerable territories, alongside a Climate Insurance Alliance, European Heatwave Plan and Water Initiative.
She also floated a future European Firefighting Fleet, declaring that Europe “can, must and will stay the course” on its climate targets.
AI: Opportunity and threat
AI was presented as both an economic opportunity and an emerging security threat. Von der Leyen warned that advanced models could enable hacking “on a level we never thought possible” and pledged closer cooperation with Canada, the UK and others on AI security.
At the same time, Europe will expand computing capacity and push AI into health, transport, agriculture, manufacturing, defence and space. “Above all, we want AI with human agency,” she said.
Jobs, housing and social rights
The Commission plans a Quality Jobs Act before the end of the year and a European Care Deal, alongside measures tackling housing pressures.
Von der Leyen said technological change must benefit workers, while strongly defending women’s rights and Europe’s social model.
PHOTO European Commission President Ursula von der Leyen and Canadian Prime Minister Mark Carney at the podium Photographer: Dati Bendo © European Union
Canada moves closer
One of the biggest surprises came with Canadian Prime Minister Mark Carney in the chamber.
Von der Leyen proposed an “Alliance for the Future” spanning technology, defence, energy, critical minerals, AI and the Arctic — before going further.
“I would like to work with you on opening the door for Canada to be the first associate member of the EU,” she told Carney. “We share one ocean, one set of values, one way of seeing the world.”
Security, defence and Ukraine
With drone incursions, cyberattacks and sabotage raising security concerns inside the EU, von der Leyen proposed a new European security strategy and an Emergency Security Protocol for incidents falling below the threshold of armed aggression.
She also wants to establish a European Security Council and strengthen joint European defence capabilities.
Ukraine faces what von der Leyen called the “toughest winter of the war”. She promised humanitarian and energy support, stronger air defences and deeper defence-industrial cooperation with Kyiv.
Borders, democracy and children online
The Commission will propose an Emergency Response Framework for exceptional migration crises and strengthen Frontex, while launching a Mediterranean Youth Skills and Jobs initiative.
Von der Leyen also announced an EU KIDS ACT, including no social media for under-13s and restrictions for children under 15, followed by a broader Digital Fairness Act.
Political groups draw battle lines
EPP leader Manfred Weber backed the focus on AI, defence and competitiveness but pushed against restrictive climate policies. “Climate change is a reality,” he said, arguing Europe needed “innovation and not bans.”
S&D leader Iratxe García Pérez demanded that von der Leyen turn “words into action”, backing climate investment, housing and worker protections while warning that simplification must not become deregulation.
Renew Europe leader Valérie Hayer made a pointed appeal for the Parliament’s pro-European majority, as the EPP has increasingly worked with parties further to the right on some legislation. “There’s only one possible majority. It’s our pro-European majority,” she said. “We need to do more. We need more Europe, and we need it more quickly.”
Greens/EFA co-chair Terry Reintke accused EU leaders of failing to respond urgently enough to extreme heat and wildfires. “We are in the middle of a climate emergency,” she said, demanding stronger Green Deal implementation while insisting: “We are not powerless. Europe is strong, and Europe can be even stronger.”
ECR co-chair Patryk Jaki struck a sharply different note, attacking the Commission over bureaucracy, energy costs and industrial competitiveness. Europe, he argued, was “as weak as it’s ever been.”
Von der Leyen closed on the central theme running through the speech: European sovereignty in an increasingly hostile world.
“The fate of Europe,” she said, “must remain in the hands of Europeans.”
Centre right MEPs say they want the EU to give itself the tools and resources to protect European democracies from foreign interference, disinformation and hybrid threats.
The assertion comes just ahead of a parliamentary vote on the EU Parliament’s recommendations on the issue.
EPP MEP Tomas Tobé, speaking on Tuesday, has called for a Democracy Shield “with the power to act.”
The deputy, the Parliament’s negotiator on the European Democracy Shield dossier, stated, "Protecting democracy from foreign interference must be a European priority.
“We must respond with greater determination and reinforce the European Democracy Shield.
"Russia remains the most serious threat to the integrity of our democracies.
"Its continued attempts to influence elections and manipulate the information space show that the Kremlin sees democratic resilience as a threat to its own interests," says Tobé MEP, EPP Group Vice-Chair.
The EPP Group said it wants the Democracy Shield “to be more than just a name.”
A spokesman said, “Europe needs stronger coordination and real operational capacity to protect elections, defend democratic institutions and counter foreign interference.
“The European Centre for Democratic Resilience must have the powers and resources to respond effectively to threats.”
Tobé added, "With this report, the European Parliament sends a clear message: we will not be passive while our democracies are under threat.
“We must now turn the European Democracy Shield into effective action to protect our elections, defend our institutions and counter foreign interference," said Tobé.
Meanwhile, the European Parliament will this week also debate the devastating impact of this summer’s extreme weather.
The focus will be on the human and economic cost which MEPs say “is impossible to ignore.”
Extreme heat has resulted in at least 35,000 excess deaths across Europe and up to €180 billion in lost GDP.
The Socialist group, in a statement on Tuesday, said, “Europe has a choice.
“We can continue to react to each disaster separately, send firefighters when the flames are already spreading, repair the damage afterwards and hope that next summer will be less severe. Or we can prepare for the Europe we know is coming. This summer has made clear that the climate crisis is no longer a future risk.”
Further comment comes from Christophe Clergeau, S&D vice-president, who said he will call for a “healthy planet, healthy people and a sustainable food ecosystem.”
He said: "Europe is paying a devastating price for extreme heat.
“Tens of thousands of people have lost their lives, while extreme weather has caused enormous economic damage. We cannot treat this as the new normal.
“Every fraction of a degree of additional warming means more frequent and severe heatwaves, wildfires, floods and droughts. That is why mitigation, adaptation and protection must be treated as the same fight.
"We need to phase out fossil fuels, which are driving the climate crisis, while investing much more in identifying and reducing vulnerabilities, adapting our cities and regions, and protecting people from extreme heat and drought.”
The MEP went on, “Our first priority must be protecting those most vulnerable. Cities and regions are on the front line and need stronger support to prepare for and manage crises, while populations must also be better informed and prepared. We must ensure that firefighters and civil protection services have the equipment and resources they need, and support the recovery and repair of territories devastated by fires and other disasters. Civic engagement and volunteers also have a vital role to play in prevention, preparedness and response.
"Europe must also build the industrial capacity needed to protect its citizens. We should produce Canadairs and other firefighting aircraft in Europe, develop a European plan to support the equipment needs of firefighters, and establish a clear R&D roadmap for civil protection technologies. And we need to do much more to prevent wildfires in the first place. When our forests are increasingly exposed to heat, drought and fires, the rejection of a European forest monitoring law by the right and the far right last year was a serious mistake. We need better information and better prevention, not fewer tools to protect our forests and citizens.
"This vote on the forest monitoring law is part of a wider pattern. While the climate crisis is becoming more dangerous, the right and far right keep attacking the Green Deal and downplaying the need for climate action.”
The deputy continued, “Yet there is no fair society if people are left exposed to devastating heat, no competitive economy without decarbonisation, and no energy sovereignty while we remain dependent on imported fossil fuels.”
"The Union Civil Protection Mechanism alone is not enough: its budget is insufficient given the scale of the risks we face. We need an ambitious European adaptation and resilience package focused on anticipation, preparedness and protection. Europe must strengthen the Green Deal and invest in prevention and recovery, rather than give in to climate denial and political obstruction,” added Clergeau.
European Commission President Ursula von der Leyen during her speech in 2025 Photographer: Dati Bendo © European Union, 2025
Ursula von der Leyen is expected to make the case for a more independent and resilient Europe in her State of the European Union address on Wednesday (16 September). But analysts and political groups in the European Parliament are demanding something more concrete: evidence that the Commission can turn its expanding ambitions into results Europeans can see.
The State of the European Union address, commonly known in Brussels as the “SOTEU”, is the Commission president’s annual speech to Parliament setting out priorities for the year ahead. Modeled in part on the US president’s State of the Union address to Congress, the EU version began in 2010 under then Commission president José Manuel Barroso. Von der Leyen will deliver this year’s address at 9:00 tomorrow morning (16 September).
The speech comes as Europe is confronted with an ongoing war in Ukraine, a fragmenting global trading system and the challenge of strengthening defence while reviving competitiveness and financing the green transition. At home, von der Leyen must reconcile political groups that broadly agree on the need for a stronger Europe but differ over what that means.
For Manfred Weber, chairman of von der Leyen’s centre-right European People’s Party group, the focus should be on voters’ economic and security concerns.
“Europe’s priorities must reflect people’s concerns: jobs, the cost of living and economic security,” Weber said. He called for a stronger economy and well-paid jobs, tighter control of Europe’s borders, leadership on AI, continued support for Ukraine and “a strong European defence pillar”.
On the centre-left, Iratxe García Pérez, president of the Socialists and Democrats group, argues that the Commission has relied too heavily on deregulation.
“Europe needs more than announcements,” García Pérez said. “It needs concrete policies backed by the necessary resources.” The S&D wants greater emphasis on affordable food, housing and energy, quality jobs and climate action, alongside European sovereignty in defence and digital technologies.
Renew Europe is also making delivery the benchmark, calling on von der Leyen to present “a credible plan turning European ambition into visible results” and framing the choice as one between united European action and fragmentation.
Analysts at the European Policy Centre see the same challenge extending to Europe’s position in the world.
“Von der Leyen will tell us that the EU is forging new partnerships around the globe,” said Almut Möller, the EPC’s director for European and Global Affairs. Canadian Prime Minister Mark Carney’s attendance will reinforce the geopolitical dimension of the speech.
But strategic autonomy goes beyond defence and trade. Georg Riekeles, the EPC’s head of political economy, identifies financial dependence as an overlooked vulnerability. With the international financial system becoming less stable, Europe cannot assume Washington and the US Federal Reserve will play the stabilising role they did in previous crises. Von der Leyen “must therefore address financial sovereignty as a core element of European security”, he argues.
Technology poses another test. Elizabeth Kuiper, the EPC’s head of health and societal resilience, says von der Leyen should “reject the trade-off between competitiveness, technological progress, and the EU’s social model”, particularly as AI affects employment, income security and social cohesion.
Climate policy presents a similar collision between ambition and resources. Stefan Šipka, the EPC’s head of sustainable prosperity, argues that Europe needs “a robust delivery mindset, no more strategies” as it tries to combine defence, decarbonisation and economic security.
The common thread is delivery. Von der Leyen has no shortage of strategic objectives. The harder task on Wednesday will be explaining how they fit together, how Europe will finance them and what takes priority when they conflict.
For EPC policy analyst Eric Maurice, von der Leyen “must provide strategic focus and political clarity”.
“As the midterm in her second term approaches,” Maurice said, “it is time for von der Leyen to present a vision and deliver.”
Renew Europe MEPs met in Paris on Tuesday and Wednesday (7-8 September) this week to set the group’s political priorities ahead of President Ursula von der Leyen’s State of the Union address next week. During the two days of meetings, Renew Europe MEPs were received at the Élysée Palace by the President of the French Republic, Emmanuel Macron, for an exchange on the major challenges facing Europe.
President Macron reminded MEPs that Europeans should remain proud of what they have achieved. Europe is a continent of opportunity and talent, which can continue to flourish with the right policies. Discussions focused on strengthening European competitiveness and innovation, protecting strategic industries, lowering energy costs, reinforcing Europe’s security and defence capabilities, safeguarding democracy and advancing Europe’s interests on the global stage.
The meeting was underpinned by a message of optimism: Europe has the capacity to shape its own future if it acts with unity, confidence and ambition. MEPs also discussed the next EU budget and the investment Europe needs to match its ambitions, including in clean and affordable energy, modern electricity grids and greater European energy independence.
Renew Europe President Valérie Hayer said: “Europe faces a clear choice: act together or accept decisions being taken for us by others. The alarming election result in Saxony-Anhalt is a warning that Europe’s political centre must answer with delivery, confidence and a credible vision of a better future. Europeans want a continent that is stronger, more united and capable of shaping its own destiny. Our task is to show them how we get there. We must protect our strategic interests, invest in our industries and innovators, secure affordable and reliable energy, and build the European defence capabilities needed to guarantee our security. Europe must also prove its relevance in people’s daily lives.
"That means lowering energy bills for families and businesses, tackling the cost of living and increasing the supply of affordable homes. We cannot allow the far right to sell an imagined past as the answer to today’s problems. Europe’s story is unfinished, and it is our responsibility to write its next chapter with optimism and ambition. President von der Leyen’s State of the Union address must provide a credible path from European ambition to delivery. Renew Europe will judge the Commission on its willingness to act with the urgency and determination this moment demands.”
The Paris meeting marks the beginning of Renew Europe’s political work following the summer break. The group will now take these priorities into the European Parliament’s State of the Union debate, calling for a stronger, more competitive and more sovereign Europe capable of protecting its citizens and defending its democratic values.
A European Parliament compromise on reforming the EU’s Sustainable Finance Disclosure Regulation (SFDR) has opened a politically sensitive dispute over whether entire industries should be excluded from sustainable investment — with fossil fuels offered a conditional transition route while tobacco remains outside.
The revision of the Sustainable Finance Disclosure Regulation, better known as SFDR, is emerging as a key political battleground over the future boundaries of sustainable finance in the European Union.
Although formally concerned with disclosure requirements and the categorisation of financial products, the dispute now goes considerably further. At stake is a fundamental question: should entire sectors be excluded from sustainable and transition finance because of the nature of their business, or should companies be judged primarily on their actual environmental performance, investment plans and capacity to transition?
That distinction has potentially significant consequences for companies, investors and access to capital.
The file is currently under consideration in the European Parliament’s Economic and Monetary Affairs Committee, ECON, where a compromise has been reached between political groups ahead of the committee vote.
Under the emerging agreement, sectoral exclusions remain within the proposed framework. Tobacco cultivation and production, as well as controversial weapons, remain outside the relevant sustainable investment categories.
Fossil-fuel companies, however, have been given a potential route into the proposed transition category where specified conditions are met.
An oil or gas company may potentially demonstrate that it is directing sufficient capital towards sustainable activities and implementing a credible emissions transition. A tobacco business, however substantial its environmental improvements, would remain excluded because of the sector in which it operates.
Crucially, however, the EPP’s decision not to challenge the tobacco exclusion should not be read as an endorsement of blanket sectoral exclusions.
Markus Ferber, the EPP’s ECON coordinator, has told EU Reporter that the decision was driven by parliamentary arithmetic and the need to assemble a stable majority for the overall compromise.
In other words, the EPP did not abandon its reservations about blanket exclusions because it had become convinced that such exclusions were the right policy. It accepted the compromise because, in Ferber’s assessment, there was no realistic parliamentary majority for an alternative amendment that would have created a performance-based pathway for tobacco.
It means the tobacco exclusion survives not because the EPP has embraced the principle behind it, but because the group concluded that challenging it would jeopardise the broader compromise.
Ferber made clear that his underlying policy position remains strongly performance-based.
“Per se, EPP does not like blanket sectoral exclusions, but unfortunately it is not only the EPP’s position that determines the final outcome of negotiations and we had to strike compromises with other political groups to achieve a stable majority,” he told EU Reporter.
Asked whether sustainable-finance rules should judge companies according to the sector in which they operate or according to their measurable environmental progress, Ferber was unequivocal.
“In my view, the objective should be to finance the transition,” he said. “Hence, environmental performance and credible transition plans should matter more than the sector.”
That comment goes to the heart of the controversy surrounding tobacco.
The sector remains excluded irrespective of whether individual companies reduce emissions, restructure production, invest in Taxonomy-aligned activities or adopt measurable transition plans.
Fossil-fuel companies, by contrast, are being offered a conditional route into the transition category.
Ferber’s most significant intervention concerns why the EPP did not attempt to overturn the tobacco exclusion through an alternative compromise amendment.
Asked directly why he was not tabling such an amendment, despite previously opposing blanket exclusions affecting tobacco, Ferber replied:
“We have assessed all options for a stable majority in the Parliament and were not convinced that tabling alternative compromises would yield such a majority.”
That answer makes the political calculus unusually clear.
The tobacco exclusion was not retained because Ferber or the EPP ECON leadership had positively embraced the underlying principle. It remained because the EPP judged that there were insufficient votes to replace it while preserving the wider agreement.
The distinction matters because it changes the interpretation of the compromise.
Rather than representing an ideological conversion by the EPP towards sector-based sustainable-finance rules, it represents a tactical concession made in the context of difficult parliamentary mathematics.
Ferber reinforced that point when discussing the wider negotiations.
“I am not enthusiastic about the compromise,” he said, “but it reflects what is politically possible in light of difficult majorities and a rapporteur that has pursued a hard-left line from the beginning.”
The Parliament’s lead rapporteur on the file is Dutch Renew Europe MEP Gerben-Jan Gerbrandy.
Ferber’s description of Gerbrandy’s approach as “hard-left” is his own political characterisation, but his remarks underline how far the SFDR revision has moved beyond a purely technical debate over disclosure rules.
The EPP has repeatedly positioned itself as an opponent of unnecessary blanket exclusions and an advocate of competitiveness, regulatory simplification and performance-based rules.
A number of centre-right amendments tabled during the ECON process sought to remove or narrow the exclusion provisions.
The material submitted to EU Reporter notes that among the amendments tabled in committee, several concerning exclusions were proposed by EPP, ECR and other centre-right lawmakers.
Asked whether significant numbers of EPP members would have preferred the exclusions to be removed or narrowed, Ferber acknowledged that different views existed within the group.
“In a large and diverse political group, you always have different positions to reconcile,” he said.
He added that EPP shadow rapporteur Luděk Niedermayer had “checked back frequently to ensure that he has sufficient backing within our group.
Luděk Niedermayer said "There were different priorities from different political groups and differences are even above different MEPs from same group. The current text reflects the agreement reached as a compromise.
Asked how much room did the EPP have to negotiate changes to Article 7, and what
concessions did the Group obtain in return for accepting the final package? he said :
"As with every file, each political group has its own priorities. For the EPP, one of the key
priorities was Article 7, where we managed to secure a text that is acceptable to the Group
and which, in my view, better reflects the nature and purpose of the transition category than
the Commission proposal."
Ferber therefore rejects the suggestion that the final compromise amounts to Niedermayer departing from an agreed EPP line.
Asked directly whether there had been a disagreement between the two men over the treatment of tobacco and sectoral exclusions, he replied:
“No, our shadow rapporteur has faithfully defended the line agreed within our group, but it has always been clear that in compromise negotiations the EPP would not get 100% of its wishes. That is the nature of a compromise.”
Niedermayer said " Maintaining a limited set of exclusions helps preserve the credibility of products marketed as sustainable without extending blanket exclusions more broadly. Furthermore, energy and utility companies are more likely to follow a credible transition pathway than the sectors mentioned above. Consistency between SFDR and Delegated Regulation (EU) 2020/1818 under the Benchmark Regulation is also a strong argument for such an approach.
The tobacco issue exposes the central philosophical question running through the SFDR revision.
Under a blanket exclusion, the decisive question is: what does this company produce?
Under a performance-based model, the question becomes: what is this company actually doing to transition?
The distinction matters because an automatic exclusion can remove the regulatory benefit of environmental improvement.
A company that reduces emissions, changes production methods, invests heavily in renewable energy or directs substantial capital expenditure towards EU Taxonomy-aligned activities may still receive exactly the same treatment as one making no transition effort at all.
That is the fundamental criticism of blanket exclusions contained in the material examined by EU Reporter.
If an oil or gas company can potentially qualify for the transition category by demonstrating credible investment and emissions reductions, opponents of the tobacco exclusion ask why businesses in another lawful sector should not at least be permitted to make the same case.
Ferber’s own words strengthen that argument: environmental performance and credible transition plans, he says, should matter more than the sector itself.
Ferber nevertheless argued that there is a rationale for distinguishing between some industries.
“One can make an argument that energy companies engaged in fossil fuel projects today are likely to ultimately change their business model towards more sustainable projects, while a controversial weapons manufacturer is likely to still manufacture deadly weapons in the future,” he said.
“So, the transition case is weaker.”
That explanation addresses controversial weapons more directly than tobacco, however.
For tobacco, the unresolved policy question remains whether environmental transition should be assessed separately from the social and health characteristics of the product being manufactured.
That is precisely where the SFDR debate is becoming politically significant.
The issue is no longer merely whether tobacco is socially desirable. It is whether a sustainable-finance regulation should use sector identity as an automatic barrier to recognising environmental transition.
The controversy also reaches into the EPP’s wider political argument that the EU needs to move away from parts of the regulatory philosophy associated with the previous Commission and the European Green Deal.
Asked whether retaining blanket exclusions amounted to accepting part of that earlier approach, Ferber was sharply critical of the sustainable-finance framework as a whole.
“The whole sustainable finance framework is a legacy product from the previous two terms,” he said.
“In my personal view, it contains some fundamental flaws, that are difficult to change with targeted reviews of individual files.”
“We have done the best we could to fix some mistakes within the SFDR. That does not mean it is perfect. If I was given a blank slate, I would design the framework differently.”
The EPP remains sceptical of the principle behind some sectoral exclusions, yet has accepted a compromise that preserves them.
The explanation, according to its ECON coordinator, is not policy conversion but political necessity.
That is likely to become one of the most important distinctions in the debate as the file moves towards its committee vote and later parliamentary stages.
The controversy also raises questions of regulatory coherence.
The EU Taxonomy measures environmental sustainability using economic indicators including turnover, capital expenditure and operational expenditure associated with qualifying activities.
The SFDR compromise can operate differently by establishing a sectoral gateway before a company’s environmental performance is assessed.
The material examined by EU Reporter argues that this risks creating two different regulatory philosophies: the Taxonomy assesses measurable activity, while SFDR can exclude by sector identity.
That matters at a time when Brussels has promised simpler and more coherent regulation.
If transition finance is supposed to encourage companies to change behaviour, critics argue that the system needs to explain why measurable transition is sufficient for one sector but irrelevant for another.
The impact is not confined to multinational tobacco manufacturers.
European tobacco growers and processors have warned MEPs that exclusion from sustainable-finance frameworks could have consequences for agricultural communities and smaller businesses.
Ten thousands of family farms would be potentially affected, alongside thousands of SMEs, many of them located in economically vulnerable agricultural regions.
The broader economic figures advanced by industry organisations should be treated as industry estimates, but the principle being argued by growers is more straightforward.
They are not asking for tobacco automatically to be labelled sustainable.
They are asking to be allowed to demonstrate transition against objective criteria.
In that respect, the fossil-fuel derogation has become politically significant.
If Europe is prepared to recognise transition in one of the world’s most carbon-intensive sectors, tobacco industry stakeholders ask why no equivalent environmental-performance test should exist for their own.
Despite his reservations, Ferber told EU Reporter that he does not expect the compromise to be altered before the ECON vote.
“I do not anticipate any changes to the text that was agreed ahead of the vote,” he said.
The immediate political battle may therefore already have been settled.
But the wider argument is unlikely to disappear.
The SFDR revision was intended to simplify sustainable finance and make it clearer for investors.
Instead, it has exposed a fundamental policy choice over whether sustainable finance should reward measurable transition or exclude entire sectors in advance.
And in the case of tobacco, the EPP’s position is now particularly clear: the exclusion remains not because its ECON leadership endorses blanket sectoral exclusions, but because it concluded that Parliament did not contain the votes necessary to remove it without jeopardising the wider SFDR compromise.
That distinction is now stated in the introduction, given its own section, and repeated in the conclusion, so it becomes the central political takeaway rather than being buried inside the Ferber interview.
MEPs are pushing for an EU solidarity mechanism to help patients pay for treatment abroad, arguing that financial barriers are preventing Europeans from exercising rights they have had on paper for more than a decade.
The calls came as Parliament discussed a report commissioned to inform its own-initiative report on modernising patients’ rights in cross-border healthcare. The study found that cross-border care accounts for just 0.004% of EU public health expenditure, despite patients continuing to face upfront costs, complex reimbursement procedures and prior-authorisation requirements.
Tomislav Sokol (EPP, Croatia) called the proposed solidarity mechanism a potential “game changer” for vulnerable patients, but challenged Parliament to spell out how it would work.
“How would it work in practice? How would it be financed? Would this be part of the EU budget?” Sokol asked. “We need to know it now, so that we can also use this in negotiations on the future EU budget, in the next MFF.”
MEPs return to business from their summer vacation to a packed programme this week. An assortment of committee meetings awaits the deputies when they get back to their offices in Brussels. First up will be the issue of the devastating wildfires this summer and EU preparedness to handle such evens. Today (1 September), MEPs from the Climate, Environment and Food Safety Committee will quiz Equality, Preparedness and Crisis Management Commissioner Hadja Lahbib on the EU’s response to the summer wildfires across the continent, and discuss lessons learnt. Mental health at work is another issue that will confront MEPs during the coming week.
In a vote on Wednesday (2 September), the Committee on Employment and Social Affairs is set to demand the Commission propose legislation to protect the mental and physical health of workers. The aim is also to prevent, eliminate or reduce work-related psychosocial risks and ensure safe and dignified working conditions. Childhood cancer is another item on the agenda. Together with a 10-year-old survivor and sectoral experts, on Wednesday MEPs in the Public Health Committee will discuss aspects of paediatric cancer. This includes innovation, public investment, and policy recommendations.
Parliament’s President Roberta Metsola will open the debate. Greenland, which has come under the spotlight during President Trump’s 2nd term, is also up for debate. The Development and Foreign Affairs committees will host Greenland’s minister for foreign affairs, business and minerals, Múte Bourup Egede, on Wednesday. The meeting takes place in the context of ongoing discussions on updating the rules governing the EU’s relationship with Greenland, and other overseas countries and territories (OCTs), and future financial support for Greenland under the EU’s next long-term budget. Another issue in Brussels will be that of Afghanistan/refugees and asylum seekers.
On Thursday (3 September), MEPs in the Subcommittee on Human Rights will discuss the return of refugees and asylum seekers from the EU to Afghanistan following Commission meetings with Taliban-appointed representatives and in the light of the human rights situation in the country. Ireland has taken over the rotating presidency and Irish presidency priorities also come under the spotlight next week. Ireland’s ministers will continue to present their priorities in meetings with the relevant parliamentary committees. Ireland holds the rotating presidency of the Council of the EU until the end of 2026. On Tuesday morning,meanwhile, Roberta Metsola will host an informal breakfast with the permanent representatives of the governments of the member states to the EU.
Strasbourg, France – Several thousand European farmers protested in the French city of Strasbourg on Tuesday against the European Union’s free trade deal with countries in the Latin American Mercosur bloc.
Around 5,000 protesters and several hundred tractors gathered in the city, according to local officials, where the European Parliament is holding a plenary session this week.
EU lawmakers are to decide on Wednesday if they want to seek an opinion from the European Court of Justice (ECJ) on whether the contested Mercosur agreement is compatible with EU law, which could delay the ratification process.
The free trade agreement was signed in Paraguay last weekend and still has to be approved by the European Parliament.
With their protest, the farmers want to keep up the pressure on EU decision-makers. They fear disproportionate competition from cheap imports from South America.
Protesters lit smoke bombs and held up placards with slogans such as “Von der Leyen go home,” directed at European Commission President Ursula von der Leyen.
The demonstration caused major traffic disruption in Strasbourg, with several roads blocked. (January 20)
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