© OLIVIER MATTHYS/EPA
The EU will not lift sanctions on Russia while its war against Ukraine continues, European Commission President Ursula von der Leyen and European Council President António Costa said on Friday. Their statements came ahead of discussions at the European Council, where leaders were due to consider further support for Ukraine and the needs of its critical infrastructure before winter. The assurances followed Washington’s move to ease sanctions pressure in connection with a deal involving Russian diesel supplies.
Von der Leyen said the EU had supported the energy truce announced by US President Donald Trump, but accused Russia of failing to observe it. “We have seen that Russia did not respect it. Not a single minute. Instead, Russia escalated. We have to increase the pressure on Russia,” she said. She added that the Commission was working on a 22nd sanctions package and that the bloc would not lift any sanctions unless Russia stopped the war.
Costa also rejected any reduction in pressure. “We will not cancel any sanctions until Russia stops the war,” he said, calling for stronger support for Ukraine and increased pressure on Moscow to secure a genuine ceasefire. The statements set out the position of the Commission and European Council presidents; they were not, in themselves, a new sanctions decision by EU member states.
The US and EU sanctions regimes are separate. Washington’s decision concerns US restrictions associated with Russian diesel exports, while EU measures are adopted by the member states. Moscow said it had resumed diesel exports under the arrangement with the Trump administration, a development that has prompted concern in Kyiv and European capitals. The reported resumption of Russian shipments has brought renewed attention to the effect of energy revenue on the Kremlin’s ability to finance its war.
The Commission describes EU sanctions as a means of reducing Russia’s capacity to fund the war, imposing costs on its political leadership and weakening its economic base. The measures cover energy, trade and finance, alongside listings of individuals, companies and organisations. The EU’s sanctions framework against Russia has been expanded through successive packages since the full-scale invasion of Ukraine.
The leaders’ statements came as Ukraine prepared for another winter of Russian attacks on energy infrastructure. The European Council meeting agenda included continued support for Ukraine and the operational needs of its critical infrastructure. Von der Leyen said the EU would continue to support Ukraine through the winter. She also referred to progress on Ukraine’s accession process, saying the remaining negotiation clusters should be opened by the end of the year.
The EU has recently added measures targeting Russia’s military-industrial sector. In October, it adopted a package of listings aimed at companies and individuals connected to the country’s war effort, as covered in EU Today’s report on the latest sanctions. The diesel arrangement has also followed earlier tensions over the use of sanctions and energy policy, including the US deal with Moscow.
The EU’s stated position is that its sanctions will remain in place until Russia ends the war. The Commission is preparing further measures, while any new package will require agreement among member states. Friday’s statements did not change the existing regime, but made clear that the US decision on Russian diesel would not, by itself, prompt Brussels to ease EU restrictions.
© OLIVIER HOSLET/EPA
The revised proposal, circulated ahead of the European Council meeting scheduled for 15–16 October, would reduce the planned 2028–2034 financial framework by approximately eight per cent to around €1.6 trillion, calculated in constant prices.
Despite the reduction, the proposed budget remains approximately 30 per cent larger than the current seven-year framework. Germany, Sweden, the Netherlands and other governments concerned about national contributions have nevertheless argued that further restraint is necessary.
The compromise, detailed in negotiations over the EU’s next financial framework, reduces proposed spending across several areas while largely protecting the Union’s established agricultural and regional development programmes. The distribution of those cuts is becoming as contentious as the overall size of the budget.
Under the Irish proposal, agricultural and regional development allocations would decline by approximately three per cent compared with the Commission’s initial plans. By contrast, funding intended for competitiveness and security would be reduced by around 13 per cent, while external action and development cooperation face cuts of approximately 17 per cent.
The difference raises questions about whether the next EU budget can support the strategic ambitions repeatedly endorsed by European leaders.
The Commission has presented industrial competitiveness, technological development, defence readiness and economic resilience as central priorities for the remainder of the decade. Yet these sectors would absorb proportionately larger reductions under the revised framework than agricultural and cohesion programmes.
The consequences could extend to investments in advanced technologies, European industrial supply chains, research programmes and cross-border defence cooperation. They could also constrain the Union’s capacity to fund external partnerships and development initiatives.
The debate is particularly sensitive because the EU’s responsibilities have changed considerably since the previous budget was negotiated. Russia’s invasion of Ukraine has increased defence requirements, while competition with China and the United States has intensified demands for industrial investment.
The central disagreement concerns how much additional expenditure European governments are willing to finance through the common budget. Germany and other major net contributors face domestic fiscal constraints, rising borrowing costs and demands to increase national defence spending.
For these governments, accepting a substantially larger EU budget would add to financial commitments already being made through national budgets.
The Irish compromise therefore faces opposition from two directions. Some governments consider the reductions insufficient, while others fear that the remaining cuts will weaken programmes essential to their national economies.
Traditional recipients of agricultural and regional funding have an interest in protecting established expenditure. Governments seeking stronger European investment in defence, innovation and industrial competitiveness have different priorities.
The European Parliament is another obstacle. Its consent will be required before the final financial framework can enter into force, giving MEPs considerable leverage in negotiations with national governments.
The proposal also envisages approximately €55 billion in additional annual financing through new or revised EU revenue sources, including customs revenues, emissions-related income and corporate contributions.
The Commission’s framework for the next long-term budget reflects a broader debate over the extent to which the Union should develop independent financing mechanisms rather than rely predominantly on national contributions.
Such mechanisms would potentially give Brussels a more predictable revenue base. However, they also raise questions about fiscal sovereignty, the distribution of costs among member states and the political accountability of European taxation.
National governments remain reluctant to surrender substantial authority over revenue collection, particularly when proposed resources could impose costs on domestic industries or consumers.
The negotiations will influence the Union’s ability to respond to future enlargement. Ukraine and several Western Balkan countries are pursuing accession, but the financial implications of bringing additional members into the Union remain substantial.
Existing arrangements for agricultural subsidies and regional development assistance would require reconsideration if large new beneficiaries entered the budgetary system.
At the same time, the EU faces pressure to support Ukraine financially and strengthen defence production without depending indefinitely on extraordinary borrowing or ad hoc national contributions. These responsibilities cannot be addressed simply by preserving the structure of earlier budgets.
European Council President António Costa will seek to narrow the divisions among the 27 leaders, but agreement on the financial framework requires unanimity. Any government can withhold its consent if it considers the final distribution of costs unacceptable.
The forthcoming summit is therefore likely to establish the parameters of further negotiations rather than eliminate the underlying disagreements. The immediate political question is whether member states can reconcile their commitment to greater European strategic capacity with their reluctance to finance it collectively.
© TOMS KALNINS/EPA
© ANTONIO BAT/EPA
European Union leaders are preparing for a two-day summit in Brussels dominated by the economic consequences of the Middle East conflict, Russia’s continuing war against Ukraine and mounting pressure on governments to reconcile defence commitments with deteriorating public finances.
The European Council meeting on 15–16 October will bring together the leaders of the 27 member states to consider immediate measures addressing high energy prices alongside longer-term decisions on competitiveness, enlargement, migration and the EU’s budget for 2028–2034.
European Council President António Costa has placed economic competitiveness and energy costs at the centre of the discussions, reflecting concerns that the disruption of global oil and gas markets is threatening the bloc’s industrial recovery.
The meeting also takes place against the background of renewed disputes over national spending limits, with Italy and Greece seeking greater freedom to finance energy relief and France facing increasing pressure over the credibility of its budget.
The Middle East conflict has created a renewed energy shock for European economies, raising transport and industrial costs while pushing inflation higher.
The disruption of shipping through the Strait of Hormuz has also affected global oil supplies, exposing Europe’s continuing dependence on internationally traded fossil fuels despite efforts to diversify imports following Russia’s invasion of Ukraine.
European leaders are expected to consider targeted and temporary support measures for households and businesses, as well as longer-term policies intended to reduce energy dependence.
The political disagreement concerns how those measures should be financed.
The European Commission has resisted requests from Italy and Greece for further exemptions from the EU’s fiscal framework. Both governments argue that extraordinary energy costs require additional budgetary flexibility.
Brussels maintains that existing provisions already permit exceptional expenditure within defined limits.
The disagreement is particularly difficult for indebted governments that must simultaneously finance military expansion, maintain public services and protect their economies from energy inflation.
France’s position has added urgency to the debate. Its borrowing costs have increased sharply as investors question whether the government can adopt a credible budget ahead of the 2027 presidential election.
A summit agreement on emergency energy assistance would therefore have to accommodate substantially different national fiscal circumstances.
Support for Ukraine remains a central item on the summit agenda as Russia continues attacks against Ukrainian cities, energy infrastructure and industrial facilities.
EU leaders are expected to review military and financial assistance, the implementation of sanctions against Moscow and the resilience of Ukraine’s economy.
The discussions take place amid renewed uncertainty surrounding American weapons deliveries.
Washington’s reported threats to suspend supplies under the NATO-backed PURL procurement arrangement have raised further questions about Europe’s dependence on the United States for advanced military equipment.
European governments have increased defence expenditure and committed additional support to Ukraine, but replacing American capabilities remains difficult, particularly in air defence, precision-guided weapons and certain intelligence systems.
The summit is unlikely to resolve those industrial limitations, but the broader question of Europe’s ability to sustain Ukrainian defence over several years will influence discussions.
Member states must also consider how increased defence expenditure will be financed alongside other demands on national budgets.
The EU’s published summit agenda includes Russian-linked hybrid attacks within Europe.
The issue has gained prominence as European governments investigate sabotage, cyber operations, information interference and threats against infrastructure and defence-related industries.
Recent warnings concerning possible Russian assassination operations targeting European defence executives and employees of companies supplying Ukraine illustrate the changing nature of the security threat.
Such activities place additional demands on national intelligence services, police forces and European institutions responsible for cross-border cooperation.
The EU has strengthened its sanctions instruments against hybrid activities, but enforcement remains dependent on coordination between national authorities.
Any further measures would need to address intelligence sharing, protection of critical infrastructure and the relationship between internal security and the Union’s wider Russia policy.
Enlargement will form another important part of the discussions following the Commission’s proposals for preparing a wider Union.
Brussels has outlined possible institutional safeguards intended to prevent future members from undermining democratic standards or blocking common decisions.
Montenegro and Albania are advancing through their accession negotiations, while Ukraine and Moldova remain central to the EU’s geopolitical enlargement strategy.
The financial implications will become increasingly important as governments negotiate the next multiannual financial framework covering 2028–2034.
Existing members are already divided over how much the EU should spend, which programmes should receive priority and whether additional common resources should be raised.
Agricultural expenditure, cohesion funding, defence investment and support for Ukraine will compete for resources within the same budget negotiations.
The Commission argues that enlargement can be accommodated through targeted reforms, but securing agreement among member states will require decisions on future expenditure and the distribution of financial benefits.
Leaders will also examine progress on the One Europe, One Market agenda, which aims to reduce barriers to economic activity within the EU and improve conditions for European businesses.
The initiative is intended to address structural weaknesses affecting investment, industrial development and the ability of European companies to compete internationally.
High energy prices have made those concerns more immediate, particularly for industries competing against producers in economies where electricity and fuel are cheaper.
The European Council will be asked to provide direction on measures planned for 2026 and 2027, but implementation will depend on subsequent legislation and decisions by member states.
The October meeting brings several unresolved European policy questions into the same negotiation: how to protect economic competitiveness, maintain fiscal credibility, finance defence, sustain Ukraine and prepare for enlargement.
The immediate test will be whether leaders can agree on a credible response to energy prices without reopening broader disputes over national budgets.
More difficult decisions concerning defence financing, institutional reform and the EU’s long-term expenditure commitments will extend well beyond the two-day summit.
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