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Germany Protects Deutsche Börse as EU Ministers Agree Reduced Financial Supervision Reform

EU finance ministers have approved a compromise that would expand the European Securities and Markets Authority’s powers while exempting some major trading venues from centralised oversight. The agreement reflects continuing resistance to transferring financial supervision from national authorities to Brussels.

European Union finance ministers have reached an agreement to expand centralised supervision of financial markets, but Germany has secured provisions allowing important parts of Deutsche Börse to remain under national oversight, substantially narrowing the European Commission’s original reform proposals.

The compromise, agreed at a meeting in Luxembourg on 9 October, would transfer responsibility for supervising selected trading venues, clearing houses and securities settlement institutions to the European Securities and Markets Authority (ESMA).

However, the agreement introduces exemptions and thresholds that reduce the number of institutions automatically subject to direct European supervision.

The result is a significant political compromise between governments seeking deeper financial integration and those reluctant to surrender oversight of nationally important market operators.

Berlin secures its exemption

The most contentious element of the negotiations concerned Deutsche Börse, the German financial-market group that operates the Frankfurt stock exchange and provides trading, clearing and other financial infrastructure services.

Germany opposed arrangements that would place all major market operators under direct ESMA supervision, arguing that institutions with predominantly domestic activities should continue to be regulated nationally.

The agreed compromise refines the criteria for determining which trading venues qualify for centralised oversight.

These conditions allow certain Deutsche Börse operations to remain outside the new supervisory regime.

The exemption had already become a point of contention during negotiations among European governments.

As EU Today reported in June, Berlin had sought to protect Deutsche Börse from mandatory European supervision despite Germany’s broader support for integrating EU capital markets.

The October agreement formalises a narrower approach within the Council’s negotiating position, although the legislation remains subject to approval by the European Parliament.

Europe’s fragmented financial markets

The European Commission has repeatedly argued that fragmented national supervision weakens the EU’s ability to compete with financial markets in the United States.

Although the Union operates a single market, many financial institutions continue to face differing regulatory interpretations, procedures and supervisory relationships across member states.

These differences can increase operating costs and discourage financial businesses from expanding across borders.

The Market Integration and Supervision Package is intended to simplify those arrangements and strengthen common oversight of financial infrastructure with significant cross-border activity.

Under the Council’s position, ESMA would assume direct supervision of selected trading platforms and institutions involved in clearing and securities settlement.

Such institutions perform essential functions in financial markets, including managing transactions, transferring securities and controlling risks between counterparties.

Differences in supervisory arrangements can complicate the operation of financial services that increasingly function across national borders.

The Commission argues that greater consistency would allow European capital to move more efficiently between member states and provide businesses with improved access to investment.

Compromise reduces original ambitions

The Commission’s original approach envisaged broader centralisation of supervisory responsibilities.

The Council agreement of 9 October introduces more restrictive criteria governing the institutions that would fall under ESMA’s direct authority.

In addition to the treatment of trading venues, ministers agreed that direct supervision of crypto-asset service providers should initially concentrate on businesses with the most significant cross-border operations.

The Council also supported changes to ESMA’s governance arrangements, including the creation of a full-time executive board.

The proposed board would strengthen the authority’s ability to make supervisory decisions independently of individual national regulators, while preserving mechanisms for cooperation with those authorities.

The compromise also introduces arrangements allowing national supervisors collectively to challenge certain decisions.

These provisions reflect concerns about concentrating regulatory powers within an institution that must oversee financial businesses operating under different national legal systems.

Why capital markets matter for European investment

The supervision reforms form part of the EU’s broader Savings and Investments Union initiative.

European policymakers want to increase the availability of private capital for companies investing in technology, defence, infrastructure and industrial development.

The Union has substantial household savings, but much of that money remains in bank deposits or is invested outside the European economy.

Companies seeking capital for expansion may consequently face higher financing costs or more limited investment opportunities than comparable businesses operating in larger and more integrated markets.

The Commission’s Savings and Investments Union programme seeks to improve access to finance and make cross-border investment more attractive.

Financial-market supervision represents only one element of that programme.

Differences in taxation, insolvency law, national investment products and corporate governance requirements also influence where investors allocate their money.

Nevertheless, regulators regard consistent supervision as an important condition for reducing fragmentation.

Parliament faces a political decision

The agreement reached by finance ministers does not conclude the legislative process.

The European Parliament must adopt its position before negotiations can determine the final provisions.

Parliamentary discussions could revisit the exemptions secured by Germany and the criteria determining which institutions fall under direct ESMA supervision.

The debate will expose differences over whether European financial integration should proceed through incremental reforms or a more substantial transfer of regulatory authority.

Governments supporting national exemptions argue that supervision should reflect the actual geographic scope of a company’s activities.

Supporters of broader European oversight contend that major trading businesses can influence financial markets beyond their home jurisdictions even when individual operations appear predominantly domestic.

The Deutsche Börse exemption has become a prominent example of the conflict between those positions.

Europe’s largest economies broadly support the objective of deeper capital markets, but remain divided over the institutional powers needed to achieve it.

The final legislation will determine whether the expanded responsibilities granted to ESMA are sufficient to reduce fragmentation or leave important parts of Europe’s financial infrastructure operating under substantially different national supervisory systems.

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Hungary Remains Under EU Article 7 Scrutiny Despite Progress Under Magyar Government

EU ministers have reviewed reforms introduced by Prime Minister Péter Magyar’s administration but left the Article 7 proceedings against Hungary unresolved. The European Commission has acknowledged significant progress while warning that further changes are required to restore the rule of law.

The European Union has maintained its Article 7 proceedings against Hungary despite acknowledging significant improvements in the country’s rule-of-law situation since Prime Minister Péter Magyar’s government took office earlier this year.

Ministers meeting at the General Affairs Council in Luxembourg on Tuesday, 13 October, reviewed reforms introduced by the Hungarian administration and received an updated assessment from the European Commission.

The proceedings, initiated by the European Parliament in September 2018, remain open eight years after concerns over judicial independence, corruption, media freedom and democratic accountability first prompted action under the EU treaties.

No decision was announced to terminate the procedure following the latest meeting.

Brussels acknowledges progress

European Commissioner Michael McGrath said ahead of the discussions that Hungary had made substantial progress towards addressing the institutional problems inherited from the administration of former prime minister Viktor Orbán.

Speaking in Luxembourg, McGrath acknowledged improved cooperation between the Hungarian government and European institutions.

However, he also indicated that the reform process remained incomplete, noting that the new administration had been in office for only several months.

The Commission’s assessment reflects the changing relationship between Budapest and Brussels following Magyar’s election victory and the subsequent introduction of reforms intended to restore judicial and institutional independence.

As EU Today reported in June, the change of government created an opportunity to resolve long-standing disputes over the condition of Hungary’s democratic institutions and the suspension of European funding.

The latest Council discussions indicate that the EU is prepared to recognise reforms already undertaken without automatically treating them as sufficient to close the Article 7 procedure.

An eight-year institutional dispute

The European Parliament initiated the proceedings in 2018 after raising concerns over developments affecting Hungary’s constitutional system, judicial independence, corruption safeguards and civil society.

Article 7 of the Treaty on European Union provides mechanisms for responding when a member state is considered at risk of seriously breaching the Union’s fundamental values.

Under its preventive provisions, the Council can determine whether there is a clear risk of such a breach.

More severe measures, including the possible suspension of certain membership rights, require additional procedures and higher institutional thresholds.

Hungary’s case has remained within the preventive stage, with successive Council meetings examining the country’s legal and political developments.

The Council’s account of the 13 October meeting confirms that Hungarian representatives presented measures intended to address concerns raised by the European Parliament and member states during earlier proceedings.

The Commission also briefed ministers on its latest assessment.

The meeting did not produce a formal finding that the outstanding concerns had been fully resolved.

Magyar faces the consequences of Orbán’s legacy

Since assuming office, Magyar has sought to reverse elements of the institutional structure established during Orbán’s lengthy premiership.

The reforms have included measures concerning public administration, judicial accountability and the relationship between national institutions and European law.

The new government has also attempted to improve relations with Brussels after years of disputes that affected EU budget decisions, sanctions policy and cooperation over Ukraine.

EU Today has previously examined Magyar’s programme of institutional renewal and the political difficulties involved in changing institutions shaped by the previous administration.

Reforming legislation does not necessarily transform the institutions responsible for applying it.

Judicial appointments, regulatory structures, public procurement procedures and anti-corruption enforcement may all require additional measures before the effects of reform can be fully assessed.

The European Commission must therefore consider not only the laws adopted by the new government but also whether the institutions concerned operate independently and effectively.

EU funding remains a separate question

The Article 7 proceedings are closely associated with wider disputes over Hungary’s access to European funding, although the relevant legal mechanisms are different.

During Orbán’s administration, the Commission and Council used financial conditionality procedures to restrict access to certain EU resources because of concerns affecting the protection of the Union’s budget.

Magyar’s reforms have opened the possibility of reversing some of those restrictions.

As EU Today reported in September, the Commission moved towards releasing €4.2 billion following changes intended to address rule-of-law concerns.

The financial decisions involve compliance with conditions attached to EU funding and can proceed independently of the Article 7 mechanism.

Consequently, the release of money does not automatically establish that all the institutional problems identified in the original parliamentary proceedings have been resolved.

Likewise, the continuation of Article 7 does not necessarily prevent the Commission from recognising progress under separate funding arrangements.

Who can end the proceedings?

McGrath addressed the possibility of terminating the procedure during remarks before Tuesday’s meeting.

He explained that the Commission could provide its assessment but did not have unilateral authority to bring the Article 7 process to an end.

In his recorded statement in Luxembourg, the Commissioner pointed to the responsibilities of the European Parliament, which initiated the case, and the Council, which has conducted the subsequent examination.

The institutional arrangements mean that improved relations between the Commission and the Hungarian government cannot by themselves dispose of the proceedings.

The Council must consider the reforms and the remaining concerns within the framework established by the treaties.

Political agreement among member states will consequently be required to determine how the process develops.

A changed relationship with Brussels

The latest discussions take place against a substantially different political background from previous years.

Budapest has recently withdrawn objections to further steps in Ukraine’s EU accession negotiations following Ukrainian legislation addressing educational rights for Hungarian speakers and other national minorities.

The change has removed one obstacle to enlargement negotiations and reflects the government’s more cooperative approach towards other EU institutions.

Nevertheless, Hungary’s position on foreign policy and enlargement is distinct from the assessment of its domestic rule-of-law arrangements.

The Council’s examination remains focused on the institutional concerns that led to the procedure being initiated.

The Irish presidency’s summary of the October Council meeting confirms that ministers received an update rather than reaching a new formal determination.

The proceedings therefore remain open while the Commission and member states continue examining the measures introduced by Magyar’s administration.

The coming decisions will establish how European institutions respond when a new government undertakes reforms intended to reverse the conduct that originally led to action under Article 7.

For Hungary, the outcome will influence its relationship with Brussels well beyond the immediate debate over EU funding. For the Union, it will demonstrate how its rule-of-law procedures operate when political circumstances change and the member state concerned begins addressing previously identified institutional problems.

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Brussels Presses Google Over Compliance With €890 Million Digital Markets Act Penalties

The European Commission is assessing changes to Google’s search engine and app-store practices after imposing two substantial fines in July. Regulators must now decide whether the company’s response satisfies EU competition requirements or leaves it exposed to further enforcement.

The European Commission is continuing discussions with Google over the company’s response to €890 million in penalties imposed under the Digital Markets Act, as Brussels examines whether changes to its search engine and app-store practices are sufficient to address infringements of European competition rules.

Commission spokesman Thomas Regnier confirmed on Wednesday, 14 October, that officials remained in dialogue with the American technology company. The Commission is assessing the measures Google has introduced, taking account of feedback from businesses affected by its services before reaching a conclusion on compliance.

The review follows two decisions adopted on 23 July, when the European Commission found Google in breach of the Digital Markets Act. A €460 million fine concerned preferential treatment for Google’s own services in search results, while a separate €430 million penalty addressed restrictions preventing app developers from freely directing customers towards alternative purchasing channels.

Search rankings remain under examination

The first infringement concerns Google’s treatment of competing online services offering hotel reservations, shopping comparisons, transport information and sports results.

Regulators concluded that Google had placed its own services in more prominent positions, sometimes providing them with enhanced visual features and search functions unavailable to competing businesses.

The Digital Markets Act prohibits designated gatekeepers from giving their own products preferential treatment when ranking services that compete with those offered by other companies.

Google has already modified its European search results in response to the Commission’s decision. The changes include revised presentations of commercial information and greater prominence for independent comparison services.

As EU Today reported following the introduction of the revised search format, Google has argued that the measures could make searches less convenient and increase dependence on intermediary websites.

The company maintains that direct information previously available through its search engine may become harder for consumers to obtain.

For competitors, however, the question is whether Google’s adjustments provide genuine commercial opportunities or merely alter the appearance of search results without changing the underlying distribution of traffic.

Google Play fees face scrutiny

The second case concerns the Google Play application marketplace, where developers have historically depended on Google’s infrastructure to distribute software and sell subscriptions.

Under the DMA, developers must be able to inform customers about alternative offers and direct them towards purchasing arrangements outside the platform, including their own websites.

The Commission found that Google’s restrictions and fees had limited that freedom.

Although the company may charge for certain services associated with acquiring customers, the Commission concluded that the level and duration of its steering-related charges exceeded what the legislation permits.

Google has since adjusted its external-offers arrangements. European officials are examining whether those changes provide developers with a commercially workable alternative to transactions processed through Google Play.

The issue has consequences for subscription services, digital publishers and software companies seeking to maintain direct relationships with their customers.

A formal ability to direct consumers elsewhere is of limited benefit if the financial conditions make such transactions uneconomic.

Enforcement enters a more demanding phase

The Digital Markets Act was designed to address market practices that conventional competition investigations often took years to resolve.

Rather than requiring regulators to establish a new infringement through lengthy proceedings in every instance, the legislation imposes specific obligations on companies designated as gatekeepers.

The Commission’s DMA enforcement framework allows regulators to examine whether those obligations are being followed and to impose financial penalties when they are breached.

Google’s July fines represented an important enforcement decision. The current review concerns the company’s subsequent conduct and the practical effects of its compliance measures.

The continuation of discussions does not itself establish a fresh infringement. Further penalties would require an additional regulatory determination.

Google also faces broader obligations concerning the sharing of search data with competing providers, an issue addressed in a separate Commission decision issued in July.

These obligations concern access to anonymised information about searches, rankings and user interactions that competing search engines may need to improve their own services.

Taken together, the measures represent a substantial intervention in how Google’s European business operates.

Transatlantic tensions complicate the dispute

The proceedings have acquired a political dimension because most of the largest companies affected by the DMA are American.

President Donald Trump has criticised European penalties against US technology companies and threatened trade measures in response to what his administration regards as discriminatory regulation.

Brussels maintains that the legislation applies according to market position and commercial conduct, regardless of nationality.

European regulators must nevertheless enforce their decisions in an environment where competition policy has become entangled with wider trade relations between the United States and the European Union.

Google’s financial exposure extends beyond the €890 million imposed in July. Continued non-compliance could lead to further regulatory proceedings, while changes to the company’s services may also affect advertising revenue and its relationships with commercial partners.

The immediate assessment will concentrate on whether competing search services receive fair treatment and whether application developers can direct customers towards alternative transactions without unjustified restrictions.

The Commission has not announced a date for its final assessment. Its decision will help establish how far Europe’s digital competition legislation can change the conduct of companies whose platforms occupy central positions in online commerce.

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How Europe’s most wanted cocaine trafficker turned Sierra Leone into the world’s first true narco state

Drawing on dozens of interviews with intelligence and police officers across two continents, a Guardian investigation reveals the murderous cost of our insatiable appetite for cocaine

Read more: Latin American organised crime ‘may operate in 16 European countries’
Explainer:
What is state capture and why does it matter?

As abductions go, few have been more brazen. Alan Jalloh was with two friends outside Goodies supermarket, frantic as usual with late afternoon shoppers. Rush hour in downtown Freetown, Sierra Leone’s capital, was under way with familiar gusto.

A black Toyota Rav4 forced its way through the Peninsula highway traffic. Witnesses describe burly white men leaping out, yanking on balaclavas. Jalloh, 40, seemed to freeze. As did his two friends, one a famous Freetown footballer. All three were dragged into the waiting SUV. None of them have been seen since.

Continue reading...

© Composite: Guardian Design

© Composite: Guardian Design

© Composite: Guardian Design

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The EU’s latest mad plan to save itself

Ursula von der Leyen has the answer. Borrow even more money. Borrow like there’s no tomorrow.

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Contact us: info@strategic-culture.su

The most remarkable thing about the rapid demise of the U.S. is that when it hits the bottom of the ocean floor economically, it will be in a better state than the EU. The panic among EU leaders, in particular Ursula von der Leyen, is breathtaking. Barely a week passes before she makes another crackpot policy announcement, gives herself a salary increase, or makes a statement about needing to give even more money to Ukraine. But in recent months these announcements have become more radical and existential, and we are seeing a new dawn now in the EU where the only solution to cover up the feral spending and borrowing is to fabricate a war with Russia and then blame Putin for the whole fiasco.

Every now and again we get a sober reminder about the economic situation of the U.S., EU and Russia. The recent news that Putin is going to sell around 2 million tonnes of diesel oil to “global markets” (as U.S. media phrases it), the lion’s share going to the U.S. before, during and just after the midterm elections in a bid to stabilise the price to help Trump. We will have to assume that countries who buy some of their diesel from the U.S. will continue doing so, but it might, in fact, be Russian oil.

There’s a lot of fake news buzzing around originating from Trump, who likes to distract journalists away from the top issues. It’s hard to see how the American public will respond to Trump’s latest decision to buy Russian diesel, but it’s hard to see this being a solution to the global oil crisis, let alone Trump’s record-low ratings. Will Trump really go ahead with a new wave of strikes on Iran after the midterms, as he has said? Or is it that his own intelligence agencies have picked up information that Iran is poised for a massive strike, and so therefore he is obliged to send even more troops, plus a carrier, to the region?

Regardless of how France and Germany get their diesel in the coming weeks, after Trump forced these governments to dip into their own reserves by threatening a U.S. export ban, it’s hard to see how the Achilles heel of most EU economies – crude oil products – can still be controlled by Moscow. While intellectually challenged figures like Mark Rutte make such stupid comments about how Russia could never win a war with NATO based on comparative GDP data, this latest move might be a huge wake-up call for Macron and Merz, the latter facing dismally low poll ratings. How do you continue to fund a war in Ukraine with the ‘frenemy’ relationship pushed to breaking point, such as is the case now with the U.S. having to buy diesel from Russia? EU countries loathe Putin, as the one hope they had to magically breathe new life into EU economies by taking Ukraine under its wing was shattered when Russian forces invaded. Putin is everything they are not. Nobody can deny Putin is a leader – the very thing that is so desperately lacking in EU countries. Leadership.

But the situation now has reached farce. With a global diesel crisis brought about by Trump’s war with Iran, EU countries are expected to buy diesel on the international market, topped up by Russia. In fact, buying oil from your enemy is nothing new. Countries have been doing this for decades. Even in Syria, we saw terror groups in the north-east of the country take over the oil infrastructure and then sell oil back to the Assad regime.

It’s hard to see how EU countries will draw a line in the sand between their geostrategic military objectives and their very realistic need for a stable oil supply. But in the midst of this chaos, Ursula von der Leyen has the answer. Borrow even more money. Borrow like there’s no tomorrow. Her latest proposal is to expand the current seven-year EU budget to 2 trillion euros, and there is only one way this can be achieved, as member states are never going to cough up more for the EU experiment. She will be forced to borrow from international banks to replace a previous loan of 750 billion euros for COVID. This is the solution for failing economies. Where once for so many years EU apparatchiks would defend the EU’s failure to implement its own rule book, in preference for constantly adopting new legislation, now this seems to have been replaced by ‘create a panic about Russia and make the EU a sort of executive of NATO without a single trace of democratic virtue’. Von der Leyen doesn’t stipulate what this massive increase is for, but we can assume some of it will be siphoned off for Ukraine. Madness on steroids. But hidden in the text is a new series of taxes which the EU itself could impose on individuals, and so in the smoke-and-mirrors confusion we see there is a back-door way to start taxing EU citizens, something Brussels never touched before. How long has the whole project got?

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EU Caps Chinese Hybrid Car Imports at 350,000 as Brussels Moves to Protect Europe’s Motor Industry

The European Union has reached an agreement with China to restrict imports of Chinese hybrid vehicles to 350,000 annually, introducing a significant new barrier to the expansion of Chinese manufacturers in Europe’s automotive market.

The arrangement, confirmed on 12 October, follows months of negotiations between Brussels and Beijing and reflects growing concern about the competitive position of European carmakers.

The import ceiling could reduce Chinese hybrid vehicle sales in the EU by more than half compared with previously anticipated volumes, although the actual effect will depend on demand, product classifications and implementation.

The agreement comes as manufacturers gather for the Paris Motor Show, where the future of European vehicle production, Chinese competition and industrial policy have become central subjects.

China’s Commerce Ministry has presented the outcome as a negotiated arrangement intended to preserve trading relations, while the European side has emphasised the need to prevent rapidly increasing imports from undermining domestic production.

Chinese manufacturers confront a new European barrier

Chinese carmakers have expanded aggressively in overseas markets as domestic demand has weakened. Chinese passenger vehicle exports rose sharply in September, with manufacturers increasingly targeting Europe, Latin America and Asian markets.

Hybrid vehicles have become particularly important because they offer consumers lower fuel consumption without requiring the same degree of dependence on charging infrastructure as fully electric cars.

This has allowed Chinese brands to compete in market segments where European manufacturers retain substantial established production capacity.

The new quota limits the number of eligible Chinese hybrid vehicles permitted to enter the European market each year. According to details of the import restrictions, shipments exceeding the permitted volume would face restrictions at EU customs.

The mechanism differs from a conventional tariff because imports beyond the ceiling cannot simply enter the market by paying a higher duty. Manufacturers and importers will need to consider both delivery costs and the availability of import allocations.

European manufacturers seek protection

The measures arrive amid growing pressure on the European automotive industry, which faces high production costs, expensive energy, competition from Chinese manufacturers and the capital requirements of shifting towards electrified transport.

Companies operating in Germany, France, Italy and other established manufacturing centres must fund the development of new vehicles while maintaining existing factories and employment.

Chinese manufacturers benefit from extensive domestic production networks, considerable scale and access to battery manufacturing capacity.

European policymakers have questioned whether competition takes place under equivalent economic conditions, particularly where Chinese producers receive support from state-directed industrial policies.

Beijing rejects allegations that its export performance results principally from unfair state assistance, arguing that Chinese companies have achieved competitiveness through investment, innovation and efficiency.

The quota represents a departure from the assumption that European consumers will necessarily have unrestricted access to the lowest-priced imported vehicles.

Its economic effects will depend partly on whether European manufacturers can use the additional protection to improve productivity and develop more competitive models.

Will Chinese manufacturers move production into Europe?

Restrictions on imports do not necessarily reduce the presence of Chinese-owned companies in the European automotive industry.

Several manufacturers are already developing production capacity outside China, including within the European Union. BYD’s investment in Hungary is one example of how Chinese companies can pursue access to European consumers through local manufacturing rather than relying entirely on imported finished vehicles.

The new arrangements could strengthen the commercial incentive to expand such operations.

For European governments, Chinese investment presents a difficult calculation. New factories may create employment, increase industrial activity and preserve automotive supply chains, while also expanding the influence of Chinese manufacturers within Europe’s domestic market.

The economic consequences depend on how much research, component manufacturing, battery production and other high-value activity takes place locally.

A Chinese-owned assembly plant using predominantly imported components would provide different benefits from a fully developed European production network.

The British dimension

The debate is also drawing attention to the position of the United Kingdom, whose automotive industry remains closely integrated with European supply chains despite Brexit.

Executives from Stellantis and Renault have supported including Britain within proposed European industrial protection measures, reflecting the importance of UK manufacturing operations to their broader businesses.

Such an arrangement would raise questions about regulatory alignment, trade preferences and the conditions under which non-EU production could qualify for European industrial support.

British manufacturers also face the challenge of Chinese competition, and decisions taken in Brussels could influence investment strategies across the wider European automotive sector.

Protection versus competitiveness

The restrictions may offer European manufacturers additional time to adapt, but they do not eliminate the structural challenges confronting the industry.

Energy prices, labour costs, the availability of batteries and the affordability of new vehicles remain important factors in the competitiveness of European production.

Nor will the quota necessarily prevent Chinese firms from gaining market share through investment, partnerships or vehicles manufactured outside China.

The EU’s approach combines restrictions on imports with the possibility of continued Chinese industrial participation inside Europe.

The outcome will depend on whether European manufacturers use the reduced competitive pressure to strengthen their technological and manufacturing position, or whether the restrictions primarily accelerate the relocation of Chinese-owned production into the EU.

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EU Budget Battle Deepens as €141 Billion in Proposed Cuts Threatens Defence and Competitiveness Funding

European Union governments are entering a critical round of budget negotiations after the Irish presidency of the Council proposed cutting €141 billion from the European Commission’s long-term spending plans, exposing deep disagreements over how the bloc intends to finance its expanding responsibilities.

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.

Europe’s new priorities face the deepest reductions

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.

Germany and the net contributors demand restraint

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.

New EU revenues remain controversial

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.

Ukraine, enlargement and Europe’s strategic ambitions

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.

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EU Leaders Face Confrontation Over Energy Prices, Ukraine and Russia at October Summit

European Union leaders will meet in Brussels on 15–16 October under pressure to address surging energy costs, Russian hybrid attacks, continued support for Ukraine and the bloc’s next long-term budget. The summit comes as economic pressures expose growing differences between national governments.

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.

Energy crisis puts fiscal rules under pressure

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.

Ukraine and the changing transatlantic relationship

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.

Russian hybrid operations move higher on the agenda

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.

A larger EU with a contested budget

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.

Competitiveness and the single market

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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Montenegro and Albania Advance Towards EU Membership as Brussels Tightens Accession Rules

Montenegro and Albania will hold separate accession conferences on 12 and 13 October as the European Commission introduces proposals for stronger safeguards against democratic backsliding, linking the next phase of EU enlargement to reforms within the Union itself.

Montenegro and Albania are preparing for another round of European Union accession negotiations this week, with meetings in Luxembourg scheduled to advance their membership bids as Brussels considers substantial changes to the conditions under which future countries will join the bloc.

Montenegro’s 29th accession conference will take place on Monday, 12 October, followed by Albania’s tenth conference on Tuesday. The meetings come less than a week after the European Commission presented a package of proposals intended to prepare the EU for enlargement while strengthening its ability to respond to breaches of democratic standards by newly admitted members.

For Montenegro, the immediate objective is to continue closing negotiating chapters after years of institutional and legal reforms. Albania’s meeting has a more precisely defined agenda: the provisional closure of Chapter 20, covering enterprise and industrial policy.

Both countries have made progress towards membership, but the Commission’s latest proposals indicate that the terms of accession could become more demanding as the EU considers admitting several new members.

Montenegro moves towards the final negotiating stage

Montenegro is widely regarded as the most advanced candidate among the Western Balkan countries.

Accession negotiations began in 2012, and all 33 negotiating chapters have been opened. Progress towards closure has accelerated as the government seeks to complete the process and secure an accession treaty.

At the end of 2025, Montenegro provisionally closed five chapters covering services, capital movements, company law, agriculture and fisheries.

As EU Today reported following that conference, the agreements brought the number of provisionally closed chapters to twelve at that stage, while the EU continued to emphasise the importance of judicial reform and sustained implementation.

Subsequent accession conferences have continued the negotiating process, with the 29th conference scheduled for 12 October.

The Commission has identified Montenegro as a country capable of concluding accession negotiations by the end of 2026, provided sufficient progress is maintained.

That objective does not mean membership would follow automatically. A completed negotiation must still lead to an accession treaty, which requires approval by all existing member states and ratification under their constitutional procedures.

Outstanding questions include the independence of the judiciary, enforcement of anti-corruption legislation and the capacity of state institutions to apply EU law consistently.

Albania advances in industrial policy negotiations

Albania’s accession process has also gained momentum, supported by renewed EU interest in incorporating the Western Balkans into European political and economic structures.

The conference scheduled for 13 October is expected to provisionally close Chapter 20, which covers enterprise and industrial policy.

The chapter concerns the legal and institutional environment in which businesses operate, including industrial competitiveness, entrepreneurship and policies supporting small and medium-sized enterprises.

Provisional closure would represent further progress in Albania’s alignment with EU legislation and policy, although it would not constitute a final agreement on accession.

As with Montenegro, the negotiating framework requires sustained progress on the fundamentals of membership, notably judicial independence, fundamental rights, corruption and organised crime.

Brussels prepares stronger safeguards

The latest accession conferences follow the European Commission’s proposals of 6 October, which address the institutional consequences of admitting new countries.

The Commission argues that enlargement can be accommodated within the existing treaties, but that the EU will need additional safeguards and improvements to decision-making.

Among the most consequential proposals is the possibility of suspending a new member state’s voting rights in the Council if it commits serious breaches of the Union’s fundamental values or the principle of sincere cooperation.

Such provisions would be incorporated into future accession arrangements, making some membership conditions enforceable after a country has joined.

The proposal reflects concerns that the EU’s existing mechanisms for responding to democratic backsliding can be slow and politically difficult to apply.

In June, EU Today reported on proposals advanced by five member states seeking stronger protections against governments that might undermine common decisions after accession.

The Commission’s October package develops that argument into a broader programme of institutional preparation.

Enlargement beyond the Western Balkans

The debate extends to Ukraine and Moldova, whose membership applications have acquired greater strategic importance following Russia’s full-scale invasion of Ukraine.

The Commission is examining how candidate countries can progressively participate in EU policies and programmes before obtaining full membership.

These arrangements could include greater integration in energy, transport, defence and selected areas of the single market, subject to the implementation of relevant reforms.

Brussels is also considering transitional arrangements affecting agricultural support, financial transfers and sensitive sectors of the economy.

The political challenge is to provide candidate countries with credible membership prospects while reassuring existing members that enlargement will not weaken common decision-making or create unsustainable budget commitments.

For Montenegro and Albania, the October conferences therefore take place at a pivotal point in the accession process.

Both governments are moving through the technical stages of membership negotiations while the EU is still determining how its next enlargement will operate.

The outcome will depend not only on their progress towards meeting accession conditions, but also on whether the existing 27 member states can agree on the institutional changes required for a larger Union.

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Brussels Rejects Italy and Greece’s Demands for Further Energy Budget Relief

The European Commission has rejected demands from Italy and Greece for additional exemptions from EU spending rules as the Middle East energy crisis drives inflation higher, exposing renewed divisions over how much financial assistance European governments can provide.

The European Commission has rejected requests from Italy and Greece for greater freedom to increase public spending in response to the energy crisis, resisting pressure from two member states that argue existing budget restrictions are limiting their ability to protect households and businesses.

The decision, confirmed on 8 October, follows renewed appeals from Italian Prime Minister Giorgia Meloni and Greek Prime Minister Kyriakos Mitsotakis for measures recognising the exceptional financial burden imposed by higher energy prices.

Meloni wants Brussels to take greater account of unexpected inflation when assessing national budgets and to permit additional tax revenue generated by rising prices to be used for energy relief. Mitsotakis has sought the exclusion of temporary support measures for consumers and businesses from the expenditure limits agreed under the EU’s fiscal framework.

Economic Commissioner Valdis Dombrovskis rejected the argument for further concessions, maintaining that the existing arrangements already take inflation into account and provide mechanisms for responding to exceptional circumstances.

The disagreement comes as Europe’s governments confront the economic consequences of the Middle East conflict, including higher fuel costs, inflationary pressures and increased demands for state intervention.

Italy’s increasingly difficult budget choices

For Italy, the dispute adds to a fiscal problem that has been developing throughout the year.

The government expects its budget deficit to rise to 3.4 per cent of GDP in 2027, reversing an earlier objective of reducing borrowing below the EU’s three per cent reference value.

As EU Today reported earlier this month, Rome plans to use additional fiscal room for defence and energy-related expenditure, while public debt is projected to remain close to 138 per cent of GDP.

The new request concerns the treatment of inflation and the financial support required to offset its effects.

Energy inflation creates an unusual budgetary problem. Governments can receive additional nominal tax revenue as prices rise, particularly through consumption taxes, while simultaneously facing public pressure to compensate consumers for higher living costs.

Meloni argues that such unexpected revenue should be available for targeted assistance without forcing equivalent reductions elsewhere in national expenditure.

Brussels is reluctant to accept arrangements that could turn temporary increases in tax receipts into an opportunity for permanent spending expansion.

Italy’s position also reflects the political competition between defence spending and domestic economic support. Rome has accepted the need for higher military expenditure but faces immediate pressure from households and energy-intensive industries.

That competition was already apparent when the government chose to prioritise energy relief over the full use of defence-spending flexibility.

Greece seeks different treatment for emergency support

Greece’s request is more narrowly focused on the treatment of temporary assistance under the EU’s expenditure rules.

Athens argues that measures intended to help businesses and households manage exceptional energy costs should not be counted against the normal spending limits.

The Greek government faces an economic environment in which higher imported energy prices threaten household purchasing power and business profitability, particularly in sectors dependent on transport and fuel.

Excluding temporary relief from expenditure calculations would give Athens additional room to intervene without breaching its agreed fiscal trajectory.

The Commission, however, has resisted establishing further exemptions beyond those already provided in the fiscal framework.

Its objection is institutional as well as financial. If additional categories of emergency expenditure are repeatedly excluded from fiscal calculations, the system becomes increasingly difficult to enforce consistently across the Union.

The limits of Europe’s reformed fiscal rules

The EU revised its fiscal governance framework in 2024, introducing nationally agreed expenditure paths intended to provide greater flexibility while maintaining sustainable public finances.

The Commission’s rules on exceptional circumstances permit member states to depart temporarily from normal requirements under specified conditions.

Those provisions have already been used to accommodate higher defence expenditure, while the Commission has also issued guidance on their application to energy-security investments.

Temporary financial assistance intended to reduce household energy bills, however, is not necessarily treated in the same way as investment in infrastructure that reduces Europe’s long-term dependence on imported fuel.

That distinction has become a source of friction between Brussels and national capitals.

Governments argue that the immediate economic effects of an international crisis require exceptional measures. The Commission is concerned that repeated concessions could weaken the credibility of the spending framework.

A wider dispute over Europe’s economic response

The Commission’s decision also comes as France faces increasing pressure over its debt and budget deficit.

The deterioration in French borrowing conditions has reinforced concerns about the risks associated with heavily indebted governments continuing to expand expenditure.

France, Italy and Greece have different fiscal positions, but the problems confronting them originate partly in the same combination of expensive energy, weak economic growth and competing spending commitments.

The dispute will now feed into preparations for the European Council meeting on 15–16 October, where energy prices and economic competitiveness are prominent agenda items.

EU leaders are expected to consider targeted and temporary measures to reduce the burden on businesses and consumers, alongside longer-term initiatives intended to reduce dependence on fossil fuels.

The Commission’s refusal to provide Italy and Greece with further fiscal exemptions establishes the limits within which those discussions will take place.

National governments remain free to introduce assistance, but Brussels is insisting that they account for its cost within the fiscal rules already agreed.

For Rome and Athens, the question is whether those rules provide sufficient room to respond to an energy crisis whose duration remains uncertain.

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EU Commission Prepares New Visa Restrictions for Russians as Security Concerns Mount

The European Commission is preparing proposals to impose tighter visa restrictions on Russian citizens entering the Schengen area, with new measures expected to be presented in January 2027 following pressure from several member states concerned about Russia’s expanding hybrid operations across Europe.

Poland, Sweden and Estonia are among the countries demanding a tougher approach to Russian visitors, particularly former military personnel who fought in Ukraine. The proposals could affect hundreds of thousands of Russian nationals who continue to receive visas for travel to the European Union despite restrictions introduced following Moscow’s full-scale invasion of Ukraine in February 2022.

According to a report published on Sunday, EU officials are finalising plans to address vulnerabilities in the Schengen visa system, which governments increasingly regard as a potential entry point for individuals involved in intelligence operations, organised crime and acts of sabotage.

Swedish Justice Minister Gunnar Strömmer said the Commission was working towards a January announcement, although Stockholm would prefer an earlier decision. He told Politico that vulnerabilities in the existing arrangements could be exploited by hostile actors.

The initiative is expected to feature in discussions surrounding the Foreign Affairs Council meeting on 12 October, when ministers will examine Russia’s intensifying hybrid campaign against EU member states.

Schengen visas remain a security concern

Despite the deterioration in relations between Brussels and Moscow, Russian citizens continue to receive substantial numbers of Schengen visas. Approximately 478,000 tourist visas were reportedly issued to Russian nationals in 2025, including a significant proportion allowing multiple entries.

The figures have renewed questions about whether existing screening arrangements adequately reflect the security environment created by Russia’s war against Ukraine.

In September 2022, the EU suspended its visa facilitation agreement with Russia, ending preferential treatment and introducing stricter application procedures, additional documentation requirements and more restrictive conditions for multiple-entry visas.

However, the decision did not amount to a general prohibition on Russian tourism. National authorities retained considerable discretion over applications, producing differences in how individual Schengen countries handle Russian visitors.

The Commission’s existing visa guidelines also preserve access for certain categories of travellers, including journalists, political dissidents, civil society representatives and people travelling for essential family reasons.

The new initiative would therefore concern not only the number of visas issued but also the extent to which national screening decisions can affect the security of other Schengen countries. Under the Schengen system, a visa issued by one participating state generally permits its holder to travel throughout the area.

Estonia calls for restrictions on former Russian soldiers

Estonia has taken a particularly forceful position, proposing an EU-wide entry ban targeting former members of the Russian armed forces who participated in the invasion of Ukraine. Estonian Foreign Minister Margus Tsahkna estimates that approximately 650,000 former Russian combatants could fall within the category of individuals requiring closer scrutiny.

Tallinn has advocated individual entry restrictions rather than relying exclusively on broader measures covering Russian nationals generally. Tsahkna warned that former soldiers, particularly those with combat experience and connections to Russian intelligence services, could present a serious security challenge if they entered European countries.

He suggested that Moscow could exploit former combatants to penetrate organised criminal networks or facilitate violent operations against European targets. These assessments remain security warnings rather than evidence that Russian veterans as a group are involved in such activities.

A coordinated European policy would also seek to prevent individuals refused entry by one member state from exploiting differences in national visa procedures elsewhere.

Restrictions on Russian diplomats also under consideration

The visa proposals form part of a wider effort to restrict the activities of Russian nationals whose presence in Europe may present security risks. EU foreign policy chief Kaja Kallas has previously indicated that member states are considering tighter controls on the movement of Russian diplomats within Schengen, alongside restrictions on visas for former combatants and a reduction in Russian tourism.

One proposal would prevent Russian diplomatic personnel from travelling beyond the member state in which they are accredited. Such restrictions would complicate cross-border activities by diplomatic officials suspected of conducting intelligence operations under official cover.

The issue has acquired greater urgency as European governments report an expanding pattern of Russian-linked sabotage, including suspected arson attacks, cyber operations and attempts to disrupt critical infrastructure.

Migration Commissioner Magnus Brunner acknowledged that the initial decline in visa issuance to Russian nationals had levelled off. He urged member states to reduce the number of visas granted and to strengthen scrutiny of applicants.

January proposals will test EU consensus

The immediate question is whether member states can agree on common restrictions that go beyond the existing visa framework. An outright prohibition on Russian tourism would represent a significant departure from the current approach, under which national governments retain responsibility for individual visa decisions.

More narrowly targeted measures against former combatants could prove easier to justify on security grounds, although identifying eligible individuals would require reliable information and cooperation between national authorities. The Commission has yet to publish its proposals, and the precise legal instruments under consideration remain unclear.

Foreign ministers meeting on Monday will discuss Russia’s hybrid campaign and possible European responses. The Council’s published agenda places the issue in the context of Moscow’s continuing aggression against Ukraine.

Whether the Commission ultimately proposes new binding restrictions or stronger common guidelines, the central difficulty remains the same: a Schengen system built around common freedom of movement must accommodate increasingly different national assessments of the security risks associated with travel from Russia.

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France Extends Schengen Border Checks Until April 2027

France will maintain controls on all its internal Schengen borders for another six months, adding to a growing network of national checks that has made temporary border control an increasingly persistent feature of Europe’s passport-free area.

France has notified the European Commission that it will extend controls at its internal Schengen borders from 1 November 2026 until 30 April 2027, maintaining checks with Belgium, Germany, Luxembourg, Switzerland, Spain and Italy as well as at relevant air and sea borders.

The notification, published in the Commission’s official register of temporary internal border controls, means the restrictions currently due to expire on 31 October will continue for another six months.

Paris cites a combination of security and migration concerns, including persistent jihadist threats, antisemitic attacks, organised migrant-smuggling networks and risks associated with irregular movements towards the Channel coast.

The French notification also refers to instability in the Middle East, Afghanistan and Somalia, Russia’s continuing war against Ukraine and security considerations surrounding the Paris Peace Forum on 10–11 November.

France is not alone.

Germany has extended controls on all of its land borders until 15 March 2027, citing irregular migration, migrant smuggling and pressure on its asylum system. Austria is maintaining controls on borders with Czechia, Slovakia, Hungary and Slovenia until the same date, while Poland has notified Brussels of checks on its borders with Germany and Lithuania through 30 March.

Denmark, Sweden, Norway and Italy also have temporary internal controls in force.

The expansion has created an increasingly complicated map inside an area established around the principle that people should normally be able to cross internal borders without routine checks.

EU Today has been following that change closely. In September, EU Today reported that Germany had extended checks on all nine of its land frontiers, while a subsequent examination found that temporary controls were spreading across the Schengen area.

The French extension takes that trend into spring 2027.

Under the Schengen Borders Code, governments retain the right to restore controls when they identify a serious threat to public policy or internal security. The Commission stresses that such action must remain exceptional, proportionate and limited to what is necessary.

The revised rules permit controls responding to a foreseeable threat for an initial period of up to six months, with extensions possible under defined conditions. Governments maintaining controls for extended periods must provide additional risk assessments and reporting.

There is therefore no legal contradiction between Schengen membership and temporary border checks. The political question concerns their frequency and duration.

In June, the European Commission had called for a gradual reduction in internal controls where conditions allowed. EU Today reported at the time that Brussels regarded the restoration of normal passport-free movement as possible in several countries.

The direction since then has largely been the opposite.

Migration remains one factor, but national notifications increasingly cite several threats simultaneously: terrorism, organised crime, Russian sabotage, war in Ukraine, Middle Eastern instability and pressure on asylum systems.

That makes it harder to identify a single event after which controls could simply be removed.

The system also creates practical consequences for cross-border regions. Millions of Europeans live in one Schengen state and work, study or conduct business in another. Selective checks can therefore cause delays even when passports are not examined systematically.

France’s controls are especially significant because of the number and economic importance of its neighbours. The extension covers land connections with six countries and internal air and sea routes.

It also comes as the EU operates new systems intended to strengthen the external Schengen frontier. Europe’s Entry/Exit System has introduced biometric registration for many non-EU travellers, while the migration and asylum pact has changed procedures for handling irregular arrivals.

The original political bargain behind Schengen was that stronger management of the common external frontier would support open internal borders.

The growing use of national internal controls shows that several governments remain unwilling to rely on that external system alone when confronted with migration, terrorism and wider security risks.

France’s latest notification is formally temporary. But by the time the new period expires on 30 April 2027, internal checks will have become a long-running feature of travel across several of Europe’s most important borders.

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Von der Leyen Offers Extra Year on EU Methane Rules as Energy Costs Bite

The European Commission is preparing to give fossil-fuel exporters another year of flexibility under the EU’s methane regime as Brussels responds to high energy prices, pressure on European refineries and concerns over security of supply.

European Commission President Ursula von der Leyen has announced an additional year of flexibility for energy exporters facing new EU methane requirements, marking the latest adjustment to climate legislation as Brussels attempts to contain rising energy costs.

Addressing the European Parliament in Strasbourg on Tuesday, von der Leyen said Europe remained exposed to high energy prices and volatile international fossil-fuel markets and confirmed that exporters would receive “one more year” to prepare for the methane rules.

She also announced a strategic dialogue with the European refining sector aimed at reducing costs and protecting supplies, according to the Commission’s published remarks.

The announcement affects a regulation that has increasingly become an energy-security issue rather than solely an emissions policy.

The EU’s Methane Regulation, adopted in 2024, introduced progressively stricter requirements for companies supplying oil, natural gas and coal to the European market. Importers have already been required to provide information about the origin of fuel and the systems used to measure and reduce methane emissions.

A more demanding stage was due from January 2027. Importers would have to demonstrate that fuel supplied under contracts concluded or renewed since August 2024 came from producers operating monitoring, reporting and verification systems equivalent to EU standards.

The rules are technically complex because European importers do not always buy directly from producers. Gas and oil may pass through traders, hubs, blending systems and several contractual relationships before reaching Europe.

The Commission’s own guidance for importers acknowledges those difficulties, particularly where companies must trace production information through complicated supply chains.

EU Today highlighted the problem in July, when an International Energy Agency assessment raised concerns that the rules could restrict Europe’s available oil supply. The dispute has since intensified because European fuel markets have become considerably tighter.

That pressure can also be seen in the cost of imported energy. EU Today reported last month that the value of EU petroleum imports had risen by 55.8 per cent in the second quarter of 2026 even though the physical volume purchased increased by only 1.2 per cent.

Von der Leyen’s intervention therefore comes against a different market background from the one in which the methane legislation was originally adopted.

The Commission has not abandoned its objective of reducing methane emissions from fossil-fuel production. Methane remains one of the most powerful greenhouse gases, and the regulation is intended to use the size of the European energy market to influence production standards outside the EU.

Instead, Brussels is attempting to adjust implementation so that regulatory requirements do not further restrict supply at a time of elevated energy prices.

The precise legal form of the additional year of flexibility has not yet been detailed in von der Leyen’s announcement. Existing requirements remain contained in Regulation (EU) 2024/1787, meaning that changes to deadlines or enforcement will have to be translated into the appropriate legal or administrative measures.

The Commission had already moved towards greater flexibility earlier this year. In July it issued recommendations designed to clarify contractual arrangements and advised national authorities on the application of penalties to importers while security-of-supply concerns persisted.

The broader problem is European energy competitiveness.

Von der Leyen told Parliament that Brussels intends to begin a strategic dialogue with refineries. European refining capacity has contracted over the longer term, leaving the continent more dependent on imported diesel and other finished petroleum products when individual plants close or external supply routes are disrupted.

The Commission is also expected to propose measures aimed at increasing electricity’s share of European energy consumption as part of its attempt to reduce dependence on imported fossil fuels.

The latest methane adjustment therefore fits a wider shift in Brussels. Climate targets remain formally intact, but implementation is increasingly being examined alongside energy prices, industrial competitiveness and the security of physical supplies.

The extra year gives exporters additional time. It also gives the Commission another year to resolve a question that has become much more urgent in 2026: how far Europe can tighten conditions on imported energy while remaining heavily dependent on those imports.

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EU Housing Act Moves to Parliament as Brussels Targets Short-Term Rentals

MEPs have opened debate on the EU’s proposed Affordable Housing Act, which would give national and local authorities a clearer legal framework for restricting short-term rentals and some non-primary residential property use in areas facing severe housing pressure.

The European Parliament has begun examining legislation that would give cities and national governments greater legal certainty when restricting short-term rentals and the use or acquisition of residential property in areas where housing has become difficult to afford.

The proposed Affordable Housing Act, presented by the European Commission on 9 September, was on Parliament’s agenda in Strasbourg on Tuesday as housing costs move further into EU-level politics.

The legislation does not transfer general housing policy to Brussels. Decisions on construction, planning, rent policy and social housing would remain primarily with national, regional and local authorities.

Instead, the proposal would establish a common EU legal framework governing some restrictions that member states and cities may introduce when attempting to protect housing supply.

The draft regulation specifically covers measures restricting short-term accommodation in residential properties other than a host’s primary residence. It would also cover restrictions on the acquisition or use of land and housing that is not intended as somebody’s principal home.

Those provisions are designed partly to resolve a legal problem that has become increasingly important in cities with large tourism markets.

Local governments have introduced restrictions on holiday rentals and second-home use, but such measures can clash with EU single-market rules governing services, property and establishment. The Commission says the legislation would provide authorities with a clearer method for demonstrating when restrictions are justified and proportionate.

The law would therefore not impose a common European cap on Airbnb-type accommodation. Nor would it oblige cities to introduce restrictions.

Authorities choosing to intervene would instead have to demonstrate housing stress and ensure that their measures meet EU requirements on proportionality, transparency and review.

Brussels argues that the scale of Europe’s housing problem now affects more than social policy.

According to the Commission’s European affordable housing plan, house prices across the EU have risen by more than 60 per cent since 2013, while average rents have increased by about 20 per cent. Short-term rentals increased by 93 per cent between 2018 and 2024.

Only between six and seven per cent of EU housing stock is classified as social housing, while about 20 per cent of homes are recorded as unoccupied.

The Commission estimates that Europe needs to build more than two million homes a year to meet current demand — around 650,000 more annually than are presently being constructed. It estimates the additional investment requirement at approximately €153 billion each year.

Those figures underline a central difficulty in the housing debate: restrictions on tourist accommodation may return some properties to residential use, but they do not address the full shortage of new homes.

EU Today examined that wider supply issue when the Commission launched its European Affordable Housing Plan, which combines proposed regulation with investment, faster permitting, construction reform and changes to state-aid rules.

The debate is becoming more politically prominent as housing affordability affects a growing share of middle-income households as well as those on lower incomes.

Berlin offers one example. EU Today reported last month that advertised rents in the German capital had risen by roughly three-quarters in less than a decade, while the city calculates that it will need another 211,000 homes by 2040.

Pressure is particularly acute in large cities and tourism centres, where residential demand competes with short-term accommodation and investment properties.

The Commission argues that this has consequences for the wider economy because workers who cannot find affordable accommodation may be unable to move to areas where jobs are available.

That is why Brussels increasingly presents housing not only as a social concern but as part of the competitiveness and single-market agenda.

The proposal is still at an early stage. Parliament and the Council must negotiate the legislation under the ordinary legislative procedure, and substantial amendments remain possible.

Questions are likely to centre on how “housing stress” is defined, what evidence authorities must provide before restricting property use and how far EU law should permit local intervention in property markets.

The political dividing line is already apparent. One side of the debate stresses that cities need more freedom to protect permanent housing stock. The other warns that regulation of short-term rentals or second properties can affect tourism businesses, property owners and investment without necessarily creating sufficient new supply.

The Affordable Housing Act attempts to establish legal rules for that dispute rather than settle it centrally.

If adopted, its importance will therefore depend less on a single Brussels policy than on how individual European cities use the powers and legal protection it provides.

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EU Plans 15-Year Safeguard for New Members as Enlargement Rules Are Rewritten

The European Commission has proposed new safeguards allowing voting rights and funding to be restricted if future EU members breach fundamental European rules after accession, as Brussels prepares for possible membership of Ukraine, Moldova, Albania and Montenegro.

The European Commission has set out a new framework for enlargement that would allow the European Union to impose restrictions on recently admitted countries for up to 15 years after accession if they retreat from commitments on democracy, the rule of law or other fundamental EU principles.

The measures form part of the Commission’s new pre-enlargement policy review, published on Tuesday, which examines how the EU’s institutions, budget and policies would have to change before another round of expansion. Brussels says the Union could accommodate additional members without rewriting its treaties, but would need stronger safeguards to prevent enlargement from making decision-making more difficult.

Under the proposals, accession treaties could contain an institutional safeguard allowing action against a new member that seriously breaches the values contained in Article 2 of the Treaty on European Union or the principle of sincere cooperation. In the most serious cases, Council voting rights could be suspended.

The Commission’s public summary describes those arrangements as temporary, targeted and reversible. Reporting on the underlying proposal indicates that the enhanced safeguard could remain available during the first 15 years of membership.

The proposal addresses a problem that has moved steadily up the enlargement agenda: how to ensure that a country continues to meet membership conditions after it has entered the EU.

Germany, France, Belgium, the Netherlands and Luxembourg had already raised the issue earlier this year. As EU Today reported in June, the five governments called for mechanisms capable of restricting some rights of new members if democratic standards deteriorated after accession.

The Commission has now turned that political argument into a wider institutional proposal.

The change is particularly relevant to Ukraine, Moldova, Montenegro and Albania, which Brussels identifies as the four candidates currently furthest advanced. The Commission says it will prepare indicative roadmaps for each country provided reform momentum continues.

Ukraine and Moldova may also make further progress within days. EU Today reported earlier on Tuesday that two more negotiating clusters could potentially be opened next week if Ukraine’s parliament passes legislation dealing with minority-language education.

Alongside stronger rule-of-law safeguards, the Commission wants candidate states to be integrated gradually into parts of the EU before full membership. Energy, transport, digital policy and defence are among the sectors identified for deeper participation.

Brussels is also proposing greater use of qualified-majority voting during the accession process, including for decisions to open negotiating clusters. At present, individual governments can delay progress at several stages because unanimity is required.

Another proposed safeguard would require a newly admitted state, for a limited period, not to block subsequent enlargements because of bilateral disputes. The measure reflects long-standing difficulties in the Western Balkans, where disputes between neighbouring states have repeatedly entered accession negotiations.

Ukraine’s agricultural sector presents a separate challenge. The Commission says transitional arrangements could be used for agriculture, sensitive products, EU funding, the movement of workers and participation in common systems. Reporting on the package indicates that unrestricted access by Ukraine to existing Common Agricultural Policy support is unlikely immediately upon accession because of the scale of Ukrainian farming.

That question is politically important for existing agricultural beneficiaries, particularly in Central and Eastern Europe, where Ukrainian grain and food imports have already caused disputes.

The institutional proposals do not guarantee membership for any candidate. Accession remains dependent on meeting the EU acquis, completing negotiations and obtaining the agreement of existing member states.

Nor has the 15-year safeguard yet become EU law. The Commission has asked the European Council and European Parliament to take forward discussions, and the eventual provisions would have to be reflected in future accession arrangements.

What has changed is the shape of the enlargement debate. Brussels is no longer concentrating solely on what candidate countries must do before joining. It is also designing mechanisms governing what happens after they enter.

For Ukraine, Moldova and the Western Balkans, that could produce a more credible path towards membership, but one accompanied by conditions extending well beyond accession itself.

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Ukraine and Moldova Could Open Two More EU Accession Clusters Next Week

Ukraine and Moldova could advance to two further stages of their European Union accession negotiations as early as next week, Enlargement Commissioner Marta Kos has said, provided Ukraine approves legislation addressing minority-language education.

The European Union could open two additional negotiating clusters with Ukraine and Moldova next week if the Ukrainian parliament passes legislation intended to address concerns over education rights for national minorities.

EU Enlargement Commissioner Marta Kos confirmed the possible timetable on Monday following a meeting of the EU-Moldova Association Council in Brussels.

Asked whether further intergovernmental conferences could take place this month, Kos said the next two clusters could potentially be opened during meetings in Luxembourg next week.

The condition is passage by the Verkhovna Rada of legislation dealing with educational rights for national minorities, an issue that has been central to Hungary’s objections to further progress in Ukraine’s accession negotiations.

Kos said during the Commission’s recorded press conference that Brussels was aware of the Ukrainian parliament’s procedures and hoped the legislation would be approved. Member states would then have to complete their own procedures quickly.

A draft law covering education rights for indigenous peoples and national minorities was registered in the Verkhovna Rada on 1 October.

The legislation is intended in part to address Hungarian demands concerning the use of minority languages in Ukrainian schools, particularly by the ethnic Hungarian community in Zakarpattia.

Hungary has repeatedly linked support for Ukraine’s EU accession process to those issues.

Ukraine and Moldova formally opened accession negotiations in 2024 and have since moved into the detailed cluster-based process used to organise negotiations over the EU acquis.

EU Today reported in June that the two countries had moved into the first substantive stage after political agreement allowed negotiations on the “fundamentals” cluster to proceed.

That cluster covers areas including the judiciary, fundamental rights, public administration, democratic institutions, public procurement and financial control.

Unlike most negotiating areas, the fundamentals cluster remains open throughout the accession process and is normally closed last.

The possible opening of two additional clusters would therefore mark another practical step in a process that remains dependent on unanimous support among EU governments at key stages.

Ukraine’s Foreign Minister Andrii Sybiha has said he hopes adoption of the minority-education amendments will remove the remaining basis for Hungary to block the next steps.

The negotiations have also become linked increasingly closely to the wider security relationship between the EU and Ukraine.

EU Today has followed the accession process as Kyiv and Chișinău seek to keep negotiations moving despite political resistance within the bloc.

Brussels continues to stress that accession remains merit-based and conditional on reforms.

Kos said on Monday that both Ukraine and Moldova were delivering reforms in difficult circumstances and described them as being among the four front-running candidate states.

The Commission is due to publish its annual enlargement reports on 28 October, providing a detailed assessment of progress across individual negotiating chapters.

Moldova has set itself a target of being ready to complete negotiations by early 2028, although any final accession date would depend on the member states.

The country has also been moving closer to EU structures outside the formal accession negotiations.

Kallas said on Monday that the EU had committed €1.9 billion under its Growth Plan for Moldova and was releasing another €157 million tranche. Moldova has joined the Single Euro Payments Area and is moving towards inclusion in the EU’s mobile roaming area.

Ukraine’s path is more politically complicated because of both the war and recurring disputes with individual EU members.

The next immediate test is parliamentary: whether Kyiv can pass the education amendments quickly enough to allow EU governments to approve the next negotiating stages in Luxembourg.

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France and Germany Seek New EU Power to Cut Market Access Over Trade Distortions

France and Germany have proposed giving the European Commission powers to respond within days to serious trade distortions, including the possibility of restricting access to the EU single market. The initiative comes as European concern grows over Chinese subsidies, industrial overcapacity and dependence on critical imports.

French President Emmanuel Macron and German Chancellor Friedrich Merz have called for a new European Union trade instrument capable of acting rapidly against countries whose economic practices cause serious disruption to the European market.

In a joint initiative sent to European Commission President Ursula von der Leyen on Monday, the two governments proposed strengthening the EU’s ability to respond to what they describe as systemic market distortions, including dumping, widespread subsidies and restrictions affecting access to critical supplies.

The Franco-German proposal does not formally identify China as its target. However, many of the practices it describes correspond directly to long-standing European concerns over Chinese industrial policy, including excess manufacturing capacity, state support and restrictions on exports of critical minerals.

The initiative represents a further development in a harder European approach towards Beijing. EU Today reported last week that China had warned it would respond if the EU introduced new restrictions against Chinese companies or products.

Macron and Merz are proposing two additional instruments.

The first would be intended to reduce European companies’ dependence on single suppliers for strategically important products and raw materials. The second would allow the EU to restrict access to its internal market when a third country uses political or economic measures that seriously undermine fair competition.

Under the proposal, the Commission could initiate countermeasures unless a qualified majority of EU governments voted to block them. That would reverse the normal political dynamic in which Brussels must first secure sufficient support before acting.

German officials have argued that the EU needs powers comparable in effect to the United States’ Section 301 trade measures or China’s ability to restrict exports of critical raw materials.

The Commission has welcomed the Franco-German intervention as a contribution to its work on economic security and global trade imbalances. Any new instrument would, however, require legislation and approval by both EU governments and the European Parliament before it could be used.

The proposal comes amid growing concern in both Paris and Berlin over the effect of subsidised Chinese production on European manufacturers.

Germany’s position is particularly significant. Berlin has traditionally been more cautious than Paris about measures that could restrict trade with China, reflecting the importance of the Chinese market to German carmakers, engineering companies and chemical producers.

That position has shifted as German industry faces increased competition from Chinese electric vehicles, machinery and other manufactured goods.

EU Today has previously examined the emerging Franco-German alignment on tougher China trade defences and demands from German manufacturers for broader European action rather than product-by-product investigations.

The new proposals go considerably further by seeking a mechanism capable of dealing with entire sectors and acting much more quickly than conventional anti-dumping proceedings.

Chemicals, PET plastics and hybrid vehicles are among sectors identified in the Franco-German document as areas where additional action may be required.

The timing is also significant. EU leaders are due to discuss trade relations with China at their summit in Brussels on 15–16 October, while Trade Commissioner Maroš Šefčovič is expected to hold talks with Chinese officials beforehand.

The Commission is already attempting to balance two objectives: maintaining Europe’s access to the Chinese market while reducing strategic dependencies that could be used as political leverage.

The Franco-German plan would give Brussels another instrument at the more coercive end of that policy. Its eventual importance will depend on whether governments agree to create it and how readily they would permit the Commission to use it against a major trading partner.

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Italy’s Deficit to Rise Again as Rome Uses EU Fiscal Flexibility

Italy expects its budget deficit to rise above the European Union’s three per cent reference level again next year as Giorgia Meloni’s government uses new EU fiscal flexibility to finance defence and measures responding to higher energy costs.

Rome’s latest multi-year fiscal projections put the 2027 deficit at 3.4 per cent of GDP, substantially above the previous target of 2.8 per cent.

The increase follows a planned fall to 2.9 per cent this year, which would bring Italy below the EU’s three per cent threshold for the first time since 2019. The deficit stood at 3.1 per cent in 2025.

The change reflects Italy’s decision to use the EU’s national escape clause, allowing member states under specified conditions to deviate temporarily from their agreed expenditure paths.

Under the latest projections, Rome intends to use fiscal flexibility worth 0.6 per cent of GDP in both 2027 and 2028 for defence and energy-related spending. The additional expenditure amounts to roughly €29 billion across the two years, while the deficit is projected at 3.2 per cent in 2028.

The decision turns a long-running dispute over fiscal flexibility into a test of the EU’s revised budget framework.

The national escape clause was introduced in the 2024 reform of the Stability and Growth Pact. It permits a member state to deviate temporarily from its fiscal path when exceptional circumstances outside its control have a major effect on public finances, provided medium-term fiscal sustainability is not endangered.

The mechanism was subsequently used to give governments greater room to increase defence spending. In 2026, the Commission also moved to broaden its application to energy-security expenditure.

Italy has been among the governments pressing hardest for such flexibility.

In August, EU Today reported that Rome intended to use the available fiscal room fully for energy measures but only partly for defence. The decision illustrated the competition between longer-term military investment and the immediate political pressure created by household and industrial energy bills.

The latest projections make that trade-off larger.

Italy’s annual inflation rate increased to 4.1 per cent in September, from 3.2 per cent a month earlier. Meloni has sought additional room from Brussels to cushion the economic effect of elevated energy costs.

At the same time, the government has improved its growth forecasts.

GDP is now expected to expand by one per cent in 2026, compared with an earlier projection of 0.6 per cent. Growth for 2027 has been revised from 0.6 to 0.8 per cent.

Those figures provide some additional room, but Italy’s debt remains the larger constraint.

Public debt is projected to rise from 138.1 per cent of GDP this year to 138.5 per cent in 2027 before edging down to 137.9 per cent in 2028. The government now expects the debt ratio to begin falling a year later than previously planned.

That leaves Rome in an unusual position. It expects formally to bring its underlying deficit below the EU threshold while headline borrowing rises above three per cent once exceptional spending is included.

Economy Minister Giancarlo Giorgetti has said Rome is discussing with the European Commission how the calculation will affect Italy’s attempt to leave the EU’s excessive deficit procedure.

The Commission will therefore have to judge not only Italy’s fiscal trajectory but how extensively exceptional expenditure can be accommodated under rules Brussels itself has made more flexible.

That question has already generated concern.

EU Today reported last month that the European Fiscal Board had warned that exceptions were beginning to weaken the clarity of the revised rules. The watchdog has been particularly critical of allowing room initially associated with higher defence spending to be extended to energy-resilience measures.

Italy provides one of the clearest examples of the problem.

Rome is trying simultaneously to increase military capacity, protect households and businesses from energy costs and demonstrate that its very high debt remains manageable.

It has also argued that European rearmament cannot proceed unless governments have sufficient room to finance it. The same tension emerged in Italy’s debate over participation in the EU’s SAFE defence loan programme.

The EU has given governments more flexibility to manage those competing demands. Italy’s 2027 budget will show how far that flexibility can stretch before the argument returns to the credibility of the fiscal rules themselves.

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Ukraine’s EU Reform Record: Why Progress Slows Where Political Power Is at Stake

Ukraine’s record on reform during Russia’s war is stronger than much recent criticism suggests. By September, Kyiv had completed 84 of 95 milestones due under the Ukraine Plan. Yet progress on a smaller group of rule-of-law commitments has been strikingly weaker. The difference between the two tells Brussels much about where Ukraine’s European transformation is encountering resistance.

Ukraine’s reform record currently produces two figures that appear difficult to reconcile.

Under the Ukraine Plan, Kyiv had completed 84 of the 95 milestones due by late September — around 88 per cent. The result was strong enough for EU governments to approve another payment of almost €3 billion under the Ukraine Facility.

Three months earlier, however, a coalition of Ukrainian organisations monitoring ten rule-of-law and anti-corruption commitments agreed with Brussels had awarded progress just 15 points out of 100.

Neither figure is wrong. They measure different programmes.

The first covers a broad reform and investment agenda extending from the judiciary and financial markets to energy, agriculture, transport, human capital and the business environment. The second examines a deliberately narrow collection of reforms concerning prosecutors, criminal investigations, anti-corruption agencies and judicial governance.

Put together, they raise a more useful question than whether Ukraine is “reforming” or “not reforming”.

Why has a country capable of delivering most of a demanding EU programme during a major war found this particular group of reforms so much harder to complete?

Russia’s aggression provides part of the answer. Ukraine has been attempting an institutional transformation while mobilising its population, financing its armed forces, repairing infrastructure and keeping a functioning state under repeated Russian missile and drone attacks. No previous EU candidate has operated under comparable conditions.

But the ten reforms where progress has been weakest have something else in common. Most concern institutions that can investigate senior officials, prosecute corruption, scrutinise appointments or otherwise place limits on the exercise of political authority.

That is what makes the comparison important.

A strong overall record

The wider reform record should not be understated.

When the European Commission released €2.9 billion to Ukraine on 2 October, it specifically credited Kyiv with implementing reforms covering the judiciary, financial markets, human capital, the business environment, energy, transport, agriculture and the green transition.

Total EU support provided under the Ukraine Plan has now exceeded €32 billion. More than €17 billion in further budget support remains potentially available during 2026, provided Ukraine fulfils the corresponding conditions.

The money is particularly important because the Ukrainian state is directing such a large share of its own resources towards defence. European financing helps keep the civilian state operating while Ukraine fights Russia.

The Ukraine Facility has therefore become more than an aid mechanism. It gives Brussels a means of measuring reform against specific commitments and releasing money when they are met.

That system has generally worked.

It also makes the areas where progress is weaker much easier to identify.

The 15/100 assessment published in June concerned ten priorities agreed in December 2025 between Enlargement Commissioner Marta Kos and then deputy prime minister Taras Kachka. The score came from Ukrainian civil society, not the European Commission, and cannot legitimately be presented as Ukraine’s overall EU reform score.

It had nevertheless risen only six points from an assessment of nine out of 100 in April.

Among the unfinished commitments were changes to criminal procedure affecting high-level corruption cases, stronger guarantees for the independence and effectiveness of NABU and SAPO, reform of the State Bureau of Investigation, new arrangements surrounding the Prosecutor General, competitive recruitment within the prosecution service and further changes to judicial governance.

These are among the most difficult reforms Ukraine has undertaken since 2014 because they concern who has the authority to investigate whom.

The July 2025 episode changed the argument

The events surrounding NABU and SAPO in July 2025 remain central to understanding why Brussels is paying such close attention.

Ukraine had spent years building a specialised anti-corruption system intended to make investigations of senior political figures less vulnerable to interference from the conventional prosecutorial hierarchy.

NABU conducts investigations. SAPO provides specialised prosecution. The High Anti-Corruption Court hears the cases.

The system has never been free from political controversy, nor has its performance been beyond criticism. But its independence became an important part of Ukraine’s relationship with the EU and other international partners.

Then, in July 2025, parliament passed legislation placing NABU and SAPO under substantially greater authority of the politically appointed Prosecutor General. Zelenskyy signed it.

The decision produced an unusually sharp reaction inside Ukraine. Demonstrators took to the streets despite martial law, while European partners made clear that the legislation threatened reforms regarded as fundamental to the country’s European integration.

As EU Today reported during the crisis, the dispute went far beyond the technical division of powers between prosecutors and investigators.

Kyiv reversed course within days. Parliament restored the independence of the two bodies.

The reversal demonstrated that Ukraine’s political system still contained powerful corrective forces. Civil society mobilised, public opposition was visible and international pressure had an effect.

Yet the episode also established that the independence of institutions created specifically to investigate high-level corruption could still become the subject of direct political intervention.

That changed the context in which subsequent reform commitments are being judged.

The European Commission’s 2025 report on Ukraine recorded both sides of the episode. It acknowledged the restoration of NABU and SAPO independence, while warning that undue pressure on anti-corruption agencies remained a concern.

The Commission also identified practical weaknesses. NABU still required better access to timely and impartial forensic examinations, while SAPO needed stronger powers in cases involving members of parliament.

This is why simply retaining NABU and SAPO is no longer sufficient evidence that this part of the reform process is secure. Brussels is looking at whether they can operate when investigations become politically difficult.

Follow the institutions

The same issue appears elsewhere.

Ukraine agreed to review the procedure for appointing and dismissing the Prosecutor General, drawing on European standards and the Venice Commission. It also committed itself to transparent and competitive recruitment for senior positions throughout the prosecution service.

The significance is obvious. The Prosecutor General occupies a pivotal position in the Ukrainian criminal-justice system. The method by which that office is filled — and the circumstances in which its occupant can be removed — affect the credibility of every politically sensitive prosecution beneath it.

Progress has been slow.

There is a similar problem with the State Bureau of Investigation, which handles cases involving senior officials and law-enforcement personnel. Kyiv agreed to an independent assessment of the bureau followed by reform of its legal and institutional framework.

Again, the issue is not administrative tidiness. An agency responsible for investigating state officials has little value as a check on government if its own leadership or investigative decisions are susceptible to political influence.

Criminal procedure provides another example.

Ukraine committed itself to changing provisions under which corruption proceedings can eventually be closed because deadlines for pre-trial investigations have expired, as well as addressing limitation periods for corruption offences.

Draft legislation has appeared. Bills No. 15333 and 15334 were registered in parliament, and NABU and the Ministry of Justice have worked on amendments.

But the process has taken months.

For a simple criminal case, procedural deadlines may appear an obscure legal question. Top-level corruption investigations are different. They can involve offshore structures, large quantities of financial evidence, foreign jurisdictions and prolonged litigation. If the clock eventually disposes of a case that investigators and prosecutors cannot bring to judgment quickly enough, the anti-corruption architecture fails at the point where it is supposed to produce results.

The same pattern is visible in judicial reform and the new Anti-Corruption Strategy for 2026–2030. Work is taking place, legislation is being prepared and institutions are consulting one another. Some changes have been completed.

Others remain somewhere between agreement and implementation.

This is precisely the stage of accession at which that distinction begins to count.

When Ukraine and Moldova moved further into the EU accession process, the significance of the Fundamentals cluster was that progress would increasingly depend on the functioning of institutions rather than declarations of political intent.

Ukraine has no shortage of declarations of European intent. What the Commission needs to establish is whether the machinery beneath them works.

The limits of the wartime argument

Any assessment that ignores Russia’s war would be unserious.

Full-scale aggression has inevitably changed the Ukrainian state. Decisions that might take months in peacetime sometimes have to be taken within days. Military information cannot be handled according to ordinary transparency rules. Elections cannot proceed under normal conditions. The executive carries responsibilities that no Ukrainian government faced before 2022.

Reform is also competing for administrative capacity with mobilisation, defence procurement, reconstruction, energy emergencies and the daily consequences of Russian attacks.

This has to be taken into account when Brussels sets timetables and assesses progress.

It is less convincing when applied indiscriminately.

Competitive recruitment of prosecutors does not interfere with the defence of Ukraine. Neither does an independent procedure for selecting the Prosecutor General. NABU’s ability to investigate senior officials does not prevent the armed forces from conducting operations, while closing procedural loopholes in corruption cases has no obvious adverse effect on wartime decision-making.

There is therefore a boundary between powers required to fight Russia and powers that are simply easier for government to retain during wartime.

Finding that boundary is becoming one of the more difficult questions in Ukraine’s relationship with the EU.

This does not support the sweeping claim that every important Ukrainian institution has been placed under political control. The evidence does not justify it.

It does show why Brussels is concentrating increasingly on institutional independence.

The problem with wartime centralisation is rarely that it begins without justification. Governments fighting wars need authority. The longer an emergency lasts, however, the more important it becomes to distinguish measures required by national security from arrangements that have become politically convenient.

Ukraine has now lived under full-scale war for more than four years. Institutions created for the post-war European state are being shaped while the wartime state still exists.

That makes the current reform period unusually consequential.

Conditionality becomes Brussels’ leverage

The EU has one powerful instrument with which to influence the outcome: money.

The Commission is already using it.

The almost €3 billion approved in September followed the completion of agreed Ukraine Plan milestones. The next payments depend on further commitments being met.

As EU Today reported when the Ukraine Plan was amended, additional financing has come with additional rule-of-law and anti-corruption requirements.

There is a limit to how far Brussels can push this. Ukraine is fighting a Russian war of aggression that also poses a direct security threat to Europe. Destabilising the Ukrainian budget in order to demonstrate the rigour of EU conditionality would make little strategic sense.

Kyiv is well aware of that.

But Brussels cannot simply waive the conditions either. Doing so would weaken reformers inside Ukraine, reduce EU influence over the accession process and make it more difficult to explain enormous long-term transfers to European taxpayers.

The result is already visible: continued financial support accompanied by increasingly detailed scrutiny of how reforms are implemented.

That approach is likely to become tougher as accession advances.

There is another reason for it.

Ukraine will eventually have to manage reconstruction on a scale Europe has not seen for decades. European governments, international financial institutions and private investors will be asked to commit hundreds of billions of euros. Confidence in prosecutors, courts, public procurement and anti-corruption agencies will affect how much money arrives and on what terms.

Strong institutions are therefore not a concession Ukraine makes to Brussels in exchange for membership.

They are part of the infrastructure required for Ukraine’s recovery.

The same applies to the war itself. Corruption in defence procurement, reconstruction or public administration gives Russia opportunities to damage confidence in the Ukrainian state and strain relations between Kyiv and its partners. Moscow has every interest in amplifying genuine scandals alongside fabricated ones.

The most effective answer is not tighter political management of damaging information. It is institutions capable of investigating misconduct credibly.

That is also why the role of Ukrainian civil society deserves attention.

The organisations producing critical assessments of Kyiv’s reforms are operating in a country under attack. Many have supported Ukraine’s European integration for years. Their reports can be disputed and their scoring methodologies examined, but criticism of government performance is not evidence of disloyalty.

The ability to produce such criticism is itself one of the features separating the Ukrainian political system from the authoritarian model Russia represents.

Ukraine’s reform record consequently looks neither like the failure portrayed by some critics nor the uninterrupted success sometimes presented by its defenders.

The broader record is impressive. Completing 84 of 95 Ukraine Plan milestones while fighting a major war is not a trivial achievement, and the EU would not have continued releasing billions of euros if the reform programme existed only on paper.

The difficulty appears further down, where institutional reform begins to affect the ability of political authorities to influence prosecutors, investigators and judicial appointments.

The NABU-SAPO confrontation made that problem impossible to ignore. The subsequent reversal showed that Ukraine also possesses the political and civic capacity to correct course.

What happens next will matter more than either episode.

Bills that have remained in parliament will have to become law. Reviews of the SBI and prosecution service will have to produce institutional changes. Competitive appointment procedures will have to work when the preferred candidate of those in power does not win. Anti-corruption bodies will have to be allowed to pursue cases when their targets are politically connected.

These are less visible achievements than opening accession negotiations or announcing another EU funding package.

They are also much closer to what EU membership ultimately requires.

Russia has forced Ukraine to build an exceptionally powerful wartime state. European integration requires Kyiv to ensure that some of that power can eventually be constrained by institutions that do not depend on whoever occupies the presidential administration.

The figures that currently look contradictory — 84 out of 95 and 15 out of 100 — are therefore telling different parts of the same story.

Ukraine has shown that it can reform during the war.

The harder test is whether it can complete reforms precisely where doing so reduces political discretion.

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Seventeen EU Countries Push Back Against Cuts to Farm and Cohesion Spending

Seventeen EU governments have joined forces to defend agricultural and regional funding in the bloc’s next seven-year budget, setting up a confrontation with Germany and five other countries demanding substantial reductions to the European Commission’s proposed €2 trillion spending plan.

Seventeen European Union countries have called for agriculture and cohesion funding to be protected from further cuts as negotiations over the bloc’s 2028–2034 budget enter a decisive phase.

In a letter dated 2 October to Irish Taoiseach Micheál Martin, whose government currently holds the rotating presidency of the Council of the EU, the countries said the overall financing of Cohesion Policy and the Common Agricultural Policy should be maintained in the next Multiannual Financial Framework.

The signatories are Bulgaria, Croatia, Cyprus, Czechia, Estonia, Greece, Hungary, Italy, Latvia, Lithuania, Malta, Poland, Portugal, Romania, Slovakia, Slovenia and Spain.

The initiative follows months of coordination by the so-called Friends of Cohesion. In an earlier joint position published by the Spanish government, members argued that cohesion, agriculture and fisheries remained central EU policies and called for new EU revenue sources to be “genuine, fair, simple and non-regressive”.

Italian Prime Minister Giorgia Meloni and Romanian President Nicușor Dan have been coordinating the group at leaders’ level. They are expected to convene another informal meeting alongside the European Council on 15–16 October. The two leaders previously brought the group together ahead of the June European Council as governments sought to coordinate their positions on the budget.

The intervention places the group in direct opposition to Germany, Denmark, the Netherlands, Austria, Finland and Sweden.

Those six governments have argued that the Commission’s near-€2 trillion proposal should be reduced by several hundred billion euros. In their joint statement on the 2028–2034 budget, they said national governments were already undertaking fiscal consolidation and that the EU budget could not be exempt from similar pressure. They called for reductions across all spending headings while giving greater weight to security, defence, competitiveness, migration and sovereignty.

EU Today previously reported on the growing pressure from net-contributor countries for deep reductions to the Commission proposal as negotiations moved towards the Irish presidency’s attempt to secure an agreement before the end of the year.

The Commission’s original proposal for the 2028–2034 Multiannual Financial Framework amounts to almost €2 trillion in current prices, equivalent to 1.26 per cent of the EU’s average gross national income over the seven-year period. It substantially restructures the budget, bringing agriculture, cohesion, fisheries, migration and internal security into national and regional partnership plans while allocating more money to competitiveness, research, defence and other emerging priorities.

Agriculture and regional development have consequently become two of the most sensitive parts of the negotiations.

The Council has already backed the principle of the new national and regional plans, but financial allocations remain unresolved. Its negotiating position specifically leaves the money to be settled as part of the overall MFF talks.

EU Today has followed the dispute since the Cyprus presidency produced a negotiating framework in June that proposed reducing the Commission’s plan by about €32.8bn. The disagreement has since widened as governments attempt to reconcile traditional spending on farmers and poorer regions with growing demands for defence, industrial competitiveness and security.

Revenue is another source of disagreement.

The Commission has proposed five new EU own resources, including revenue connected to the Emissions Trading System and Carbon Border Adjustment Mechanism, a contribution based on uncollected electronic waste, a tobacco excise resource and a contribution from large companies operating in the EU. The proposals are intended partly to reduce reliance on national contributions and help finance repayment of pandemic-era borrowing.

EU Today previously examined the dispute over new sources of EU revenue after leaders asked the Irish presidency to develop financing options alongside negotiations over expenditure.

The Friends of Cohesion have also called for a more gradual repayment schedule for NextGenerationEU borrowing and oppose retaining contribution rebates for wealthier member states. Under the Commission proposal, repayments of principal and interest would amount to a fixed €24bn annually between 2028 and 2034, or €168bn across the seven-year budget period.

Ireland now faces the task of narrowing the gap.

The Council’s timetable for the negotiations envisages the Irish presidency advancing the next negotiating framework ahead of the October European Council, with governments seeking a political agreement before the end of 2026. That would leave 2027 for adoption of the legislation required before the new budget takes effect on 1 January 2028.

An agreement among governments will require unanimity. The European Parliament must then give its consent, while the separate decision governing the EU’s own resources also requires unanimous approval by member states and ratification according to their national constitutional procedures.

With 17 governments now explicitly defending agriculture and cohesion spending and six major contributors demanding substantial reductions, the October summit will bring the central budget dispute directly before EU leaders.

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