Czech Prime Minister Andrej Babiš is facing new accusations that he never fully severed ties with his agricultural empire, after publicly promising to do so in order to avoid major conflicts of interest in both Prague and Brussels. On taking up the Czech premiership in December, Babiš pledged to cut all links with his company Agrofert, one of Central Europe’s largest agri-food and chemicals groups. President Petr Pavel required him to take that step before approving his government, and Babiš insisted his children would only take Agrofert stakes after his death. The commitment was meant to address long-standing conflict-of-interest concerns. During Babiš’s previous term, EU and national auditors found the company had improperly received at least €208 million in EU and national agricultural subsidies, triggering payment suspensions and repayment demands. At the EU level, the stakes are heightened by the fact that as prime minister, Babiš is now helping to negotiate the bloc’s next long-term budget, including farm spending from which Agrofert has previously benefited. Babiš’s pledges of a total rupture with Agrofert are now coming into question, even though the prime minister insists he has done much more than the law required. A leaked legal document that purports to map out his new relationship with the company describes a trust structure that removes him from day-to-day decision-making only while he remains in office, and that transfers decision-making powers to a family-run governance mechanism once his political career ends. The 18-page document, dated Dec. 17, was first reported by Czech outlet Seznam Zprávy. POLITICO has seen a copy. The document says the trust is meant to ensure “independent administration during the period in which the [establisher of the trust] holds the office of a member of the Government.” Once that period ends — whether through Babiš’s departure from office or, eventually, his death — the business would automatically transition to “family administration” Opposition lawmakers seized on the document as evidence that Babiš would still have strong personal and family interests tied to Agrofert during his lifetime, potentially motivating his decisions on both the domestic and EU levels. “The news about Andrej Babiš’s unresolved conflict of interest is really just the proverbial cherry on top,” Pirate party parliamentary leader Olga Richterová said in a legislative debate in Prague on Tuesday. “It is becoming clear that you can’t teach an old dog new tricks. The old practices used when Agrofert was previously parked in trust funds appear set to be applied again in a very similar way.” Danuše Nerudová, a European Parliament lawmaker from the Mayors and Independents party, told POLITICO the arrangement preserves a personal incentive to protect family business interests. “His companies benefited improperly from EU agricultural subsidies in the past,” she said. “That incentive does not disappear simply because the structure is renamed.” Given the implications for the EU budget, the European Commission said it was monitoring developments and underlined its rule that “anybody nominated in a member state to be involved in budget implementation … shall not take any action which may bring their own interests into conflict with those of the union.” POLITICO requested comment from Babiš’s office, but did not receive a response before publication. Danuše Nerudová told POLITICO the arrangement preserves a personal incentive to protect family business interests. | Martin Divisek/EPA Babiš responded to the Seznam Zprávy story in another newspaper. He did not deny the authenticity of the document and its reference to a continued family interest, but claimed he was doing nothing wrong. “What I said earlier clearly applies. I did much more than the law required of me. The shares of the company that I built for almost 30 years will never be returned to me,” he told the Deník N newspaper. POLITICAL DEBATE IN PRAGUE When Babiš made his pledge to keep out of Agrofert last year, his language was definitive. “I have decided to irrevocably give up the Agrofert company,” Babiš said in December. “I will never own it, I will not have any economic relations with it, and I will not be in any contact with it.” He added: “My children will only get Agrofert after my death.” Babiš reiterated his defense this week, telling Czech news agency ČTK that the Agrofert shares would never return to him and that he would not benefit from them for the rest of his life. He said the arrangement complied with both Czech and European law, and accused critics of trying to deprive him of his property. The prime minister has previously insisted any conflict would be resolved once the trust takes effect. He missed a self-imposed early-January deadline to complete the share transfer, saying he was still awaiting approval from financial authorities in two EU countries. David Kotora, executive director of Transparency International Czech Republic, said the trust “is currently an inactive shell” because the share transfer has not taken place. Once activated, he said, it would still fail EU standards. “This structure clearly cannot withstand European regulations concerning conflicts of interest in the redistribution of public funds,” Kotora said. During the parliamentary session on Tuesday, Babiš dismissed the renewed scrutiny as a “festival of hypocrisy.” “This is not a spontaneous defense of democracy. It’s political theater,” he said, stressing that Agrofert is not receiving any subsidies until the trust is in effect. “You invented the conflict of interest because you’re incapable of beating me.” Lawmakers from Babiš’s ANO party have rallied behind him, rejecting assessments of unresolved conflicts of interest. In a joint statement to POLITICO, MEPs Ondřej Knotek and Klára Dostálová said the prime minister had taken steps “well beyond what is required by Czech and European law.” He has relinquished ownership and control of Agrofert permanently, they said, and would not benefit from the company for the rest of his life. “If someone finds this insufficient,” they added, “it is no longer about the essence of the matter, but about an effort to constantly question it.” Economist Petr Bartoň, a regulatory and public policy expert, noted Czech conflict-of-interest rules were never designed for politicians with business empires on the scale of Agrofert. “The law does not aim to permanently separate politicians from their assets,” Bartoň said. “It aims to manage conflicts while they are in office.” Promises to go further, he added, may have political value but “no legal force.” Ketrin Jochecová contributed to this report.

BRUSSELS — Disgraced British politician Peter Mandelson is facing demands to be stripped of his pension as a former European commissioner if investigators found he broke EU rules over his contact with convicted sex offender Jeffrey Epstein.  Mandelson served as a European commissioner between 2004 and 2008 and is now at the center of a spiraling scandal in Britain. Newly released files showed how Mandelson, who was a senior British minister at the time, helped provide Epstein, then a financier, with information about a €500 billion bailout to save the euro in 2010.  The European Commission is looking into whether Mandelson broke its rules, which apply even after commissioners have left office, though ethics campaigners have called for a full fraud inquiry by independent investigators. Mandelson should lose the commissioner’s pension to which he is entitled if he’s found to have breached the rules, the campaigners said.  “Given the severity of allegations concerning Peter Mandelson’s deplorable relationship with Jeffrey Epstein, the European Commission and European Anti-Fraud Office must pursue an immediate investigation to establish any potential misconduct both during and beyond his tenure as European Commissioner,” Nick Aiossa, director at Transparency International, a leading anti-corruption campaign group, told POLITICO. “Should it do so, Mandelson must be stripped of his Commissioner’s pension.” Daniel Freund, a Green MEP from Germany, condemned the lack of action and investigations against “the most powerful people on earth” over their links to the disgraced financier. “That EU commissioners were somehow involved with this universe is just outrageous,” he told POLITICO. “Taking away the pension would be justified if he broke any EU rules.” Mandelson, 72, was entitled to an inflation-linked pension reportedly worth £31,000 a year when he turned 65 for his four years as a European commissioner. This is on top of other any pensions from his time as an elected politician in the U.K. and in other roles. Mandelson did not immediately respond to a request for comment. He has previously said he was wrong to have continued his association with Epstein and apologized “unequivocally” to Epstein’s victims. In a statement, the EU’s anti-fraud office, known as OLAF, said: “We cannot provide details regarding cases which OLAF may or may not be treating. This is to protect the confidentiality of any possible investigations and of possible ensuing judicial proceedings, as well as to ensure respect for personal data and procedural rights.” In London, Britain’s Health Secretary Wes Streeting said Mandelson should lose the severance payment he was entitled to when his career as U.K. ambassador to the United States ended over the Epstein scandal. Speaking to Times Radio, Streeting also suggested Mandelson could potentially be stripped of related pension entitlements. The opposition Reform UK party said Mandelson should lose the pension he’s entitled to receive as a former government minister. Noah Keate contributed to this report.

LONDON — Keir Starmer will draft a new law to strip Peter Mandelson of his right to sit in Britain’s House of Lords after new revelations about the former British ambassador to Washington’s links to convicted sex offender Jeffrey Epstein appeared in the Epstein files. The British prime minister has asked officials to draft legislation to remove Mandelson from the House of Lords “as quickly as possible,” his spokesman told reporters Tuesday afternoon. No.10 Downing Street said the Cabinet Office has also referred material to the police after the newly released files appeared to show Mandelson sharing live government policy deliberations with the disgraced financier.  The Metropolitan Police said Monday it is reviewing allegations of misconduct in a public office. Starmer’s spokesperson said the Epstein file documents “contain likely market sensitive information surrounding the 2008 financial crash and official activities thereafter to stabilize the economy.” “Only people operating in an official capacity had access to this information, [with] strict handling conditions to ensure it was not available to anyone who could potentially benefit from it financially,” the spokesperson said, adding: “It appears these safeguards were compromised.” Mandelson, a former Labour Cabinet minister who twice had to resign from Tony Blair’s government, was given a seat in the House of Lords by Gordon Brown in 2008 — a move which allowed Brown to appoint him as business secretary. More recently, the peer was made U.S. ambassador by Starmer as he sought to build strong ties with Donald Trump’s administration. The British prime minister sacked Mandelson last year after the release of U.S. Department of Justice files which shed new light on Mandelson’s friendship with Epstein. The former ambassador quit the ruling Labour Party on Sunday— but Starmer is under mounting political pressure to go further. Starmer “regards it as ridiculous that a peerage cannot be removed, except with primary legislation, something that has not happened since 1917,” his spokesman said Tuesday. “The prime minister believes there is a broader need for the House of Lords to be able to remove transgressors more quickly,” the spokesperson added. Downing Street has called for cross party support for its bid to modernize the unelected House of Lords. Currently peers can retire from the upper chamber — but they cannot be removed.

The UK has historically been a global leader in life sciences innovation, but recent statistics paint a worrying picture for medicines access. The right policy can start to reverse this. We are living in a time where the intersection between breakthrough science, technology and data insights has the potential to transform treatment options for some of the toughest health conditions faced by patients in the UK. The UK has long played a central role in driving innovation when it comes to healthcare, and at Johnson & Johnson (J&J) we were pleased to see some positive signs from the Government at the end of 2025, illustrating an intent to reverse a decade of decline of investment in how the UK values innovative treatments. It was a positive first step, but now the real work begins to enable us to deliver the best possible outcomes for UK patients. To achieve this, our focus must be on ensuring our health system is set up to match the pace and gain the benefits of innovation that science provides. We need a supportive medicines environment that fully fosters growth, because even the most pioneering drugs and therapies are only valuable if they can be accessed by patients when they need them most. > even the most pioneering drugs and therapies are only valuable if they can be > accessed by patients when they need them most. At J&J, we are proud to have been part of the UK’s health innovation story for more than a century. We believe that turning ambition into delivery requires a clearer focus on the foundations that enable innovation to reach patients. We have had a substantial and long-term economic presence, with our expertise serving as the grounds for successful partnerships with patients, healthcare providers, clinical researchers and the NHS. Recent national developments are a step in the right direction The UK Government’s recent announcements on the life sciences industry are an important move to help address concerns around medicines access, innovation and the UK’s international standing. This includes a welcome planned increase to the baseline cost-effectiveness threshold (the first change to be made since its introduction in the early 2000s). While it is crucial to get this implemented properly, this seems like a step in the right direction — providing a starting point towards meaningful policy reform, industry partnership and progress for patients. The true impact of stifling medicine innovation in the UK compared with our peers These positive developments come at a critical time, but they do not fix everything. Over the past decade, spending on branded medicines has fallen in real terms, even as the NHS budget has grown by a third.[i] Years of cost-containment have left the UK health system ill-prepared for the health challenges of today, with short-term savings creating long-term consequences. Right now, access to innovative medicines in the UK lags behind almost every major European country[ii]; the UK ranks 16th and 18th among 19 comparable countries for preventable and treatable causes of mortality.[iii]These are conditions for which effective medicines already exist. Even when new medicines are approved, access is often restricted. One year after launch, usage of innovative treatments in England is just over half the average of comparator countries such as France, Germany and Spain.[iv] The effect is that people living with cancer, autoimmune conditions and rare diseases wait longer to access therapies that are already transforming lives elsewhere in Europe. And even at its new level, the UK’s Voluntary Scheme for Branded Medicines Pricing, Access and Growth (VPAG) clawback rate remains higher than in comparable countries.[v] J&J is committed to working together to develop a new pricing and access framework that is stable, predictable and internationally competitive — enabling the UK to regain its position as a leading destination for life sciences. Seeing the value of health and medicines investment as a catalyst for prosperity and growth Timely access to the right treatment achieves two things; it keeps people healthy and prevents disease worsening so they can participate in society and a thriving economy. New research from the WifOR Institute, funded by J&J, shows that countries that allocate more resources to health — especially when combined with a skilled workforce and strong infrastructure — consistently achieve better outcomes.[vi] > Timely access to the right treatment achieves two things; it keeps people > healthy and prevents disease worsening so they can participate in society and > a thriving economy. The UK Government’s recent recognition of the need for long-term change, setting out plans to increase investment in new medicines from 0.3 percent of GDP to 0.6 percent over the next 10 years is positive. It signals a move towards seeing health as one of our smartest long-term investments, underpinning the UK’s international competitiveness by beginning to bring us nearer to the levels in other major European countries. This mindset shift is critical to getting medicines to patients, and the life sciences ecosystem, including the pharmaceutical sector as a cornerstone, plays a pivotal role. It operates as a virtuous cycle — driven by the generation, production, investment in, access to and uptake of innovation. Exciting scientific developments and evolving treatment pathways mean that we have an opportunity to review the structures around medicines reimbursement to ensure they remain sustainable, competitive and responsive. At J&J, we have the knowledge and heritage to work hand-in-hand with the Government and all partners to achieve this. Together, we can realise the potential of medicine innovation in the UK Patients have the right to expect that science and innovation will reach them when they need it. Innovative treatments can be transformative for patients, meaning an improved quality of life or more precious time with loved ones. We fully support the Government’s ambitions for life sciences and the health of the nation. Now is the moment to deliver meaningful change — the NHS, Government and all system partners, including J&J, must look at what valuing innovation actually means when it comes to modernising the frameworks and mechanisms that support access and uptake. Practical ways to do this include: * Establishing a new pricing and access framework that is stable, predictable and internationally competitive. * Evolving medicines appraisal methods and processes, to deliver on the commitments of the UK-US Economic Prosperity Deal. * Adapting thresholds and value frameworks to ensure they are fit for the future — in the context of wider system pressures, including inflation, and the evolution of medical innovation requiring new approaches to assessment and access. > the NHS, Government and all system partners, including J&J, must look at what > valuing innovation actually means when it comes to modernising the frameworks > and mechanisms that support access and uptake. By truly recognising the value of health as an investment, rather than as a cost, we can return the UK to a more competitive position. The direction of travel is positive. At J&J, we stand ready to work in partnership to help ensure the UK is once again the best place in the world to research, develop and access medicines. Follow Johnson & Johnson Innovative Medicine UK on LinkedIn for updates on our business, our people and our community. CP-562703 | January 2026 -------------------------------------------------------------------------------- [i] House of Commons Library (2026). ‘NHS Funding and Expenditure’ Research Briefing. Available at: https://commonslibrary.parliament.uk/research-briefings/sn00724/ (Accessed January 2026). [ii] IQVIA & EFPIA (2025). EFPIA Patients W.A.I.T Indicator 2024 Survey. Available at: https://efpia.eu/media/oeganukm/efpia-patients-wait-indicator-2024-final-110425.pdf. (Accessed January 2026) [iii] The Kings Fund (2022). ‘How does the NHS compare to the health care systems of other countries?’ Available at: https://www.kingsfund.org.uk/insight-and-analysis/reports/nhs-compare-health-care-systems-other-countries (Accessed January 2026) [iv] Office for Life Sciences (2024). Life sciences competitiveness indicators 2024: summary. Available at: https://www.gov.uk/government/publications/life-sciences-sector-data-2024/life-sciences-competitiveness-indicators-2024-summary (Accessed January 2026). [v] ABPI. VPAG payment rate for newer medicines will be 14.5% in 2026. December 2025. Available at: https://www.abpi.org.uk/media/news/2025/december/vpag-payment-rate-for-newer-medicines-will-be-145-in-2026/. (Accessed January 2026). [vi] WifOR Institute (2025). Healthy Returns: A Catalyst for Economic Growth and Resilience. Available at: https://www.wifor.com/en/download/healthy-returns-a-catalyst-for-economic-growth-and-resilience/?wpdmdl=360794&refresh=6942abe7a7f511765977063. (Accessed January 2026).

LONDON — Peter Mandelson said he has nothing new to tell U.S. lawmakers about Jeffrey Epstein, as he branded his sacking as Britain’s Ambassador to Washington over his links to the convicted sex offender a “life-changing crisis.” “There is nothing I can tell Congress about Epstein they don’t already know,” he told the Times in an interview published Monday night. “I had no exposure to the criminal aspects of his life,” he added. Britain’s Metropolitan Police said Monday it is reviewing reports relating to alleged misconduct in a public office. Newly-released Epstein files appear to suggest Mandelson passed information from inside the U.K. government to the convicted sex offender while he was business secretary. In the same Times interview, Mandelson, who twice resigned from the New Labour government, said being sacked as U.S. ambassador last September “felt like being killed without actually dying.” “I’ve had a lot of bad luck, no doubt some of it of my own making,” he said. The Times interview was conducted on January 25 — before the latest tranche of documents was published – and the paper also spoke to Mandelson on Sunday. U.K. minister Karin Smyth, speaking for the U.K. government on Tuesday morning, criticized Mandelson’s lack of self-awareness. “I’m sure you’ve seen and interviewed over time, men that have been involved in similar sorts of behavior, seem to not be able to recognize their own self in that,” Smith told Sky News presenter Sophy Ridge. Smith said Mandelson should testify before U.S. Congress, if asked, adding: “Anybody who’s got information should support the investigation, should be as open as they can be.” Newly released Epstein files appear to show Mandelson shared sensitive government policy decisions with the disgraced financier. They also suggest Epstein made payments linked to Mandelson. Mandelson did not immediately respond to a request for comment. He has previously said he was wrong to have continued his association with Epstein and apologized “unequivocally” to Epstein’s victims. Prime Minister Keir Starmer has asked Cabinet Secretary Chris Wormald to investigate the apparent government leaks. Politicians from across the political spectrum have called on Mandelson, who resigned from Labour, to retire or be removed from the House of Lords.

President Donald Trump on Tuesday said he has no problem with the sharp decline in the dollar that’s been triggered by convulsions in global bond markets and growing skepticism about the U.S.’s reliability as a trading partner. “I think it’s great,” Trump told reporters in Iowa when asked about the currency’s decline. “Look at the business we’re doing. The dollar’s doing great.” Trump has long maintained that a weaker currency helps industries that he’s seeking to boost — particularly manufacturers, but also oil and gas. And U.S. corporations that export goods and services abroad typically report stronger earnings when they can convert foreign payments into a weaker greenback. But a soft dollar also diminishes the purchasing power of U.S. businesses and consumers and can lead to higher inflation. That’s one reason why Treasury officials, including Secretary Scott Bessent, have historically advocated for a stronger dollar. Some of Trump’s other advisers — including Fed Gov. Stephen Miran, who’s on leave from his role as the president’s top economic adviser — argue that the dollar’s strength in recent years has placed domestic businesses at a competitive disadvantage to overseas-based companies. The greenback was trading at its lowest level in nearly four years before Trump weighed in on its recent declines. After the president’s remarks, its value sank even further against a basket of foreign currencies. Trump’s foreign policy agenda and repeated tariff threats — including his push to acquire Greenland — have amplified a “sell America” narrative that has hurt the dollar and other U.S. asset prices. A possible intervention to prop up the value of the Japanese yen has also pushed down the dollar over the last week.

Reform UK leader Nigel Farage said he doesn’t like banks and will scrap interest payments British lenders receive through the Bank of England’s quantitative easing program.  The Reform Party included the proposal to end the practice of the U.K. central bank paying interest on the reserves placed with it by banks in its 2024 manifesto, which it claimed would bring in up to £40 billion for taxpayers.  “We are going to do it. Some of the banks won’t like it. Well, I don’t like the banks very much because they debanked me, didn’t they?” Farage said in an interview with Bloomberg at the World Economic Forum in Davos.  “This will be tough for banks to accept, but I am sorry, the drain on public finances is just too great. It’s not a tax. They are just not going to get free money anymore. They’ll adjust; business always does.” The BoE currently pays interest on the bank reserves created during the post-global financial crisis quantitative easing (QE) program. That money is now largely held on deposit back at the BoE by commercial banks, which earn a risk-free return linked to the current Bank Rate. Amid concerns about what a Reform government would mean for policymakers’ independence, Farage declared that he’s “not questioning the independence” of the central bank, but didn’t rule out appointing his own governor.  “Andrew Bailey is a perfectly polite, nice man, but they should have picked somebody who was a Brexiteer to be in charge of the Bank of England to think totally differently, especially around financial markets, financial market regulation,” he said.  “If we don’t do things differently, we’re going to get poorer. We’re going to pick different people with a different attitude towards everything.”  Farage has recently claimed he is giving “serious thought” to scrapping the independent Office for Budget Responsibility if his party wins the next general election.

BRUSSELS — European Commission President Ursula von der Leyen’s plan to shake up how the EU spends its almost €2 trillion budget is rapidly being diluted. Von der Leyen’s big idea is to steer hundreds of billions in funds away from farmer subsidies and regional payouts — traditionally the bread and butter of the EU budget — toward defense spending and industrial competitiveness. But those modernizing changes — demanded by richer Northern European countries that pay more into the budget than they receive back from it — are difficult to push through in the face of stern opposition from Southern and Central European countries, which get generous payments for farmers and their poorer regions. A coalition of EU governments, lawmakers and farmers is now joining forces to undo key elements of the new-look budget running from 2028 to 2034, less than six months after the European Commission proposed to focus on those new priorities. Von der Leyen’s offer last week to allow countries to spend up to an extra €45 billion on farmer subsidies is her latest concession to powerful forces that want to keep the budget as close as possible to the status quo. Northern European countries are growing increasingly frustrated by moves by other national capitals and stakeholders to turn back the clock on the EU budget, according to three European diplomats. They were particularly irritated by a successful Franco-Italian push last week to exact more concessions for farmers as part of diplomatic maneuvers to get the long-delayed Mercosur trade deal with Latin America over the line. “Some delegations showed up with speaking points that they have taken out of the drawer from 2004,” said an EU diplomat who, like others quoted in this story, was granted anonymity to speak freely. The EU’s Common Agricultural Policy was worth 46 percent of the bloc’s total budget in 2004. The Commission’s proposal for 2028-2034 has reserved a minimum of roughly 25 percent of the total cash pot for farmers, although governments can spend significantly more than that. The Commission had no immediate comment when asked whether the anti-reform camp was successfully chipping away at von der Leyen’s proposal. THE ANTI-REFORM ALLIANCE The Commission’s July proposal to modernize the budget triggered shockwaves in Brussels and beyond. The transition away from sacred cows consolidated a ramshackle coalition of angry farmers, regional leaders and lawmakers who feared they would lose money and influence in the years to come. “This was the most radical budget [ever proposed] and there was resistance from many interested parties,” said Zsolt Darvas, a senior fellow at the Bruegel think tank. A protest by disgruntled farmers in Brussels during a summit of EU leaders on Dec. 18 was only the latest flashpoint of discontent. | Bastien Ohier/Hans Lucas/AFP via Getty Images The scale of the Commission’s task became apparent weeks before the proposal was even published, as outspoken MEPs, ministers and farmers’ unions threatened to dismantle the budget in the following years of negotiations. That’s exactly what is happening now. “The Commission’s proposal was quite radical so no one thought it could go ahead this way,” said a second EU diplomat.   “We knew that this would be controversial,” echoed a Commission official working on the file. A protest by disgruntled farmers in Brussels during a summit of EU leaders on Dec. 18 was only the latest flashpoint of discontent. The terrible optics of the EU’s signing off on Mercosur as farmers took to the streets on tractors was not lost on national leaders and EU officials. Commission experts spent their Christmas break crafting a clever workaround that allows countries to raise agricultural subsidies by a further €45 billion without increasing the overall size of the budget. The extra money for farmers isn’t new — it’s been brought forward from an existing rainy-day fund that was designed to make the EU budget better suited to handling unexpected crises. By handing farmers a significant share of that financial buffer, however, the Commission is undermining its capacity to mobilize funding for emergencies or other policy areas. “You are curtailing the logic of having a more flexible budget for crises in the future,” said Eulalia Rubio, a senior fellow at the Jacques Delors Institute think tank. At the time, reactions to the budget compromise from frugal countries such as Germany and Netherlands were muted because it were seen as a bargaining chip to win Italy’s backing for the Mercosur deal championed by Berlin. The trouble was instead postponed, as it reduces budget flexibility. Darvas also argued that the Commission has not had to backtrack “too much” on the fundamentals of its proposal as countries retained the option of whether to spend the extra cash on agriculture. In a further concession, the Commission proposed additional guarantees to reduce the risk of national governments cutting payments to more developed regions. | Nicolas Tucat/AFP via Getty Images ANOTHER MONTH, ANOTHER CONCESSION This wasn’t the first time von der Leyen has tinkered with the budget proposal to extract herself from a political quagmire. The Commission president had already suggested changes to the budget in November to stem a budding revolt by her own European People’s Party (EPP), which was feeling the heat from farmers’ unions and regional leaders. At the time, the EU executive promised more money for farmers by introducing a “rural spending” target worth 10 percent of a country’s total EU funds. In a further concession, the Commission proposed additional guarantees to reduce the risk of national governments cutting payments to more developed regions — a sensitive issue for decentralized countries like Germany and Spain. “The general pattern that we don’t like is that the Commission is continuing to offer tiny tweaks here and there” to appease different constituencies, an EU official said. The Commission official retorted that national capitals would eventually have made those changes themselves as the “trend of the negotiations [in the Council] was going in that direction.” However, budget veterans who are used to painstaking negotiations were surprised by the speed at which Commission offered concessions so early in the process. “Everyone is scared of the [2027] French elections [fearing a victory by the far-right National Rally] and wants to get a deal by the end of the year, so the Commission is keen to expedite,” said the second EU diplomat. Nicholas Vinocur contributed to this report.

LONDON — U.K. ministers are warning Elon Musk’s X it faces a ban if it doesn’t get its act together. But outlawing the social media platform is easier said than done. The U.K.’s communications regulator Ofcom on Monday launched a formal investigation into a deluge of non-consensual sexualized deepfakes produced by X’s AI chatbot Grok amid growing calls for action from U.K. politicians. It will determine whether the creation and distribution of deepfakes on the platform, which have targeted women and children, constitutes a breach of the company’s duties under the U.K.’s Online Safety Act (OSA).   U.K. ministers have repeatedly called for Ofcom, the regulator tasked with policing social media platforms, to take urgent action over the deepfakes. U.K. Technology Secretary Liz Kendall on Friday offered her “full support” to the U.K. regulator to block X from being accessed in the U.K., if it chooses to. “I would remind xAI that the Online Safety Act Includes the power to block services from being accessed in the U.K., if they refuse to comply with U.K. law. If Ofcom decide to use those powers they will have our full support,” she said in a statement. The suggestion has drawn Musk’s ire. The tech billionaire branded the British government “fascist” over the weekend, and accused it of “finding any excuse for censorship.”   With Ofcom testing its new regulatory powers against one of the most high-profile tech giants for the first time, it is hard to predict what happens next. NOT GOING NUCLEAR — FOR NOW   Ofcom has so far avoided its smash-glass option. Under the OSA it could seek a court order blocking “ancillary” services, like those those processing subscription payments on X’s behalf, and ask internet providers to block X from operating in the U.K.   Taking that route would mean bypassing a formal investigation, but that is generally considered a last resort according to Ofcom’s guidance. To do so, Ofcom would need to prove that risk of harm to U.K. users is particularly great.  Before launching its investigation Monday, the regulator made “urgent contact” with X on Jan. 5, giving the platform until last Friday to respond. Ofcom stressed the importance of “due process” and of ensuring its investigations are “legally robust and fairly decided.”   LIMITED REACH   The OSA only covers U.K. users. It’s a point ministers have been keen to stress amid concerns its interaction with the U.S. First Amendment, which guarantees free speech, could become a flashpoint in trade negotiations with Washington. It’s not enough for officials or ministers to believe X has failed to protect users generally.   The most egregious material might not even be on X. Child sexual abuse charity the Internet Watch Foundation said last week that its analysts had found what appeared to be Grok-produced Child sexual abuse material (CSAM) on a dark web forum, rather than X itself — so it’s far from self-evident that Ofcom taking the nuclear option against X would ever have been legally justified.   X did not comment on Ofcom’s investigation when contacted by POLITICO, but referred back to a statement issued on Jan. 4 about the issue of deepfakes on the platform. “We take action against illegal content on X, including Child Sexual Abuse Material (CSAM), by removing it, permanently suspending accounts, and working with local governments and law enforcement as necessary. Anyone using or prompting Grok to make illegal content will suffer the same consequences as if they upload illegal content,” the statement said. BIG TEST   The OSA came into force last summer, and until now Ofcom’s enforcement actions have focused on pornography site providers for not implementing age-checks.  Online safety campaigners have argued this indicates Ofcom is more interested in going after low-hanging fruit than challenging more powerful tech companies. “It has been striking to many that of the 40+ investigations it has launched so far, not one has been directed at large … services,” the online safety campaign group the Molly Rose Foundation said in September.   That means the X investigation is the OSA’s first big test, and it’s especially thorny because it involves an AI chatbot. The Science, Innovation and Technology committee wrote in a report published last summer that the legislation does not provide sufficient protections against generative AI, a point Technology Secretary Liz Kendall herself conceded in a recent evidence session.  POLITICAL RISKS  If Ofcom concludes X hasn’t broken the law there are likely to be calls from OSA critics, both inside and outside Parliament, to return to the drawing board. It would also put the government, which has promised to act if Ofcom doesn’t, in a tricky spot.  The PM’s spokesperson on Monday described child sexual abuse imagery as “the worst crimes imaginable.” Ofcom could also conclude X has broken the law, but decide against imposing sanctions, according to its enforcement guidance. The outcome of Ofcom’s investigation will be watched closely by the White House and is fraught with diplomatic peril for the U.K. government, which has already been criticized for implementing the new online safety law by Donald Trump and his allies. Foreign Secretary David Lammy raised the Grok issue with U.S. Vice President JD Vance last week, POLITICO reported.  But other Republicans are readying for a geopolitical fight: GOP Congresswoman Anna Paulina Luna, a member of the U.S. House foreign affairs committee, said she was drafting legislation to sanction the U.K. if X does get blocked. 

Just as Cyprus’ government should be concentrating on its presidency of the Council of the EU, it has to firefight controversy at home over a video circulating online that alleges top-level corruption. The furor centers on a mysterious video posted on X with a montage of senior figures filmed apparently describing ways to bypass campaign spending caps with cash donations, and seemingly discussing a scheme allowing businesspeople to access the president and first lady. One segment made reference to helping Russians avoid EU sanctions. The government denies the allegations made in the video and calls it “hybrid activity” aimed at harming “the image of the government and the country.” The government does not say the video is a fake, but insists the comments have been spliced together misleadingly. The footage appears to have been shot using hidden cameras in private meetings. Unconvinced, opposition parties are now calling for further action. Cypriot President Nikos Christodoulides hit back hard against the suggestion of illicit campaign funding in remarks to local media on Friday. “I would like to publicly call on anyone who has evidence of direct or indirect financial gains during the election campaign or during my time as President of the Republic to submit it immediately to the competent state authorities,” he said. “I will not give anyone, absolutely anyone, the right to accuse me of corruption.” In relation to the reference to payments made by businesses, he said companies “must also offer social benefits within the framework of Corporate Social Responsibility (CSR) for the state, I want to repeat, for the state. And they do so in the areas of health, welfare, defense, and many other areas.” The contentious video was posted on Thursday afternoon on social media platform X on an account under the name “Emily Thompson,” who is described as an “independent researcher, analyst and lecturer focused mainly on American domestic and foreign policies.” It was not immediately possible to find public and verifiable information confirming the real identity of the person behind the account. The video includes footage of former Energy Minister George Lakkotrypis and the director of the president’s office, Charalambos Charalambous. In the recordings, Lakkotrypis is presented as a point of contact for people seeking access to Christodoulides. He appears to walk his interlocutor through the process on payments above the €1 million campaign limit. In a written statement, Lakkotrypis said it is “self-evident” from the video that remarks attributed to him were edited in order to distort the context of the discussions, with the aim of harming Cyprus and himself personally. He added that he filed a complaint with the police. The police have launched an investigation into the video, after Lakkotrypis’ complaint, its spokesman Vyron Vyronos told the Cyprus News Agency. The video then shows Charalambous, Christodoulides’ brother-in-law, who explains gaining access to the presidential palace. “We are the main, the two, contacts here at the palace, next to the president,” he says, adding that interested parties could approach the president with a proposal and money that could be directed toward social contributions. There was no official statement from Charalambous. The video alleges that social contributions made by companies through a fund run by the first lady are being misused to win preferential treatment from the presidency. Concern over this fund is not new. The Cypriot parliament last year voted through legislation that called for the publication of the names of the donors to that fund. The president vetoed that move, however, and took the matter to court, arguing that publicly disclosing the list of donors would be a personal data breach. The court ruled in favor of the president and the names were not revealed. Stefanos Stefanou, leader of the main opposition AKEL party, said the video raised “serious political, ethical, and institutional issues” which compromised the president and his entourage politically and personally. He called on the president to dismiss Charalambous, abolish the social support fund and — after the donors have been made public — transfer its responsibilities to another institution. AKEL also submitted a bill on Friday to abolish the fund within the next three months and called for the first lady to resign as head of the fund. AKEL also requested that the allegations from the video be discussed in the parliament’s institutions’ committee. Another opposition party, Democratic Rally, said: “What is revealed in the video is shocking and extremely serious … Society is watching in shock and demanding clear and convincing answers from the government. Answers that have not yet been given.” Cyprus has parliamentary elections in May and the next presidential election is in 2028.