BRUSSELS — Faced with a €30 billion-a-year repayment bill from Covid-era borrowing, the European Commission briefly considered the unthinkable — tapping into the EU’s most sacred cow, farm subsidies. For a few tense months, Brussels flirted with folding the Common Agricultural Policy and cohesion funds into broader national envelopes, a so-called national partnership plan modeled on the pandemic-era Recovery and Resilience Facility. Under the proposal, national governments would have more control over how EU money was spent, allowing for faster shifts toward priorities like defense, competitiveness and climate. Officials pitched the system as flexible and streamlined. Critics saw it as a power grab — and a stealth attempt to hollow out the CAP. As budget talks ramped up, so did the resistance. Farm lobbyists mobilized. Agriculture ministers revolted. The Commission’s own agriculture chief, Christophe Hansen, began pushing back internally. Germany’s governing Christian Democrats wrote to Commission President Ursula von der Leyen, who hails from the party,  urging their “Dear Ursula” not to fold the farm budget into broader spending plans.  “Cuts to the Common Agricultural Policy would send out completely the wrong signal,” Johannes Steiniger, one of the authors of the letter, told POLITICO. “The CAP must continue to have an independent and reliable budget.” The goal had been to fundamentally reshape how the farm budget worked. But in the end, the next CAP will look much like the current one, with its basic structure left intact. By June, the Commission had quietly shelved the restructuring plan. Jan Olbrycht, a special adviser to Budget Commissioner Piotr Serafin, said the CAP would remain as a separate pillar in the EU’s 2028-2034 budget. Rural development funding would stay within the CAP’s two-pillar structure. Earlier ideas to shift that money to the cohesion rubric were, Olbrycht said, “over, finished.” That marked a major retreat before the official unveiling of the Commission’s budget proposal on July 16. And it has underscored the raw political power the farm lobby can still exert in Brussels, even as the number of farmers declines and the EU faces growing calls to redirect money toward strategic challenges. STRUCTURE SAVED, BUT CUTS STILL STING For Europe’s farmers, the victory is bittersweet. With pressure mounting to repay the Covid debt and finance new priorities, Brussels is trying to stretch a budget that is unlikely to grow. The Commission is still expected to propose significant cuts to overall CAP funding. Early estimates suggest a reduction of between 15 percent and 25 percent compared to current levels. While the structure of the CAP may be safe, the size of the pot is not. At nearly €400 billion, the CAP currently accounts for almost a third of the EU’s entire seven-year budget. Created in 1962, it is the bloc’s oldest common policy — and is fiercely defended by the vested interests that have benefited from it for so long. European Commissioner for Agriculture and Food Christophe Hansen. | Olivier Hoslet/EFE via EPA In practice, however, farmers will still lose money. Top-ups to direct payments, the backbone of the CAP, are likely to shrink. That could be enough to rekindle the protests that swept across Europe last year, especially if farmers feel they’ve been strung along with structural protections but no financial ones. “If the Commission is serious about its vision for agriculture and wants to strengthen European agriculture and make it fit for the future, rumors of a drastic budget cut cannot be a serious option,” Bernhard Krüsken, general secretary of the German Farmers’ Association, told POLITICO.  “Anything other than an increased and earmarked agricultural budget will not do justice to the challenges of the time.” The failed attempt to restructure the CAP also reveals how hard it is to shift money in Brussels. Even as EU officials argue for a more strategic budget, the traditional alliance of farm groups, conservative MEPs, and agriculture ministries continues to defend the CAP with almost religious fervor. The political compromise leaves both sides unsatisfied. For farm groups, structural survival without financial security is little comfort. For budget hawks and modernizers, keeping the CAP intact looks like a missed opportunity. But it also illustrates a deeper truth about Brussels: Power in EU budget politics isn’t just about the numbers. It’s about the coalitions that can be mobilized, and the red lines drawn early and loudly. And this time, the farmers shouted loudest. Bartosz Brzeziński reported from Brussels. Oliver Noyan reported from Berlin. Gregorio Sorgi contributed reporting.

BRUSSELS ― Carlos Cuerpo wants eurozone members to wake up and lead Europe to financial union. The 44-year-old Spanish economy minister — who on Friday entered the race to head up the powerful group of eurozone countries known as the Eurogroup — is calling for a major shake-up of a body he says has become all talk and no action. “Going forward, the Eurogroup should be more about decisions,” Cuerpo, a socialist, said in an interview with POLITICO, where he outlined his proposal for sweeping changes to the body. Cuerpo argued that groups of countries ― as opposed to all the EU’s 27 states ― should lead the way to integrate Europe’s financial markets, a long-held ambition in Brussels that has repeatedly struggled to get off the ground. “If you cannot go in terms of reducing fragmentation from 27 to one, you might have to go in different steps and reduce the fragmentation by putting groups of countries together.” This is a major rupture from the incumbent Eurogroup President Paschal Donohoe, whom critics accuse of prioritizing broad consensus over actual decisions in his two terms in office. To everyone’s surprise, in October, Cuerpo launched a “coalition of the willing” ― known as the European Competitiveness Lab ― to finally make progress on a decades-old project to create U.S.-style financial markets in Europe. The EU’s biggest countries ― Germany, France, Italy, Poland, Luxembourg, the Netherlands and Spain ― have signed up to the initiative, boosting Cuerpo’s leadership credentials. He said he will empower this scheme if he’s elected as Eurogroup president. “I expect that all 27 member states would be members of the competitiveness lab at some point.” The Spaniard, however, faces an uphill battle to defeat Donohoe in next Monday’s secret vote by the eurozone’s 20 finance ministers. While many officials praised Cuerpo’s soft skills and “encyclopedic knowledge” of the European economy, others feel alienated by his more radical ideas, such as doubling the size of the EU budget or issuing common debt for defense. Donohoe is the odds-on favorite to secure a third term as he hails from the powerful center-right European People’s Party and appeals to small countries who will tip the balance of the election. Lithuanian socialist Finance Minister Rimantas Šadžius, is unlikely to make it past the first round of voting, according to several officials. | Oliver Hoslet/EPA The third candidate, Lithuanian socialist Finance Minister Rimantas Šadžius, is unlikely to make it past the first round of voting, according to several officials with knowledge of the voting procedures. A simple majority — 11 votes — is necessary to be elected as president. THE EUROGROUP’S MIDLIFE CRISIS The Eurogroup is a club of 20 eurozone ministers who meet every month to coordinate economic policy. During its heyday, it steered the eurozone through the rumble-tumble of the sovereign debt crisis, but lost influence as the euro area stabilized and a more inclusive EU-wide group of 27 finance ministers gained power. The Eurogroup has become a “bland working group” or a “think tank,” according to two EU diplomats, who, like others in the story, were granted anonymity to speak freely. A group of countries — including Spain — have questioned the usefulness of holding monthly meetings in Brussels in an informal report that was seen as mildly critical toward Donohoe’s presidency. Faced with this criticism, Cuerpo said he wants to breathe new life into stalled Eurogroup projects such as creating an EU-wide financial and banking union and strengthening the role of the euro. “We need to be very efficient in coming up with deliverables, otherwise we might be late to the party,” compared to other foreign countries. “Eurogroup needs to have a voice for these new times that actually requires us to face new challenges and call for a revamped Eurogroup.” THE ITALIAN VETO One of the thorniest issues is Italy’s veto over a plan to use money from the European Stability Mechanism — a bailout fund for countries introduced during the eurozone crisis — to rescue failing banks. Populist parties in Italy oppose ratifying the reform over the ESM’s lingering association with strict bailout conditions during the eurozone meltdown. Rome, however, is open to using these funds to provide cheap loans for defense — something that Cuerpo has endorsed in the past. In a sign of détente, Cuerpo said that “we have to help Italy help us on this [ratifying the ESM],” although he shied away from questions on using these funds for defense. “[We need] to provide the right narrative, which is sometimes also an important element around how the ESM can help us going forward in these new challenges as well.” This story has been updated to reflect Carlos Cuerpo’s formal job title as minister of economy, trade and business.

BRUSSELS ― Italian Commissioner Raffaele Fitto is leading a rearguard fight inside the EU executive to secure a powerful role for Europe’s regions in the bloc’s new multi-year budget. Fitto, who is currently in charge of €400 billion in regional funding, is at odds with his boss, European Commission President Ursula von der Leyen, over a plan to dramatically increase the power of national governments in managing the cash pot to the detriment of local bodies. That would be a major setback for the regions, and for Fitto, who have handled the so-called cohesion policy ever since it was introduced in the 1970s to narrow the gap between poorer and richer areas in Europe.   Von der Leyen is investing major political capital in radically reforming the EU’s budget, currently worth €1.2 trillion, for the 2028-2034 cycle. The plan to steer billions in EU funding away from agriculture and regional spending and toward defense and innovation, however, is sending shockwaves through Brussels and across national capitals. Months of simmering tensions inside the Berlaymont are now at a boiling point ahead of the Commission’s presentation of its budget proposal on July 16. Von der Leyen supports overhauling a set of criteria ― known as the Berlin formula ― that allocates a major share of the cohesion cash to underdeveloped regions across the bloc, two EU officials and two EU diplomats told POLITICO. “The first question is: Will [the Berlin formula] be kept or not?” Jan Olbrycht, a former MEP now serving as an advisor to budget commissioner Piotr Serafin, said during a public event last week. “My answer for today is ‘I don’t know’, and I’m not sure it will be kept like this.” Changing the rules could result in the Commission handing the money directly to national governments, which would have more leeway over how to allocate the funding to regions. Critics view this as problematic, as it could reinforce existing disparities within individual countries and sideline regions from the process. “It’s basically a renationalization of the programs,” said one of the EU officials who, like others quoted in the story, was granted anonymity to speak freely. Italy’s Fitto ― who is famed for his quiet and reserved public demeanor ― is leading the pushback against these sweeping changes that could diminish his power in the Commission in the years to come. His view is broadly shared by Serafin, MEPs from von der Leyen’s own European People’s Party (EPP), 149 regions and 14 national governments, who wrote a critical letter to the Commission president.   Raffaele Fitto, who is currently in charge of €400 billion in regional funding, is at odds with his boss, European Commission President Ursula von der Leyen. | Marie Odgaard/EPA “Sixteenth July will be just the beginning of the fight,” Olbrycht said, predicting tough negotiations with national capitals and the Parliament further down the line. BUDGET FAULT LINES Proponents of the cohesion funding reform ― most importantly, the Commission’s powerful budget department, if not the commissioner himself ― argue that it will allow greater simplification and more strategic investments in defense and industrial build-up. The changes are part of a broader plan to lump agricultural and regional funds ― which jointly make up around two-thirds of the EU’s €1.2 trillion purse ― into a single cash pot for each country, where payments are linked to the fulfilment of economic reforms. Critics argue that the new system will effectively bypass regions and create a democratic deficit, with local bodies bearing the brunt of governments’ failing to carry out major economic reforms. Skeptics also fear that autocratic leaders, such as Hungary’s Viktor Orbán, will cut EU funding to regions governed by political rivals. To prevent this risk, Fitto and Serafin support linking regional payments to local reforms. They’re also looking for safety nets to secure funding for farmers and regions, even if the reforms are not met. Disagreement between the Commission’s budget and regions departments over cohesion policy is so strong that less than two weeks out from the budget’s publication date they haven’t finalized a draft text. Unlike many other areas of the budget, internal consultations over this issue haven’t started yet, the two officials told POLITICO. “There are different visions inside the Commission,” Olbrycht said.

Listen on * Spotify * Apple Music * Amazon Music Europe baked, the Atomium shut early — and Brussels finally unveiled its long-delayed climate target. Host Sarah Wheaton speaks with POLITICO Climate Reporter Louise Guillot, Chief Foreign Affairs Correspondent Nick Vinocur and EU Politics Reporter Max Griera about the EU’s new 2040 goal: What a 90 percent emissions cut really means, why critics say it’s already being softened, and how Denmark’s presidency of the Council of the EU plans to juggle climate, migration and more amid stormy politics. We also pull back the curtain on Ursula von der Leyen’s powerful gatekeeper, Bjoern Seibert — and on Viktor Orbán’s crackdown on Budapest Pride. Later, POLITICO’s Cities Correspondent Aitor Hernández-Morales joins to explore how Europe’s cities are navigating the heat — both political and literal — and why so many mayors are now turning to Brussels for help with urgent issues like housing.

The European Parliament is getting hot and sweaty, and it’s not because of the upcoming EU budget negotiations. The air-conditioning system in Zone C of the Paul-Henri Spaak building in Brussels, home to staff from the Greens, the liberals of Renew Europe, and the right-wing European Conservatives and Reformists, has malfunctioned. The affected parties appear to be taking it in good humor, at least. “It hasn’t been this overheated since [European Commission President Ursula] von der Leyen cut the green claims stuff!” quipped a Renew spokesperson, referring to last week’s political turmoil over the Commission’s mixed messaging on whether it would kill an anti-greenwashing bill.  “I hear it’s better on the 5th floor, where they don’t believe in climate change,” the spokesperson added, referring to the offices of the ECR, a group that wants to water down the EU’s climate policies. Not to be outdone, an ECR spokesperson said: “I know they want to make us sweat over our political positions, but isn’t this ridiculous?” The Spaak building is set for a €440 million renovation starting in 2027, which will take about five years. It is meant to bring the infrastructure up to modern safety and green standards after the partial collapse of the plenary chamber ceiling, according to the Parliament’s administration. On Tuesday night the system experienced “a major malfunction” due to “exceptionally high temperatures,” an internal communication from the Parliament’s infrastructure department reads. “Our teams were unable to restore the system during the night and repair works are continuing this morning as a matter of absolute priority,” the note adds. 

BRUSSELS — With the Socialists and liberals threatening to block European Commission President Ursula von der Leyen’s agenda, an obvious question looms: Can’t she simply govern with the European Parliament’s right-wing majority? Last week, the centrist coalition she has been relying on to pass legislation appeared close to breaking point due to frustration over the efforts of von der Leyen’s center-right European People’s Party to water down the EU’s green plans. That has set the forces further to the right in the Parliament crowing over what they portray as their success in bringing the EPP on board with their agenda, enabling them to push through ideologically divisive measures on topics such climate and migration. “The most natural outcome would be to have a right-wing majority” when agreeing the new regulation on deportations, said Dutch MEP Marieke Ehlers, a leading member of the Patriots for Europe group working on that law. “If the EPP were to work with the left on this file, they would end up with a proposal that is weaker than what their own commissioner has proposed, so I don’t really see how they would sell that to their voters,” she added. But while von der Leyen might find some marriages of convenience on environmental themes and immigration with the far right, she would find it almost impossible to build a workable legislative agenda with such fractured and disparate right-wing parties. Some, for example, are pro-Russian, others anti-Russian. “They find it very hard to agree. That, in turn, means they are an unreliable partner for the EPP as a permanent coalition,” said Richard Corbett, a former British MEP and adviser to the European Council president.  GERMAN SENSITIVITIES Von der Leyen also has particular sensitivities as a German centrist politician, highly conscious of coming from a country shaped by its Nazi past, about coordinating legislation with extremist nationalist parties. If she were to rely on the right, she would often find herself allying with politicians who are pro-Kremlin, anti-Ukraine, anti-LGBTQ+, anti-abortion and Euroskeptic — all anathema to her essential beliefs. While there is probably more room to cooperate with the European Conservatives and Reformists, dominated by Italian Prime Minister Giorgia Meloni, it would be far harder to see von der Leyen making regular common cause with the Patriots, whose big names include Hungary’s Viktor Orbán and France’s Marine Le Pen. And any frequent coordination with the far-right Alternative for Germany (AfD) in the Europe of Sovereign Nations grouping would prove especially tricky — although the EPP has already flirted with that option. If von der Leyen were to rely on the right, she would often be allying herself with numerous politicians who are pro-Kremlin, anti-Ukraine, anti-LGBTQ+, anti-abortion and Euroskeptic. | Annette Riedl/Picture Alliance via Getty Images Working with the far right is specially delicate for von der Leyen, with German Chancellor Friedrich Merz battling the AfD back in Berlin. Of the German Christian Democrat trio dominating Brussels, only Manfred Weber, leader of the EPP, has relied on far-right votes in the Parliament. “Weber is the only one. So von der Leyen is careful, Merz is very careful for national reasons, and Weber, he’s the only one that really doesn’t have any shame of cooperating with the far right,” said Sophia Russack, a researcher at the Centre for European Policy Studies. Von der Leyen “clearly does not like to cater to the far right, she has demonstrated that in her first term. The majority that she built most of her legislation on was the center left and right, the centrist majority,” she added. WRECKERS NOT BUILDERS While the EPP can rely on a Parliamentary majority of various hues of right-wingers to help shoot down files they don’t like — such as parts of the Green Deal — the symbiosis will be far more difficult when it comes to assembling more complex legislation like the budget. An example of the perils of flirting with the far right came with the 2025 EU budget guidelines. The EPP had initially coordinated with its regular allies the Socialists, liberals and Greens, but then shifted to working with the far right including the AfD to introduce harder language on border barriers and detention centers. After the EPP lurched right, the Socialists, liberals and Greens decided to vote against the text as a whole, alongside the Patriots, who despite their success in getting the migration amendments passed regarded the resolution itself as “unacceptable.” As Rasmus Andresen, an MEP from the Greens, put it at the time: “If you like relying on the far right, then maybe you will get an amendment passed, but you will not get the budget passed.” Even on green policy — where the right-wing bloc broadly agrees some trimming is needed — the far right’s demand that laws be scrapped in their entirety would be too much for the EPP. Accepting it would risk internal fractures, given that some of its members support a strong Green Deal. Relying on a right-wing majority would also raise eyebrows among some of the EPP’s own heavyweights, such as Polish Prime Minister Donald Tusk, who is locked in a bitter political feud with his country’s nationalist conservative opposition, the Law and Justice party. The Poles have already called out EPP leader Weber’s rapprochement with hard-right forces in the past. At the same time, the EPP’s Hungarian party Tisza is leading the opposition to Orbán.   The Socialists, still the second-largest overall grouping in the Parliament, are being clear that an understanding was struck among the centrists on the Commission’s program, and that von der Leyen will need to stick to it. “There is a cooperation between different forces that has supported a Commission with a program. I want to remind you, President von der Leyen made a speech promising certain things, and this speech was the result of many negotiations and meetings with the president of the Socialist group,” Laura Ballarín, a Socialist MEP and former chief of staff of the Socialist group, told POLITICO. “If these promises are not kept, we can obviously reevaluate our role.”

BRUSSELS — The European Union is trying to stop space from turning into a junkyard. The European Commission on Wednesday proposed a new Space Act that seeks to dial up regulatory oversight of satellite operators — including requiring them to tackle their impact on space debris and pollution, or face significant fines. There are more than 10,000 satellites now in orbit and growing space junk to match. In recent years, more companies — most notably Elon Musk’s Starlink — have ventured into low-Earth orbit, from where stronger telecommunication connections can be established but which requires more satellites to ensure full coverage. “Space is congested and contested,” a Commission official said ahead of Wednesday’s proposal in a briefing with reporters. The official was granted anonymity to disclose details ahead of the formal presentation. The EU executive wants to set up a database to track objects circulating in space; make authorization processes clearer to help companies launch satellites and provide services in Europe; and force national governments to give regulators oversight powers. The Space Act proposal would also require space companies to have launch safety and end-of-life disposal plans, take extra steps to limit space debris, light and radio pollution, and calculate the environmental footprint of their operations. Mega and giga constellations, which are networks of at least 100 and 1,000 spacecraft, respectively, face extra rules to coordinate orbit traffic and avoid collisions. “It’s starting to look like a jungle up there. We need to intervene,” said French liberal lawmaker Christophe Grudler. “Setting traffic rules for satellites might not sound as sexy as sending people to Mars. But that’s real, that’s now and that has an impact on our daily lives.” Under the proposal, operators would also have to run cybersecurity risk assessments, introduce cryptographic and encryption-level protection, and are encouraged to share more information with corporate rivals to fend off cyberattacks. Breaches of the rules could result in fines of up to twice the profits gained or losses avoided as a result of the infringement, or, where these amounts cannot be determined, up to 2 percent of total worldwide annual turnover. Satellites exclusively used for defense or national security are excluded from the law. THE MUSK PROBLEM The Space Act proposal comes as the EU increasingly sees a homegrown satellite industry as crucial to its connectivity, defense and sovereignty ambitions. Musk’s dominance in the field has become a clear vulnerability for Europe. His Starlink network has showcased at scale how thousands of satellites can reach underserved areas and fix internet voids, but it has also revealed his hold over Ukraine’s wartime communication, highlighting the danger of relying on a single, foreign player. Top lawmakers in the European Parliament, including Grudler, earlier this month advocated for a “clearly ring-fenced budget of at least €60 billion” devoted to space policy, while French President Emmanuel Macron last week called for the next EU budget to earmark more money to boost Europe’s space sector. That’s crucial “if we want to stay in the game of the great international powers,” he said shortly after the French government announced it would ramp up its stake in Eutelsat, a Franco-British satellite company and Starlink rival. The Space Act proposal introduces additional requirements for players from outside the EU that operate in the European market, unless their home country is deemed to have equivalent oversight by the Commission, which could be the case for the U.S. They will also have to appoint a legal representative in the bloc. The proposal is set to apply from 2030 and will now head to the Council of the EU, where governments hash out their position, and the European Parliament for negotiations on the final law. Aude van den Hove contributed reporting.

BRUSSELS ― The Socialists are not just rebelling against European Commission President Ursula von der Leyen’s attempts to water down the EU’s green agenda — they are also out to stop her cutting budget funds for training young people and the unemployed. Von der Leyen, from the center-right European People’s Party (EPP), needs the Socialists as part of a centrist coalition to pass legislation through the European Parliament. It is an ominous signal for her that the center-left is already gearing up to play hardball over the EU’s next budget, or Multiannual Financial Framework (MFF). The fight is set to hinge on the social fund — worth €142.7 billion in the 2021-2027 budget — which is supposed to tackle poverty and support vulnerable groups. Von der Leyen wants to see that money channeled more to defense and scaling up industry. “I do not understand an MFF, a community budget, without such an important fund as the European Social Fund,” said Iratxe García Pérez, leader of the Socialists and Democrats in the European Parliament during the last plenary session.  “[The Commission] won’t have a blank check from the Socialist group,” she warned, hinting the fund will be a red-line in negotiations. She added to POLITICO: “We need to adapt to new challenges, and competitiveness is part of it, but not at the cost of leaving behind the EU’s social cohesion. Farmers, industry and business also benefit from social spending.” The Socialists, the second-largest group in the European Parliament, accuse the center-right-dominated EU executive of railroading its pro-business and deregulation agenda into the next seven-year budget.  Last week, Socialists and liberals threatened to pull the plug on von der Leyen’s informal pro-EU majority after she controversially sided with the far right in canceling an anti-greenwashing law. Inside the Berlaymont, the Socialist commissioner for social rights Roxana Mînzatu ― who is in charge of the European Social Fund — is fighting a rearguard battle to save it. “I do not understand an MFF, a community budget, without such an important fund as the European Social Fund,” said Iratxe García Pérez. | Ronald Wittek/EPA Mînzatu and her three fellow Socialist commissioners, however, are outnumbered by 14 commissioners from the EPP who are keen to steer the EU’s €1.2 trillion cashpot towards new priorities such as defense and industry.  EU commissioners from all parties are lobbying to secure greater control and funding for their programs ahead of the presentation of the budget proposal on July 16.  SIMPLIFICATION AND ITS CRITICS The Commission intends to lump dozens of funds into a national and regional plan that links payments to the completion of economic reforms.  Supporters say this system will reduce complexity and make it easier for countries to spend the EU’s money.  But critics warn that this is a smokescreen to cut the EU’s funds, and shuffle money away from priorities such as regional development and social cohesion. “The question you have to ask in deliberating any new structure for the MMF is how can the Commission manage, sway or control that governments will spend the EU funds on the right policy priorities, which are not always necessarily the most attractive or [visible]?” said a Commission official. Mînzatu supports attaching a price tag to the social fund in the new budget to compel governments to actually spend the money on social policy.  Inside the European Parliament, the EPP is also in favor of ringfencing specific money pots ― although the center right is more interested in farmers’ subsidies than social programs. “We cannot have farmers competing for funds for highways or modernizing public transport or for making buildings or energy efficiency,” said lawmaker Siegfried Mureșan, the EPP’s point person for the budget talks.  “The social fund will be defended by the European Parliament,” he added.

BRUSSELS ― The remaining four years of Ursula von der Leyen’s period at the helm of the European Commission look set to be shaped by last week’s dramatic decision to side with the far right in canceling a significant climate law. By opting to pull legislation designed to stop companies from “greenwashing,” the Commission president detonated a bomb under the informal coalition of centrist pro-EU groups that support her leadership and whose votes she will rely upon to make her biggest priorities a reality. Measures such as rules on deportations for asylum seekers, an overhaul of the Common Agricultural Policy, and a law simplifying green reporting requirements ― policies that will almost certainly cause deep ideological divisions ― will be in disarray if von der Leyen can’t keep the Socialists and Democrats (S&D) and the liberal Renew Europe on board. Even the ever-tortuous negotiations over the EU’s seven-year EU budget, which looms ominously on the horizon, could be affected, although politicians and officials play this down. While von der Leyen is from the center-right European People’s Party, the group for decades had an informal coalition with the Socialists and, to some extent, with the liberals. The arrangement kept the EU functioning and pursuing a broadly middle-of-the-road, moderate agenda. But Brussels politics is showing that it is not immune to the right-wing winds sweeping across the continent. As the EPP pushes its relationship with the two other mainstream groups further to the right, the EU’s core institutions are now beset by infighting, uncertainty and mistrust.   The “EPP are being irresponsible, using their position just to power play and it feels like they want to humiliate us,” said Socialist MEP Tiemo Wölken, who was his group’s representative leading the greenwashing legislation, the Green Claims directive. And it wasn’t that this topic was an outlier that the EPP needed to crush, he said. “It could have been any other file.” As well as being angry at the cancelation of the proposed law itself, both centrist parties accuse the EPP and von der Leyen of circumventing the EU’s legislative norms. Although the Commission has insisted it has the prerogative to shield the bloc from what it sees as bad versions of laws it originally proposed, this one was already in the final stages of negotiation between the Parliament and the EU Council ― representing national governments ― with both institutions having already approved their positions after months of work. MAKING LIFE DIFFICULT So now for the backlash. In the months and years ahead, Socialist and liberal lawmakers could slow the process of scrutinizing, shaping and agreeing to proposed laws. They could “make the Commission’s life difficult” by refusing to play ball with the EPP on files that groups further to the right won’t support, said EU expert Richard Corbett, a former U.K. MEP and adviser to the European Council president.  Notably, Socialists and liberals could target von der Leyen’s plan to reduce red tape linked to climate targets, the No. 1 priority of her second term in office, he added. “Von der Leyen has to make a choice,” said René Repasi, leader of the German Socialists, warning that if she continues to cater to the right-wing faction in the Parliament, the Socialists could trigger “tough” consequences for the ongoing negotiations over the green reporting rules simplification package ― the so-called omnibus.  “Von der Leyen and the EPP [now] need to say that this action [the withdrawal of the anti-greenwashing bill] was an accident, and to remedy this within this week, otherwise the very foundation [of the coalition] is put into question,” he said. “Von der Leyen has to make a choice,” said René Repasi, leader of the German Socialists, warning that if she continues to cater to the right-wing faction in the Parliament, the Socialists could trigger “tough” consequences. | Alejandro Garcia/EPA The centrists are irked at how last week’s decision appears to deliver a victory to the right-wing in its determination to kill off part of the flagship Green Deal from the last term. This despite von der Leyen’s having used the Socialists and liberals to become Commission president in the first place. It comes after months of growing resentment as the EPP repeatedly hooked up with right-wing and far-right forces ― such as the European Conservatives and Reformists and the Patriots for Europe, the group of France’s Marine le Pen and Hungary’s Victor Orbán ― to press ahead with its policy priorities. “If President von der Leyen wants to have a broader collaboration around the center [in order to advance her policy agenda], this is what she has to avoid,” said the Parliament’s liberal vice president, Martin Hojsík. For its part, the EPP argues that the makeup of the Parliament has shifted away from the left and the center, a change that has given it the mandate to deliver center-right policies ― and, if need be, to rely on far-right votes. WINDS OF CHANGE It’s not just the political configuration of the Parliament that is causing difficulties for von der Leyen.  The waning influence of the center left in national governments across Europe could also paradoxically strengthen the hand of the center left in Brussels ― because it would have less to lose ― thereby making life more difficult for the center-right-dominated Commission. The center left’s hold on power in Spain is increasingly fragile, while this year’s election in Germany saw it reduced from holding the chancellor’s post to junior coalition partner status. At the EU level, the center-left group could feel less bound by the responsibilities of government and become a more active opposition. The same goes for the liberals, if French President Emmanuel Macron isn’t succeeded by a politician of the same party in elections two years hence. “There is definitely this risk,” Repasi said. “The Spanish delegation is the second largest one, they have the leader of the group, and if they do not feel bound by Council responsibilities, it will make it easier for them to move into a different direction.” STORM IN A TEACUP? Yet despite the bickering, some politicians believe the informal coalition of the three centrist parties will stick together in a crunch ― because it’s in all their interests. Precedent is also a factor. The Socialists and liberals have on several occasions ― even in the past few months ― failed to follow through on threats to distance themselves from von der Leyen’s more controversial moves. Such as when they both said they would refuse to vote in favor of Raffaelle Fitto, an Italian right-winger, for European commissioner ― only to do so. And while the right-wing majority has been instrumental in allowing the EPP to advance some of its priorities, the far right’s fundamental opposition to EU integration makes it an unreliable partner when it comes to important files such as the bloc’s €1 trillion seven-year budget. While Ursula von der Leyen is from the center-right European People’s Party, the group for decades had an informal coalition with the Socialists and, to some extent, with the liberals. | Kai Foersterling/EPA “The cooperation of all pro-European voices is unavoidable,” said EPP MEP Sigfried Mureșan, who leads the budget negotiations for the center right. “Otherwise, Europe will not have a budget for the next seven years, and that would be irresponsible.” As for last week’s greenwashing decision, the Commission has now said it could backtrack on the bill’s withdrawal if the Parliament and the Council agree to exempt small firms from having to comply. In the end, this latest crisis might get sorted. But the wounds it has opened are likely to fester. Karl Mathiesen, Marianne Gros and Sarah Wheaton contributed reporting.

BRUSSELS ― The European Union is looking to extract billions of extra euros from frozen Russian assets by moving them into riskier investments — via a plan that would increase aid to Ukraine while avoiding accusations of stealing Moscow’s money. The EU executive is considering transferring almost €200 billion of frozen Russian state assets held in Belgium into a new, riskier investment fund that would pay out higher interest, four officials with knowledge of proceedings told POLITICO. The goal is to generate more profits to help keep Ukraine’s war-battered economy afloat amid U.S. president Donald Trump’s threats to halt funding. The assets were frozen in 2022 in response to Russia’s full-scale invasion of Ukraine. However, the move would stop short of confiscating the Russian assets altogether — which is opposed by several EU states including Germany and Italy over financial and legal concerns. By only spending the interest and leaving the underlying capital untouched, the EU hopes it can avoid accusations of breaching international law. Members of the G7 group of industrialized countries last year agreed to give Ukraine €45 billion generated by investing the immobilized sovereign assets. The EU’s €18 billion share of the G7 loan, however, will be entirely paid out by the end of the year ― raising questions on how Ukraine’s funding needs will continue being met in 2026. Finance ministers from the EU’s 27 countries will kickstart these discussions on Thursday at an informal dinner in Luxembourg. “It is important that we hear from the Commission on the available options, especially regarding the potential use of frozen Russian assets and further steps regarding the sanctions regime,” the rotating Polish Council presidency, which organized the dinner, wrote in the invitation letter to ministers seen by POLITICO. Poland also suggested that the EU’s new defense loan scheme, SAFE, can be used by countries to buy weapons for Ukraine. Thursday’s meeting will set the scene for months of tense discussions as European capitals with overstretched budgets are increasingly torn between continuing to support Ukraine and delivering on domestic priorities. THE EU’S WORKAROUND As a potential workaround, EU officials are considering transferring the assets from Euroclear in Belgium to a “special purpose vehicle” under the EU’s umbrella. The main advantage of creating the new fund quickly is that the assets could then be assigned to riskier investments capable of generating much higher returns for Ukraine. The officials did not say exactly what sort of investments these might be. The Russian assets are blocked under the EU’s sanctions regime — which must be unanimously renewed every six months — and the Hungarian government has repeatedly threatened to use its veto as a sign of goodwill towards the Kremlin. | Natalia Kolesnikova/AFP via Getty Images Under its rules, Euroclear is obliged to invest the assets — many of which have now matured into liquid cash — with the Belgian central bank, which offers the lowest risk-free rate of return available. In 2024, the windfall profits generated by such investments amounted to €4 billion, which was later earmarked to service the G7 loan to Ukraine. Supporters of the new investment fund argue that the EU has to generate more revenues from Russia’s sovereign funds to bolster Ukraine in the long term amid a protracted standoff in the peace talks with Moscow. Another potential advantage is that it could prove a useful shield against the risk that Hungary might veto the sanctions renewal and effectively hand back the money to Russia. The Russian assets are blocked under the EU’s sanctions regime — which must be unanimously renewed every six months — and the Hungarian government has repeatedly threatened to use its veto as a sign of goodwill towards the Kremlin. Over the past weeks, the Commission held informal talks with a group of countries — including France, Germany, Italy and Estonia — to examine legal ways to keep the assets frozen if Hungary blocks the sanctions renewal, two officials with knowledge of proceedings told POLITICO. But the working group did not devise a workaround to achieve this outcome. TOUGH BUDGET ARITHMETIC EU officials are looking for ways to set up the new fund by simple majority — as opposed to unanimity — to sideline Hungarian Prime Minister Viktor Orbán. Critics of the new funding vehicle, however, warn that EU taxpayers will ultimately have to pay compensation for any unproductive investments that are made. The EU is looking for creative solutions as its central €1.2 trillion cash pot — which governs all public spending — is overstretched and the new budget will only come into force in 2028.   “It’s not going to be easy to find money under the current MFF [multiannual financial framework],” said an EU diplomat. A large part of the EU’s €50 billion cash pot to Ukraine, which was agreed in 2023 and was set to last until the end of 2027, has already been spent. Besides the economic constraints, officials are skeptical about the idea of further topping up the EU’s central budget as this requires unanimity — and Hungary is likely to hold out.