ATHENS — The country that almost got kicked out of the eurozone is now running the powerful EU body that rescued it from bankruptcy. Greece’s finance minister, Kyriakos Pierrakakis, on Thursday beat Belgian Deputy Prime Minister Vincent Van Peteghem in a two-horse race for the Eurogroup presidency. Although an informal forum for eurozone finance ministers, the post has proved pivotal in overcoming crises — notably the sovereign debt crisis, which resulted in three bailouts of the Greek government. That was 10 years ago, when Pierrakakis’ predecessor described the Eurogroup as a place fit only for psychopaths. Today, Athens presents itself as a poster child of fiscal prudence after dramatically reducing its debt pile to around 147 percent of its economic output — albeit still the highest tally in the eurozone. “My generation was shaped by an existential crisis that revealed the power of resilience, the cost of complacency, the necessity of reform, and the strategic importance of European solidarity,” Pierrakakis wrote in his motivational letter for the job. “Our story is not only national; it is deeply European.” Few diplomats initially expected the 42-year-old computer scientist and political economist to win the race to lead the Eurogroup after incumbent Paschal Donohoe’s shock resignation last month. Belgium’s Van Peteghem could boast more experience and held a great deal of respect within the eurozone, setting him up as the early favorite to win. But Belgium’s continued reluctance to back the European Commission’s bid to use the cash value of frozen Russian assets to finance a €165 billion reparations loan to Ukraine ultimately contributed to Van Peteghem’s defeat. NOT TYPICAL Pierrakakis isn’t a typical member of the center-right ruling New Democracy party, which belongs to the European People’s Party. His political background is a socialist one, having served as an advisor to the centre-left PASOK party from 2009, when Greece plunged into financial crisis. He was even one of the Greek technocrats negotiating with the country’s creditors. The Harvard and MIT graduate joined New Democracy to support Prime Minister Kyriakos Mitsotakis’ bid for the party leadership in 2015, because he felt that they shared a political vision. Pierrakakis got his big political break when New Democracy won the national election in 2019, after four years of serving as a director of the research and policy institute diaNEOsis. He was named minister of digital governance, overseeing Greece’s efforts to modernize the country’s creaking bureaucracy, adopting digital solutions for everything from Cabinet meetings to medical prescriptions. Those efforts made him one of the most popular ministers in the Greek cabinet — so much so that Pierrakakis is often touted as Mitsotakis’ likely successor for the party leadership in the Greek press. Few diplomats initially expected the 42-year-old computer scientist and political economist to win the race to lead the Eurogroup after incumbent Paschal Donohoe’s shock resignation last month. | Nicolas Economou/Getty Images After the re-election of New Democracy in 2023, Pierrakakis took over the Education Ministry, where he backed controversial legislation that paved the way for the establishment of private universities in Greece. A Cabinet reshuffle in March placed him within the finance ministry, where he has sped up plans to pay down Greece’s debt to creditors and pledged to bring the country’s debt below 120 percent of GDP before 2030.

The European Commission is considering tying pension reform to cash payouts from the EU’s next €2 trillion budget as it attempts to protect member countries’ finances from a looming demographic crisis. Three EU senior officials told POLITICO that the EU executive’s economic and finance legislative arms are looking into buttressing countries’ creaking state pension systems by recommending retirement savings policies to individual countries. If EU capitals ignore these country-specific recommendations, or CSRs, then they might not get their full share of the EU’s seven-year budget from 2028. “Our job in the Commission is to help countries do the difficult stuff,” said a senior Commission official, who, like others quoted in this story, spoke on the condition of anonymity to speak freely. “CSRs would be well suited to do it” by “linking reforms to investment.” The EU faces a toxic cocktail of high debt, an aging population and declining birthrates. Combined, they will cripple any public “pay-as-you-go” pension system that relies on taxpayers to provide retirees with a source of income. That’s a problem today as well as tomorrow. Over 80 percent of EU pensioners relied on a state pension as their only source of income in 2023. That overreliance has left one in five EU citizens above the age of 65 at risk of poverty, the equivalent of 18.5 million people. Brussels’ goal is twofold: Alleviate the pressure on the state coffers to keep pensioners afloat, and help create a U.S.-style capital market by putting people’s long-term savings to work. The idea, while well-intended, would be politically difficult and has deputy finance ministers wincing at the thought. Pension policy lies well outside of the EU executive arm’s legal reach. Even then, the risks of tying EU funds to politically toxic issues could spell disaster for governments, especially when democracy’s most loyal participants are above the age of 50. “You can’t buy pension reform,” said a deputy finance minister. “It’s going to hit the nerve of what democracy is about.” Over 80 percent of EU pensioners relied on a state pension as their only source of income in 2023. | Dumitru Doru/EPA Pension reform also has a habit of bringing protesters onto the streets. In Brussels, police clashed with trade unions on Tuesday, who were demonstrating over austerity measures that include raising the age of retirement from 65 to 67 by 2030. Belgium got off lightly when compared to France, which witnessed months of protests in 2023 when President Emmanuel Macron raised the retirement age from 62 to 64. Even then, France’s recently reinstated prime minister, Sébastien Lecornu, announced Tuesday that he’d put Macron’s pensions reforms on ice to overcome a parliamentary crisis that’s made it impossible to pass a budget. Postponing the reforms could cost Paris up to €400 million next year at a time when the government tries to tighten its belt and reduce the country’s ballooning debt burden. The Commission’s focus would stop short of setting retirement age or mandating monthly payouts to pensioners. Brussels’ reform plans instead home in on incentivizing citizens to save for retirement and encouraging companies to offer corporate pension plans to employees. CSRs are part of an annual fiscal surveillance exercise that the Commission uses to coordinate economic policies across the bloc. These recommendations are negotiated with EU capitals in a bid to fix a country’s most pressing economic problems. The Commission doesn’t consider this coercion, just sound economics. “If it’s on pensions, then so be it,” a second senior Commission official said. POST-PANDEMIC CARROTS AND STICKS EU capitals have had a habit of ignoring CSRs in the past. That could change if the Commission adds cash incentives, an idea that was born out of the EU’s €800 billion post-pandemic recovery fund. The Commission also saw an opportunity to incentivize governments to enforce costly reforms to modernize the bloc’s economy by setting targets that’d unlock EU funds in tranches. For countries like Spain, these included pension reform. The carrot and stick strategy proved such a hit within the Berlaymont that it wants to use the same system in the next EU budget, especially if it helps add teeth to CSRs. Not everyone’s a fan. The mountains of paperwork that governments had to amass to prove they’d met the Commission’s demands slowed progress, leaving hundreds of billions of euros on the table. “We don’t know why the Commission is so fond of this model,” said another deputy finance minister, who poured cold water on the idea. “[Pension reform is] hugely controversial. I highly doubt anyone’ll do it.” Giorgio Leali contributed reporting from Paris.

Journalists who survived until the bitter end of Thursday’s European Council were treated to a inadvertent standup comedy set by Belgium’s new Prime Minister Bart De Wever. That’s a change of pace for Brussels, where leaders’ summits are usually a somber — often tense — affair, even when Russian military threats and tariff wars aren’t on the agenda. De Wever is the first Flemish nationalist to take the reins of Belgium, and his government has pledged big spending cuts and the strictest migration policy ever. In large swaths of Belgium’s French-speaking Wallonia region, where his past derisory statements about Walloons are still etched in the collective memory, De Wever is regarded with distrust. In Dutch-speaking Flanders, however, he’s also known for his sardonic wit.  On Thursday, De Wever told reporters that he’d used that to his advantage in talks with other EU leaders. “With some humor — dark humor admittedly — I told them what was on my mind,” he said. He gave his post-summit press conference the same treatment, filling his late-night debrief with puns and one-liners. Here’s POLITICO’s shortlist of De Wever’s snappiest quotes: “Is there an escape door?” That was De Wever’s reaction upon being asked about frozen Russian assets, the bulk of which are held in Belgium. The Belgian PM said he was grateful no one had raised it during the summit — until the press conference, that is. “Today, I was very happy, until I met you,” he told the journalist who asked for an update. But, he added, “I’m not Trump, I’m actually very nice.” Frozen Russian assets are not “Putin’s little piggy bank that you can just break with a hammer and then take the money out and spend it on whatever you want.” The Belgian PM didn’t mince his words when it comes to frozen Russian assets and the risks involved in confiscating the cash to support Ukraine. He added that it could be an “act of war.” “I have the impression that I’m in a plane, and I want to be there, but what is the direction and who is the pilot?” De Wever praised French President Emmanuel Macron for drumming up a “coalition of the willing” to boost military aid for Ukraine as U.S. support dwindles. But he said he’d pleaded for a bit more structure in the group. “We are willing — but willing to do what exactly?” he wondered. “I’ve found that in Europe, people call five full days and nights [of talks] long negotiations. I said: ‘In Belgium, we call that a free weekend.’” Negotiations on the European Union’s next seven-year budget, the so-called Multiannual Financial Framework, could get tough, De Wever predicted. But he also poked fun at EU leaders’ five-day-long talks to agree the current budget back in 2020. While they were legendary in EU circles, that extended timeline remains unimpressive to a weathered Belgian politician beaten down by monthslong coalition talks. “You can’t dig your way out of a pit” EU leaders will have to come up with a plan to pay back around €350 billion the EU borrowed for its COVID recovery fund. De Wever, for his part, warned against rolling over the debt. Belgium, “considering its deficit and debt, is very badly placed to play the frugal part, but I nonetheless tried my very best,” he joked. “Satan has many faces. If you dance with him, he never changes; only you do. Those are biblical truths.” Yes, that’s still him talking about debt. Meloni is “one of the top dogs.” Italian Prime Minister Giorgia Meloni’s statements carry weight around the European Council table, according to De Wever, who said she’s a “very pleasant woman” with “very good” political positioning. “If you look at the room and see whose words carry weight, then Meloni is obviously one of the top dogs in Europe right now.” Meloni’s Brothers of Italy and De Wever’s N-VA party are both in the European Conservatives and Reformists group (ECR). David Cameron and Boris Johnson tried their hand at “advanced political mathematics” in the Brexit referendum. De Wever’s New Flemish Alliance joined the European Parliament’s right-wing ECR group at the insistence of then-U.K. Conservative leader David Cameron, who he said offered him an alliance “for eternity” — before Brexit removed his party and country from the EU. Cameron was sure he’d win the referendum, and Brexit figurehead Boris Johnson assured De Wever that he’d lose anyway — but get personal credit for winning Brexiteer votes. De Wever said he’d wondered: “The man who doesn’t have a plan for losing could lose anyway, and the man who has no plan for a victory might actually end up the winner.” “I’m a Belgian politician: I can tell the difference between talking and negotiating very well.” Negotiations require mediation and a clear target. U.S. President Donald Trump’s talks with Russian President Vladimir Putin and Ukrainian leader Volodymyr Zelenskyy, with Russian demands that would amount to a “true capitulation by Ukraine,” don’t appear to go beyond simply talking, De Wever argued. Trust the Belgian to tell the difference.

Mujtaba Rahman is the head of Eurasia Group’s Europe practice. He tweets at @Mij_Europe. Donald Trump’s return to the White House is now the main issue occupying senior minds across Europe’s capitals — and rightfully so. Trump 2.0 creates risks for the EU across a range of issues, including security, trade, and the bloc’s stance on China. But the immediate concern is what happens with Ukraine, particularly given Trump’s stated aim of ending the conflict in “24 hours.” In this regard, the bloc has already agreed on one early priority: It must do everything possible to convince Trump that Ukraine should enter any negotiations from a position of strength, and that a bad deal for Ukraine would make him look weak on the international stage — much like Afghanistan did for President Joe Biden, or Syria did for former President Barack Obama. While this line of argument is being pushed by NATO Secretary-General Mark Rutte and several EU leaders, presenting Trump with this angle alone is unlikely to sway him. Therefore, the bloc has also begun discussing an “offer” it hopes might make Trump more sympathetic. But if the EU wants to seriously influence Ukraine’s negotiations it has to be willing to pay for it. The bloc’s biggest concern is that negotiations over Ukraine’s future might turn into a “mini Munich.” That they would not only involve immediate territorial losses for Ukraine but also risk further Russian advances in the country’s east, a big wave of Ukrainian refugees to the EU and a mindset of appeasement that would exclude Kyiv’s NATO membership and possibly jeopardize its push to join the EU too. Such a turn would be a major strategic setback for the EU and greatly test its cohesion. It’s also much more likely to happen if Ukraine start talks from a position of weakness — which is why putting a lot more money on the table is important. Officials believe the recently brokered €50 billion G7 loan will last Ukraine until the end of 2025. So, the purpose of any fresh money would be to signal support for Ukraine in 2026 and possibly 2027. In the EU’s eyes, such an offer could also give Trump the “win” he needs — U.S. pressure forcing the bloc to shoulder more of the financial burden for Ukraine, as well as for its own security and defense. Yet, stumping up more cash is no easy task. France’s government recently fell as it tried to pass a budget for 2025. Germany’s upcoming February elections and subsequent coalition negotiations will complicate Berlin’s ability to sign off on decisions of major fiscal consequence. Moreover, seven member countries are in an excessive deficit procedure; there is only around €5 billion left for defense in the existing EU budget; and since the next EU budget will only run from 2028 onward, it cannot help address what can be done now. Officials believe the recently brokered €50 billion G7 loan will last Ukraine until the end of 2025. | Kirill Kudryavtsev/AFP via Getty Images However, the bloc is exploring a range of different options to organize more money for Ukraine. One idea is to simply lend Kyiv money at concessional interest rates and longer repayment periods against the so-called headroom in the EU budget. Another is to augment the EU’s ability to borrow against this headroom, with member countries providing a fiscal guarantee. Such a template would be modeled on the EU’s €100 billion SURE facility, which was established to support furlough schemes during Covid-19. Other possibilities include the European Stability Mechanism (ESM), which retains a lending capacity of €422 billion. But a previous attempt to make the ESM useful to member countries during the pandemic failed, as no member drew down any of the cheap cash that was on offer. Repurposing unused NextGenerationEU funds is another option, since only 41 percent of the €650 billion post-Covid Recovery and Resilience Facility has been used so far. But while the target is €300 billion by the end of the year, the facility is due to expire by the end of 2026 and is unlikely to be extended. The main issue, however, is that all these options are technically and politically complicated, as they require the involvement of the EU’s 27 national parliaments — at least to some degree. Furthermore, as ever larger sums of money for Ukraine will invariably involve more weapons purchases from the U.S., it will inevitably face opposition in some EU capitals, even if they recognize the need for more pragmatism in the short and medium term. An emerging compromise on the European Defense Industry Program, which would enable a greater percentage of euros to be used for non-EU military procurement, demonstrates this growing pragmatism. And some policy-makers in Brussels want to go even further, citing former U.S. Secretary of State Mike Pompeo’s “lend-lease” plan as a possible model to follow. Such a scheme would allow Ukraine to use billions of euros to borrow U.S. military equipment without any restrictions. Further still, some member countries want to create one overall package combining billions for Ukraine with the EU’s own security and defense and trade concessions — such as buying more U.S. LNG and agricultural products, as well as more alignment with the U.S.’s tougher stance on China. Such a package is a useful idea. Not only would it send a stronger signal to both Trump and Russian President Vladimir Putin, it could also help maintain intra-EU cohesion, marrying the concerns of member countries more worried about trade with those more anxious about security. The logic is simple: Spending even more on EU security and defense would result in even greater fiscal transfers to the U.S., thus securing even more concessions when it comes to tariffs. Overall, the EU’s institutions and member countries are clearly alive to the challenge a second Trump administration presents. More money for Ukraine now seems inevitable, and it will undoubtedly make the front end of the bloc’s broader approach. As one senior EU official said: “The choice is the following: Trump’s plan or Putin’s plan — unless we have the guts to propose an alternative that we need to be willing to pay for.” And the EU’s moment of truth is fast approaching.

Emmanuel Macron and Olaf Scholz lead the EU’s two biggest economies, sharing a 280-mile border. But when it comes to protecting Europe from global threats, these neighbors may as well be on different planets. At an event in Berlin this week, the French president warned that the EU “could die” and that if it continues with a “classical” free-trade agenda, it will be “out of the market” in two or three years. He made the case that Europe should embrace a more protectionist agenda if it wants to survive. Scholz meanwhile argued that a push to protect European industries from unfair trade practices “must not lead to us harming ourselves.” Germany is set to vote against new EU duties on Chinese electric vehicles on Friday, after Scholz intervened to toughen up his country’s opposition to the move. The clash dramatizes the dilemma facing the bloc’s 27 governments at a highly sensitive moment for global trade. The U.S. presidential election is on a knife edge and could see Donald Trump reelected in one month’s time. He has past form playing hardball with the EU on trade and has proposed sweeping new tariffs if he wins back the White House for the Republicans.  But even Democrat Joe Biden’s presidency has taken American policy in a protectionist direction, prioritizing domestic firms for hundreds of billions of dollars worth of industrial investment and tempting European companies to relocate to the U.S.  With China increasingly assertive especially in critical new carbon-neutral technology and supply chains, the EU has some choices to make if it wants to compete. Those decisions will require a large degree of consensus from national leaders. And the bloc’s two biggest powers can’t seem to agree. At the Berlin Global Dialogue on Wednesday, Scholz and Macron shook hands, smiled warmly and then spent the day offering wildly different takes on what Europe must do next. They diverged on key topics including proposals for joint EU borrowing, duties on imports of Chinese vehicles and trade talks with South American countries. During a Q&A at the event, Macron hinted at his difficulties with Scholz when he was asked whether he would be able to convince Berlin to issue joint EU debt, as proposed in an official report by former Italian PM Mario Draghi. The French leader laughed and said the last time it happened had been in response to the pandemic, with some help from “a colleague called Covid-19.” Macron and Scholz discussed the Draghi report on Europe’s competitiveness, which will be on the agenda of the next European Council summit. Officially, both Paris and Berlin say they agree with Draghi. But, in reality, they disagree on the proposed new wave of joint EU borrowing to invest in strategic sectors and rival China and the U.S. While France has often called for new EU debt and for repeating the experience of the post-pandemic recovery plan, for Germany that’s a no-go. This is not the first time the two leaders have been at loggerheads on European policy with tensions frequently bubbling over and once culminating in the cancellation of a joint Cabinet meeting in 2022. It doesn’t help that Scholz and Macron have very different leadership styles and personally don’t get on particularly well. IT’S MY ECONOMY, STUPID Over the past months, France and Germany made great efforts in public to display their shared vision for the EU’s economic agenda, signing joint blueprints on Europe’s industrial policy and co-drafting amendments to the European Council summit conclusions. But when it comes to the biggest existential issues facing Europe, Berlin and Paris systematically disagree. At the Berlin Global Dialogue on Wednesday, Olaf Scholz and Emmanuel Macron shook hands, smiled warmly and then spent the day offering wildly different takes on what Europe must do next. | Ludovic Marin/AFP via Getty Images France has been the cheerleader of an EU probe into subsidized Chinese electric vehicles which resulted in provisional tariffs hitting Chinese EVs. Since the investigation launched last year, Germany raised concerns that it could backfire. Berlin is expected to vote no in a key EU vote to confirm import duties proposed by the European Commission on Friday. But the truth is that despite all the leaders’ rhetoric about having Europe’s best interests at heart, both Scholz and Macron have their eyes firmly on domestic concerns.  “We just don’t have the same interests,” said French Senator Ronan Le Gleut, president of the Franco-German Senate friendship group. “We don’t have the same priorities, France’s automobile industry doesn’t export in China, or very little … whereas things like the crisis at Volkswagen worry everyone in Germany.” On Wednesday, Macron called for more cross-border mergers between EU companies in a not-so-implicit criticism of the German government, which wants to torpedo the takeover of Germany’s Commerzbank by Italy’s banking giant UniCredit. WEAK LEADERS According to Senator Le Gleut, France and Germany always go through a phase of disagreement before finally muddling their way toward a compromise. “At the end of the day we are not going to dislocate the EU over national differences,” he said. Le Gleut pointed to France and Germany finally reaching a deal on reforms to the energy market last year.  But even that spat isn’t over. After spending years fighting on whether to include nuclear power in one list of EU green investments, Paris and Berlin kept battling over the issue on almost every Brussels text that followed.  France wants to recognize nuclear as a strategic technology and ease state aid rules for the sector. But a top German official last week warned that EU resources should not be spent on nuclear power.  It’s also getting harder for both Berlin and Paris to make concessions that will upset voters at home, even if their countries benefit from a compromise.  The French president faces a fractured National Assembly and a surging far right. Meanwhile, Scholz, whose party has suffered a series of election defeats, is eyeing a federal election that is due by next September but could come earlier if his government falls apart. Frustrations are also growing in both capitals over the other’s perceived inability to budge on the EU’s existential questions.  On free trade, Nils Schmid, a German lawmaker for Scholz’s Social Democrats said many countries would rather be “trading with the EU than with China.” But if the EU continues to drag its feet on the deal between the EU and the South American Mercosur trade bloc, “it’s China who will be redefining trade rules.” “There is a geopolitical dimension — often the French accuse the Germans of not thinking about geopolitics, but there we feel that they are stuck in their Franco-French thinking,” said Schmid, who is also a member of the Franco-German parliamentary assembly. “Impatience is growing in Germany,” he said. Hans von der Burchard and Koen Verhelst contributed reporting.