Switzerland will raise its value-added tax rate for a decade to boost defense spending, its government announced today. “In view of the deteriorating geopolitical situation, the Federal Council wants to substantially strengthen Switzerland’s security and defense capabilities,” the statement reads. “To this end, additional resources in the order of 31 billion Swiss francs [€33 billion] are required.” The Council plans to temporarily raise VAT by 0.8 percent from the current 8.1 percent for 10 years, as of 2028. The additional revenues will be allocated to an armament fund that will also have borrowing capacity. However, raising the VAT requires a change in the constitution and a public consultation will open in the spring. Switzerland has been rethinking its defense stance since Russia’s attack on Ukraine almost four years ago. It is looking for more military cooperation with European nations and ramping up its rearmament, although it still has no intention of joining NATO. Switzerland spends about 0.7 percent of its GDP on defense, one of the lowest rates in Europe. The current goal of boosting that to 1 percent by 2032 is now out of date, the Federal Council said. “Due to the savings made in recent decades, the armed forces are also insufficiently equipped, particularly to effectively repel the most likely threats, namely long-range attacks and hybrid conflicts,” the statement added. Priorities for the country’s armament push include short- and medium-range air defense systems, cybersecurity and electromagnetic capabilities.

The killing of Alex Pretti by federal immigration agents in Minnesota has led to a rare rebuke of top Trump administration officials by leading 2nd Amendment advocates. Multiple national gun-rights organizations, as well as a prominent Minnesota gun rights group, have expressed horror at top Trump administration officials’ criticism of Pretti for being armed with a handgun that he had a legal permit to carry. “The FBI director needs to brush off that thing called the Constitution, because he clearly hasn’t read it,” National Association for Gun Rights President Dudley Brown told POLITICO. “I know of no more crucial place to carry a firearm for self defense than a protest.” FBI Director Kash Patel said Sunday on Fox News that “You cannot bring a firearm, loaded, with multiple magazines to any sort of protest that you want. It’s that simple. You don’t have a right to break the law.” DHS Secretary Kristi Noem said Saturday that she didn’t “know of any peaceful protester that shows up with a gun and ammunition rather than a sign.” White House press secretary Karoline Leavitt said Monday that “any gun owner knows” that carrying a gun raises “the assumption of risk and the risk of force being used against you,” during interactions with law enforcement. Gun-rights groups rushed to push back on an administration that was breaking with conservative orthodoxy on the right to bear arms in public places. Several were particularly outraged by Bill Essayli, the acting U.S. attorney for the Central District of California, who posted on X: “If you approach law enforcement with a gun, there is a high likelihood they will be legally justified in shooting you.” The National Rifle Association, a longtime ally of President Donald Trump, posted that Essayli’s remarks were “dangerous and wrong,” and called for a full investigation rather than “making generalizations and demonizing law-abiding citizens.” Aidan Johnston, the director of federal affairs for Gun Owners of America, called Essayli’s remarks “absolutely unacceptable.” “Federal prosecutors should know better than to comment on a situation when he didn’t know all the facts, to make a judgment in a case like this, and then also, just to make a blanket statement, threatening gun owners in that way,” Johnston said Monday. It’s not the first time Trump and the gun lobby have tangled since he returned to office. In September, gun rights advocates were shocked by reports that the administration was looking into a gun ban for transgender Americans. During Trump’s first term, his administration issued a regulation to ban bump stocks, but the Supreme Court ultimately blocked the rule in 2024. There are still conflicting accounts surrounding Saturday’s shooting — including whether Pretti’s hand at any point during the incident was near his gun. Video verified and analyzed by several media outlets, including the New York Times, show the item Pretti appeared to be holding was a phone he was using to film the scene before he attempted to help a woman who had been pushed to the ground by Border Patrol agents. According to a Washington Post analysis of video footage, federal agents appear to have secured Pretti’s gun moments before an agent shot the 37-year-old ICU nurse, who was also a U.S. citizen. “We can all see what is on video,” said Minnesota Gun Owners Caucus chair Bryan Strawser, arguing statements from Trump’s officials have not lined up with footage of the event. Strawser hoped the incident would help Democrats understand the importance of gun ownership. “If it has helped move the needle and helped individual folks realize that they should be protecting this right, I think that’s a good thing,” he said. “I think the more political-minded part of my brain would say, ‘are they just using this for their own political purposes and this isn’t going to change their position at all?’ I think time will tell as to where that goes.” California Democratic Gov. Gavin Newsom — who became a gun owner last year — responded on X to Noem’s remarks: “The Trump administration does not believe in the 2nd Amendment. Good to know.” Rep. Dave Min (D-Calif.) and former Rep. Mary Peltola (D-Alaska) also used the moment to highlight the right to carry. “Joining the gun lobby to condemn Bill Essayli was not on my bingo card but here we are,” Min said on X. “Lawfully carrying a firearm is not grounds for being killed.” Brown argued it was Newsom and Democrats who were being hypocritical, pointing to Newsom’s longtime support for more gun control. “The irony is thick,” he said. Jacob Wendler contributed to this report.

BRUSSELS — The European Commission on Wednesday unveiled a €90 billion loan to Ukraine aimed at saving it from financial collapse as it continues to battle Russia while aid from the U.S. dries up. About one-third of the cash will be used for normal budget expenditures and the rest will go to defense — although countries still need to formally agree to what extent Ukraine can use the money to buy weapons from outside the EU. A Commission proposal gives EU defense firms preferential treatment but allows Ukraine to buy foreign weapons if they aren’t immediately available in Europe. While the loan is interest-free for Ukraine, it is forecast to cost EU taxpayers between €3 billion and €4 billion a year in borrowing costs from 2028. The EU had to resort to the loan after an earlier effort to use sanctioned Russian frozen assets ran into opposition from Belgium. The race is now on for EU lawmakers to agree on a final legal text that’ll pave the way for disbursements in April, when Ukraine’s war chest runs out. Meetings between EU treasury and defense officials are already planned for Friday. The European Parliament could fast-track the loan as early as next week. The financing package is also crucial for unlocking additional loans to Ukraine from the International Monetary Fund. The Washington-based Fund wants to ensure Kyiv’s finances aren’t overstretched, as the war enters its fifth year next month. The €90 billion will be paid out over the next two years, as Moscow shows no sign of slowing down its offensive on Ukraine despite U.S.-led efforts to agree on a ceasefire. “Russia shows no sign of abating, no sign of remorse, no sign of seeking peace,” Commission President Ursula von der Leyen told reporters after presenting the proposal. “We all want peace for Ukraine, and for that, Ukraine must be in a position of strength.” When EU leaders agreed on the loan, Ukrainian President Volodymyr Zelenskyy called the deal an “unprecedented decision, and it will also have an impact on the peace negotiations.” Adding to the pressure on the EU, the U.S. under President Donald Trump has halted new military and financial aid to Ukraine, leaving it up to Europe to ensure Kyiv can continue fighting. Once the legal text is agreed, the EU will raise joint debt to finance the initiative, although the governments in the Czech Republic, Hungary and Slovakia said they will not participate in the funding drive.  The conditions on military spending are splitting EU countries. Paris is demanding strict rules to prevent money from flowing to U.S. weapons manufacturers, while Germany and other Northern European countries want to give Ukraine greater flexibility on how to spend the cash, pointing out that some key systems needed by Ukraine aren’t manufactured in Europe. MEETING HALFWAY The Commission has put forward a compromise proposal — seen by POLITICO. It gives preferential treatment to defense companies based in the EU, Ukraine and neighboring countries, including Norway, Iceland and Liechtenstein, but doesn’t rule out purchases from abroad. To keep the Northern European capitals happy, the Commission’s proposal allows Ukraine to buy specialized weapons produced outside the EU if they are vital for Kyiv’s defense against Russian forces. These include the U.S. Patriot long-range missile and air defense systems. The rules could be bent further in cases “where there is an urgent need for a given defense product” that can’t be delivered quickly from within Europe. Weapons aren’t considered European if more than 35 percent of their parts come from outside the continent, according to the draft. That’s in line with previous EU defense-financing initiatives, such as the €150 billion SAFE loans-for-weapons program. Two other legal texts are included in the legislative package. One proposes using the upper borrowing limit in the current budget to guarantee the loan. The other is designed to tweak the Ukraine Facility, a 2023 initiative that governs the bloc’s long-term financial support to Kyiv. The Commission will also create a new money pot to cover the borrowing costs before the new EU budget enters into force in 2028. RUSSIAN COLLATERAL Ukraine only has to repay the €90 billion loan if it receives post-war reparations from Russia — an unlikely scenario. If this doesn’t happen, the EU has left the door open to tapping frozen Russian state assets across the bloc to pay itself back. Belgium’s steadfast opposition to leveraging the frozen assets, most of which are based in the Brussels-based financial depository Euroclear, promises to make that negotiation difficult. However, the Commission can indefinitely roll over its debt by issuing eurobonds until it finds the necessary means to pay off the loan. The goal is to ensure Ukraine isn’t left holding the bill. “The Union reserves its right to use the cash balances from immobilized Russian assets held in the EU to repay the Ukraine Support Loan,” Economy Commissioner Valdis Dombrovskis said alongside von der Leyen. “Supporting Ukraine is a litmus test for Europe. The outcome of Russia’s brutal war of aggression against Ukraine will determine Europe’s future.” Jacopo Barigazzi contributed to this report from Brussels.

The Central Bank of the Russia Federation lowered its key interest rate today and slashed its growth forecast for 2025 as the country’s economy is battered by a combination of high inflation and wide-ranging Western sanctions. The move comes after the U.S. imposed sanctions on two of its major oil suppliers, Rosneft and Lukoil. Oil and gas account for around a fifth of Russia’s gross domestic product (GDP). The bank updated its outlook, forecasting that the economy would grow by between 0.5 to 1 percent in 2025, down from 1 to 2 percent earlier. It also lowered its key interest rate by 0.5 percentage points, to 16.5 percent, despite forecasting an uptick in inflation next year, to between 4 to 5 percent. It’s unusual for a central bank to lower its policy rate while revising its inflation outlook upward, since lower rates are usually linked to higher inflation, and central banks are tasked with maintaining price stability. However, the combination of managing escalating foreign sanctions on the economy, together with the need to maintain a high level of industrial output to produce the armaments necessary to prolong its war on Ukraine, has put the bank’s governor, Elvira Nabiullina, in a tough spot. Ukraine’s ongoing drone campaign aimed at crippling Russia’s oil refineries has heaped further pressure on the country’s economic output. On Thursday, Herman Gref, who heads Russia’s largest lender Sberbank, said that it had been a mistake to focus too much on inflation at the expense of economic growth. In its statement, the central bank said that it sees inflationary pressures increasing in the medium term, as tax hikes, trade disruption and fluctuations in the oil price all bite. “Geopolitical tensions remain a significant uncertainty factor,” it said.

Liam Byrne is chair of the Business & Trade Committee and a member of the U.K. Parliament. U.S. President Donald Trump’s state visit to the U.K. is no mere pageant. It is a test of whether Britain and America can enlarge the future, or if they will remain trapped in a tariff battle that serves neither party well. It was former Prime Minister Winston Churchill who warned in 1940:“If we open a quarrel between the past and the present, we shall find that we have lost the future.” This week, we must convince Trump that for all his unhappiness with America’s trade deals of yesterday, the future is the greater prize — and by working together, our countries can build a deeper partnership that helps keep the West safer, stronger and richer at a pivotal moment in world history. Prime Minister Keir Starmer did extremely well to ensure Britain was the first to strike the new “General Terms of an Economic Prosperity Deal” with the U.S. But we have to be honest: We’re now trading with our largest trading partner on terms that are worse than those we enjoyed before Trump took office. Industry called it “the best deal we could have hoped for under the circumstances.” But that phrase tells its own story. It means the best under duress, relief without permanence, and access on terms that, in some cases, are less favorable than those granted to our European neighbors. Even worse, uncertainty still gnaws at the future of our critical industries. Steel, aluminum and pharmaceuticals — all industries facing endless reviews — can’t plan investment against the specter of renewed tariffs. Boardrooms are hesitating; investors are holding back; jobs are hanging in the balance; and without clarity, capital may well migrate to safer harbors. This is why this deal can’t stop where it stands. It must be driven forward toward strategic alignment and commercial certainty during this state visit. The stakes are too high to deliver anything less — as was all too clear when Chinese President Xi Jinping gathered 20 world leaders to witness an extraordinary display of military and technology leadership in Tiananmen Square recently. We know that behind the tanks, troops, drones and hypersonic weaponry lies an invisible, formidable dark arsenal of AI capabilities — the armaments of tomorrow. With stagecraft, steel and silicon, China is making its claim to leadership clear. And unless Britain and America act, the commanding heights of the global economy will tilt East. This is the backdrop against which Trump’s visit must deliver. It is the moment to pivot from paper promises to strategic purpose and a binding bargain.   This new partnership has to be about more than tariffs. It must be about technology. As former Google CEO Eric Schmidt once said: “Technology is the power in superpower.” Britain and America have the building blocks for a formidable technology alliance: The U.S. boasts the world’s largest tech firms, deepest venture markets and broadest innovation ecosystem. Meanwhile, Britain is home to Europe’s most dynamic AI cluster, a world-leading life sciences base, universities of global caliber and the City of London’s unrivaled capital markets. Prime Minister Keir Starmer did extremely well to ensure Britain was the first to strike the new “General Terms of an Economic Prosperity Deal” with the U.S. | Andrew Harnik/Getty Images Alone, each is strong. Together, they could set the standards of the century. Therefore, the task in London this week is two-fold: First, enlarge the future. That means binding our nations around joint missions in AI, clean energy, biotech and digital trade. It means creating shared standards for data, procurement, labor and regulation. It means linking our research, finance and industrial capacity, so that when the world writes its rules, it is our rules — and our values — that prevail. Second, we must harness the promise of tomorrow to tackle the perils of protectionism today. Britain should press Trump to grant it the same terms as the EU in order to end the tariff uncertainty that still confronts our key industries, and provide the predictability investors require. Tariff relief alone isn’t enough; what matters is tariff parity — and the confidence it can unlock. So, let us be clear. This visit isn’t about gilded dinners or ceremonial splendor — though that is what will capture the media’s attention. Rather, it is about whether Britain and America can summon the imagination to expand the future and the discipline to settle the past. If we succeed, we’ll not only close the tariff gap but anchor Western leadership in the technologies that matter most. The lesson from history couldn’t be clearer: If we don’t shape the future, others will. And if technology is, indeed, “the power in superpower,” then only a U.S.-U.K. bargain, forged during this state visit, can safeguard Western leadership through tomorrow.

PARIS — France’s prime minister is likely to be ousted — again — and political turmoil risks delaying the country’s pledge to boost defense spending, amid increasing worry about the Russia threat and Donald Trump’s commitment to European security. If French lawmakers topple François Bayrou on Monday as expected, the overall direction of higher military spending will be slowed, but it’s not likely to be scrapped. However, the country’s focus on its domestic troubles comes in sharp contrast with French President Emmanuel Macron’s push for leadership on the global stage. On Thursday, he co-chairs alongside U.K. Prime Minister Keir Starmer a meeting of the so-called coalition of the willing, a group of countries working on security guarantees for Ukraine in case of a ceasefire with Russia. “There is a huge gap between the international context, which is still very bad with the war in Ukraine, and the internal French situation which seems disconnected from these issues,” said Guillaume Lagane, an expert on defense policy and a teacher at the Sciences Po public research university. “There is a strategic signaling problem; we are not conveying the right message to our adversaries and allies,” he stressed, adding: “Our allies are moving forward [with their military buildup], and we’re not.” If Bayrou is voted out next week, it’ll be the second time in less than a year that a French prime minister is toppled by the National Assembly, after Michel Barnier’s fall in December. “Once again, there is uncertainty,” conceded French Armed Forces Minister Sébastien Lecornu last week when asked about the impact of Monday’s vote on the country’s military ramp-up. Lecornu is one of the front-runners to replace Bayrou should he be ousted. NEW MILITARY PLANNING LAW In July, Macron promised that France would boost defense spending to €64 billion in 2027. His pledge came a few weeks after NATO allies committed to boost defense spending to 5 percent of gross domestic product, including 3.5 percent of GDP for purely military expenditures. That’s a sharp increase compared with the previous 2 percent target. The French president said the government would present to parliament in the fall an update of the seven-year military planning law to earmark the spending increases. That bill, which is not ready yet, is bound to be postponed if France has to change government or even go through another snap election — an option that remains on the table. “The defense budget increases announced by President Macron … [and] welcomed by a majority of the political class, remain dependent on a vote in parliament: they are therefore now uncertain,” said Bertrand de Cordoue, an adviser on defense and armament at the Jacques Delors Institute. There is broad agreement across France’s political spectrum that the country’s defense expenditure should increase and a change in prime minister is not likely to threaten that. According to Hélène Conway-Mouret, a Socialist senator who sits on the defense and foreign affairs committee, “no one will dare touch the [defense spending] commitments that have been made, because they are existential.” However, parliament, industry and military officials warned in conversations with POLITICO that precious time will inevitably be wasted. Defense companies will also be more reluctant to invest or make long-term plans before the political crisis is resolved, they said. This week, Lecornu embarked on a France-wide tour to visit defense companies despite the political crisis, in a bid to show that prep work for the updated military planning law continues regardless. But in French defense circles, there’s an awkward feeling of déjà vu. “Here we go again,” sighed a defense industry official, speaking on condition of being granted anonymity, summing up the mood among French arms-makers. The fall of Barnier’s government ultimately led to months of delays in orders and payments for military equipment. “The military has not forgotten that the Barnier government’s censorship messed up some of the weapons programs,” said a parliament official.

Israel killed Iran’s new wartime chief of staff in an airstrike just days after assassinating his predecessor, the IDF said Tuesday. Maj.-Gen. Ali Shademani, who led Iran’s Khatam al-Anbiya Central Headquarters, was described by the Israel Defense Forces as the country’s “most senior military commander” and a close confidant of Supreme Leader Ali Khamenei. His death is the latest in Israel’s Operation Rising Lion, which has targeted much of Iran’s top military leadership since launching Friday. Israel’s opening strikes killed Gen. Hossein Salami, commander of the Islamic Revolutionary Guard Corps, and Gen. Mohammad Bagheri, Iran’s armed forces chief of staff. While European calls for de-escalation of the conflict between Israel and Iran are largely falling flat, German MP Johann Wadephul, speaking from Oman on Monday, said Berlin is using its ties with both Israel and regional powers to push for diplomacy. “My hope and my efforts are that it will not be a prolonged war, but that we take the opportunity to enter into a negotiation phase,” he said. But he added that Iran must show “clear willingness to refrain from nuclear armament” if talks are to move forward. Speaking to ABC news on Monday, Israeli Prime Minister Benjamin Netanyahu argued that targeting Khamenei would end, not escalate, the ongoing conflict between the countries. “The ‘forever war’ is what Iran wants, and they’re bringing us to the brink of nuclear war. In fact, what Israel is doing is preventing this, bringing an end to this aggression, and we can only do so by standing up to the forces of evil,” he said. Explosions were reported Tuesday in Tel Aviv and Jerusalem, as Iranian state media claimed a new wave of missiles had been launched toward Israel. These were followed by a new round of Israeli airstrikes in western Iran, according to a military official. U.S. President Donald Trump issued an all-caps warning on social media Tuesday urging Iranians to evacuate Tehran — further stoking fears of regional escalation. “I’m not too much in a mood to negotiate,” Trump told reporters on Air Force One on Tuesday, adding he wanted “not a ceasefire, a real end” to the conflict. “Iran is the principal source of regional instability and terror. We have been consistently clear that Iran can never have a nuclear weapon,” a joint statement from G7 leaders, including the U.S., said Monday. Joe Stanley-Smith contributed to this report.

LONDON — The EU wants to work more closely with the U.K. on defense. That doesn’t mean the bloc is going to make it easy for the Brits. In London last week, European Commission President Ursula von der Leyen appeared alongside a smiling Keir Starmer to unveil a wide-ranging deal as part of the British leader’s mission to “reset” relations with the EU.  While much was made of extended access for EU fishing vessels to British waters and looser border controls, a heavily advertised security and defense pact contained fewer solid guarantees. The document declared that the “U.K. and the EU share a responsibility for the security of Europe” and pledged closer coordination on support for Ukraine as well as joined-up thinking on everything from ships to space rockets.  Only now can discussions begin on the separate prize of British participation in joint purchases as part of the EU’s €150 billion defense fund known as Security Action for Europe (SAFE), through which countries can borrow to buy military gear. The two sides will now prepare for yet more negotiations and an entirely separate agreement.  While von der Leyen raised hopes that a further deal could be reached “within weeks,” there are several hurdles to clear first, including some ill will from the U.K.’s adversaries in previous Brexit battles. Any expectation of an imminent deal already appears to be on shaky ground, according to multiple officials in London and Brussels who were granted anonymity to discuss ongoing talks. STICKING POINTS Ben Jones, a fellow in European foreign policy at King’s College London, described the partnership as “significant” but warned it was “long on principles and short on concrete commitments, particularly on the defense industrial side, and there will be plenty of hard bargaining to come.” The 27 EU nations have yet to agree a mandate for taking forward the next stage of talks, with governments divided over how much they should cooperate with external allies on procurement. Anne Fort, deputy head of cabinet for defense at the European Commission, told a defense conference in London Friday: “If we want the industry to be part of SAFE … we will also have to define a financial contribution that the U.K. will have to make.” The U.K. will also need to say whether it wants both big companies and smaller suppliers to be allowed to take part, she said. A second senior EU defense official confirmed that discussions would now center on the U.K.’s level of contributions to the SAFE budget, and a 35 percent cap applied to components produced outside the EU. In a more favorable outcome for London, the 35 percent limit could be varied in order to make it more attractive to participate in the program. If the EU takes a tougher line, the U.K. would not only have to accept the cap on parts, but its participation could be limited to project-specific borrowing. One diplomat from an EU country was adamant the fund should not be used by London to strengthen only U.K. companies, meaning that a way must be found for U.K. bids to help strengthen EU firms, as the deal should work both ways.   A British official said the U.K. wanted to “move swiftly” as soon as the EU had agreed a position. BREXIT WOUNDS That may not be easy. The terms offered to the U.K. have yet to be pinned down, partly because of splits within the EU over how Britain should be treated. A second EU diplomat said there was “undoubtedly” a generation of Brexit veterans from European countries who had been part of the Trade and Cooperation Agreement process “who don’t want to make life easy for the U.K.”  However, he added, others took “a more pragmatic approach” due to the “urgency of the moment,” with war in Ukraine and the U.S. pulling back from its role in defending Europe. French officials had emerged from the broader reset negotiations particularly pleased with their win on fishing rights, said one former French diplomat, and would now “push to limit access” to the EU defense fund. Despite the hurdles ahead, both sides are optimistic of finding a way forward — with profit and principles at stake.  France is widely seen as one of Britain’s harshest interlocutors, yet many French companies have supply chains which run through the U.K., and the largest French arms producer, BAE Systems, is based in London. Expanding SAFE would also represent a concrete piece of action to match the warm words offered by the EU and the U.K. on bolstering their military capabilities and demonstrating their resolve to Russia’s Vladimir Putin. Andy Start, the U.K.’s national armaments director, said: “We have to get real … There is not sufficient engineering effort or money or resources for us to be able to compete with the likes of China unless we do it together.” For now, the will to strike a deal remains much clearer than how to do so. Jacopo Barigazzi in Brussels and Clea Caulcutt in Paris contributed to this report.

Spain will back out of a contract to purchase Israeli arms, a government official said Thursday, in a bid to quell the backlash that nearly split the country’s coalition government. After the Spanish press revealed that Madrid had ordered 15 million bullets from an Israeli military firm last fall, Prime Minister Pedro Sánchez announced the €6.6 million contract would be nixed. Spain is one of the most outspoken European critics of Israel’s military operations in Gaza and has maintained an embargo on the purchase or sale of weapons from and to the country since 2023. But on Wednesday the Cadena Ser radio network revealed that the controversial contract to acquire millions of rounds of 9 mm ammunition had not been canceled after all. Although Spain’s Ministry of Interior, which is purchasing the bullets to outfit the country’s Civil Guard police force, moved to cancel the order, its legal experts ultimately concluded that the deal could not be annulled without causing substantial legal and financial strife. The news set off a firestorm of criticism within Sánchez’s left-wing coalition government, with Labor Minister Yolanda Díaz, who heads junior coalition partner Sumar, demanding the situation be “rectified immediately.” Antonio Maíllo, general coordinator of the United Left party within the Sumar group, called it the “biggest crisis” the executive had faced since taking office in 2023. Faced with the threat that Sumar could abandon the five seats it controls within the Council of Ministers, Sánchez moved to settle the issue quickly. A Spanish government official granted anonymity to discuss the politically sensitive issue told POLITICO on Thursday that after trying all other avenues to get out of the deal, the contract would be “unilaterally” terminated. The rounds of ammunition would be blocked from importation for reasons of “public interest,” the official said, adding Spain would not buy or sell arms to Israel in the future and that the government was looking into what legal action could ensue. Given the unilateral nature of the contract’s annulment, it is possible that Madrid may have to pay the full amount for which it agreed to purchase the bullets, regardless of whether it receives any of them. Although the Spanish government maintains that it does not acquire Israeli armaments, other deals appear to have been signed since 2023. A spokesperson told POLITICO that the contracts are for essential weapons systems that are either exclusively produced by Israeli firms, or contain components that are only manufactured in Israel. Spain’s government was already in turmoil over Sánchez’s announcement earlier this week that Madrid would hike defense spending to 2 percent of gross domestic product this year, triggering an outcry from Sumar and the government’s left-wing allies in the country’s parliament. The governing coalition’s junior partner is concerned about the possibility that increased military expenditures could come at the cost of Spain’s expansive welfare system, and it has also expressed its opposition to the country’s “militarization.” Sánchez insists that Spain remains a “pacifist” country, and that the investments are meant to “deter those who might think of attacking Europe.” The ammunition contract crisis is personally embarrassing for the prime minister, who last year assured lawmakers that Spain had not purchased or sold weapons to Israel since 2023. He is likely to be challenged on those statements when he next appears in the country’s parliament, while simultaneously being attacked by right-wing parties for failing to secure needed ammunition for domestic security forces.

President Donald Trump has spent the first three months of his second term imposing his will on the rest of the globe, telling long-time allies that they “don’t have the cards.” But in capitals across Europe and elsewhere, debates are raging over the hands they could play. Proposals under consideration range from minor irritants to extreme actions that could sever defense and economic relationships that have cemented alliances for nearly a century. Those include finding alternative suppliers of military equipment and munitions from U.S.-based defense contractors, enacting stronger counter-tariffs, rolling back intellectual property protections for U.S. companies and lessening their reliance on American tech giants, according to conversations with more than two dozen government officials in Europe and Canada, many of whom were granted anonymity to describe high-level discussions they’re not authorized to speak about publicly. “There’s a change in mindset. We’ve moved on from seduction to strategy,” one EU diplomat said about dealing with Trump. “We’ll take decisions to protect ourselves.” The diplomat added: “We need to strike a path that works without Washington.” Less than three months into Trump’s term, his pursuit of a transactional, mercantilist and imperialist foreign policy has rattled leaders across the globe. It started with the president’s persistence in talking about annexing Canada and Greenland, his eagerness to end the war in Ukraine largely on Russia’s terms and Vice President JD Vance’s caustic comments describing Europe as freeloaders. But Trump’s market-cratering move this month to impose massive tariffs on nearly all U.S. trading partners — based on a formula scores of economists found bizarre — caused many longtime allies to shed any last remnants of magical thinking that they could manage or contain this predictably unpredictable American president as they did during his first term. Leaders from London to Warsaw, Helsinki to Rome, are continuing efforts to de-escalate and maintain productive relationships with Washington — while considering how to “de-risk” by protecting themselves from Trump’s havoc. Their initial moves could be the first cracks in a dam that could break wide open, unleashing a torrent of increasingly punitive actions that, ultimately, could unravel a transatlantic alliance that has tied America to Europe for eight decades and refashion the global order. The White House, however, downplayed the potential for a rift, asserting that Trump’s efforts to end the war in Ukraine — which he has undertaken with little input from NATO allies — are aimed at making Europe more secure, even though many of the continent’s leaders fear that any potential concessions to Russian President Vladimir Putin will make their collective security even more precarious. “The President has led in an effort to bring the biggest conflict since WWII in Europe to a peaceful resolution, and he is helping restore international shipping lanes in the Red Sea that will also benefit European markets,” said national security council spokesperson Brian Hughes. “We will continue to work with our European allies on ways to improve security cooperation — be that through foreign military sales, encouraging our allies to increase their defense budgets, and holding our adversaries like the Houthis accountable.” Of course, private Signal messages during the attack on the Houthis laid bare how some of the president’s most senior aides view Europe as “free-loading,” with Vance lamenting that he “hated” bailing the continent out. Trump officials “seem to think Europe is this dying continent that has no future and is not capable of independent action, that Russia is the more formidable power,” said Minna Ålander, a fellow on transatlantic defense and security at the Center for European Policy Analysis. “They may soon find out that the opposite is true.” SHIFTING DEFENSE DOLLARS AWAY FROM AMERICA Few countries across Europe are more indebted or unconditionally loyal to the U.S. than Poland. And yet, posters are now showing up around Warsaw merging two silhouettes: Putin and Trump. It’s an indication of the extent to which two months of direct threats and challenges from Washington are rapidly changing public opinion — and the private calculations of government officials — in Warsaw and in other European capitals. Trump has been pushing NATO members to increase their spending on defense, saying that the alliance’s requirement that nations allocate 2 percent of GDP should be raised to 5 percent. But the result of his pressure may well be that NATO allies shift their defense investments away from American contracts, shrinking a lucrative financial arrangement upon which the U.S. relies. Poland, which borders Ukraine and Russia-aligned Belarus, is already spending 4.7 percent of its GDP on defense, the most of any NATO member. And it buys more American defense equipment than any other country in the world. Trump and Defense Secretary Pete Hegseth have praised Poland as an exemplary ally. But Warsaw is reconsidering that partnership. Prime Minister Donald Tusk has ruled out the cancellation of any existing contracts, but there are qualms in Warsaw about entering new ones. “Confidence in the USA has been severely shaken,” said Pawel Kowal, the Ukraine envoy in Tusk’s office. “I don’t think we will be placing any more major orders with the American arms industry for the time being after analyzing our experiences with what is happening now.” That’s no small statement given how much Poland’s procurement of American defense equipment, Kowal added, has helped to solidify relations with Washington, and the Trump administration in particular. Poland plans to spend $47.1 billion on defense in 2025, more than half of which will go to U.S. contractors. But Kowal says Poland now needs “to diversify our arms purchases” and “to buy in Europe or rely more on our own Polish arms industry.” Cezary Tomczyk, Poland’s deputy defense minister, said that maintaining strong ties to the U.S. remains important, noting that Trump has encouraged Europe to be more self-reliant and saying investing more in production in Poland is part of that. But Tomczyk offered a word of caution, noting that the U.S. has tangible interests in Poland as well. “If the U.S. alienates Poland, it would not be good for the U.S.,” he said. As Trump prepared to take office for the second time, European leaders strategized that they could keep him engaged with NATO by meeting his demand that they increase defense spending with commitments to direct most of their outlays to American companies. Now, they’re moving in the opposite direction. “Europe is now going to heavily increase its investments to defense. And it will be very logical that Europe is turning this money to its own economy,” said Estonian Foreign Minister Margus Tsahkna, who also referred to the sudden questions about the reliability of American-made weapons systems that arose after Trump abruptly halted defense aid to and intelligence sharing with Ukraine in March. “There must be a political trust that if you buy something, you must be sure that you can use them as well.” Many of the countries determined to boost defense spending are loath to invest in America’s defense industrial base — and newly aware that placating Trump isn’t as simple as it was during his first term. “In previous years, under Trump 1.0 and even afterward, we said, yes, we can appease him. He wants to make deals, he wants us to go on a big shopping spree from him: Buy F-35s, Patriots, liquified natural gas and all sorts of other things … and then he’ll be appeased,” said Peter Beyer, a member of Germany’s Bundestag from the conservative Christian Democrats, the party expected to lead Germany’s incoming government. “I think that’s a much too simplistic calculation. It all doesn’t add up, at least not today. It won’t work.” Trump’s willingness to use U.S.-controlled weapons systems as leverage over Ukraine in the midst of a war has given rise to new worries. Canada, Portugal, Denmark and Germany have publicly expressed reservations about continuing to purchase F-35 fighter jets from the U.S. given that Trump, in the event of a political disagreement, could block access to spare parts and software upgrades needed to keep the aircraft flying and combat-ready. German Defense Minister Boris Pistorius has asserted that Berlin will continue to honor its F-35 contracts, calling the U.S. “an important ally for us.” But he has also made clear that’s at least partly due to a lack of other options when it comes to upgrading a current fleet that is about to age out. Beyer, a former transatlantic coordinator for the German government, said that even if concerns about an F-35 “kill switch” aren’t reality-based, it would be “daft” for Berlin to continue relying so heavily on America’s security backing given the administration’s approach. “If we purchase weapons systems, be it Patriot, F-35 or whatever, Lockheed Martin, Northrop Grumman, Raytheon, we have to be aware that it’s like a Damocles sword that a shutdown could occur,” Beyer said. “This thought is now there in people’s minds, also in connection with Starlink, Elon Musk and the data for Ukraine — this discussion is in full swing.” Given that Europe is so integrated into America’s defense industrial base after decades of procurement, finding European alternatives to U.S. systems won’t happen overnight. But even the U.S.-made Patriot system has its challengers. The French-Italian SAMP/T, which takes only two years to produce, is now going through upgrades to put its range on par with Patriots. And confidence about it being a viable alternative has grown after its widespread usage by Ukraine over the last few years. TAKING COUNTER-TARIFFS TO THE EXTREME On April 2, Trump levied 20 percent tariffs on the EU as part of a sweeping policy shift aimed at erasing trade deficits, only to abruptly hit the pause button less than a week later to halt a global economic panic that was starting to affect even America’s bond market. Even if the detente holds, allies still reeling from the whiplash still face a new reality of chronic uncertainty. Hours before Trump announced he was pausing all tariffs except those on China, the EU voted to hit back with counter-tariffs on nearly €21 billion of U.S. products — soybeans, motorcycles and orange juice — but stopped short of retaliating on the 20 percent “reciprocal” tariff Trump had imposed on all EU exports to the U.S. “Right now, Europe is focusing on customs duties in response to the duties announced by the U.S., and we aren’t looking for escalation. We don’t want to fuel confrontation, but we do want to be very clear,” one senior European diplomat said. The EU quickly put its retaliatory measures on hold after Trump announced his 90-day pause. But if the tit-for-tat on trade ratchets back up, Europe could go even further. There has been some talk already about deploying the EU’s Anti-Coercion Instrument, adopted in 2023 in response to China’s attempted political blackmailing of Lithuania over its position on Taiwan. The ACI, dubbed by some EU officials the “bazooka,” sets out a step-by-step procedure if and when coercion is identified, starting with talks with the country involved to determine the best way to resolve the matter. If the economic coercion continues, the EU is then empowered to ratchet up its response with countermeasures ranging from tariffs increases and exclusion from public procurement to restrictions on intellectual property rights protection. Although Trump’s initial rationale for the tariffs — boosting American manufacturing — is not ostensibly coercive, the EU Commission is considering and discussing with member states whether the ACI could be a weapon in a prolonged trade war with the U.S., according to one EU official. “It has been discussed at the European Commission level, but it’s really the nuclear option,” the European official said. “It was devised against a systemic rival [China]. You start hitting data, services, it’s a lot more imposing, you really are widening the scope. The decision is not taken, but it’s been more than just mentioned at the Commission, it’s being discussed as a possibility.” There is hope that such a move won’t be necessary. “The brake [on Trump] could well come from the markets,” another senior European diplomat said. “Europe is not defenseless.” TARGETING SPECIFIC PRODUCTS Some countries — and their citizens — are also looking at how to hit back at individual companies or industries to cause pain or grab headlines in the United States. Some EU governments are considering weaponizing agricultural and environmental standards to discriminate against American products. They could ban specific products from certain Trump-supporting states, like Kentucky bourbon or Florida orange juice. As boycotts of Tesla have already shown — European sales were down 45 percent in January — public sentiment alone could drive people to stop buying American products on their own. Across the continent, Facebook groups devoted to organizing boycotts of American products have amassed tens of thousands of followers. In Denmark, a survey showed that roughly half the population has avoided buying American products since Trump’s inauguration. And the country’s largest grocery store operator now marks whether products sold are from European companies on its electronic price tags. There’s also tourism. Canada is among a handful of countries that have issued advisories warning about traveling to the U.S., going as far as to ask citizens to “reconsider” visiting the States. Passenger bookings on airline routes between the U.S. and Canada are down 70 percent compared to the same period a year ago, a shift that industry analysts believe will cost $2 billion in lost travel and business revenue. Similarly, travel from Europe to the U.S. has dropped by 35 percent in the last two months. If Trump imposes tariffs he is weighing on pharmaceuticals coming into the country, the EU might decide to add export controls on top of that — making Americans pay even more for popular drugs like Ozempic, Novo Nordisk’s obesity and diabetes drug, which is largely produced in Denmark. DISRUPTING SUPPLY CHAINS Some countries are also looking at ways to limit — or make more costly — essential products or services the U.S. depends on. The EU could impose export tariffs on EU-produced machinery, electrical equipment or pharmaceuticals — creating immediate price pressure on U.S. supply chains. That would come at a high cost for European countries, but some officials and analysts aren’t ruling it out. “Europe can have some chokepoints vis à vis America. Europe trades in machinery and optical equipment, we can effect a standstill of American production,” Swedish economist Fredrik Erixon said. “These products are not easily substitutable.” For instance, Europe could impose export controls on products made by Dutch company ASML, the world’s biggest provider of photolithography machines which are used to produce computer chips. This would force U.S. manufacturers that use ASML technology — American consumers — to pay more. Other choke points could be highly advanced technology products made by Nokia and Ericsson that are essential to network operators. Erixon described such moves as “the nuclear option” in a transatlantic trade war, given how intertwined their supply chains are. But, he said, “America is in a predicament because it wants to impose general tariffs, whereas the EU has the possibility of rearranging trade flows.” Some European companies have taken to disrupting supply lines on their own. A Norwegian fuel supplier refused to refuel the U.S. Navy warships and submarines after Trump and Vance berated Ukraine’s president in the Oval Office. It was an isolated incident, but illuminated how much American interests rely on and benefit from strong alliances — and what stands to be lost if relationships deteriorate. And allies closer to home have other levers to pull. Canada supplied 27,220,531 megawatt hours of electricity to the U.S. last year, not to mention 59 percent of the crude oil America imports — a point of leverage, some leaders have noted, in the event of a protracted trade war. The premier of Canada’s largest province threatened last month to shut off the electricity that powers much of New England the Great Lakes states, vowing that Americans “need to feel the pain” from Trump’s trade war. At the same time, the premier of Nova Scotia said American companies would no longer be able to bid on provincial procurement contracts and could see their existing contracts canceled, remarking that “some people need to touch the hot stove to learn.” STICKING IT TO SILICON VALLEY Musk’s involvement with the Department of Government Efficiency and the presence of a raft of tech CEOs at Trump’s inauguration have highlighted the extent to which U.S. tech leaders are increasingly in league with Trump. The EU had already been in the lead on regulating tech companies and attempting to curb the spread of misinformation on privately owned platforms like Musk’s X. But there had been a sense of wanting to work together with the U.S. on policies and standards. That’s changing. In the Netherlands, lawmakers last month approved funding for a new Dutch-controlled cloud services platform to reduce the country’s reliance on U.S. tech companies. That followed a call from then-Belgian Prime Minister Alexander De Croo for the EU to “take action” in response to Musk’s involvement in recent European elections where he advocated for far-right candidates. The EU has been investigating X, the social media platform Musk owns, for nearly a year and a half over suspected breaches of Europe’s Digital Services Act, which requires platforms with over 45 million monthly users to comply with a raft of stringent rules designed to keep users safe and curb the spread of illegal, harmful content. Cutting against the grain, Britain is considering a cut to the digital services tax levied on tech giants, although the optics of doing so would be extremely uncomfortable at a time when the government is also drawing up plans to reduce welfare payments for disabled people. In a sign of how countries can leverage their own tech markets and companies that are important to the U.S., China is harnessing its control over TikTok’s future in the U.S. Trump has been forced to delay the enforcement of a law requiring that TikTok find a new owner in the U.S. or be banned over security concerns. That’s because Beijing, upset about being hit with additional tariffs, scuttled a tentative deal giving a group of American investors a 50 percent stake in the company. GOING IT ALONE Whether allies in Europe or the Americas end up implementing some of the more aggressive responses they’re now discussing, Trump’s unilateral approach and disregard for the interwoven economic and security interests at the core of longstanding alliances has heightened the urgency of lessening their dependence on Washington. No one put it in more stark terms than Canada’s new prime minister, Mark Carney, responding to Trump’s tariffs: “The old relationship we had with the United States, based on deepening integration of our economies and tight security and military cooperation, is over,” he said in late March. Increasingly, Europe’s sudden seriousness about defense spending isn’t driven by the idea that placating Trump will help maintain American hard power as a backstop for the continent’s defense — but by the realization that in many ways Europe is already on its own. That’s a message Hegseth and Vance have conveyed directly both in private meetings and public statements. Following his election two months ago, Germany’s new chancellor, Friedrich Merz, declared his top priority to be strengthening Europe to “achieve independence from the USA,” lamenting that Trump has made clear that “the Americans … are largely indifferent to the fate of Europe.” To that end, Merz succeeded in winning the Bundeswehr’s approval to skirt Germany’s “debt brake” and dramatically boost defense spending, a striking about-face for a country that has been wary of greater militarization since the end of World War II. And as more countries follow suit, there is growing interest in forming new coalitions. Several countries in Europe’s north and east appear interested in joining the six-member Organisation for Joint Armament Cooperation, or OCCAR, which manages armament programs on behalf of France, Germany, Italy, Spain, the United Kingdom and Belgium. Denmark, which has long contributed more to NATO defenses than many larger member countries, has joined the European Sky Shield Initiative to create a multi-layered air defense system in Europe. “In three to five years, we need to be totally able to defend ourselves in Europe,” Danish Prime Minister Mette Frederiksen told POLITICO last month. Similarly on the trade front, allies are eager to insulate themselves from Trump’s erratic approach by replacing trade with the U.S. with new partners. French Trade Minister Laurent Saint-Martin said last month that Paris was suddenly rethinking its opposition to a massive EU trade pact with several South American nations, calling on leaders in Brussels to address French concerns so that the “Mercosur” deal could be finalized. Trump’s “Liberation Day” announcement, Saint-Martin said, was “a wake-up call.” After Trump’s reversal on tariffs left China as his primary target under an increased 145 percent tariff, Beijing opened negotiations with the EU to abolish the bloc’s tariffs on imported vehicles from China. Those discussions, if successful, could dramatically reduce the volume of American-made vehicles sold in the European market. In the long run, Trump’s belief that he has better cards could weaken America’s hand, reducing its leverage over longtime allies once they’re more independent from Washington. “We need to take advantage of the crisis with the U.S., to rebuild our economic, defense and energy sovereignty,” said a former French minister. “And we need to carry on hitting back.” This text is a collaboration of the Axel Springer Global Reporters Network. Eli Stokols reported from Washington, WELT’s Philipp Fritz reported from Warsaw, Clea Caulcutt reported from Paris and Emily Schultheis reported from Los Angeles. Nicholas Vinocur in Brussels and Esther Webber in London contributed to this report.