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 head of the U.S. oil industry’s top lobbying group said Tuesday that American producers are prepared to be a “stabilizing force” in Iran if the regime there falls — even as they remain skeptical about returning to Venezuela after the capture of leader Nicolás Maduro. “This is good news for the Iranian people — they’re taking freedom into their own hands,” American Petroleum Institute President Mike Sommers said of the mass protests that have embroiled Iran in recent days. President Donald Trump is said to be weighing his options for potential actions against the Iranian government in response to its violent crackdown on the protests. “Our industry is committed to being a stabilizing force in Iran if they decide to overturn the regime,” Sommers told reporters following API’s annual State of American Energy event in Washington. “It’s an important oil play in the world, about the sixth-largest producer now — they could absolutely do more,” he said of the country. Iran’s oil industry, despite being ravaged by years of U.S. sanctions, is still considered to be structurally sound, unlike that of Venezuela’s. In order for companies to return to Venezuela, on the other hand, they will need long-term investment certainty, operational security and rule of law — all of which will take significant time, Sommers said. “If they get those three big things right, I think there will be investment going to Venezuela,” he said. Background: Experts who spoke earlier from the stage at API’s event also underscored the differences between Iran and Venezuela, whose oil infrastructure has deteriorated under years of neglect from the socialist regime. “Iran was able to add production under the weight of the most aggressive sanctions the U.S. could possibly deploy,” said Kevin Book, managing director at the energy research firm ClearView Energy Partners. “Imagine what they could do with Western engineering.” Bob McNally, a former national security and energy adviser to President George W. Bush who now leads the energy and geopolitics consulting firm Rapidan Energy Group, said the prospects for growing Iran’s oil production are “completely different” from Venezuela’s. “You can imagine our industry going back there — we would get a lot more oil, a lot sooner than we will out of Venezuela,” McNally said. “That’s more conventional oil right near infrastructure, and gas as well.” No equity stakes: Sommers told reporters that API would oppose any efforts by the Trump administration to take a stake in oil companies that invest in Venezuela. The administration has taken direct equity stakes in a range of U.S. companies in a bid to boost the growth of sectors it sees as a geopolitical priority, such as semiconductor manufacturing and critical minerals. “We would be opposed to the United States government taking a stake in any American oil and gas companies, period,” Sommers said. “We’d have to know a little bit more about what the administration is proposing in terms of stake in [Venezuelan state-owned oil company] PdVSA, but we’re not for the nationalization of oil companies or for there to be a national oil company in the United States.”

BRUSSELS — Germany and the Netherlands are at odds with France in seeking to ensure Kyiv will be able buy U.S. weapons using the EU’s €90 billion loan to Ukraine. EU countries agreed the crucial lifeline to Kyiv at a European Council summit in December, but the capitals will still have to negotiate the formal conditions of that financing after a European Commission proposal on Wednesday. This sets up tense negotiations with Paris, which is leading a rearguard push to prevent money flowing to Washington amid a growing rift in the transatlantic alliance. French President Emmanuel Macron is keen to give preferential treatment to EU military companies to strengthen the bloc’s defense industry — even if that means Kyiv can’t immediately buy what it needs to keep Russian forces at bay. A majority of countries, led by governments in Berlin and The Hague, respond that Kyiv must have more leeway in how it spends the EU’s financial package to help fund its defense, according to position papers seen by POLITICO. These frictions are coming to a head after years of debate over whether to include Washington in EU defense purchasing programs. Divisions have only worsened since U.S. President Donald Trump’s administration threatened a military takeover of Greenland. Critics retort France’s push to introduce a strict “Buy European” clause would tie Kyiv’s hands and limit its ability to defend itself against Russia. “Ukraine also urgently requires equipment produced by third countries, notably U.S.-produced air defense systems and interceptors, F-16 ammunition and spare parts and deep-strike capacities,” the Dutch government wrote in a letter to other EU countries seen by POLITICO. While most countries including Germany and the Netherlands support a general “Buy European” clause, only Greece and Cyprus — which currently maintains a neutral stance as it is chairing talks under its rotating presidency of the Council of the EU — are backing the French push to limit the scheme to EU firms, according to multiple diplomats with knowledge of the talks. CASH FOR KYIV EU leaders agreed last month to issue €90 billion in joint debt to support Ukraine, after Belgium and others derailed a separate plan to mobilize Russian frozen state assets. Over two-thirds of the Commission’s funding is expected to go toward military expenditure rather than ordinary budget support, according to two EU diplomats briefed on the discussions. With only a few days until the Commission formally unveils its plan, EU capitals are trying to influence its most sensitive elements. French President Emmanuel Macron is keen to give preferential treatment to EU military companies to strengthen the bloc’s defense industry. | Pool photo by Sarah Meyssonnier via AFP/Getty Images Germany broke with France by proposing to open up purchases to defense firms from non-EU countries. “Germany does not support proposals to limit third country procurement to certain products and is concerned that this would put excessive restrictions on Ukraine to defend itself,” Berlin’s government wrote in a letter sent to EU capitals on Monday and seen by POLITICO. The Netherlands suggested earmarking at least €15 billion for Ukraine to buy foreign weapons that are not immediately available in Europe.  “The EU’s defence industry is currently either unable to produce equivalent systems or to do so within the required timeframe,” the Dutch government wrote in its letter. The French counterargument is that Brussels should seek to extract maximum value from its funding to Ukraine. Critics say that boosting Ukraine’s defense against Russia should take precedence over any other goal.    “It’s very frustrating. We lose the focus on our aim, and our aim is not to do business,” said a third EU diplomat. Another diplomat said that a potential French veto can be easily overcome as the proposal can be agreed by a simple majority of member countries. GERMANY FIRST In a further point of controversy, the German government, while rejecting the EU preference sought by France, still suggested giving preferential treatment to firms from countries that provided the most financial support to Ukraine. This would play to the advantage of Berlin, which is among the country’s biggest donors. “Germany requests for the logic of rewarding strong bilateral support (as originally proposed for third countries by the Commission) to be applied to member states, too,” Berlin wrote in the letter. Diplomats see this as a workaround to boost German firms and incentivize other countries to stump up more cash for the war-torn country. Giovanna Faggionato contributed to this report.

Cyprus’ corruption scandal continued to explode on Monday as the president’s top aide resigned. President Nikos Christodoulides’ chief of staff Charalambos Charalambous announced his resignation citing a targeted effort to “personally harm the president, question the government, and damage the image of our homeland.” “My own participation, through deliberate distortions, selective excerpts, and references in a different context, guided people to misleading conclusions [and] is being exploited, without the intention of a sober reading of the real information,” he said in a Facebook post. The move comes after a secretly recorded video was posted on X on Thursday evening, just a day after Cyprus officially assumed the presidency of the Council of the EU, triggering a political crisis. It was not immediately possible to find public and verifiable information confirming the real identity of the person behind the account that posted the video. The video includes a montage of senior figures filmed apparently describing ways to bypass campaign spending caps with cash donations, and seemingly discussing a scheme allowing businesspeople to access the president and first lady. One segment made reference to helping Russians avoid EU sanctions. Charalambous, Christodoulides’ brother-in-law, is shown explaining how to gain access to the presidential palace. The video also alleges that social contributions made by companies through the AFKS fund, run by the first lady, are being misused to win preferential treatment. On Sunday, first lady Philippa Karsera announced that she is stepping down from the management committee of a charity fund. The government denies the allegations made in the video and has called it “hybrid activity” aimed at harming “the image of the government and the country.” Cyprus has requested assistance from specialized teams in the United States, Israel, the United Kingdom and France to help it investigate the οrigin of the video and who created it, according to the Cyprus News Agency.

Cyprus’ first lady Philippa Karsera announced on Sunday that she is stepping down from the management committee of a charity fund amid corruption allegations. In a post on her Facebook page, Karsera said she’ll formally announce her resignation during a committee meeting of the Independent Social Support Agency (AFKS) on Monday. She cited an “unrelenting attack” against her and her family on social media over the past days and added that she has sought legal advice. The move comes after a secretly recorded video was posted on X on Thursday evening, just a day after Cyprus officially assumed the presidency of the EU Council, triggering a political crisis. The video includes a montage of senior figures filmed apparently describing ways to bypass campaign spending caps with cash donations, and seemingly discussing a scheme allowing businesspeople to access the president and first lady. One segment made reference to helping Russians avoid EU sanctions. It alleges that social contributions made by companies through the AFKS fund that the first lady runs are being misused to win preferential treatment. The government denies the allegations made in the video and has called it “hybrid activity” aimed at harming “the image of the government and the country.” Cyprus has requested assistance from specialized teams in the United States, Israel, the United Kingdom and France to help it investigate the οrigin of the video and who created it, according to the Cyprus News Agency. “The First Lady’s resignation came with three days’ delay, while the director of the president’s office remains in his position,” said opposition party AKEL in a statement, adding that the government continues to refuse to disclose the names of those who donated to the fund. The political parties that support the country’s coalition government are considering withdrawing their support, according to local media. Cyprus is set to hold parliamentary elections in May while the next presidential election is scheduled for 2028.

President Donald Trump’s promise to revive the Venezuelan oil industry drew praise from U.S. energy executives on Friday — but no firm commitments to invest the vast sums of money needed to bring the country’s oil output back from the doldrums. The lack of firm pledges from the heads of the companies such as Exxon Mobil, Chevron and ConocoPhillips that Trump summoned to the White House raised doubts about the president’s claim that U.S. oil producers were ready to spend $100 billion or more to rebuild Venezuela’s crude oil infrastructure. The country boasts the world’s largest oil reserves, but its production has cratered since the regime pushed most of those companies out decades ago. Exxon CEO Darren Woods offered the starkest assessment, telling Trump in the live-streamed meeting in the East Room that Venezuela is “uninvestable” under current conditions. He said major changes were needed before his company would return to the country, and that big questions remain about what return Exxon could expect from any investments. “If we look at the legal and commercial constructs and frameworks in place today in Venezuela today, it’s uninvestable,” Woods told Trump. “Significant changes have to be made to those commercial frameworks, the legal system. There has to be durable investment protections, and there has to be a change to the hydrocarbon laws in the country.” Still, Woods said he was confident the U.S. can help make those changes, and said he expected Exxon could put a technical team on the ground in Venezuela soon to assess the state of its oil infrastructure. Harold Hamm, a fracking executive and major Trump ally, expressed more enthusiasm but still fell short of making any commitments. “It excites me as an explorationist,” Hamm, whose experience has centered on oil production inside the U.S., said of the opportunity to invest in Venezuela. “It is a very exciting country and a lot of reserves — it’s got its challenges and the industry knows how to handle that.” Still, Energy Secretary Chris Wright pointed reporters after the meeting to a statement from Chevron — the only major U.S. oil company still operating in Venezuela — that it was ready to raise its output as a concrete sign the industry was willing to put more money into the country. Chevron currently produces about 240,000 barrels a day there with its partner, the Venezuelan state-run oil company Petróleos de Venezuela SA. Mark Nelson, Chevron’s vice chairman, told the gathering the company sees “a path forward” to increase production from its existing operations by 50 percent over the next 18 to 24 months. He did not commit to a dollar figure, however. Wright indicated that the $100 billion figure cited by Trump on Thursday was an estimate for the cost of reconstructing Venezuela’s dilapidated oil sector — rather than a firm spending commitment made by producing companies. “If you look at what’s a positive trajectory for Venezuela’s oil industry in the next decade, that’s probably going to take about $100 billion investment,” said Wright, who later told Bloomberg Television he is likely to travel to Venezuela “before too long.” Most of the nearly two dozen companies in attendance at Friday’s meeting expressed tepid support for the administration’s plan, though others indicated they were eager to jump back quickly. Wael Sawan, the CEO of the European energy giant Shell, said the company had been pushed out in Venezuela’s nationalization program in the 1970s, giving up 1 million barrels per day of oil production. Now it was seeking U.S. permits to go back, he said. “We are ready to go and looking forward to the investment in support of the Venezuelan people,” he said. Jeffery Hildebrand, CEO of independent oil and gas producer Hilcorp Energy and a major Trump donor, said his company was “fully committed and ready to go to rebuild the infrastructure in Venezuela.” Trump said during the meeting that companies that invest in Venezuela would be assured “total safety, total security,” without the U.S. government spending taxpayer dollars or putting boots on the ground. He indicated that Venezuela would provide security for the U.S. companies, and that the companies would bring their own protection as well. “These are tough people. They go into areas that you wouldn’t want to go. They go into areas that if they invited me, I’d say, ‘No, thanks. I’ll see you back in Palm Beach,’” Trump said of the oil companies. Before the executives spoke, Trump insisted that oil executives are lining up to take the administration up on the opportunity. “If you don’t want to go in, just let me know,” he said. “There are 25 people not here today willing to take your place.” Following the public meeting, the companies stayed for further discussions with administration officials behind closed doors. The president also dismissed speculation that the administration may offer financial guarantees to back up what he acknowledged would be a risky investment. “I hope I don’t have to give a backstop,” he said. “These are the biggest companies in the world sitting around this table — they know the risks.” Trump also laughed off the billions that Exxon Mobil and ConocoPhillips are owed for the assets seized by the Venezuelan regime decades ago. “Nice write-off,” he quipped. “You’ll get a lot of your money back,” Trump told ConocoPhillips CEO Ryan Lance. “We’re going to start with an even plate, though — we’re not going to look at what people lost in the past because that was their fault.” ConocoPhillips spokesperson Dennis Nuss said in a statement that Lance “appreciates today’s valuable opportunity to engage with President Trump in a discussion about preparing Venezuela to be investment ready.” The White House at the last minute shifted the meeting from a closed-door session in the Cabinet Room to a live-televised spectacle in the East Room. “Everybody wants to be there,” the president wrote of the oil executives on social media just ahead of the meeting. POLITICO reported on Thursday that the White House had scrambled to invite additional companies to the meeting because of skepticism from the top oil majors about reentering the country. Treasury Secretary Scott Bessent acknowledged in an appearance Thursday that “big oil companies who move slowly … are not interested,” but said the administration’s “phones are ringing off the hook” with calls from smaller players. Bethany Williams, a spokesperson for the American Petroleum Institute, called Friday’s meeting “a constructive, initial conversation that highlighted both the energy potential and the challenges presented in Venezuela, including the importance of rule of law, security, and stable governance.” Venezuela — even with strongman Nicolás Maduro in custody in New York — remains under the rule of the same socialist government that appropriated the rigs, pipelines and property of foreign oil companies two decades ago. Questions remain about who would guarantee the companies’ workers’ safety, particularly since Trump has publicly ruled out sending in troops. Kevin Book, a managing director at the energy research firm ClearView Energy Partners, noted that few CEOs in the meeting outright rejected the notion of returning to or investing in Venezuela, instead couching any sort of presence on several conditions. Some of those might be nearer term, such as security guarantees. Others, like reestablishing legal stability in Venezuela, appear more distant. “They need to understand the risk and they need to understand the return,” Book said. “What it sounded like most of the companies were saying … is that they want to understand the risk and the return and then they’ll look at the investment.” Evanan Romero, a Houston-based oil consultant involved in the Trump administration’s effort to bring U.S. oil producers back to Venezuela, said international oil companies will not return to the country under the same laws and government that expropriated their assets decades earlier. “The main contribution that [interim president] Delcy [Rodríguez] and her government can do is make a bonfire of those laws and put it on fire in the Venezuelan Bolivar Square,” Romero said. “With those, we cannot do any reconstruction of the oil industry.” Zack Colman and Irie Sentner contributed to this report.

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

Europe’s biggest ever trade deal finally got the nod Friday after 25 years of negotiating.  It took blood, sweat, tears and tortured discussions to get there, but EU countries at last backed the deal with the Mercosur bloc — paving the way to create a free trade area that covers more than 700 million people across Europe and Latin America.  The agreement, which awaits approval from the European Parliament, will eliminate more than 90 percent of tariffs on EU exports. European shoppers will be able to dine on grass-fed beef from the Argentinian pampas. Brazilian drivers will see import duties on German motors come down.  As for the accord’s economic impact, well, that pales in comparison with the epic battles over it: The European Commission estimates it will add €77.6 billion (or 0.05 percent) to the EU economy by 2040.  Like in any deal, there are winners and losers. POLITICO takes you through who is uncorking their Malbec, and who, on the other hand, is crying into the Bordeaux. WINNERS Giorgia Meloni Italy’s prime minister has done it again. Giorgia Meloni saw which way the political winds were blowing and skillfully extracted last-minute concessions for Italian farmers after threatening to throw her weight behind French opposition to the deal.  The end result? In exchange for its support, Rome was able to secure farm market safeguards and promises of fresh agriculture funding from the European Commission — wins that the government can trumpet in front of voters back home. It also means that Meloni has picked the winning side once more, coming off as the team player despite the last-minute holdup. All in all, yet another laurel in Rome’s crown.  The German car industry  Das Auto hasn’t had much reason to cheer of late, but Mercosur finally gives reason to celebrate. Germany’s famed automotive sector will have easier access to consumers in LatAm. Lower tariffs mean, all things being equal, more sales and a boost to the bottom line for companies like Volkswagen and BMW. There are a few catches. Tariffs, now at 35 percent, aren’t coming down all at once. At the behest of Brazil, which hosts an auto industry of its own, the removal of trade barriers will be staggered. Electric vehicles will be given preferential treatment, an area that Europe’s been lagging behind on.  Ursula von der Leyen Mercosur is a bittersweet triumph for European Commission President Ursula von der Leyen. Since shaking hands on the deal with Mercosur leaders more than a year ago, her team has bent over backwards to accommodate the demands of the skeptics and build the all-important qualified majority that finally materialized Friday. Expect a victory lap next week, when the Berlaymont boss travels to Paraguay to sign the agreement. Giorgia Meloni saw which way the political winds were blowing and skillfully extracted last-minute concessions for Italian farmers after threatening to throw her weight behind French opposition to the deal. | Ettore Ferrari/EPA On the international stage, it also helps burnish Brussels’ standing at a time when the bloc looks like a lumbering dinosaur, consistently outmaneuvered by the U.S. and China. A large-scale trade deal shows that the rules-based international order that the EU so cherishes is still alive, even as the U.S. whisked away a South American leader in chains.  But the deal came at a very high cost. Von der Leyen had to promise EU farmers €45 billion in subsidies to win them over, backtracking on efforts to rein in agricultural support in the EU budget and invest more in innovation and growth.   Europe’s farmers  Speaking of farmers, going by the headlines you could be forgiven for thinking that Mercosur is an unmitigated disaster. Surely innumerable tons of South American produce sold at rock-bottom prices are about to drive the hard-working French or Polish plowman off his land, right?  The reality is a little bit more complicated. The deal comes with strict quotas for categories ranging from beef to poultry. In effect, Latin American farmers will be limited to exporting a couple of chicken breasts per European person per year. Meanwhile, the deal recognizes special protections for European producers for specialty products like Italian parmesan or French wine, who stand to benefit from the expanded market. So much for the agri-pocalpyse now.  Mercosur is a bittersweet triumph for European Commission President Ursula von der Leyen. | Olivier Matthys/EPA Then there’s the matter of the €45 billion of subsidies going into farmers’ pockets, and it’s hard not to conclude that — despite all the tractor protests and manure fights in downtown Brussels — the deal doesn’t smell too bad after all.  LOSERS Emmanuel Macron  There’s been no one high-ranking politician more steadfast in their opposition to the trade agreement than France’s President Emmanuel Macron who, under enormous domestic political pressure, has consistently opposed the deal. It’s no surprise then that France joined Poland, Austria, Ireland and Hungary to unsuccessfully vote against Mercosur.  The former investment banker might be a free-trading capitalist at heart, but he knows well that, domestically, the deal is seen as a knife in the back of long-suffering Gallic growers. Macron, who is burning through prime ministers at rates previously reserved for political basket cases like Italy, has had precious few wins recently. Torpedoing the free trade agreement, or at least delaying it further, would have been proof that the lame-duck French president still had some sway on the European stage.  Surely innumerable tons of South American produce sold at rock-bottom prices are about to drive the hard-working French or Polish plowman off his land, right? | Darek Delmanowicz/EPA Macron made a valiant attempt to rally the troops for a last-minute counterattack, and at one point it looked like he had a good chance to throw a wrench in the works after wooing Italy’s Meloni. That’s all come to nought. After this latest defeat, expect more lambasting of the French president in the national media, as Macron continues his slow-motion tumble down from the Olympian heights of the Élysée Palace.  Donald Trump Coming within days of the U.S. mission to snatch Venezuelan strongman Nicolás Maduro and put him on trial in New York, the Mercosur deal finally shows that Europe has no shortage of soft power to work constructively with like-minded partners — if it actually has the wit to make use of it smartly.  Any trade deal should be seen as a win-win proposition for both sides, and that is just not the way U.S. President Donald Trump and his art of the geopolitical shakedown works. It also has the incidental benefit of strengthening his adversaries — including Brazilian President and Mercosur head honcho Luiz Inácio Lula da Silva — who showed extraordinary patience as he waited on the EU to get their act together (and nurtured a public bromance with Macron even as the trade talks were deadlocked). China  China has been expanding exports to Latin America, particularly Brazil, during the decades when the EU was negotiating the Mercosur trade deal. The EU-Mercosur deal is an opportunity for Europe to claw back some market share, especially in competitive sectors like automotive, machines and aviation. The deal also strengthens the EU’s hand on staying on top when it comes to direct investments, an area where European companies are still outshining their Chinese competitors. Emmanuel Macron made a valiant attempt to rally the troops for a last-minute counterattack, and at one point it looked like he had a good chance to throw a wrench in the works after wooing Italy’s Meloni. | Pool photo by Ludovic Marin/EPA More politically, China has somewhat succeeded in drawing countries like Brazil away from Western points of view, for instance via the BRICS grouping, consisting of Brazil, Russia, India, China and South Africa, and other developing economies. Because the deal is not only about trade but also creates deeper political cooperation, Lula and his Mercosur counterparts become more closely linked to Europe. The Amazon rainforest  Unfortunately, for the world’s ecosystem, Mercosur means one thing: burn, baby, burn. The pastures that feed Brazil’s herds come at the expense of the nation’s once-sprawling, now-shrinking tropical rainforest. Put simply, more beef for Europe means less trees for the world. It’s not all bad news for the climate. The trade deal does include both mandatory safeguards against illegal deforestation, as well as a commitment to the Paris Climate Agreement for its signatories. 

LONDON — The union representing British nurses is under fire from some of its own members over what they say is an opaque investment strategy linked to companies investing in Israel’s occupation of the Palestinian Territories. A report sent to Royal College of Nursing (RCN) management by activist group Nurses for Palestine and NGO Corporate Watch, and obtained by POLITICO, argues that the union’s choice of investment managers Legal & General and Sarasins is at odds with its own ethical investment policy. Members of the group say they don’t know exactly which shares the union holds in its portfolio, because the union’s management hasn’t informed them. The report points to a list of companies held by the RCN’s fund managers, including U.S. tech firm Palantir and Israeli arms-maker Elbit Systems, which activists say should be enough for the union to put its money elsewhere. A spokesperson for the RCN declined to say which companies were in its portfolio when contacted by POLITICO. The group said it was “committed to social responsibility” and stressed that it did not invest in weapons manufacturing or any “ethically unacceptable practices.” ‘TRUE ETHICAL INVESTMENT’ The Nurses for Palestine and NGO Corporate Watch report draws on a United Nations investigation into what its human rights council calls Israel’s “Economy of Genocide” to identify companies that activists say link fund managers to Israel’s occupation of the Palestinian Territories. The International Court of Justice is currently considering allegations of genocide against Israel, while an independent U.N. inquiry found Israel was committing genocide against the Palestinians. Israel has adamantly rejected those allegations and argued it upholds its obligations under international law. The companies named in the UN report include U.S. tech firms that provide Israel with cloud and artificial intelligence technology. These are among the most widely held shares in the world and are mainstays in the portfolios offered by popular fund managers, which often track the performance of the stock market. A Palantir spokesperson told POLITICO the company rejected its inclusion in the U.N. report and referred to previous statements clarifying its partnership with the Israeli military. The report — which follows two open letters whose signatories include 100 RCN members — does not present evidence that the union directly holds shares in companies more directly involved in the arms trade. But it argues that “true ethical investment” should look beyond investors’ own portfolios and at their fund managers’ “wider practices.” The RCN spokesperson said: “Despite the globalised nature of investments, our indirect exposure — to companies that we may not directly invest in — is a fraction of a single percentage.” According to its latest annual report, the RCN Group (including the union and its charitable foundation) had a combined investment portfolio worth £143.6 million as of Dec. 31, 2024. Sarasins said in a statement that it takes a “rigorous approach to identifying and assessing any potential exposure to human-rights risks across the many companies we invest in on behalf of our clients.”  “The situation in Gaza is evolving, and we are in the process of considering targeted engagement approaches and discussing these with expert contacts and stakeholders,” the firm said. A spokesperson for L&G said all of its investments were in line with international laws and regulations and that any holdings in the companies named in the report were part of “broad, global market indices.”

President Donald Trump on Wednesday declared he would ask Congress for a $1.5 trillion defense budget in 2027, a massive $500 billion increase from this year’s Pentagon budget. The huge boost likely reflects how expensive some of Trump’s military ambitions are, from the Golden Dome air defense effort to his call for a new battleship design. Neither of those programs could be fully funded under current spending levels. The president provided few details in his post on Truth Social, other than to say the money would pay for his “Dream Military.” Trump did suggest that tariff revenues could cover the increase, but even if he managed to circumvent Congress’ constitutionally mandated power over spending, existing tariff collections would still be several hundred billion short of what the president plans to ask for. While finding half-a-trillion dollars in new spending would prove difficult, Trump and some congressional Republicans appeared confident they could do so. The budget reached $1 trillion this year thanks to $150 billion in new money Congress voted to pour into Pentagon coffers via a reconciliation bill, although much of that will be spread out over the next five years on various long-term projects. Lawmakers have yet to complete a defense spending bill for this fiscal year, although a final agreement is expected to increase Trump’s budget request by several billion dollars. Some Republicans have long argued for significant annual increases in Pentagon funding, with a topline total of around 5 percent of GDP, up from the current 3.5 percent. Rep. Don Bacon (R-Neb.) called Trump’s aspirations “a good news story” after his administration proposed budgets defense hawks on Capitol Hill saw as lacking. “We think we need a permanent 4 percent [of GDP] or better,” Bacon said. “That’s what it’s gonna take to build our Navy, our Air Force, our ICBMs, our bombers, and take care of our troops.” The 2026 budget only reached $1 trillion due to the $150 billion added on by Congress. That one-time infusion gave a boost to Golden Dome as well as new initiatives to build more precision-guided munitions and air defense weapons. But the funding will need to be included in year-on-year spending legislation, something Trump’s new proposal appears to take into account. Trump’s surprise budget announcement came just hours after he sent defense stocks plunging by railing against the performance of major defense companies. In another social media post, Trump said he would not allow defense companies to buy back their own stocks, offer executives large salaries and issue dividends to shareholders. He also slammed the companies for moving too slowly, and charging too much, for weapons. “A lot of us are saying we want a commitment to a sustained spending [increase], not just a one-year,” Bacon said. The White House and Republicans have left open the possibility of another party-line megabill that could be used to increase defense spending again this year. It is unclear if GOP leaders are willing to pursue the procedurally and politically arduous approach again while they still maintain control of both chambers of Congress. Republicans would need to use that process again to accommodate even a portion of Trump’s request because Democrats are likely to balk at any move that slashes healthcare benefits, education and foreign aid in the ways Republicans have sought, said one defense lobbyist. “Golden Dome and Golden Fleet are completely unaffordable without budgets of this size, so the administration would need to come up with the numbers to back it up,” said the lobbyist, who was granted anonymity to discuss sensitive spending dynamics. “But my guess is that the extra money will have to be in reconciliation.” House Appropriations Chair Tom Cole (R-Okla.) said overall defense spending “needs to go up,” but wouldn’t say if the massive increase pitched by Trump is realistic. “I’ll take any request the president makes seriously, and we’ll see,” Cole said. Another senior House appropriator, Rep. Steve Womack (R-Ark.), hailed Trump as “absolutely right” in his own post. “For too long, we have underfunded our defense apparatus—undermining our national security and benefiting our foreign adversaries,” Womack said. “A strong national defense is critical to our long‑term prosperity and to protecting our country against every emerging threat. I commend President Trump for his leadership and look forward to working to advance a $1.5 trillion defense bill.”