Listen on * Spotify * Apple Music * Amazon Music Die SPD ringt sichtbar mit ihrem Führungsanspruch. Parteichefin und Arbeitsministerin Bärbel Bas schließt eine Kanzlerkandidatur 2029 für sich schon mal aus und löst damit Zweifel an Ambition, Rollenverständnis und strategischer Orientierung der Sozialdemokratie aus. Gordon Repinski analysiert, warum diese Aussage keine persönliche Zurückhaltung  ist und was sie über den aktuellen Zustand der SPD sagt. Im 200-Sekunden-Interview stellt sich der Parlamentarische Geschäftsführer der SPD-Fraktion Dirk Wiese den Fragen nach Richtung und Selbstverständnis seiner Partei. Es geht um Bürgergeld, Reformen, Sanktionen, Rentenfragen, die Energiepreise und um darum, ob die SPD noch auf Sieg spielt oder sich mit Verwaltung begnügt. Danach der Blick nach Sachsen-Anhalt. Beim IHK-Neujahrsempfang in Halle sendet Kanzler Friedrich Merz wirtschaftspolitische Signale, die in der Koalition noch für Diskussionen sorgen werden. Rasmus Buchsteiner ordnet ein, warum Merz dort über längeres Arbeiten, Steuerpolitik und das Heizungsgesetz spricht und wie groß die Nervosität der CDU mit Blick auf die starke AfD ist. Und: Donald Trumps Ansprüche auf Grönland lösen weitere Sorgen aus in Dänemark, aber auch für unerwartete wirtschaftliche Effekte mit einer ironischen Note. Den Spaziergang mit Ulrich Siegmund findet ihr zum Nachhören hier und das 200-Sekunden-Interview mit Sven Schulze zum Unvereinbarkeitsbeschluss hier. Die Machthaber-Folge, in der wir Giorgia Meloni porträtiert haben, gibt es hier.  Das Berlin Playbook als Podcast gibt es jeden Morgen ab 5 Uhr. Gordon Repinski und das POLITICO-Team liefern Politik zum Hören – kompakt, international, hintergründig. Für alle Hauptstadt-Profis: Der Berlin Playbook-Newsletter bietet jeden Morgen die wichtigsten Themen und Einordnungen. Jetzt kostenlos abonnieren. Mehr von Host und POLITICO Executive Editor Gordon Repinski: Instagram: @gordon.repinski | X: @GordonRepinski. POLITICO Deutschland – ein Angebot der Axel Springer Deutschland GmbH Axel-Springer-Straße 65, 10888 Berlin Tel: +49 (30) 2591 0 information@axelspringer.de Sitz: Amtsgericht Berlin-Charlottenburg, HRB 196159 B USt-IdNr: DE 214 852 390 Geschäftsführer: Carolin Hulshoff Pol, Mathias Sanchez Luna

Croatia, Estonia, Finland, Latvia, Lithuania and Portugal will face off for the European Central Bank’s No. 2 job, according to a statement from the Council of the EU. The crowded race for the vice presidency kickstarts a wider battle for a seat on the ECB’s coveted six-person executive board, the eurozone’s most powerful forum for economic and monetary policy. Four of the seats, including the presidency itself, will become vacant over the next two years. Competition will be fierce, as the eurozone’s largest economies will seek to maintain their influence on the board, leaving smaller countries with fewer seats to fight over. Eurozone finance ministers are set to pick the winner behind closed doors in a secret ballot when they meet in Brussels for this month’s Eurogroup meeting on Jan. 19. The winner will need at least 16 votes from the 21 ministers, representing around 65 percent of the eurozone’s population. Eurozone leaders formally propose the candidate to succeed the outgoing vice president, Luis de Guindos, whose eight-year term ends on May 31. The European Parliament and the ECB are entitled to an opinion about the final pick. Northern European applicants make up the bulk of the contenders, with Finland’s central banker, Olli Rehn, facing competition from Baltic neighbors. These include his central banking peers, Estonia’s Madis Müller and Latvia’s Mārtiņš Kazāks. Lithuania’s former finance minister, Rimantas Šadžius, completes the Baltic round-up. The other two applicants come from Southern Europe: Portugal’s ex-Eurogroup president, Mário Centeno, and the Croatian central bank governor, Boris Vujčić. The candidates are tentatively scheduled to face questions from MEPs behind closed doors before finance ministers meet on Jan. 19.

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

Listen on * Spotify * Apple Music * Amazon Music Ein Montag mit zwei Baustellen für den Kanzler: Friedrich Merz kämpft parteiintern mit der Frage nach der Brandmauer zur Af – und industriepolitisch mit der schwächelnden Chemieindustrie. In Berlin präsentiert er seine Linie gegen Rechts, in Hannover spricht er beim Kongress der Industriegewerkschaft Bergbau, Chemie, Energie. Rasmus Buchsteiner analysiert beide Baustellen.  Im 200-Sekunden-Interview fordert Michael Vassiliadis, Chef der Chemiegewerkschaft, einen echten Chemie-Gipfel, sinkende Energiepreise und mehr Verantwortung von deutschen Managern: Standortflucht ist keine Lösung, sagt er. Und Hans von der Burchard berichtet über das bevorstehende Treffen der EU-Außenminister: neue Sanktionen gegen Russland, Ungarns Blockade und Deutschlands Botschafter-Rückruf aus Georgien. Das Berlin Playbook als Podcast gibt es jeden Morgen ab 5 Uhr. Gordon Repinski und das POLITICO-Team liefern Politik zum Hören – kompakt, international, hintergründig. Für alle Hauptstadt-Profis: Der Berlin Playbook-Newsletter bietet jeden Morgen die wichtigsten Themen und Einordnungen. Jetzt kostenlos abonnieren. Mehr von Host und POLITICO Executive Editor Gordon Repinski: Instagram: @gordon.repinski | X: @GordonRepinski.

BRUSSELS — After three years of reasoning, pleading and conceding, the EU has had enough. On Monday, the bloc’s 27 member countries are expected to back a new bill that will permanently cut Russian gas supplies to Hungary and Slovakia — whether they like it or not. Since Moscow launched its all-out war in Ukraine in 2022, the EU has weakened the Kremlin’s long-held grip over the bloc’s energy supply, all but eliminating its imports of Russian oil, coal and gas. But throughout that bitter energy divorce, Budapest and Bratislava have stubbornly refused to play ball. Repeatedly arguing that they have no real alternative, their Russia-friendly governments complained that quitting Moscow would mean exploding prices for consumers. Experts largely dispute those claims. And in any case, EU capitals are ready to overrule them. While Russia repeatedly pummels Ukraine’s energy infrastructure, “billions of euros have been paid … by Hungary and Slovakia to Russia,” said Lithuanian Energy Minister Žygimantas Vaičiūnas. “They are using this for their war machine … this is really not acceptable.”  “Now, it is time to demonstrate … political will on the EU level,” he told POLITICO. NO MORE EXCEPTIONS Since Vladimir Putin first ordered troops into Kyiv, Brussels has slapped an embargo on Russian crude, fuel and coal entering the bloc; it’s imposed a $47.60 per barrel price limit on Moscow’s global oil sales, below the market rate; and it’s whittled down the Kremlin’s share in the EU’s gas market from 45 percent to 13 percent.  But Hungary and Slovakia have repeatedly dug their heels in and held up sanctions, winning carve-outs that have allowed them to keep importing Russian crude via the Druzhba pipeline through Ukraine, and blocking efforts to target Moscow’s gas and nuclear sectors. In fact, the two countries are steadily increasing their fossil fuel payments to Moscow, according to Isaac Levi, Russia lead at the Helsinki-based Centre for Research on Energy and Clean Air think tank. Budapest and Bratislava have paid Russia €5.58 billion for fossil fuel imports so far this year, he said, already beating the €5.56 billion they forked out last year. Realizing its consensual approach had hit a wall, the European Commission in June decided to change tack. The EU executive unveiled a legal proposal that would impose a ban on Russian gas, starting from next year for short-term contracts and ending in late 2027 for long-term deals. Unlike sanctions, which require unanimity from all EU countries, the proposal — billed as a trade measure — only needs a qualified majority of capitals to approve it, effectively removing Hungary and Slovakia’s veto power over the draft law. Since Vladimir Putin first ordered troops into Kyiv, Brussels has slapped an embargo on Russian crude, fuel and coal entering the bloc; it’s imposed a $47.60 per barrel price limit on Moscow’s global oil sales, below the market rate; and it’s whittled down the Kremlin’s share in the EU’s gas market from 45 percent to 13 percent.  | Contributor/Getty Images On Monday, EU energy ministers will rubber-stamp the bill, sending a signal that they are ready to override both nations before they enter final negotiations with the European Parliament. “We’ll reach an agreement despite their opposition,” said one senior EU diplomat, who, like others for this story, was granted anonymity to speak freely on closed-door discussions. “It’s not an easy subject, but I believe we’ll get there.” LANDLOCKED, NOT BLOCKED In the run-up to the vote, the two countries have pulled out all the stops in a bid to scupper a deal. Slovak Prime Minister Robert Fico has vowed to block the EU’s 19th sanctions package against Russia unless he wins concessions on the gas ban, otherwise known as REPowerEU. But EU countries are holding strong. “That’s always the case, that they are finding ways to make their exit strategies,” Vaičiūnas said, “but now we have to really take a strong [stance] on … REPower.” In the meantime, the two countries have continued to argue the law threatens their energy security, will raise prices for consumers and hurt their heavy industry. Slovak Prime Minister Robert Fico has vowed to block the EU’s 19th sanctions package against Russia unless he wins concessions on the gas ban, otherwise known as REPowerEU. | Contributor/Getty Images Hungary’s state-owned energy firm MVM currently has a long-term contract with Russia’s Gazprom until 2036, as well as shorter-term seasonal deals. Slovak firm SPP is bound by its deal with the Kremlin-controlled export monopoly until 2034.  After MEPs agreed on their negotiating stance on the bill last week, Budapest’s Foreign Minister Péter Szijjártó called the text “a direct attack on Hungary’s energy security.”  It “sets back our economic performance, and threatens the low utility costs of Hungarian families,” he wrote on social platform X. “We won’t let this happen!!” “REPOWER IS A NONSENSICAL IDEOLOGICAL MOVE,” Fico fumed earlier this month. The Hungarian foreign ministry and the Slovak economy ministry did not respond to POLITICO’s requests for comment. But the industry isn’t as vociferous. The proposal is “probably not cataclysmic,” said one Hungarian oil and gas sector insider. “The government and politicians do cry wolf — let’s see if this wolf really comes.”  It is true the bill will likely raise prices in the region by “5 to 10 percent” in the midterm, said Tamás Pletser, an oil and gas analyst at Erste bank. But if the Commission works with countries to lower gas transit fees, that could eliminate “up to 40 percent” of the price hike, he added. Meanwhile, MVM is quietly signing new gas deals, Pletser added. Hungary can also find alternatives via liquefied gas from Western Europe and Greece, he said, as well as a new drilling project in Romania from mid-2027. The industry is “absolutely” ready, he said. The EU executive is nonplussed, too. “The measures have been designed to preserve the security of the EU’s energy supply while limiting any impact on prices,” said one Commission official. Whether or not it leads to price increases, EU capitals are ready to pull the trigger.  “They didn’t do much to diversify, sabotaged sanctions and had quite a lot of time,” said a second EU diplomat. “There is no other way [than] to make them.” “It’s not yesterday that we started talking about phasing out Russian gas,” said a third EU diplomat. “Russia is not a partner — it’s a problem. It’s time to stop pretending it is not.”

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

LONDON — For years, Labour didn’t want to talk about Brexit. It’s changed its mind. As the 10th anniversary looms of Britain’s vote to the leave the European Union, senior ministers in the ruling center-left Labour Party are going studs up — daring to pin the U.K.’s sluggish economic performance on its departure from the trading bloc. “There is no doubting that the impact of Brexit is severe and long-lasting,” Chancellor Rachel Reeves said in an interview broadcast on Wednesday. “I’m glad that Brexit is a problem whose name we now dare speak,” Health Secretary Wes Streeting, another staunch ally of Keir Starmer, told a well-heeled literary festival audience in the leafy county of Berkshire on Monday. Senior government officials insist the reason for this week’s interventions is simple — rolling the pitch for bad news in Reeves’ Nov. 26 budget. Britain’s productivity over the last 15 years is expected to be downgraded in a review by the Office for Budget Responsibility watchdog. Officials expect it to say explicitly that Brexit had a larger impact than first thought — leaving Reeves with no choice but to talk about the issue. Others in Starmer’s government, though, also spy a link to the prime minister’s wider strategy to challenge Reform UK leader Nigel Farage in a more muscular way. Labour ministers are seeking to paint Tory leaders and Farage — one of Brexit’s biggest champions — as politicians who took Britain out of the EU without answers, contrasted with the (still-limited) deal that Labour secured with Brussels in May. But these strategies, and particularly the way they are voiced, create a tension within government. Some aides and MPs fear they will be perceived to blame Brexit voters, reopening the bitter politics that followed the 2016 vote and driving them further toward Farage. This risk rises, argued one Labour official, when the government line strays beyond a narrow one of attacking the implementation or Farage and into the consequences of Brexit itself. The official added: “You can’t just go around blaming Brexit, because it’s saying voters are wrong.” LAYING THE GROUND Reeves’ intervention this week did not come out of the blue. “I’m glad that Brexit is a problem whose name we now dare speak,” said Health Secretary Wes Streeting, another staunch ally of Keir Starmer. | Dan Kitwood/Getty Images Nick Thomas-Symonds, Starmer’s minister negotiating post-Brexit trading rules with the EU, pointedly turned up at the Spectator — a magazine once edited by Boris Johnson — in August to make his pitch for a new relationship. Armed with statistics about the Brexit hit to exports, he said: “Behind every number and statistic is a British business, a British entrepreneur, a British start-up paying the price.” Starmer (who campaigned for a second referendum in 2019) is said to have liked what he heard. In his party conference speech in September the PM went a step further, attacking politicians “who lied to this country, unleashed chaos, and walked away after Brexit,” while also hitting out at those responsible for the “Brexit lies on the side of that bus.” The shift in No. 10 over recent months has been informed by focus groups and polls that show many Britons think Brexit was implemented badly, said one minister. “I think it’s very risky,” the minister added. “But it’s a gamble they’ve decided to take because they can see which way the wind is blowing.” It has also been encouraged by some campaign groups and think tanks. The Labour-friendly Good Growth Foundation shared a report with the government in May saying 75 percent of Labour-to-Reform switchers (out of a sample of 222) would support co-operation with the EU on trade and the economy. One Labour MP added: “It’s totally the right strategy. Just look at the maths. It’s, like, 70-30 for people saying Brexit was a bad idea. It’s just where people are.” (A July poll by More in Common found 29 percent would vote to leave and 52 percent to remain if the 2016 referendum was today. The rest would not vote or did not know.) Supporters of Starmer’s strategy believe the May deal — which will ease some trade barriers and sand off the hardest edges of Boris Johnson’s Brexit — allows the government to sound more positive. The government is “in a really confident position on this” and “actively negotiating” solutions, a second minister argued. Labour officials also believe they can hammer Farage as a man without the answers to complex problems such as returning migrants to Europe. One argued the Reform leader promised to leave the EU for stronger borders and a better NHS, but did not “do the work” to show how it would happen. Labour aides also note that Farage did not mention Brexit directly in his recent conference speech — instead focusing on issues such as net zero, government waste and immigration. (Challenged on this criticism, a Reform spokesperson texted a statement with the party’s nickname for Reeves: “Labour can try any excuse they like, but they can’t escape the reality that Rachel from accounts has the U.K. economy flatlining.”) PITCH TO THE LEFT One group that will lap up any anti-Brexit noise is Starmer’s own party. The first minister quoted above said the pivot had gone down well with their local Labour members, many of whom have long viewed Brexit as a mistake. “There’s been a feeling in the party and in government that we have been alienating our own members a bit by trying to appeal to Reform voters,” the minister said. “It’s not gone unnoticed by our faithful — it’s been seen as something finally for them.” Anti-Brexit activist Steve Bray holds a ‘Stop the Brexit mess’ placard during a protest in Parliament Square calling on the government to rejoin the European Union. | Vuk Valcic/SOPA Images/LightRocket via Getty Images Some in Labour also believe that talking about the harms of Brexit could slow a drift of left-wing voters towards the Green Party and Liberal Democrats. The minister added: “If you are looking at younger voters, the polls are saying we’re losing them in their droves to more progressive parties.” But worried Labour strategists want to keep the messaging tight and nuanced, not drift back into a pro-EU comfort zone. This means keeping the focus on jobs, the cost of living and borders — bread-and-butter issues touched by Brexit. “Nobody is suggesting we relitigate 2016,” said the second minister quoted above. This is especially true now that Labour has implemented policies that could not have been done inside the EU, such as economic deals with the U.S. and India — and even the controversial 20 percent Value Added Tax on private school fees. A second Labour MP said: “We’re not going to rejoin, but we can at least say that it went badly and has harmed the economy.” A third Labour MP added: “I think now it’s happened, we can discuss if it was done well. It’s certainly felt like an elephant in the room while there was a general consensus that our economy was amorphously fucked. There is always a danger — but this pretence it was without impact was treating the public like fools.” Nuance can become lost in a world of partisan social media, though. One person who speaks regularly to No. 10 said: “I was surprised that they took that on as a new narrative … it is a risky strategy. You’ve got to be careful about how you frame that — to blame what people voted for, not them.” Farage could also try to turn Labour’s strategy on its head. Luke Tryl, Executive Director of the More in Common think tank, said Brexit voters in focus groups often believe it has gone badly — but tend to blame politicians “rather than saying it could never have worked.” This exposes a flaw in Labour’s policy of attacking Farage, Tryl argued: “It leaves Farage able to say ‘if I am in charge, I will do a proper Brexit and get the benefits.’” OUR FRIENDS IN EUROPE Labour’s stance may, at least, go down well in Brussels. Many in the EU (naturally) also think Brexit has gone badly, and showing a willingness to open up about problems might help Thomas-Symonds — who is in the process of negotiating a deal to smooth the trade of food, animals and plant products across the channel by aligning with EU rules, the boldest step back into Brussels’ orbit yet. Anand Menon, director of the UK in a Changing Europe think tank, said: “[U.K. ministers] are ramping up the rhetoric, saying we’ve got this, we need to implement it fast … There’s a lot of deadlines coming up, and they want movement, and they want to show a sense of enthusiasm.” But Menon was skeptical about whether it will make any difference. He added: “For all this newfound enthusiasm, actually, the EU aren’t going to let them get much closer. “So it’s probably a doomed strategy anyway.” Bethany Dawson and Jon Stone contributed reporting.

Alexander Lukashenko’s stubborn grip on the Belarusian economy plunged the potato-happy country into a spud shortage this spring. Critics of the authoritarian ruler, who in January grabbed a seventh term in power, say he has warped the economy with strict price controls on staples like potatoes — while encouraging citizens to snitch on grocery stores that flout regime rules.  The limits, launched by Lukashenko in October 2022 as he aimed to keep prices low and stave off inflation, instead made potatoes far less profitable for farmers to produce.  Opponents say that decisions made by Lukashenko’s team stunted production last year and pushed many cash-strapped farmers to sell their produce to neighboring Russia, humiliating the Minsk regime and crippling grocery stores expected to sell potatoes on the cheap. Paltry potato price increases weren’t keeping up with rising costs for farmers and retailers, and the country’s demotivated farmers in turn planted fewer potatoes. Belarus harvested 3.1 million tons of potatoes in 2024, down from more than 4 million a year prior. “If you know from the history of the Soviet Union, when people don’t have motivation, you cannot really force them to do work very well,” said Lev Lvovskiy, academic director at the flagship Belarusian BEROC economic think tank. The irony: Lukashenko himself once led a collective farm in Gorodets, in the east of modern-day Belarus, during the twilight years of Soviet communism. The price controls instituted by Minsk made selling to Russia a highly profitable proposition. Potatoes cost over twice as much in Russia as in Belarus in March, according to BEROC data. And Belarus exported about 200,000 tons of potatoes to Russia in 2024, making it the No. 1 supplier of the staple crop to its neighbor.  The financial incentives of trade with Russia aren’t lost on the government. Lukashenko himself has implored farmers to produce enough potatoes to feed both Minsk and Moscow. “We need to help our Russian kinfolk. And besides, we will earn good money from it,” he said in May. ROTTEN POTATOES Due to the resulting shortage, however, the regime temporarily banned the export of potatoes — including to Russia — absent a license beginning in December 2024. Many farmers have responded to the restrictions by labeling healthy potatoes as spoiled, and continued to funnel them to Russia, Lvovskiy told POLITICO.  The result of the upheaval: Small, scarce and sometimes rotten potatoes in Belarusian grocery stores, a phenomenon that escalated in March and April. This shows how “Lukashenko and his administration can artificially create deficits of goods that were in enormous numbers before,” said Aleś Alachnovič, economic adviser to exiled Belarusian opposition leader Sviatlana Tsikhanouskaya. The irony: Lukashenko himself once led a collective farm in Gorodets, in the east of modern-day Belarus, during the twilight years of Soviet communism. | Belarus president press service That’s not the regime’s line.  “We made adjustments to the government resolution several times based on the reality on the ground. Thus, all negative trends in trade and in manufacturing were nipped in the bud. Price regulation did not cause any imbalances. There is a sufficient amount of goods on the shelves at reasonable prices,” Ivan Vezhnovets, first deputy minister of antimonopoly regulation and trade, said in a statement in March. In a sign of just how much the market moves in accordance with Lukashenko’s wishes, so-called washed potatoes — better-quality spuds not under the price controls — remained on shelves but at significantly higher prices. To incentivize farmers to grow more and sell domestically, officials jacked up the maximum price of the regular potatoes in April. And in late May, the state reversed a ban on imports of certain foodstuffs, including potatoes, from European Union countries classed as “unfriendly,” to try to address the self-inflicted shortage. “Now, [availability is] getting better,” Lvovskiy told POLITICO.  But apart from massaging international trade, Minsk’s solution to the crisis in supermarkets has been to assert even more control.  Lukashenko in June suggested that unnamed “certain individuals” had manufactured the shortage to punish the government’s economic policy. “There were plenty of potatoes. But the supply was limited in order to demonstrate the adverse effects of the president interfering with pricing practices. But when [the State Control Committee] showed up with handcuffs and placed them on the table, potatoes became available,” he said at a government conference. In early May, the regime’s State Control Committee launched a hotline for shoppers to report grocery stores that either weren’t selling potatoes or charged too much. “Part of the strategy is just to harass all these retail chains in [the] hope that they would be so afraid of prison that they would come up with potatoes from pure air,” Lvovskiy said. It isn’t exactly a foolproof plan. “We believe that it proves, once again, the inefficiency of the policies that Lukashenko is pursuing, definitely,” said Vladzimir Astapenka, the Brussels-based representative for international and European cooperation in Tsikhanouskaya’s United Transitional Cabinet in exile. “But he tries to survive. He tries to stay afloat.”

BERLIN — German Finance Minister Lars Klingbeil defended his country’s paradigm-shifting fiscal expansion on Tuesday and expressed confidence that the massive spending increases will not contravene EU deficit rules. “The signals that we have received from the European level are very clear that everything is in line,” Klingbeil said while presenting the government’s draft budget for 2025, adding that there will still be “intensive talks” with the European Commission when Germany presents its medium-term fiscal plan. “I’m confident about that,” he said of negotiations. “We can find a common path.” The scale of Germany’s ambitions to radically expand defense and infrastructure spending have raised thorny questions about how such spending can be reconciled with EU fiscal rules that Germany — previously a fiscal hawk — had long pushed for. Since March, however, Germany has led a concerted pushed for a loosening of those rules to allow for vastly greater defense spending. Klingbeil argued that the EU’s largest economy, with its relatively low debt load, has the financial leeway to greatly increase spending after many years of fiscal restraint. “We have a debt-to-GDP ratio of 63 percent in Germany, which is well below other countries such as France or the USA, some of which are at over 100 percent,” he said. “And I am firmly convinced of this: Now is the right time to invest in our country’s ability to defend itself, and to invest significantly.” Klingbeil, a leader of the center-left Social Democratic Party, played a key role in negotiating a set of constitutional changes that passed through parliament in March before he became finance minister in the current government, led by conservative Chancellor Friedrich Merz. The reforms unlocked billions of spending for infrastructure and defense and turned Germany away from more than 15 years of self-imposed austerity since the country first introduced the debt brake in 2009, under then-Chancellor Angela Merkel. The government is now set to take up record debt of around €850 billion through 2029 and increase its net borrowing to €82 billion in 2025. A big swath of that money is to be invested in the country’s military along with infrastructure spending for bridges, schools and the country’s railway system. For 2025, Berlin has allocated €86 billion for defense, equal to 2.4 percent of gross domestic product. By 2029, annual defense expenditures are expected to reach €153 billion, or 3.5 percent of GDP — marking the country’s most ambitious rearmament effort since reunification. Aid for Ukraine is set for €8.3 billion. The German parliament will consider the government’s draft 2025 budget in the next months and is expected to approve a final budget in September. The previous coalition government collapsed over continuous spending rifts, including the budget for 2025. Giovanna Faggionato and Rasmus Buchsteiner contributed to this report.

Christine Lagarde has discussed leaving the European Central Bank early to take over running the World Economic Forum according to its founder Klaus Schwab. Schwab told the Financial Times he had met with the ECB president to arrange her taking over from him as chief executive in early 2027. Lagarde’s term with the ECB runs until the end of October of that year. The WEF runs the annual Davos extravaganza high up in the Swiss Alps, welcoming world leaders, financial titans and captains of industry. Schwab, who left the WEF last month amid accusations of financial improprieties which he denies, said he had made arrangements for Lagarde to take an apartment in the Villa Mundi in Geneva, where the WEF has its administrative offices. The most recent discussions they had on the subject, he added, were in early April in Frankfurt, “to discuss with her the leadership transition [at WEF] with myself remaining chair until she was ready to take over, at the latest, early 2027.” He added that he had planned for “several years” for Lagarde to succeed him. An ECB spokesperson contradicted Schwab, saying that “President Lagarde has always been fully committed to deliver on her mission and is determined to complete her term.” Lagarde is a regular at the Davos meetings in January. She joined the WEF’s board of trustees in 2019 while still managing director of the International Monetary Fund. In a statement, the WEF said: “The WEF is not in any position to comment on possible confidential discussions that may have taken place between our former chairman and Madame Lagarde. Regarding Villa Mundi, this is new information to us. The venue is now being used by our staff and constituents as part of the Forum’s ongoing work.”