EU summit: Merz calls for cuts to 'too high' budget

We are closing this blog which provided coverage for the two-day EU summit.

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DW correspondent Teri Schultz reports on the reactions and Costa's reported outreach to the Kremlin at the EU summit.

At a press conference after the EU summit in Brussels, European Council President Antonio Costa said that the European Union does not intend to mediate peace talks to end the war in Ukraine because it sides with Kyiv.

According to Costa, there were "no credible signs" that Russia wanted to engage in serious negotiations.

Earlier during the summit, Costa's diplomatic overture to the Kremlin exposed divisions among EU leaders over how to handle relations with Russia.

Some countries, including Spain, Italy, and Ireland, welcomed the outreach. Others, including Germany and France, were skeptical of the move. 

"What ​I'm doing through my office ​is to establish ‌a diplomatic channel, because we cannot depend only on ⁠others to interpret Russian messages and we ⁠must ​be able to convey to Russia our own messages," Costa explained.

He dismissed suggestions of rivalry between competing diplomatic initiatives. "I see no contradiction nor competition between different actors and formats. They are complementary," Costa said.

He also added that Ukrainian President Volodymyr Zelenskyy is the only person with the legitimacy to negotiate on behalf of Ukraine.

Europeans must be at the table as and when there are peace ‌talks ⁠to ⁠end the war in Ukraine, said French ​President Emmanuel Macron at an EU summit in Brussels.

"We ​have always backed ​the ‌idea that when the talks take place, Europeans must ‌be at the ‌table, because ​this concerns the interests of Europe," Macron said.

He also said in statements to DW that Europeans are not mediators.

"We stand with Ukraine. We support Ukraine and provide assistance," Macron said.

However, the French president stressed that both EU institutions and member states must be represented when negotiations take place, as they are essential for guaranteeing future security arrangements.

Any negotiations will first take place between Russia and Ukraine, Macron said, adding that Americans and Europeans will then need to be involved in the process.

The French leader added that Antonio Costa — the President of the European Council — could participate in such negotiations, provided that his role in that capacity is clearly defined.

France opposes 'return hubs' in third countries

Macron also said that his country does not support the creation of so-called "return hubs" for migrants in third countries.

However, he added that he respects countries that want to set up such hubs.

Macron added that he was not sure these hubs align with European values and questioned their efficiency.

After a summit in Brussels, German Chancellor Friedrich Merz said the European Union's current budget proposals were unaffordable.

His remark highlighted the disagreement within the 27-member bloc regarding its seven-year funding plan.

According to Merz, what was on the table so far was "not feasible. It's not affordable."

At the same time, he called for the negotiations to move more quickly.

"I want us to reach a decision this year," he said.

Merz urges patience over Ukraine talks

As for the debate over EU Council President Antonio Costa's contacts with Russia, the German chancellor urged patience.

He said that the decision about who will speak on behalf of the EU regarding Ukraine will be made at the appropriate time.

"We don't need to decide today who speaks for the European Union," Merz said.

"We'll decide that when talks begin," he added, referring to Russia’s unwillingness to even negotiate an end to the war with Ukraine.

Chancellor calls for dialogue with China

In the debate over distortions of competition caused by countries such as China, Merz has proposed a dialogue on currency issues.

"In some cases, we are competing with currency areas whose currencies are undervalued by up to 30% ... relative to ours," the German chancellor said.

Merz emphasized that it was right for the European Commission to now develop a toolkit of defensive measures against distorting competition. The EU must be able to protect itself, he stressed.

"I think it's regrettable. But, given the nature of this scenario, it’s not entirely unexpected,” Ireland’s Prime Minister Michael Martin said upon arriving for the second day of the EU summit in Brussels. “I would urge continued dialogue and adherence to the agreement because the world needs stability and peace.”

Martin's comments come after news broke that the United States and Iran postponed their planned negotiations in Switzerland. 

It’s somewhat dulled the general optimism here at the EU summit in Brussels, after the successful G7 summit in Evian. There, they had seized the moment: US President Donald Trump was promised European political support for the newly negotiated Memorandum of Understanding with Iran, whilst they were also able to convince him to increase pressure on Russian President Putin so that peace talks could potentially finally begin over ending the war in Ukraine.

Strategic Stakes for Europe and Ukraine

For the European Union, the stakes go beyond the immediate question of nuclear safeguards and the security of critical shipping routes, such as the Strait of Hormuz.

The G7 summit in Evian showed how closely the conflicts in Iran and in Ukraine are interconnected.

With a solution to the Iran war and the opening of the Strait of Hormuz on the horizon, the tense situation for the global economy could also ease, particularly when it comes to oil prices. This easing, in turn, would allow US President Trump to reinstate oil sanctions against Russia. As he promised in Evian.

The key question for Europe remains: When might a diplomatic window for peace talks with Russia open, and just how might it take shape?

German Chancellor Friedrich Merz said he is in favor of a smaller proposal for the European Union's next long-term budget for the period from 2028 until 2034.

"The proposal on the table is far too high. The figures need to be reduced," Merz said before talks with other EU leaders on Friday. "A new proposal must be put forward," he said.

The European Commission has proposed a budget of nearly €2 trillion for the 2028-2034 period. That's an increase on the last budget but at 1.26% of the bloc's gross national income over those seven years, it's a small fraction of what individual member states spend domestically.

Negotiations are tricky and often meet resistance from leaders who prioritize their own key interests.

Currently, the European Commission is debating a 2% reduction in the proposed budget. 

What is the EU's long-term budget?

The EU's long-term budget is also sometimes referred to as the multiannual financial framework (MFF), as it is called in the EU treaty. It sets limits on how much money the EU can invest over a period of at least five years in different policy areas. Recent long-term budgets have been set for seven years.

One of the reasons the EU has a long-term budget is to make it easier for the beneficiaries of the programs that the EU wants to fund to plan and increase their efficiency.

Welcome back to our coverage on June 19, with EU leaders set to discuss a contentious topic — the EU budget.
 

We'll be pausing our coverage of the EU leaders' summit in Brussels until the bloc's top politicians emerge from their hotel rooms on Friday morning. 

EU leaders met late into the night Thursday and used dinner to discuss some of the global economic challenges, according to an official who briefed reporters.

Leaders agreed that a European response was required to address global macroeconomic imbalances and that this would be based on European unity and dialogue with the bloc's main economic partners.

Leaders discussed the One Europe One Market agenda, which is a roadmap that seeks to advance European competitiveness.

It was determined that the EU needs to continue trade diversification, derisking, reduction of dependencies and reinforcing strategic autonomy.

Ukrainian President Volodymyr Zelenskyy said hundreds more missiles would be needed if the war with Russia continued into another winter.

The Ukrainian leader said that while he wants diplomacy to bring an end to fighting, if it continued, then at least 300 missiles would be needed.

"Of course, we want to end this war before winter —  through diplomacy and through pressure on Russia," Zelenskyy said on Telegram.

"But we understand who we are dealing with. Putin is a war. So if the war continues, we will need a winter aid package. This should include an energy package — gas, diesel and the necessary energy equipment – ​​and a missile package for at least 300 missiles for the winter," Zelenskyy said.

He added that this is what was said when he addressed the European Council summit in Brussels.

Israeli Foreign Minister Gideon Saar said he was cutting ties to the EU's foreign policy representative Kaja Kallas.

Saar has challenged her to address a Euractiv media report claiming that she compared Israel's treatment of Palestinians in the West Bank and Gaza to apartheid South Africa in a visit to Mexico last month. 

EU-Israel relations have been strained amid the conflicts that followed the October 7, 2023, Hamas-led terror attacks.

Keep reading here to find out what Kallas had to say in response.

 

Addressing an EU summit, Ukrainian President Volodymyr Zelenskyy said the future of Europe was being decided with the defense of Ukraine.

He also stressed that the best guarantee for the future would be to grant Kyiv fast-track EU membership.

"The future of Europe — free, united, and in peace — is being decided in our defense. That shows how unique our situation is," Zelenskyy said in excerpts of the address posted on X.

"The most important such step could be a fast-track path for Ukraine to join the EU," he added.

This week, the European Council agreed to open the first cluster of chapters in the accession negotiations with Ukraine. The goal now, according to an EU official, is to open all the other clusters as soon as possible. 

The official said all the EU’s efforts are aimed at strengthening Ukraine and putting pressure on Russia in view of future peace negotiations. 

Zelenskyy, however, stressed that Europe's security depended on securing funding for Ukraine's military: "We need to provide long-term security guarantees for Europe, and that means long-term financial guarantees for the Ukrainian army."

He added that the EU and the "coalition of willing" countries supporting it could develop the financial instruments to ensure that funding.

 

On the sidelines of the EU summit in Brussels, Luxembourg's Prime Minister Luc Frieden called for a bigger EU role in Ukraine talks.

"I've always said we cannot leave it to the Americans to speak to Russia about Ukraine and Europe," he told reporters ahead of the summit.

But before reaching out to Russia, the EU needs to establish a common position, Frieden stressed, namely, "We stand on the side of Ukraine, we defend the fundamental principles of international law and the principles of the United Nations charter, that was obviously violated."

At the European Union summit in Brussels, German Chancellor Friedrich Merz acknowledged the new US security strategy, which includes a review of troop deployments worldwide, including in Europe and Germany.

Consequently, Germany's and Europe's defense capabilities must be strengthened, he stressed.

There is already good coordination within the EU and among NATO partners, including Norway and the UK, in this regard, Merz stated, adding that this coordination serves to reinforce the European pillar of NATO.