Spiralling energy prices, the EU’s long-term budget and support for Ukraine in the wake of Donald Trump’s latest overture to Vladimir Putin will dominate the conversation as the leaders gather for a two-day summit in Brussels.
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Enlargement, hybrid warfare, economic stagnation, rising borrowing costs, trade imbalances and irregular migration will also feature in the talks.
The meeting will start early on Thursday with a hotly anticipated discussion on energy prices, which hostilities in the Middle East have sent skyrocketing. Oil remains above $100 per barrel despite a coordinated G7 release, while gas trades at its highest level since winter 2022, with underground storage running below average.
The market shockwaves have rattled EU leaders, who are under mounting pressure to deliver tangible relief for households and industries, especially as temperatures cool down and the heating season begins.
Italian Prime Minister Giorgia Meloni and Greek Prime Minister Kyriakos Mitsotakis have led the charge, asking Brussels to relax the bloc’s fiscal rules to allow governments to finance “temporary and targeted measures” to cushion the energy crunch.
Other countries, however, worry that excessive flexibility will promote fossil fuel consumption and discourage investments in the green transition.
Meanwhile, six member states (Austria, Germany, Italy, Poland, Portugal and Spain) have proposed an EU-wide windfall tax to capture excess profits from energy companies amid high prices. But the idea remains divisive and has not gained enough traction.
Energy will be followed by another pressing economic challenge: China.
With a €1 billion trade deficit every day, Brussels threw down the gauntlet by imposing a deadline on Beijing to deliver “tangible results” by October at the latest.
Those results emerged last week in Trade Commissioner Maroš Šefčovič’s trip to Beijing, where he secured preliminary concessions on hybrid and plug-in hybrid cars, rare earths and permanent magnets, and market access for European companies.
“We’re satisfied with the results, but for us, it’s only a first step because imbalances are not specific to one sector – there are across the board,” a senior diplomat said, cautioning implementation will be key to show whether Beijing is serious.
“Why is China agreeing to something that China has never agreed before? (Because) they’re starting to realise they’re killing their customers. We’re not naïve.”
The concessions avert, for now, an all-out trade war. Leaders are expected to call on the Commission to continue “results-oriented dialogue” with China and “urgently enhance” trade tools to retaliate if needed, according to the draft conclusions seen by Euronews.
In a sign of exasperation, Germany and France have pitched a “kill switch” to cut off China’s access to the EU market if the deficit remains unsustainable.
Money talks, but does anyone listen?
The summit’s most contentious moment will arrive on Thursday afternoon when the next seven-year EU budget is put on the table. The wrangle will take place against the backdrop of steep borrowing costs, particularly alarming in France.
European Council President António Costa has appealed to member states to move away from their red lines and reach an agreement by the end of the year so that the complex legislative work can be fully completed before January 2028.
Ireland, the country holding the rotating presidency, has tabled a proposal that cuts the original draft by €141 billion. But the knife mostly spares agriculture and cohesion funds and falls instead on research, technology, climate action, security and foreign policy.
The Irish “nego-box” has made everyone unhappy.
The so-called “frugals” (Austria, Denmark, Finland, the Netherlands, Sweden and Germany) say the cuts need to go much deeper and across the board. The 17 “Friends of Cohesion” say the opposite, that the cuts have gone far too deep. The European Commission warns its vision of a modernised, flexible budget is in real danger.
On top of that, nobody agrees which EU-wide taxes should be approved to collect additional revenue for the common pot.
The clash of opinions and the unwillingness to compromise bode ill for Costa’s ambition to have a unanimous deal in December. Spanish Prime Minister Pedro Sánchez’s shock decision to call snap elections adds yet another layer of uncertainty.
“I don’t think there will be blood on the wall, but it’s important in these sorts of negotiations that leaders feel where the contradictions are,” another senior diplomat said. “We are not in a hurry. We need a good deal. We don’t feel any time pressure.”
The first day will end with a strategic debate on how to prepare the 27-strong bloc for the admission of new member states and reform its internal decision-making. Montenegro, the frontrunner in the accession race, aims to close all chapters this year.
Backing Zelenskyy, rebuking Trump
Friday will be dedicated to Ukraine in the presence of President Volodymyr Zelenskyy.
The peace talks took a dramatic turn after US President Donald Trump blindsided Europeans by cutting a deal with his Russian counterpart, Vladimir Putin, to bring tens of thousands of Russian diesel into the US market. Washington issued a sanctions waiver until April 2027 to enable what would until now have been a forbidden sale.
The news jolted Europeans and prompted a scramble to close ranks and rally behind Ukraine to control the fallout from a unilateral, uncoordinated decision that has revived memories from the Trump-Zelenskyy showdown in the White House.
Although the diesel deal is likely to have a limited impact on the prices at the pump, which Trump wants to lower ahead of the midterm elections, there is greater concern over the diplomatic implications of providing relief to Russia at a time when it escalates its attacks to decimate the Ukrainian economy ahead of the winter.
The summit’s conclusions have been changed to add a rebuke: “The European Council regrets the United States’ decision to temporarily lift sanctions on Russian diesel.”
Trump has spent the last few days calling on Zelenskyy to stop attacks on Russia’s oil refineries and abide by his energy ceasefire. Zelenskyy says he is ready for the truce as long as Russia complies, but Russia keeps bombing Ukraine’s power facilities.
Europeans are reluctant to endorse Trump’s petition because the long-range strikes are Kyiv’s greatest leverage over Moscow. Giving it up would further tilt the war.
“It’s not the first time that we’re going through divergences with the US in what the Ukraine war is concerned, but I would disagree with the idea that we’re ignored,” a senior EU official said.
“We have seen that dialogue with the US doesn’t always lead to full agreement in the way the EU and the US see things, but it’s always better than not having dialogue,” the official added. “This is what needs to continue to be done. It’s the normal thing.”
The last item on the summit will be a strategic debate on migration poised to pit Sánchez against the Meloni-led majority in the room. In the aftermath of the Ceuta border crisis, Italy introduced border checks with Spain, and Spain retaliated in kind.
The checks, which are conducted randomly at airports, last to this day.
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