Why Europe fears the worst after Trump’s ‘excellent’ chat with Putin

Good morning. Food for thought: Brussels must not cut back its farming subsidies to increase funding for defence, the EU’s agriculture commissioner told the Financial Times. “It is difficult to build a continent on an empty stomach,” he warned those currently drafting the bloc’s next seven-year budget.

Yesterday evening, US President Donald Trump had a convivial chat with Russia’s Vladimir Putin and signalled that the US was stepping back from driving peace talks over Ukraine — spooking European capitals, as I report below. And our finance correspondent hears how Brussels wants to use this week’s G7 meetings to get Washington’s support for tightening its sanctions regime.

Stepping away

For months European leaders have worried that US President Donald Trump would abandon Ukraine to a shotgun peace agreement dictated by Vladimir Putin’s Russia.

That fear began to feel more real last night as he signalled he was done trying to broker a deal — and putting pressure on Moscow.

Context: Trump was elected pledging to end the conflict immediately, but months of US-led shuttle diplomacy have failed to do so. Trump and Putin spoke for two hours last night, their third publicly disclosed discussion since the former took office in January. US support for Ukraine is critical given its military and financial might and intelligence capabilities.

“Russia and Ukraine will immediately start negotiations toward a Ceasefire,” Trump announced after the call. “The tone and spirit of the conversation were excellent.”

But the US would no longer play referee, he added: “The conditions for that will be negotiated between the two parties, as it can only be, because they know details of a negotiation that nobody else would be aware of.”

That was made stark in a subsequent call Trump held with the leaders of Ukraine, Finland, France, Germany, Italy, the UK and the European Commission, people briefed on the conversation said. The US was leaving this to the belligerents, he told them, and could not promise to continue putting pressure on Moscow.

That’s vastly different from the announcement a week ago by European leaders, who said the US had backed an ultimatum to Putin that Moscow would be hit with major new sanctions if it didn’t agree to an immediate ceasefire.

European officials said last night that the call represented a major victory for the Russian leader after he spent weeks refusing to engage with peace efforts while signalling enough rhetorical willingness to keep stringing along Trump.

Ukraine’s President Volodymyr Zelenskyy said the quiet bit out loud: “It is crucial for all of us that the United States does not distance itself from the talks and the pursuit of peace, because the only one who benefits from that is Putin.”

“He is stepping away,” said one senior European diplomat briefed on the call. “Supporting and financing Ukraine, putting pressure on Russia: that’s all on us now.”

Following the call Putin merely said he was “ready to work with the Ukrainian side on a memorandum about the possible future peace agreement”.

But his foreign policy aide Yuri Ushakov was more exuberant. It was a “frank and friendly” conversation where the presidents used their first names, he said, and neither wanted to be the first to hang up.

Chart du jour: Contagion

The European Commission has cut its growth forecasts for the Eurozone as US trade policy disrupts the economy.

Cap in hand

The European Commission wants to lower a price cap on Russian oil but needs to secure US support to do so, the EU’s top economy official told Paola Tamma.

Context: The EU is planning a more substantial package of sanctions against Moscow — its 18th — which includes lowering a price cap on Russian crude exports agreed in 2022 and set at $60 per barrel, as well as further financial restrictions.

The EU executive will float the idea of lowering the oil cap at a meeting of G7 finance ministers and central bankers in Canada starting today and running through Thursday, which US Treasury secretary Scott Bessent is expected to attend. 

“This is something which we flagged from the commission side in the context of creating an 18th sanctions package, so I would expect some interest also from other G7 partners,” Valdis Dombrovskis, representing the commission at the gathering in Banff, Alberta, told reporters.

The idea would require unanimous backing of the EU’s 27 member states as well as G7 members. The EU’s G7 countries — France, Germany and Italy — have in principle given their approval, officials said.

But US support for further sanctions against Russia is uncertain following Trump’s call with Putin yesterday.

What to watch today

1. EU defence ministers and EU foreign ministers meet in Brussels.

2. Informal meeting of ministers responsible for cohesion policy in Warsaw.

Now read these

• Far-right rise: While centrists snatched narrow wins in Romania, Poland and Portugal this weekend, the far right were within touching distance in all.

• Picking cherries: Yesterday’s EU-UK deal has been hailed as a “new chapter”, but some are sceptical of how much of that chapter will ultimately be written.

• Unexpected perks: Poland’s stock market has emerged as one of the world’s top-performing bourses this year.