Good morning. A scoop from yesterday: A former Stasi agent and close friend of Vladimir Putin is leading a push to restart the controversial Nord Stream 2 gas pipeline from Russia to Germany, with the backing of US investors — in a startling sign of the economic rapprochement between Washington and Moscow as part of a potential Ukraine peace deal.
Today, my Brussels colleague reports on the Ukraine summit in London yesterday ahead of an EU defence summit this week, and the EU’s clean growth commissioner gives me the business case for more lax green state aid rules.
‘Heavy lifting’
The biggest tests for Europe are whether it can collectively guarantee a durable peace in Ukraine and ensure its own security. On the first objective, leaders made some progress yesterday, writes Paola Tamma.
Context: Still reeling from Friday’s calamitous dressing down of Ukraine’s President Volodymyr Zelenskyy by US President Donald Trump, more than a dozen leaders gathered in London with UK Prime Minister Keir Starmer to discuss a peace plan for Ukraine.
Starmer said that the UK, France and others would lead an effort for a peace plan that would involve Ukraine, but which “must have strong US backing”.
“Europe must do the heavy lifting,” he said, committing “[British] boots on the ground and planes in the air” of Ukraine.
“A number of countries have indicated today that they want to be part of the plan that we’re developing . . . we’ve been able to move that forward,” said Starmer following the meeting, which was attended by Zelenskyy, the European Council and European Commission presidents António Costa and Ursula von der Leyen, Nato secretary-general Mark Rutte, and leaders from France, Germany, Poland, Italy, Spain, Finland, Norway, Sweden, Denmark, the Netherlands, Czech Republic and Canada.
“Strong unity on the first phase: strengthen Ukraine and put pressure on Russia. Low hanging fruit, but it’s something,” summed up one person briefed on the talks.
The summit circus moves to Brussels on Thursday for all 27 EU leaders, and turns to the parallel question of European security. “Thursday’s summit will be about how we can do more for our own defence,” German Chancellor Olaf Scholz said yesterday.
That question is becoming increasingly pressing as the US threatens to shrink its security umbrella for the continent. The EU is working on plans to address missing defence capabilities and increase military spending, which von der Leyen will share with leaders this month.
But it’s clear that it won’t be easy. Hungary’s Viktor Orbán has threatened to oppose Thursday’s conclusions as “there are strategic differences in our approach to Ukraine that cannot be bridged by drafting or communication,” he wrote to Costa on Saturday.
Chart du jour: Peace dividend
The “peace dividend” has ended with the return of war to Europe, writes Martin Wolf. But spending significantly more on defence is also an economic opportunity.
Green subsidies
Brussels’ plan to extend its lenient approach to policing green state subsidies and allow capitals to keep pouring cash into cleantech investments is necessary, the bloc’s clean growth commissioner has said, even if it might impinge on his free market principles.
Context: The EU’s state aid regime is designed to prevent continent-wide subsidy races between countries. But successive crises — from the 2008 financial crisis to Covid-19 and Russia’s war against Ukraine — have triggered greater flexibility in the rules.
Wopke Hoekstra, European commissioner for climate, net zero and clean growth, said that allowing governments to help green industries was the right move.
“We are living in a world of almost unprecedented geopolitical turmoil, with huge pressures on our industry and our competitiveness,” the Dutch liberal former finance minister told the Financial Times. “It will be madness to just continue the things that we have been doing before and expect a different result.”
The lax rules have sparked some controversy, with smaller states concerned that countries such as Germany and France will use their bigger balance sheets to distort the EU single market.
“I’m someone who deeply believes that competition is changing the world for the better,” Hoekstra said. “In an ideal world, I am convinced that my model is still the best. And to the extent it is possible, we should uphold it.”
“But we should also be realistic about what is being forced upon us. And one of the things clearly is high energy prices. So if [state support] is needed to make sure that we help our companies to decarbonise . . . and we to some extent use public money for that, I think that is a fair and good bargain for our companies and our people,” he added.
What to watch today
EU Council President António Costa visits Moldova.
European Commission president Ursula von der Leyen participates in the Strategic Dialogue on the Future of the European Automotive Industry.
European parliament president Roberta Metsola meets Nato secretary-general Mark Rutte at 7pm.
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