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Franco-German rift threatens to derail EU competitiveness summit

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Serious disputes between Germany and France are overshadowing today’s (February 12) special European Union summit on competitiveness.

The objective of this informal gathering is to draft new measures to bolster the EU economy. Experts argue that the internal market requires urgent reform; currently, trade barriers between EU member states are equivalent to a 45% tariff on goods and a staggering 110% tariff on services.

According to German Foreign Policy, while some proposals have met little resistance, others remain deeply divisive. Chief among these are demands for preferential treatment for EU-made goods in public procurement and the issuance of joint EU debt to finance critical investments in high-tech sectors.

France supports both initiatives, while Germany rejects them outright.

Conversely, a consensus appears to be emerging on strengthening private pension systems to utilize deposits for investment, modeled after the Canadian pension fund system. While this move would expose pensions to new market risks, a joint Franco-German concept paper explicitly endorses the project.

Objective: The Capital Markets Union

The agenda for today’s special summit at Alden Biesen Castle in Belgium includes initiatives regarding a potential Capital Markets Union (CMU). One primary goal is to create a unified EU capital market capable of generating larger investments than are currently possible within individual member states.

This integration is expected to help the EU compete with the US in sectors such as startup financing. Last year, German and French finance ministers Lars Klingbeil and Roland Lescure commissioned a report on the matter, which was presented in mid-January.

The report’s authors—former German Finance Minister Jörg Kukies and former Governor of the Bank of France Christian Noyer—propose encouraging larger financial groups across the EU to engage in joint investments while leveraging private pension services.

According to the report, if private pension services are significantly bolstered, pension funds could be utilized to inject substantial capital into private companies. This would, inevitably, turn pensions into objects of speculation. Klingbeil has already begun efforts to strengthen these private pension frameworks.

Diverging paths toward a “sovereign and competitive” Europe

Klingbeil is currently drafting a ten-point plan to strengthen the capital markets union. “In light of global upheavals, we are focusing on a sovereign and competitive Europe,” the SPD politician stated, adding that “strong capital markets” are the key to achieving this.

Among the ten points proposed by the Federal Finance Minister is the EU-wide standardization of the legal structures for small and medium-sized enterprises. Until now, only the European Company (SE) designation existed. Additionally, the plan seeks to standardize insolvency laws and streamline bureaucracy, though specific details remain vague.

Klingbeil’s plan also includes initiatives to strengthen private pension services, aiming for the comprehensive use of pension funds for investment and the inclusion of associated risks. To implement this, Klingbeil intends to rely initially on the “E6 format”—comprising Germany, France, Italy, Poland, Spain, and the Netherlands—rather than the entire EU. According to the minister, this would represent a further step toward a “multi-speed Europe.”

Plans to abolish unanimity for a “multi-speed” Europe

European Commission President Ursula von der Leyen has also signaled clear support for a “multi-speed Europe.” In a letter sent to EU heads of state and government on Monday ahead of today’s summit, von der Leyen noted that while the primary goal should always be to “reach an agreement among all 27 member states,” no one should “hesitate to use the possibilities for enhanced cooperation provided for in the Treaties.”

Under the EU’s founding documents, closer cooperation in specific policy areas is permitted provided at least nine member states join forces. To date, this mechanism has rarely been utilized.

One model discussed in the past is “Core Europe,” a Germany-centered alliance that would allow the EU’s power center to pursue deeper integration than the states on the union’s geographic periphery. Recently, Wolfgang Ischinger, President of the Munich Security Conference, proposed such a “core Europe” for the EU’s foreign and potentially military policy.

Merz vs. Macron

The option for “different speeds” within the EU is a critical factor for the summit, as German and French proposals to increase competitiveness have once again diverged sharply.

Chancellor Friedrich Merz, who initiated the special summit, advocates primarily for strengthening the internal market, reducing bureaucracy, and pursuing deregulation. The specifics of the latter two points remain entirely undefined; however, there are indications that the EU must stop supporting “zombie enterprises” that are no longer fit for the modern age. Such a move could impact everything from labor protections to environmental standards.

Merz also supports the simplification of digital legislation, though it remains unclear whether this would affect data protection standards.

From the perspective of French President Emmanuel Macron, these measures are insufficient. Macron warns that the world is experiencing a “deep geopolitical rift” hitting the EU from two sides: rapidly accelerating competition from China and continuous pressure from the Trump administration in the US. In an interview published in four leading European daily newspapers, Macron warned: “If we do nothing, Europe will perish within five years.”

French demands: “Made in Europe” and eurobonds

Consequently, Macron advocates not only for deregulation and the diversification of foreign trade relations but also for “prioritizing European products.”

This concept is being discussed under the “Made in Europe” banner. It would require a minimum proportion of jointly produced goods in EU public procurement across at least three sectors: steel, eco-technology, and electric vehicles. For electric cars, the proposed quota is 70%, while for solar panels—where Chinese competition is most intense—it ranges between 10% and 20%. This demand is being championed most vocally by French EU Industry Commissioner Stéphane Séjourné.

Furthermore, Macron is pushing for “joint debt capacity,” or Eurobonds, to fund investment in key sectors. The French leader argues that the EU is under-investing in defense, security, technology, ecological transition, artificial intelligence, and quantum technology. In his view, the EU has no choice but to engage in joint borrowing to close the investment gap with the US and China.

Germany emphasizes national interest

The German government rejects these final two demands, citing national interests.

Berlin fears that introducing a minimum “Made in Europe” quota for procurement would trigger retaliation. EU exporters could find themselves at a disadvantage in procurement processes outside of Europe. As the EU’s largest exporter, Germany would be the most affected by any such restrictions.

Furthermore, Germany remains staunchly opposed to EU joint debt, symbolized by Eurobonds. Berlin’s rejection is not merely a matter of principle; Germany’s debt is only half that of France, allowing it to easily assume its own debt to stimulate investment. Moreover, Berlin calculates that such investments would primarily benefit German companies rather than EU firms in general.

Italy sides with Germany

Rome has aligned itself with Berlin, stating that now is not the time to discuss the European joint debt proposed by Macron.

Italian Foreign Minister Antonio Tajani stated on Wednesday that while the government generally recognizes the need for joint borrowing to invest in strategic sectors, there is no point in entertaining the idea while France and Germany remain in conflict over it.

“Instead of starting a debate on issues where no agreement can be reached, I prefer to find solutions on matters where various countries already agree,” Tajani told Sky TV. “If an agreement cannot be reached, there is no point in entering a discussion, even on issues we find positive.”

Italy continued to support EU joint debt even under the current Prime Minister, Giorgia Meloni. However, in recent weeks, Meloni has drifted away from Macron’s “Made in Europe” proposals—which favored European companies in procurement and local content rules—and has moved closer to Merz.

Rome makes no secret of the fact that its cautious stance on discussing joint debt at the EU leaders’ meeting is a strategy to avoid tension with Germany. “I have always supported Eurobonds, but currently there is no agreement between Germany and France,” Tajani said. “Starting a discussion and dividing ourselves is pointless. We must find what unites us and move forward.”

Europe

Hungary’s new PM Magyar vows absolute ban on illegal migration, challenging Brussels over fines

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Hungary’s newly elected Prime Minister Péter Magyar has pledged to block all illegal migration, reject European Union quotas, and challenge Brussels’ punitive fines, signaling a highly restrictive border policy even as he vows to restore ties with European partners.

In his first interview with the German newspaper Frankfurter Allgemeine Zeitung since taking office, Magyar outlined his administration’s strategic roadmap. He addressed the smear campaigns directed against him by the former government of Viktor Orbán, relations with the EU, migration policy, and the economic necessity of maintaining energy ties with Russia.

Reflecting on his transition to power, Magyar noted that the Orbán administration targeted him, his family, and his colleagues during a highly polarized campaign.

“I have known Viktor Orbán for a long time. What happened during the election campaign was no surprise to me, even if it might be difficult to imagine in other countries,” Magyar said. “The mudslinging campaign was not just directed at me personally, but also against my family, my colleagues, and my friends. However, those who faced each other were not Hungarians against Hungarians; it was Viktor Orbán and his vassals standing against the Hungarian nation. One of our most important campaign promises is that we will do everything we can to reunite the Hungarian nation.”

Despite running a pro-European campaign to secure victory, Magyar acknowledged fundamental disagreements with Brussels, particularly on migration. He argued that former Prime Minister Orbán’s hardline stance during the 2015 European migrant crisis was correct.

“My government will pursue an extremely strict and decisive policy regarding illegal migration,” Magyar said. “You can be as angry with Viktor Orbán as you want—and no one has criticized him more than I have—but when the migration crisis began in 2015, he was right. Many member states have now admitted they made wrong decisions at the time. In any case, we will protect our homeland, our country’s borders, and the external borders of Europe.”

“Hungary will not accept any illegal migrants”

Responding to whether Hungary would comply with newly implemented EU asylum rules, which mandate member states to conduct processing procedures at external borders, Magyar delivered a firm refusal regarding quotas and penalties.

“I can only say this: Hungary will not accept any illegal migrants. We will not pay any penalties for this either,” Magyar said. “However, we will help protect Europe’s external borders, whether in Greece, Malta, or Italy. The 2015 migration crisis must be a lesson for Europe. The most important duty of European politicians is to protect the safety of the people. I believe there are many ways to stop illegal migration without violating European Union rules. It is simply a matter of being able to negotiate.”

Magyar also dismissed the current relevance of a European Court of Justice ruling imposing a daily fine of 1 million euros on Hungary for failing to implement EU asylum procedures, arguing the decision is outdated.

“The court’s decision was made at a very different time and under a different legal framework,” Magyar said. “Today, we are in a completely different situation. This decision no longer reflects today’s reality. Today, there are many countries acting just like Hungary, yet this European Court of Justice decision does not apply to them. I find this incredibly unfair. In order to protect our borders and avoid having to pay the daily fine of 1 million euros, we will hold talks with our European partners and find a common solution.”

While acknowledging that the judicial ruling is final and cannot be appealed, Magyar described the financial burden on Hungarian citizens as unjust.

“The decision cannot be appealed. We are looking for new rules and opportunities to avoid paying the fine,” he said. “It is unfair and disproportionate that the people of Hungary must pay a fine of 1 million euros every day. Similarly, it is a great injustice that while other member states receive these funds, Hungary has been provided with no financial resources for the wire fence it constructed to protect the external border of the European Union.”

“Exclusion only makes the far-right stronger”

Magyar strongly opposed pushback from member states—particularly pressure from Germany—to transition EU foreign policy decision-making from unanimity to qualified majority voting, defending the preservation of national sovereignty.

While rejecting the confrontational rhetoric favored by Orbán toward Brussels, Magyar emphasized the importance of compromise among sovereign states.

“I served as a diplomat within the European Union for a long time, and I know very well how difficult it is to reach a consensus among 27 countries. Yet, most of the time, this is achieved,” Magyar said. “Orbán always said, ‘We must defeat Brussels.’ I do not think that is the point. The point is to understand each other, to persuade, and not to try to defeat one another. People do not want a United States of Europe; they want a European Union based on strong member states. For this reason, I do not support transitioning to a majority voting system in many areas instead of the unanimity rule at this stage. We will negotiate and find a middle ground.”

Addressing the political rise of far-right parties across Europe, particularly in France and Germany, Magyar criticized traditional political elites for being disconnected from public anxieties and relying on political moralizing.

He warned that isolating these populist movements is counterproductive.

“I do not like labels like far-right or far-left. I do not like ideological wars,” Magyar said. “People deserve more than politically correct speeches where ideological labels are slapped on one another. I have no intention of interfering in the internal affairs of other member states, and I will not do so; on this point, I differ from Orbán. However, I observe that some countries make mistakes in combating extremist parties. In many countries, politicians do not act honestly. They do not understand people’s fears and expectations, and they do not dare to talk openly about problems and face them. They use the language of political correctness and, at the end of the day, fail to grasp reality itself. These are precisely the mistakes that certain groups exploit. Excluding these people and these parties, building a wall of isolation around them, is not a solution on its own. Exclusion only makes these forces stronger. In many countries, these mistakes have been recognized, but not yet everywhere.”

Asked if this critique applied to Germany, Magyar maintained his criticism of governing establishments.

“In many countries, the political, media, and economic elites protect their own positions and do not always address the real fears and problems of the people. But the public does not forget this. That is why what we need is honesty, honesty, and once again, honesty,” he said.

On the debate over whether conservative factions in the European Parliament should cooperate with the Alternative for Germany (AfD) party, Magyar shared his perspective on the future strategy of the European People’s Party (EPP), which includes his own party, Tisza.

“In the European Parliament, political forces must always seek a majority, and grand coalitions between the center-left and center-right can function. Germany and Austria are good examples of this,” Magyar said. “However, this does not always work, and that is why the CDU/CSU and the European People’s Party, which includes my party Tisza, may have to make a decision one day. In my view, the European Conservatives and Reformists (ECR) are the natural allies of the European People’s Party. Whether they want to cooperate with the AfD is not my decision to make. However, I believe that talking to one another and listening to the other’s arguments never causes harm. What we accept from each other’s proposals is an entirely separate matter.”

“Europe will partially return to Russian energy after the war”

Defending Hungary’s decision to continue importing crude oil and natural gas from Russia despite the war in Ukraine, Magyar emphasized the country’s landlocked geography and economic constraints.

“The Hungarian people elected me as the Prime Minister of Hungary. My government’s duties include ensuring energy security, security of supply, and the lowest possible energy prices,” Magyar said. “In recent years, Hungary has become one of the poorest and most corrupt countries in the European Union. Three million people live below the poverty line. Our neighbors in the European Union must understand that Hungary is a landlocked country. We are still dependent on Russian oil, and we cannot change this overnight. We have not seen economic growth for years, and we need cheap energy to grow. Of course, we are doing everything we can to diversify our energy resources, but we cannot afford to see our companies’ competitiveness decrease further and Hungarian families’ energy poverty increase. I think Europe will partially turn back to Russian energy resources and lift sanctions when the war ends, because the competitiveness of all of Europe is at stake here. In a future state of peace, no one has an interest in maintaining a new economic and political Cold War. For this, of course, the war must first end.”

While Orbán maintained close ties with American conservative movements and received explicit support from Donald Trump, Magyar indicated that the change in leadership in Budapest would not damage relations with Washington.

“The US is Hungary’s natural ally in NATO and a highly important economic partner. What happened during the election campaign will not change this. We will maintain good relations with every American administration,” Magyar said.

Magyar criticized Orbán’s personal relationship with Russian President Vladimir Putin, arguing instead for a pragmatic, non-ideological approach to Moscow in the post-war era.

“I know the role of Russia in Hungarian history very well. I have not forgotten the years 1849 and 1956. In both periods, Russian troops bloodily suppressed the Hungarian freedom movement,” Magyar said. “But on the other hand, the reality is that geography does not change. We must accept this as it is. Therefore, we must develop pragmatic relations with Russia once the war against Ukraine ends. Nonetheless, it is extremely clear that Russia currently poses a security risk to all of Europe. It is unacceptable that people in Europe must live in fear of Russian sabotage or a Russian attack. That is why this war must end, and we must provide international security guarantees to Ukraine. However, Europe can only develop when normalcy returns, and Russia cannot have an interest in a new Cold War becoming permanent on the continent.”

“We can turn a new page with Ukraine”

Magyar pledged to end the hostile state-sponsored propaganda directed at Ukraine by the previous administration, emphasizing his respect for Ukraine’s territorial integrity and his personal involvement in humanitarian efforts.

“We want to build good relations with all our neighbors, not least because a Hungarian minority lives in each of them. This also applies to Ukraine,” Magyar said. “We have always stated that Ukraine is the victim in the Russia-Ukraine war and that Ukraine has the right to its territorial integrity. When the Russians bombed the largest children’s hospital in Kyiv in the summer of 2024, I immediately went to Kyiv with our volunteers and personally delivered the humanitarian aid of the Hungarian people. Right after the attack, we set off in a 30-year-old Ford Transit and reached Kyiv within 20 hours under air raids and missile bombardments. I did not see any other European politician at that bombed hospital. We are currently holding talks with Ukraine at a technical level, and we are working to reach an agreement within a few days to restore and guarantee the language, education, and cultural rights of the 100,000 Hungarians living in Ukraine. Today, we need to clarify certain matters with Ukraine regarding our minority in that country, and I hope we will achieve this in the coming days. Ethnic Hungarians there currently do not have the opportunity to use their mother tongue in their relations with official authorities. However, if we resolve these issues on the basis of mutual interest, we can turn a new page.”

Magyar cautioned that future security guarantees for Ukraine must be concrete and enforceable, unlike previous international agreements.

“In 1994, the famous Budapest Memorandum was signed, in which the US and other major powers guaranteed Ukraine’s independence and integrity. However, these promises were not kept, because empty slogans are of little use,” Magyar said. “Right now, everything is at stake in Ukraine. A large number of people are dying, and it is possible that this country will lose part of its territory. Therefore, Ukraine needs real, enforceable international guarantees.”

However, the Prime Minister reiterated that Hungary would remain militarily uninvolved in the conflict, stating that arms shipments do not constitute a genuine security guarantee.

“I do not believe that weapons are a security guarantee. Security guarantees can only be provided by the international community,” the Hungarian leader concluded. “Hungary cannot play a decisive role here; this is the work of the major powers. We can provide diplomatic and humanitarian aid, and Hungary can also provide a suitable ground for negotiations.”

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EU agrees new deportation rules allowing migrant return centers outside the bloc

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European Union lawmakers and member states have reached agreement on new legislation overhauling rules governing the deportation of asylum seekers.

According to Politico, the agreed text allows asylum applicants whose claims have been rejected to be sent to dedicated return centers established outside the EU.

As a key condition of the deal, measures to establish the return centers are set to be implemented immediately.

The move is said to be of particular importance to the Netherlands and Germany. Other provisions of the legislation are expected to take effect one year later.

The agreement must still receive final approval from both the EU Council and the European Parliament before it can formally enter into force.

European Commissioner for Migration Magnus Brunner said the agreement would help the EU regain control over both those arriving in the bloc and those required to leave it.

According to data from Eurostat, the proportion of migrants denied asylum in the European Union who ultimately leave the bloc remains at around 27%.

“We must give people the feeling again that we have everything under control,” Brunner said.

The new framework grants member states the authority to transfer individuals ordered to leave EU territory to return centers located outside the bloc.

Several member states are already examining the option, while human rights organizations have warned of risks of rights violations and abuse during the process.

The legislation also introduces stricter measures, including home searches, extended detention periods, entry bans, and penalties for individuals deemed security threats or those who refuse to cooperate.

French Member of the European Parliament François-Xavier Bellamy told the publication: “For years, Europe sent the worst possible message: even if you had no right to stay, there was a high likelihood that nothing would happen. That era is ending. If you do not have the right to remain in Europe, you must leave.”

The initiative, however, has faced opposition from lawmakers affiliated with liberal and left-wing groups.

Melissa Camara, a representative of the Greens group, described the agreement as “a legal arsenal serving a xenophobic ideology” and criticized both offshore centers and the detention of minors.

Marta Welander, head of the International Refugee Committee, said the new measures signaled “a troubling new era.”

Welander argued that the rules would normalize migrant raids and increase the risk of people being deported to countries where they could face persecution or torture.

According to available data, the number of migrants living within the European Union reached 64.2 million in 2025. During the same period, the foreign-born population arriving from outside the bloc increased by 2.1 million people annually.

In 2010, the European Union was home to approximately 40 million migrants.

As a result, the migrant population has increased by more than 60% over the past 15 years, while migrants’ share of the EU population has risen to 14.2%.

In December last year, US President Donald Trump said Europe faced the risk of destruction because of the migration policies pursued by European countries.

Trump had previously argued that the continent was facing a wave of migration and that, as a result, Europe was “no longer the Europe it once was.”

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Anthropic invites EU cybersecurity agency to access Mythos AI hacking model

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Anthropic has invited the European Union to access Mythos, its powerful AI-powered hacking tool, by sending an invitation to the bloc’s cybersecurity agency.

A European Commission official said the AI company issued the formal invitation following a meeting with the Commission in San Francisco last Thursday, adding that the EU must now establish a mechanism that would allow access to the model under appropriate security safeguards.

Bloomberg reported on Monday that ENISA, the EU’s cybersecurity agency based in Athens, would be granted access to Mythos.

European Commission spokesperson Thomas Regnier said the Commission had held “several productive meetings with Anthropic” and “welcomes the latest developments regarding potential future access.”

Anthropic unveiled Mythos in early April and warned that the model outperformed most humans in identifying and exploiting cybersecurity vulnerabilities.

The disclosure raised concerns that the model could be used to carry out large-scale attacks against critical and sensitive systems if it fell into the hands of cyber adversaries.

European officials were unable to access the cutting-edge cybersecurity AI technology for weeks, prompting urgent calls from European lawmakers and government officials to secure access.

Cybersecurity officials also urged Europe to develop its own version of the technology.

“This latest development is extremely important in helping us gain a clear understanding of the potential risks. We should not forget that Mythos is not an isolated case and that a new wave of powerful models is entering the market,” Regnier said.

An ENISA official said the agency does not currently have active access to the model but is working to make it operational.

The Commission is developing a formal action plan to respond to powerful AI hacking tools.

According to an industry official, the Commission has indicated that it wants to publish the plan before the summer break.

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