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Von der Leyen unveils €2 trillion EU budget plan for 2028-2034

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European Commission President Ursula von der Leyen has presented a record-breaking long-term budget plan, announcing that the 2028-2034 budget will be €2 trillion.

As announced by von der Leyen in Brussels yesterday, the EU budget for 2028-2034 (the Multiannual Financial Framework) will reach approximately €2 trillion. This figure represents 1.26% of the EU’s gross domestic product (GDP), significantly more than the 1.1% of GDP allocated by Brussels for 2021-2027.

“This budget is more strategic, more flexible, and more transparent. We are investing more in our capacity to react and in our independence,” the European Commission President stated on Wednesday afternoon.

Von der Leyen’s plan reshapes the budget’s structure around three main pillars: €865 billion for agriculture, fisheries, cohesion, and social policy; €410 billion for competitiveness, including research and innovation; and €200 billion for external actions, of which €100 billion is allocated to Ukraine.

Although direct contributions from member states will cover most of the budget, von der Leyen also envisions introducing new EU-wide taxes on electronic waste, tobacco, and the revenues of large corporations so that Brussels can generate additional income on its own.

The main plan is to consolidate the EU’s central spending into three main budget lines. This will allow the Commission to respond more quickly to crises and conflicts, but also to control member states more than before under headings such as the “rule of law.”

The Commission also plans to establish a “Global Europe Fund” for an ambitious global policy.

The plans to radically change the structure of the EU budget are explained by the European Commission’s desire to act more “flexibly and effectively” in the future, while also allocating more funds for foreign policy activities and the improvement of member states’ defense capabilities.

Agriculture and cohesion funds are being merged

According to the Commission’s statement, approximately 90% of expenditures are typically fixed in the multiannual financial framework. The multiannual financial framework determines the EU’s seven-year spending; this long period was chosen to avoid having to enter into lengthy budget negotiations every year.

According to Brussels, this framework should be designed in the future so that the Commission can draw on more comprehensive resources in the event of a crisis or war, and for this purpose, the current budget structure will need to be changed.

This structure allocated about one-third of spending to farmers and another third to regions. The official purpose of the share allocated to regions was to bring the standard of living in the EU’s poor regions up to the level of more prosperous regions. There were also numerous small EU programs for different purposes.

Now, the Common Agricultural Policy (CAP), which covers subsidies to farmers, and the cohesion funds are being merged and will cease to be separate entities, both being grouped under the first pillar, National and Regional Partnerships, worth a total of €865 billion.

The two budget items appear to be significantly downsized compared to the current budget, where CAP and cohesion funds account for more than 60% of allocations.

A new approach is now planned. According to this approach, funds for farmers and regions will be combined in a previously non-existent budget item called “European social model and quality of life.”

Tensions will rise between the ‘poor’ south and the ‘rich’ north

On Wednesday, various figures regarding the exact volume of this budget circulated after clearly contradictory information was leaked from the Commission meeting, which lasted much longer than planned, into the afternoon.

According to the latest information, €865 billion—almost half of the total budget that Ursula von der Leyen wants to increase to €2 trillion—has been allocated to this budget item.

Unlike in the past, this money will be transferred directly to the member states, which will sign “national and regional partnership agreements” with the Commission. In these agreements, member states will set targets for their spending and commit to making “reforms.”

The deep cut will be the scene of a fierce debate between the southern countries, which are anxiously watching for any reaction from the agricultural sector, and the eastern countries, which are dependent on cohesion policy to close the gap with wealthier member states.

At the same time, this reduction will be welcomed by the western and northern countries, which have consistently argued for a greater focus on today’s priorities, such as climate action, defense, security, research, innovation, and advanced technologies.

According to the announcement, these reforms may particularly relate to the protection of the “rule of law.” Under this rhetoric, the EU has been “disciplining” governments with which it has fallen into contradiction for years, such as Viktor Orbán’s in Hungary.

Brussels’ control is increasing

In addition to the massive fund for farmers and regions, the European Commission is planning a new budget item: the European Competitiveness Fund (ECF).

This fund will bring together more than a dozen previously independent programs. The Commission officially states that it wants to reduce “complexity” and “bureaucracy.”

At least initially, the supervision of the ECF was planned to be delegated to the Commission. This would have given the Commission more flexibility to use the funds at its discretion and to distribute them more effectively, for example, in the event of new crises and conflicts.

On Wednesday, a figure of €410 billion was circulating, slightly less than initially planned. However, the ECF has faced serious criticism, especially from the European Parliament (EP), from those who feel deprived of their say and thus their authority, as with the agricultural and regional budgets.

The ‘Global Europe Fund’ will tie non-EU countries to the EU

In addition to these two budget items, the European Commission’s budget plan includes a third item, currently called the “Global Europe Fund.”

This fund was created to bring together programs affecting countries outside the EU. This will allow the Commission to use funds for the EU’s global influence policy in a more targeted way than before.

The programs of the Global Europe Fund will be strictly separated by region, and according to preliminary statements, this will make it much easier to “use development cooperation as a tool of EU foreign policy.”

The size of the Global Europe Fund was announced yesterday as approximately €200 billion. In addition to the official budget, a Ukraine fund is also planned, which von der Leyen wants to equip with about €100 billion.

Tax protests from the German business community

The restructuring of EU spending is accompanied by a restructuring of revenues. This figure is also higher than before, as debt repayments of between €25 billion and €30 billion will be made each year from 2028.

Von der Leyen has already shelved the plan to use revenue from a possible new digital tax on US digital giants to consider the fundamental interests of the Trump administration. Instead, she wants to tax unused electronic waste and take a share of national tobacco taxes.

In addition, a tax is planned for EU-based companies with an annual revenue of over €100 million. This is already causing strong protests from the German business community, particularly because a large proportion of the affected companies (up to 40% according to some estimates) are based in Germany.

Observers predict that the draft budget will cause serious disagreements in the EU for at least two years and will further exacerbate existing differences.

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EU tech chief warns AI is becoming geopolitical weapon, urges rapid push for technological sovereignty

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The European Union’s technology chief, Henna Virkkunen, has warned that artificial intelligence is turning into a geopolitical weapon.

In an interview with the Financial Times, Virkkunen emphasized that Europe must rapidly develop its own alternatives to US models or risk being deprived of strategic capabilities.

Virkkunen said Brussels fears becoming “dependent on third countries for these highly critical technologies.”

The technology commissioner warned that governments with the power to cut off access to artificial intelligence models could use this leverage for their own interests.

The EU’s concerns regarding dependence on US technology became a reality in June, when Washington imposed export restrictions on leading models from Anthropic due to security concerns.

Although those measures were lifted following pushback from foreign governments and Silicon Valley, the incident reignited fears that the US could, through emergency decisions, cut off access to technologies that underpin the European economy.

Virkkunen stated that those who control critical technologies “not only dominate the economy” but also possess “a major strategic asset” at a geopolitical level.

The Finnish politician, who oversees technology and cybersecurity at the European Commission, continued:

“The access restriction applied to Anthropic showed us very clearly how important it is to be prepared for this kind of reality in our cybersecurity landscape. We know that in the coming months and years, even more of these highly capable AI models will enter the market. Therefore, we must be very well prepared for this.”

Virkkunen likened the situation in artificial intelligence to the decision by the previous Joe Biden administration to impose export restrictions on cutting-edge chips. That decision had divided EU member states into those granted access and those denied it.

“AI capabilities are truly strategic assets today, and that is why it is very important for us to establish our own technological sovereignty,” Virkkunen said.

Last month, Brussels presented a technological sovereignty package aimed at reducing dependence on US technology by supporting European alternatives in sectors ranging from semiconductors to cloud computing and artificial intelligence.

The plan includes incentives to accelerate the construction of European data centers and support domestic cloud and AI technologies, such as the AI company Mistral, as well as cloud providers like Scaleway or OVHcloud.

“It is very important for Europe to develop its own capacities and for us not to depend on third countries for these highly critical technologies,” Virkkunen said.

To fund these investments, the EU and the European Investment Bank will establish a new mechanism to make strategic investments in European technology companies.

Meanwhile, Brussels is continuing bilateral discussions with the US administration to ensure ongoing access to the most advanced AI models.

Leaders from the EU, France, Germany, and Italy also used the G7 summit in June as an opportunity to discuss with US President Donald Trump the possibility of establishing a “trusted partner” program to ensure continuous access to the most powerful AI models, which have the capability to detect critical cybersecurity vulnerabilities.

“We continue to work on this [proposal] at the international level,” Virkkunen said.

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Germany accelerates African energy diplomatic push to secure natural gas and green hydrogen

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German Foreign Minister Johann Wadephul has conducted high-level talks in Mauritania aimed at securing “energy imports,” signaling a continued expansion of Berlin’s diplomatic and economic outreach across Africa.

The initiative seeks to secure natural gas and green hydrogen from the African continent to compensate for structural deficits in Germany’s energy imports from Russia and the Persian Gulf, which have been severely disrupted by conflict.

According to a report by German Foreign Policy, the German minister held discussions in Mauritania on Monday focusing, among other agenda items, on future green hydrogen imports. Mauritania is currently positioning itself to become a primary hub for the green hydrogen economy in West Africa.

Following his talks in Nouakchott, Wadephul is scheduled to arrive in Nigeria today, where Berlin expects to secure deliveries of both green hydrogen and natural gas.

The diplomatic push follows meetings last week between German Chancellor Friedrich Merz and Algerian President Abdelmadjid Tebboune. Berlin is actively seeking to procure both natural gas and green hydrogen from Algeria.

However, critics have sharply condemned the strategy—which includes the construction of a major hydrogen pipeline beneath the Mediterranean Sea—labeling it a “neo-colonial project.” Detractors argue that the initiative risks exploiting the resources of the Global South at the direct expense of local economic development.

From Berlin’s perspective, these steps have become geopolitically non-negotiable. Intense systemic competition with Russia and the US-led conflict against Iran have severely threatened and disrupted Germany’s established raw material and energy supply chains.

Algeria’s strategic importance to Germany grows

Algeria is rapidly emerging as an increasingly critical natural gas supplier for Germany.

The North African nation holds the second-largest proven natural gas reserves on the continent after Nigeria, and stands as Africa’s largest exporter of natural gas.

Furthermore, Algeria is Europe’s second-largest supplier of pipeline gas, utilizing two major pipeline networks stretching north across the Mediterranean Sea: one terminating in Spain, and the other in Italy.

In addition to pipeline infrastructure, Algeria exports liquefied natural gas (LNG). In early July, the Wilhelmshaven 1 gas terminal received its maiden shipment of Algerian LNG from the state-owned energy enterprise Sonatrach, with subsequent deliveries expected to follow.

These Algerian shipments are helping Berlin reduce its heavy reliance on hydraulic fracturing (fracking) gas imported from the US. Last year, US-sourced LNG accounted for 96% of all imports arriving at German LNG terminals.

At the same time, Algeria is advancing the construction of the Trans-Saharan Gas Pipeline. This infrastructure project is designed to transport natural gas from Nigeria, through Niger, and into Algeria, where it will connect to existing Mediterranean pipelines bound for Europe.

The pipeline’s projected transit capacity is up to 30 billion cubic meters of natural gas annually.

Germany and the broader European Union are actively incentivizing natural gas imports from Africa. The strategy is designed not only to replace sanctioned Russian gas imports that are no longer available, but also to establish greater strategic independence from Middle Eastern gas supplies threatened by the conflict in Iran.

Africa’s role in the “green” transition

Over the longer term, Algeria is projected to play an even more significant role for Germany in the supply of green hydrogen—produced via renewable energy sources—which Berlin plans to deploy on a massive industrial scale as a foundational future energy source.

Berlin is currently planning multiple infrastructure projects to facilitate these green hydrogen imports. Chief among these is the “South H2” pipeline, designed to transport green hydrogen from Algeria through Tunisia and across the Mediterranean Sea into Italy, Austria, and Germany.

In Europe, the pipeline project is backed by a consortium of energy infrastructure firms, including the Italian pipeline operator Snam, Gas Connect Austria, and BayerNets.

The European Union has designated the pipeline as a “Project of Common or Mutual Interest” and has classified it as a flagship project of its “Global Gateway” infrastructure initiative, allocating corresponding EU financing.

To produce the requisite volumes of green hydrogen, Algeria plans to construct utility-scale renewable energy generation facilities.

German Chancellor Friedrich Merz discussed the project in detail last Thursday with Algerian President Abdelmadjid Tebboune during the latter’s official visit to Berlin.

Merz stated that Germany, in cooperation with Italy, plans to “advance the development of the southern hydrogen corridor” in order to “intensify hydrogen exports” to Germany.

Intra-European competition in Africa’s hydrogen economy

Foreign Minister Johann Wadephul’s current diplomatic mission to Mauritania represents a parallel effort to secure additional green hydrogen capacities.

Mauritania is actively working to transform its domestic economy into a regional hub for renewable energy-based hydrogen production.

One of the largest planned industrial developments in the country is being led by a joint venture comprising the German project developer Conjuncta, the Egyptian firm Infinity, and the United Arab Emirates-based Masdar Group.

The project represents a $34 billion investment aimed at installing 10 gigawatts of electrolysis capacity to produce green hydrogen earmarked for export to Europe.

This mega-project, known as “Infinity Power,” faces direct competition from a rival development named “Nour.” Initiated by Chariot Resources of the United Kingdom, TotalEnergies of France, and the Luxembourg-based Eren Group, the Nour project is also designed for 10 gigawatts of electrolysis capacity. However, this project is structured to prioritize Mauritania’s domestic energy requirements first, with only surplus volumes designated for export to Europe.

Prior to his arrival in Mauritania, Wadephul noted that the country “offers significant opportunities for renewable energy, particularly in the production of green hydrogen.”

While in Nouakchott, the Foreign Minister stated his intention to discuss “possibilities” for bilateral cooperation in “future technology sectors.”

Berlin seeks to reduce energy dependencies

Germany is also pursuing deeper strategic cooperation with Nigeria regarding both LNG and hydrogen. Wadephul is scheduled to arrive in Nigeria today for detailed consultations.

In November 2023, Germany and Nigeria signed a bilateral agreement under which Berlin committed to investing $500 million in renewable energy projects across the West African nation. In exchange, Germany secured commitments for LNG deliveries, with initial shipments scheduled to commence this year.

Much like the imports from Algeria, these Nigerian deliveries are intended to diversify Germany’s gas supply. They aim to further reduce Berlin’s reliance on US LNG, even as Germany phases out Russian LNG imports and navigates supply constraints from other traditional sources such as Qatar.

Furthermore, Berlin is evaluating the long-term potential of importing green hydrogen from Nigeria. In the autumn of 2023, then-Chancellor Olaf Scholz stated that Nigeria was not only “well-positioned” to supply Germany with the LNG “that we will continue to need in the coming years until the hydrogen market is fully established,” but could also become a “key actor” in Germany’s future hydrogen supply chain.

The German government has maintained an active “hydrogen partnership” with Nigeria for several years, which includes the operation of a dedicated “hydrogen office” in the country.

A “neo-colonial” project?

The planned hydrogen pipeline from Algeria to Germany has drawn sharp, systematic criticism from civil society organizations concerned about the geopolitical implications of the green energy trade.

In a joint protest declaration signed by 87 non-governmental organizations in March 2023, critics argued that hydrogen imports by Germany and other wealthy Western nations from Global South partners perpetuate an exploitative economic dynamic. They assert that the model prioritizes exporting domestic resources to wealthy Western economies at the expense of local populations.

Opponents contend that this framework “perpetuates the exploitative legacy of the past,” preventing independent development within Global South nations.

Critics also warn that the model strengthens multinational fossil fuel companies by enabling them to preserve legacy corporate structures through the construction of new pipelines and transport infrastructure.

They argue this occurs to the detriment of the Global South, where domestic economic development is systematically delayed by raw material extraction rather than the establishment of localized, high-value industrial supply chains.

Consequently, these organizations argue that the construction of the pipeline and the utilization of Global South renewable energy capacity for European consumption constitutes “a neo-colonial project.”

According to critics, this characterization applies equally to the other natural gas and hydrogen initiatives pursued by Foreign Minister Wadephul during his current African tour.

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US secures multi-billion-dollar energy and AI deals at Three Seas summit in Dubrovnik

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A struggle for influence is intensifying between the European Union and the United States in Central, Eastern and South-Eastern Europe, with the “Three Seas Initiative” (3SI) emerging as a primary arena for this geopolitical contest.

An analysis published by German Foreign Policy reveals that Western European nations and the EU are increasingly positioning renewable energy as a strategic counterweight to US liquefied natural gas (LNG) deliveries in the region.

At a 3SI summit convened in late April in the Croatian coastal city of Dubrovnik, representatives from the Trump administration met with officials from the 13 EU member states that comprise the initiative. The parties agreed on a series of new projects spanning energy supply, pipelines, artificial intelligence (AI), and digital infrastructure.

The immediate focus of these talks centred on new natural gas interconnectors for South-Eastern Europe and a massive AI project in Croatia carrying an estimated investment volume of €50 billion.

Originally established to modernise and expand infrastructure between the Baltic, Adriatic and Black Seas, the initiative has increasingly transformed into a vehicle for American power projection in Eastern and South-Eastern Europe.

Energy policy remains the critical battleground: whilst the Trump administration seeks to lock in long-term US LNG export markets, the EU is pushing to pivot the region towards renewable energy. Notably, investments targeting renewable energy systems were also approved during the Dubrovnik proceedings.

A brief history of the Three Seas Initiative

The Three Seas Initiative was launched in 2015 by Polish President Andrzej Duda and Croatian President Kolinda Grabar-Kitarović, holding its inaugural summit in Dubrovnik in August 2016. The platform comprises 13 EU member states stretching from the Baltic nations (Estonia, Latvia and Lithuania) through the Visegrád Group (Poland, Hungary, the Czech Republic and Slovakia) and Austria, down to Croatia, Romania, Bulgaria and Greece.

Albania, Montenegro, Ukraine and Moldova have subsequently associated themselves with the platform.

The initiative derives its name from its geographical objective: linking the Baltic, Adriatic and Black Seas through the territory of its member countries.

The creation of the 3SI was heavily driven by the United States. US strategists drew direct inspiration from an interwar Polish foreign policy concept formulated by Marshal Józef Piłsudski. Piłsudski’s “Intermarium” plan sought to unite Eastern European nations—spanning from the Baltic states to Yugoslavia and Romania—into a geopolitical bloc designed to act as an anti-Soviet bulwark.

In late 2014, the US think tank the Atlantic Council, collaborating with Central Europe Energy Partners (CEEP)—a lobby group representing energy companies in Poland, Lithuania and Romania—published an influential analysis. The report focused on developing a “North-South Corridor” extending from the Baltic Sea to the Adriatic and Black Seas.

The founding documents of the Three Seas Initiative explicitly reference this American strategic blueprint.

Washington has spent years utilising the 3SI to consolidate and expand its influence over the participant states. The cornerstone of this strategy is energy policy, specifically aimed at substituting imports of Russian pipeline gas with US-sourced LNG.

A North-South corridor to bypass the East-West axis

To achieve this geopolitical shift, the Three Seas Initiative seeks to expand the infrastructure of Eastern and South-Eastern Europe by adding robust north-south transport and energy links. Since 1990, infrastructural development in the region had run predominantly on an east-west axis, prioritising integration with Germany at the heart of the EU.

Constructing a north-south network will not only facilitate the distribution of US LNG imported via Adriatic and Baltic ports, but also foster a more autonomous regional infrastructure. By reducing reliance on road and rail networks terminates in Germany, the project threatens a significant dilution of Berlin’s economic and political leverage in the region.

Following the EU’s commitment to phase out Russian gas imports entirely by 2027, the strategic weight of LNG terminals and their corresponding north-south pipelines has steadily grown.

This structural dependency is visible within Germany itself. According to the Federal Ministry for Economic Affairs and Climate Action, approximately 96% of the LNG imported via German North Sea and Baltic terminals in 2025 originated from the US. This US supply accounts for 10.3% of Germany’s total gas imports.

German-American friction in South-Eastern Europe

The struggle for influence in Eastern Europe, and the decisive role of energy transit within it, was recently illustrated by a leadership crisis in Bosnia and Herzegovina surrounding the German diplomat Christian Schmidt, the international community’s High Representative.

Schmidt’s eventual resignation was precipitated by intense political maneuvering between certain Western European nations—led by Germany—and the Trump administration, which has been actively pursuing gas and raw material agreements in Bosnia and Herzegovina.

Having successfully pressured Schmidt to step down, the US proposed Italian diplomat Antonio Zanardi Landi as his successor. The nomination served to drive a wedge between EU member states, with Germany opposing Washington’s preferred candidate whilst Italy offered its support. President Trump warned that Washington would halt financial assistance to Bosnia and Herzegovina if the US plans were thwarted.

The move aligns with a new US strategy for South-Eastern Europe submitted by the Trump administration to Congress in May. The updated policy pivots away from “democracy promotion,” focusing instead on security and securing market access for American corporations.

Historically, Bosnia and Herzegovina has relied on Russian natural gas delivered via the TurkStream pipeline. Washington aims to replace this supply with US LNG imported through a terminal on the Croatian island of Krk.

The proposed infrastructure plans involve constructing a new pipeline extension into Bosnia and Herzegovina, to be built by US engineering firm Bechtel alongside AAFS Infrastructure and Energy. Schmidt had increasingly been viewed by US officials as an obstacle to these plans.

A victory for the Trump administration at the 3SI summit

In late April, Dubrovnik hosted the 10th anniversary summit of the 3SI alongside an aligned Business Forum. The event drew high-level participation, including seven presidents and prime ministers from 3SI member states, numerous cabinet ministers, and senior representatives from the Trump administration.

At the forum, the US successfully leveraged multi-billion-dollar energy and technology projects to entrench its footprint in South-Eastern Europe.

US Secretary of Energy Chris Wright declared in Dubrovnik: “The United States is ushering in a new era of cooperation for Central and Eastern Europe. This partnership is built on our mutual support for an aggressive energy expansion agenda.”

To formalise this initiative, Wright, Croatian Prime Minister Andrej Plenković and the Chairwoman of the Council of Ministers of Bosnia and Herzegovina, Borjana Krišto, signed a memorandum of understanding to launch the “Trump Peace Pipelines Framework”.

The agreement directly advances the “Southern Interconnection” project, which will link Bosnia and Herzegovina’s gas grid to the Croatian network and the Krk island LNG terminal.

At the summit, Polish Climate and Environment Minister Miłosz Motyka also emphasized the region’s commitment to expanding nuclear energy, calling it the “cornerstone of our new security architecture.”

Parallel to these energy agreements, American investors announced plans to build a massive AI and data centre hub in Croatia. The Pantheon Atlas investment group signed a memorandum of understanding with the Croatian firm Končar Group to construct an AI campus.

The total investment is projected at approximately €50 billion—a sum exceeding half of Croatia’s annual gross domestic product (GDP).

The gigawatt-scale power capacity required to run the data centre is comparable to the electricity demand of a major metropolitan area like Zagreb. To meet its current power requirements, Croatia relies heavily on natural gas, much of which is imported through the Krk LNG terminal.

Foreign policy implications of the energy transition

The Dubrovnik summit also marked the establishment of a new regional infrastructure fund. The vehicle is designed to finance joint investments in hydrogen production, cross-border transport infrastructure, renewable energy systems and electrical grid expansion, with at least €2 billion earmarked for initial projects.

By comparison, more than €4 billion was invested in natural gas infrastructure within the region between 2016 and 2025.

This gradual shift toward renewable energy introduces a distinct foreign policy dynamic. While LNG supplies are overwhelmingly dominated by imports from the US, the hardware and technology required to deploy renewable energy infrastructure do not carry the same transatlantic dependency. In the vast majority of cases, this technology is manufactured and supplied from within Europe itself.

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