Brussels — The second day of the European Council summit is underway, with leaders bracing for a fierce battle over the EU's next long-term budget, known as the Multi-Annual Financial Framework (MFF). The discussions come after a tense first day dominated by European Council President António Costa's surprise move to open a diplomatic channel to Moscow, which has exposed deep rifts among member states.
Costa's Russia Gambit Divides Leaders
Thursday evening's talks ran longer than expected, largely due to Costa's decision to authorize his chief of cabinet, Pedro Lourtie, to hold phone calls with a top aide to Russian President Vladimir Putin. Several leaders expressed frustration that they had not been consulted beforehand, according to reports from Jorge Liboreiro and Maria Tadeo. However, an EU official noted that a number of leaders saw Costa as the natural representative of the bloc's interests, suggesting potential support for appointing him as a special envoy for direct talks with Russia. Belgian Prime Minister Bart de Wever, who has backed dialogue with Moscow, publicly endorsed Costa's potential role in peace negotiations.
The official stressed that the aim was to be ready to defend EU interests when the right moment comes, as the bloc does not currently consider Russia prepared for genuine engagement. Ukrainian President Volodymyr Zelenskyy, who joined the first phase of talks, urged leaders to open the remaining phases of Kyiv's EU membership negotiations in the coming weeks and to endorse a fast-track bid—a move that continues to divide the 27 member states.
China Trade Tensions Take Center Stage
Leaders also agreed to give European Commission President Ursula von der Leyen a mandate to develop new tools to counter unfair Chinese trading practices. The EU's trade deficit with China reached a staggering €360 billion last year, driven by a glut of low-cost, heavily subsidized goods. Von der Leyen, a known China hawk, has already debated potential instruments with her top team, including anti-dumping and anti-subsidy duties, as well as targeted tariffs. However, uniting all 27 members around a common response will require significant effort, as some capitals fear escalation into a trade war, with Beijing threatening retaliation.
Budget Talks: Frugals vs. Friends of Cohesion
Today's focus shifts to the MFF, which is splitting countries into two camps: frugal states demanding cuts and the so-called Friends of Cohesion, a group of 16 governments that want to preserve agricultural funding. A first proposal by the Cypriot EU Presidency, known as the nego-box, pitched an additional €32.8 billion to the overall €2 trillion pot originally tabled by the European Commission. The frugals have firmly rejected this, with the Dutch dismissing it as a no-go box.
Speaking to Euronews from the summit, Sweden's Minister for EU Affairs, Jessica Rosencrantz, said that while she welcomes the proposal's focus on security and competitiveness, the volume is way too high and needs to come down substantially. From the Swedish point of view, we want a budget that's around 1% of GNI, so that's a substantial decrease, she added. A lot of member states are doing tough priorities back home, the EU needs to do the same. It's about taking responsibility for taxpayers' money.
The Friends of Cohesion are likely to stand firm, setting the stage for tough negotiations. There is also a sense of urgency to close the deal before major elections in countries like France and Poland next year, which could derail talks. For more on the budget dynamics, see our analysis on EU leaders face tough budget talks as frugal states clash with cohesion advocates.
Kallas Responds to Israeli Threats
EU foreign policy chief Kaja Kallas responded to Israeli Foreign Minister Gideon Sa'ar's threat to sever all contacts with her over comments she reportedly made comparing Israel to South Africa's apartheid regime. Speaking to reporters on Thursday evening, Kallas sought to de-escalate the dispute without confirming or denying the remarks. We don't always see eye to eye with the Israelis, she said. I've had very good, open, frank and sometimes very difficult discussions with Minister Sa'ar that I found very constructive. We are willing to continue with this, but we can't deny the criticism.
Sa'ar had earlier posted on social media that Israel had not received a denial, clarification or response in relation to her severe statement, concluding that he had no choice but to sever all contact with Kallas. For more on the broader context of EU-Israel relations, see our coverage on EU leaders call for unified strategy against €31 billion drug trade.
In other news, a planned Memorandum of Understanding signing ceremony between Iran and the United States in Switzerland has been delayed, and fighting between Hezbollah and Israel in southern Lebanon continued overnight. The head of the UN's International Organisation for Migration warned on the sidelines of the Berlin conference that foreign aid cuts and climate change are pushing up migrant flows.
