BRUSSELS — Europe’s flagging economy is about to be bumped down the European Council agenda — again.
Next week’s summit of EU leaders was supposed to be a chance to come up with responses to the economic malaise blighting the continent but instead it’s turning into another firefighting mission. The war in Iran is muscling out some of the longer-term issues.
The meeting, on April 23-24 in Cyprus, was convened in large part to make progress on the EU’s €1.8 trillion seven-year budget, which needs to be in place by 2028. A discussion on that will still take place, but it’ll be squeezed by the need to address the Middle East crisis, which many fear could cause a global recession.
“Heads of state and government are right to invest significant time in the unexpected geopolitical crises that have occurred over the course of the last weeks,” said Siegfried Mureșan, the lead lawmaker on the budget from the center-right European People’s Party, from which European Commission President Ursula von der Leyen and most of the leaders also hail. “However, I believe that as a union we should not spend all of our political time on a single topic at a time and then ignore other subjects which are important but maybe not necessarily urgent.”
Leaders have called on Brussels to help protect consumers and industry from high energy prices resulting from Iran’s blockade of maritime traffic in the Strait of Hormuz, which has already lasted for six weeks. Oil and gas tankers have been left stranded in the strategic waterway, which links major exporters like Qatar and Saudi Arabia to the global market. Finland’s President Alexander Stubb told POLITICO last month that the conflict risks triggering a “self-inflicted global recession.”
But leaders are wrestling with several different issues all at once and that’s proving tricky. Governments need to make significant progress on the budget before the end of the year, Mureșan said, warning “the Council delaying the process would mean that nothing will be ready … on January 1, 2028,” disrupting planned payments.
On top of that, proposals to boost the EU’s economic competitiveness in the face of stiff trade competition — demanded by capitals in response to sluggish growth — have fallen by the wayside, despite the Commission having done much of the work required to present a “roadmap” setting out next steps.
“The roadmap is technically ready, but capitals aren’t asking to speak about it — they want to talk about a thousand other things like energy and security,” said one of the EU officials involved in the development of the plans, who was granted anonymity to speak frankly. “There are 10 topics on the table and we don’t have time to talk about all of them.”
‘Challenging’ geopolitics
Competitiveness has been forced further up the agenda of the European Council over the past year by leaders concerned the EU is falling behind the U.S. and China, where energy prices for industry are several times lower. It was also the focus of a February summit where they demanded concerted action from the Commission. But it’s no longer their priority.
“Given the context, it is clear that a big part of the agenda will be dedicated to the situation in the Middle East,” a second EU official confirmed, adding that Brussels is working with Cyprus, which is hosting the meeting as part of its six-month rotating presidency of the Council of the EU, to try to ensure sufficient time is available to cover geopolitical concerns as well as the budget, known as the Multiannual Financial Framework.
In his letter inviting leaders to the two-day sitdown, European Council President António Costa acknowledged the competing topics of conversation. “We will address the challenging geopolitical environment and Europe’s response to it, and we will also provide political guidance for the work on the [MFF], to prepare the ground for an agreement by the end of this year.”
Other important questions facing the bloc will have to wait. Countries are under pressure to sign off a €90 billion loan to Ukraine agreed by leaders in December, which has been blocked by Hungarian Prime Minister Viktor Orbán as part of a row with Kyiv over a damaged Russian oil pipeline. Formally, that doesn’t need leaders to approve it again.
Orbán lost parliamentary elections over the weekend to Péter Magyar — who has hinted he will drop the veto — but a resolution is unlikely he takes office next month.
Signed photos
Hungary’s outgoing prime minister will not attend the summit, POLITICO reported on Wednesday.
That would mean he’d miss out on the tradition of outgoing leaders receiving trophies, signed photos and video testimonials from others around the table. That might have been quite an awkward moment anyway, given Costa blasted Orbán’s behavior as “unacceptable” the last time they met in March.
Ireland, which takes over the presidency of the Council of the EU from Cyprus in July, will try to scramble to secure an agreement on the budget before the end of the year.
