Good morning from Brussels,

According to documents obtained by Euractiv, EU lawmakers from the European Parliament's regional development committee (REGI) will examine Italian commissioner-designate Raffaele Fitto's stance on the potential introduction of conditionalities in the distribution of cohesion funds. 

“There are concerns that the objectives of cohesion policy [...] may be compromised by the potential introduction of conditionalities,” the MEPs warn in the documents.

Another issue raising eyebrows in Parliament is how the new EU cohesion funds will be implemented and monitored. In Italy, when Fitto was a minister, he pushed for more centralised management, sidelining regions in the decision-making.

Alessia Peretti, Jonathan Packroff and Nicoletta Ionta provide all the details about what is at stake and how several stakeholders react.

As the first-ever summit between the European Union and the Gulf Cooperation Council (GCC) will take place next week, Europeans are eyeing closer ties on regional security and economic issues. Read more.

On defence, three names, including the high-profile former Dutch defence minister, have emerged as contenders in a race to determine the future direction of the European Defence Agency (EDA) at a time when its future role remains unclear. 

Moreover, the European Investment Bank tabled proposals to euro-area finance ministers on Monday, during which the lender would actively kickstart the bloc’s Capital Markets Union plans and channel funds to European companies seeking to scale up. 

Last but not least, take a look at The Brief  which focuses on the rise of Antisemitism and Islamophobia one year after 7 October. 

STOCKHOLM

Swedish far-right leader embroiled in gang-related controversy. The leader of the far-right Sweden Democrats, Jimmie Akesson (SD, ECR), is now in hot water after a media investigation revealed that he allegedly knew the president of a motorcycle club with links to organised crime. Read more.

Sweden to contribute on ground, at sea and in the air to NATO defence, government said. Sweden will contribute forces to NATO on land, at sea, and in the air next year, the Swedish government announced at a press conference on Monday (7 October). Read more.

MADRID

///

LISBON

Portuguese banks urged to create bigger 'cushions' against credit losses. Banks in Portugal will have to strengthen their capital 'cushions' for credit losses, according to the public consultation launched on Monday by the Bank of Portugal, which will raise the countercyclical capital reserve to 0.75%.

Until now, the methodology for calculating the countercyclical capital buffer (calculated on the basis of each bank's risk-weighted exposure to the private sector) has meant that it has regularly been set at 0%.

In a statement on Monday, the Bank of Portugal announced that it will change the methodology and that the countercyclical capital reserve will rise from the current 0% to 0.75% on 1 January 2026. In other words, that's when banks will have to build up this capital 'cushion'. (Irina Melo | Lusa.pt)

BRATISLAVA

After a second meeting with Robert Fico's government, Ukrainian Prime Minister Denys Shmyhal reiterated Ukraine's decision not to extend its transit agreement with Russia, which expires at the end of this year, and urged European countries to reduce their dependence on Russian gas. Read more.

SOFIA 

Bulgarian farmers to receive €100 million in state subsidies after protest threat. The Bulgarian government will give €100 million in state subsidies to local farmers who have threatened new protests over imports of Ukrainian agricultural products, the government announced on Monday. Read more.

• EU: Economic and Financial Affairs Council convenes to discuss Recovery and Resilience Facility implementation, list of non-cooperative jurisdictions regarding taxation, climate finance, and more;
• Commission President Ursula von der Leyen chairs College of Commissioners meeting; Receives Chairs of European People’s Party, Progressive Alliance of Socialists and Democrats and Renew Europe Groups Manfred Weber, Iratxe García-Pérez and Valérie Hayer, Co-Chairs of Greens/EFA Group Terry Reintke and Bas Eickhout;
• Economy Commissioner Paolo Gentiloni meets with European Investment Bank President Nadia Calviño;

***

[Edited by Sarantis Michalopoulos, Daniel Eck, Alice Taylor-Braçe]