New budget shows who runs Europe

Welcome to the Capitals by Eddy Wax, with Nicoletta Ionta.
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Today:
- EU’s new seven-year
- EU ponders Israel
- Greens have no regrets
- Petrol car phase out

When Ursula von der Leyen outlines her plan for the EU’s new seven-year budget on Wednesday it will be the purest expression of the true power balance across the union: National governments and the Commission are in charge, in that order. And as we’ll explain, that’s exactly why those in the know think it's doomed.
Von der Leyen is tightening control over the trillion-euro fund and cutting out pesky MEPs and traditional interlocutors in Europe’s regional governments.
If this radical shake-up becomes reality, countries will need to submit a national plan and meet domestic reform targets to get their share of the EU’s traditional cohesion and farming subsidies, worth two-thirds of the current budget, as Sofía Sánchez Manzanaro and Jacob Wulff Wold reported in this scoopy piece. The new framework will be modelled directly on the post-pandemic scheme, which sidelined Parliament and enraged auditors over its baked-in unaccountability.
Despite soothing words to regions and farmers from von der Leyen in recent weeks, this nightmare – or much-needed modernisation, depending on how you see it – will set the frame for the upcoming negotiations with countries and MEPs.
The EU’s agriculture commissioner used to be a commanding figure in Brussels (think Franz Fischler). The current incumbent is fighting a rearguard action to stop rural investments from being subsumed into “national and regional partnerships” – and made vulnerable to cuts, as Euractiv scooped on Monday. Christophe Hansen has insisted that per hectare farm subsidies be ring-fenced, but that doesn't mean the numbers will be at the same level.
There is another view. Why should the Commission chew through 17 Spanish rural development plans, instead of just one? France and Germany, crucially, back a cash-for-reforms model, as made clear in this helpful overview of all EU countries’ positions, and experts say streamlining the clunky budget is necessary.
The model is no surprise. Since 2019, when von der Leyen first took over, Europe has become more governments-led, amid the need for quick Brussels-to-capitals decisions to support Ukraine and buy vaccines.
Experts believe the budget’s modest size could be its downfall. For all the talk of ‘more Europe’, Germany has ruled out spending more, and other big countries are hobbled by their budget problems, as Thomas Møller Nielsen writes in this analysis.

EU foreign ministers will go through their options about how to rework their relationship with Israel to pressure it to end the war in Gaza today. Some diplomats thought the Gaza aid deal struck by the EU’s top diplomat Kaja Kallas last week would diffuse today's talks. But the humanitarian situation in Gaza suggests otherwise.
"We do not see enough improvement on the ground. We need to really see that this, all this – what we have agreed – is also happening,” Kallas told reporters, including our own Alexandra Brzozowski last night. An EU diplomat said that while “aid access has gotten better since the deal last week, distribution still remains difficult and of course the aid deal falls short of any full ceasefire."
Yet, ministers will remain deeply divided on whether to take measures against Israel, which means no substantive action is expected. The bitter, if familiar reality for Europe, is that trajectory of Israel’s war on Hamas will be decided in Jerusalem and Washington.
Nonetheless, EU officials took solace in the fact that Israeli and Palestinian ministers came to Brussels for the EU-Southern neighbourhood ministerial dinner last night, the first time since the war in Gaza started.

Greens chief Bas Eickhout said he doesn’t regret voting for the European Commission last year, even though the European People’s Party is now squarely setting the agenda on all things climate and environment.
"But things need to change,” the Dutch MEP told me in an interview, in which he lashed out at “nasty” pharmaceutical lobbyists for pushing the EU simplification drive too far, and said that von der Leyen, in her “heart”, wants to work with the Greens. Read the full Q&A here.

Bad news for Manfred Weber. Germany’s new environment minister said the EU should stick to its target of banning new fossil-fuel powered cars from 2035. “I don't believe in revisiting decisions that have been made and agreed upon ... at the moment when they become effective,” said the aptly-named Carsten Schneider, a Social Democrat, on his first visit to Brussels, Niko J. Kurmayer writes.
Europe’s right-wingers hate the EU’s planned 2035 combustion engine ban and the centre-right EPP – whom Schneider sits in government with – even campaigned for the 2024 EU election promising to scrap it.
Whether Schneider’s view will ultimately carry the day in car-crazed Germany is another matter.
Major news on minors
Countries are now allowed to set their own legal age limits for kids to access social media, in a win for France which was pushing for this. On Monday, the Commission released new guidelines to protect minors online. Anupriya Datta has the story.
EU fraud-buster race
Three contenders are in the running to lead OLAF, the EU’s anti-fraud agency that has the power to ruin Brussels careers. Elisa Braun was watching as they made their pitches in the European Parliament Monday.
Petr Klement said OLAF shouldn’t be a mere advisory body; it must push for binding recommendations and work smoothly with its rival crime-busting body, EPPO. He came first in a secret ballot of MEPs. Slovak ex-Eurojust president Ladislav Hamran pitched OLAF as an “intelligence service” capable of spotting risks early. Polish EEAS candidate Joanna Krzeminska-Vamvaka positioned herself as a sort of technocratic glue, emphasizing protecting the EU budget and communicating more with the public.
In a sure sign of OLAF’s independence, the Commission has the final say on who will replace outgoing chief Ville Itälä at the end of the month.
Šuica’s pact takes shape
A Dubravka Šuica-shaped plan to bind the EU more closely to its neighbours around the Mediterranean will come on 15 October, the commissioner told reporters Monday as talks kicked off. Her flagship initiative aims to deepen economic ties and tighten migration management across the Med.

UKRAINE
US President Donald Trump said on Monday Europeans will buy US weapons to replace gear sent to Ukraine – a move aimed at increasing deliveries to the battlefield and boosting European purchases of American-made equipment. Read more.
GERMANY
Merz claimed credit for the above deal, saying last night: "President Trump and I have discussed this several times in recent days. I have assured him: Germany will play a decisive role."
ITALY
The European Commission has raised concerns about Italy’s use of its “golden power” mechanism in UniCredit’s €10 billion acquisition of Banco BPM, warning that Rome’s conditions may breach EU law. Read more.
POLAND
A third major fire in less than a week broke out in Poland on Monday, prompting the authorities to suspect that the incidents may be linked to hybrid operations by Russian intelligence services. Read more.
CZECHIA
A Czech journalist is facing a torrent of hate after exposing abuse allegations against far-right MEP Filip Turek, which he denies. Read more.
SPAIN
Spain and Catalonia’s regional government jointly unveiled a proposed fiscal scheme for Barcelona on Monday, amid concerns that the “unique” financing plan could undermine the principle of solidarity among the country's autonomous regions. Read more.
BELGIUM
Several properties, including an antique store, were searched in connection with the money laundering investigation into former European Commissioner Didier Reynders, Belgian media and Follow the Money report. Reynders had several of his properties raided by Belgian police in December last year, days after he left his EU job as justice commissioner. He is suspected of laundering money by purchasing large amounts of lottery tickets.
ROMANIA
The government survived its first no-confidence motion on Monday after Parliament rejected a challenge from far-right parties, but the vote exposed growing tensions within the pro-EU ruling coalition. George Simion, who was behind the motion of censure against the European Commission last week, also spearheaded this push, with other far-right parties. Read more.
SWEDEN
The Sámi Parliament election was declared invalid after 88 votes were disqualified, triggering a rerun. The Sámi – an Indigenous people of northern Scandinavia – elect their own parliament. Only 9,755 voters were registered for the election, a fraction of Sweden’s estimated Sámi population of 20,000 to 40,000.

MONEY MAP: We mapped where every single EU country stands on the EU budget. Read here.
LE PEN FEELS THE HEAT: From alleged misuse of EU funds to questionable campaign financing, France’s far-right Rassemblement National heads into the summer under intensifying judicial scrutiny. Read the story.
QUIET PART OUT LOUD: A European Commission official involved in US trade negotiations, said Washington has urged Brussels to “follow us 100%” on China policy. Read more.
THE VISÉ GRAD'S COMEBACK: Regional power blocs like the Viségrad four (Poland, Czechia, Slovakia, Hungary) or the Baltic Triangle are playing an ever more strategic role, argues Angelo Valerio Toma, in this op-ed. Read the op-ed.

Von der Leyen meets a delegation of Fianna Fáil MEPs
Foreign Affairs Council, chaired by Kaja Kallas
NATO chief Mark Rutte continues his US visit
Press conference by MEPs Siegfried Mureșan (EPP) and Carla Tavares (S&D) on the new EU budget at 09:30
Hearing in the Parliament's social affairs committee with Commissioners Roxana Mînzatu and Valdis Dombrovskis

Armez les diplomates, formez les working parties: António Costa was spotted belting out La Marseillaise at the French permanent representation to the EU’s Bastille Day party last night.
A Meeh exit: Katharina Meeh, spokesperson for the German perm rep, is leaving Brussels to become an adviser for German Foreign Minister Johann Wadephul.

Not possible without: Magnus Lund Nielsen, Jacob Wulff Wold, Niko J. Kurmayer, Anupriya Datta, Alexandra Brzozowski, Maria Simon Arboleas, Angelo Di Mambro, Thomas Møller-Nielsen, Elisa Braun, Charles Szumski, Catalina Mihai, Aneta Zachová, Nick Alipour, Aleksandra Krzysztoszek, Inés Fernández-Pontes, Alessia Peretti.

Editors: Matthew Karnitschnig, Sofia Mandilara.