1. The G7 did not release a joint communiqué

The absence of a joint communiqué at this week’s G7 summit starkly illustrates the deepening policy divisions among leaders of the world’s most powerful economies. While policymakers debate what the G7 can accomplish amid growing US-European tensions, a more fundamental question has emerged: Is the G7 itself equipped to address today’s complex geopolitical landscape? 

The summit exposed significant rifts between G7 members and the United States on critical international issues. Trump’s assertion that ejecting Russia from the former Group of Eight (G8) was a strategic mistake amplified tensions over Russia’s war in Ukraine. While the G7 did endorse a statement calling for “de-escalation of hostilities, including a ceasefire in Gaza,” watered down statements like this underscore the challenges in achieving consensus. These parallel conflicts reveal not only internal G7 divisions but also the growing disconnect between G7 positions and broader global sentiment, especially when it comes to Israel and Gaza.  

The lead-up to the Kananaskis summit highlighted another critical question: Can the G7 remain relevant while excluding major global players? Pressure from G7 leaders ultimately compelled Canadian Prime Minister Mark Carney to extend an invitation to Indian Prime Minister Narendra Modi, despite ongoing diplomatic tensions over last year’s killing of a Khalistani separatist in British Columbia. This last-minute inclusion underscores an emerging reality—as one of the world’s largest economies, a crucial node in global supply chains, and a key player in Indo-Pacific security, India’s absence from major G7 discussions would render many outcomes meaningless. 

Perhaps most troubling is the weakening of the shared democratic values that supposedly bind the G7 together. The transatlantic relationship faces unprecedented strain as the Republican Party, under the leadership of Trump and Vice President JD Vance, increasingly views liberal European societies through a harsh cultural lens. While the United States frames China as the primary geopolitical challenge of its time, today’s Republican Party often sees European societies as equally divergent from American values and interests. This ideological drift threatens the very foundation upon which the G7 was built. 

These developments raise existential questions about the G7’s future relevance. A forum designed for the world’s democratic economic powerhouses now struggles to produce basic agreements, while excluding nations essential to global stability and prosperity. Today, the G7 risks becoming an increasingly irrelevant talking shop, much like the United Nations Security Council, unable to address many of the defining challenges of the twenty-first century. 

—Rachel Rizzo is a nonresident senior fellow at the Atlantic Council’s Europe Center.

***

Trouble was brewing even before Trump’s early departure from the leaders’ summit on Monday evening and the absence of a communiqué on Tuesday. Trump’s trade policy had already effectively resulted in a G6+1—a coalesced European, Canadian, and Japanese front against the United States. But the fracture in the G7 has only become more evident this week. At the time of its formation fifty years ago, the group was created as a channel for economic coordination between the world’s largest economies. In recent years, the conflict between Ukraine and Russia had energized the G7, which had functioned as the hub for sanctions coordination and strategizing on supporting Ukraine. This energizing, and in some ways defining, achievement of the G7 in the past decade was put into question by Trump’s assertion on Monday that Russia should be brought back into the G8 fold, laying bare the misalignment between him and the other leaders. 

There are issues that could have possibly aligned G7 leaders, such as responding to Chinese economic influence, including Beijing’s manufacturing overcapacity. But what ultimately binds the group and makes it different from the Group of Twenty (G20) and the United Nations Security Council is broad agreement on democratic values, free and open markets, and a belief in working together with allies. A fracturing G7 puts these foundational tenets under scrutiny. Trump’s early departure also snubbed partners beyond the G7; India and Mexico were looking forward to their respective bilateral meetings that could have furthered trade negotiations.  

It’s clear that on its fiftieth anniversary, the G7 is in the middle of a geopolitical crisis, as the Israel-Iran conflict plays out, and an existential crisis, exacerbated by the United States’ strained relationship with the rest of the group. What lies ahead as France will take on the presidency in 2026, and whether the G6+1 break will continue, depends on how much value Washington sees in collaborating with its closest allies on economic issues. 

—Ananya Kumar is the deputy director for future of money at the GeoEconomics Center.  

2. Trump did not meet with Ukraine’s president

Trump did himself no favors at the G7 Summit toward his goal of achieving a durable peace in Ukraine. Trump has set out a tough approach to achieve that peace. He has asked for serious concessions from both Ukraine and Russia and said that he would exert pressure on the side(s) blocking progress. Since then, Ukraine has accepted every proposal Trump has offered since mid-March, and Russia has rejected them all except for one that it violated immediately. It is clear which side is obstructionist.   

Trump had an excellent chance to use the G7 Summit to put needed pressure on the Kremlin. The G7 was poised to lower the price cap for a barrel of Russian oil from sixty dollars to forty-five dollars, which would put pressure on the Russian oil revenues enabling its aggression in Ukraine. But the United States vetoed the proposal last week—Trump’s first gift to Russian President Vladimir Putin at this G7 Summit.   

The second gift came after his arrival in Canada. The US president repeated his criticism of the G7 for kicking Russia out of the group because of its conquest and “annexation” of Crimea in 2014. (Trump had done the same in his first term.) Since Putin is blocking his peace efforts, why would Trump provide this offering to the Russian dictator at this time? It is also true that by departing the summit early to deal with the ongoing crisis in the Middle East, Trump missed a planned side meeting with Ukrainian President Volodymyr Zelenskyy. No harm, no foul there, but achieving a real peace in Ukraine will remain a distant wish if the White House continues to treat the aggressor to bouquets. 

—John E. Herbst is the senior director of the Atlantic Council’s Eurasia Center and a former US ambassador to Ukraine. 

3. Trump did not meet with Mexico’s president

After much anticipation, the first face-to-face meeting between Trump and Mexican President Claudia Sheinbaum did not take place due to the US president’s early departure. Perhaps unexpectedly, the leaders have had an amicable and constructive relationship so far, with mutual praise often being shared between the two and at least seven phone calls taking place since Trump’s election in 2024.  

The meeting in Kananaskis, however, would have offered neutral ground for both leaders to further discuss the actions Sheinbaum has taken to address US security concerns while also addressing the thornier aspects of the bilateral relationship. This includes Mexico’s refusal to accept the involvement of US troops in its strategy against the illegal drug trade and cartels. It also includes Mexico’s concern about a proposed 3.5 percent tax on remittances currently moving through the US Senate. (Remittances to Mexico represent roughly 3.7 percent of the country’s gross domestic product.)  

A three amigos-style meeting of Trump, Sheinbaum, and Carney was off the table even before the summit. But the presence of all three newly minted North American leaders and their confirmed bilateral meetings on the sidelines of the G7 Summit had nonetheless raised hopes across the region that a tangible agenda to discuss next steps for the United States-Mexico-Canada Agreement (USMCA) would be set. Now, just over a year before the sunset clause is activated in July 2026, the private sector across all three countries will be left craving certainty about the future of the trade deal, especially against the current backdrop of continuously changing trade conditions and recently doubled steel and aluminum tariffs.  

So what comes next? US-Mexico communication lines remain open. Mexico has an ally in Christopher Landau, a US deputy secretary of state and a former US ambassador to Mexico who met with Sheinbaum last week. The United States should now continue to signal its willingness to engage with Mexico to find solutions to shared challenges by setting a date for Secretary of State Marco Rubio’s announced visit and pave the way for a Trump–Sheinbaum tête-à-tête.  

—Valeria Villarreal is a program assistant at the Atlantic Council’s Adrienne Arsht Latin America Center.

4. No momentum was generated going into the NATO Summit

The G7 presents two cautionary tales for next week’s NATO Summit in The Hague. First, if Zelenskyy’s presence at the G7 contributed to Trump’s early departure, then this would serve as a reminder for NATO allies to tread lightly on signaling too much support for Ukraine in The Hague at the risk of alienating the US administration. Second, Trump’s comments in Canada suggesting that Russia should rejoin the G8 are also a warning to NATO. While allied leaders were already unlikely to raise costs on Russia at the summit for its ongoing war in Ukraine, Trump’s comments highlight that even tough language on Russia in the expected summit communiqué could exacerbate tensions while Trump is in The Hague.  

Ignoring the threats Russia poses to the Alliance and the importance of maintaining support for Ukraine comes with different (and I would argue more problematic) risks. But if NATO’s goal in The Hague is to project Alliance unity and avoid a dust-up with Trump, then the Alliance should stay focused on securing a new defense spending pledge and go home. All the hard work, for better or for worse, will fall after the summit. 

—Torrey Taussig is the director of and a senior fellow at the Transatlantic Security Initiative in the Atlantic Council’s Scowcroft Center for Strategy and Security. Previously, she was a director for European affairs on the National Security Council.

The post What did not happen at the G7 Summit in Canada (and why it matters) appeared first on Atlantic Council.

While this latest Kyiv blitz was by no means unprecedented in a war that has been marked by frequent Russian attacks on Ukraine’s civilian population, the timing is unlikely to have been coincidental. Like a mafia boss ordering elaborate killings to send coded messages, Putin has repeatedly scheduled major bombardments of Ukraine to coincide with international summits and gatherings of Western leaders. For example, Russia bombed Kyiv, Odesa, and other Ukrainian cities on the eve of NATO’s 2023 summit, and conducted a targeted missile strike on Ukraine’s biggest children’s hospital as NATO leaders prepared to meet in Washington DC last summer.

Bombing raids have also taken place during high-profile visits of international dignitaries. In spring 2022, Russia launched an airstrike on Kyiv while UN Secretary General António Guterres was in the Ukrainian capital. At the time, Ukrainian President Volodymyr Zelenskyy said the attack was a deliberate attempt by the Kremlin to “humiliate” the United Nations. Two years later, Russia subjected Ukrainian Black Sea port Odesa to intense bombardment as Greek PM Kyriakos Mitsotakis visited the city.

The massive bombardment of Kyiv and other Ukrainian cities during this week’s G7 summit is the latest example of Putin’s penchant for sending messages with missiles. On this occasion his message could hardly have been clearer: Russia does not want peace. On the contrary, Moscow feels increasingly emboldened by growing signs of Western weakness and is more confident than ever of securing victory in Ukraine.

As the world watches the Russian invasion of Ukraine unfold, UkraineAlert delivers the best Atlantic Council expert insight and analysis on Ukraine twice a week directly to your inbox.

Russia’s rejection of US-led peace efforts is equally evident in the diplomatic arena. While Ukraine agreed to US President Donald Trump’s call for an unconditional ceasefire more than three months ago, Russia still refuses to follow suit. Instead, the Kremlin has engaged in obvious stalling tactics while creating a series of obstacles aimed at derailing any meaningful progress toward peace. At one point, Putin even claimed the Ukrainian authorities lacked the legitimacy to negotiate a settlement and suggested the country be placed under temporary UN administration.

The recent resumption of bilateral talks between Moscow and Kyiv has provided further confirmation of Russia’s commitment to continuing the war. Putin personally initiated these talks but then chose not to attend and sent a low-level delegation instead. In the two meetings that have since taken place, Russian officials have presented a list of ceasefire conditions that read like a call for Kyiv’s complete capitulation.

The Kremlin’s demands include Ukraine’s withdrawal from four partially occupied Ukrainian regions that the Russian army has so far been unable to fully occupy. This would mean handing over dozens and towns and cities while condemning millions of Ukrainians to the horrors of indefinite Russian occupation.

Moscow also wants to ban Ukraine from any international alliances or bilateral security partnerships, while imposing strict limits on the size of the Ukrainian army and the categories of weapons the country is allowed to possess. In recent days, Russia’s Deputy Foreign Minister Alexander Grushko has underlined Moscow’s insistence on Ukraine’s total disarmament by calling on the country to destroy all Western weaponry provided since 2022.

Putin’s punitive peace terms are not limited to sweeping territorial concessions and harsh military restrictions. The Kremlin also expects Ukraine to grant the Russian language official status, reinstate the Russian Orthodox Church’s legal privileges, rewrite Ukrainian history in line with Russian imperial propaganda, and ban any Ukrainian political parties that Moscow deems to be “nationalist.”

The Kremlin’s negotiating position envisions a postwar Ukraine that is partitioned, disarmed, internationally isolated, and heavily russified. If imposed, these terms would allow Russia to reestablish its dominance over Ukraine and would deal a fatal blow to Ukrainian statehood. In other words, Putin wants a Ukraine without Ukrainians.

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Donald Trump’s talk of peace through strength succeeded in generating considerable optimism during the early months of 2025, but it is now time to acknowledge that this was largely based on wishful thinking. Since Trump returned to the White House, the Russians have significantly escalated their air war against Ukraine’s civilian population. On the battlefield, Putin’s troops are now engaged in the early stages of what promises to be a major summer offensive. Meanwhile, Kremlin officials continue make maximalist demands at the negotiating table that no Ukrainian government could accept. These are not the actions of a country seeking a pathway to peace.

In both words and deeds, Putin is sending unambiguous signals that he has no interest whatsoever in ending his invasion and remains determined to achieve the complete subjugation of Ukraine. This uncompromising stance will not change unless Western leaders can convince Putin that the most likely alternative to a negotiated peace is not an historic Russian triumph but a disastrous Russian defeat.

The steps needed to bring about this change and create the conditions to end the war are no secret. Sanctions measures against Russia must be tightened and expanded to starve the Kremlin war machine of funding and weaken the domestic foundations of Putin’s regime. Countries that currently help Moscow bypass international sanctions must be targeted with far greater vigor. In parallel, Western military aid to Ukraine must be dramatically increased, with an emphasis on providing long-range weapons and financing Ukraine’s rapidly growing domestic defense industry.

All this will require a degree of political will that is currently lacking. It would also be expensive. Indeed, during this week’s G7 summit, Trump balked at the idea of imposing new sanctions, saying they would “cost us a lot of money.” This is dangerously shortsighted. Trump and other G7 leaders need to urgently recognize that if Putin is allowed to succeed in Ukraine, the cost of stopping him will skyrocket.

Peter Dickinson is editor of the Atlantic Council’s UkraineAlert service.

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The views expressed in UkraineAlert are solely those of the authors and do not necessarily reflect the views of the Atlantic Council, its staff, or its supporters.

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This shake-up has important implications for global energy security, which has come into sharp focus since the full-scale Russian invasion of Ukraine. Considering the Trump administration’s renewed focus on an “energy dominance” agenda, including an emphasis on furthering US oil and gas production and exports, one should not overlook the equally important geopolitical aspects of the electricity sector. Increasingly relevant to global affairs, the electricity sector has experienced rapid global demand growth of 4 percent per year—often placing new energy systems at the heart of geopolitics.  

As the world enters an “age of electricity,” decisions made during this second Trump administration will have far-reaching consequences impacting the future of international conflict, competition, and cooperation around the world. 

Security, growth, and innovation

A dominant geopolitical feature impacting the electricity landscape is Russia’s military aggression against Ukraine, which has sharpened the confrontation between the West and a coalition of authoritarian states that have in various ways supported Russia’s war effort, including China, Iran, and North Korea. The conflict has illustrated and heightened the priority of electricity security, as the executive director of the International Energy Agency (IEA) recently emphasized to European Union (EU) leaders. The EU, with major help from US liquefied natural gas (LNG) exports, reduced its dependence on Russian gas for electricity, ramped up renewable energy to 47 percent of total generation, began to replace Russian nuclear fuels with Western sources, and disconnected the Baltic states from the Russian power grid.  

Meanwhile, outside of the EU, the rest of the world saw record levels of electricity demand growth in 2024, especially in Asia, with China accounting for about half of the increase. Although the International Monetary Fund (IMF) forecasts slower world economic growth given the impact of uncertainty given ongoing trade pressure from Trump’s tariff strategy, the IEA still projects substantial electricity growth over the next three years.  

Partly fueling this expected rise in demand is the explosion of digital information, along with the artificial intelligence (AI) systems to analyze this data. This trend is revolutionizing the electricity sector and creating growing demands for reliable, flexible, secure, and resilient electricity supplies for data centers and in other key civilian and military spheres. More complex and interconnected national and regional electricity grids are growing in almost all regions of the world. But these large digital systems are increasingly vulnerable to cyberattacks, especially from malign actors such as China and its Volt, Flax, and Salt Typhoon threat teams. Electricity security is therefore a vital component to national security in this new age. 

This growing demand has set off a race to innovate and deploy new energy technologies. One critical strategic area is the development of advanced nuclear power systems, with designs under development to meet needs for electricity, industrial heat, desalination, military systems, district heating, data centers, hydrogen production, and shipping. There has been a resurgence of interest in nuclear power around the world—at COP28, leading countries pledged a tripling of nuclear power by 2050 from 2020 levels.  

Competition for electricity markets 

Against this complex backdrop, the Trump administration’s expanded use of tariffs has added new dimensions to global economic competition that is affecting relationships both allies and opponents alike. These measures have also introduced added strain on already fragile electricity supply chains, including those of power transformers, switchgear, and meters. This added pressure for the West and Western-aligned countries gives China, the world’s largest exporter of electric power equipment and electronics, an opportunity to expand further its global market presence, especially in emerging markets and developing economies (EMDEs). EMDEs generate about two thirds of the world’s power and are projected to account for 85 percent of global electricity growth over the next three years.  

Moreover, over the past decade as the costs of solar and wind have dropped, EMDEs have pursued a transition to renewable energy. Although renewables supplied only 26 percent of EMDE generation in 2023, they now provide over 75 percent of new EMDE generation capacity outside of China. China’s dominance in renewables gives it significant market—and geopolitical—influence. Global installed solar photovoltaic (PV) capacity increased by 30 percent in 2024, and Chinese companies are poised to continue flooding the market with solar PV systems and components. 

EMDE natural gas demand for power, which can complement intermittent renewables and improve grid reliability, and for industry is also growing. This creates space in EMDE electricity markets for a growing US role. As the world’s largest LNG exporter, the United States is looking to increase export capacity and access markets in India, Southeast Asia, and other EMDEs. Some countries may commit to increasing US LNG imports in their trade negotiations with the Trump administration to address trade imbalances and reduce tariffs. In 2024, US volumes went to 20 EMDEs and represented about 30 percent of total US LNG exports.  

In the past five or so years, the United States has made significant progress in the development of advanced nuclear power systems, some of which are now beginning construction. This has placed the United States in a strong position to compete for new nuclear contracts in EMDEs, particularly to build small and micro reactors. These systems offer the prospect of lower total capital costs, faster construction times, and more appropriate sizes for the smaller grids in many of these countries than large 1000-MW reactors. Russia has dominated the international new-build market with Rosatom constructing  large VVER 1000/1200 reactors in India, Bangladesh, Egypt, Turkey, Iran, and China and beginning a small modular reactor (SMR) project in Uzbekistan. China has the largest number of reactors under construction (30 domestically) and is working to expand exports of its Hualong I large reactor beyond the completed units in Pakistan as well as developing several types of SMR systems. South Korean, European, and Canadian companies are also eyeing foreign markets and nuclear supply chains for new reactors are linking companies from these regions.   

Recognizing the critical role nuclear can play in meeting US electricity demand growth, the Trump administration, with bipartisan cooperation, is supporting advanced reactor development and demonstration as well as domestic uranium mining, enrichment, and fuel production efforts. Trump recently signed an executive order targeting an increase in US nuclear capacity from 100 to 400 gigawatts by 2050. Domestic growth in the sector would enable the administration to export both large AP-1000s and SMRs, with at least a dozen projects and cooperation in the works not only in advanced economies, like the United Kingdom, Canada, Poland, Romania, Bulgaria, but also with EMDEs like Ukraine, India, Ghana, Kenya, the Philippines, Indonesia, and Vietnam. Interest in SMRs is at play in most of these countries and US companies could achieve of a sizeable share of the IEA’s projected SMR global market of 120 GW by 2050.  

National security and global engagement 

Given its broad-based excellence in the electricity sector and emerging digital and AI technologies, the United States is well positioned to engage with allies on the adoption of technologies that advance grid reliability, flexibility, and resilience. US involvement in these growing overseas markets, valued at over $2 trillion annually, is vital to its commercial, technological, and national security interests and to restoring trust and confidence in the United States as a reliable partner.  

In this effort, the United States should leverage its strengths as the largest producer of both natural gas and nuclear power to help other countries build out firm, baseload, and peaking power, helping reduce dependence on Chinese solar and battery systems in an age of electricity. But US investment both at home and abroad in renewables, energy efficiency, carbon capture, hydrogen, and other technologies is also critical to US influence in the world.  

As the Trump administration reconfigures US foreign policy, it is important to forge a new partnership with industry to enhance US energy leadership and coordinate deployment of key diplomatic and economic tools—including technology and commercial agreements, policy and regulatory assistance, capital allocation, and trade and investment promotion—in a package that can be tailored to the energy needs of individual countries. In addition to bilateral efforts, successful US global leadership will require close cooperation with allies in supporting sound multilateral financial and technology cooperation mechanisms, Western-oriented regional electricity markets, and secure supply chains. 

The age of electricity is coming. Will the United States step up and recognize that being a global leader in this sector is critical to its national security?  

Robert F. Ichord Jr. is a nonresident senior fellow at the Atlantic Council Global Energy Center. 

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Factors will depend, however, on evolving political circumstances coupled with the effects of a continuing shift toward more fragmented policy making across borders. This issue has long been on the minds of government and industry alike, but it may become more complicated in the near to medium term. It is timely to examine these trends to better understand the direction of travel between the UK, European Union (EU), and United States, and how this will impact markets and economies globally.

First, in the UK, the government’s Financial Services Growth and Competitiveness Strategy will be published this July. It will focus on five priority growth opportunities—sustainable finance, asset management, fintech, insurance, and capital markets. The Prudential Regulation Authority and the Financial Conduct Authority will be at pains to continue emphasizing that the primary objectives of consumer protection and systemic stability will not be compromised through any changes. However, it will be important to reflect on how issues such as the Basel III Endgame implementation will be addressed in light of these priorities, considering the approach of other jurisdictions (especially the United States) to the future of this global prudential package.

Second, in the EU, the European Commission has similarly affirmed that it will increasingly focus on growing financial market activity and ensuring the bloc can adequately compete with other world actors in financial services. This will likely lead to further discussions on, inter alia, sustainability standards, financial risk rules, and closer market integration. Though there is consensus on the need to make the EU more competitive, concerns have already been raised, for example, by Frank Elderson, vice-chair of the European Central Bank supervisory board that increasing competitiveness should not be pretext for watering down regulation and potentially increasing instability.

Further complicating matters is the issue of how, or if, the bloc will respond to any escalation of punitory trade measures by the US administration. Though the pace of recent trade talks has accelerated, questions remain in the near term about the potential application of the EU Anti-Coercion Instrument if negotiations fail, and what that may mean for the imposition of restrictions on financial services activity from third countries.

Third, in the United States, a more complex picture is emerging. The economic implications of White House trade policy will have to be weighed against the general deregulatory bent of the administration, but a few themes have come to light. There is a clear indication that the US Treasury will play a greater role in financial services regulation. Treasury Secretary Scott Bessent is on record stating that lending policies should better match the risk of financial firms, and that bank regulation has not taken economic growth into account. Federal banking agency rulemaking will also likely shift. Federal Reserve (Fed) vice chair for supervision, Governor Michelle Bowman, has indicated that supervisory reform, the promotion of innovation, and a pragmatic approach to regulation will be prioritized. The objective of cost-benefit analysis being applied toward regulation will affect how the Fed addresses the outstanding issue of the Basel III Endgame implementation, alongside an expected review of the supplementary leverage ratio and its impact on the US Treasury market.

Lastly, how the United States approaches international regulatory initiatives is also expected to be gauged by how they align with updated US regulatory policy objectives and the America First approach of the administration. SEC Commissioner Hester Peirce recently questioned the agendas of the international standard setters in light of calls for increased domestic control over policy. Secretary Bessent has also raised the issue of US reliance on these bodies. Such interventions will be important to monitor considering the wider gap between national and international rhetoric on cooperation geopolitically.

This is certainly a non-exhaustive snapshot of trends across three major economies, but it raises the question of where the rest of the world stands. How will international cooperation on financial stability evolve with this more domestic-minded focus on growth and competitiveness? This question is coupled with potential disputes on international trade in goods spilling into reciprocal action against the services sector.

On the first point, cooperation will likely continue around topics of consistent mutual concern at the Basel Committee, the Financial Stability Board, the Committee on Payments and Market Infrastructures, and the International Organization of Securities Commissions. Areas of focus will include oversight of the non-bank financial institution sector, modernizing cross-border payments, and addressing issues for operational resilience and cyber security. In his April letter to the Group of Twenty finance ministers and central bank governors, outgoing Financial Stability Board Chair Klaas Knot emphasized the importance of vigilance and international cooperation to address emerging risks and ensure the continued resilience of the financial system. Bilateral and multilateral regulatory collaboration is also continuing in the crypto currency space. The United States and the UK, in particular, are working together to support the responsible growth of digital assets.

However, the prospect is significant for increased fragmentation in regulatory approaches to capital, liquidity, and financial risks related to climate, among other issues. Cross-border financial institutions will potentially have to navigate a much more complicated and disparate set of requirements, which ultimately may impact systemic safety and soundness.

On the second point, the Bank for International Settlements recently warned that geopolitical tensions between countries reduce cross-border bank lending between them. The specter of retaliatory responses in reaction to punitive trade policies seeping into the regulation of financial services can exacerbate this concern. This is particularly acute in the regulation and supervision of foreign banks. Trapping capital and liquidity can have a specific negative impact on the provision of domestic financial services products, hurting the very objectives of growth and competitiveness that appear the ubiquitous watchwords of national policymakers.

There is still a strong case to be made for an interconnected global financial services system where regulatory authorities collaborate on the best means to ensure stability and security across borders. Doing so is not mutually exclusive with objectives for increased domestic growth and competitiveness. It can, in the case of cross-border capital flows, contribute to achieving those goals. An important area of reflection for both the public and private sectors in the coming months is how cooperation can be activated to prioritize economic development while maintaining stability with consistent global standards.

Matthew L. Ekberg is a contributor at the Atlantic Council and former Senior Advisor and Head of the London Office for the Institute of International Finance (IIF).

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1. What impact would this proposal have on the Nord Stream gas pipelines? 

This package could put the final nail in Nord Stream 2’s coffin, providing a much overdue, decisive vision for the future of Russian pipeline flows to Europe. Ending this zombie project debate once and for all also sends a clear message to global liquefied natural gas producers, which may be hesitant to expand partnerships with the European buyers as long as a relapse to Russian gas dependence is a possibility. This checkmate move from the European Commission still needs approval from EU member states, as well as watertight language on sanctions implementation to prevent caveats or exemptions. Moreover, the Commissions’s bold action on Nord Stream 2 brings the Commission’s Roadmap to fully end EU dependency on Russian energy closer to reality, just as the roadmap’s legislative proposals are expected later this month.

—Olga Khakova is the deputy director for European energy security at the Atlantic Council’s Global Energy Center.

***

The proposal is a welcome one to put an end to the questions about the restarting of the pipelines. The proposed rules would ban any EU operator from doing direct or indirect transactions for Nord Stream 1 or 2, making the operation of the pipelines impossible. More importantly, the proposal would end any rumors or quiet discussions around the future of the pipeline and shows the seriousness, at least in the Commission, around achieving energy independence from Russia. “There is no return to the past,” von der Leyen declared during Tuesday’s announcement. 

—Jörn Fleck is the senior director of the Atlantic Council’s Europe Center.

***

After nearly two static decades of Germany’s Gazpromphilic foreign policy, and statements emerging in recent weeks from German politicians from the Social Democratic Party (SPD) and the Alternative for Germany (AfD) indicating openness to a revival of Nord Stream, today’s EU announcement of Nord Stream sanctions is nothing short of astonishing. That’s because it amounts to a de facto approval by new German Chancellor Friedrich Merz. Since assuming the Chancellery, Merz has taken steps toward a true Zeitenwende that were lacking in Germany since that political approach to Russia had been first announced by his predecessor Olaf Scholz, with Merz stating clearly and resolutely in late May that under his leadership, the German government will “do everything to ensure that Nord Stream 2 cannot be put back into operation.” 
 
Merz doubled down on this rhetoric while sitting next to US President Donald Trump in the Oval Office last week, declaring Nord Stream to have been “a mistake.” Saying this next to Trump is especially important given recent reports that a US-based investor has sought to lobby the Trump administration to drop sanctions on Nord Stream to allow for American ownership of the pipelines. According to the investor, this move is an attempt to supposedly achieve the “de-Russification” of the projects—despite the logical incoherence of how such infrastructure could ever be truly “de-Russified” if it were still delivering Russian gas. 
 
If the EU is able to successfully get this sanctions package through the gauntlet of member state ratification—no small task with the likes of Hungary and Slovakia waiting in the wings to go to bat for Russian President Vladimir Putin’s energy interests in Brussels—it will be a major step toward finally ending Russia’s energy grip over European political and security interests. 
 
—Benjamin L. Schmitt is a senior fellow at the University of Pennsylvania’s Kleinman Center for Energy Policy and Perry World House. 

2. How much would lowering the oil price cap from $60 to $45 hurt Russia’s economy? 

That depends on how effectively the new price cap would be enforced and where the general price of crude would fluctuate. The impact would probably be significant but not as big as it would be if the United States could find a way to limit third-country purchases of Russian oil, either through US Senator Lindsey Graham’s bill or in another (and more practical) form. 

—Daniel Fried is the Weiser Family distinguished fellow at the Atlantic Council and a former US ambassador to Poland. 

***

Russia still relies on revenue from oil exports, so lowering the price cap could negatively affect how much money they can bring in. However, the price cap has been very difficult to enforce. In response to the price cap, Russia developed an expansive shadow fleet to export its oil, which created an additional challenge for Western sanctions enforcement authorities.  

That said, lowering the price cap would be welcome considering the price of Brent Crude as of today, $67.24 per barrel, which is very close to the $60 price cap. When the price cap first went into effect in 2022, the price of oil was over $100 per barrel. Reducing the price cap is an acknowledgement that oil prices have dropped considerably since it was first introduced and reflects a commitment to restrict Russia’s ability to generate revenue. 

—Kimberly Donovan is the director of the Economic Statecraft Initiative at the Atlantic Council’s GeoEconomics Center. She previously served in the federal government for fifteen years, most recently as the acting associate director of the Treasury Department Financial Crimes Enforcement Network’s Intelligence Division.

3. What else is in this sanctions package? 

The most interesting aspect of this package is the “transaction ban” on “financial operators in third countries that finance trade to Russia, in circumvention of sanctions.” That sounds a lot like secondary sanctions, which historically have been controversial in the EU. If this passes, it could significantly strengthen EU sanctions by extending their reach. 

—Kimberly Donovan

4. What are the chances of this proposal moving forward? 

It’s worth keeping in mind that this is still just a proposal, and there is a long way to go before it is finalized. These sanctions proposals require the unanimous support of the EU’s twenty-seven member states, which, in and of itself, is no simple process of negotiations. The proposal will likely face two immediate hurdles from the likes of Hungary and Slovakia, whose respective leaders have delayed or played spoiler on the previous efforts for political leverage until their demands were met. However, the fact that there have been seventeen successful rounds of sanctions in the past suggests that solutions, however messy, incomplete, or last-minute, are possible. There is an important transatlantic angle as well. The EU wants to move together with the United States on Russia. So European holdouts will certainly not want to be seen as roadblocks should the Trump administration decide, for example, to push for further sanctions on Russia. 

—Jörn Fleck 

***

I don’t know how much has been vetted with Hungary nor what kind of pressure the Commission is prepared to put on Budapest if it attempts to block the proposal. But the Commission seems serious about ramping up pressure and announcing steps before the G7 Summit, where they will have a chance to obtain Japanese and Canadian support, and thus to present the United States with some decisions. 

—Daniel Fried  

***

Brussels seems optimistic that the eighteenth sanctions package will pass. However, aspects of the sanctions package will need G7 support. This includes the proposal to reduce the price cap, which is why the Commission understandably announced the proposal in advance of G7 meetings this coming weekend in Canada. Further, support from Washington or lack thereof could sway how countries such as Hungary and Slovakia vote on the sanctions package. 

—Kimberly Donovan

5. How might Washington react to this proposal? 

That is a big question, and I can’t give a reliable answer. The European leaders at the G7 will have a chance to convince Trump that it is his own plan to end the war that the EU is backing, and that the United States ought to go all in to that end and agree to pressure Russia. But Trump, despite edging up toward imposing additional costs on Russia, has not yet done so, despite multiple opportunities and provocations from Putin. 

—Daniel Fried  

***

It’s unclear how Trump himself will react to the proposal. But what the US president should see in this proposal is a Europe that is a willing and serious partner. The administration has made clear that it expects Europe to step up for its own security and for Ukraine’s. This is part of Europe’s response to do just that. European leaders have been united on pushing for action on Russia given Moscow’s continued intransigence on cease-fire talks and devastating attacks on Ukraine. This proposal is another indication that Europe is putting real ideas on the table to boost US and Ukrainian leverage with Putin. 

—Jörn Fleck 

***

Members of Congress may welcome this package, as the spirit is consistent with the bill Graham introduced to get Putin to the negotiating table. However, we’ll have to wait and see how Trump reacts considering the stalled cease-fire talks and escalating violence on the battlefield. 

—Kimberly Donovan

The post Five questions (and expert answers) about the new EU sanctions plan for Nord Stream and Russian banks and oil appeared first on Atlantic Council.

The Kremlin employs hybrid warfare tactics to remain below the threshold that would trigger a unified and potentially overwhelming European response. This has led to a surge in sabotage, cyberattacks, political interference, and disinformation campaigns across Europe, with a particular emphasis on countries closer to Russia.

Moscow’s hybrid war against Europe mirrors the tactics used by the Kremlin in Ukraine following the start of Russia’s invasion in 2014. Ukraine’s response to the often unprecedented challenges posed by Russian hybrid warfare offers important lessons for Kyiv’s European partners.

The Ukrainian experience highlights the gravity of the hybrid threat and the importance of an integrated response. The overall message to Western policymakers is clear: Moscow views hybrid warfare as an important Russian foreign policy tool and will continue expanding its campaign. Europe cannot afford to wait for Russian hybrid attacks to escalate further before building the advanced capabilities required to counter this threat.

As the world watches the Russian invasion of Ukraine unfold, UkraineAlert delivers the best Atlantic Council expert insight and analysis on Ukraine twice a week directly to your inbox.

There have been growing reports of Russian hybrid war-style attacks across the EU since the onset of Russian aggression against Ukraine eleven years ago. This trend gained significant additional momentum following the start of the full-scale invasion in February 2022.

Typical incidents include cyberattacks targeting infrastructure, sabotage including arson attacks, and attempts to disrupt military aid destined for Ukraine. Moscow is also accused of investing billions of dollars in sophisticated social media campaigns to influence the outcome of elections across Europe. The Kremlin’s hybrid operations are concentrated in central and eastern Europe, with Poland, Romania, and the Baltic states among the primary targets.

None of this is new to Ukraine. For more than a decade, Ukrainians have been learning to cope with the full range of Russia’s hybrid warfare toolbox. Russia’s attack on Ukraine began in February 2014 when Russian soldiers without insignias took control of Ukraine’s Crimean peninsula in a lightning operation that was accompanied by a massive wave of targeted disinformation.

Russia’s subsequent efforts to destabilize and subjugate the rest of Ukraine have involved a combination of conventional military aggression, sabotage, cyberattacks, disinformation campaigns, and support for pro-Russian actors in Ukraine. Thanks to this prolonged exposure to Russian hybrid warfare, Ukraine has been able to develop countermeasures that have helped build resilience and reduce the impact of Russia’s hybrid operations.

Ukraine’s response has been a collaborative effort involving the Ukrainian government, civil society, and the private sector. In the cyber sphere, efforts to improve Ukraine’s digital security have played a key role, with the launch of the country’s popular Diia platform and the establishment of the Ministry of Digital Transformation helping to drive important digital governance reforms.

This has enhanced Ukraine’s ability to maintain public services amid acts of cyber aggression and has improved engagement with the population. Ukraine’s progress in the digital sphere has been recognized internationally, with the country climbing from the 102 spot to fifth position in the UN’s annual Online Services Index in the seven years between 2018 and 2025.

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Ukraine’s coordination structures, such as the Center for Strategic Communications and the Ministry of Digital Transformation, enable swift and well-coordinated responses across government, media, and digital channels. This offers a number of advantages in a hybrid war setting. For example, it allows the Ukrainian government to synchronize positions with proactive narrative-setting when countering the Kremlin’s disinformation campaigns.

Ukraine has also benefited from a decentralized approach involving digital volunteers, civil society, and public-private partnerships. A wide range of civic tech groups and open-source investigators are active in Ukraine detecting and countering Russian disinformation. These measures have made it possible to expose Russian narratives efficiently, coordinate messaging across government and civil society, and maintain coherence during military operations.

Since 2014, Ukraine has been able to reduce Russia’s overwhelming initial advantages on the information front of the hybrid war. While Russian disinformation tactics continue to evolve and remain a major aspect of the ongoing invasion, Ukraine has managed to increasingly leverage information to shape international opinion and influence diplomatic outcomes.

At present, the European response to Russia’s hybrid war lacks the institutional agility and coordination between public sector and civil society that is evident in Ukraine. Instead, the EU and NATO have developed a number of parallel structures such as NATO’s Joint Intelligence and Security Division and the EU’s East StratCom Task Force. While these agencies continue to make meaningful contributions to the fight back against Russian hybrid warfare, they have yet to demonstrate the kind of real-time operational coordination that has served Ukraine so well.

Ukraine’s model for combating Russian hybrid warfare can’t be replicated in full, but it could serve as a practical reference point for building more adaptive and integrated responses across the West. Given Ukraine’s unique experience, it might make sense to establish a trilateral consultative framework together with the EU and NATO to enable rapid hybrid threat evaluations and coordinate responses.

Ukraine’s long record of countering Russian hybrid warfare has also highlighted the role of civil society. Kyiv’s European partners should consider increasing support for initiatives such as investigative journalism, fact-checking platforms, and technical watchdogs that can serve as support elements in a broader European defense ecosystem. In an environment where information is increasingly weaponized, Ukraine’s experience has also underlined the need to embed media literacy into the education system to ensure European citizens are able to consume information critically and are less vulnerable to Russian propaganda.

Maksym Beznosiuk is a strategic policy specialist and director of UAinFocus, an independent platform connecting Ukrainian and international experts around key Ukrainian issues.

Further reading

UkraineAlert May 8, 2025

Russia’s coming summer offensive could be deadliest of the entire war

By Mykola Bielieskov

As the US-led peace initiative continues to falter, the unfolding summer campaigning season in Ukraine promises to be among the bloodiest of the entire war, writes Mykola Bielieskov.

Conflict European Union

UkraineAlert May 29, 2025

UN probe: Russia’s ‘human safari’ in Ukraine is a crime against humanity

By Peter Dickinson

UN investigators have concluded that a coordinated Russian campaign of deadly drone strikes targeting civilians in southern Ukraine’s Kherson region is a crime against humanity, writes Peter Dickinson.

Conflict Drones

UkraineAlert Jun 3, 2025

After Ukraine’s innovative airbase attacks, nowhere in Russia is safe

By David Kirichenko

Ukraine carried out one of the most audacious operations in modern military history on June 1, using swarms of smuggled drones to strike four Russian airbases simultaneously and destroy a significant portion of Putin’s bomber fleet, writes David Kirichenko.

Artificial Intelligence Conflict

The views expressed in UkraineAlert are solely those of the authors and do not necessarily reflect the views of the Atlantic Council, its staff, or its supporters.

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UkraineAlert is a comprehensive online publication that provides regular news and analysis on developments in Ukraine’s politics, economy, civil society, and culture.

The Eurasia Center’s mission is to enhance transatlantic cooperation in promoting stability, democratic values and prosperity in Eurasia, from Eastern Europe and Turkey in the West to the Caucasus, Russia and Central Asia in the East.

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China: There is no cooling off this trade war

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Mexico, Canada, and the Americas: While some countries may be in less of a rush, USMCA negotiations will ramp up

India: Its special position means New Delhi should press ahead on a deal

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Trump Tariff Tracker

The second Trump administration has embarked on a novel and aggressive tariff policy to address a range of economic and national security concerns. This tracker monitors the evolution of these tariffs and provides expert context on the economic conditions driving their creation—along with their real-world impact.

The post Experts react: How the world is responding to the courtroom drama around Trump’s tariffs appeared first on Atlantic Council.

The benefits are clear. According to initial estimates, IMEC’s overland transportation route could reduce logistics costs by 30 percent and transportation time by 40 percent relative to shipping via the Suez Canal. The new route would also likely provide important structural benefits, such as reducing the risk of supply chain shocks and lowering energy costs. There are also geopolitical implications: Washington, Europe, and India have welcomed the IMEC proposal as a potential counterweight to China’s Belt and Road Initiative.

As the main market at the end of the proposed route, Europe has a critical role to play in ensuring IMEC’s success. With its strong regulatory and logistics capacity, the European Union (EU) will need to take a leading role in setting the rules of the game for IMEC while making much-needed investments to resolve specific bottlenecks around financing, customs alignment, and conflict-resolution mechanisms. To do this, however, Europeans will need to act decisively and quickly.

Where IMEC has paused

The initial IMEC signatories include the leaders of India, the United States, the United Arab Emirates (UAE), Saudi Arabia, Italy, France, Germany, and the European Commission. Although not yet signatories, Greece, Israel, and Jordan are implicitly included in the initiative, given the proposed route that goes through the Port of Haifa as the gateway to the Mediterranean. 

Momentum for the project was strong when it was first announced. However, recent instability in the Middle East has led to substantial uncertainty. Just weeks after the IMEC memorandum of understanding was signed at the G20 Summit, Hamas’s October 7 attack against Israel—and the continuing Israel-Hamas conflict—effectively put the brakes on another important initiative: a Saudi-Israeli normalization deal. Normalization was widely regarded as a critical enabler for progress on IMEC given the centrality of the Saudi Arabia-Jordan-Israel railway link in the project. While normalization would certainly ease political and logistical hurdles, it’s not an absolute requirement, and the project could still move forward with careful diplomatic management. 

This will be an important hurdle to overcome given that a normalization deal does not seem imminent. Immediately following a meeting between US President Donald Trump and Israeli Prime Minister Benjamin Netanyahu in February, where Trump called for turning Gaza into a “Riviera for the Middle East,” the Saudi Ministry of Foreign Affairs reiterated the country’s position that it will not seek a full-normalization agreement or engage on Gaza reconstruction until there is “a credible, irreversible pathway to a Palestinian state,” and the establishment of a more enduring cease-fire agreement. The Saudi foreign ministry’s statement did not mention IMEC by name, but it appears to be affected by this pause. 

Where IMEC is moving forward

Despite the lack of top-down progress toward a secretariat or coordinated development plan among the various signatories, there have still been positive developments on IMEC in the interim. Building on a 2024 Intergovernmental Framework Agreement signed between the UAE and India, both countries have deepened their cooperation on IMEC by launching a digital trade corridor and working together on port modernization. As a result of improving bilateral ties, UAE-India trade reached $65 billion in 2024, representing 20.5 percent growth from 2023. India is now the UAE’s second-largest export market, comprising 9 percent of its total foreign trade and 14 percent of its non-oil exports. This year, UAE-India trade is anticipated to reach $85 billion. 

There is other positive news as well. Several European countries have appointed special envoys to IMEC, including France and Italy. And earlier this month, Israel and Cyprus announced new energy development projects under the framework of IMEC, calling to relaunch the Israel-Cyprus-Greece trilateral forum.  

Where Europe steps in

These are all steps in the right direction, but today, it is important for Europe and the United States to double down on their support for IMEC so that this progress doesn’t falter. The EU and Washington can do this by promoting policies that continue to build momentum in various bilateral relationships and sectors underpinning IMEC, which will also reaffirm their leadership roles within the project. This is especially true for European policymakers, who now have a unique opportunity on the tail end of Trump’s visit to the Gulf in May to step up their leadership on IMEC. Doing so now would signal the European Commission’s increasing commitment to securing its core energy, commercial, and connectivity interests from the Mediterranean to the Indian Ocean, while also demonstrating its ability to advance a foreign policy agenda that can gain support in a skeptical Washington. So, how should the EU do this? 

To begin with, Europe should name an official EU coordinator for IMEC. Based in Brussels, this person could coordinate the Europe side of the project, working primarily with the EU commissioner for international partnerships and the EU commissioner for trade and security. The goal should be to integrate regional partners, work on project timetables and cost estimates, and coordinate with France, Italy, and Greece to discuss IMEC’s terminal port. All three of these countries—with their ports of Piraeus, Thessaloniki, Trieste, and Marseille—are vying to host IMEC’s terminal port. At the moment, Greece and Italy seem to make the most sense, simply by virtue of their proximity to both the Middle East and existing infrastructure. In reality, each of these ports will likely play its role in the project, but the final decision will come down to questions of strategic alignment, investment commitments, and geopolitical concerns, including China’s role in the Port of Piraeus. A high-level EU coordinator is necessary to work through these ongoing and often difficult debates. 

Funding must come next. As the EU discusses how to mobilize funding for major defense projects, such as Readiness 2030, it should also rethink how it mobilizes funding for major connectivity projects. Later this year (potentially alongside the planned EU-India Summit tentatively scheduled for the last quarter of 2025) the EU should host a major “IMEC summit” co-hosted with India, the UAE, Saudi Arabia, and the United States. This summit could include the announcement of an IMEC fund, which could be seeded with money out of the EU’s Global Gateway Initiative, the European Investment Bank, and contributions from member states. This would put needed heft behind IMEC (and Global Gateway, for that matter), while simultaneously showcasing the EU’s ability to lead on major initiatives. In turn, these tangible commitments could potentially attract more private and Gulf investment. 

Although the idea of EU-level debt issuance comes with real questions and caveats about the drawbacks and risks over joint borrowing, the EU could create an IMEC fund building on financial mechanisms already in place. For instance, the European Investment Bank (EIB) already issues “green bonds,” known as Climate Awareness Bonds (CABs) and Sustainability Awareness Bonds (SABs). These bonds finance projects that support climate action and environmental sustainability. The EIB could issue CABs and SABs that help fund “green” portions of IMEC, such as a renewable energy grid and a green hydrogen pipeline, but it could also create IMEC-specific bonds that could attract investors interested in the project more generally. These could help with things like port upgrades or rail construction. 

Finally, a strong India-EU partnership will be key to advancing IMEC. In February, European Commission President Ursula von der Leyen and the EU College of Commissioners visited New Delhi. This first-of-its-kind trip highlighted the EU’s recognition that it needs to look beyond the United States for stable long-term economic partnerships. For its part, India appears ready to jump at this opportunity. Thus, IMEC’s chances of success could be bolstered by the EU and India continuing to build the economic and connectivity projects already underway. Officially signing the free trade agreement after years of negotiations, for example, will be a difficult but necessary step in that direction. 

Stronger European leadership alone will not overcome all the hurdles ahead for IMEC. It is unlikely, for example, to deliver an Israeli-Saudi normalization deal or bring peace to the Middle East. However, it is important both for the EU and Washington that IMEC projects develop in line with their shared values, priorities, and vision for a secure region-spanning architecture.

Factoring in the view from Washington

For a Washington that wants to see results and is renegotiating how it works with its allies, firm, coordinated, and proactive European leadership that makes tangible—if incremental—progress on IMEC would likely be perceived positively. As IMEC moves forward, the United States will likely emphasize the importance of mitigating Chinese influence across dual-use infrastructure and in the sectors promoted by the project. Washington will also be interested in ensuring open competition for tenders and contracts related to IMEC projects and guaranteeing a role for US companies in the initiative. Europe needs to step up its proactive leadership of IMEC to get ahead of these concerns, particularly before a ministerial meeting is set to determine the path toward a more formalized governance architecture.

History shows that when Trump sees an area ripe for investment, he commits. Now is the right time for Europe to lead on IMEC as the United States is actively deepening its relationships with all the corridor countries, particularly Saudi Arabia and India, and is calling on European leaders to do more. The problem each side keeps running into is the classic “first-mover problem,” whereby early players shoulder an outsized share of risk given the overall uncertainty. The success of IMEC could potentially reshape connectivity and trade throughout the globe and lay the framework for more projects of its kind. The EU should jump at the opportunity to help make it something tangible.

Rachel Rizzo is a nonresident senior fellow at the Atlantic Council’s Europe Center. 

Nicholas Shafer is a consultant at the Atlantic Council’s N7 Initiative.

The post It is Europe’s time to shine on IMEC  appeared first on Atlantic Council.

Current Russian troop movements and battlefield dynamics indicate that the coming summer offensive may be one of the largest and most ambitious of the entire war. If successful, this campaign could allow Russian troops to push the front line tens of kilometers forward into Ukrainian-held territory and overrun parts of Ukraine’s Donetsk, Luhansk, Zaporizhzhia, and Dnipropetrovsk provinces.

The cities of Kostyantynivka, Pokrovsk, and Kramatorsk are high on the list of likely targets. They have all experienced significant damage and large-scale displacement as a result of Russian bombardment. If these cities and others in the surrounding area fall to the Russians in the coming months, the wider region could become depopulated as large numbers of people flee the fighting.

As the world watches the Russian invasion of Ukraine unfold, UkraineAlert delivers the best Atlantic Council expert insight and analysis on Ukraine twice a week directly to your inbox.

Based on current trends and previous displacement waves, at least two hundred thousand Ukrainian civilians living close to the current front lines of the war could be forced to leave their homes by fall 2025. This is not speculation; it is informed by experience gained during Russia’s full-scale invasion.

Since the beginning of the invasion in February 2022, Ukrainian organizations have been on the front lines of the humanitarian response. They have provided essential aid, temporary housing, psychological support, and ongoing reintegration counselling to help Ukrainians displaced by Russia’s invasion rebuild dignity and restart their lives.

Ukraine’s civil society has worked wonders over the past three years but cannot realistically hope to absorb another 200,000 diplaced people without international support. The situation is even more alarming due to the recent closure of USAID, which was a major player in the humanitarian response to Russia’s invasion. With Putin’s troops already advancing, Ukraine’s Western partners must not ignore the looming danger.

According to the UN Office for the Coordination of Humanitarian Affairs (OCHA), more than 3.6 million people remained internally displaced within Ukraine as of early 2025. Most are women, children, and elderly individuals. Many have already been forced to flee multiple times. This population of displaced people may soon become considerably larger.

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Compounding the crisis, European governments are beginning to phase out temporary support programs for Ukrainians. While the EU recently agreed to extend temporary protection through 2026, enforcement is sometimes patchy. Meanwhile, there are indications across Europe that resettlement fatigue is growing.

In the UK and US, political rhetoric on the topic of Ukrainian refugees has shifted ominously. Most recently, reports emerged that the Trump administration is exploring options to repatriate Ukrainians who entered the United States following the start of the full-scale Russian invasion.

If these trends continue, millions of Ukrainians could find themselves trapped between advancing Russian forces and a closing window of international asylum. While Ukrainians in the east of the country flee Putin’s invading army, many Ukrainian refugees may be forced to return home with uncertain prospects.

If the overstretched Ukrainian military is unable to contain Russia’s summer offensive, the fallout will reverberate far beyond Ukraine’s borders. The displacement of at least 200,000 more civilians would severely strain humanitarian corridors, destabilize border regions, and sow chaos in Ukrainian cities already struggling to absorb previous waves of refugees.

Ukraine’s Western partners still have time to prevent this, but they must act with a sense of urgency. While the Trump administration has been clear that it does not plan to provide Ukraine with further military aid, it should continue sharing intelligence with the Ukrainians while confirming its readiness to sell arms to Kyiv. Europe must speed up the delivery of promised weapons and should expand supplies significantly to improve Ukraine’s position on the battlefield.

In parallel, European countries should take steps to provide reassurance and protect the legal status of Ukrainian refugees. Donor organizations can help by strengthening partnerships with Ukrainian civil society groups that have demonstrated agility, transparency, and high levels of local trust.

The next phase of Russia’s invasion is not just being fought on the front lines of the war. It is taking place across the country in bomb shelters, train stations, and temporary accommodations. Russia is trying to break Ukrainian resistance by making large parts of Ukraine unlivable and destabilizing the country. Ukraine’s partners can do much to counter these efforts, but they must act now before the military and humanitarian situation deteriorates further.

Viktor Liakh is president of the East Europe Foundation. Melinda Haring is a nonresident senior fellow at the Atlantic Council’s Eurasia Center and a senior advisor at Razom for Ukraine.

Further reading

UkraineAlert May 8, 2025

Russia’s coming summer offensive could be deadliest of the entire war

By Mykola Bielieskov

As the US-led peace initiative continues to falter, the unfolding summer campaigning season in Ukraine promises to be among the bloodiest of the entire war, writes Mykola Bielieskov.

Conflict European Union

UkraineAlert May 21, 2025

Putin aims to destroy Ukraine and has zero interest in a compromise peace

By Peter Dickinson

Russia’s ongoing campaign to destroy Ukraine as a state and as a nation is taking place in front of the watching world and makes a complete mockery of US-led efforts to broker some kind of compromise peace, writes Peter Dickinson.

Conflict Disinformation

UkraineAlert May 13, 2025

Drone superpower: Ukrainian wartime innovation offers lessons for NATO

By David Kirichenko

Today’s Ukraine is now a drone superpower with an innovative domestic defense industry that can provide its NATO allies with important lessons in the realities of twenty-first century warfare, writes David Kirichenko.

Conflict Defense Industry

The views expressed in UkraineAlert are solely those of the authors and do not necessarily reflect the views of the Atlantic Council, its staff, or its supporters.

Read more from UkraineAlert

UkraineAlert is a comprehensive online publication that provides regular news and analysis on developments in Ukraine’s politics, economy, civil society, and culture.

The Eurasia Center’s mission is to enhance transatlantic cooperation in promoting stability, democratic values and prosperity in Eurasia, from Eastern Europe and Turkey in the West to the Caucasus, Russia and Central Asia in the East.

Learn more

The post Russia’s summer offensive could spark a new humanitarian crisis in Ukraine appeared first on Atlantic Council.

As diplomatic efforts falter, attention is turning to economic statecraft—the strategic use of trade and economic leverage to influence state behavior. The European Union (EU) and United States are Israel’s largest and second-largest trading partners, and any economic pressure they apply could have severe consequences for Israel’s economy. Already facing tariffs from the US, Israel may soon encounter additional pressure from the EU, which is considering its own economic measures.

In Europe, growing humanitarian concerns about the scale of destruction in Gaza have prompted calls to reevaluate the best strategy to manage the conflict. Notably, the humanitarian blockade and high-profile incidents, such as the deaths of fifteen aid workers during an Israeli special forces operation in Rafah—an event Israel attributed to “professional failures”—have intensified pressure for a more impactful response. There is a growing sentiment that new tools may be needed to influence the trajectory of the conflict.

Recently, Dutch Foreign Minister Casper Veldkamp called on the EU to investigate Israel’s compliance with Article 2 of the EU-Israel Association Agreement, which ties trade relations to respect for human rights and democratic principles. Veldkamp argued that, “The blockade violates international humanitarian law. You have the right to defend yourself, but the proportions now seem completely lost. We are drawing a line in the sand.”

Although Veldkamp faced domestic political backlash for his move, support across Europe appears to be growing. On May 20, the governments of the United Kingdom (UK), France, and Canada issued a joint statement urging Israel to halt its renewed offensive in Gaza. While reaffirming Israel’s right to defend itself, the statement described the current escalation as “wholly disproportionate.” In tandem, the UK suspended talks on expanding a free-trade agreement with Israel and announced additional sanctions on extremist Israeli settlers in the West Bank.

Crucially, the majority of EU foreign ministers backed the Dutch proposal to review the EU-Israel Association Agreement. Their choice signals a potential turning point: the first serious momentum behind reevaluating a trade framework that underpins diplomatic and economic ties. Should the EU find Israel in breach of Article 2, it could suspend parts of the agreement or enact targeted economic penalties.

The implications are substantial. The EU is Israel’s largest trading partner, accounting for 32 percent of Israel’s total trade in goods as of 2024, amounting to $48.25 billion. Services trade added another $29 billion, while bilateral foreign direct investment stands at over $134.8 billion. This underscores a deeply integrated economic relationship.

Despite the ongoing conflict, Israel has so far managed to maintain some level of macroeconomic stability. Debt levels are within sustainable bounds, credit worthiness remains intact, and the economy has continued to grow (albeit slowly). However, the economic toll of war is has been straining certain sectors disproportionately. The tech industry continues to grow, partially due to defense contracts, but construction has largely halted, agricultural sectors have lost critical labor, and tourism has plummeted. While gross domestic product growth has not entirely contracted, it slowed to around 1 percent in 2024. This was a significant drop from 6.5 percent in 2022, with the deceleration primarily driven by reduced exports. In response, the Israeli government has implemented budget adjustments that include cuts to domestic welfare programs—historically an area of generous spending—as it works to offset growing wartime expenditures.

Compounding these challenges, Prime Minister Netanyahu recently announced plans to eliminate Israel’s trade surplus with the United States—its second-largest trading partner—which amounted to $7.4 billion in 2024. While the move is framed as a gesture toward economic rebalancing and strengthening bilateral ties, it may carry domestic economic consequences. Efforts to narrow this surplus—especially in a climate of shifting global trade patterns and economic uncertainty—could dampen Israeli export growth and further expose the economy to external shocks.

The potential suspension or downgrading of EU-Israel trade ties would add significant pressure. Given the scale and interdependence of EU-Israel trade, such a move could affect Israel’s economic resilience and, by extension, its ability to sustain long-term military operations in Gaza.

While no approach guarantees a swift end to such a deeply entrenched conflict, economic statecraft presents a credible alternative to stalled diplomatic channels. Unlike traditional negotiations, which often falter due to uncompromising demands or ideological impasses, economic levers could alter the cost-benefit calculus of continued hostilities. A concerted and coordinated effort by major economic partners could incentivize compromise, creating a window for diplomacy to succeed.

The EU’s evolving posture may represent a strategic recalibration—one that leverages economic influence to encourage de-escalation while remaining anchored in international law and human rights norms. Whether this shift can yield tangible results remains to be seen, but it marks an important recognition: that intractable conflicts may require not just moral outrage or political pressure, but a strategic application of economic power.

Lize de Kruijf is a project assistant at the Atlantic Council’s Economic Statecraft Initiative.

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Click to jump to an expert analysis:

Kimberly Donovan: Sanctions are a powerful, yet slow-burning tool 

Rachel Rizzo: Europe is no longer waiting for the United States to act

Elisabeth Braw: Spotlight who is replenishing Russia’s shadow fleet, too

Aleksander Cwalina: There is still more the EU can do to tighten the screws to Russia

Olga Khakova: If Trump also goes after the shadow fleet, it could bring Putin to the table

Sanctions are a powerful, yet slow-burning tool 

The EU’s seventeenth package is a welcome addition to the extensive sanctions the Group of Seven-plus (G7+) coalition maintain on Russia in response to Russia’s ongoing war in Ukraine. The latest package further brings EU sanctions in line with US and UK designations on Russian oil producers including Surgutneftegas, as well as the ongoing strategy to target Russia’s illicit oil trade using shadow fleet vessels.  

The extent and timing of this latest sanctions package demonstrate Europe’s resolve to maintain economic pressure on Russia, and they are a clear signal that Europe maintains strong economic leverage in potential negotiations with Russia to end the war.  

It’s hard not to notice that the sanctions were announced the day after US President Donald Trump spoke with Russian President Vladimir Putin and posted on social media that “Russia wants to do largescale TRADE with the United States when this catastrophic ‘bloodbath’ is over, and I agree.” There is growing concern about a potential divergence in US and EU foreign policy, and the latest EU package is a strong reminder that EU sanctions could remain in place even if Washington decides to ease its sanctions or open avenues for trade and finance with Moscow. 

That said, EU sanctions require renewal every six months and need consensus by all twenty-seven members. If the United States does not maintain economic pressure on Russia, then there is concern that Hungary may break with the bloc and veto EU sanctions on Russia’s economy when they are up for renewal in July. 

Sanctions are a powerful, yet slow-burning tool. The multilateral sanctions that G7+ coalition partners levied against Russia are finally having the intended effect. Russia’s economy is struggling, interest rates and inflation remain high, Russia is drawing down on its National Welfare Fund, and the country is in a wartime economy. This is why Moscow’s primary demand from the Black Sea cease-fire talks was lifting sanctions.  

To get a better and bigger deal with Russia over the war in Ukraine, it would be in Washington’s best interest to not only engage its European allies in negotiations, but also to join them in issuing additional sanctions to deny Moscow the opportunity to gain leverage at the negotiation table. 

—Kimberly Donovan is the director of the Economic Statecraft Initiative at the Atlantic Council’s GeoEconomics Center. She previously served in the federal government for fifteen years, most recently as the acting associate director of the Treasury Department Financial Crimes Enforcement Network’s Intelligence Division.

Europe is no longer waiting for the United States to act

The latest round of EU sanctions against Russia highlights the EU’s willingness to do something it hasn’t yet done since February 2022: take ownership over the outcome of Russia’s war in Ukraine. The United States has always been in the driver’s seat, with the Biden administration both shaping and leading the West’s response to the war. The re-election of Trump brought an almost 180-degree shift in the US approach, with a much more conciliatory tone toward Russia emanating from the White House, along with a hope that Trump’s dealmaking skills could get both sides to the table for a cease-fire. That approach has yet to bear fruit.  

This is where the EU’s pressure becomes important. It highlights the bloc’s willingness to act independently of the United States and use its own tools to get Russia to the table without waiting for the United States to provide political cover. With European Commission President Ursula von der Leyen leading the charge, the hope is that the EU stays united on the sanctions front for the foreseeable future, squeezing Russia’s war machine (and its broader economy) to the point where Putin has no other choice than to stop the war. 

—Rachel Rizzo is a nonresident senior fellow at the Atlantic Council’s Europe Center. Her research focuses on European security, NATO, and the transatlantic relationship.

Spotlight who is replenishing Russia’s shadow fleet, too

Every sanction helps reduce the shadow fleet’s activities, and the EU’s diligent efforts to identify shadow vessels are to be saluted. The EU should be especially proud of its latest package, which includes sanctions against an extraordinary 189 shadow vessels and some of the ships’ owners. The latter is especially important, since the owners do their best to operate in the shadows and are extremely hard to trace. 

However, the shadow fleet’s main characteristic remains in place: the fact that it can be constantly replenished. It can be replenished because there are ship owners willing to sell their retirement-age ships into the shadow fleet. In fact, doing so is commercially advantageous for them: Retiring old vessels involves paying for them to be scrapped, while selling them into the shadow fleet brings in money—a lot of it.  

Unfortunately, a few shipowners, including in Western countries, undermine sanctions against Russia by selling their ships into the shadow fleet. Perhaps even worse, by doing so, they willingly create risks on the high seas, because shadow vessels pose hazards to other vessels, to the maritime environment, and to coastal states. Publishing their names would send a strong message. 

—Elisabeth Braw is a senior fellow with the Atlantic Council’s Transatlantic Security Initiative in the Scowcroft Center for Strategy and Security.

There is still more the EU can do to tighten the screws to Russia

On the sidelines of the G7 finance ministers’ meetings in Banff, Canada, this week, the United States opposed language in a joint statement that included “further support” for Ukraine. The United States also expressed reluctance to describe the Russian full-scale invasion of the country as “illegal,” further distancing Washington from its G7 counterparts. This follows a concerning trend as Trump has talked about Washington stepping back in peace talks and eventually restarting US trade with Russia. 

In contrast, the European Commission pushed forward and adopted its seventeenth sanctions package against Russia, underlining European Union unity and clarity. The package closed some remaining loopholes that allow Russia to fund its war machine and access key Western technology for military use. In doing so, it reiterated EU solidarity with Ukraine. 

The package was received well in Kyiv, with Ukrainian President Volodymyr Zelenskyy calling the newest round of sanctions “strong” and saying that they will limit Moscow’s ability to continue its invasion.  

However, more can be done to tighten the screws on Russia.  

Kyiv and its European allies are already discussing how to raise the stakes in a harsher eighteenth EU sanctions package if Moscow does not make serious efforts toward a cease-fire. This would most likely target the Russian banking and energy sectors and aim to further limit the Russian shadow fleet that Moscow uses to evade maritime trade restrictions. The EU and its partners should continue to target these industries. The bloc should also seriously consider seizing assets from sanctioned individuals in the EU for Ukraine and implementing secondary sanctions that limit third-party purchasing of Russian oil—both steps recommended by Kyiv. 

As European leaders are becoming increasingly frustrated with Washington’s stalling and Putin’s faux negotiations and maximalist demands, the EU should lead by example and take bold steps to continue aiding Ukraine and putting pressure on Russia. 

—Aleksander Cwalina is an assistant director at the Atlantic Council’s Eurasia Center.

If Trump also goes after the shadow fleet, it could bring Putin to the table

Putin’s strategy of buying time with deceitful “peace” promises is shown to be failing in the face of the new EU and UK sanctions, as funding for Moscow’s war starts to run out. 

The shadow fleet carries more than 60 percent of Russian oil exports, according to a recent estimate, and the new sanctions will help strengthen enforcement of the price-caps mechanism on Russian oil. Currently, there are some discussions at the G7 level on lowering the price cap for the next sanctions package. But lowering the price cap will only impact Russia if it is enforced. Otherwise, Russia will continue to send large quantities of its oil through the shadow fleet, ensuring it continues to rake in profits.  

In addition to curtailing Russia’s oil profits, the shadow fleet sanctions protect European coastlines from the potential environmental damage and sabotage that the Russian shadow fleet could cause. Europe is achieving this by refusing the provision of services, insurance, and port access to these metal-scrap grade ships. 

The United States has already sanctioned 183 vessels. Now, Trump has an opportunity to forge his legacy as a peacemaker by joining the EU and UK sanctions on 342 vessels to bring Putin to the negotiating table. Moscow will only take US pressure seriously if it is implemented with decisiveness and strength—something the Trump administration has demonstrated effectively in tough negotiations with other nations.   

—Olga Khakova is the deputy director for European energy security at the Atlantic Council’s Global Energy Center.

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The European Union (EU) Growth Plan for the Western Balkans aims to integrate the region into the EU single market, enhance regional cooperation, implement significant governance and rule of law reforms, and boost EU financial support. In doing so, the EU seeks to foster economic development, political stability, and security in the region amid rising geopolitical tensions, while accelerating the Western Balkans’ EU accession process.

The Growth Plan holds substantial potential to reinvigorate the enlargement process and counter the stagnation felt by both the EU and the region. Strong points include:

• Tangible benefits before full accession: Providing stronger incentives for reform.
• Active involvement of regional governments: Increasing buy-in from local leaders, who must submit their own reform agendas.
• Enhanced economic integration, greater access to the EU market, increased EU funding, and reforms to governance and the rule of law: Stimulating investment, promoting economic growth, and raising living standards.

These improvements would bring the Western Balkans closer to the economic success seen in the Central and Eastern European countries in the EU over the past two decades. Moreover, fostering deeper regional cooperation will not only deliver an economic boost but also contribute to political normalization. If successful, the plan will bolster the EU’s political influence in the region, countering the impact of external actors and encouraging much-needed nearshoring investment from EU firms.

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• Enforceability: Although conditionality is rigorous, with disbursement of funds tied to strict conditions to prevent misuse, there are concerns regarding its enforceability. The European Court of Auditors has already raised reservations.
• Quantity: Additionally, the financial support offered is significantly lower than what EU member states in Southeast Europe receive. The reforms required for fund access and single market integration are substantial and will demand significant political will and institutional capacity—both of which have been lacking in the region at times over the past two decades.

The success of the growth plan will largely depend on its implementation. The EU must ensure rigorous enforcement of conditionality, reward positive reform steps, and increase funding for countries making progress. Civil society in the Western Balkans should be engaged as much as possible to foster broader support and transparency. The EU should also leverage the plan to align with its broader geopolitical and geoeconomic interests, particularly in strengthening its strategic autonomy. Additionally, the Growth Plan should be fully integrated with the EU’s competitiveness, green, and digital transition agendas. For their part, Western Balkans leaders should seize the increased agency provided by the plan. They must take ownership of the reforms they propose, participate actively in EU meetings, and design their reform agendas to deliver better living standards and deeper EU integration for their populations.

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This means that for the first time in Portuguese democratic history, there is not a “center majority” between the center-right and center-left. With new power balances in play, Portugal’s politics may get even messier—with political paralysis the new norm, preventing necessary reforms in key sectors such as housing, healthcare, and defense.

This was the third election in three years for Portuguese voters. Among European Union (EU) nations, only Bulgaria has had more elections than Portugal over the past seven years—and election fatigue was evident in this campaign. What Portuguese voters really want is stability, but these results might make that dream harder to come by in the months and years ahead.

Winners and losers

AD, a center-right coalition between the Social Democratic Party and the CDS-People’s Party, won the March 2024 legislative elections by the slimmest of margins, taking the reins of government from PS for the first time since 2015. That election also marked the surge of the far-right Chega party—“Enough” in Portuguese—with a strong third-place showing. Although this fractured political landscape made governing difficult for AD, led by Prime Minister Luís Montenegro, it was still able to pass a budget and begin implementing its program as a minority government. 

The 2025 election campaign was nearly identical to the 2024 cycle, with the same eight principal parties/coalitions on the ballot—all led by their same respective leaders. The Portuguese housing crisis and migration topped the list of voter concerns, followed by healthcare, pensions, and salaries. The war in Ukraine, transatlantic relations, and defense investment were not actively discussed during the campaign and the debates. 

Three parties secured the majority of the 230 parliamentary seats, and they will drive the Portuguese political system for the near future.

AD won the election, but it fell short of an absolute majority. With eighty-nine seats (up from eighty in 2024), the election reinforces Montenegro’s belief that the country is asking for stability and the opportunity to govern with the normal full four-year mandate. But even if AD partners with smaller parties, it still will not have a majority to govern outright. Thus, AD is hoping the president will once again ask the center-right to form a minority government. 

The Socialist Party was the big loser on Sunday, securing only fifty-eight seats (down from seventy-eight) and losing more than 360,000 votes from 2024. This is an epic fall for a party that has been a staple of Portuguese politics since the transition to democracy in the 1970s. In the next government, PS—even if aligned with small left-wing parties—will not be able to outright block government initiatives, leaving the role of kingmaker to Chega. 

The far-right party was the biggest winner, as Chega secured fifty-eight seats (up from fifty), gaining more than 230,000 votes from the 2024 contest. Depending on the distribution of the last four seats, which are reserved for the votes of Portuguese citizens living outside the country, Chega could find itself in second place. (The distribution of these seats will be known by May 28.) In 2024, Chega won two of the four “emigrant” seats, with the other two split between PS and AD. A similar outcome this year would put Chega in the runner-up position. The election results show that the issues most central to Chega’s program—illegal migration and corruption—continue to resonate with the Portuguese electorate.

Political pitfalls ahead

Although AD won the most votes, there is no guarantee that President Marcelo Rebelo de Sousa will immediately invite Montenegro and AD to form a government. That’s because the president is keen on stability, and he made it clear during the election that he wants any government he nominates to have its program accepted by Parliament. 

In Portugal, the nominated prime minister has ten days to present its governance plan to Parliament. If no party or faction within the new Parliament votes to reject (or approve) the program, then the program passes automatically, and the nominated government inherits full executive authority. Should any party or faction reject the program, then it would go to a vote to the whole of Parliament. 

In this case, an absolute majority would be needed to bring down the nominated government—forcing the president to nominate a different government configuration (as happened in 2015) or subject the country to another legislative election. But the Portuguese Constitution prohibits the legislature from being dissolved within the first six months of its mandate or during the final six months of a presidential term. Rebelo de Sousa will finish his second term in March 2026, with the next presidential election scheduled for January 2026. This means late spring 2026 could be the earliest opportunity for new elections. So if a nominated government is brought down, it would leave a long-term caretaker government—a situation the president wants to avoid. It is unlikely that Chega and the Socialists would join forces to block the installation of an AD minority government. Nonetheless, the president will do his due diligence behind the scenes before nominating Montenegro to be prime minister again.

Regardless of the composition of the new government, there is now an absolute majority on the right. Should AD and Chega find common ground on a particular issue—such as immigration—they will be able to enact policy without the left blocking proposals. With Chega possibly becoming the number two party in Parliament, it will be under more pressure to show it is more than just an anti-incumbent party and has the ability and gravitas to govern. 

From Lisbon to Washington

It is still too early to see how any new Portuguese government will approach the current US administration, but it is unlikely that Portugal will change its approach of having the transatlantic relationship be one of the pillars of its foreign policy. Montenegro’s government was reserved and cautious on transatlantic relations during the early days of the new US administration. The prime minister refused to critique the United States for its stance on Gaza, while asking for “realism” and dialogue concerning tariffs. Yet, Montenegro allowed his defense minister to openly question US predictability as an ally when making public comments about the potential purchase of the US-built F-35 fighter jet. 

Chega’s outsized role in the next Parliament, even if it does not become part of the government, may change this dynamic and push the executive toward reinforced ties with the United States. US President Donald Trump invited André Ventura, Chega’s leader, to attend the presidential inauguration in January, while Chega vowed to “privilege the transatlantic link” and prioritize its alliance with the United States as part of its 2025 election campaign foreign policy program. Montenegro has often critiqued Chega as unreliable, but he may have to adapt to the new reality of the Portuguese political landscape.

The NATO Summit looms on the horizon, and it is possible a new government begins its mandate only a week or two before the June 24-25 event in The Hague. Whoever represents Portugal as head of government will have the unenviable position of articulating a plan to increase defense investment, which is still well below the 2 percent of gross domestic product threshold set in the Alliance’s 2014 Wales pledge. 

Defense spending is one area that the AD and Chega may find common ground. Chega proposed for Portugal to meet its 2 percent goal in 2026, three years earlier than AD’s 2029 goal, while PS did not quantify a target date in its electoral plan. It will take political will by Montenegro and AD to use this opportunity to move Portugal out of the shrinking list of NATO members still unable to fulfill the Wales pledge. This willpower has been historically absent in Portugal among all parties, a country benefiting from its geography and its distance from the Alliance’s eastern flank to under-prioritize defense spending while focusing on social programs. 

With the composition and functioning of the new government in flux, Portugal could remain in an era of political paralysis for some time. How the future center-right government leads with a far-right primary opposition will determine if the country can break through its fractured political landscape and address the country’s challenges. Lisbon’s foreign policy could remain unsettled for some time given this reality. The big question remains whether the government will come together effectively enough to avoid yet another election in a year’s time.

Andrew Bernard is a nonresident senior fellow with the Atlantic Council’s Europe Center.

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Click to jump to an expert analysis:

Daniel Fried: Dan ran a pro-Europe, pro-NATO, and pro-Ukraine campaign

Victoria Olari: The implications of Dan’s win will ripple across Eastern Europe

Anca Agachi: Romanians don’t want more of the same, so how will Dan be different?

Mark Scott: It was an election fought as much online as offline

Andrei Covatariu: After the election, can Romania’s energy diplomacy bridge Brussels and Washington?

Olga Khakova: Energy policy can help build the coalition and strengthen the country

Dan ran a pro-Europe, pro-NATO, and pro-Ukraine campaign

There are two lessons to take from Romania’s presidential elections. First, Romanians seemed turned off by the establishment parties that have traded off running the government for decades. The candidate of the ruling coalition didn’t make it past the first round; and Dan and Simion were both seen, Romanians tell me, as alternatives to the ruling coalition. Second, despite predictions (or fears), the preference for an outsider didn’t translate into a preference for a nationalist or anti-EU firebrand, which is how Simion ran his campaign. Dan, a mathematician by training, ran a campaign that was pro-Europe, pro-NATO, and pro-Ukraine. 

Simion appeared to enjoy support from Russia, and plenty of stories are circulating of Russian information ops in his favor. He had maintained distance from Russian President Vladimir Putin (wise in Russo-skeptic Romania) and instead courted the Make America Great Again (MAGA) movement in the United States, even visiting the United States during the campaign. But this did not translate into enough support at home.   

Dan’s win is decisive, but it alone will not overcome the divisions in Romanian society. Romanians have voted for Europe and democracy, not nationalism, but they also seem to want change in the form of better governance. Dan will have a mandate but a big job ahead. 

—Daniel Fried is the Weiser Family distinguished fellow at the Atlantic Council and a former US ambassador to Poland.

The implications of Dan’s win will ripple across Eastern Europe

Romania’s presidential runoff turned into an intense race with significant stakes for the nation and the wider region. Dan won, an outcome expected mainly given the high voter turnout, offering him a strong democratic mandate. 

From the early hours of election day, Simion’s ultra-nationalist camp signaled that they would not accept a loss. They took to social media with accusations of fraud and amplified fake news stories that mimicked legitimate outlets and falsely declared Simion the winner. Simion told his supporters not to trust the exit polls, claiming that political elites had manipulated the results behind the scenes. His team also accused foreign actors of interference, notably targeting Moldova’s president, Maia Sandu, for allegedly mobilizing Romanian voters in Moldova. This followed an unprecedented voter turnout there in the second round, partly spurred by Simion’s hostile rhetoric toward Moldova. The nationalist camp further alleged meddling by France, specifically accusing President Emmanuel Macron of election interference. 

Despite these efforts, the election results left little room for dispute. Dan secured a mandate from Romanians. Simion conceded early Monday morning, marking the end of a tense and polarized campaign. 

This election isn’t just about Romania. It’s a big deal for the region, too. A win for Dan will likely lock in Romania’s commitment to the EU and NATO, a vital move as Russia’s war in Ukraine continues to unsettle the region. This is critical, as Romania’s strategic position strengthens regional security and support for Kyiv. Additionally, it will likely bolster Moldova’s EU integration efforts under Sandu, fostering closer Romania-Moldova ties and countering Russian influence. On the other hand, a Simion victory would have likely emboldened far-right movements across Europe, disrupted regional unity, and undermined support for Ukraine, which Simion openly opposed. 

Even with all the divisions, Romanian voters sent a loud message: they reject the old political elite. Both Dan and Simion positioned themselves as anti-system challengers, capitalizing on widespread frustration with corruption and governance failures. This call for change is real, and it’s going to continue to shape Romania’s future.  

—Victoria Olari is a research associate for Moldova at the Atlantic Council’s Digital Forensic Research Lab (DFRLab).

Romanians don’t want more of the same, so how will Dan be different? 

“Hope and patience.” This is what Dan, the now president-elect of Romania, asked for in his speech when the first exit polls were released. 

Patience because his mandate will be an incredibly difficult one. Immediately, he will have to choose a prime minister and help establish a pro-European political coalition in the Romanian Parliament, one third of which is made up of far-right parties. He will need to help build trust in an economy that has the EU’s highest budget deficit compared to gross domestic product. And he will need to lead the country’s foreign policy at a time when the regional context for Romania has never been more dangerous given Russia’s continued war in Ukraine. In the long term, Dan will have to face down the unaddressed root causes of discontent that gave oxygen to far-right parties in the first place and brought Romania to the brink of disaster. The country is plagued by poverty, inequality, a failing public health system, corruption, and inefficient, unresponsive, and distrusted state institutions, as well as a forgotten diaspora. He will have to “rebuild a one Romania” together with a divided population. 

But Dan was also right to ask for hope. In the election result Sunday, Romania decided it cannot go back, and Romanians have firmly made the choice to remain anchored in the Western, transatlantic community. Despite external pressures, disinformation campaigns, suspicions of Russian interference, and fears of a contested election result, Romanians made it clear that they are European. But the same voters who turned out in massive numbers for two anti-system candidates also made it clear that more of the same in Romanian politics is simply not acceptable. This is the hope and the opportunity Romania is facing—starting now. 

—Anca Agachi is a nonresident fellow with Transatlantic Security Initiative in the Atlantic Council’s Scowcroft Center for Strategy and Security. She currently serves as a defense policy analyst at the RAND Corporation, where she focuses on international security and defense issues.

It was an election fought as much online as offline 

Faced with a barrage of false online information, potential foreign interference, and opaque practices by social media companies, Romania’s second-round presidential election held up to scrutiny—but only just. In the hours before Dan was elected, Simion took to X to proclaim himself as Romania’s new president, only to backtrack on that claim when the official tally gave Dan the final victory.

Pavel Durov, the chief executive of Telegram, the popular messaging service, also took to his platform and other social networks to accuse “a Western European government” of urging Telegram to “silence conservative voices in Romania.” The Russian tech boss subsequently named that country as France, though Paris denied any potential interference in the Eastern European country’s election.

More than any other recent European election, Romania’s vote has been riddled with potential digital attacks on local democratic institutions, including scores of cyberattacks that the country’s security forces suggested may have come from Russia. In response, Romanian officials and those from the European Commission have criticized social media companies for not doing enough to combat malign actors, both in and outside of the country.

Yet even hours after Dan was officially named as Romania’s next president, little, if any, evidence about the role these global platforms played in promoting election-related falsehoods has been made public. Local voters remain mostly in the dark about how social media—and potential bad actors—may have targeted them in this weekend’s election. That has left more questions than answers as policymakers, tech giants, and the public try to unpack how Dan successfully saw off Simion in an election that was fought as much online as offline. 

—Mark Scott is senior resident fellow at the DFRLab’s Democracy + Tech Initiative within the Atlantic Council Technology Programs.

After the election, can Romania’s energy diplomacy bridge Brussels and Washington? 

Romania avoided a political shock this weekend as pro-European candidate Dan defeated right-wing populist Simion. The result reassures Romania’s continued commitment to EU and transatlantic partnerships. Yet, after months of political turbulence and voter polarization, restoring macroeconomic stability now depends on forming a new government—no easy feat despite a pro-European majority in Romania’s Parliament. 

The election outcome has implications for Romania’s strategic energy direction, too, even though energy and climate policy were not prominently featured in the campaign debates. Dan has pledged to keep Romania on its path of regional energy relevance, proven over the past few years, and to enhance the existing cooperation with the United States and the EU. His platform includes proposals to create a national energy champion, reduce Romania’s energy dependencies on authoritarian regimes, support strategic investment (including in data centers), and deepen ties with Moldova and Ukraine. His strong backing for EU enlargement further strengthens Romania’s geopolitical and energy role in Central and Eastern Europe (CEE). 

At the same time, Romania—like other CEE states—faces a growing tension between the EU’s accelerated decarbonization push and the United States’ emphasis on “energy freedom,” as recently articulated by US Energy Secretary Chris Wright at the Three Seas Business Forum in Warsaw. This divergence presents both challenges and opportunities. The Romanian president can play a key role in expanding the win-set between Brussels and Washington through enhanced energy diplomacy—advancing nuclear partnerships (notably small modular nuclear reactors with US support), Black Sea gas development, cross-border infrastructure with Ukraine and Moldova, and clean generation scale-up. Romania also has the potential to become a clean technology manufacturing destination, supporting both EU goals and transatlantic alignment in a shifting geopolitical landscape.  

By advancing projects that resonate in both Brussels and Washington, Romania can amplify its geopolitical weight in the energy space. 

—Andrei Covatariu is a nonresident senior fellow with the Atlantic Council’s Global Energy Center.

Energy policy can help build the coalition and strengthen the country 

This anti-establishment, anti-corruption vote presents a historic opportunity for the new Romanian leadership to use this mandate to build on previous positive energy reforms. The next Romanian government has a chance to engage with the population to forge a secure, resilient, and diversified energy strategy that can attract new deals and investments in the energy sector. 

However, the close election results showcase that national concerns such as energy prices, reliability, and industrial competitiveness helped drive a significant percentage of voters to support the candidate with a nationalistic platform. The good news is that Romania can prioritize domestic issues through stronger partnerships and deeper regional integration: developing Black Sea resources, integrating electricity and gas interconnections with neighboring countries, and making progress on nuclear agreements with countries like the United States. 

Romania has led on diversification from Russian energy sources and support for Ukraine and Moldova’s energy security. The new coalition can lead by example in fortifying the region from backsliding into Russian natural gas dependence, as seen in the growing Russian liquefied natural gas shipments to the EU. 

Moreover, a strong energy agenda could also be a unifying platform for building the ruling coalition. 

—Olga Khakova is the deputy director for European energy security at the Atlantic Council’s Global Energy Center.

The post Experts react: What message did Romanians send by electing Nicusor Dan? appeared first on Atlantic Council.

The EU and Britain need each other. Their shared challenges, including sluggish economic growth, the protracted war in Ukraine, and a US administration erecting tariffs on European goods and seeking to disengage from the continent’s defense, have made this abundantly clear.

Faced with these common challenges, EU and UK leaders are looking to sign three agreements at the summit. The first is a broad statement of shared values and common principles—a “geopolitical preamble” to shape a new strategic partnership. This statement is expected to reaffirm a commitment to free and open trade, Ukrainian sovereignty, and multilateral action to address global issues such as climate change.

The second, and most urgent, prospective agreement is a security and defense pact, which would open the way to the United Kingdom’s participation in EU-backed military spending. This agreement would allow Britain to take part in joint procurement for military capabilities alongside the bloc’s member states and to enable EU countries to purchase British-made military equipment as part of the new €150 billion European instrument to ramp up defense spending.

As one of Europe’s leading miliary powers, Britain is essential to achieving the continent’s aim of taking the primary role of defending itself in the wake of the Trump administration’s stated desire to reduce the United States’ commitment to defending Europe. In February, UK Prime Minister Keir Starmer pledged that Britain would increase its defense spending to 2.5 percent of its gross domestic product by 2027 and to 3 percent during the next parliament.

European fears about Russian aggression and US withdrawal from the continent have increased the pressure for decisive action on defense and security, and the EU-UK pact would represent a welcome step toward developing the continent’s defense industrial base and enhancing effective military cooperation.

The third item on the summit’s agenda is to agree to a “common understanding” on a range of issues concerning the trade and economic relationship between Britain and the EU. Current UK-EU trade arrangements are governed by the Trade and Cooperation Agreement (TCA) signed by the two sides in late 2020.

For all the fanfare associated with the economic deal the United Kingdom signed with the United States on May 8, the EU remains Britain’s single largest trading partner by far. Boosting economic ties weakened by Brexit could bring desperately needed dividends for both sides, even if it doesn’t produce the growth that would come from Britain rejoining the European single market, a policy Starmer promised not to pursue on the campaign trail.

The TCA is subject to a joint review next year, and both the United Kingdom and EU have bilateral issues they want to amend. The United Kingdom is keen to negotiate an agreement to reduce border checks on agricultural products and secure a mutual recognition agreement for professional qualifications to help open up markets for UK service exporters.

On the EU side, there are calls from France and others to support EU fishing rights in UK waters and a European Commission proposal to create a youth mobility scheme, which would allow young people from across Europe to work and travel freely between the United Kingdom and the EU.

Some of these issues will require political risks and trade-offs from both sides. Starmer’s popularity has slumped since he was elected last summer, and Brexiteers in the United Kingdom will be ready to accuse him of compromising on the outcome of Britian’s referendum to leave the European Union.

This domestic pressure has become more intense after local elections in England earlier this month that represented a heavy defeat for the governing Labour Party and a significant victory for the populist right-wing party, Reform UK, led by the arch Brexit champion Nigel Farage.

There will be pressure on European governments, too, not to compromise the principles of the EU single market for a deal on defense and security. And there remain concerns in European capitals about Britain’s long-term commitment to closer ties with a club it chose to leave nine years ago.

Yet, for all the political difficulties, this is a time for both the EU and the United Kingdom to be bold. Squabbles about fishing or veterinary checks cannot be allowed to undermine the vital steps that must be taken to confront the economic and security threats facing Britain and the EU today.

Europe has always been stronger when the United Kingdom and its continental neighbors are united. Next week’s summit can mark a modest but important step forward for UK-EU relations and demonstrate that the friction and pain of the last decade can be replaced by a new partnership with mutual benefits.

 Ed Owen is a nonresident fellow of the Atlantic Council’s Europe Center and a former UK government adviser.

The post Can the EU-UK summit lead to a new post-Brexit partnership? appeared first on Atlantic Council.

While the Kremlin insists it is ready for peace, developments on the battlefield tell a different story. According to Britain’s Ministry of Defense, Russia is intensifying its offensive operations and sustained approximately 160,000 casualties during the first four months of the current year, the highest total for this period since the start of the full-scale invasion. If this trend continues during the coming fighting season, 2025 will be the deadliest year of the war in terms of Russian losses.

Russia’s strategy continues to rely on costly frontal assaults, but the nature of these attacks is steadily evolving. Russian troops now increasingly employ motorbikes and other improvised vehicles to advance in small groups and infiltrate Ukraine’s defensive lines. These assaults are backed by strike drones, glide bombs, and artillery, making it difficult for Ukraine to direct reinforcements to hot spots or provide medical and engineering support. The end goal is to force Ukrainian tactical withdrawals and inch further forward.

As the world watches the Russian invasion of Ukraine unfold, UkraineAlert delivers the best Atlantic Council expert insight and analysis on Ukraine twice a week directly to your inbox.

Ukraine’s defensive strategy is focused primarily on attrition. This includes remote mining to channel advancing Russian troops into kill zones, along with the extensive use of traditional artillery. Ukraine’s expanding drone army is also playing a crucial role, making it possible to target Russian units at depths of up to 15 kilometers behind the line of contact.

By increasing drone coverage along the front lines, Ukrainian commanders aim to hamper the logistics of Putin’s invasion force and significantly reduce the potential for future Russian advances. This approach is being dubbed the “drone wall,” and may well come to play a far biggest role in efforts to freeze the front lines. However, Russia is also rapidly innovating to address Ukraine’s growing drone capabilities, leading to a relentless technological contest that runs in parallel to the fighting on the battlefield.

As the Russian army currently holds the initiative and is advancing at various points along the front lines of the war, Putin’s commanders can choose from a range of potential locations as they look to identify geographical priorities for their summer offensive.

At present, Russia is expanding a foothold in northeastern Ukraine’s Sumy region after largely pushing Ukrainian formations out of Russia’s Kursk region. There have also been recent localized Russian advances in the Kharkiv region. However, the main thrust over the next few months is expected to come in eastern Ukraine, where Russia has concentrated forces in the Pokrovsk and Kostiantynivka sectors. Success in these sectors could create the conditions for the occupation of the entire Donetsk region, which remains Russia’s most immediate political objective.

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Drones, defense, and diplomacy: Negotiations and the battlefield in Ukraine

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While Putin is under no pressure on the home front, he will be keen to achieve some kind of meaningful breakthrough in the coming months in order to demonstrate to domestic and international audiences that the Russian army is capable to achieving victory in Ukraine. He recently stated that Russia has “sufficient strength and resources to take the war in Ukraine to its logical conclusion,” but the fact remains that his army has failed to capture and hold a single Ukrainian regional capital in more than three years of brutal warfare.

For war-weary Ukraine, the coming summer campaign will be a major test of endurance. If Ukrainian forces are able to prevent any significant Russian advances despite dwindling supplies of US military aid, it would serve as a powerful argument for pro-Ukrainian politicians in Europe and the United States. This would likely lead to strengthened support for the Ukrainian war effort, and could help convince skeptics in the Trump White House to adopt a firmer stance toward Russia.

The Ukrainian authorities have already accepted a US proposal for an unconditional 30-day ceasefire and remain ready to pursue a sustainable peace settlement. But with Russia showing little sign of following suit, Ukraine faces another long summer of brutal fighting.

The Kremlin’s current negotiating position would leave postwar Ukraine partitioned, isolated, and defenseless. Any peace on such terms would almost certainly mean the end of Ukrainian statehood. Instead, Ukraine must continue to defend itself while hoping that Russia’s ability to sustain heavy losses declines faster than the West’s collective commitment to stopping Putin.

Mykola Bielieskov is a research fellow at the National Institute for Strategic Studies and a senior analyst at Ukrainian NGO “Come Back Alive.” The views expressed in this article are the author’s personal position and do not reflect the opinions or views of NISS or Come Back Alive.

Further reading

UkraineAlert Mar 25, 2025

Ukraine’s growing military strength is an underrated factor in peace talks

By Serhii Kuzan

Any discussion on the future course of the war against Russia and the terms of any peace deal must take into account the fact that Ukraine is a now major military power in its own right, writes Serhii Kuzan.

Conflict Defense Industry

UkraineAlert May 7, 2025

Putin’s parade cynically exploits WWII to justify his own criminal invasion

By Peter Dickinson

Putin is expected to use this week’s Victory Day parade marking 80 years since the defeat of Hitler to legitimize his current invasion of Ukraine. But if anyone is guilty of echoing the crimes of the Nazis, it is Putin himself, writes Peter Dickinson.

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UkraineAlert May 6, 2025

The shadow of 1930s appeasement hangs over US-led peace talks

By Oleksandr Merezhko

As the world prepares to mark the eightieth anniversary of the victory over Nazi Germany, the shadow of events leading up to World War II hangs over efforts to end Russia’s current invasion of Ukraine, writes Oleksandr Merezhko.

Conflict European Union

The views expressed in UkraineAlert are solely those of the authors and do not necessarily reflect the views of the Atlantic Council, its staff, or its supporters.

Read more from UkraineAlert

UkraineAlert is a comprehensive online publication that provides regular news and analysis on developments in Ukraine’s politics, economy, civil society, and culture.

The Eurasia Center’s mission is to enhance transatlantic cooperation in promoting stability, democratic values and prosperity in Eurasia, from Eastern Europe and Turkey in the West to the Caucasus, Russia and Central Asia in the East.

Learn more

The post Russia’s coming summer offensive could be deadliest of the entire war appeared first on Atlantic Council.

Since US-led peace talks began in February, Russia has carried out some of the deadliest attacks of the entire invasion targeting Ukrainian civilians. These have included a ballistic missile strike on a playground in Ukrainian President Volodymyr Zelenskyy’s hometown, Kryvyi Rih, that killed 18 people including 9 children. On Palm Sunday, Russia launched targeted strike on Sumy city center as civilians made their way to church, leaving 35 dead.

Some of these attacks have made international headlines. Many more have not. Every single day, the population in front line Ukrainian cities like Kharkiv in the east and Kherson in the south face relentless Russian bombardment. At night, millions of Ukrainians are forced to seek shelter as Russia launches wave after wave of missiles and drones at targets across the country.

As Russia intensifies its air offensive against Ukraine’s civilian population, the death toll is rising. According to UN officials, the number of Ukrainian casualties has spiked recently. During the first 24 days of April, 848 civilians were killed or wounded, representing a 46 percent increase on the same period one year ago.

Meanwhile, Russia is also escalating its offensive operations on the battlefield as Putin’s commanders seek to wear down Ukrainian resistance and achieve a breakthrough. This is leading to mounting Russian losses. The UK Ministry of Defense reports that in the first four months of 2025, Russia suffered approximately 160,000 casualties. If the current rate of attrition persists, this will become the costliest year of the war for Putin’s invading army.

As the world watches the Russian invasion of Ukraine unfold, UkraineAlert delivers the best Atlantic Council expert insight and analysis on Ukraine twice a week directly to your inbox.

Despite extensive evidence of Russia’s intention to escalate the invasion, the United States continues to pursue a vision of peace through compromise. Since talks began, the Trump administration has offered the Kremlin a range of concessions while pressuring Ukraine to back down on key issues such as the country’s NATO ambitions. A recent US peace proposal indicated that President Trump may even be prepared to officially recognize Russia’s 2014 seizure of Ukraine’s Crimean peninsula.

The tone of American diplomacy has shifted noticeably since Trump returned to the White House, with US officials now seeking to avoid any direct condemnation of Russia. In line with this new strategy, the United States has sided with Moscow on a number of occasions to vote against UN resolutions critical of the Kremlin. The US has also stepped back from international efforts to hold Russia accountable for alleged war crimes committed in Ukraine, defunding one flagship program and exiting another.

The Trump administration’s conciliatory approach toward Russia does not appear to be working. Far from offering concessions of his own, Putin has responded to the new US administration’s peace initiative by doubling down on his maximalist war aims. The Kremlin dictator insists on international recognition for Russia’s claims to Ukrainian territory, and demands that any peace deal must leave Ukraine disarmed and internationally isolated.

Eurasia Center events

Online Event Tue, June 17, 2025 • 1:00 pm ET

Drones, defense, and diplomacy: Negotiations and the battlefield in Ukraine

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The current lack of progress toward peace should come as no surprise. After all, the experience of the past two decades has demonstrated that there is nothing more likely to provoke Putin than weakness. When the West chose not to punish Russia for the 2008 invasion of Georgia, this paved the way for the 2014 invasion of Crimea and eastern Ukraine. The underwhelming Western response to Putin’s initial assault on Ukrainian sovereignty then set the stage for the full-scale invasion of Ukraine in February 2022.

Russian’s sense of impunity is now a crucial factor fueling the largest European invasion since World War II. While Putin is always ready to engage in diplomatic maneuvers, his evasive actions in recent months confirm that he has no real interest in a compromise peace. Instead, he is more confident than ever that he can outlast the West in Ukraine and achieve his objectives.

Russia’s invasion of Ukraine is a watershed event in world history that will define the future of international security for decades to come. If Western leaders allow Russia to continue bombing civilians and destroying the foundations of international law without consequence, a ruthless new world order will emerge and will be defined by the principle that might makes right. Putin and his authoritarian colleagues in China, Iran, and North Korea will dominate the global stage and will rewrite the rules to suit their expansionist agendas. No country will be secure.

Today, Ukrainians are paying the price for the West’s reluctance to confront Russia. If Putin is not stopped in Ukraine, many other countries will also count the cost of this failure.

Alyona Nevmerzhytska is CEO of hromadske.ua.

Further reading

UkraineAlert Mar 25, 2025

Ukraine’s growing military strength is an underrated factor in peace talks

By Serhii Kuzan

Any discussion on the future course of the war against Russia and the terms of any peace deal must take into account the fact that Ukraine is a now major military power in its own right, writes Serhii Kuzan.

Conflict Defense Industry

UkraineAlert May 6, 2025

The shadow of 1930s appeasement hangs over US-led peace talks

By Oleksandr Merezhko

As the world prepares to mark the eightieth anniversary of the victory over Nazi Germany, the shadow of events leading up to World War II hangs over efforts to end Russia’s current invasion of Ukraine, writes Oleksandr Merezhko.

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UkraineAlert Apr 29, 2025

Putin announces ceasefire to protect Moscow parade from Ukrainian attack

By Peter Dickinson

Vladimir Putin is now so emboldened by Western weakness that he believes he can personally pause the war to host a military parade on Red Square before resuming his invasion three days later, writes Peter Dickinson.

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The views expressed in UkraineAlert are solely those of the authors and do not necessarily reflect the views of the Atlantic Council, its staff, or its supporters.

Read more from UkraineAlert

UkraineAlert is a comprehensive online publication that provides regular news and analysis on developments in Ukraine’s politics, economy, civil society, and culture.

The Eurasia Center’s mission is to enhance transatlantic cooperation in promoting stability, democratic values and prosperity in Eurasia, from Eastern Europe and Turkey in the West to the Caucasus, Russia and Central Asia in the East.

Learn more

The post Putin is escalating the war in Ukraine. He will not stop until he is stopped. appeared first on Atlantic Council.

US President Donald Trump’s efforts to initiate peace talks between Russia and Ukraine reflect a commendable desire to end the war. Nevertheless, after more than three months of Russian stalling tactics and empty promises, it should now be abundantly clear that attempting to negotiate a meaningful compromise with Vladimir Putin was a mistake.

Since the current peace process began in early February, the Russian ruler has refused to join Ukraine in backing a US proposal for an unconditional ceasefire. Instead, Putin continues to insist on maximalist goals that reflect his undiminished determination to erase Ukrainian statehood and subjugate the Ukrainian people.

Putin’s demands include the comprehensive disarmament of the Ukrainian military and the reestablishment of Russian dominance in all spheres of Ukrainian public life (euphemistically called “denazification” by the Kremlin), along with official international recognition for Russia’s territorial gains and an end to all military support for Kyiv. If implemented, Putin’s terms would leave Ukraine partitioned, isolated, and defenseless. This is not a negotiating position; it is a call for Kyiv’s capitulation.

As the world watches the Russian invasion of Ukraine unfold, UkraineAlert delivers the best Atlantic Council expert insight and analysis on Ukraine twice a week directly to your inbox.

While Russia’s ultimate objectives remain unchanged, there is a very real danger that Putin may seek to exploit Trump’s evident ambition to settle the Ukraine issue as soon as possible. He could do so by agreeing to a temporary ceasefire that would lead to a pause in hostilities, while creating the conditions to complete the conquest of Ukraine following the end of Trump’s presidency. This would allow Putin to lift sanctions, rebuild the Russian army, and destabilize Ukraine from within.

In order to secure Kremlin backing, a ceasefire deal would need to hand Putin the semblance of victory while denying Ukraine any genuine and reliable security guarantees. Alarmingly, reports indicate that current US peace proposals go a long way toward meeting these conditions.

Crucially, the United States is reportedly prepared to officially recognize the Russian seizure of Ukraine’s Crimean peninsula. This has led to inevitable comparisons with the 1938 Munich Agreement, which saw Britain and France hand Czechoslovakia’s Sudetenland over to Nazi Germany in the hope that this would satisfy Adolf Hitler. Instead, the shameful deal struck in Munich encouraged the Nazi dictator to escalate his territorial demands. Less than a year later, World War II began.

The appeasement policies of the 1930s have long been condemned for enabling the rise of Hitler. Attempts to appease Putin have produced strikingly similar results. After Russia invaded Georgia in 2008, Western efforts to downplay the war and resume “business as usual” only served to embolden the Kremlin. When Russia’s 2014 invasions of Crimea and eastern Ukraine again failed to produce a resolute Western response, Putin interpreted this as a tactic green light to go further. This paved the way for the full-scale invasion of 2022.

Eurasia Center events

Online Event Tue, June 17, 2025 • 1:00 pm ET

Drones, defense, and diplomacy: Negotiations and the battlefield in Ukraine

Conflict Defense Technologies Europe & Eurasia Politics & Diplomacy

It should now be obvious to any objective observer that the continued appeasement of Putin will further fuel his imperial ambitions. This would be potentially fatal for Ukraine itself. It would also be disastrous for the future of international security.

Putin’s revisionist agenda is not limited to Ukraine. He openly speaks of establishing a new world order and frequently laments the fall of the Russian Empire, which at its peak included more than a dozen currently independent nations beyond Ukraine, from Finland and Poland in the west to the Southern Caucasus and Central Asia. If Putin is allowed to succeed in Ukraine, it is delusional to think he will simply stop. On the contrary, abandoning Ukraine to Russia would dramatically increase the chances of a far larger conflict in the coming years.

In order to prevent this nightmare scenario from materializing, the West must demonstrate maximum unity and an uncompromising commitment to Ukraine’s survival as an independent state. Putin interprets any talk of compromise as a sign of weakness. The only language he truly understands is the language of strength.

The most effective deterrent remains Ukrainian membership of NATO. Unsurprisingly, Putin has worked hard to prevent this from happening. He has employed nuclear blackmail to intimidate the West, and has spent years spreading false narratives about an alleged NATO security threat to Russia itself.

Putin’s objections to Ukrainian NATO membership do not stand up to scrutiny. Notably, he has been unable to explain why he went to war over Ukraine’s distant hopes of joining NATO but did nothing to oppose Finland’s recent NATO accession, despite the fact that Finnish membership of the alliance more than doubled Russia’s NATO borders overnight. Indeed, Russia already shares borders with six NATO member states and leaves these frontiers largely unguarded. Putin’s real problem is evidently with Ukrainian independence and not NATO enlargement.

Bringing Ukraine into NATO would serve as a powerful barrier to future Russian invasions and would dramatically reduce the likelihood of a major European war without undermining Russian national security. However, this would require a degree of political will on the part of the United States and major European powers including Britain, France, and Germany that is currently absent. Unless that changes, Western leaders must come up with a credible alternative to NATO membership that will guarantee Ukraine’s long-term security.

Nobody wants peace more than the Ukrainian people. But Ukrainians also recognize that well-meaning efforts to compromise with the Putin regime will only encourage further Russian aggression. Similar policies aiming to accommodate and appease Hitler led directly to World War II. If Western leaders wish to prevent a repeat of this catastrophic outcome, they must stop offering the Kremlin concessions and demonstrate the kind of resolve that Russia respects.

Oleksandr Merezhko is a member of the Ukrainian Parliament for the Servant of the People Party and Chair of the Ukrainian Parliament’s Foreign Affairs Committee.

Further reading

UkraineAlert Mar 25, 2025

Ukraine’s growing military strength is an underrated factor in peace talks

By Serhii Kuzan

Any discussion on the future course of the war against Russia and the terms of any peace deal must take into account the fact that Ukraine is a now major military power in its own right, writes Serhii Kuzan.

Conflict Defense Industry

UkraineAlert Apr 29, 2025

Putin announces ceasefire to protect Moscow parade from Ukrainian attack

By Peter Dickinson

Vladimir Putin is now so emboldened by Western weakness that he believes he can personally pause the war to host a military parade on Red Square before resuming his invasion three days later, writes Peter Dickinson.

Brazil China

UkraineAlert Apr 10, 2025

A pragmatic peace plan for Ukraine

By Mykola Bielieskov

A pragmatic and sustainable peace is possible in Ukraine if Kyiv’s European partners dramatically increase their own defense spending while significantly strengthening the Ukrainian military, writes Mykola Bielieskov.

European Union NATO

The views expressed in UkraineAlert are solely those of the authors and do not necessarily reflect the views of the Atlantic Council, its staff, or its supporters.

Read more from UkraineAlert

UkraineAlert is a comprehensive online publication that provides regular news and analysis on developments in Ukraine’s politics, economy, civil society, and culture.

The Eurasia Center’s mission is to enhance transatlantic cooperation in promoting stability, democratic values and prosperity in Eurasia, from Eastern Europe and Turkey in the West to the Caucasus, Russia and Central Asia in the East.

Learn more

The post The shadow of 1930s appeasement hangs over US-led peace talks appeared first on Atlantic Council.

Watch the full event

Public Event Thu, May 1, 2025 • 3:00 pm ET

French Foreign Minister Jean-Noël Barrot on Europe and the new world order

AN #ACFRONTPAGE EVENT—French Minister for Europe and Foreign Affairs Jean-Noël Barrot will share his vision of Europe’s role for the future of transatlantic relations.

Europe & Eurasia Politics & Diplomacy

“Multilateralism will survive whether or not the US quits multilateralism, and so someone will fill the void,” said French Minister for Europe and Foreign Minister Jean-Noël Barrot at an Atlantic Council Front Page event on Thursday. China, he warned Washington, is already preparing to “become the new hegemon of this new era of multilateralism” if the United States were to “decide to let them play this role.”

Speaking against the backdrop of the Trump administration’s sweeping tariffs that have upended the global trading system and strained relations with US allies, Barrot cautioned the United States from pulling back from the multilateral system it helped build. Instead, he said, “a better route” would be “reforming, reshaping multilateralism.” 

He said this would require being willing to “share the power in order not to lose it” by expanding representation in the United Nations Security Council (UNSC) and international financial institutions. It will also require being “ready to build coalitions of the willing to overcome obstruction” in international institutions such as the United Nations and the World Bank. “This is the new era of multilateralism,” he said, a route “that Europe is hoping to take alongside the United States of America.”

The French foreign minister also laid out his vision of European strategic autonomy. While Europe should be committed to the rules-based international order, in a more “brutal world,” he said, “you’re going to need to be much stronger, much less dependent on other regions” to uphold the values of freedom and democracy. “We see our strategic autonomy as a way to defend” the rules-based multilateral model.

Below are more highlights from Barrot’s remarks and discussion moderated by Atlantic Council President and CEO Frederick Kempe. 

Ukraine negotiations

• Barrot praised the US-Ukraine critical minerals agreement signed Wednesday, calling it “a very good agreement for Ukraine and also for the US.” 
• Barrot noted that by signing the agreement and by earlier agreeing to a US-proposed thirty-day cease-fire, Kyiv had met the Trump administration’s demands in Ukraine-Russia peace negotiations. Meanwhile, he said, Russian President Vladimir Putin has not shown “any signal, any sign of willingness to comply with the requests” of the Trump administration. “Right now, the main obstacle to peace is Vladimir Putin,” he said.
• Barrot said that Europe understands that the United States is “counting on us to bear the burden” of providing security guarantees to Ukraine after the war ends. But he added that this “coalition of the willing” led by France and the United Kingdom will “need to be honest” with the United States “once we’ve done our homework” and know what capabilities only Washington can provide to deter Russia from further aggression against Ukraine.

Iran nuclear talks

• Barrot said France has been coordinating with the United States “from day one” on the Trump administration’s negotiations with Iran, whose nuclear program he called a “major threat to our security interests.”
• He said that there is “no military solution to this issue” of Tehran’s nuclear program and that it can only be resolved diplomatically. He added that if there is no deal “sufficiently protective of our security interests” by the summer, then France will “not hesitate to reapply all the sanctions” it lifted against Iran a decade ago when Tehran signed the Joint Comprehensive Plan of Action.

Trade and tariffs

• The Trump administration’s tariffs “are not good news, are not a good idea,” Barrot said. He added that the tariffs “will make us Europeans, as well as Americans, poorer” and warned that the United States’ and Europe’s adversaries would “benefit massively from this trade war if we choose confrontation over cooperation.”
• Barrot recalled jokingly telling US Secretary of State Marco Rubio that the “one positive aspect” of the tariffs is that by lowering NATO members’ gross domestic products (GDP), it would make it easier to meet the Alliance’s 2 percent of GDP defense spending target.
• Since the Trump administration announced blanket tariffs on most countries in the world last month, Barrot says that he “cannot count the number of countries that are knocking at the EU’s door to strike a trade deal or even to become a candidate,” noting that “it’s not only Iceland and Norway that seem to be interested.”

Reshaping multilateralism

• France’s position on reforms for the UNSC, Barrot said, is that a permanent seat should be given to India, Germany, Japan, Brazil, and two African countries.
• In pushing for greater representation for Global South countries at the UNSC and international financial institutions, Barrot added, “some of them are no longer developing countries” and are now “major powers.” This means “they should have a seat at the table, but they should also behave as major powers,” he said.
• While Barrot said he takes Chinese Foreign Minister Wang Yi’s claims that Beijing is a champion of multilateralism “with lots of grains of salt,” Barrot added that be believes China will “consider filling the void at the World Health Organization” and other global institutions where China “see some pullback” from the United States. 
• Barrot said that he thinks “there can be a trade agenda with China” for Europe, but he added that discussions with Beijing “cannot only touch upon trade.” Noting China’s support for Russia, North Korea, and Iran, he said that if China wants a trusting relationship with Europe, “it will have to show also that it takes our security interests into account.”

Daniel Hojnacki is an assistant editor on the editorial team at the Atlantic Council.

Watch the event

The post France’s foreign minister on Europe’s role in the ‘new era of multilateralism’ appeared first on Atlantic Council.

Public Event Thu, May 1, 2025 • 3:00 pm ET

French Foreign Minister Jean-Noël Barrot on Europe and the new world order

AN #ACFRONTPAGE EVENT—French Minister for Europe and Foreign Affairs Jean-Noël Barrot will share his vision of Europe’s role for the future of transatlantic relations.

Europe & Eurasia Politics & Diplomacy

Speaker

Jean-Noël Barrot
Minister for Europe and Foreign Affairs of the Republic of France

Moderator

Frederick Kempe
President and CEO, Atlantic Council

Event transcript

Uncorrected transcript: Check against delivery

FREDERICK KEMPE: Good afternoon to those joining us in our headquarters, our relatively new global headquarters here in Washington today. Good evening to those watching online from Europe. Hello to everyone joining us from throughout the world. My name is Fred Kempe. I’m president and CEO of the Atlantic Council. And I’m delighted to welcome you to Atlantic Council Front Page. This is our premier platform for global leaders. And it’s an honor to host today the Minister for Europe and Foreign Affairs of the French Republic Jean-Noël Barrot. Today’s discussion turns our attention to one of the most enduring and consequential bilateral relationships in US history.

In the nearly two-and-a-half centuries since France became the first country to formalize diplomatic relations with the newly born United States—and next year, Mr. Minister, is the anniversary of the revolution here—France became the first country to formalize diplomatic relations with the newly born United States. Since that time, this pillar of the transatlantic relationship has seen moments of triumph and moments of trial. From Lafayette and Washington to the beaches of Normandy, the United States and France have forged a partnership unlike any other, based on common values and history.

However, this relationship goes beyond just sentiment. At each major inflection point in recent history, our countries have stood together. Not just because of friendship, but because of shared interests. And now, facing a war on European soil, facing an unfolding trade war, potentially, rapidly evolving technological disruptions, and more, the United States and France must consider how to recalibrate and perhaps how to reinvent its partnership, and the broader Atlantic alliance with it, in order to achieve our common goals of security, prosperity, and freedom.

As we think through how best to address these challenges, we are delighted to welcome Minister Barrot for today’s event, and on the occasion of his first visit to the United States in his current role. The minister has held numerous positions in the French government, including most recently minister delegate for Europe, and then minister delegate for digital affairs, making him well-placed to share the French perspective on the political dynamics at the EU level, as well as critical issues of digital and tech policy. And it may help in these times also to be an economist. Minister Barrot, so, welcome to the Atlantic Council.

Before we begin, let me just say to our audience that we will be taking questions. First Minister Barrot will make some opening comments, then I will join him on the stage and ask a few questions, and then turn to the audience for questions. For those in person, we’ll have a microphone to pass around. For those online, please go to AskAC.org, AskAC.org, to send your question in virtually.

Minister Barrot, it’s always a pleasure to have someone speak at the end of meetings in Washington instead of the beginning of meetings of Washington. So we look very much forward to your reflections.

JEAN-NOËL BARROT: Thank you very much, Mr. President. Hello, everyone.

One week from now on May 8 we’ll mark an important anniversary, the eightieth anniversary of the end of World War II in Europe. This was the starting point of an extraordinary endeavor, a formidable building—the building of rule-based international order, the building of multilateralism.

Who was the architect of this formidable building? Well, the architect of this building were the United States of America. They did not do this out of charity. They did this as—out of enlightened self-interest. They collected substantial dividends from multilateralism throughout the eight decades that have just passed by. The dividends of multilateralism—think about security. Thanks to the nonproliferation treaty, we collectively have avoided a race to the nuclear bomb that would have caused so much instability and raised the cost of defense for all our countries. NATO has allowed the US, alongside its European partners, to ensure security in the North Atlantic, but also a tool for major investment opportunities for its defense industry.

Think about trade. WTO has allowed the US economy to grow, has allowed US services to thrive—digital services, financial services, around the world.

Think about currency. The Bretton Woods Institution, the Bretton Woods framework have made the dollar a global reserve currency. What does it mean to be a global reserve currency? It means that everyone wants to hold you so that the yields on your Treasury bonds are the lowest on earth. And even more than that, when there is a crisis—even when there is a crisis in the US, people rush to buy your Treasury bonds, and the cost of borrowing goes down.

This exorbitant privilege, as a French president coined it, is part of the dividends of multilateralism that the US brought to the world and that they also benefitted from.

This formidable building, the building of multilateralism, was designed eighty years ago for a unipolar war, where a benevolent hegemon, the United States of America, was the guarantor of rule-based international order. A world in which US leadership was unchallenged, untested.

But eighty years later, indeed, the world has changed. It has become multipolar. US leadership is challenged, and sometimes multilateralism seems powerless or unfit for purpose. And therefore, and gradually, a temptation arises for the US to perhaps let go of multilateralism, quit multilateralism, to pull back, to restrain. This is a sovereign choice that belongs to the American people. But this would be a major shift—a major shift for the US, who would not be able to collect the dividends of multilateralism any longer; a major shift for the world, because the multilateralism will survive whether or not the US quit multilateralism.

And so someone will fill the void, starting with China, who is already getting ready to step up and to become the new hegemon of this new era of multilateralism, in the case where the US would decide to let them play this role.

Now, there is another route. There is an alternative route. Rather than quitting multilateralism, reshaping it, adjusting it, making it fit for the twenty-first century. The first step—and this is a difficult step—is accepting to share the power in order not to lose it altogether. This means reforming the UN and its Security Council, reforming the financial infrastructure to make space for big emerging countries, and share the burden with them, but also hold them responsible because they have part of the burden to share in handling the global issues and challenges.

The second step when building multilateral for a multipolar world is to be ready to build coalitions of the willing to overcome obstruction in multilateral fora like the UN Security Council when they arise. It’s not because something won’t happen at the UN or the IMF or the World Bank that you cannot design a coalition of the willing with willing and able countries in order to overcome this obstruction.

This is the new era of multilateralism and this is the route that Europe is willing to take and that Europe is hoping to take alongside the United States of America. One week from now we’ll celebrate another anniversary, not on May 8th but on May 9th, the seventy-fifth anniversary of the birth of Europe.

On May 9th of 1950 my distant predecessor Robert Schuman woke up in a country, France, that was five years past World War II but where tensions were arising with the neighbor and rival Germany.

Germany was recovering from the war faster than France was and so what was the tendency in Paris on that day in that year? Well, the tendency was protectionism, was raising tariffs, raising barriers, to prevent Germany from thriving and fully recovering.

And so Robert Schuman, as he was heading to the council of ministers, he had this crazy idea in mind to put in common steel and coal across France and Germany, swimming against the tide to favor cooperation over confrontation.

At the council of ministers he barely mentioned this initiative for his prime minister not to prevent him from announcing it, and at 6:00 p.m. in a 1:30 speech he made this unilateral offer to create the European steel and coal community and laid the foundation of a multilateral cooperative European Union.

So, you see, when times are hard and when the tendency is to restrain, pull back, raise barriers, those visionary men that brought us prosperity and that brought us peace in European continent they swam against the tide and offer innovative models for cooperation.

So let us find inspiration in the great work of these visionary people. Thank you very much.

FREDERICK KEMPE: Minister Barrot, that was a—I feel that was a very important statement, and I’m going to start with that. You see by the audience and standing room only that there’s a lot of interest in this conversation and what you had to say.

The seventy-fifth anniversary of the birth of Europe, the eightieth anniversary of VE Day all next week—thank you for calling attention to that—and it seemed really to be a call to your American allies and to the current administration to stay the course on multilateralism and transatlantic engagement, et cetera.

So, A, do you intend it as that? And it’s no accident no one in this audience who’s following the news, everyone knows that there are doubts right now in the transatlantic stream. Not all of them do I share. But I just wonder if you could give us a little bit more of the context for your statement.

JEAN-NOËL BARROT: Well, we deeply care about the rule-based international order, multilateralism. So I spent two days in New York at the Security Council as we were wrapping up our presidency. You know, the fifteen members of Security Council, they get a one-month presidency every fifteen months. And so you try and make the most of your month’s-long presidency. And to give you a sense of what our commitment is, I am—we are very committed to the three fundamental missions of United Nations—peace and security, human rights, sustainable developments.

That’s why we had three important security meetings, Ukraine, Middle East, but also nonproliferation, in a closed-door Security Council meeting that was on proliferation that was first convened in fifteen years—was last convened fifteen years ago. On human rights, we brought together—I was mentioning coalitions of the willing. International humanitarian law is under attack, let’s say. And we brought together countries from all around the world—east, south, west, and north—in a coalition of the willing to support politically and better implement in practice the rules of international humanitarian law.

And then third, on sustainable development, we took this opportunity to bring together the countries that are the most committed, like we are, to the preservation of oceans, forty days ahead of the third United Nations Conference on Oceans that will take place in Nice, south of France, and is—and that is aimed to be the equivalent for ocean as what the Paris accord has been for carbon emissions. So we’re very ambitious with this event. We need as many countries as possible to rally some of the key deliverables of this conference. And so I decided I would spend some time at the UN talking about that.

So we think this is the right way to go, adjusting multilateralism to make it more efficient in the multipolar world that we’re—that we’re living in. And I hear that the new leadership in the—in the US is considering what its course of action is going to be. And I think amongst friends that have—that are actually the oldest friends, we owe each other, you know, an honest discussion on what we see our common interests to be. And I think that was the sense of my introductory remarks.

FREDERICK KEMPE: Thank you so much. And I think you’re seeing a signal of commitment today, I think, toward the United Nations, with the nomination of National Security Advisor Mike Waltz, to be the UN ambassador. So also an interesting piece of news.

Speaking of news, you have had meetings here. We do have media. French, US, other here. And I wonder whether you could tell us your perspective on what you take away from your conversations with Secretary Rubio, with others. Anything specific that we can take away from that? And then in that context, as you’re looking at what your greatest challenges are, what were the priorities in your conversations with US leadership?

JEAN-NOËL BARROT: Well, I mentioned the ninth of May and seventy-fifth anniversary of this declaration by Robert Schuman. This year will be in Ukraine, because I think a very important—a significant chunk of our future, and I’m not talking about the future of Europeans only, depends on how this war of aggression is going to end. So we’ll be with my fellow European ministers of foreign affairs there to express our support to Ukraine and our willingness for this war to end in accordance with the UN Charter and international law. So that was clearly an important topic that I discussed with US leadership at the State Department, as well as Capitol Hill.

But we also discussed the Middle East, where France and the US have been leading the effort to put an end to the war that was basically destroying Lebanon eight months ago. We managed to broker a ceasefire five months ago, to monitor the ceasefire through a joint mechanism. We managed to create the conditions for the end of a political crisis, with the election of President Joseph Aoun, that then appointed a government that is now at work trying to implement the reforms that are long due in Lebanon.

And we want to do the same thing—same fruitful cooperation—in Syria, where this—after overturning the dictatorship of Bashar al-Assad there is an opportunity to build a strong, sovereign country that will be a source of stability rather than instability for the region.

I cannot let aside Gaza and the Israel-Palestinian conflict, where, again, we converge on the necessity to bring back stability and peace to the region. We have praised the Abraham Accord logic. And we are working in the same direction, bringing Muslim and Arabic countries in the region and Israel towards a security architecture that would ensure the security of all peace and stability.

We also discussed Africa, where the US made a breakthrough in handling or in sort of moving towards a cessation of hostilities in the Great Lakes regions in the east of the Democratic Republic of Congo, where the second-worst humanitarian crisis is happening right now. This is good. And after they were received or they were hosted by the Department of State a few days ago, the ministers of DRC and Rwanda gathered in Qatar with France and with the United States.

So, as you can see, on some of the major, major issues, major crises, France and the US are working together, you know, to find the right solutions. Sometime we’ll disagree. Sometime we don’t start from the same point. But look at Lebanon. It’s because of our complementary, because of different history in the region, because of the different nature of our partnership/relationship/friendship with the stakeholders of that crisis that we were able to broker a ceasefire and a political solution.

FREDERICK KEMPE: Thank you for that answer.

Let’s start with Ukraine. News yesterday about a critical minerals deal with Ukraine. Almost more interested in the political side of this than the economic side of this. Talking to Ukrainian officials over the last few months, they’ve been concerned that the US had gone more from being an actual partner of Ukraine in trying to counter Russian threat and the Russian attack and more of an arbitrator, more of a moderator. This critical mineral deal, if you read the language of it, suggests a little bit of a change of direction. And I just wonder—and that is an area where, you know, France and the US have not always been entirely singing from the same song sheet. What did you hear during your trip there? How do you assess this new agreement and its political meaning?

JEAN-NOËL BARROT: Well, I think it’s a very good agreement. I think it’s a very good agreement for Ukraine and also for the US.

But I also think that it tells us something very important about what’s happening right now. Let’s go back to the Oval Office when President Zelensky was there. What was the expectation by President Trump with respect to Ukraine? Well, actually, there were two expectations: ceasefire and sign a minerals deal. Since then, on March 9 in Jeddah, Saudi Arabia, Ukraine accepted a comprehensive ceasefire. And yesterday night, they agreed to a minerals deal with the United States of America. They’ve done their part of the job. They’ve walked their part of the talk.

But in the meantime, we haven’t seen Vladimir Putin send any signal, any sign of its willingness to comply with the requests of President Trump. To the very contrary. So let’s face it: Right now the main obstacle to peace is Vladimir Putin.

So what I found very interesting my meetings here in Washington is the efforts—the commendable efforts by Senator Lindsey Graham, who put together a massive package of sanctions that he—that he collected bipartisan support for, with almost seventy senators now signing the bill, which is aimed at threatening Russia into accepting a ceasefire or else those sanctions will apply. And here again, we agreed that we would try to coordinate because we, Europeans, are in the process of putting together a seventeenth sanction package that we are going to try on substance and timing to coordinate with Senator Graham’s own package.

That was perhaps a bit of a long answer, but in summary, it’s good news that this deal was struck. It’s good news that the US—and I heard Secretary Bessent express what he had in mind, that the US are considering deep economic cooperation with Ukraine. It goes in the right direction. It’s the right course that they should—that should be taken, basically.

FREDERICK KEMPE: And Secretary Bessent also said this is meant to be a signal to Putin, and you see it as that, as well?

JEAN-NOËL BARROT: Yeah. Put together this deal, the package by Lindsey Graham—who last time I checked is not a political adversary of President Trump—as well as the pressure that Europe is building up on Russia, and you get a sense of—well, the fact that it’s now basically Putin’s fault if we don’t yet have a ceasefire in Ukraine.

FREDERICK KEMPE: So, you’ve—in recent discussions with US Envoy Steve Witkoff, what divergences existed between France and the United States, and how do you hope to close those divergences? I guess part of this has to do with European troops, American backstop, but it also gets to the conditions behind a peace deal.

JEAN-NOËL BARROT: Now, listen. If Ukraine was to capitulate, this would have long-lasting, wide-ranging consequences for the entire world, because it would basically replace rule-based international order by the law of the strongest. It would create massive incentives for countries around the world that have borders issue with their neighbors to consider that they can invade or they can use military threat or force to obtain territorial concessions. This would be major. And this would be very costly for all of us, at least for responsible powers like the US and France that tend to get involved when there are issues around the world, where we would see issues exploding all around the world. It would be major instability.

In addition to that, should Ukraine capitulate after Ukraine has agreed to let go of its nuclear weapons in exchange for security guarantees, this will send a signal that the only ultimate security guarantee is the possession of nuclear weapons. And there, you have a nuclear proliferation crisis which, again, raises global instability at levels that we haven’t seen for the past eighty years, and will increase the cost massively of security in the US, security in Europe. And I think this view is shared between the US and France.

But, of course, there is one difference between the perspective of the US and the European perspective on this crisis, which is that our own security is at stake because we are neighbors of Russia, or because we don’t want to be neighbors of this Russia that is now spending 40 percent of its budget on its military spending, 10 percent of its GDP, that just conscribed 160,000 additional soldiers, the largest conscription in fourteen years. I’ve heard many, many times Russia say that they don’t want NATO at their borders. Well, we don’t want this Russia at our borders either.

And that’s why we are so serious about what’s happening, about how the war will end. And that’s why we’ve been insisting so much about the security guarantees. And I think our message went through. And I think the US are counting on us to build the security arrangements such that when the peace deal is struck that we can provide those security arrangements in order for the peace to be lasting and durable. But I think it’s well understood. And I’ve heard President Trump, but also officials from the US, clearly say that, of course, they want this peace to be lasting. And of course, this means that there is security guarantee for Ukraine.

FREDERICK KEMPE: And can it work without an American backstop? Are you getting closer to a conversation about that? Or, alternatively, is this critical minerals deal a security guarantee, in a different form?

JEAN-NOËL BARROT: So you should put things into perspective. We are—we have been supporters of the Euro-Atlantic integration of Ukraine. Namely, we’ve said that we were open to extend an invitation, a NATO invitation, to Ukraine. We understand that NATO members—not all NATO members agree with our view. And so we have to find an alternative path. This alternative path is the sense of this coalition of the able, of the willing, that France and the UK has been putting together in order to design those security arrangements. This is ongoing work. This starts with making the Ukrainian army strong enough to be able to deter any further aggression by Russia, but it also very likely means some form of military capacity as a second layer of such a guarantee.

When those detailed discussions will have been wrapped up, they’re currently ongoing, it will appear whether or not, and how much, any contribution or backstop by the US is needed. It’s possible that it is needed. Why? Well, because as far as Europeans are concerned, we’ve been working—we’ve been—we’ve been working and planning for our defense. It’s a little bit—little bit different for France, the UK, and Poland. But for the rest of European armies, we’ve been working within NATO frameworks. So if—you know, if you’re going to work on a security arrangement outside of a NATO framework, then at some point you might need some kind of NATO-like enablers, or, you know, make items that are going to make sure that the security arrangement is robust.

But that being said, in the same way we fully understand that the US have decided that they will—they will likely reduce their commitment within NATO. We also understand that they are counting on us to bear the burden of providing the security arrangements. But we also need to be honest with them, once we’ve done our homework, if there are pieces of these security arrangements that cannot be replaced—you know, that can be—cannot be found outside of, you know, US contribution. We’ll just be honest.

FREDERICK KEMPE: Excellent answer. Thank you so much.

The one thing you didn’t mention in your opening comments is you didn’t talk about—you didn’t talk about tariffs. You knew I was going to say tariffs. And I wonder if it came up at all in your discussions. And also, I wonder if you could talk a little bit about what—you know, this ninety-day pause gives a potential for an agreement. What sort of agreement can you imagine, or what is the direction of agreement with the European Union and the United States? How concerned are you about the tariffs driving a more lasting wedge across the Atlantic?

JEAN-NOËL BARROT: Well, the good thing, when you’re a foreign minister—the foreign affairs minister for France, is that you’re not responsible for tariffs. It’s the European Commission. That being said, you’re allowed to have your own view on things. And indeed, as an economist, I have to say, otherwise I would be a traitor to my profession, that tariffs are not good news. Are not a good idea. President Trump wants to bring jobs back to America. And this is a perfectly legitimate ambition. In fact, we have the same in Europe. We want to bring jobs back to Europe. But tariffs are probably not the best way to achieve this objective.

Tariffs are in tax on our economies. It’s a tax on the middle class. And it will make us, Europeans as well as Americans, poorer. We do have research on what happened during the last trade war, the 2018 trade war. What happened? Well, the effect on the economy on this side of the Atlantic was limited. It’s basically a seven billion loss—a seven-billion-dollar loss on the economy. That’s not big, but it led to a massive transfer from the US consumer middle class of fifty billion [dollars]. So a loss for the US consumer of fifty billion [dollars]; transferred to producers nine billion [dollars], to the government 35 billion [dollars], and the rest is what’s lost from US economy. So it’s a mild loss but it’s a massive transfer from the US consumers to the US government. That’s what happened last time around, and those numbers are small because the trade war at the time was very limited.

Multiply this, right, by ten and you’ll get the kind of effects that you’re going to see on European economies, US economies, and so on. So our hope is to reach the same type of outcome that we got the last time around. The US applied tariffs, we retaliated, and then at some point we suspended those. We lifted those tariffs.

It was not the same administration that did it but still those tariffs were lifted, and I really hope that we’ll get to this objective because, again, we’re very closely intertwined economies so we have a lot to lose while we have major rivals, adversaries, competitors, that are going to benefit massively from this trade war if we sort of choose confrontation over cooperation.

FREDERICK KEMPE: So let me ask one quick follow-up there and then I’ll go to the audience. On the tariffs, you know, did you raise this issue when you were here—you are the foreign minister but it is a political as well as an economic issue—and did you get any indications of what direction the agreement could go?

JEAN-NOËL BARROT: Well, the good thing about being Marco Rubio is that you’re not in charge of tariffs either. But when we met in NATO I told him that if there was only one positive aspect of those tariffs is that by lowering GDPs that would allow us to reach our NATO targets faster.

FREDERICK KEMPE: That’s on the record, everybody.

Let me take a first question from Bill Drozdiak.

Q: William Drozdiak, author and journalist.

We seem to be entering a phase—a new intensive phase of big-power rivalry with the United States retreating from security commitments in Europe, Russian military militarizing its society and having designs on other neighbors besides Ukraine, and China seeking economic domination of the world. President Macron has spoken often about the need for Europe to achieve greater strategic autonomy. Do you think Europe should seek to constitute a fourth bloc even at the risk of putting greater space between its principal—with its principal ally, the United States?

And a quick follow-up. You spoke about the need to share power in a multilateral context. In terms of UN Security Council reform is France prepared to fold its seat into the European Union presence or would you also agree to the idea of expanding the Security Council to have ten to twelve nations?

JEAN-NOËL BARROT: Well, thank you. So you mentioned Russia. You mentioned the four blocs. That was your first question.

I wouldn’t call Russia a bloc. Russia has a GDP that is twenty times smaller than the EU. I wouldn’t call that a bloc. Russia is a big country geographically. It is, you know, one of the winning nations of the Second World War so it has a—you know, there are a number of consequences coming with that including the permanent seat at the Security Council. But I wouldn’t call Russia a bloc.

And we don’t see the—we don’t see ourselves—when we speak about strategic autonomy we don’t see ourselves as entering into a logic of blocs or spheres of influence and stuff like that. We remain committed to multilateralism, rule-based international world order, balance.

The only thing is that in a more brutal world—brutal world—if you want to be heard and be respected when you’re upholding the values that Europe and the EU are upholding—freedom, democracy, free speech, and so on—you’re going to need to be much stronger, much less dependent on other regions.

And so we see our strategic autonomy as a way to defend a model which is an open model, which is a balanced model, which is a multilateral model of governance for the world. And we see a lot of sort of appetite for this approach, because since those trade wars started we cannot count the number of countries that are knocking at EU’s door to strike a trade deal or even to become a candidate. And it’s not only Iceland and Norway that seem to be interested; I heard that on this side of the Atlantic there are people considering it. And you know that there is one geographical criteria, but I just want to mention that even though it’s a very, very, very, very tiny island in the middle of the Atlantic Ocean—no one lives there; I think it’s, like, twenty meters long—but this island is split between Canada and Denmark, which gives Canada an actual border with the European Union.

And the second question is about reform. So I want quickly because I was told that remarks should not be long in introduction of those conversations, but I really think that if we want to adjust those institutions—Security Council and so on—to the new era, we need to accept that others have grown over the past eighty years and they need to—they need to be represented, but they also need to take their responsibility. Some of them are no longer developing countries; they are actual major economies, major powers. So they should have a seat at the table, but they should also behave as major powers.

So what’s our position? Our position is a permanent seat at the Security Council for India, Germany, Japan, Brazil, and two African countries, with all associated prerogatives. This is what we want for the reform of the Security Council.

But we also want the same kind of thing to happen with the international financial institutions. And this is the spirit of what President Macron has called the Paris pact for all, the pact for the people and the planet, where the idea is the following: No country in the south should have to choose between fighting against poverty and fighting against climate change. So it should be more balanced, more equal, sort of equitable funding for southern countries. But those emerging countries for the south—from the south that are now developed economies should also bear their responsibilities with respect to the least-developed countries, with the poorest countries on the planet. Because right now some of them are sort of bunching with the least-advanced countries to not sort of take their responsibility with respect to the poorest countries. So that’s the spirit in which we’re pushing. And in fact, I had a meeting dedicated to Security Council reform on Monday in New York with some of the African countries that are working on it.

FREDERICK KEMPE: Thank you for that clear answer.

Well, we’re got a lot of questions now. I saw this gentleman first, and then we’ll go—I’ll figure it out. We’ll figure it out. Where have I got—I want to turn to the French press here at some point. If there’s anyone here that wants to—there we go. That’s what I’m going to do next. There we go. Please.

Q: Thank you, Foreign Minister.

In context with President Macron’s call to Prime Minister Modi of India in solidarity after the terror attack in Pahalgam, Kashmir, India, do you see a justifiable response by India against this attack as another roadblock to ensuring the India-Middle East corridor gets off the ground? Of course, it was set back after the Israel-Hamas war. And did that conversation come up in your discussion with Secretary Rubio today? And if not, then what do we need to do, collectively as the international community, to make sure this gets off the ground?

FREDERICK KEMPE: Could you identify yourself too?

Q: Oh yes. Jay Kansara. Jay Kansara, independent analyst.

FREDERICK KEMPE: Great.

JEAN-NOËL BARROT: Thank you. So President Macron has been in touch with Prime Minister Modi. I’ve been in touch on the phone two times with Dr. Jaishankar, my fellow foreign affairs minister from India. We expressed solidarity. We’ve expressed that we stand alongside India to fight against terrorism. Of course, we hope for restraint on both sides, for the tensions not to escalate. And I heard Secretary Rubio called Pakistan to formally recognize the terrorist nature of this attack, and to condemn it in the strongest possible way. And I would happily join his call to Pakistan to recognize the terrorist nature of this—of what happened. And we’ll keep in touch with Marco Rubio, but also with my fellow minister David Lammy from Great Britain, the UK, and my Indian colleague in order to ensure or to try and avoid an escalation in the region.

FREDERICK KEMPE: Please?

Q: Good afternoon, Minister. Piotr Smolar from the French newspaper Le Monde.

I have two questions, the first one regarding security guarantees for Ukraine. For months France supported the idea of a deployment of a sort of international monitoring force in Ukraine but with very strong American security guarantees. The Trump administration doesn’t seem to see eye-to-eye on this. They don’t—they are not inclined to offer any sort of serious security guarantees. So what’s the plan B? Have you given up on this two-fold idea or not?

And the second question, regarding Iran. There are currently very important discussions between the Trump administration, direct and indirect with the Iranian representatives. For a very long time France was in favor of putting on the table as well with Iran the ballistic issue. That doesn’t seem the case at all right now. The Trump administration is basically considering a sort of JCPOA—revisit it, or maybe an interim agreement. So what’s your view exactly on the current discussions?

JEAN-NOËL BARROT: Thank you. So on the first question, let me just clarify, because I think it’s important that everyone gets this right. There are two things. First there is a ceasefire, and the ceasefire needs to be monitored. And the coalition of the able and willing, put together by France and the UK, have been working on proposals so that the minute a ceasefire is brokered that the US have in their hands—because they will be sort of the guardians of the ceasefire—solutions for this ceasefire to be monitored. And this might involve some European capacity just to, you know, to check what’s happening and the line of contact and to be able to attribute violations. So that’s one thing.

But the ceasefire is only one step towards what’s our end goal, which is a full-fledged peace treaty or peace agreement. This peace agreement that the Ukrainians and Russians will be discussing—but that was President Trump’s intuition—this discussion cannot happen while the war is happening in Ukraine. That’s why you need a ceasefire for the discussion to start.

It will end up with discussions on territories and discussions on security guarantees. And with the same coalition of the able and willing, we’re working on this second piece, which is security guarantees. But security guarantee has nothing to do with monitoring the ceasefire. Security guarantee is deterrence against any further aggression. How do you do that? Well, as I was saying earlier, the first layer is to porcupine the Ukrainian army, for it to be deterrent enough for anyone to try and invade. But then you probably have in other layers—so, military capacity, deployed in Ukraine or around Ukraine, and that’s what we’re working on. And when the moment is ripe, we will get to the Americans and ask them or tell them what is it we need for this security guarantee to be. And we’re working on this, and we’re confident. And again, as I was saying, I’ve heard President Trump on several occasions speak in a way that shows that he understands the importance of this security guarantee.

And then on Iran—very important topic that I should have mentioned in response to your first question, Mr. President, because this is a topic on which we’ve been coordinating with Marco Rubio on day one—from day one.

We are supporting, encouraging the discussion that the US opened with Iran. Why? Because Iran is posing a major threat to our security interests because we, France—Marseilles—are within reach, and because our partners—close partners in the region are also within reach. So we are very serious about this question. But we believe that there is no other route, no other path than a diplomatic path to solve this issue. That there is no military solution to this issue, and that any form of military attempt to solve this issue would have very large costs that we would not like to bear.

So in order for this discussion to be as successful as possible, we’ve been coordinating with the US on substance and timing. Substance, because our teams have been working over the past few months ahead of the expiration of the JCPOA, of the nuclear agreement that was struck ten years ago and is that is expiring in the fall. So we were getting ready for this expiration. And we have a clear idea of, indeed, what might be a robust and protective deal for us. And this would include, indeed, some of the ballistic components, but also the regional activities, components. And the substance is what is sort of at the disposal of US negotiators, because it’s for free and there is no copyright. And I was very transparent with that.

But we also coordinated on timing, because we will not hesitate to reapply all the sanctions that we lifted ten years ago when JCPOA was struck in the case where the IAEA confirms that Iran has violated its obligations under JCPOA, and if it happens that by the summer we don’t have a protective—or, a deal that is sufficiently protective of our security interests.

FREDERICK KEMPE: So we—this has got to be the last question. I really apologize to others, but I saw that gentleman’s hand up first right here in the middle. So—no, no. There we go. Yes, please. Thank you. Yes. Yeah, thank you. Thank you.

Q: Mr. Minister, thank you for being here. I’m Alex Saint-Jemi from Transfer Paris and Georgetown University.

You mentioned very clearly the fact that the PRC will fill the void caused by US disengagement during your opening speech. I’d like to know what’s your opinion, what’s your take on what will—how France will balance its relationship with the US and at the same time with China, in light of the fact that France needs new partners, and also in light of the fact that President Trump openly asked European leaders to break ties with the PRC. Thank you.

FREDERICK KEMPE: And since this is the last question, let me add to it. Let me add to it on the tariff front, because, you know, in your conversations here—and you’ve spoken before about the relationship between the European Union and China on the trade front—does this tariff policy drive Europe more into the hands of trade and economic relationships with China? And if you believe that, have you said that to your interlocutors here in Washington during your visit?

JEAN-NOËL BARROT: I mean, it’s obvious, no? We were—I mean, you know, whether you want it or not, look at what happened. I mean, read economic research. The numbers I quoted earlier are from a paper in the Quarterly Journal of Economics called the Return to Protectionism. It’s the best paper on the 2018 trade war, best economic paper, research paper. But any paper will tell you that what happened last time is that it was—you know, during the 2018 trade war it’s not like suddenly factories moved from one country to another. It was a reshuffling of international trade. So you’re going to see a lot of reshuffling.

You mentioned the—or, you recalled what I said up there on China and filling the void. Listen to Chinese official speeches now. And, again, we take all of this with lots of grains of salt, but my colleague, Wang Yi, minister of foreign affairs, now in all his speeches is saying how much he cares about multilateralism. And I’m sure—no, but he seriously is saying this constantly. And he will—I mean, I’m pretty sure that they will consider filling the void at the World Health Organization. I’m pretty sure that they will—anytime they will see some pullback, they will try to step in. Because they have two—there are two possible strategies. Either the US are there filling the void, and then they will try to build sort of formats outside of the established formats, as we’ve seen them do; or they will see US pullback and then they will try and fill the void.

Now, what’s our relationship with China, as far as Europe is concerned? Again, we’re lucid. We are—we’re not blind. And so we think there can be a trade agenda with China, so long as some of the issues that we’ve had are solved, which is not quite the case now. Because we’ve also had our trade war with China those past few years, with us sanctioning Chinese EVs and them sanctioning European brandies, which mean cognac and armagnac. So this is dear to our heart, and we—of course, it’s going to be difficult to engage into an actual trade agenda with them until those sort of contentious issues are solved. Then we can.

But of course, our discussion cannot only touch upon trade. And when China is supporting Russia’s war of aggression, when China is on the side of DPRK, on the side of Iran, proliferating countries that are threatening this Non-Proliferation Treaty and sort of the global stability, it’s difficult to build trust. And so if China wants to establish sort of a trusted relationship with European countries, it will have to show also that it takes our security interests into account. Otherwise, it will—it might—it might be challenging.

FREDERICK KEMPE: Thank you for—you have your answer? . . . Yes. Great. Thank you.

So, look, this—Minister Barrot, on behalf of the audience, on behalf of the Atlantic Council, thank you for three things: First of all, for your visit to the United States, a very timely visit, very crucial moment; second of all, for taking so much time with us at the Atlantic Council and talking so frankly and clearly in your opening statement, and in this fascinating engagement; and then, most of all, for our enduring alliance. So thank you so much.

JEAN-NOËL BARROT: Thank you.

Watch the full event

The post French Foreign Minister Jean-Noël Barrot on US tariffs, European security, and risks from Russia, China, and Iran appeared first on Atlantic Council.

Online Event Wed, April 30, 2025 • 4:00 am ET

Microsoft’s Brad Smith on digital resilience during geopolitical volatility

AN #ACFRONTPAGE EVENT—Brad Smith, vice chair and president of Microsoft, shares insights on maintaining trust and promoting competitiveness in a time of trade and geopolitical volatility.

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Should “any government” issue an order that aims to compel Microsoft to cease its operations in Europe, the company “will go to court,” Brad Smith said. “We will take every legal avenue to contest any such order.” 

Smith, vice chair and president of Microsoft, spoke at an Atlantic Council Front Page event in Brussels on Wednesday, where he outlined the company’s five new commitments to Europe in this age of geopolitical volatility. 

Among these new initiatives was a commitment to support Europe’s digital resilience, no matter what happens geopolitically. “It’s important for us as a business to be a voice of reason across the Atlantic,” Smith said.  

The European Union (EU) is slated to say on Thursday that decoupling from the United States in the realm of technology is “unrealistic.” 

However, Smith added that he believes that an order that pushes Microsoft to suspend its Europe operations is “exceedingly unlikely.” Smith said that the US officials he had recently spoken with in Washington seemed surprised to hear about European concerns that the US government might one day shut off Europe’s access to US technology. 

“Europeans need to be able to count on us,” Smith said. 

Below are more highlights from the conversation, moderated by Atlantic Council Senior Resident Fellow Mark Scott, during which Smith debuted Microsoft’s five commitments to Europe and talked about the US-EU relationship. 

His vows

• One commitment Smith announced is a promise to help build the artificial intelligence (AI) and cloud ecosystem across Europe by expanding Microsoft data center capacity by 40 percent over two years, in partnership with European companies and countries. Such collaboration, Smith added, supports an ecosystem of “sovereign” cloud data centers. 

• He said that in the event Microsoft’s operations in Europe are threatened, the company will “put in place business continuity partnerships” so that its European partners can access Microsoft code and can continue services for European customers. 

• The Microsoft chief said that the company is “committed to respecting” Europe’s laws, including its competition law and Digital Markets Act. “We respect the fact that European governments will make their own decisions . . . We will adapt, and we’ll be supportive of whatever they decide.” 

• Smith vowed to protect the privacy of European data. In addition, he pledged to strengthen Europe’s economic competitiveness, “including for open-source developers, open-source code, [and] open-source models.” That, he said, extends to AI, which he said “will impact every part of the economy.” That means Europe will need it to bolster its competitive edge. 

• Smith also said that Microsoft will look to bolster Europe’s cybersecurity, noting the company’s efforts to support Ukraine’s cybersecurity by evacuating its data to other data centers across Europe and through other forms of assistance. He also announced the creation of a new role, the deputy chief information security officer of Europe, to address European needs. 

‘A bridge across the Atlantic’ 

• With so much geopolitical volatility, Smith said, the business sector “needs to be a bridge across the Atlantic,” to help governments “find a common path.”  

• As the US-EU relationship continues to shift, particularly regarding trade, Smith said that he does not anticipate any changes in the trade relationship to disrupt Microsoft’s supply. “The economics of the cloud are actually easier to manage than, say, the economics of digital devices like laptops or other things that may come from, say, China,” he explained. 

• Smith said he believes there are opportunities in cybersecurity and data privacy for the United States and EU to cooperate more closely. He cited agreements the United States has struck with the United Kingdom and Australia, under the framework of the Clarifying Lawful Overseas Use of Data Act (CLOUD Act), which allows US law enforcement to request data stored overseas in investigations. 

• “We’ve long supported and advocated for an agreement between the US and the EU,” Smith said. “Let’s get that done this year.” 

• Smith talked about a theory that economic crises happen every eighty years—because the generation that experienced the former crisis passes away, taking lessons with them. Meanwhile, NATO, the Bretton Woods institutions, and other pillars of the transatlantic relationship are all around eighty years old and under increasing strain.  

• “There, quite rightly, are people on both sides of the Atlantic and in the world today who look back and see enormous opportunities for improvement,” he said. “But let’s not forget what led us to create it in the first place.” 

Katherine Golden is an associate director of editorial at the Atlantic Council. 

Watch the full event

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At the same time, threatening allied countries and fellow NATO members with tariffs or invasion upends any potential cooperative economic statecraft with these same states. It may seem like business as usual in certain corridors of the executive branch. The reality is that trade tensions and geopolitical shake-ups rattling traditional US alliances are weakening these tools and exacerbating business uncertainty at a time when the global economy may be least able to afford it.

As a force multiplier, partnerships are key to effective economic statecraft. To paraphrase Daleep Singh, former US deputy national security advisor for international economics, the force of economic statecraft is directly related to the size of the coalition implementing and enforcing the authorities. Multilateral sanctions and cooperative targeting amongst allies have been key pillars of US sanctions policy to date. They reinforce legitimacy by demonstrating agreement across governments and enable safe and legitimate markets to take shape, compounding confidence in the global flow of goods and services. Yet the actions of the current US administration—in many ways picking up where it left off—are straining US relations with stalwart friends like Canada and the European Union (EU). Ursula von der Leyen, the president of the European Commission, went so far as to say that “the West as we knew it no longer exists.”

The fracturing of traditional alliances carries significant consequences for companies facing multijurisdictional compliance obligations, meaning an already complex situation will become more chaotic. The United States used to expend significant diplomatic effort to convince its allies to harmonize sanctions and trade controls. This level of cooperation can no longer be taken for granted and may lead to more significant divergence, particularly regarding Russia. The Kremlin has already requested various forms of sanctions relief in exchange for a ceasefire in Ukraine. The United States has also quietly delisted some high-profile targets like Karina Rotenberg and Antal Rogan, with the secretary of state going so far as to publicize that Rogan’s “continued designation was inconsistent with US foreign policy interests.” Companies are taking notice, too. Raiffeisen Bank International, after years of concerns over its business in Russia, is reportedly slowing its efforts to exit Russia with the notion that “rapprochement between Washington and Moscow” may be in sight.

This complexity was foreshadowed in the wake of Russia’s February 2022 reinvasion of Ukraine and the 2018 US “maximum pressure” sanctions campaign against Iran. These events led to greater discord between US and allied sanctions and may contain clues for how the present situation could evolve. For example, when the first Trump administration withdrew from the Iranian nuclear deal, the EU expanded its “blocking statute.” The statute was intended to protect EU companies engaged in otherwise lawful business from the effects of extra-territorial application of US sanctions, but it ultimately produced a series of headaches and lawsuits for major multinational companies. Will the United States attempt the same, and try to shield US persons from EU and United Kingdom (UK) sanctions? Major multinational companies suddenly freed from the burdens of US sanctions may find themselves held back by EU or UK and risk drawing the ire of the US government if they err on the side of caution so as not to violate European laws.

The United States cannot expect to practice status quo ante economic statecraft while simultaneously trying to reshape the global order. US allies rightfully followed the lead of prior US administrations in establishing robust tools of economic statecraft, and these will not be “deleted” at the whims of the United States—if anything, present conditions suggest the EU may need to strengthen these tools. At the current rate, US actions are likely to produce a number of adverse consequences beyond diplomatic disunity and compliance nightmares. The United States may drive illicit finance into the US economy, for instance, if major US clearing banks are compelled to handle Russia-related transactions and the administration is already deemphasizing anti-corruption initiatives.

To be sure, US lawmakers may have leverage to prevent the Trump administration from providing wholesale sanctions relief. Some members are pushing for strong, new sanctions requirements tied to any Ukraine ceasefire deal. The negotiations between Presidents Trump and Putin and their teams are unpredictable, to say the least. However, it is becoming clear that no matter what the future holds, we may have already seen the zenith of transatlantic synchronization on sanctions and trade controls. The nadir is shaping up to be a mess.

Jesse Sucher is a nonresident senior fellow at the Atlantic Council’s Economic Statecraft Initiative.

The views and opinions expressed herein are those of the author and do not reflect or represent those of the US Government or any organization with which the author is or has been affiliated.

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There are first the legal barriers, particularly with respect to the Nord Stream 2 pipelines. The European Union (EU) Gas Directive of 2024 imposes a supply security test on non-EU asset owners—clearly a problem for Gazprom. However, US investors may be able to take advantage of EU rules to push forward their proposal for the acquisition of Nord Stream pipelines (possibly one, two or all the pipelines) arguing they are more likely to pass such a test than any Russian entity.  

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However, there is potentially a major second barrier: civil damages. A range of multibillion dollar claims against Gazprom are now underway because of its refusal to supply gas to its long-term customers during the energy crisis of 2021–22. There is not much point in investing in a pipeline if the gas or the revenues will then be seized by Gazprom’s former customers.

Furthermore, if Chinese tariffs on US liquefied natural gas (LNG) remain, US producers will likely want to keep Russian gas out of the EU market. This factor may weigh decisively on the Trump administration.  

The Nord Stream Pipelines

The Nord Stream pipelines consist of two sets of pipelines, Nord Stream 1 and 2, which run along the seabed of the Baltic Sea. Prior to the full-scale invasion of Ukraine in February 2022, Nord Stream 1 was fully operational, while Nord Stream 2 was awaiting German and EU authorization.  Each set in turn consist of two pipelines: Nord Stream 1A and B, and Nord Stream 2A and B. Each has a total annual capacity of approximately 27.5 billion cubic meters (bcm), amounting to 110 bcm in all—equal to two thirds of pre-2022 Russian gas exports to the EU.  

Leading up to the full-scale invasion of Ukraine, Gazprom progressively cut the flow of gas to the EU via all pipeline routes—not just Nord Stream 1, but also the Yamal pipeline and Ukrainian transit routes. These supply cuts sent EU gas prices spiraling to over €340 per megawatt hour by August 2022, well over the 2009–19 range of €9–29. By early September 2022, no gas flowed through Nord Stream 1, and Nord Stream 2 remained unauthorized. Later that month, explosions ruptured three of the pipelines leaving only Nord Stream 2A intact. 

The EU responded first by providing social protection for its consumers and businesses and funding gas purchases, principally from LNG providers. This cost the EU and member states approximately €500 billion. Subsequently, the EU significantly diversified its gas market, increasing pipeline supplies from Norway and LNG from the United States, Qatar, and even Russia. The EU plans to prohibit all Russian pipeline gas by April 2027. With the end of Russia’s Ukrainian transit contract in December 2024, the only Russian pipeline gas arriving in the EU is the 15 bcm which flows via the Turk Stream 2 pipeline principally to Hungary and non-EU Serbia. 

Can Nord Stream restart?

The major US figure pushing for a restart is investment banker Stephen Lynch, who has focused particularly on the still-intact Nord Stream 2B pipeline. Lynch has also suggested that repairing the other NS2 pipeline would cost less than $700 million.  

It is natural that one would start with the intact pipeline. However, the fundamental regulatory problem is that neither Nord Stream 2 pipeline has been authorized under German or EU law. The 2024 Gas Directive imposes two key requirements on pipeline owners. First, the owner must demonstrate that it is not also the supplier of the gas. Second, a non-EU owner person must show that certification will not risk the energy or overall security of any member state or the EU itself. 

One can see how the Lynch proposal could work with the EU law provisions. A US-owned pipeline would be far more likely than Gazprom to obtain certification under the supply security test, given Gazprom’s behavior during the energy crisis. Furthermore, as the US investors would own the pipeline but not provide the gas, they would be able to pass the separation of ownership and supply test. 

However, for such a proposal to work, the sale would need to be at full arm’s length—at market prices and with no Russian money or Russian state connections on the US side. The 2024 Gas Directive imports a very broad definition of control from the EU Merger Regulation. Any below-market-price transaction or Russian participation could raise the prospect of a legal challenge against the certification of the new non-EU owner—some EU member states would certainly launch a challenge if there were any suspicion of Russian involvement on the US side. 

One also must ask whether Gazprom—which has never willingly sold one of its long-distance pipeline systems—would be prepared to do so now. Gazprom ran a half-decade campaign to get Nord Stream 2 authorized so it could run the pipeline, and it would be unprecedented for Gazprom to surrender it. 

A further problem is that in response to the prospect of Nord Stream 2 restarting, the EU could seek to deauthorize Nord Stream 1, which was authorized under an older assessment regime which did not include the supply security test. As both Nord Stream 1 pipelines are ruptured and have not been repaired in over two years, the European Commission could propose amending legislation to the 2024 Gas Directive which could provide that any significant and lengthy rupture to a major piece of gas infrastructure would require the application of the supply security test.  

Adopting such legislation would potentially strengthen US investors’ hands with Gazprom. It would mean the only way that Russian gas could flow through the pipelines would be if they were sold. However, Gazprom would probably be even more reluctant to surrender all of its pipelines to outside hands. Taking that position, however, would mean that Nord Stream 1 could never be revived. 

The damages barrier

Perhaps the most formidable barrier to US investment in the Nord Stream pipelines is the fact that Gazprom would have difficulty selling its gas in the European Union, stemming from its behavior during the 2021–2022 energy crisis.  

From spring 2021—presumably as a means to weaken Europeans’ resolve to assist Ukraine once the full-scale invasion got underway—Gazprom progressively cut gas flows to the EU. This started with a failure to respond to demand for more gas on the European spot market as COVID restrictions lifted. Then, Gazprom did not fill its own European-based gas storages and indeed drew from them as the winter heating season began. By early winter 2021–22, some of Gazprom’s EU storages were as little as 5 percent full.  

Following the invasion in February 2022, Moscow went much further. In March, the Kremlin issued a presidential decree requiring all of Gazprom’s long-term customers to pay in rubles rather than in euros or dollars as per their contracts. Because it was difficult to be sure that payments would be cleared, many customers refused to pay in rubles. By May, Gazprom began systematically cutting off its long-term customers, starting with Poland in May and finishing with Italy in October. Over the summer, Gazprom progressively cut gas flows via Nord Stream 1, reducing supplies even for those continuing customers it was nominally still supplying.  

This led to at least twenty long-term customers suing Gazprom. As these arbitration proceedings are private, it is not possible to know how many cases there are or the scale of their claims. However, it is known that Germany’s Uniper has been awarded €13 billion by the Stockholm Court of Arbitration, and that Austria’s OMV is pursuing several claims and has so far received awards amounting to €330 million. In addition, Poland’s Orlen has said publicly it has a claim outstanding for €1.45 billion.  

The problem for Gazprom is that such awards create a major barrier to returning to the EU market. Gazprom will face seizures of its gas as it enters the EU market or more likely its customers payments will be seized to satisfy outstanding arbitration awards such as that handed down to Uniper. 

However, it is not only the long-term customers of Gazprom who have claims. Gazprom was the dominant gas supplier in most of Central and Eastern Europe and parts of Western Europe. Given that refusal to supply is an antitrust abuse of dominance under EU law, and indirect purchasers (including energy-intensive industrial users) as well as consumers are able to bring claims, the potential scale of damages against Gazprom may be enormous. 

With its long-term customers, Gazprom could potentially offer very cheap gas as a means of compensation. It could adopt a divide-and-conquer strategy by doing similar low-price compensation deals with high-volume users while seeking to contest consumer cases. The question remains however, as to whether the scale of compensation that Gazprom may have to pay undermines the economic case for entry to the EU market—and thereby the economic case for US investors to acquire one, two or all of the Nord Stream pipelines. 

Chinese tariffs and US LNG interests

With the imposition of Chinese tariffs on US LNG, US gas shipments are already being redirected toward the European market. If the current tariff regime is sustained, then US producers will want to maximize access to alternative markets. This then raises the question as to whether the US government would be willing to support any Russian gas flows returning to the EU.   

Potentially, Chinese tariffs may give Beijing greater incentive to finally consent to a version of the Power of Siberia 2 pipeline, which would, for the first time, bring natural gas from the Western Siberian gas fields—the main supply fields for the EU—to China.  

If this ends up being the case, one can see the potential reshaping of global gas markets. Russia would increase its gas flows to China, while the United States—via long-term LNG contracts—would supply the EU market. In such a world there would only be a limited role—if any—for the Nord Stream pipelines. Given the formidable obstacles, restarting Nord Stream may simply be one pipe dream too far.  

Alan Riley is a non-resident senior fellow at the Atlantic Council Global Energy Center and a Professor at the College of Europe, Natolin.

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Nearly three months of zero gas flows have shown that Europe can manage without the volumes of Russian gas that previously transited Ukraine—only 15 bcm in 2024, compared to 84 bcm in 2019. Nevertheless, rumors of possible restoration of Russian gas deliveries to the European Union (EU)—either via Nord Stream or through Ukraine—continue to circulate in the press. Resuming this trade could be a potential Russian condition for halting hostilities as Russia desperately needs gas export revenues. If that is the case, resumed flows might be a necessary step to create peace. But they must be routed through Ukraine and under conditions that will ensure energy security and full transparency. 

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Russia is extremely interested in resuming supplies to the premium European gas market. Since 2021, Russia has lost more than 100 bcm per year of gas exports to Europe, undermining Gazprom’s financial stability. Desperate attempts by Gazprom to redirect exports to Central Asia and China have not brought significant financial returns, as prices there are two-and-a-half times lower than European prices. Moreover, pipeline export capacity to those markets is very limited. Russia’s direct pipeline export capacity to China currently stands at 38 bcm per year via Power of Siberia. This infrastructure is not connected to the large gas fields historically used to supply European markets. Additionally, Russia’s ability to export liquefied natural gas (LNG) faces significant constraints due to US sanctions. To cushion the loss of the European market, the Russian government has been forced to raise domestic prices, an unusual and very unpopular move in the country.  

Additionally, the Kremlin is eager to maintain its political influence over Europe, including through export revenues. Hungary and Slovakia are clear examples of how this influence manifests—both nations have repeatedly opposed or diluted EU sanctions against Russia and blocked critical financial and military support for Ukraine. 

The Russian government and several members of the German far right regularly raise the issue of resuming Russian gas supplies to Germany via the surviving branch of the Nord Stream 2 pipeline, which has a capacity of 27.5 bcm per year. However, German authorities categorically rule out the possibility of such a resumption. Other Northern European countries, as well as Poland and the Baltic states, also strongly oppose restoring transit through Nord Stream, fearing increased militarization of the Baltic Sea and the potential reversion to EU dependence on Russian gas. Resuming transit through Poland is also unlikely, for both political and technical reasons, as the Yamal–Europe pipeline has now been almost fully integrated into Poland’s domestic gas system and can no longer handle flows from Russia. 

This leaves Ukraine as the most feasible route for resuming Russian gas deliveries to Europe.  

EU officials and most member states officially do not support the idea of resuming gas transit through Ukraine. However, the EU has not imposed sanctions on Russian pipeline gas or LNG, allowing Russia to retain a significant market share in Europe. The European Commission continues to reaffirm its commitment to phasing out Russian gas completely by 2027, and this month plans to present a detailed roadmap for this process. 

Unfortunately, the European Commission has been unable to fully ban Russian gas imports. Combined pipeline and LNG imports from Russia accounted for less than 19 percent of total EU gas inflows in 2024. However, there may be concern that a complete ban could significantly impact gas prices in Europe. Given that the Commission has outlined a plan—not a binding commitment—to fully phase out Russian gas by 2027, it might opt to delay sanctions on Russian gas until then in exchange for peace. The anticipated influx of new LNG volumes from the United States, Canada, and Qatar between 2026–28 could mitigate EU concerns about price volatility during this transitional period. 

The position of the United States will be determinative. On one hand, the Trump administration consistently demands that EU countries increase purchases of US LNG and may not welcome significant increases in Russian gas imports to Europe. However, for the sake of a peace deal, Trump may agree to limited imports of up to 15 bcm annually—a volume that flowed via Ukraine in 2024 and would have only a minor impact on US exports to Europe. 

As for Ukraine, estimated annual revenues of $400–600 million from Russian gas transit are a miniscule contribution to the economy. Therefore, the question of resuming transit should be considered in a broader context of cease-fire agreements and establishing long-term peace. Continued transit of Russian oil and renewed gas transit through Ukraine could allow Russia to earn up to $12 billion annually. Accordingly, Ukraine is entitled to expect not only transit fees of around $200 million for oil and an estimated $400–600 million for gas, but also significant additional concessions from Russia. 

These concessions should include Ukrainian control over the Zaporizhzhia nuclear power plant, which can produce 6 gigawatts of electricity annually, but was occupied by Russia in 2022. This would help balance Ukraine’s power system, large parts of which have been destroyed by Russian missile and drone attacks, and eliminate the need to import electricity from the EU. It is worth noting that Russian control over the plant has little economic sense, as Russia cannot restart the plant without restoring the Kakhovka Reservoir, which is unlikely without Ukrainian cooperation. 

Additionally, Ukraine has the right to demand 15–20 percent of Russian oil and gas exports—either in monetary terms or in kind—as a transit tax. These funds should go into a special fund for the restoration of Ukraine’s energy production, which has been destroyed by Russian attacks. The proposed percentage is reasonable, given the existing discounts on Russian oil and gas which, as sanctions are lifted, should disappear.   

In order to limit Kremlin’s influence on the European gas market and on political processes within Europe, the EU should place red lines on its reengagement with Russian energy. 

First, import volumes of Russian gas should be capped, both for the entire EU and for individual member states, to prevent any renewed dependency on Russian energy supplies. 

Second, gas purchases should be carried out collectively through the AggregateEU initiative, with the delivery point for European buyers located at the Russia–Ukraine border. This would eliminate Gazprom’s ability to offer politically motivated pricing to more loyal countries and energy companies. 

Finally, the EU and Ukraine should create an international consortium to manage Ukraine’s gas transmission system. This idea was explored in 2018, and its revival could increase European traders’ confidence in transit reliability through Ukraine.  

Conclusion

If a cease-fire necessitates resuming Russian gas flows to Europe, it must flow via Ukraine and be conditional on key concessions from Russia. These must include safeguards to ensure that the EU does not become dependent on Russian gas again and that Moscow can no longer use gas as political leverage. Ukraine should also regain control over vital energy assets like the Zaporizhzhia nuclear plant and secure a substantial transit tax for reconstruction of its energy infrastructure. Policymakers in Kyiv, Brussels, and Washington must remain resolute in demanding these terms to ensure any peace agreement reinforces, rather than undermines, regional stability and energy security. 

Sergiy Makogon is a non-resident senior fellow at the Center for European Policy Analysis and the former CEO of GasTSO of Ukraine (2019-2022).

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The emergence of the Ukrainian army as a serious international fighting force can be traced back to the beginning of Russia’s invasion in 2014. At the time, decades of neglect and corruption had left Ukraine virtually defenseless. With the country’s existence under threat, a program of military modernization was rapidly adopted. During the following years, the Ukrainian Armed Forces expanded dramatically and implemented a series of far-reaching reforms in line with NATO standards.

Following the full-scale Russian invasion of February 2022, the transformation of the Ukrainian military entered a new phase. The number of men and women in uniform swelled to around one million, making the Ukrainian army by far the largest in Europe. They have been backed by a domestic defense industry that has grown by orders of magnitude over the past three years and now accounts for around 40 percent of Ukraine’s military needs.

As the world watches the Russian invasion of Ukraine unfold, UkraineAlert delivers the best Atlantic Council expert insight and analysis on Ukraine twice a week directly to your inbox.

For today’s Ukraine, a strong domestic defense sector is now a matter of national survival. During the initial stages of Russia’s full-scale invasion, the Ukrainian authorities relied heavily on military aid from the country’s partners. This support helped enable Ukraine’s early victories but was also often subject to prolonged delays that left Kyiv vulnerable to changing political priorities in various Western capitals.

The need for greater military self-sufficiency has been underlined in recent months by the return of US President Donald Trump to the White House. The new US leader has made clear that he does not intend to maintain United States military support for Ukraine, and plans instead to downgrade the overall American commitment to European security. This shift in US policy has confirmed the wisdom of Ukraine’s earlier decision to prioritize the expansion of the country’s domestic defense industry.

Ukraine’s growing military capabilities owe much to a defense tech revolution that has been underway in the country since 2022. Following Russia’s full-scale invasion, hundreds of Ukrainian companies have begun producing innovative new technologies for the military ranging from software to combat drones. By focusing on relatively simple and affordable defense tech solutions, Ukraine has been able to close the gap on Russia despite Moscow’s often overwhelming advantages in terms of manpower, firepower, and resources.

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Drones, defense, and diplomacy: Negotiations and the battlefield in Ukraine

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More than three years since the start of Russia’s full-scale invasion, it is now clear that wartime necessity has transformed Ukraine into perhaps the most agile and experimental military ecosystem in the world. Whereas Western arms procurement cycles typically span several years, Ukraine can translate ideas into operational weapons within the space of just a few months. This has helped establish Ukraine as a global leader in drone warfare. The country’s use of inexpensive FPV drones is increasingly defining the modern battlefield and now accounts for approximately 80 percent of all Russian casualties.

Ukraine’s domestic drone production capacity is growing at a remarkable rate. According to the country’s Deputy Defense Minister Ivan Havryliuk, Ukrainian forces are currently receiving approximately 200,000 drones per month, a tenfold increase on the figure from just one year ago. Kyiv is also making rapid progress in the development of numerous other cutting edge military technologies including robotic systems, marine drones, and cruise missiles.

Ukraine’s dramatically expanded armed forces and groundbreaking defense tech sector make the country an indispensable partner for Europe. After decades of reliance on US security support, European leaders currently find themselves confronted with the new political realities of an isolationist United States and an expansionist Russia. In this uncertain environment, it makes good sense for Europe to upgrade its support for the Ukrainian army while deepening collaboration with Ukrainian defense tech companies.

European investment in the Ukrainian defense industry is already on the rise, both in terms of government donor funds and private sector investment. This trend looks set to intensify in the coming months as Ukrainians and their European partners increasingly acknowledge that their collective future security depends on closer cooperation. Russia’s invasion has forced Ukraine to become a major military power and a leading defense tech innovator. This status looks set to guarantee the country a position at the heart of Europe’s security architecture for many years to come.

David Kirichenko is an associate research fellow at the Henry Jackson Society.

Further reading

UkraineAlert Mar 25, 2025

Ukraine’s growing military strength is an underrated factor in peace talks

By Serhii Kuzan

Any discussion on the future course of the war against Russia and the terms of any peace deal must take into account the fact that Ukraine is a now major military power in its own right, writes Serhii Kuzan.

Conflict Defense Industry

UkraineAlert Apr 22, 2025

Putin’s cynical Easter ceasefire stunt backfires as Zelenskyy calls his bluff

By Peter Dickinson

Vladimir Putin’s surprise Easter ceasefire announcement was clearly a cynical stunt, but it did inadvertently serve an important purpose by underlining the simple fact that Russia can end the war whenever it chooses, writes Peter Dickinson.

Conflict Disinformation

UkraineAlert Apr 10, 2025

A pragmatic peace plan for Ukraine

By Mykola Bielieskov

A pragmatic and sustainable peace is possible in Ukraine if Kyiv’s European partners dramatically increase their own defense spending while significantly strengthening the Ukrainian military, writes Mykola Bielieskov.

European Union NATO

The views expressed in UkraineAlert are solely those of the authors and do not necessarily reflect the views of the Atlantic Council, its staff, or its supporters.

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UkraineAlert is a comprehensive online publication that provides regular news and analysis on developments in Ukraine’s politics, economy, civil society, and culture.

The Eurasia Center’s mission is to enhance transatlantic cooperation in promoting stability, democratic values and prosperity in Eurasia, from Eastern Europe and Turkey in the West to the Caucasus, Russia and Central Asia in the East.

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The post Ukraine’s innovative army can help Europe defend itself against Russia appeared first on Atlantic Council.

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April 23, 2025

Banque de France’s François Villeroy de Galhau on strengthening Europe

Banque de France Governor François Villeroy de Galhau discussed the challenges of safeguarding the euro amid global economic uncertainty with Charles Lichfield, deputy director of the Atlantic Council’s GeoEconomics Center.

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Transcript of remarks

Uncorrected transcript: Check against delivery

Thanks to all of you for welcoming me in the Atlantic Council. We sit just a few blocks from Franklin Park and Lafayette Square. And if necessary, Washington’s geography reminds us of the enduring bond between our two nations.

As the Marquis de Lafayette, probably as famous in the US as in France, hero of the two worlds, once wrote to George Washington, I quote him: “Humanity has won its battle. Liberty now has a country.” From the very start, the cause of liberty, of freedom, has been one we have carried together, across the Atlantic, and I strongly wish it is still today, despite very troubled waters we are sailing through.

Let me also remind you with gratitude that Dean Acheson, who played a key role in the creation of your Atlantic Council, was also instrumental in the early steps of European integration. This is perhaps less well known, but he urged the French government in 1949 and 1950 to take the bold step leading to the Schuman Declaration of 9th of May 1950, and hence of what would become the European Union.

For Dean Acheson, as for many Americans, the EU was not designed, and sorry for the quotation, was not designed to “screw the US,” on the contrary. And let me, by this opportunity, also pay tribute to his French counterpart, Robert Schuman, at that time French Foreign Affairs Minister. He came from the French-German border, Jenna, which you alluded to, and it’s a legacy I feel personally connected to, having grown up like him in that very region where our two nations meet.

Hence, I will highlight that the transatlantic partnership has been so far strong and balanced, as no other worldwide. Second, nevertheless, the US trade policy shift will harm the global economy, starting at home. Lastly, and more positively, I will trace out a path for this possible European moment you mentioned, if, I stress, if we seize the opportunity.

Let me try to state the obvious first, but telling the truth means sometimes reminding the obvious at present. The US and the EU are the world’s two largest economies, maintaining one of the largest bilateral economic relationships. Then there is this question of the trade surplus.

Let me give some figures. If I look at the surplus in goods, obviously, there is a European surplus of $234 billion. But there is a services deficit which has significantly widened in the last years and which is at the advantage of the US for $125 billion. If I add a third element, which is a net primary income flows in favor of US firms, this leads ultimately to a balanced current account.

Can I also add that the effective applied tariffs between the EU and the US were close before recent developments, 3.95 percent for the EU on US products, 3.5 percent for the US on European products. Let me remind also the obvious: Value-added tax, VAT, is not a customs duty. It is levied on the final value of imported and domestically produced goods equally like the sales tax in the US. And nobody would argue in Europe that the sales tax is a customs duty.

European majority-owned affiliates directly employed an estimated [5.3 million] US workers in 2023, and European-based investors represent close to 50 percent of all foreign holdings of US securities that same year.

Last figure, and I will stop there, but only to show how deep, old, and balanced our relationship is: Today, 120,000 European researchers are working in the US universities, labs, and firms.

I must unfortunately go to my second point about the US policy shift and its harmful consequences.

Let me be honest: I don’t mean that the latest globalization wave was a fairy tale. It had its problems. It had its imbalances, both social and financial. But the current lose-lose game will obviously increase these problems and in no way solve them. The new trade measures, tariffs announced, as well as the increasing unpredictability which affects confidence, constitute without any doubt a major negative shock, and self-indicted, to the global economy, but first and foremost, to the US economy. I say that with sadness.

According to all analyses by most US and international banks and yesterday by the IMF, the American economy could suffer this year from an average estimated loss of around 1 percentage point in annual growth less and a similar-sized, 1 point rise in underlying inflation. There could even be a US recession, which was unthinkable, unthinkable, three months ago. But bad news for the US is bad news for all, including for Europe.

According to our preliminary assessments, there could be a direct negative impact of 0.25 percent to euro area GDP growth this year. The impact on inflation remains more uncertain but could be as a whole on the downside. And this is a significant difference; our inflation would diminish while the US one would increase. That said, our baseline scenario for France and the euro area remains that of an exit from inflation without a recession.

Financial markets, as we all know, they reacted very negatively to these trade announcements with a very unusual combination—let me stress that—of a sharp drop in US equity indexes, a rise—very surprisingly—in US long term bond yields, and a broad-based decline in the US dollar. The economic uncertainty may possibly threaten financial stability. I say it with some gravity. And I add that such deeply disruptive effects would also result from attacks on the independence and credibility of central banks. Let me on this occasion express again my gratitude to Fed’s Chair Jay Powell, who admirably shows how a central banker must behave.

One word about monetary policy, if you allow me. Independent from political impatience, our monetary policies are also autonomous from one another across the Atlantic. This in no way precludes—and this is my commitment to you—this in no way precludes a continuous, trusted, and indispensable dialogue, which is more necessary than ever for global financial stability.

But this autonomy is precisely what allows each of us to fulfil our domestic price stability mandate. In Europe, this is made possible by one of the greatest institutional achievements of the [1990s]: the creation of the euro. I am old enough, I must confess, to have been personally in Maastricht thirty-three years ago, and much more recently, I was in Frankfurt last week, for our latest decision to cut interest rates.

There is currently, as I said, no inflationary risk in Europe. And we can almost say “mission accomplished” when it comes to bringing inflation back to our 2 percent target. The significant deceleration of wages is another proof thereof. It is therefore both fair and appropriate that, compared to the US Fed or the Bank of England, the ECB has started cutting rates earlier—last June—faster, and likely further this year.

While this supports activity in the short term, the key to strengthening European growth remains structural through a broader mobilization of our internal resources.

And this brings me to my last and more positive considerations about Europe. Can I first say hope that we use the ninety-day pause to seriously talk across the Atlantic.

The least economically harmful option would be indeed to negotiate and then deescalate the situation rather than setting off a transatlantic spiral of tariff hikes. So far, Europeans, and you could witness it, Europeans have reacted in a remarkably united and calm manner.

Furthermore, I strongly wish Europe and the US can still commit together to what I call a pragmatic multilateralism. I mean a pragmatic multilateralism that is focused on some practical themes of common interest.

Let me name just a few: financial stability, cross-border payments and crypto-assets, cybersecurity, or the fight against financial crime and the prevention of extreme climate events. I insist: Let us resolutely preserve and support the multilateral institutions such as the IMF and World Bank, born and hosted in this great country—and this great city of Washington.

Let me express one final hope. If this difficult current situation has a silver lining, it is to possibly usher the European moment: Europe, despite its limitations—and we are aware of these limitations—as a safe haven of economic predictability and confidence, of rule of law, of social cohesion. But this will not happen without bold moves.

We can already see the impressive shift of the next German government. And these moves are obvious on defense, but let me focus today on economy, as the other pillar of this European moment. We need what I would call a “general mobilization” focusing on three imperatives, three “I”s, taking the best of the impressive economic success of America—or if you prefer, rather than three “I”s, size multiplied by muscle multiplied by speed. What do I mean? And I will be very short, but this is a sum up of the Draghi report, so to say—four hundred pages.

First, we need to integrate, the first “I”, the single market more. This means making the most of its size—as large in GDP terms as the US—by removing internal barriers in several areas such as services and energy. We also need, second “I”, to invest better, giving priority to the most promising breakthrough innovations, particularly those related to AI. And to succeed there, we need to build financial muscle through a genuine Savings and Investments Union, fostering more our abundant private savings—we don’t lack private savings, no the contrary—but we must force them towards equity and venture capital, again, US type. And third “I”: We need to innovate faster. Europe needs simplification, obviously. Less bureaucracy, fewer procedures, and shorter deadlines, while stressing—and this is one of our messages—that simplification is not deregulation, and we will come back to that.

Can I add a general consideration on this European agenda and this European moment: To successfully implement these three “I”s, these three imperatives, we urgently need a binding, visible, and not too distant calendar: Such a calendar will mobilize all our political and economic forces, as did in the past the 1st of January 1993 for the single market, also 1st of January 1999 for the single currency.

Let me conclude, in quoting the great French writer Victor Hugo. He wrote, almost two centuries ago, “A day will come when there will be no other battlefields but markets opening to trade and minds. . .  A day will come when these two great groups, the United States of America and the United States of Europe, will stand face to face, reaching out across the seas, exchanging their products, their commerce, their industries, their arts, and their genius.”

That day, alas, has grown more distant in recent times, but we need such nice utopias. The transatlantic sky has darkened considerably. But even in the storm, we must not lose sight of our long-term course. You, the American people, will decide what must be said and what must be fought for on your side of the Atlantic, as loud and clear as necessary. As Europeans, our task is clear: to strengthen our own side of the ocean. Let us, in the very name of the Atlantic spirit this Council embodies, let us seize the European moment.

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“America’s present need is not heroics but healing,” Harding said, “not nostrums but normalcy; not revolution but restoration; not agitation but adjustment; not surgery but serenity; not the dramatic, but the dispassionate . . . ” 

It was certainly unintentional, but I heard echoes of Harding when Valdis Dombrovskis, a Latvian who serves as an executive vice president for the European Commission, came to the Atlantic Council yesterday in defense of “boring” predictability.  While mentioning US President Donald Trump only once in his opening remarks, he underscored what Europe has long seen as its shared virtues with its American partners.  

“You see our fundamental values, individual liberties, democracy, and the rule of law often painted as weakness by authoritarian regimes to prey upon,” said Dombrovskis, who previously served as the European Union’s (EU’s) trade negotiator and is one of Europe’s longest-serving commissioners.* “However, in times of turmoil, predictability, the rule of law, and willingness to uphold the rules-based international order become Europe’s greatest assets. We are committed to doing whatever it takes to defend our ‘boring’ democracies, because boring brings certainty and a safe haven when a rules-based order is questioned elsewhere. Our processes allow for debates and consultations to take place, building buy-in from our key stakeholders and enabling us all to pull in the same direction.”

This week’s meetings of the International Monetary Fund (IMF) and World Bank in Washington, DC, are arguably the most important since the financial crisis of 2008-2009, because the Trump administration is seeking fundamental changes to the world trading and financial system not seen since the Bretton Woods agreement of 1944. In that year, the United States and its partners brought down protectionist trade barriers, established a new international monetary system, and laid a foundation for post-World War II global economic cooperation. One of the results was the creation of the IMF and the World Bank.

The last thing the Trump administration appears to want is a return to the normalcy of the eighty years that followed that agreement, arguing that the United States has been taken advantage of by its trading partners and that international system. One can say many things about Trump’s first hundred days in power, but “boring” certainly isn’t one of them.  

Many of the world’s economic elites in town for this week’s IMF-World Bank meetings appear to be yearning for the first Trump administration, during which the rhetoric was often more extreme than the policies that emerged. Investors appear to agree with them, driving up markets Tuesday when Trump said that he wasn’t planning on removing Federal Reserve Chair Jerome Powell from office and US Treasury Secretary Scott Bessent signaled that the United States wanted a trade deal with China.

Yesterday brought fresh reports, most notably in the Wall Street Journal, of Trump’s willingness to dial back China tariffs, while Bessent had harsh words for China’s export-driven economic model even as he hinted at a deal. “China needs to change,” he told the Institute of International Finance. “Everyone knows it needs to change. And we want to help it change—because we need rebalancing too.” 

As I’ve argued previously in Inflection Points, the Trump administration this time around is more determined to bring about lasting changes than most investors and trading partners recognize. “The revolution,” I wrote, “is about breaking what Trump administration officials believe needs to be fixed, whether it is foreign assistance or international trade, because previous experience has shown that reforms aren’t possible.”

In his Atlantic Council remarks, Dombrovskis showed that he understands the European status quo also needs to change, but that it should be achieved by building upon the rules-based system that has served it so well since World War II. 

He spoke of accelerating efforts to build European defense and about the need to support Ukraine against Russian aggression as “Ukraine is central to Europe’s security considerations.” He spoke about deepening the European single market (“our main economic asset”) of 450 million consumers and about tackling “a longstanding problem of bureaucracy and red tape” by reducing administrative costs for European companies by 25 percent.

He also spoke about expanding the EU’s growing network of economic partnerships and about tapping growing international demand for euro-denominated assets. First and foremost, he played up European predictability as a core strength. What was understood, but not said, was that the EU now sees its “boring” predictability as a competitive advantage when measured against the United States.

Make no mistake: the EU would much prefer to do a damage-reducing deal with the Trump administration, but Dombrovskis’s tone was that of someone who knows he’s entered a time of transatlantic uncertainty when that’s not an outcome he can bet on.

The wording Dombrovskis chose was telling, saying that the EU “isn’t giving up on our closest, deepest, and most important partnership,” with an economic and trade relationship of $9.5 trillion per year, including a services trade estimated at $475 billion in 2024.

He spoke about the EU’s readiness to buy more US liquefied natural gas and offered to negotiate down to zero tariffs on all industrial goods. At the same time, he reminded the audience that the EU would escalate, if necessary, and that a first, 21-billion-euro package of countertariffs was put on hold following the Trump administration’s ninety-day pause on its own “reciprocal” tariffs.

Dombrovskis’s message was a clear one: that the EU “is determined not to let this crisis go to waste,” and it wants to make “inroads to help shape new strands of the global economy.” As for how the EU can reach a deal with the country that was both the host and at the heart of the Bretton Woods agreement eighty years ago, he regretted that “so far we also don’t have clear responses” to EU offers on a path forward.  

It’s far too early to know whether “boring” can win the day and whether American voters will return to Warren Harding territory. That said, Dombrovskis yesterday laid out a sound—and even compelling—approach for a continent where rules-based international order has been an antidote to its bloody past.

Frederick Kempe is president and chief executive officer of the Atlantic Council. You can follow him on X: @FredKempe.

This edition is part of Frederick Kempe’s Inflection Points newsletter, a column of dispatches from a world in transition. To receive this newsletter throughout the week, sign up here.

Note: An earlier version of this article inaccurately referred to Dombrovskis as the EU’s current trade negotiator. This essay has been updated to note that he is a former EU trade negotiator, as Dombrovskis left that position in December 2024.

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Securing the EU: Commissioner Valdis Dombrovskis on trade and defense

Commissioner Valdis Dombrovskis discusses the EU’s strategic priorities for trade, defense, and competitiveness in a rapidly shifting global landscape in conversation with the Atlantic Council’s Jörn Fleck on the sidelines of the IMF-World Bank Spring Meetings.

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Speaker

Valdis Dombrovskis
Commissioner for Economy and Productivity, Implementation and Simplification, European Commission

Moderator

Jörn Fleck
Senior Director, Europe Center, Atlantic Council

Introductory remarks

Josh Lipsky
Chair of International Economics; Senior Director, GeoEconomics Center, Atlantic Council

Event transcript

Uncorrected transcript: Check against delivery

JOSH LIPSKY: Good morning, and welcome to day three of IMF-World Bank Week at the Atlantic Council. I am Josh Lipsky, chair of international economics at the Atlantic Council and senior director of the Atlantic Council’s GeoEconomics Center. And it is my pleasure to invite everyone to our live programming here from the Atlantic Council Global Headquarters in Washington, DC.

I have the privilege of welcoming you this morning to our conversation with European Commissioner for Economy and Productivity, Implementation and Simplification Valdis Dombrovskis. Commissioner Dombrovskis joins us as part of a special series of events during the IMF-World Bank Spring Meetings, and we’re very pleased to co-host today’s event with our Europe Center.

Throughout the week, we have been listening and learning from finance ministers and central bank governors from around the world on their priorities during this busy week in Washington. And there is no doubt the issue that is on the top of everyone’s minds: trade, tariffs, and the future of international economic coordination.

We all know these tariffs do not always discriminate between allies and adversaries. As IMF Managing Director Kristalina Georgieva noted in her curtain-raiser address last week, the resilience of the global economy is being tested by nothing short of a reboot of the global trading system. The US now has the highest effective tariff rate than at any point in the past century, and the cost to global growth was made clear in the IMF’s downgrades published yesterday.

But it was not as if there weren’t issues to address in the global economy before these tariffs were levied earlier this month. Macroeconomic imbalances, high public debt, strengthening productivity—these issues and challenges still confront the global economy in the weeks and months ahead and this is where the European Union has a critical and indispensable role to play.

As one of the largest markets in the world and a champion of a rules-based trading system, the EU’s voice is needed at this moment. As the United States’ largest trading partner with deeply intertwined supply chains, business ventures, two-way investments, it is a voice that carries enormous weight here in Washington and around the globe.

And we have the perfect guest to help us understand the EU’s stance at this moment of disruption. Commissioner Dombrovskis knows a thing or two about steady leadership and transatlantic economic relations during complicated times.

He has served as the economy commissioner since December 2024, his third post as a commissioner. He previously served as commission executive vice president for the economy, which also carried the trade file, during the previous European Commission mandate from 2019 to 2024, and as the commission vice president for the euro overseeing the bloc’s financial stability from 2016 to 2019.

In addition to his distinguished career in Brussels, Commissioner Dombrovskis also served as the prime minister of Latvia from 2009 to 2014. I will say that we have had the honor of hosting him before during the IMF World Bank’s Spring Meetings including in the sweltering heat of Marrakesh eighteen months ago. So it’s nice to have you in our cooler room today, Commissioner.

Commissioner, thank you for joining us once again at the Atlantic Council. We’re very much looking forward to your remarks and the conversation to follow with my colleague Jörn Fleck, senior director of the Atlantic Council’s Europe Center. But, first, Commissioner, the floor is yours.

VALDIS DOMBROVSKIS: Good morning, ladies and gentlemen. It’s good to be back amongst friends at the Atlantic Council.

You are all probably familiar with the old political adage never let a good crisis go to waste. A similar sentiment was once expressed by a founding father of the European Union. Jean Monnet famously said that Europe will be forged in crises and will be the sum of the solutions adopted for those crises, and he was right.

You see, when stakes are high Europe comes together and does whatever it takes to overcome crisis and emerge stronger, and the stakes could not be any higher today. Today’s extraordinary uncertainty presents Europe with challenges but also with opportunities.

The question is how the European Union can make the most out of those opportunities. So let me focus today on five opportunities that Europe is determined to seize.

First, using our predictability as strengths; second, getting our act together on security and defense; third, investing in our main economic asset, the single market of 450 million consumers; fourth, cutting red tape to boost our competitiveness; and fifth, expanding our network of partnerships across the world.

So, first, on predictability. We often hear that European Union is a large and slow ship which is hard to turn but, I would say, except in crisis when as the COVID-19 pandemic struck the European Union and its member states responded quickly, forcefully, and in a coordinated manner.

We rapidly put in place safety nets and support schemes to safeguard our economies and keep people in jobs. More recently, during the first year of Russia’s war of aggression against Ukraine President Putin threatened to freeze Europe to death.

In response we worked with member states and business communities to establish a joint purchasing platform for gas to ensure sufficient supplies. We adapted our infrastructure for alternative supplies and we committed to phasing out our dependency on Russian fossil fuels.

The US played a critical role here in this process, for which we are grateful. You see our fundamental values, individual liberties, democracy, and the rule of law is often painted as weakness by authoritarian regimes to prey upon. However, in times of turmoil, predictability, the rule of law, and willingness to uphold the rules-based international order become Europe’s greatest assets. We are committed to doing whatever it takes to defend our boring democracies, because boring brings certainty and a safe haven when a rules-based order is questioned elsewhere. Our processes allow for debates and consultations to take place, building buy-in from our key stakeholders and enabling us all to pull in the same direction.

This is what we are now doing on defense. My second point today is that European Union is now finally getting its act together on security and defense. President Trump is right in saying that Europe needs to take more responsibility for its security. At the 2014 NATO Wales summit, allies agreed to reverse the trend of declining defense budgets and aim towards achieving the NATO guideline of spending 2 percent of GDP on defense within a decade. Some European countries got serious about investing in their defense, but not all did. Today, as high-intensity war rages on our continent, there is a clear understanding that Europe can and must take greater responsibility for its security. It must carry its fair share of burden alongside its NATO allies, and United States in particular.

We are also committed to supporting Ukraine in its fight against Russian aggression until a just and lasting peace can be achieved. Ukraine is central to Europe’s security considerations. And it’s a vital part of Europe’s security shield, because Russia has a track record of open and hidden attacks on its neighbors: Moldova already in early 1990s, Georgia in 2008, Crimea and Donbas in 2014, and the whole of Ukraine in 2022. And Russia is not hiding its intention to launch an attack against European and NATO nations. This is a reality we face at Europe’s eastern flank. We cannot reward Russia for this kind of behavior. History taught us that demonstrating strength and determination is the best way to deter aggression. And we will do just that.

Last month, the European Commission presented the ReArm Europe Plan and Readiness 2030 Initiative to facilitate and encourage investment in our defense capabilities and defense industry. The package aims to unlock up to 800 billion euros in additional defense spending. This should allow defense spending in the EU to move from 2 percent to about 3 percent of GDP on average. Some nations, such as Poland and the Baltic states, are already above the 3 percent target and intend to increase their national defense spending further. And if needs be, we will commit even more. In addition to this, Germany has recently announced a 500-billion-euro package for infrastructure and defense investments. All this is a game changer for Europe’s security.

Of course, the EU should not only spend more but also spend better together. Our plan incentivizes EU member states to buy defense equipment together, promotes interoperability, ensures predictability for the order books, reduces costs, and creates a scale needed to strengthen Europe’s defense industrial base. And we remain open to participation and investment from our partner countries, under certain conditions. The European defense industrial base also includes Ukraine. At the great cost to the Ukrainian nation, its battlefields have also become a real time test laboratory for developing and refining innovative European and Ukrainian defense products.

Beyond enhancing Europe security, we expect that additional defense spending will bolster the international role of the euro, as we see a large market demand for euro-denominated safe assets. It must also boost competitiveness and economic growth, drive innovation, create new jobs, and help establish a common European market for defense.

Even more importantly, advanced technologies like AI and quantum computing cut across defense and security, and are foundational assets for our future competitiveness. Europe has fallen behind US and China when it comes to certain advanced technologies, and we are determined to catch up as a strategic priority.

This brings me to the third opportunity, the power of Europe’s single market as a strategic asset for European Union. US officials are right to emphasize that large and dynamic consumer markets are a source of great strength. And the EU is the largest of such markets in the West, home to 450 million people. Yet, when it comes to deepening the single market, we must shake ourselves from our complacency. Tearing down the remaining barriers would boost the EU’s competitiveness while attracting global talent and investment. It would also be beneficial for American companies already operating in the European market and for any firm or individual who wants to invest in market open to talent and trade.

We have already put some ambitious proposals on the table. We are integrating Europe’s capital markets to better channel our household savings, estimated at around ten trillion euros, towards productive investments. We are reducing Europe’s energy costs while decarbonizing our economies. We are investing heavily in strategies to develop the skills needed for future labor markets, including digital skills. We will propose a single set of rules for innovative companies to invest and operate in the single market. We will modernize our public procurement rules to take into account economic and national security considerations. We will make sure that our industrial and technological base is not wiped out by unfair competition, manufacturing overcapacities, or a shortage of critical imports. These actions, together with others we have planned, will help to reignite Europe’s economic dynamism and power a new era of productivity growth in Europe’s single market.

And we must tackle a longstanding problem of bureaucracy and red tape in the EU. This is my fourth point. I have been given the responsibility for driving and coordinating the European Commission’s work on cutting the red tape. We are on the journey to make our regulations smarter and governance simpler. We plan to intervene in a predictable, proportionate, and surgical way to alleviate the heaviest burdens.

We have set ambitious targets to reduce all administrative costs for companies by 25 percent, and by 35 percent for small- and medium-sized enterprises. This translates into cutting roughly 37.5 billion euros in annual administrative costs by the end of this European Commission’s mandate.

We have already presented the first two proposals to simplify EU rules in the fields of sustainability reporting, sustainability due diligence, taxonomy, and public investments. When fully adopted this package will bring, at conservative estimate, 6.3 billion euros in annual savings to businesses.

But this is just a start. We will continue our efforts across every policy area throughout the five years ahead. By doing so, we will make the EU a more attractive destination to invest, innovate, and to do business in, and a more attractive EU will be an economic powerhouse. Remember, we issue as many patents as the US. If we fully unleash our potential, Europe will be an important creator on next-generation technologies.

My fifth and final point is on our partnerships and trade. Let me start by that the European Union is not giving up on our closest, deepest, and most important partnership, with the United States. Our economic and trade relationship is estimated at $9.5 trillion. We are key trade and investment partners, as everyone in this audience knows. And we are also each other’s most important services trading partners, with our services trade estimated at $475 billion in 2024. And we will need each other even more in tomorrow’s increasingly conflictual and competitive world.

The EU stands by its existing partnerships and intends to deepen them, but will also seal new partnerships across the world to diversify and strengthen our economic security at home. The EU will remain an attractive, reliable, and predictable trading partner. We already have trade agreements in place with seventy-six countries. We have recently concluded negotiations with—for new or enhanced trade partnerships with Mercosur, Mexico, and Switzerland. We continue negotiations with India, Thailand, the Philippines, Indonesia, amongst others. Just a couple of weeks ago, we launched trade talks with the United Arab Emirates.

These trade agreements seek to establish win-win partnerships which are reliable and rules-based. Europe therefore remains open for business, investment, and trade. The EU has already made significant inroads to help shape new strands of global economy. For example, our new trade deals focus on digital partnerships, strategic investment in—strategic investment, or access to critical raw materials, or future sources of energy. As we speak, Europe is busy consolidating its stable network of partnerships that will act to lift all boats.

To conclude, ladies and gentlemen, Europe is determined not to let this crisis go to waste. The European Union will not sit back and content itself with reacting to unfolding events. We will actively seize opportunities emerging from the turmoil and offer our vision for a way forward. We are already seeing markets rewarding our predictability and efforts to get our act together. And we will deliver on these expectations. Thank you very much.

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The Atlantic Council hosts a series of special events with finance ministers and central bank governors from around the globe during the 2025 Spring Meetings of the World Bank and International Monetary Fund (IMF).

JÖRN FLECK: Well, thank you, Commissioner Dombrovskis, for your opening remarks, for setting out the EU’s approach to navigating these turbulent times by doubling down on its own strengths. And a warm welcome from me as well. Great to have you back here at the Council. We’ll try and dive deeper into each of those five opportunity areas that you set out. And if we have some time left, we’ll also try and bring in questions from the audience. But with little time, let’s dive right in.

You ended on global partnerships that the EU is driving forward. And in light of President Trump’s tariff threats and the impact on the global economy, those issues are obviously top of mind for everyone this week at the IMF and World Bank meetings. You also mentioned and made a commitment to the EU not giving up on its $9.5 trillion economic relationship with the United States, but we’re clearly in a highly volatile dynamic on transatlantic trade and investment. Given your experience, your prior portfolio managing and leading the EU’s trade policy, how do you judge the conversations with the US administration? The EU has put some offers on the table. And how hopeful are you that the United States and the EU can really come to a deal?

VALDIS DOMBROVSKIS: Well, indeed. Our first preference is clearly to come to the negotiated solution with US. And from our side we already came with some openings and indications, notably indicating our readiness to engage in buying more US LNG and strengthen our partnership in the area of energy. As regards industrial goods, coming with a proposal for zero for zero tariffs on industrial goods, indicating our openness also as regards industrial goods to work towards closer regulatory alignment and removal of non-trade barriers. Actually, we had during the previous administration a very useful format for this, the EU-US Trade and Technology Council. So we have also indicated our US counterparts that we would see useful to have this kind, or similar, format for our engagements also looking forward.

So we’re open to negotiate and we are open to seek mutually acceptable solutions. But at the same time, we have also clearly indicated that if those negotiations are not coming to the solutions we are also ready to come with counter-tariffs. We actually have already adopted our first package of counter-tariffs, worth twenty-one billion euros, but we suspended those counter-tariffs now for ninety days as the Trump administration at least partially have suspended so-called reciprocal tariffs so to give this time for negotiations.

JÖRN FLECK: There’s been a lot of reporting about trading partners of the United States walking away a little bit confused about what exactly the administration wants. So, with that, sort of can you comment at all whether you’ve gotten some signals in those conversations with the United States of where this might head?

VALDIS DOMBROVSKIS: Well, that’s exactly spot on because, indeed, we would welcome more clarity on the US side what are exactly the expectations and how we can arrive to the solutions without this imposition of additional tariffs. And already mentioned a couple of concrete openings from the EU side which we had suggested, but we so far also don’t have clear responses from the Trump administration side on those openings.

JÖRN FLECK: You spoke already in your answer about giving these negotiations a little bit of space and the EU pulling back on its initial retaliation or retaliatory tariffs. This morning we saw the European Commission announce fines against two US tech firms, Apple and Meta, for alleged violations of the—of Europe’s Digital Markets Act regulating platforms and competition policy. The Trump administration has made the EU’s digital regulation part of their rationale, their case for tariffs against the EU, as sort of non-tariff barriers in the administration’s argument. Are you at all concerned about the impact of those fines, the announcements now, on negotiations with the United States?

VALDIS DOMBROVSKIS: Well, we do not see the two issues as actually linked. So our Digital Markets Act is in place. It has to be followed by all large online platforms, be it European or foreign platforms, so it’s non-discriminatory in this regard. It also doesn’t have any extraterritorial effect; it only concerns the conduct of those companies in the respect of EU legislation for the EU customers. And since there have been some breaches found in case of Apple and Meta, the European Commission has levied the fines as regards to breaches of those DMA provisions, and the companies now have sixty days to address those breaches.

JÖRN FLECK: Allow me one last question on the trade policy side. You already hinted at this in your remarks and your speech. Josh Lipsky, our senior director of our GeoEconomics Center, called the administration’s approach an attempt to reboot the global trading system. We’re seeing a much more protectionist stance of the United States. And so, if tariffs and trade policy tensions are the new normal or are becoming the new normal, how are you expecting to deal with the overcapacity issues? How concerned are you about redirection of trade, especially from China, into the European Union, which is sort of the prime alternative destination in many ways? And more generally to your last opportunity area, how can the EU maintain its open trade stance, really, when there’s more protectionism, there’s also trade as a controversial domestic issue not just in the United States but also in Europe? We’re seeing that with the Mercosur negotiations. And so, in other words, can the—can the EU survive as the free trader—the lone free trader among a growing pack of protectionists?

VALDIS DOMBROVSKIS: Well, that’s why I was mentioning that EU has already the largest network of free trade agreements in the world. We currently have agreements with seventy-six countries. We are negotiating a number of new agreements. So I would say we are not the lone player committed to rules-based international trading system. And we seek is engagement with partners around the world to preserve this rules-based international trading system because we think that it’s serving the EU and the global economy well. So we see value in protecting it.

JÖRN FLECK: And on China and the redirection of overcapacity?

VALDIS DOMBROVSKIS: Yes. That, obviously, is a concern with US market now effectively closed to Chinese goods. The question is where all those goods will go, and given China’s industrial over capacities that’s a concern for the EU and we believe that’s a concern for many other countries.

So a lot will depend also on China’s behavior in this regard, if it will act as a responsible global player or will try now to dump all this over capacity on the EU or elsewhere.

In this case, obviously, we’ll help to protect our market against this overcapacity and against potential destructions in our market as, by the way, we recently did as regards Chinese battery electrical vehicles.

JÖRN FLECK: Turning to the EU’s economic outlook, the single market—doubling down on your own strengths, so to speak—we had the release of the IMF’s updated forecast yesterday downgrading growth by 0.2 percentage points to 0.8 percent in 2025. There was some discussion yesterday about given the massive reverberations throughout the global economy and stock, bond, and currency markets whether this is a little bit of a too rosy picture for the global forecast. For Europe how are you at the European Commission—how are your teams assessing the impact? Is that too rosy or are you confident that there are also spillover effects in terms of strengthening Europe—the euro—as a safe haven in uncertain times, which is the theme of your speech, in many ways?

VALDIS DOMBROVSKIS: Well, all in all we expect a negative economic effect on EU and even more so on US and also on global economy.

I will say, broadly consistent with also the IMF’s update, we’ll be updating our economic forecast next month so—but it’s clear that, all in all, it’s a negative effect. So we had done some simulations estimating the negative effect of Trump tariffs on EU economy in the range of 0.2 percent both this year and next. For US itself we expect negative effect of 0.8 percent this year, 1.6 percent next year. That is without further escalations and without retaliations from other trading partners which, obviously, cannot be excluded.

It’s worth noting it’s just, you know, simulations amidst huge uncertainty so but, say, all in all I think you—some idea on a scale of economic problem. For the world economy in the same scenario expect negative economic impact somewhere in the range 0.5-0.6 percent.

So but, indeed, crisis also comes with certain opportunities and, indeed, the EU being a stable and predictable partner we see interest from a number of other countries to engage with the EU in the trading sessions. We see renewed dynamics so it was also possible to conclude the EU-Mercosur agreement which, as you noted, was not easy on both sides, by the way.

But the Trump administration coming into office probably helped to concentrate minds in this regard. But also we see now stronger investor interest in Euro-denominated assets and, correspondingly, a stronger interest for the international role of the euro.

JÖRN FLECK: I want to come back to that first and ask you, though, about the competitiveness agenda at the European Union level and your portfolio, your role, plays such a key role in that respect. You mentioned in your—in your opening remarks some of the measures that the EU has already taken coming up to sort of half a year in this Commission’s mandate. What do you consider the biggest successes here? What specific measures on the competitiveness agenda would you like to see pushed forward, or you have in the pipeline? And you mentioned shaking off complacency, right, in your speech. Is this Commission being bold enough and swift enough in terms of driving forward measures on its competitiveness agenda?

VALDIS DOMBROVSKIS: Well, indeed, if you look at two overarching priorities of this European Commission, those are competitiveness and security and defense. And on this competitiveness, we already came forward with our broad strategy, Competitiveness Compass, outlining the directions of work for strengthening Europe’s competitiveness. And I touched upon them in my speech because that’s a broad range of factors—regaining and strengthening our positions in a number of strategic industries and strategic economic sectors, addressing high energy prices, addressing labor skills, including digital skills, obviously, addressing bureaucracy and cutting red tape, leveraging the strength of our single market, and so on and so forth. So it’s a whole range of issues we need to address to strengthen our competitiveness. But we are determined to do so. And also among EU member states there is a clear understanding and willingness to work seriously and address those issues.

JÖRN FLECK: As part of this you oversee the simplification agenda. Can you tell us a little bit more about that, and specifically what more measures we can expect? And whether you see also political consensus and political will behind that simplification agenda, because that’s a complex, interinstitutional, and member state agenda, obviously.

VALDIS DOMBROVSKIS: Well, yes. Indeed, on simplification, so we already put out our first packages of legislative proposals as regards sustainability reporting where we actually moved quite boldly: de-scoping some 80-85 percent of the companies for those sustainability reporting requirements, simplifying requirements for other companies, starting the review of European also sustainability reporting standards, in a view of simplifying them, and so on and so forth. So we already made quite strong first moves. There are more proposals in the pipeline. And next month we’ll be coming with a proposal to simplify EU’s common agricultural policy and also set up a new category of enterprises, small and mid-caps. So it’s a relevant alleviation for those small and mid-caps, also for more proportionate and simplified reporting requirements.

We’ll be later coming with the proposals on review of REACH, as regards chemical industry, on digital package. And all in all, in the European Commission’s this year’s work program, out of eighteen legislative proposals eleven will have to do with simplification. And we will continue the stress testing and assessing the EU legislative base, so called, acquis communautaire, in each area. And we’ll be coming with new simplification proposals throughout the entire European Commission’s mandate.

JÖRN FLECK: One last—

VALDIS DOMBROVSKIS: Oh, sorry. And on this agreement, I would say there is a broad agreement among EU member states. They were actually calling for European Commission to come with far-reaching simplification proposals. And already now there is agreement on so-called stop the clock proposals concerning two directives, corporate sustainability reporting directive and corporate sustainability due diligence directive. In a sense, avoiding further reporting requirements now being put on companies while the legislative process is ongoing. And those so-called stop the clock proposals are already adopted, so we have now time for a proper legislative process.

I would say things are more nuanced on the European Parliament side. There were—there are political groups which are, so to say, more cautious on this entire simplification agenda. So that will certainly require work with European Parliament. But we see that it’s also possible to move forward with European Parliament because it also came on board eventually on these stop the clock proposals and now is engaged in substantial discussions on our simplification agenda.

JÖRN FLECK: Thank you.

I’ll try and fit in two really quick questions. Please be very concise. Question mark at the end. Who wants to jump in? OK, over here and the lady in yellow.

Q: Hi. My name is Aaron. I’m a private equity associate in New York.

I wanted to ask, it seems that the Trump administration’s qualms with Europe are as much ideological as they are economic. And the kind of rhetoric we hear around shared values that we see in Europe is, frankly, absent from the Trump administration’s rhetoric. So how do you deal with the relationship when it seems like those kinds of overtures fall on deaf ears?

JÖRN FLECK: We’ll take them together, please.

Q: Terrific. Andrea Shalal with Reuters.

Commissioner Dombrovskis, I want to ask you about the fines on Meta and Apple again, and sort of drill in. So the timing is not—you know, is the timing coincident? And do you—do you seriously think that that kind of fine, especially given the strong relationship that exists between the Trump administration and the tech companies—including Apple and Meta specifically—does that send some kind of a signal about the EU’s willing—you know, defiance or decision to be resolute in terms of responding to what’s coming from the US right now?

JÖRN FLECK: Thank you.

VALDIS DOMBROVSKIS: Well, first of all, on shared values, I would say that we have a very long and very deep partnership which cuts across different levels of administration, society, people-to-people contact. So it’s not only administration to administration contacts. And I would say this deep alliance and understanding of shared values is there. Yes, we obviously have our differences with the Trump administration. As I said, from our side we are approaching them with open mind, and willing to find solutions. But I don’t think this should negate now our many decades of very strong partnership and being strategic allies.

Then the question on fines for Meta and Apple. Well, first of all, those investigations under Digital Markets Acts are, in a sense, running its own course and following its own logic. And the point is that all large online platforms when dealing with European consumers need to meet certain rules and obligations on protecting the user’s privacy, on possibilities also for smaller providers to compete fairly in the field which those platforms are providing. And those are the obligations which companies which are operating in Europe needs to meet, regardless of their incorporation—place of incorporation or controlling shareholders. So we do not see any reason to mix those investigations and finding of those investigations in our ongoing trade or other discussions.

JÖRN FLECK: Let me try and fit in one really quick question. You also oversee the Stability and Growth Pact and the European Semester, looking at compliance with the requirements of the Stability and Growth Pact. You spoke about Europe—a shift in Europe of Europe needing to spend more on defense, on infrastructure, on technology, and the green transition. At the same time, there’s not a lot of fiscal space for a lot of the member states. On that front, how do you see that balance between the requirement to spend more, but equally fiscal pressures on the member states and spending? And then on the defense side specifically, how happy are you with the incentives in the ReArm and SAFE, specifically, initiative to really get to joint procurement, joint projects on the defense side?

VALDIS DOMBROVSKIS: Well, first of all, obviously, there is always a difficult balance to find between our additional investment needs and fiscal sustainability considerations. But the fact remains that we have emerged from the previous two crises—from COVID-19 pandemic and from beginning of Russia’s war in Ukraine, with its disruption of supply chains and energy price shock—so we emerged from these crises already with elevated debt and deficit levels, so we need to address it. And that’s the purpose also of our new economic governance framework, how to allow member states to bring their debt-to-GDP ratios on downwards track while providing more flexibility for member states to choose their own fiscal adjustment trajectories.

Obviously, the latest developments on the Trump administration side and the clear understandings that Europe needs to take its security matters much more in its own hands because there’s clearly less commitment from Trump administration required us to act quickly. And that’s where this ReArm Europe Plan came in, providing additional flexibility under EU fiscal rules for EU member states. But it’s clearly framed, so it’s additional defense spending of up to 1.5 percent of GDP for a four years period starting this year. So allowing, first, member states to restock on their equipment and ammunition and so on, because many things have been sent to Ukraine; and also, allowing member states to transition towards structurally higher defense expenditure which will be necessary. So, and since we are clearly containing this proposal both in volume and time, we are also limiting its fiscal impact on—and impact on debt trajectories.

As regards the joint procurements, indeed, our SAFE Initiative—so 150 billion euros lending capacity, which we are now creating—is exactly there for EU member states to do, or some partner countries also to do, joint procurement of military equipment. And this whole ReArm Europe Initiative, which is focusing on financial part, is to be seen also in a context of our white paper on “Future of European Defence,” where we are planning how we actually will work much more together in this area of defense and security as European Union, ensuring also streamlining of our weapons systems, our interoperability, addressing a number of practical issues, closing our capability gaps, because defense is a new area for European Union. The European Union was not active in area of defense, but now in a context of war raging in European continent again, in a context of current geopolitical developments, it’s clear that EU will and is doing already much more on defense.

JÖRN FLECK: Well, that’s all we have time for, Commissioner. Thank you very much for joining us and covering such a wide range of issues. We wish you every success in your mission here in Washington, DC, and in your—with your mandate and your agenda back home in strengthening Europe and Europe’s global role.

With that, thank you very much to our audience here, to our audience online. Continue to watch the Atlantic Council’s coverage of IMF-World Bank Week at the Atlantic Council on our platforms, and look forward to seeing you for other discussions this week.

Thank you very much, Commissioner.

VALDIS DOMBROVSKIS: Thank you.

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The post EU Commissioner Valdis Dombrovskis: With the rules-based order in question, Europe’s ‘boring democracies’ offer ‘certainty and a safe haven’ appeared first on Atlantic Council.

When Merz takes up his post in the coming weeks, his first big foreign policy decision will be whether to provide Ukraine with long-range Taurus missiles. Current German Chancellor Olaf Scholz has consistently refused to do so, but Merz has indicated that he will be prepared to give the green light for deliveries. This would potentially enable Ukraine to launch precision strikes against targets deep inside Russia.

The Kremlin is clearly anxious to prevent this from happening. Speaking in Moscow on April 17, Russian Foreign Ministry spokesperson Maria Zakharova warned that any decision to supply Ukraine with Taurus missiles would have serious consequences for Berlin, and would be viewed by Russia as direct German involvement in the war.

As the world watches the Russian invasion of Ukraine unfold, UkraineAlert delivers the best Atlantic Council expert insight and analysis on Ukraine twice a week directly to your inbox.

It is no surprise to see Russia engaged in yet more saber-rattling. After all, this approach has served the Kremlin well throughout the full-scale war in Ukraine. From the very first days of Russia’s invasion, Putin has attempted to exploit Western fears of escalation by threatening to retaliate if Kyiv’s partners dare to cross arbitrary red lines set by Moscow limiting the scale of international support for Ukraine.

Russia’s threats have proved remarkably effective. They have helped fuel prolonged debates in Western capitals over each and every aspect of military aid for Ukraine, and have made many of Kyiv’s partners reluctant to provide the kinds of weapons that could lead to a decisive Ukrainian victory. Indeed, while the Russian army has struggled to advance on the battlefield, Putin’s ability to intimidate the West has been arguably his most important achievement of the entire war.

This success is all the more remarkable given how many times Putin’s bluff has been called. He began the full-scale invasion of Ukraine in February 2022 by issuing thinly-veiled threats indicating that any Western attempts to interfere would be met by a nuclear response. When Western leaders ignored this and proceeded to arm Kyiv, Putin did nothing.

In September 2022, as he prepared to illegally annex four partially occupied regions of Ukraine, Putin famously announced his readiness to use nuclear weapons to defend his Ukrainian conquests. “I’m not bluffing,” he declared. When Ukraine completely disregarded this bluster and proceeded to liberate the strategically vital southern city of Kherson days later, Putin did not reach for his nuclear button. On the contrary, he ordered his defeated army to quietly retreat across the Dnipro river.

The Kremlin’s many bloodcurdling threats regarding the sanctity of Russian-occupied Crimea have proved similarly hollow. Since 2022, Moscow has sought to position the occupied Ukrainian peninsula as being beyond the boundaries of the current war. This has not prevented Ukraine from sinking or damaging around one-third of the entire Russian Black Sea Fleet, which has traditionally been based in Crimea. Putin has responded to this very personal humiliation in typically understated fashion by withdrawing the rest of his warships to the safety of Russia.

Remarkably, Putin even failed to react when Ukraine crossed the reddest of all red lines and invaded Russia itself in August 2024. Rather than declaring World War III or attempting to rally his compatriots against the foreign invader, Putin actively sought to downplay the significance of Ukraine’s incursion into Russia’s Kursk region.

Eurasia Center events

Online Event Tue, June 17, 2025 • 1:00 pm ET

Drones, defense, and diplomacy: Negotiations and the battlefield in Ukraine

Conflict Defense Technologies Europe & Eurasia Politics & Diplomacy

The Russian Foreign Ministry’s recent warnings regarding the potential delivery of German missiles to Ukraine are eerily similar to the empty threats made by Putin last September as the US weighed up the possibility of allowing Ukraine to conduct long-range strikes inside Russia using American weapons. At the time, Putin stated that any lifting of restrictions would mean that Russia was “at war” with NATO. However, when the US then duly granted Ukraine permission to begin attacking Russian targets, there was no discernible change in Putin’s stance.

Russia’s saber-rattling over Taurus missiles represents an important early test for Germany’s next leader. As Chancellor, Merz will inherit a major war on Europe’s eastern frontier that is now in its fourth year and could potentially expand further into the heart of the continent. He is also well aware that Europeans can no longer rely on US military support, as they have done for generations.

Germany is the obvious candidate to lead Europe’s rearmament, but Merz must first demonstrate that he has the political will to match his country’s undoubted industrial capabilities. US President Joe Biden consistently sought to avoid escalation with Russia, while his successor Donald Trump seems more interested in building bridges with Vladimir Putin than containing the Kremlin. If Merz wants to lead the Western resistance to Putin’s imperial agenda, he can begin by rejecting Russia’s threats and delivering Taurus missiles to Ukraine.

Peter Dickinson is editor of the Atlantic Council’s UkraineAlert service.

Further reading

UkraineAlert Mar 25, 2025

Ukraine’s growing military strength is an underrated factor in peace talks

By Serhii Kuzan

Any discussion on the future course of the war against Russia and the terms of any peace deal must take into account the fact that Ukraine is a now major military power in its own right, writes Serhii Kuzan.

Conflict Defense Industry

UkraineAlert Mar 20, 2025

Putin is ruthlessly erasing Ukrainian identity in Russian-occupied Ukraine

By Peter Dickinson

Kremlin dictator Vladimir Putin is pursuing policies in Russian-occupied Ukraine that almost certainly meet the definition of ethnic cleansing and may qualify as genocide, writes Peter Dickinson.

Civil Society Conflict

UkraineAlert Apr 10, 2025

A pragmatic peace plan for Ukraine

By Mykola Bielieskov

A pragmatic and sustainable peace is possible in Ukraine if Kyiv’s European partners dramatically increase their own defense spending while significantly strengthening the Ukrainian military, writes Mykola Bielieskov.

European Union NATO

The views expressed in UkraineAlert are solely those of the authors and do not necessarily reflect the views of the Atlantic Council, its staff, or its supporters.

Read more from UkraineAlert

UkraineAlert is a comprehensive online publication that provides regular news and analysis on developments in Ukraine’s politics, economy, civil society, and culture.

The Eurasia Center’s mission is to enhance transatlantic cooperation in promoting stability, democratic values and prosperity in Eurasia, from Eastern Europe and Turkey in the West to the Caucasus, Russia and Central Asia in the East.

Learn more

The post Putin is attempting to intimidate Merz with yet more Russian red lines appeared first on Atlantic Council.

Following his return to the White House in January, US President Donald Trump has initiated a dramatic shift in United States foreign policy that has left many in Europe unsure of the transatlantic alliance and keen to ramp up their own defense capabilities. This geopolitical instability is also encouraging European policymakers to rethink Ukraine’s role in the defense of the continent. With unparalleled combat experience and proven ability to scale up arms production at relatively low cost, Ukraine is in many ways the ideal partner for European countries as they confront the twin challenges of an expansionist Russia and an isolationist US.

As the world watches the Russian invasion of Ukraine unfold, UkraineAlert delivers the best Atlantic Council expert insight and analysis on Ukraine twice a week directly to your inbox.

Ukraine’s defense industry has grown at a remarkably rapid rate since 2022 and is now capable of meeting approximately 40 percent of the country’s military needs. The segment that has attracted the most international attention so far is drone production, with Ukraine widely recognized as a global leader in drone warfare. It requires a careful approach in order to identify the few true gems from among the hundreds of Ukrainian companies currently producing over a million of drones per year, but the potential for groundbreaking advances in drone technologies is obvious.

In order to make the most of this potential, Ukraine must first safeguard its survival as an independent nation. Looking ahead, a key challenge for the Ukrainian authorities will be creating the kind of business climate that can enable the country’s emerging defense industry to prosper in a postwar environment that is likely to feature declining defense budgets.

At present, many Ukrainian defense sector companies are moving production to locations outside Ukraine due to a combination of factors including export bans and a lack of financing options inside the country. The most elegant solution to this problem is to promote more defense sector partnerships with Ukraine’s European allies.

Eurasia Center events

Online Event Tue, June 17, 2025 • 1:00 pm ET

Drones, defense, and diplomacy: Negotiations and the battlefield in Ukraine

Conflict Defense Technologies Europe & Eurasia Politics & Diplomacy

During the first few years of Russia’s full-scale invasion, security cooperation between Ukraine and the country’s partners was generally a one-way street, with weapons and ammunition flowing to Kyiv. More recently, a new model has emerged involving Western countries funding production at Ukrainian defense companies. This approach is efficient and strategically sound. It boosts Ukraine militarily and economically, while also taking advantage of the country’s strengths as a cost-effective and innovative arms producer. However, it lacks long-term appeal for Ukraine’s partners.

Establishing joint ventures between Ukrainian and European defense companies may be a more attractive and sustainable format. This would be a financially attractive way of fueling Europe’s rearmament, and would allow participating companies to build on a wide range of potential research and development synergies. Setting up production facilities in wartime Ukraine would clearly involve an element of risk, but this need not necessarily be a deal breaker if sensible security measures are implemented.

The scope for such joint ventures is huge. Indeed, it would make good sense to invest in specialized business and science parks providing the full range of related services and industry expertise. Initially, jointly produced equipment could be fast-tracked to the Ukrainian Armed Forces. Further down the line, output could also be exported to partner countries and global markets. The growth of joint ventures would significantly improve Ukraine’s defensive potential and enhance the country’s ability to shield Europe from the Russian threat.

An ambitious European rearmament plan is currently taking shape that could significantly accelerate the integration of Ukraine’s defense industry. For this to happen, a number of regulatory and operational issues must first be resolved in Kyiv, Brussels, and various European capitals. While Ukraine can undoubtedly make a meaningful contribution to European security, the continent’s political complexities are particularly pronounced when it comes to defense budgets and procurement policies. It will require a degree of pragmatism to dismantle bureaucratic hurdles and overcome narrow national interests.

As European leaders adapt to radical shifts in the geopolitical landscape, Kyiv is ideally positioned to help the continent address its most pressing security needs. Ukraine’s army is by far the largest in Europe and has unique experience of modern warfare. It is backed by a domestic arms industry that is growing at a phenomenal rate while benefiting from an innovative startup culture that is transforming the twenty-first century battlefield. With sufficient international funding and technological cooperation, the Ukrainian defense sector can serve as a cornerstone of Europe’s security architecture for decades to come.

Pavlo Verkhniatskyi is managing partner of COSA, co-founder of Fincord-Polytech Science Park, and advisor to the Defense Group at the Ukraine Facility Platform.

Further reading

UkraineAlert Mar 25, 2025

Ukraine’s growing military strength is an underrated factor in peace talks

By Serhii Kuzan

Any discussion on the future course of the war against Russia and the terms of any peace deal must take into account the fact that Ukraine is a now major military power in its own right, writes Serhii Kuzan.

Conflict Defense Industry

UkraineAlert Mar 20, 2025

Putin is ruthlessly erasing Ukrainian identity in Russian-occupied Ukraine

By Peter Dickinson

Kremlin dictator Vladimir Putin is pursuing policies in Russian-occupied Ukraine that almost certainly meet the definition of ethnic cleansing and may qualify as genocide, writes Peter Dickinson.

Civil Society Conflict

UkraineAlert Apr 10, 2025

A pragmatic peace plan for Ukraine

By Mykola Bielieskov

A pragmatic and sustainable peace is possible in Ukraine if Kyiv’s European partners dramatically increase their own defense spending while significantly strengthening the Ukrainian military, writes Mykola Bielieskov.

European Union NATO

The views expressed in UkraineAlert are solely those of the authors and do not necessarily reflect the views of the Atlantic Council, its staff, or its supporters.

Read more from UkraineAlert

UkraineAlert is a comprehensive online publication that provides regular news and analysis on developments in Ukraine’s politics, economy, civil society, and culture.

The Eurasia Center’s mission is to enhance transatlantic cooperation in promoting stability, democratic values and prosperity in Eurasia, from Eastern Europe and Turkey in the West to the Caucasus, Russia and Central Asia in the East.

Learn more

The post The Ukrainian army is now Europe’s most credible security guarantee appeared first on Atlantic Council.

Meloni’s Washington visit is the first for a European leader since President Donald Trump’s “Liberation Day” tariffs, and it represents a litmus test for the future of US-European Union (EU) relations in an evolving global landscape.

Headwinds for trade ties

With two-way trade in goods and services with the United States exceeding $126 billion, Italy’s economy is among the most vulnerable in Europe to US trade retrenchment. The United States is now Italy’s top non-EU export market, valued at $76 billion in 2024 and representing 10 percent of the country’s total exports. Italy is also the third-largest EU exporter to the United States after Germany and France. But that interdependence between “unshakable allies” is a double-edged sword.

Much of the recent growth in Italy’s trade surplus with the United States—marked at $43.75 billion, the third-highest among EU member states—stems from sectors now in Washington’s crosshairs: industrial machinery, pharmaceuticals, chemicals, textiles, and food exports such as cheese, pasta, and wine. For instance, industrial exports alone accounted for roughly $27 billion, and Italy sends a quarter of its wine exports to the United States—about $2.16 billion annually. Similarly, a quarter of Italy’s pharmaceutical exports, valued at $14.6 billion, cross the Atlantic.

Confronted with three tariff regimes—25 percent on automobiles, 20 percent on steel and aluminum, and all-encompassing “reciprocal” tariffs at 10 percent (temporarily reduced from 20 percent)—Italy could see its gross domestic product contract by 0.4 to 0.6 percentage points over the next two years, risking the loss of over fifty thousand jobs, according to an early report by Confindustria. For an economy heavily reliant on signature exports and deeply embedded into Germany’s industrial supply—and with limited fiscal leeway for countermeasures—the contraction would not only hit hard at home but also stoke unease in Brussels, where Italy’s poor economic performance linked to its immense public debt are a perennial concern for the European Union’s stability. As a further indication of the mounting pessimism about the country’s ability to absorb such shocks, Italy’s stock market was the hardest hit among Western economies in the days after April 2.

A calculated balancing act

Since taking office in 2023, Meloni has sought to brand herself as a pragmatic conservative—capable of bridging European priorities with her electoral base, all while remaining unexpectedly closely aligned with Washington’s evolving agenda. In a recent Financial Times interview, she dismissed the notion of choosing between the United States and the EU as “childish,” instead advocating for strategic engagement with both. She took a similar approach to recent Ukraine talks, offering cautious support for defense initiatives while avoiding moves that could alienate Washington—a reflection of Meloni’s broader strategy to engage without provoking.

That approach is now evident in her government’s response to US tariffs. While Paris has called for triggering the EU’s anti-coercion mechanism, Rome has prioritized dialogue. Foreign Minister Antonio Tajani underscored the “existential” urgency to avoid “a transatlantic trade war that would destroy our companies.” While there is logic in this approach, it risks weakening Italy’s ability to adapt to a fragmenting global trading system. While others begin exploring what an EU with a less involved United States might look like, Italy continues to advocate for a slower approach, one that seemingly does not yet accept that these changes are here to stay.

Advancing Italy by elevating Europe

Meloni’s visit is not just about Italy—it’s about Europe. As the first EU leader to travel to Washington since April 2, she has a unique opportunity to serve as a conduit between a strained EU and a transactional US administration. But that role is fraught with risk. A purely Italy-centric approach would play into Trump’s preference for country-by-country dealmaking, weakening the continent’s leverage and exacerbating its divisions.

Meloni should then frame European unity not as a threat to Trump’s agenda, but as a force multiplier for the transatlantic partnership, or the “West,” one of Meloni’s favorite terms. A “zero-for-zero” agreement on industrial tariffs could be a symbol of renewed cooperation, or at least a new baseline for broader adjustments, and drive home how much easier and efficient it is to deal with one bloc at the negotiation table, instead of twenty-seven individual countries.

Arriving in Washington shortly after EU Trade Commissioner Maros Šefčovič, Meloni has the chance to double down on Europe’s commitment to reducing intra-EU non-trade barriers, so the single market can “level the playing field.” This includes unleashing further investment opportunities for US export-driven sectors such as energy, tech, and defense, while defusing escalation over irritants concerning value added tax or digital service taxes. It will be essential to frame Europe as a trusted alternative to dependence on China, thereby aligning with Trump’s priority of repositioning industrial and economic policies to tackle those that have exploited the global trading system and address nonmarket practices, overcapacities, and intellectual property theft.

This meeting is not just about Italian exports. If tariffs escalate, Europe may retaliate, imperiling cooperation on broader issues and leaving Italy worse off. The transatlantic relationship has weathered trade spats before, but today’s stakes are higher. Ironically for a leader who rose to prominence in nationalist and Euroskeptic circles, a strong, united, EU-wide message may now be Meloni’s best chance at defending Italian interests. Meloni has a complex task ahead of her, presenting to Trump a unified, nonthreatening EU open to dialogue—but one with the tools to counter a prolonged tariff regime. Failure to achieve this balance risks backfiring, angering all of her constituencies on both sides of the Atlantic.

A strategic crossroads

The Italian leader has a history of defying expectations, especially in her foreign policy decisions. For example, upon taking office, she continued Italy’s support for Ukraine and did not renew Italy’s membership in China’s Belt and Road Initiative. Yet, this moment calls for more than tactical diplomacy. Meloni must resist the temptation of short-term wins and instead articulate a long-term vision of Italy—and Europe—as indispensable partners even in a reimagined global playing field. It would work in Italy’s favor, as well as that of the United States and the entire EU.

Rome has long punched below its weight on the international stage. This visit offers Meloni the chance to change that, and she has long wanted this moment to prove her leadership and leverage her established political capital. But she will succeed only if she steps onto the stage not just as Italy’s leader, but as a credible steward of transatlantic unity.

Nicholas O’Connell is a nonresident fellow at the Atlantic Council’s Europe Center.  

Jacopo Pastorelli is a program assistant at the Europe Center.

Correction: This article was updated on April 15, 2025, to reflect the fact that one quarter of Italy’s wine exports go to the United States. A previous version incorrectly stated that one quarter of Italy’s cheese exports go to the United States.  

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In this episode of #BalkansDebrief, Ilva Tare, Resident Senior Fellow at the Atlantic Council’s Europe Center, explores Bosnia and Herzegovina’s fragile political landscape, as the country nears the 30th anniversary of the Dayton Agreement. With separatist pressures rising and youth fleeing the country, is silent abandonment more dangerous than loud secession?

Joined by Adnan Ćerimagić, Senior Analyst for the Western Balkans at the European Stability Initiative based in Berlin, the conversation delves into:

• The implications of Milorad Dodik’s conviction and continued political activity;

• The EU’s and NATO’s stances on Bosnia’s sovereignty and why EUFOR will not get involved in a potential arrest of Dodik;

• Legal actions against Republika Srpska leadership and questions over the constitutional changes and international enforcement; and

• The future of the Office of the High Representative and the so-called Bonn Powers in Bosnia.

With tensions high and regional implications looming, this episode asks the urgent question: What will it take for Europe—and the West writ large—to finally draw a line in the sand?

#BalkansDebrief is an online interview series presented by the Atlantic Council’s Europe Center and hosted by journalist Ilva Tare. The program offers a fresh look at the Western Balkans and examines the region’s people, culture, challenges, and opportunities.

Watch #BalkansDebrief on YouTube and listen to it as a Podcast.

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This failure to achieve a breakthrough is a significant setback for US President Donald Trump, who famously claimed during the 2024 election campaign that he would end the war in twenty-four hours. Since returning to the White House in January, Trump’s approach to peace talks has been based on the need for a compromise settlement. He has sought to persuade Moscow and Kyiv by pointing to the devastating cost of continued hostilities, while arguing that neither side can realistically hope to achieve their goals via military means.

So far, Putin remains unconvinced. This is in part due to Trump’s own actions. The US leader’s foreign policy turn away from Europe, together with his frequent Kremlin-friendly statements and hostile treatment of Ukrainian President Volodymyr Zelenskyy during their notorious Oval Office meeting, have encouraged Putin to believe that he can outlast the West in Ukraine.

With the Western coalition in support of Ukraine looking increasingly fragile, Putin is now more than confident than ever of succeeding in his historic mission to extinguish Ukrainian statehood. This is reflected in his current negotiating position, which includes a series of maximalist demands that would deny postwar Ukraine any meaningful sovereignty or security, leaving the country at Russia’s mercy.

Needless to say, Putin’s insistence on an internationally isolated, disarmed, and defenseless Ukraine is a non-starter for Kyiv. Ukrainians have learned the bitter lessons from previous international agreements with Russia such as the 1994 Budapest Memorandum, which did not deter Moscow from attacking Ukraine in 2014 and failed to prevent the full-scale invasion of 2022. Understandably, Ukrainian officials are now emphatic that security guarantees for their country must be at the heart of any future peace deal.

As the world watches the Russian invasion of Ukraine unfold, UkraineAlert delivers the best Atlantic Council expert insight and analysis on Ukraine twice a week directly to your inbox.

With Putin unwilling to make concessions and seemingly determined to fight on, the United States will soon be forced to reassess its approach to ending the Russia-Ukraine War. In order to deliver on his promise of peace, Trump must seek to change Russia’s strategic calculus and convince the Kremlin that its present goals in Ukraine are unattainable.

Any settlement seems certain to involve Russia’s continued occupation of the almost 20 percent of Ukraine that is currently under Kremlin control. This has led some commentators to draw parallels with the partition of the Korean peninsula following the Korean War in the early 1950s. In order for such comparisons to be relevant, the front lines of the current war in Ukraine must be stabilized to the extent that neither side has any realistic chance of achieving a decisive military victory. That is not yet the case.

If a ceasefire proves possible, the next challenge will be moving toward a more permanent peace. Trump has made it clear that he does not support Ukrainian membership of NATO and will not deploy US troops to Ukraine in order to enforce any peace deal. Instead, responsibility for safeguarding Ukraine’s security will fall primarily on the country’s own armed forces and Kyiv’s European partners. This cannot be compared to the kind of watertight security guarantees that many Ukrainians had hoped for, but it is not entirely unrealistic.

The Ukrainian military has evolved dramatically since 2022 and already represents a formidable obstacle to Putin’s imperial ambitions. Crucially, Ukraine has emerged over the past three years as one of the world leaders in drone warfare. In 2024, Ukraine became the first country to establish a separate branch of its military dedicated to drones. Hundreds of Ukrainian companies are now producing millions of drones per year, and are using wartime conditions to test their products on the battlefield. This is leading to new innovations on a virtually daily basis. Ukraine’s drone revolution is already transforming the way wars are waged and can serve as a key pillar of the country’s future security.

The broader Ukrainian defense industry is undergoing rapid expansion but needs additional investment in order to make the most of excess production capacity. With this in mind, Kyiv is calling on the country’s partners to place orders with Ukrainian defense companies and support joint ventures. If sufficient international investment is forthcoming, Ukraine’s defense sector can become a key component in Europe’s future security architecture. This would greatly improve the country’s ability to defend itself and help contain the threat posed by an expansionist Russia.

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With continued United States security support no longer assured, European countries are now embarking on an unprecedented rearmament drive. This will have huge implications for any peace settlement in Ukraine. Indeed, Ukraine’s survival may well hinge on Europe’s ability to match the current rhetoric about the need to rearm with concrete steps to boost weapons production.

The EU is preparing to unveil a major package of measures to support defense sector spending in the coming weeks, while individual countries including Germany are set to radically increase national defense budgets. A significant portion of Europe’s expanding arms industry output will likely go to Ukraine. After all, European leaders are acutely aware that if Ukrainian resistance should falter, they will be next in line.

Some European countries are also expected to play a more direct role in enforcing a peace deal in Ukraine. A “coalition of the willing” led by Britain and France is already taking shape, with practical discussions between military chiefs over possible troop deployments now well underway. However, it is still far from clear whether European troops in postwar Ukraine would have a mandate to engage in combat operations, leading to doubts over their effectiveness as a deterrent force.

While details remain vague, Ukrainian commanders and their European partners are currently discussing a military presence “on land, in the sky, and at sea.” The most practical contribution may be in the air, with coalition forces potentially capable of supplying fighter jet squadrons and air defense systems. This could allow them to close the skies over large parts of Ukraine, minimizing the threat posed by Russian missiles and drones without risking direct clashes between coalition and Russian forces.

Officials in Kyiv and across Europe are also still counting on some degree of continued US support. First and foremost, this means leading the diplomatic push for a ceasefire and the start of serious peace talks.

While it is thought to be highly unlikely that the Trump administration will be willing maintain earlier levels of military aid, the US can still make a critical contribution to Ukraine’s security in terms of intelligence sharing, sanctions enforcement, and the supply of specific munitions such as missiles and air defense interceptors. In a bid to win Trump’s approval, Ukraine has recently expressed a willingness to pay for future US weapons packages, possibly with support from European partners.

After two months of false dawns and failed ceasefires, it is evident that the road toward a sustainable settlement in Ukraine remains long and uncertain. The radical recent shift in US foreign policy under Trump has transformed perceptions of what a possible peace deal in Ukraine could look like, but a plausible picture is now slowly beginning to emerge.

Naturally, the first step is to stop the fighting. If US-led talks do lead to a ceasefire, preparations are in place that should allow Ukraine and the country’s European partners to make any temporary pause in hostilities more permanent. Participating European countries will be expected to close Ukrainian skies and provide a reassurance force of troops on the ground, creating the conditions for a Ukrainian national recovery. In parallel, they must also significantly increase the flow of military aid to Kyiv and strengthen Ukraine’s domestic defense industry.

Ultimately, Ukraine’s main security guarantee will remain the Ukrainian Armed Forces. The country’s military has already proven itself during the past three years of full-scale war. If Kyiv’s European partners can now rise to the challenge and provide sufficient support, Ukraine looks destined to continue guarding Europe’s eastern frontier and defending against the Russian threat for many years to come.

Mykola Bielieskov is a research fellow at the National Institute for Strategic Studies and a senior analyst at Ukrainian NGO “Come Back Alive.” The views expressed in this article are the author’s personal position and do not reflect the opinions or views of NISS or Come Back Alive.

Further reading

UkraineAlert Mar 25, 2025

Ukraine’s growing military strength is an underrated factor in peace talks

By Serhii Kuzan

Any discussion on the future course of the war against Russia and the terms of any peace deal must take into account the fact that Ukraine is a now major military power in its own right, writes Serhii Kuzan.

Conflict Defense Industry

UkraineAlert Mar 20, 2025

Putin is ruthlessly erasing Ukrainian identity in Russian-occupied Ukraine

By Peter Dickinson

Kremlin dictator Vladimir Putin is pursuing policies in Russian-occupied Ukraine that almost certainly meet the definition of ethnic cleansing and may qualify as genocide, writes Peter Dickinson.

Civil Society Conflict

UkraineAlert Mar 26, 2025

If Trump wants peace in Ukraine, he must increase the pressure on Putin

By Doug Klain

Weeks after Ukraine backed a US proposal for an unconditional ceasefire, Russia continues to stall and push for further concessions. If Trump wants to secure peace, he must increase the pressure on Putin, writes Doug Klain.

Conflict Defense Technologies

The views expressed in UkraineAlert are solely those of the authors and do not necessarily reflect the views of the Atlantic Council, its staff, or its supporters.

Read more from UkraineAlert

UkraineAlert is a comprehensive online publication that provides regular news and analysis on developments in Ukraine’s politics, economy, civil society, and culture.

The Eurasia Center’s mission is to enhance transatlantic cooperation in promoting stability, democratic values and prosperity in Eurasia, from Eastern Europe and Turkey in the West to the Caucasus, Russia and Central Asia in the East.

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The post A pragmatic peace plan for Ukraine appeared first on Atlantic Council.

He’s hitting the brakes and the gas. On Wednesday, US President Donald Trump announced that he would suspend until July many of the “liberation day” import tariffs that had gone into effect hours earlier, but also raise the tariff on China to a whopping 145 percent—while keeping the 10 percent global tariff in place. The news caused markets to jolt upward, after having lost trillions of dollars in value in the past week, but they plunged again on Thursday as the full details became clear. Below our experts dig into what these changes mean for the global economy—and American consumers.

• Josh Lipsky (@joshualipsky): Senior director of the Atlantic Council’s GeoEconomics Center and former adviser to the International Monetary Fund
• Barbara C. Matthews: Nonresident senior fellow at the GeoEconomics Center and former US Treasury attaché to the European Union
• L. Daniel Mullaney: Nonresident senior fellow with the Europe Center and GeoEconomics Center, and former assistant US trade representative

Bond bust

• While the US stock market has shed trillions of dollars in value since Trump announced the “reciprocal” tariffs on April 2, stocks did not move the US president to react. Instead, Josh tells us, “Trump saw the massive disruptions in the bond market and decided risking the entire US—and global—financial system was too high a price to pay for the reciprocal tariffs.” 
• Rising bond yields and a falling US dollar were too alarming for Trump to ignore. “The president prioritized the reserve currency over a trade war waged using a particularly flawed calculation mechanism and rhetoric that inflamed anti-US sentiment even among the United States’ longest and most trusted allies,” says Barbara.
• While allies will feel at least temporary relief, it’s unlikely American consumers will, Josh concludes. The GeoEconomics Center team calculates that the overall tariff rate for the United States is nearly as high as it was before Trump’s Wednesday reversal because of the higher levy on China. “Trump launched a global trade war and then decided—at least for now—to zero in on China,” Josh says. “But don’t expect the rest of the world to rush to help the US given the whipsaw of the past week and tariffs they are facing. Remember: if Chinese goods can’t come into the US market, they’ll quickly flood other economies.”

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The next ninety

• “Expect US-China tensions to escalate before they de-escalate,” Josh predicts. “China has been preparing for this for six years. And while their economy is already struggling, they can handle the loss of revenue from these tariffs through a range of fiscal and currency maneuvers.”
• Meanwhile, other nations will likely feel pressure to choose between the United States and China, says Barbara. With some fifty governments apparently seeking to open bilateral negotiations with the United States, the next ninety days will launch the “technical, asymmetric negotiation phase” of the tariff war.
• Barbara is paying close attention to countries with upcoming elections, such as Australia and Canada: “Populist politics will incentivize those running for elective office to make promises regarding trade retaliation, but governing after the election may require immediate compromises.”
• We will also see a flurry of attempted dealmaking at the IMF-World Bank Spring Meetings in Washington in ten days. “Expect economies like Japan and India to move to the front of the line while the European Union likely will have to wait, given the president’s long-standing complaints about the single market” Josh tells us.

Post-pause predictions

• So what’s Brussels’s next move? Barbara argues that “if the EU were to take a stronger stance regarding China” in the coming months, it could become a model for many countries in this attempted global trade rebalancing. “The most optimistic scenario here would see the EU emerge publicly as an equal partner to the United States in the geoeconomic battle against China.”
• But it’s unclear where that US-China battle is heading. Josh interprets Wednesday’s market surge as investor optimism about a deal between the world’s two largest economies, given Trump’s willingness to back off in this instance. “But just like the original market bet that Trump would only be in negotiating mode, that hope may be misplaced.”
• Josh also points to the newly created massive tariff imbalance in Asia raising the “trans-shipment risk” that cropped up during Trump’s first term, when Chinese goods were rerouted to the United States via lower-tariff countries. Vietnam and Malaysia are well positioned to benefit this time, he adds.
• More advanced economies in the Pacific region such as Australia and India will also experience increased trade pressures from expected forthcoming US trade measures on pharmaceuticals. Barbara observes that “trade diversification solutions that prioritize Europe at the expense of China could be viewed as a positive outcome by the White House if they are accompanied by concessions to the United States regarding non tariff barriers.”
• Amid a “head-spinning” week, Dan advises to pay attention to the Trump administration’s underlying consistency: “Tariffs are primarily a tool to achieve specific objectives, among them to counter perceived imbalances in the trading system,” says Dan, and the Trump administration has laid now out those objectives in detail.
• Since tariffs can often be a “blunt tool that inflicts self harm,” Dan says, it would make sense to seek “alternate arrangements in lieu of tariffs that achieve the objectives, without the adverse consequences.” What’s needed now, he argues, are “calm discussions over trade and investment packages and initiatives that address the underlying concerns.”

The post What to expect as Trump’s trade war zeroes in on China appeared first on Atlantic Council.

This latest excuse is a variation of the tired old trope about “Ukrainian Nazis” that has been used exhaustively by the Kremlin since 2014 to legitimize Russia’s escalating aggression against Ukraine. For more than a decade, Putin’s propagandists have been depicting Ukraine as a hotbed of far-right extremism as part of a disinformation campaign designed to dehumanize ordinary Ukrainians and prepare the ground for the wholesale erasure of Ukrainian national identity. It therefore comes as no surprise that Moscow is now citing this phantom fascist threat in order to rebuff calls for a ceasefire.

In reality, Ukrainian public support for far-right political parties is among the lowest in Europe. After years of failure at the ballot box, Ukraine’s nationalist parties formed a coalition ahead of the country’s last prewar parliamentary elections in 2019, but could only collectively muster 2.16 percent of the vote. That same year, Ukrainians also elected Russian-speaking Jewish comedian Volodymyr Zelenskyy as the country’s president. Zelenskyy’s Jewish heritage has helped highlight the absurdity of Russia’s “Nazi” narrative, forcing Kremlin officials to engage in increasingly ridiculous mental gymnastics. Most notoriously, during a 2022 interview with Italian television, Russian Foreign Minister Sergei Lavrov sought to defend Moscow’s baseless claims by declaring that Adolf Hitler “also had Jewish blood.”

As the world watches the Russian invasion of Ukraine unfold, UkraineAlert delivers the best Atlantic Council expert insight and analysis on Ukraine twice a week directly to your inbox.

In addition to invoking imaginary Ukrainian Nazis, the Kremlin has also sought to stall negotiations over a possible ceasefire by questioning the legitimacy of the Ukrainian government. Ukraine was scheduled to hold presidential and parliamentary elections in 2024, but the Ukrainian Constitution stipulates that elections cannot take place during martial law. Despite this constitutional barrier and numerous logistical obstacles to wartime elections in Ukraine, officials in Moscow have repeatedly called for a new national ballot while arguing that President Zelenskyy lacks the authority to conclude a peace deal.

Most recently, Putin went one step further by suggesting that Ukraine should be placed under some kind of external administration, with United Nations officials overseeing elections. This obvious attempt to derail peace talks proved too much even for US President Donald Trump, who reportedly responded by stating that he was “pissed off” with Putin. Trump then threatened to impose secondary tariffs on Russian oil exports if the Kremlin dictator refuses to make a deal ending the war in Ukraine.

Putin’s inflexible negotiating position further underlines his intention to continue the invasion of Ukraine. Kyiv has made a number of major concessions in recent months, including expressing its readiness to accept the temporary occupation of Ukrainian regions currently under Kremlin control. Rather than offering compromises of his own, Putin has insisted on the surrender of additional Ukrainian land that the invading Russian army has so far been unable to seize. He also demands an end to all foreign aid and the dramatic reduction of the Ukrainian army to a mere skeleton force. This would leave Ukraine partitioned, isolated, disarmed, and defenseless against further Russian aggression. No Ukrainian government could expect to remain in power for long if they accepted Putin’s maximalist terms. Indeed, it is unlikely that Ukraine itself would survive such a suicidal settlement.

Eurasia Center events

Online Event Tue, June 17, 2025 • 1:00 pm ET

Drones, defense, and diplomacy: Negotiations and the battlefield in Ukraine

Conflict Defense Technologies Europe & Eurasia Politics & Diplomacy

By now, it should be abundantly clear that Putin does not want peace. For more than two months, the Trump administration has tried to entice Moscow by pressuring Ukraine into concessions while offering the prospect of lucrative future cooperation between Russia and the United States, only to be met with endless excuses and stalling tactics. Although Putin remains reluctant to openly reject Trump’s peace overtures, his goal evidently remains the complete subjugation of Ukraine and the effective end of Ukrainian statehood.

Many Western leaders are now publicly criticizing Putin’s refusal to engage in meaningful peace talks. “It is urgent that Russia stops with the pretenses and stalling tactics and accepts an unconditional ceasefire,” French President Emmanuel Macron commented recently. The Trump White House is also apparently now finally running out of patience. While US officials have been keen to talk up progress in talks with their Russian counterparts, Secretary of State Marco Rubio stated last week that Trump was not “going to fall into the trap of endless negotiations” with Moscow.

Trump’s initial attempt to broker a Ukraine peace deal by offering Putin an attractive off-ramp has failed. He must now decide whether he is prepared to employ sticks as well as carrots. At present, Putin has little interest in limited territorial concessions and remains committed to the destruction of Ukraine as a state and as a nation. Crucially, he has been encouraged by Trump’s reluctance to maintain US support for the Ukrainian war effort. This has strengthened the Russian ruler’s conviction that he can ultimately outlast the West in Ukraine.

In order to force a change of mood in Moscow, the United States must increase the costs of the invasion while undermining Russian hopes of military victory. This can be achieved by tougher sanctions measures targeting the Russian energy sector along with increased military aid that will allow the Ukrainian army to regain the battlefield initiative. Anything less will be interpreted by the Kremlin as a tacit green light to continue the invasion. If Trump is serious about persuading Putin to seek peace, he must first convince him that the alternative is defeat.

Peter Dickinson is editor of the Atlantic Council’s UkraineAlert service.

Further reading

UkraineAlert Mar 25, 2025

Ukraine’s growing military strength is an underrated factor in peace talks

By Serhii Kuzan

Any discussion on the future course of the war against Russia and the terms of any peace deal must take into account the fact that Ukraine is a now major military power in its own right, writes Serhii Kuzan.

Conflict Defense Industry

UkraineAlert Mar 26, 2025

If Trump wants peace in Ukraine, he must increase the pressure on Putin

By Doug Klain

Weeks after Ukraine backed a US proposal for an unconditional ceasefire, Russia continues to stall and push for further concessions. If Trump wants to secure peace, he must increase the pressure on Putin, writes Doug Klain.

Conflict Defense Technologies

UkraineAlert Mar 20, 2025

Putin is ruthlessly erasing Ukrainian identity in Russian-occupied Ukraine

By Peter Dickinson

Kremlin dictator Vladimir Putin is pursuing policies in Russian-occupied Ukraine that almost certainly meet the definition of ethnic cleansing and may qualify as genocide, writes Peter Dickinson.

Civil Society Conflict

The views expressed in UkraineAlert are solely those of the authors and do not necessarily reflect the views of the Atlantic Council, its staff, or its supporters.

Read more from UkraineAlert

UkraineAlert is a comprehensive online publication that provides regular news and analysis on developments in Ukraine’s politics, economy, civil society, and culture.

The Eurasia Center’s mission is to enhance transatlantic cooperation in promoting stability, democratic values and prosperity in Eurasia, from Eastern Europe and Turkey in the West to the Caucasus, Russia and Central Asia in the East.

Learn more

The post Russia’s endless ceasefire excuses are proof that Putin does not want peace appeared first on Atlantic Council.

There is a model to deal with economic and financial crises over the past two decades, and it requires activating the Group of Twenty (G20) and relying on the US Federal Reserve to provide liquidity to a financial system under stress. Neither option will be available in the current challenge.

First, the G20. The G20 was created by the United States and Canada in the late 1990s to bring rising economic powers such as China into the decision-making process and prevent another wave of debt crises like the Mexican peso crisis of 1994 and the Asian financial crisis of 1997. In 2008, as Lehman Brothers collapsed and financial markets around the world began to panic, then President George W. Bush called for an emergency summit of G20 leaders—the first time the heads of state and government from the world’s largest economies had convened.

What followed was one of the great successes of international economic coordination in the twenty-first century—the so-called London Moment, when the G20 agreed to inject five trillion dollars to stabilize the global economy. With this joint coordination, the leaders sent a powerful signal to the rest of the world that they would not let a recession turn into a worldwide depression.

Nearly twelve years later, at the outbreak of the COVID-19 pandemic, the same group of leaders convened to work on debt relief, fiscal stimulus, and—critically—access to vaccines.

Now we face the third major economic shock of the twenty-first century. But this one is fully man-made by one specific policy decision. It could, of course, be undone by a reversal of that decision, which if it kicks in at midnight tonight will send US tariff rates from 2.5 percent last year to over 20 percent this year—the highest in a hundred years. But as I have said since November, Donald Trump is serious about tariffs, they are not only a negotiating tool, and that means many of them are likely here to stay.

There will be no “London Moment” this time around. The United States can’t call for a coordinated response to a trade war it initiated—one that is predicated on the idea that the rest of the world is taking advantage of the United States. Some countries actually have an incentive to see the situation in financial markets worsen, in the hope that it puts pressure on the Trump administration to relent. Others may want to make bilateral deals, but a coordinated effort between China, Europe, Russia, and Brazil is off the table. This will make for an especially tense G20 finance ministers meeting in ten days, when Treasury Secretary Scott Bessent meets his colleagues for the first time at the International Monetary Fund-World Bank Spring Meetings in Washington, DC. Bessent can expect to face pointed questions from his counterparts on why the United States is reverting to the very protectionism that led to the creation of the Bretton Woods system eighty years ago.

The second—and more powerful—actor in the global economy has been the US Federal Reserve. In the global financial crisis and during the COVID-19 pandemic, the Federal Reserve slashed rates to zero, injected trillions into the US economy through quantitative easing, and issued swap lines around the world to help countries access dollars when they most needed it.

This time around, Chair Jerome Powell has signaled to the White House the so-called “Powell Put” is a long way off. On Friday, Trump posted on social media, “This would be a PERFECT time for Fed Chairman Jerome Powell to cut Interest Rates.” This makes sense if you believe tariffs will indeed cause higher prices and put economic stress on millions of US citizens. But Powell said the same day that “we don’t need to be in a hurry.” He wants to see how the crisis unfolds. In a different situation, if the markets had fallen by 20 percent because of, say, a virus or a terrorist attack on the United States, then the Fed would likely have reacted very differently.

Powell, however, understands that a trade war built on high US tariffs could prove to be stagflationary—the dreaded combination of higher prices with slower growth. A stagflationary environment isn’t necessarily the time for pre-emptive rate cuts since lower rates might further fuel inflation. Powell also wants to send the signal that this policy could be undone by the White House—or, of course, by Congress—and show his colleagues in Washington that they can’t rely on the Fed to fix a problem of their own making.

The situation is going to become incredibly complicated for the Fed in the weeks ahead. Economic conditions in the United States could deteriorate quickly. Other central banks, including the European Central Bank, the Bank of England, and the Bank of Canada, may start cutting rates. That’s because they are primarily worried about weaker economic growth, not inflation from higher import costs.

This will leave the US Federal Reserve with higher rates than the rest of the world—and Trump will likely grow increasingly frustrated with a Fed chair whom he has clashed with over and over again since he appointed Powell back in 2017. Trump is likely to feel that the Fed is undercutting him in his trade war while other central banks are supporting their political leadership. The truth will be more nuanced.

Don’t expect the pressure to get to Powell.

Powell has exactly one year left on his term, and he appears committed to leave a legacy as a Federal Reserve chair who fiercely protected the institution’s dual mandate and independence. So, while there may be an economic pain point where the Fed has to step in—it’s further away than both Trump and the markets are hoping.

In the past week analysts have been trying, understandably, to compare the market reaction to what happened during the global financial crisis and the COVID-19 pandemic. But the reality is that these are both poor barometers for the situation. In both previous economic crises this century, the toolkit of international coordination and central-bank firepower were deployed to stabilize the situation. This time, the same tools won’t fix what’s being broken. 

Josh Lipsky is the senior director of the Atlantic Council’s GeoEconomics Center and a former adviser at the International Monetary Fund. 

The post No one is coming to save the global economy appeared first on Atlantic Council.

As part of the EU’s “open strategic autonomy” strategy, the strongest card that the bloc has in its hand is the “anti-coercion instrument.” Confronted with Washington’s array of tariffs across three fronts—25 percent on automotive and car parts, 25 percent on steel and aluminum, and 20 percent “reciprocal” tariffs across the board—Brussels may soon be ready to play its newest ace. 

What is the anti-coercion instrument?

The anti-coercion instrument was originally conceived as a deterrent against efforts by third countries to influence policy using economic leverage. It was in part inspired by Washington’s use of Section 301 of the 1974 US Trade Act to apply trade-restrictive or interventionist measures to defend US commercial interests. Lithuania’s experience of a de facto Chinese embargo campaign in 2021 turbocharged the debate in Europe, underscoring the urgency to equip the EU’s existing toolbox with a more flexible and World Trade Organization–compatible defense instrument.

Entered into force in late 2023, the framework is noteworthy for at least two reasons: 

1. It allows the European Commission to impose a wide range of retaliatory measures beyond higher import duties. This includes applying export controls, restricting intellectual property rights, curtailing foreign investments, banning services, or applying duties to digital platforms. The tool could also be used to exclude access to the European single market and public-procurement tenders. 

2. Using the anti-coercion instrument requires “only” a qualified majority: that is, 55 percent of the EU’s twenty-seven member states representing at least 65 percent of the union’s population. No individual member state can use the instrument, but a member state, a company, or the European Commission can submit a request to initiate the examination process. 

The tool has not been used before, and its powers are broad enough that it could take a number of different forms if implemented, some more severe, others less so.

If, for example, the EU deployed a forceful use of the instrument against the United States, then it could restrict US banks’ access to the EU’s massive public procurement market, which is estimated to be worth over two trillion dollars per year (a plan floated earlier this year in Brussels). It could also restrict US tech giants’ access to the lucrative European market. Either or both of these steps could lead to an unprecedented escalation of the trade war that Trump started.

What needs to happen before the EU deploys the instrument?

The anti-coercion instrument is meant to be a consultation process, expected to last between three and six months, rather than a single measure. The European Commission must first examine the alleged economic coercion. If it concludes that a third country is indeed exercising economic coercion as defined by the act, it must first attempt to conduct dialogue with the third country to reach a negotiated solution. Only if this fails can the EU move to impose economic response measures under the anti-coercion instrument. 

Will the EU use the anti-coercion instrument against the US?

The anti-coercion instrument has not yet been used, but European Commission President Ursula von der Leyen did appear to leave the door open on April 1, just ahead of Trump’s tariff announcement. “Europe holds a lot of cards. From trade to technology to the size of our market. But this strength is also built on our readiness to take firm countermeasures. All instruments are on the table,” von der Leyen said.

So far, the EU has responded to Trump’s steel and aluminum tariffs by announcing its first round of own duties on €26 billion in US imports into the EU effective April 15. Against the backdrop of the new US tariffs impacting €380 billion in European exports and projections estimating a 0.3 percent contraction of Europe’s gross domestic product over the next two years, the instrument would allow Brussels to ratchet up the pressure on Washington proportionally. Faced with the prospects of the anti-coercion instrument restricting market access to US tech giants and financial services companies, freezing some US investment in Europe, or suspending some US intellectual property right protections, the Trump administration may feel pressure to strike a deal with Brussels. 

There are clear risks, however. Most prominent is that the use of the anti-coercion instrument might invite further retaliatory measures from the United States, which could in turn either increase further duties on EU imports or even escalate and target European firms’ reliance on US cloud and digital infrastructures for their operations. 

For now, some EU leaders remain hesitant to unleash the anti-coercion instrument, preferring to use other tools, such as retaliatory, sectoral counter-tariffs on some exports, such as bourbon from Kentucky, that hit Republican-leaning states especially hard. With these counter-tariffs, Brussels is trying to show its firmness while preventing further escalation and a tit-for-tat transatlantic trade war. However, if the Trump administration doubles down and takes additional measures, in particular retaliating against EU regulations, such as the Digital Markets Act, the Digital Services Act, or member states’ digital service taxes, then more European leaders may view the tool as a necessary step to pressure Washington.

Erik Brattberg is a nonresident senior fellow at the Atlantic Council’s Europe Center.

Jacopo Pastorelli is a program assistant at the Atlantic Council’s Europe Center. 

Benjamin Schwab is a young global professional at the Atlantic Council’s Europe Center.

The post The EU could respond to Trump’s tariffs with a new ‘anti-coercion instrument.’ Here’s what to know. appeared first on Atlantic Council.

The “rally ‘round the flag” effect—a surge in public support for a government in times of international crisis—is a well-documented phenomenon in politics. In an increasingly unpredictable world, Europeans are now rallying around the EU flag in Brussels. This growing confidence in the EU as a political and economic actor matters—not just for Europeans, but also for Americans, who should recognize that Europeans have started to prepare for a world in which the United States is no longer a central part of the continent’s security.

The message from Europeans is clear: They still want allies. But at the same time, they are getting ready to stand on their own feet in an uncertain world.

Sweden offers a striking example. Historically, Sweden is a transatlantic-leaning country with deep cultural and political ties to the United States. And it has often maintained a cautious stance toward EU integration. Yet in this latest poll, 79 percent of Swedes say that EU membership has been good for the country. At the same time, a separate survey conducted the same month by Sweden’s largest newspaper, Dagens Nyheter, shows a dramatic shift in Swedish public opinion toward the United States. Only 10 percent of Swedes hold a positive view of the United States, down from 23 percent just two years ago. The shift correlates with US President Donald Trump’s return to office in January. A full 86 percent of Swedes express a negative opinion of him. This dislike is not just personal; Trump is seen as a symbol of a declining US commitment to democratic norms and multilateralism, which many Swedes value highly. A striking two-thirds of Swedes surveyed in the Dagens Nyheter poll say that the United States has lost its role as leader of the free world. This sentiment had already taken root before Trump’s April 2 announcement of major global tariffs, which included a 20 percent tariff on the EU.

Across Europe, 66 percent of respondents in the Eurobarometer poll say that the EU should play a stronger role in protecting citizens from global crises and security threats. Three out of four respondents want the EU to be equipped with more tools, financial or institutional, to tackle these challenges. That said, this surge in pro-EU sentiment is not uniform. In countries led by more Trump-friendly or Euroskeptic governments, such as Hungary and Slovakia, support for deeper EU integration remains more tempered. Yet even in these contexts, the broader shift is visible. In Hungary, where Prime Minister Viktor Orbán has long been critical of Brussels, an April 2024 Eurobarometer survey found that more than two thirds of Hungarians view EU membership as beneficial, marking an increase from previous years. In Slovakia, public frustration with Prime Minister Robert Fico’s pro-Russian stance has sparked mass demonstrations in the past few months, with tens of thousands protesting under the slogan “Slovakia is Europe” expressing their support for democratic values and closer ties to the EU and NATO. These developments suggest that even where political leadership leans Euroskeptic, citizens are increasingly looking to the EU to safeguard their security and sovereignty.

The EU has responded in unprecedented ways to the call from its citizens to step up on defense and security. In January, European Commissioner for Defense and Space Andrius Kubilius called for a “Big Bang” in European defense spending and policy changes to face the Russian threat. This was an uphill task, with frugal nations such as Sweden, Germany, and the Netherlands opposing initiatives to take out loans and raise debt ceilings, while other nations refused to make commitments to increase defense spending.

But with the push provided by the Trump administration’s clear signaling in recent weeks that Europe will become less of a US security priority, Kubilius got his wish. The ReArm Europe/Readiness 2030 program, presented by the European Commission on March 18, outlines a new era in European security. It should not be understood merely as a short-term reaction to the Trump administration, but a necessary response to a changing global order—one in which the United States pivots to the Indo-Pacific while Europeans can no longer fully rely on US protection to counter the existential threat posed by Russia. As Kubilius put it in a speech on March 20: “450 million Europeans should not ask 340 million Americans to defend us from 140 million Russians who can’t even defeat 38 million Ukrainians.”

The ReArm Europe/Readiness 2030 program marks a historic shift in EU defense policy, mobilizing up to €800 billion through a mix of new and adapted financial instruments. What sets this initiative apart is not just its ambition but how the funding is being unlocked. For the first time, the EU’s Stability and Growth Pact has been loosened to allow member states to undertake defense-related borrowing beyond national debt limits via the escape clause. The initiative also launched a new €150 billion joint-borrowing mechanism, comparable in scale to the EU’s COVID-19 pandemic recovery fund, to support collective procurement and help ramp up the defense industry, including cooperation with Ukraine.

In another radical departure from past practice, the European Investment Bank, which was previously prohibited from military financing, can now fund defense industries. These steps would have been politically impossible just a short while ago. Even Sweden, which has long been resistant to debt-financed EU initiatives, and other traditionally frugal countries are now prepared to take on loans to fund defense modernization. For example, Germany’s recent €100 billion national rearmament plan reflects a sea change in Berlin’s approach to military spending. These developments underscore that Europe is not merely responding to US disengagement but is building real capacity to act.   

The tendency for the EU to integrate during crises is not new. For instance, the COVID-19 pandemic resulted in the pan-European procurement of vaccines and the first issuance of an EU eurobond. Still, it is remarkable that no EU government outright blocked the path toward greater defense integration, as far-right parties that are sympathetic to Trump hold power in Hungary, Italy, Slovakia, and the Netherlands. To be sure, European unity on defense is neither unanimous nor uncontested. Some governments remain wary of surrendering sovereignty over defense policy, and debates over funding mechanisms and the scope of joint procurement highlight enduring divisions among member states. These reservations underscore that while the trend is significant, it remains fragile and a range of questions on the implementation of further defense integration remain unsolved. Even so, this is a moment the United States should watch closely. The renewed push for a European Defense Union is a strategic counterweight to the uncertainty coming from Washington. Rather than retreating into nationalism or disengagement, Europeans are choosing to strengthen the EU as a geopolitical actor.

Anna Wieslander, PhD, is director for Northern Europe and head of the Atlantic Council Northern Europe Office in Stockholm.

Louise Blomqvist is a project assistant at the Northern Europe Office.

The post Europeans are responding to Trump by rallying around the EU flag appeared first on Atlantic Council.

The US servicemen had gone missing a week earlier during training exercises at a Lithuanian military facility close to the border with Belarus. This led to the largest search operation in modern Lithuanian history through the surrounding area of forests and swamps, with military and civilian teams being joined by colleagues from Poland, Germany, and Estonia. Tragically, the four missing United States soldiers were eventually found submerged in a peat bog together with their vehicle.

As the world watches the Russian invasion of Ukraine unfold, UkraineAlert delivers the best Atlantic Council expert insight and analysis on Ukraine twice a week directly to your inbox.

Around one thousand US soldiers have been based at Camp Herkus in Lithuania since 2021. Their presence is part of NATO’s Operation Atlantic Resolve, which involves rotational deployments of troops from member states as part of the alliance’s deterrence strategy on its eastern flank.

The recent deaths of four US soldiers have shocked and saddened the Lithuanian public, underlining the bonds between the country and the United States. For days, the search operation for the missing soldiers gripped the nation of almost three million. “For us, it is more than a duty, it is an emotion. We have experienced trials in our history and therefore we understand well what loss is, what death is, what honorable duty is,” commented Lithuanian President Gitanas Nausėda during events in Vilnius honoring the deceased servicemen.

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The tragedy has served to highlight the importance of the NATO troop presence in Lithuania at a time when Moscow’s full-scale invasion of Ukraine has heightened alarm in the region over the threat posed by a resurgent Russia. With the Trump administration now discussing plans to reduce the US commitment to European security and focus more of Asia, there are concerns in Lithuania and other front line NATO member states that Russia may seek to take advance of any weakening of resolve within the alliance.

In March, Lithuanian Foreign Minister Kestutis Budrys traveled to Washington DC with his Estonian and Latvian colleagues to meet with US Secretary of State Marco Rubio and seek assurances regarding the continued United States commitment to the security of the Baltic region. “The Baltic states are quite skeptical about Russia’s intentions. Our intel assessments clearly show that Russia and their instruments of power are all aligned toward war, not toward peace,” commented Latvian Foreign Minister Baiba Braze while in the US.

Lithuania is currently preparing for a dramatic increase in military spending as the country responds to Russia’s expansionist agenda and Kremlin dictator Vladimir Putin’s apparent imperial ambitions. Lithuanian officials unveiled plans in January 2025 to boost the defense budget from just over three percent to between five and six percent starting next year. This increase comes as the Trump White House calls on NATO members to move beyond current guidelines stipulating two percent of GDP and spend significantly more on national security.

Amid heightened geopolitical uncertainty, the recent tragic events involving US troops stationed in Lithuania have helped unite the two countries. “We cannot thank our allies and fellow service members enough, especially the Lithuanians, who spared no resource in support of this mission,” commented Major General Curtis Taylor, the commanding general of the United States 1st Armored Division, in the wake of the tragedy. “Together, we delivered on our promise to never leave a fallen comrade.”

Agnia Grigas is a nonresident senior fellow at the Atlantic Council’s Eurasia Center and the author of Beyond Crimea: The New Russian Empire and other books.

Further reading

UkraineAlert Mar 25, 2025

Ukraine’s growing military strength is an underrated factor in peace talks

By Serhii Kuzan

Any discussion on the future course of the war against Russia and the terms of any peace deal must take into account the fact that Ukraine is a now major military power in its own right, writes Serhii Kuzan.

Conflict Defense Industry

UkraineAlert Apr 3, 2025

The West must stop seeking Putin’s permission for peace in Ukraine

By Alyona Getmanchuk

If Western leaders are serious about achieving a lasting peace in Europe, they must move decisively to provide Ukraine with security guarantees without worrying whether Putin will agree or not, writes Alyona Getmanchuk.

Conflict European Union

UkraineAlert Mar 20, 2025

Putin is ruthlessly erasing Ukrainian identity in Russian-occupied Ukraine

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Kremlin dictator Vladimir Putin is pursuing policies in Russian-occupied Ukraine that almost certainly meet the definition of ethnic cleansing and may qualify as genocide, writes Peter Dickinson.

Civil Society Conflict

The views expressed in UkraineAlert are solely those of the authors and do not necessarily reflect the views of the Atlantic Council, its staff, or its supporters.

Read more from UkraineAlert

UkraineAlert is a comprehensive online publication that provides regular news and analysis on developments in Ukraine’s politics, economy, civil society, and culture.

The Eurasia Center’s mission is to enhance transatlantic cooperation in promoting stability, democratic values and prosperity in Eurasia, from Eastern Europe and Turkey in the West to the Caucasus, Russia and Central Asia in the East.

Learn more

The post Lithuanians pay tribute to US soldiers who died in training exercise tragedy appeared first on Atlantic Council.

Watch the full event

Public Event Thu, April 3, 2025 • 9:30 am ET

Europe’s Teresa Ribera on the EU’s clean transition and US-EU relations

AN #ACFRONTPAGE EVENT—Teresa Ribera, executive vice-president of the European Commission, shares her vision for the EU, the bloc’s competitiveness, and the US-EU relationship.

Digital Policy Economy & Business Energy & Environment Europe & Eurasia

US President Donald Trump’s sweeping tariffs, announced Wednesday, are “bad news for the whole world—including Americans,” said Teresa Ribera, executive vice-president of the European Commission for a clean, just, and competitive transition. 

“We will defend the Europeans,” from businesses to citizens, added Ribera at an Atlantic Council Front Page event Thursday. The European Union (EU) will first look to avoid a “big clash” with the United States. “We will remain firm and open,” and see if there are any avenues to “solve any type of misunderstanding and avoid conflict,” she said. 

As for what the US tariffs mean for the EU’s trade strategy, Ribera said that the bloc will “keep on developing and deepening the relationship with the rest of the world.”  

“The whole world is bigger, or larger, than the US market. So yes, of course, we will try to keep on building that,” she said. 

She added that it is “worth it to defend” the “multilateral-order-based rules,” including ones around trade, that the EU has built with its partners “during the last eighty years.” 

Below are more highlights from the conversation, moderated by Europe Center Distinguished Fellow Frances Burwell, which also touched upon the EU’s competitiveness agenda and green transition. 

All for one . . . 

• Ribera argued that in responding to the US tariffs, it will be important to have a “strong” EU that is “united” in a “common approach.”  

• “I say that we are boringly reliable, but I think that it is absolutely true,” Ribera said. She pointed to the EU remaining together against Russian President Vladimir Putin’s attempts to divide it. “This is one of the most important principles we need to stick [with],” she said. 

• She added that internal changes—such as removing barriers to trade within the European single market—could help offset losses incurred from US tariffs, seeing as internal trade barriers amount to the equivalent of a 45 percent tariff.  

• Ribera noted that the US-EU trade relationship has come to be a “story of success” in joint cooperation, so the two parties should not look to weaken the relationship, but to strengthen it. “It’s good to count on supply chains that work, markets that work and are predictable,” she said. 

• In order to address today’s challenges and address society’s demands, she said, “it is much [easier] to build bridges than to build barriers.” 

Guided by a new “Compass”

• Ribera will soon review the EU’s competition policy, which regulates mergers and acquisitions. She said the policy has been built on a global situation that “has changed” with the power of the West diminishing in its ability to set the terms of global markets. She said she will identify how the tools can actually help attain a more competitive environment, in line with the EU’s new Competitive Compass. 

• After US Federal Trade Commissioner Andrew Ferguson said that he was “suspicious” of the EU Digital Markets Act (which imposes restrictions on tech companies operating in Europe) and criticized laws that “get at American companies abroad,” Ribera argued that the act is “not intending to go against anyone.” She said, rather, it is intended to protect from the development of monopolies against new innovators in the EU market. 

Clean, green machine 

• In addressing criticism that the EU’s green push is getting in the way of achieving competitiveness priorities, Ribera said that the green framework can actually be a “main driver” of Europe’s future competitiveness. 

• Other countries have come to realize the value of the green transition and now “have a big share of the international market dealing with green equipments,” she said. “We don’t want to miss the train anymore.” 

• With the European Commission having proposed the Omnibus package of measures to simplify rules (such as those around sustainability reporting) for businesses, Ribera said that “simplification is very important.” She said she hears from businesses that they want simpler reporting obligations and more clarity from the EU to help them make the “right decisions” on investments. 

• The EU must show investors and the industrial community that it will not go “back to the past to solve the problems of today,” Ribera said. “This is clean, this is industrial, but this is a deal,” she added, explaining that the deal means the EU will be “paying attention to where the concerns may be and how we can . . . [better] bring better everybody together.” 

Katherine Golden is an associate director of editorial at the Atlantic Council.

Watch the event

The post The European Commission’s Teresa Ribera: ‘We will defend’ Europeans in the face of new US tariffs appeared first on Atlantic Council.

The bad news is that the entire discussion over the possible deployment of Western troops to Ukraine continues to be overshadowed by concerns over Russia’s inevitably negative reaction. While British and French officials insist that they do not require the green light from Moscow, a significant number of their European colleagues disagree. Furthermore, many of those who appear supportive of Western troops in Ukraine seem ready to grant Putin a veto on other critical issues relating to Ukraine’s long-term security, such as the country’s NATO aspirations.

Efforts to seek some kind of consensus with the Kremlin over the future security of Ukraine are futile and fundamentally misjudge the expansionist goals underpinning Russia’s invasion. After more than three years of full-scale war, it should be painfully obvious to any objective observer that Putin is not pursuing legitimate security concerns, and is instead obsessed with the idea of erasing Ukraine as a state and as a nation.

As the world watches the Russian invasion of Ukraine unfold, UkraineAlert delivers the best Atlantic Council expert insight and analysis on Ukraine twice a week directly to your inbox.

Since the onset of Russia’s full-scale invasion in February 2022, Putin has demonstrated time and again that he has no intention of seeking a sustainable solution that could lead to peaceful coexistence between the Russian Federation and an independent Ukraine. On the contrary, he remains committed to wiping the Ukrainian state off the map. This is most immediately apparent in the systematic eradication of Ukrainian national identity throughout areas of the country currently under Kremlin control.

Putin’s current negotiating position is similarly revealing. The Kremlin dictator continues to insist on a demilitarized and neutral Ukraine, with Kyiv prevented from receiving any further Western aid and forced to cede large tracts of additional Ukrainian territory that the Russian army has so far been unable to occupy. If implemented, these so-called peace terms would amount to a complete capitulation that would leave Ukraine partitioned, isolated, and virtually defenseless against further Russian aggression. It would then only be a matter of time before Putin completed his conquest.

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Drones, defense, and diplomacy: Negotiations and the battlefield in Ukraine

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Given what we now know about Russia’s war aims in Ukraine, it makes little sense to let Putin set the agenda for peace negotiations or dominate the debate over future security guarantees. His imperial ambitions clearly leave no room for any meaningful compromise that would guarantee Ukraine’s national survival or serve as the basis for a lasting peace in the wider region.

Instead, Ukrainians should be focused on convincing the country’s European partners that they do not need Russia’s consent before acting to defend Ukrainian sovereignty and safeguard their own security. One of the most compelling arguments in this respect has been provided by Putin himself. After all, the Russian ruler did not ask Western leaders for their opinion when he invited North Korean soldiers to join his war against Ukraine, or when he deployed Russian nuclear weapons to neighboring Belarus.

It is delusional to think that offering Putin concessions will persuade him to abandon his expansionist agenda. In reality, as long as Ukraine’s Western partners continue to seek Putin’s permission before taking steps to protect themselves, they will never be secure. If the leaders of the democratic world are serious about achieving a lasting peace in Europe, they must move decisively to provide Ukraine with credible security guarantees without worrying whether Putin will agree or not.

Alyona Getmanchuk is director of the New Europe Center and a nonresident senior fellow at the Atlantic Council Eurasia’s Center.

Further reading

UkraineAlert Mar 25, 2025

Ukraine’s growing military strength is an underrated factor in peace talks

By Serhii Kuzan

Any discussion on the future course of the war against Russia and the terms of any peace deal must take into account the fact that Ukraine is a now major military power in its own right, writes Serhii Kuzan.

Conflict Defense Industry

UkraineAlert Mar 26, 2025

If Trump wants peace in Ukraine, he must increase the pressure on Putin

By Doug Klain

Weeks after Ukraine backed a US proposal for an unconditional ceasefire, Russia continues to stall and push for further concessions. If Trump wants to secure peace, he must increase the pressure on Putin, writes Doug Klain.

Conflict Defense Technologies

UkraineAlert Mar 27, 2025

UN report: Russia is guilty of crimes against humanity in occupied Ukraine

By Peter Dickinson

A new United Nations report has concluded that Russia is guilty of committing crimes against humanity in the occupied regions of Ukraine, writes Peter Dickinson.

Conflict Freedom and Prosperity

The views expressed in UkraineAlert are solely those of the authors and do not necessarily reflect the views of the Atlantic Council, its staff, or its supporters.

Read more from UkraineAlert

UkraineAlert is a comprehensive online publication that provides regular news and analysis on developments in Ukraine’s politics, economy, civil society, and culture.

The Eurasia Center’s mission is to enhance transatlantic cooperation in promoting stability, democratic values and prosperity in Eurasia, from Eastern Europe and Turkey in the West to the Caucasus, Russia and Central Asia in the East.

Learn more

The post The West must stop seeking Putin’s permission for peace in Ukraine appeared first on Atlantic Council.

“It’s our declaration of economic independence.” That’s how President Donald Trump described Wednesday’s Rose Garden announcement that the United States will levy 10 percent baseline tariffs on all imported goods. Trump also announced “reciprocal tariffs” on dozens of other countries, including steep rates on major trading partners such as China (54 percent in total), the European Union (20 percent), and Japan (24 percent), though Canada and Mexico were spared from new tariffs. How will these tariffs upend US trade partnerships, international financial markets, and the global economy? And how might the countries hit the hardest retaliate? Our experts at the GeoEconomics Center, which is following each move in its Trump Tariff Tracker, declare their independent assessments below. 

• Josh Lipsky (@joshualipsky): Senior director of the Atlantic Council’s GeoEconomics Center and former adviser to the International Monetary Fund
• L. Daniel Mullaney: Nonresident senior fellow with the Europe Center and GeoEconomics Center, and former assistant US trade representative
• Barbara C. Matthews: Nonresident senior fellow at the GeoEconomics Center and former US Treasury attaché to the European Union

Zooming out

• The historic significance of Wednesday’s actions are clear, Josh tells us: “The United States said the global trading system we helped create no longer works for us.” He notes that these new levies, scheduled to go into effect next week, would raise overall US tariff rates to north of 20 percent—their highest level in a century, exceeding even the Smoot-Hawley era of the 1930s.
• Trump’s tariff announcements underscored that he “sees the world less in terms of allies and adversaries than in terms of countries that run trade deficits with the US versus countries that run trade surpluses,” Josh says. 
• Josh points out that Japan will be tariffed at a much higher rate than Iran. “These decisions are not based on systems of government or military alliances or historical relationships. They are based on a new formula—where trade is the organizing principle behind Trump’s engagement with the world.”

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Zooming in

• The difference in rate assigned to each country “suggests that the tariffs are actually motivated by perceived imbalances in trade relationships” rather than a simple desire to “erect a tariff wall around the United States,” says Dan. For example, he notes that the European Union, which has a $200 billion goods trade deficit with the United States, was tariffed much more than the United Kingdom, which has none.
• An additional executive order closing tariff exemptions for low-value goods from China underscores the national security concerns motivating the tariffs, Barbara tells us. She notes that the administration justified the move “on the grounds that those low-value imports facilitate the fentanyl trade.”
• The especially high tariffs on China are a major reason for the negative overnight market reaction to the announcements, says Josh, as 54 percent is “above and beyond” what Beijing can manage through currency maneuvers. Potential alternative Southeast Asian trading partners such as Vietnam were hit hard as well. “From your Airpods to your Air Jordans, hundreds of products Americans use in day-to-day life are set to get more expensive.”

Response time

• Dan has some advice for European leaders as they deliberate how to respond: “It is unhelpful to castigate the United States for imposing tariffs” and then vow to “strike back” on politically sensitive targets such as Kentucky bourbon and Florida orange juice. He argues that “a more constructive” reaction would be to “rebalance” transatlantic trade obligations by taking an approach similar to a World Trade Organization dispute and withdrawing equivalent concessions with respect to the United States.
• At the same time, Dan adds, European officials should work with the Trump administration to reach accommodations in lieu of tariffs. This could include, for instance, renewing “work on a steel and aluminum arrangement,” cooperating on nonmarket economy policies and practices, and reducing regulatory trade barriers. “We’re in an unprecedented and disruptive era, but there are avenues for restoring balance and building up the transatlantic trade relationship.”
• While countries may opt to impose retaliatory tariffs on the United States, Barbara notes that tariff rates are only part of the picture. “No one wins a trade war,” she cautions, adding that “negotiations based merely on tariff levels will not be sufficient” to address the Trump administration’s other economic and security concerns, such as value-added taxes, currency manipulation, and drug trafficking. Instead, she says, talks with Washington must address “a broad range of security and geoeconomic issues beyond trade policy that the United States has been raising for a number of years.”
• All of these tariff announcements remain subject to change based on negotiations. “Markets need to be ready for a steady stream of policy volatility and adjustments,” says Barbara, “as the terms of trade shift to reflect a new geopolitical balance of power as defined by the United States.”

The post How Trump’s ‘liberation day’ tariffs will transform global trade appeared first on Atlantic Council.

Trump aims to secure peace in Ukraine as part of a broader shift involving a reduced US commitment to Europe and a strategic pivot toward Asia. This goal is actually very much in line with longstanding United States foreign policy. However, with Putin’s Russia now an openly expansionist power and European nations dangerously weakened by decades of defense sector complacency, this is not the ideal time for an American withdrawal.

In the current climate of mounting international instability, maximum Western unity is required. This is essential in order to avert a descent into the geopolitical jungle and prevent the emergence of a new security environment shaped by the Kremlin where the rule of law is replaced by brute force. It is therefore in US interests to maintain Ukraine’s military strength as a bulwark against Russia while Europe rearms.

As the world watches the Russian invasion of Ukraine unfold, UkraineAlert delivers the best Atlantic Council expert insight and analysis on Ukraine twice a week directly to your inbox.

Putin has repeatedly signalled that he views the complete subjugation of Ukraine as only the first step toward reasserting Russian hegemony over the wider region. He has placed his entire country on a war footing, openly claims to be returning “historically Russian lands,” and declares his intention to establish a new multipolar world order. If Putin is allowed to succeed in Ukraine, his position will become far stronger, while Europe will be more vulnerable than ever. There will then be little to prevent him from achieving his wider objectives.

Trump’s obvious haste to exit Ukraine is now encouraging the Russian dictator to pursue his most maximalist war aims. These include the outright annexation of five Ukrainian regions representating around twenty percent of the entire country, and the international isolation of the remaining Ukrainian state, which would be left neutral, disarmed, and defenseless. In such circumstances, it would only be a matter of time before Putin completed his conquest.

The destruction of Ukraine would set a disastrous precedent that would undo many decades of progress in international relations and mark a return to the diplomatic standards of the nineteenth century, complete with empires, invasions, and annexations. Putin himself would be emboldened to acquire more “historically Russian lands,” while his fellow autocrats in Beijing, Tehran, and beyond would draw the obvious conclusions and follow suit. Failure to confront one aggressive dictatorship would give rise to many more.

Eurasia Center events

Online Event Tue, June 17, 2025 • 1:00 pm ET

Drones, defense, and diplomacy: Negotiations and the battlefield in Ukraine

Conflict Defense Technologies Europe & Eurasia Politics & Diplomacy

Some in Washington believe that by appeasing Putin in Ukraine, they can convince Russia to ally with the United States against China. This is dangerously naive and fails to appreciate the strength of the current strategic partnership between Moscow and Beijing. China has played an important supporting role in the invasion of Ukraine and sees the current war as an opportunity to undermine the West. As long as Russia can deliver geopolitical success, cooperation between the two countries will continue to deepen.

In contrast, Russian defeat in Ukraine would set off alarm bells in Moscow and Beijing, causing both countries to reassess the nature of their partnership. Many Russian leaders in particular would become increasingly concerned over their growing dependence on China. With this in mind, it would probably make more sense for US officials to maintain or even increase their support for Ukraine if they are serious about creating the long-term conditions for closer cooperation with Russia in the coming confrontation with China.

Perhaps the gravest and most far-reaching geopolitical consequence of a Putin-friendly peace in Ukraine would be the spread of nuclear weapons. In 1994, Ukraine gave up the world’s third-largest nuclear arsenal in exchange for security assurances from Russia, the US, and the UK. These assurances have since proved worthless. To make matters worse, Russia has repeatedly used nuclear blackmail during the past three years to intimidate Ukraine’s Western allies and enable the invasion.

The lessons from Ukraine’s unilateral nuclear disarmament and Russia’s subsequent nuclear bullying are painfully clear: Any country that wishes to avoid a similar fate must acquire nuclear weapons of their own. This grim reality is likely to spark a new nuclear arms race, with governments from Berlin and Warsaw to Seoul and Tokyo already reportedly exploring their options. If the US backs a pro-Russian peace deal in Ukraine, unprecedented nuclear proliferation will become virtually inevitable.

It is still far too early to pass judgment on Donald Trump’s efforts to end the war in Ukraine, but the potentially disastrous consequences of a bad deal are already clear. Any peace on Putin’s terms would discredit the entire Western world and signal the dawn of a dangerous new era in global affairs marked by mounting instability, international aggression, and the looming threat of nuclear war.

This calamitous outcome can be avoided by backing Ukraine militarily and providing the country with the kind of NATO-style security guarantees that can prevent further Russian aggression and secure peace in Europe. Anything less will merely serve as a pause before the next stage in Russia’s war against the West and the unraveling of the current world order.

Oleksandr Merezhko is a member of the Ukrainian Parliament for the Servant of the People Party and Chair of the Ukrainian Parliament’s Foreign Affairs Committee.

Further reading

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Civil Society Conflict

The views expressed in UkraineAlert are solely those of the authors and do not necessarily reflect the views of the Atlantic Council, its staff, or its supporters.

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UkraineAlert is a comprehensive online publication that provides regular news and analysis on developments in Ukraine’s politics, economy, civil society, and culture.

The Eurasia Center’s mission is to enhance transatlantic cooperation in promoting stability, democratic values and prosperity in Eurasia, from Eastern Europe and Turkey in the West to the Caucasus, Russia and Central Asia in the East.

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The post Peace on Putin’s terms would lead to a new era of international insecurity appeared first on Atlantic Council.

In December, European Commission President Ursula von der Leyen assigned Kaja Kallas, the EU’s top diplomat, and Andrius Kubilius, the first-ever commissioner for defense and space, to produce this document. The resulting text presents a roadmap for Europe to build up its defense capabilities in response to growing external security threats, including the possibility of Russian military aggression against EU territory. The White Paper also represents a direct reaction and message to the ongoing changes in Washington’s approach to European security under US President Donald Trump.

The White Paper adopts a five-year outlook, which is also the timeframe in which several European intelligence agencies have estimated Moscow would require to reconstitute its military capabilities such that it could conduct a large-scale attack on a NATO country. In the event of a cease-fire or peace agreement with Ukraine, Russia would almost certainly seek to accelerate its rearmament. Meanwhile, Europe faces uncertainty regarding the extent of continued US security assistance given Washington’s rapidly shifting foreign policy stances and priorities.

The White Paper calls for addressing critical capability gaps, fostering a competitive defense industry, strengthening military support for Ukraine, and securing relevant financial instruments and resources for defense. But whether the EU will be able to address these challenges in the five-year window the report outlines will depend on member states’ willingness to make the necessary financial commitments and their ability to navigate political divisions within the bloc.

Filling capability gaps

The document begins by diagnosing Europe’s severe defense shortcomings. It explicitly states that Europe is currently ill-equipped to respond adequately to contemporary security challenges.

Major capability gaps are identified in the following areas:

• Air and missile defense
• Artillery systems
• Ammunition and missile production
• Drones and counter-drone systems
• Military mobility
• Artificial intelligence, quantum technologies, cyber, and electronic warfare
• Strategic enablers and critical infrastructure protection

It’s a big list, and to close these gaps the White Paper advocates for deeper collaboration among European nations on defense projects of common interest. It builds on EU reports from 2024 by former Finnish President Sauli Niinistö on civilian and military preparedness and by former European Central Bank President Mario Draghi on competitiveness, both of which highlighted inefficiencies and excessive costs resulting from a lack of coordination within the European defense industry.

So, what does this mean in practice? The White Paper specifically recommends harnessing “European economies of scale” and collaborative procurement to reduce costs, shorten delivery times, make demand more predictable for producers, and enhance interoperability.

A major question going forward, however, is how the EU’s efforts fit in with NATO. Importantly, capability building is an area in which EU collaboration can benefit the Alliance. EU countries share a single set of capabilities. If these capabilities are primarily defined by NATO, then the twenty-three EU member states that are also part of the Alliance would contribute to fulfilling them, including through EU instruments. For example, one of the major capacity building areas is military mobility, which particularly important for the EU countries that provide NATO host-nation support.

Strengthening the defense industry

In addition to capability gaps, the White Paper addresses structural weaknesses within the European defense industry, pinpointing fragmentation and underinvestment as major obstacles to achieving credible deterrence. Three years into the war in Ukraine, Europe remains unable to produce sufficient weapons and ammunition quickly. To remedy this, the document proposes creating a common European defense market, aggregating demand to increase predictability.

Another main focus is ensuring supply-chain security and reducing external dependencies. The commitment to collaboration is further reinforced by plans to simplify regulations. The European Commission pledged to launch a strategic dialogue with the defense industry and introduce the Defence Omnibus Simplification Proposal by June 2025. This act is intended to simplify the legal and administrative framework for procurements and industry cooperation. Excessive regulation has been a long-standing obstacle in this field, and streamlining administrative processes is overdue.

Prioritizing Ukraine

The White Paper states that Ukraine remains on the front line of European security and enhancing the EU’s defense requires continued military support to Kyiv. The report outlines what it calls a “Porcupine Strategy,” which is aimed at deterring further Russian aggression by equipping Ukraine with the necessary capabilities. This is the strongest security guarantee that Europe can provide to Kyiv.

The document highlights the following defense priorities for enhancing Europe’s military support for Ukraine:

• Provision of large-caliber artillery ammunition (with a target of two million rounds in 2025)
• Deployment of air defense systems
• Enhanced drone capabilities
• Continued military training

Despite Kallas’s initial ambition for a twenty billion euro military support package in 2025, her initiative has reportedly faced resistance from several member states, resulting in a more limited focus on ammunition supplies. This highlights the potential limitations that will complicate efforts to implement the plans outlined in the White Paper.

The document also calls for supporting Ukraine’s defense industry through direct contracts and closer integration with the European defense sector, including joint ventures. This effort should be further outlined in the forthcoming European Defence Industry Plan, expected within the next few months. Close cooperation with Ukraine in this domain is in Europe’s interest, as the bloc will benefit from Kyiv’s wartime experience and innovations. Such defense industry collaboration could also indirectly strengthen Ukraine’s EU membership prospects.

Securing new financial sources

Perhaps the most transformative element of the White Paper concerns defense financing. It builds upon the ReArm Europe Plan, unveiled by von der Leyen in early March.

The financial framework includes:

• Joint EU loans backed by the EU budget, branded as SAFE (Security and Action for Europe), with an initial ceiling of €150 billion
• An “escape clause” from the Stability and Growth Pact, allowing member states to exclude up to 1.5 percent of defense spending from national debt assessments
• Relaxation of existing EU funding rules, mobilization of private capital, and adjustments to European Investment Bank regulations

The overarching ambition is to generate up to €800 billion in defense funding.

Success will depend on how seriously member states approach the offer. Some may take advantage of the relaxation of the escape clause to finance projects that are only superficially linked to military objectives. There is also some uncertainty surrounding the SAFE instrument, which aims to increase member states’ investments in defense via loans. Some capitals may secure better interest rates in domestic markets than those offered by the EU. Others may prefer different cooperation frameworks. Fiscally cautious governments might even exclude loans as an option on principle. A true embarrassment for the EU would arise if a substantial number of capitals considering SAFE were to withdraw due to the instrument’s byzantine rules.

From paper to practice

Since the White Paper is a European Commission initiative, it does not require formal approval from member states. However, its implementation will hinge on their willingness to support concrete instruments that will be built on the White Paper’s findings.

The first high-level discussions will take place at the upcoming EU Defense Ministers’ meeting on April 2-3, followed by the Foreign Affairs Council meeting on April 14. The goal is to secure agreement on key measures—such as SAFE and the Defence Omnibus Simplification Proposal—by June’s EU leaders’ summit.

A white paper, not a silver bullet

EU financial tools and incentives—aiming to generate €800 billion—certainly have the potential to move things forward, but they are not a silver bullet. A comprehensive response to the defense and security challenges Europe faces requires a multipronged approach to funding, with a majority of resources coming from member states. This will require significant increases in member states’ defense spending, likely beyond the currently discussed figure of 3 percent of each country’s gross domestic product. The mobilization of private capital should also be considered as part of this mix.

The success of the White Paper’s recommendations will also depend on the unity of the EU. Hungary, which has repeatedly blocked proposals for further military support to Ukraine, will not be the only obstacle to consensus on these initiatives. Take, for example, the prolonged discussions surrounding the upcoming European Defence Industry Plan, with the question of non-EU country participation emerging as a significant stumbling block. If increasing obstacles put EU security at greater risk, then one could expect a growing willingness to move forward instead in a “coalition of the willing,” which would further diminish the Commission’s coordination and support work.

Five years—the period in which a potential Russian threat to the EU could materialize—is a brief timeframe for Europe’s rearmament. For the sake of the EU and, in the more immediate term, of Ukraine, Europeans need to move from identifying the problems to acting on them. The White Paper is a good beginning, indicating a positive change in the mindset of EU policymakers, but the bloc must now translate this spirit into swift implementation.

Petr Tůma is a nonresident senior fellow at the Atlantic Council’s Europe Center. He is a Czech career diplomat with expertise on Europe, the Middle East, and transatlantic relations. His views are his own.

The post The EU just released a roadmap to defend Europe. Will member states follow it? appeared first on Atlantic Council.

The appeal is part of a lively ongoing discussion on both sides of the Atlantic over the fate of hundreds of billions of dollars in Russian sovereign assets that have been frozen since Russia’s full-scale invasion of Ukraine began in February 2022. Over the past three years, many have advocated using the funds to back Ukraine’s defense or cover the costs of the country’s reconstruction, but a range of political, financial, and legal considerations have so far prevented any firm moves toward seizure.

Canada and the United States have both introduced legislation empowering governments to confiscate frozen Russian assets, while the French parliament recently passed a non-binding resolution on the use of frozen Russian funds to back Ukraine. Others such as Polish Prime Minister Donald Tusk have voiced their support for the initiative. For now, however, Ukraine’s international partners can only agree on using the interest from the frozen funds to cover loans for Kyiv.

As the world watches the Russian invasion of Ukraine unfold, UkraineAlert delivers the best Atlantic Council expert insight and analysis on Ukraine twice a week directly to your inbox.

Opponents say using Russia’s frozen assets to finance Ukraine’s defense and recovery could have far-reaching negative ramifications for the Western financial system that would outlast the current war. They warn that seizing Russia’s assets would undermine the international credibility of Western financial institutions, and may also lead to direct and indirect countermeasures from the Kremlin that could further fuel global instability.

Speaking at a gathering of EU leaders in Brussels in late March, Belgian Prime Minister Bart De Wever said any move to confiscate the Russian assets would be considered “an act of war.” The Belgian PM, whose country holds the largest share of the frozen Russian funds, warned that the proposed seizure would carry “systemic risks to the entire financial world system” and could spark retaliation, with any remaining Western assets located inside Russia likely to be targeted.

In addition to these considerations, the legal basis for the seizure of Russia’s frozen sovereign assets remains subject to considerable debate. Any court order commanding a government to seize Russian assets would be illegal under international law, Durham University professor of financial law Federico Luco Pasini told Euronews recently. However, if there was an executive decision by the government to seize the assets, “this could potentially bypass the issue,” Pasini stated. Others believe legal precedents exist, with some pointing to the use of frozen state assets to compensate victims of Iraq’s 1990 invasion of Kuwait.

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Drones, defense, and diplomacy: Negotiations and the battlefield in Ukraine

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The idea of making Russia pay for the devastation it has caused in Ukraine has obvious appeal, with many seeing it as a form of international justice. Supporters believe the use of Russian funds would be particularly appropriate in this context, given the fact that few if any Kremlin officials are likely to be held legally accountable for war crimes committed in Ukraine. Using Russian money would also reduce the burden on taxpayers throughout the West and ease the political pressure on governments struggling to fund the largest European war since World War II.

Discussions over the possible transfer of frozen Russian assets to Ukraine have gained considerable momentum in recent months following the return of Donald Trump to the White House. The Trump administration’s decision to briefly pause military aid to Ukraine and the broader US foreign policy pivot away from Europe have highlighted the need to find alternatives to continued United States support for Ukraine.

The emergence of an axis of authoritarian regimes centered on Moscow is also now helping to convince many in the West that unprecedented measures are required. With North Korean soldiers fighting for Russia against Ukraine and Iran providing the Kremlin with large quantities of attack drones to bomb Ukrainian cities, there is a growing sense of insecurity in Western capitals. “Russia, China, Iran, and North Korea are hostile to democratic states’ interests and values. They are increasingly working together to undermine the international order,” noted former British Prime Minister Rishi Sunak in a recent article backing calls to hand Russia’s frozen assets to Ukraine.

Faced with the new geopolitical realities of an expansionist Russia and an isolationist United States, many policymakers across Europe may soon become more sympathetic to the idea of using Russia’s frozen sovereign assets to fund Ukraine’s ongoing fight for survival. However, there is still no consensus on the issue amid widespread reluctance to set what opponents believe would be a dangerous precedent. While supporters argue that the seizure of Russia’s assets could be legally justified, any decision will ultimately be a test of Western resolve and a matter of political will.

Mark Temnycky is a nonresident fellow at the Atlantic Council’s Eurasia Center and an accredited freelance journalist covering Eurasian affairs.

Further reading

UkraineAlert Mar 25, 2025

Ukraine’s growing military strength is an underrated factor in peace talks

By Serhii Kuzan

Any discussion on the future course of the war against Russia and the terms of any peace deal must take into account the fact that Ukraine is a now major military power in its own right, writes Serhii Kuzan.

Conflict Defense Industry

UkraineAlert Mar 26, 2025

If Trump wants peace in Ukraine, he must increase the pressure on Putin

By Doug Klain

Weeks after Ukraine backed a US proposal for an unconditional ceasefire, Russia continues to stall and push for further concessions. If Trump wants to secure peace, he must increase the pressure on Putin, writes Doug Klain.

Conflict Defense Technologies

UkraineAlert Mar 20, 2025

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By Peter Dickinson

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Civil Society Conflict

The views expressed in UkraineAlert are solely those of the authors and do not necessarily reflect the views of the Atlantic Council, its staff, or its supporters.

Read more from UkraineAlert

UkraineAlert is a comprehensive online publication that provides regular news and analysis on developments in Ukraine’s politics, economy, civil society, and culture.

The Eurasia Center’s mission is to enhance transatlantic cooperation in promoting stability, democratic values and prosperity in Eurasia, from Eastern Europe and Turkey in the West to the Caucasus, Russia and Central Asia in the East.

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The post Still no consensus on using frozen Russian assets to support Ukraine appeared first on Atlantic Council.

At present, the international discussion over security guarantees for Ukraine is focused primarily on potential military alliances, peacekeeping missions, and the strengthening of the Ukrainian Armed Forces. This makes perfect sense as Western leaders seek to address the largest European invasion since World War II. However, the ongoing role of sanctions to help maintain peace in the years to come should also be explored in greater detail.

Sanctions have long been viewed as a tool to pressure Russia and force Putin to rethink the invasion of Ukraine. They can also play a part in longer term efforts to limit the potential for further Russian aggression. Sanctions can be used in a practical sense to limit Moscow’s ability to wage war, and can also serve as part of broader policies designed to deter the Kremlin and provide Europe as a whole with a greater sense of security.  

As the world watches the Russian invasion of Ukraine unfold, UkraineAlert delivers the best Atlantic Council expert insight and analysis on Ukraine twice a week directly to your inbox.

The issue of removing existing sanctions in exchange for Russian compliance with peace-building steps is already under discussion. Even at this early stage in the US-led peace process, there are signs of diverging opinions on opposite sides of the Atlantic with regard to the use of sanctions as a tool to bring Russia to the negotiating table. Moving forward, unity on sanctions policy will be crucial.   

Many if not most of the current sanctions measures imposed on Russia since 2022 in response to the full-scale invasion of Ukraine are likely to remain in place until a peace agreement can be implemented. In the postwar period, it will be important to maintain or impose targeted sanctions that can restrict Kremlin access to cutting edge military technologies. This will help limit Russia’s ability to rearm.   

Countries across Europe are already debating significant increases in defense spending, with many governments planning to invest in expensive air defense systems in order to guard against the kind of Russian bombing campaigns they have witnessed in Ukraine. While these air defense upgrades are clearly necessary, it would also make sense to take steps that could potentially prevent Russia from replenishing its missile and drone arsenals by denying Moscow the ability to acquire key components in large quantities.

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Drones, defense, and diplomacy: Negotiations and the battlefield in Ukraine

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In addition to baseline sanctions on military technologies, Western leaders should also explore the possibility of agreeing on comprehensive sanctions packages to be triggered in the event of renewed Russian aggression against Ukraine or elsewhere. A credible rapid response mechanism would send an unambiguous message to Moscow regarding the inevitable and severe economic consequences of further invasions.   

This approach could build on the sanctions experience of the past three years. Western policymakers could increase collaboration to better identify Russia’s vulnerabilities and address potential loopholes, such as the role of third party intermediaries in bypassing sanctions measures. Much would depend on the readiness of participating countries to work together in order to present the Kremlin with a united front.  

No sanctions measures, whether imposed or implied, can ever hope to fully replace the hard power of military deterrence. Russian expansionism and the isolationism of the current US administration mean that a high degree of European rearmament is already inevitable. This also means that the Ukrainian military will likely remain at the heart of Europe’s new security architecture for many years to come, and will be a major focus for defense sector investment. At the same time, tools such as sanctions can help further deter the Kremlin.    

There is currently no consensus over the impact of sanctions on efforts to end Russia’s full-scale invasion of Ukraine. Nevertheless, with sufficient political will and Western unity, sanctions can become an important component in postwar efforts to safeguard Ukraine’s security and provide Europe with a degree of stability. This approach is economically appealing. While expanding defense budgets will significantly increase the burden on European taxpayers, sanctions are the single most cost-effective way of containing Russia and enhancing international security. As such, they should be utilized to their maximum potential.   

Dr. Ilona Khmeleva is the Secretary General of the Economic Security Council of Ukraine (ESCU). 

Further reading

UkraineAlert Mar 18, 2025

Britain takes the lead as Europe seeks to boost support for Ukraine

By Alina Hrytsenko

With the future of US support for Ukraine in doubt, Britain is leading European efforts to bolster the Ukrainian war effort and deny Putin an historic victory that would place the whole of Europe in peril, writes Alina Hrytsenko.

Conflict Defense Industry

UkraineAlert Mar 20, 2025

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By Peter Dickinson

Kremlin dictator Vladimir Putin is pursuing policies in Russian-occupied Ukraine that almost certainly meet the definition of ethnic cleansing and may qualify as genocide, writes Peter Dickinson.

Civil Society Conflict

UkraineAlert Mar 20, 2025

Trump’s energy sector ceasefire could be good news for Putin’s war machine

By David Kirichenko 

Russian dictator Vladimir Putin has backed US President Donald Trump’s proposal for a partial ceasefire on energy sector attacks, but this may be a strategic step rather than an indication of his readiness to end the invasion of Ukraine, writes David Kirichenko.

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The views expressed in UkraineAlert are solely those of the authors and do not necessarily reflect the views of the Atlantic Council, its staff, or its supporters.

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UkraineAlert is a comprehensive online publication that provides regular news and analysis on developments in Ukraine’s politics, economy, civil society, and culture.

The Eurasia Center’s mission is to enhance transatlantic cooperation in promoting stability, democratic values and prosperity in Eurasia, from Eastern Europe and Turkey in the West to the Caucasus, Russia and Central Asia in the East.

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The post Sanctions will remain an essential tool to deter future Russian aggression   appeared first on Atlantic Council.

Click to jump to an expert analysis:

Jörn Fleck and Jacopo Pastorelli: Brussels is ready to bargain, but the US may not want to make a deal

Frances Burwell: For the EU, this trade war is about more than just economics

Joseph Webster: The US auto sector loses, and China wins

Barbara Matthews: The journey to a new global trading system will not be linear—and it will be bumpy

Brussels is ready to bargain, but the US may not want to make a deal

The transatlantic trade dispute over steel and aluminum is back, almost exactly seven years after US President Donald Trump first exercised his authority under Section 232 (on March 8, 2018). Back then, the EU responded by launching a World Trade Organization (WTO) proceeding and imposing surgical levies on US exports from key Republican-leaning constituencies. In July of that year, then European Commission President Jean-Claude Juncker managed to strike a deal with Trump to roll back the tariffs, promising increased purchases of US liquefied natural gas and soybeans.

This time around, Brussels was better prepared. Europe struck back immediately this morning, sticking with the “proportionate countermeasures” approach previewed by European Commission President Ursula von der Leyen a month ago. The Commission automatically reapplied suspended levies on more than four billion euros worth of US exports (steel and aluminum, bourbon, motorcycles, jeans, and orange juice) effective April 1, with plans for a second round worth over eighteen billion euros (on cosmetics, clothes, wood, soybeans, and other agricultural goods) set for April 13. Rather than punching back hard, Brussels seems to be prioritizing unity among EU member states and leaving the door open for a deal. The EU has also refrained from unleashing its new “anti-coercion instrument” and is keeping some of its powder dry. The staged approach is a signal with the Trump administration’s release of its “fair and reciprocal tariff plan” on April 2 in mind—that plan would hit a much broader cross-section of EU exports with duties. Go there and we will hit you harder, the Commission is saying. 

In the lead up to this week’s tariff announcements, Brussels explored several avenues to get to a deal and avert Trump’s tariffs of 25 percent on both steel and aluminum imports, without getting any traction with the US counterparts. The back-and-forth trade threats and responses witnessed by Canada and Mexico should serve as lessons for Europe: It should firmly defend its industries, avoid signs of weakness, and leverage the continent’s economic weight and tools to respond to economic coercion. Neither Canada and Mexico’s proximity and trade integration with the United States, nor last-minute negotiation efforts by Japan, India, or Trump-friendly Australia, granted the countries exemptions.

But more fundamentally, Europe will have to confront the possibility that there may not be a deal to be had in the short term. Trump’s hyperactive tariff actions and talk of short-term economic pain for long-term gain may just betray a strategy to fundamentally shift the United States’ global economic engagement, turning its back on a seemingly broken multilateral trade system. Such a shift would pose a far greater challenge to an export-reliant and WTO-adherent EU economy than any broadside of US tariffs. Notwithstanding US market losses, early signs of economic slowdowns, and potential “transition” period ahead, Brussels must internalize the “America first” trade policy in Washington and develop a broader trade and industrial policy strategy quickly.  

—Jörn Fleck is the senior director of the Atlantic Council’s Europe Center.

—Jacopo Pastorelli is a program assistant in the Atlantic Council’s Europe Center.

Trump Tariff Tracker

The second Trump administration has embarked on a novel and aggressive tariff policy to address a range of economic and national security concerns. This tracker monitors the evolution of these tariffs and provides expert context on the economic conditions driving their creation—along with their real-world impact.

For the EU, this trade war is about more than just economics

The United States and the European Union are falling into a trade war, with unpredictable consequences. The tariffs and retaliatory measures related to steel and aluminum are not going to wreck either the US or EU economy. Indeed, we have experienced most of these measures before, as they were in force at the end of the first Trump administration. But this is only the opening salvo from Washington in its bid to counter what it sees as protectionist EU policies, as Trump is exploring reciprocal tariffs on all countries (which could implicate the EU auto industry) and an investigation into digital services taxes (charged by some EU member states).

Tariffs based on these policy issues—rather than on trade measures—will widen the scope of the conflict, especially if the EU responds through its anti-coercion instrument, which allows for broader retaliatory measures, including tariffs on services and intellectual property restrictions. Should the United States and EU go down this path, the damage to their economies will be far greater than that caused by steel tariffs.

But for the EU, this is not just about economics. This is about institutional recognition and credibility. Trump has made clear his disdain for the European Union, and I have heard visiting members of the European Parliament come away from meetings with Republican legislators saying they now understood that the Republicans viewed Europe as an adversary, not an ally. No meeting is yet scheduled between Trump and von der Leyen. Thus, it may be that the EU’s retaliation is also aimed at forcing the Trump administration to deal directly with the EU. If that is the case, it will be even more difficult for the EU to back down.

Whether there can be a cease-fire depends on how much economic pain the EU and the United States can withstand. Europe’s economy has been sluggish overall, and the competitiveness debate has not yet translated into real reforms and growth in productivity. In the United States, inflation remains a key concern for voters—and is likely to be worsened by tariffs—while stock market declines threaten one of Trump’s key success metrics. Both sides will need to find an off-ramp before too long.

When that moment comes, both sides will need to save face with a deal. The EU has a “deal” ready, which Maroš Šefčovič, the EU trade commissioner, reportedly proposed and that features reductions in car tariffs and pledges to buy more liquefied natural gas and defense equipment from the United States. This may not be sufficient to quiet Trump’s concerns—it may be necessary to address the issue of digital service taxes and find a way to simplify some of the implementation of EU digital laws. Many in the EU would find that a challenging pill to swallow. But if it came with an acknowledgement of the EU and its role as an economic partner, there might be a basis for a settlement.

—Frances Burwell is a distinguished fellow at the Atlantic Council’s Europe Center and a senior director at McLarty Associates.

The US auto sector loses, and China wins

The US auto sector faces tariff whiplash. While the automotive sector’s tariff rates for critical manufacturing inputs seem to be changing on a daily basis, the sector’s economic fundamentals are more rigid. Trade with Canada makes the US automotive sector more competitive. Canada accounts for about 78 percent of steel and iron and 95 percent of aluminum imports for the Detroit census district, the beating heart of the US auto industry. Steel and aluminum are critical cost drivers for autos; lightweight aluminum is used extensively in electric vehicles. With few near-term alternatives to Canadian steel and aluminum providers, US automakers will be forced to accept higher costs from domestic producers of these materials. Accordingly, US automakers will be forced to pass on higher input costs to consumers, cut production, and eliminate jobs. Investment plans will be stalled due to uncertainty. Crucially, the US auto sector will become less competitive relative to international competitors—especially Chinese companies. 

Chinese automakers will be the primary beneficiaries of the tariffs. Not only will US automakers’ competitiveness suffer from higher input costs, but other trading partners—Europe, Mexico, and especially Canada—might begin to consider Chinese-made electric vehicles and connected vehicles as more appealing on commercial and diplomatic grounds.

—Joseph Webster is a senior fellow at the Atlantic Council’s Global Energy Center and Indo-Pacific Security Initiative; he also edits the independent China-Russia Report.

The journey to a new global trading system will not be linear—and it will be bumpy

Steel and aluminum have been in the crosshairs of tariff policy for over a decade, so today’s tariff actions are not exactly extraordinary. They also create no surprises; today’s tariff action was highly publicized well in advance. The reaction from US trading partners is far from surprising as well: retaliatory tariffs on key US exports. Today’s moves may not be surprising, but they are strategically significant as major advanced economies continue to redefine the terms of their trading relationships. The United States is telling trading partners that the traditional mechanisms for managing trade policy no longer function for a US economy that looks increasingly inward when defining trade policy priorities.

Structural economic shifts are inevitable as a consequence. The journey away from Bretton Woods will not be linear, and it is certain to be bumpy.

For example, Ontario’s climb-down regarding electricity trade with the United States and the White House’s retaliation threat on March 11 illustrate how swiftly tariff policy can shift toward more benign outcomes. Policymakers in North America pulled back from the brink of a debilitating retaliation dynamic that would have damaged both economies. Future pullbacks may also be possible amid complex geopolitical negotiations between the United States and its trading partners. 

Like the Bretton Woods structure, the new terms of trade will articulate a new balance of geo-economic power. US initiatives to strike bilateral bargains that protect strategic priorities (e.g., national security, increased domestic manufacturing, access to critical minerals, the export of civilian nuclear technologies) will operate in tandem with ongoing EU and UK initiatives to increase bilateral trade and economic partnerships that prioritize climate-related goals (e.g., carbon emissions reduction, expanded clean energy and hydrogen, the achievement of sustainable development goals). Unlike the Bretton Woods structure, the process for changing the terms of trade clearly will be bilateral rather than multilateral; it will likely take months if not years before a new equilibrium has been reached.  

As markets and strategists evaluate escalating trade policy tensions, they need to prepare for a protracted period of policy volatility that assess the impact of both tariff increases and any negotiated delays or tariff decreases. Additional disruption should be expected. At least two significant inflection points remain on the foreseeable horizon. First, the United States on April 2 plans to revive a reciprocal foundation for cross-border trade that effectively neuters the multilateral trade policy structure that the United States championed for over seventy-five years. Second, the silence regarding China’s role in the global trading system is deafening and telling. 

As policymakers from Washington to Brussels to Ottawa to Canberra to Tokyo redefine their mutual terms of trade, how and when they break their silence regarding China will be at least as strategically significant as the current reactions and retaliations regarding US trade policy.

—Barbara C. Matthews is a nonresident senior fellow with the Atlantic Council. She is also CEO and founder of BCMstrategy, Inc and a former US Treasury attaché to the European Union.

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Germany’s political landscape is shifting after the parliamentary elections on February 23—conservatives won, the far-right AfD surged, and foreign policy questions loom large over Berlin. What will the next leadership in Germany mean for the country’s approach to EU enlargement and, in particular, the Western Balkans?

In this episode of #BalkansDebrief, Ilva Tare, Resident Senior Fellow at the Europe Center, sits down with Gerald Knaus, Chairman of the European Stability Initiative, a leading voice on EU engagement, to discuss why Germany must step up as Europe’s stabilizer. Knaus warns that the next four years are critical: Berlin must push for EU enlargement in the Balkans—no more delays, no vague goals. Without bold leadership, the region risks stagnation.

Knaus also highlights Merz’s recent foreign policy statements as the boldest from any European leader now and argues that Merz’s government could be the most consequential in Germany since Konrad Adenauer in 1949.

Will Germany step up as Europe’s stabilizer? As Europe faces a growing security crisis, will Germany push for a stronger NATO presence in the Balkans? Could a potential divide between the United States and the EU weaken efforts to stabilize the region? What one piece of advice would Gerald Knaus give to Germany’s new leadership regarding the Balkans?

#BalkansDebrief is an online interview series presented by the Atlantic Council’s Europe Center and hosted by journalist Ilva Tare. The program offers a fresh look at the Western Balkans and examines the region’s people, culture, challenges, and opportunities.

Watch #BalkansDebrief on YouTube and listen to it as a Podcast.

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The post Will Merz step up Germany’s role in the Balkans? | A Debrief with Gerald Knaus appeared first on Atlantic Council.

This packed schedule follows the tempestuous meeting between Ukrainian President Volodymyr Zelenskyy and US President Donald Trump on February 28—the latest indication of an emerging transatlantic rift over European security. Below, Atlantic Council experts walk us through what this eventful week revealed and what to expect next.

Sunday, March 2—The British prime minister hosts a leaders summit on Ukraine

On Sunday, Starmer convened eighteen leaders at Lancaster House in London for the “Securing Our Future” summit. (Fans of The Crown might recognize the site as the series’s major filming location.) Though the summit had been planned beforehand, it gained much greater geopolitical significance in the wake of last week’s disastrous Oval Office meeting. For Starmer (who had himself just returned from a much more successful visit to the White House) the summit served three purposes:

1. Showing European solidarity and support for Ukraine and for Zelenskyy personally; 
2. Re-establishing the United Kingdom’s role as a major player in Europe’s strategic conversation and as a bridge to Washington; and 
3. Making tangible progress on providing Kyiv with diplomatic and military support.

Afterwards, Starmer announced the grouping as a new “coalition of the willing,” comprising sixteen heads of government plus the leaders of the European Union (EU) and NATO. This group agreed on a four-point plan as the basis for peace in Ukraine:

1. Maintaining the flow of military aid to Ukraine and ramping up sanctions on Russia;
2. Affirming that any peace must be lasting and negotiations must involve Ukraine;
3. Enhancing Ukraine’s defense capabilities post-cease-fire to deter further aggression; and 
4. Developing this new coalition as a forum for driving continued progress.

The leaders emerged from the ornate corridors to commit to a Europe that steps up to the challenge of turning Ukraine, in European Commission President Ursula von der Leyen’s words, into an “indigestible steel porcupine” and a Europe that swiftly rearms after decades of underinvestment. As part of this, Starmer announced new spending, including roughly two billion dollars in air defense missile purchases for Ukraine, to be manufactured in Belfast.

Starmer has had a shaky start to his premiership, but he is evidently seizing this opportunity to redefine the central purpose of his government, and winning rare, broad-based support from across the British political spectrum in the process. On Thursday, his defense secretary, John Healey, visited the Pentagon to try and sustain this momentum.

—Philippe Dickinson is a deputy director with the Transatlantic Security Initiative (TSI) at the Atlantic Council’s Scowcroft Center for Strategy and Security.

***

The most important takeaway from the London meeting is that Ukraine is not alone. European leaders demonstrated that they are stepping up—not just with words but with concrete proposals. Starmer and Macron, with their proposal for a European reassurance force and outlines of steps toward a temporary cease-fire, have seized the diplomatic initiative. This makes Europe an actor with agency. 

The message from London was clear: Europe refuses to be a bystander while Washington dictates Ukraine’s fate. For the United Kingdom, this is a key post-Brexit moment with a lead role in shaping European resolve. It returns the United Kingdom to its traditional role of being a security shaper in Europe.

—Roderick Kefferpütz is a nonresident senior fellow at the Atlantic Council’s Europe Center and the director of the Heinrich-Böll-Stiftung European Union office in Brussels.

***

The most important message was not the one communicated in London, but rather the one conveyed by the exclusion of the Baltic states from the meeting. Discussing the defense of Ukraine without the Baltic states—which, along with Denmark, represent the top four countries in terms of government support to Ukraine as a percentage of their gross domestic product (GDP)—feels highly inappropriate at the current moment. The Baltic states are also Europe’s most exposed frontline states and would be the first ones to defend Europe from Russian aggression, thus making them a crucial part of any considerations on European defense. Involving the eastern flank countries in such discussions is crucial for deterring Russia, which consistently attempts to argue that these nations are irrelevant in the larger power play. Europe is awakening, but it still needs to relearn not only rearmament but also strategic communication and messaging.

—Justina Budginaite-Froehly is a nonresident senior fellow with the Atlantic Council’s Europe Center and Transatlantic Security Initiative within the Scowcroft Center for Strategy and Security.

Tuesday, March 4—German leaders announce changes to fiscal rules

The announcement by Merz that Germany would reform its much-fetishized, constitutionally enshrined debt brake to exempt military spending above 1 percent of GDP from its fiscally restrictive provisions on new debt is one of the most significant economic and security announcements in Europe in a decade. 

The move—a stunning reversal from his own party’s campaign rhetoric and decades of German fiscal orthodoxy—could allow for major investments in closing defense capability and readiness gaps, provide long-term certainty for defense-industrial capacity, and bring Berlin’s defense spending closer to 3 percent of GDP. The announcement combines with a shift in Berlin’s posture in supporting von der Leyen’s joint borrowing proposal for a 150 billion euro EU defense fund and a relaxation of EU debt and deficit rules for defense spending purposes—both long anathema to Germany’s fiscal hawks.

This Zeitenwende 2.0 moment matters not only for Berlin but also Europe. Merz’s moves show that the likely next chancellor has understood the unprecedented geopolitical moment Germany and the continent are in—under threat from adversaries in Moscow and Beijing, and at risk of desertion from its ally in Washington. The framing and timing of these policy shifts a few days before the extraordinary European Council summit also suggest a new type of German leadership in Europe after years in which Germany was largely missing in action. Merz seems willing to think big and get creative on long-entrenched positions complete with necessary political maneuvering when stark realities make a reassessment necessary. And he appears to understand the impact that strategic messaging from Europe’s political and economic heavyweight can have—for allies and adversaries alike. 

The effectiveness of Germany’s role going forward will depend on whether Merz and his future government can follow through on their bold proposals. Domestically, building the necessary two-thirds parliamentary majority for a constitutional change on a short timeline will be a first priority. But that’s just the beginning. Devising and implementing an effective defense and defense industrial strategy at home, coordinating with European partners, and managing the inflationary and debt-related repercussions across Europe while jump-starting its own ailing economy will be no small challenge for Germany’s next government.

—Jörn Fleck is the senior director of the Atlantic Council’s Europe Center.

***

The negotiators of the potential new German government coalition, consisting of the Christian Democratic Union (CDU) and the Social Democratic Party (SPD), announced far-reaching plans to loosen the debt brake rules for the priority areas of defense and infrastructure modernization. The plan stipulates that all defense spending exceeding 1 percent of GDP would be exempt from Germany’s strict debt rule, thus allowing the country to plan for a long-term sustainable increase in defense spending. This, in turn, would send positive signals to the defense industry, enabling it to ramp up arms and ammunition production lines in an urgently needed effort to rearm Germany. 

Regarding infrastructure modernization, the plan allocates 500 billion euros over ten years, with this amount also exempt from the debt brake. This crucial decision is likely to facilitate the upgrading of Germany’s dual-use infrastructure, such as roads, bridges, and railways, thereby strengthening its role as a key European hub for military logistics. 

The new debt brake exemption plan, together with Germany’s urge to ease the EU’s fiscal rules to boost defense spending, marks a major shift in the country’s position on fiscal discipline. This can be seen as an important indicator of the incoming German government’s intention to bring Germany back into the strategic discussion about Europe’s security and defense.

—Justina Budginaite-Froehly

***

Under Chancellor Olaf Scholz, Germany often dithered on Ukraine, appearing uncertain and reactive. But with Merz, we are already seeing a different approach—one that could mark a fundamental shift in Germany’s role in Europe.

This is a seismic moment. Fiscal conservatism is deeply ingrained in German political DNA; Merz himself campaigned on it. Yet, he has now put forth proposals to allow for increases in defense spending without running afoul of Germany’s constitutional debt brake, create an infrastructure fund, and increase investments. Von der Leyen’s proposal to allow defense spending outside the EU’s fiscal rules constraints gives Berlin the space to act. When Europe’s largest economy starts moving, it’s a big deal—and good news for the continent’s ability to respond to geopolitical challenges.

But the real question is: How far will Germany go? Will it limit itself to fiscal flexibility and defense industrial policy, or will it make a deeper shift in its strategic culture? The United Kingdom and France are leading on Ukraine, with a proposed reassurance force. Will Germany step up and contribute? If Merz follows through, Germany could finally become the European player that many have long hoped for.

—Roderick Kefferpütz

Wednesday, March 5—The French president speaks to the nation

In his special address to the nation on Wednesday, Macron sought to outline and justify his answers to “a new era” of global uncertainty. The French president was speaking foremost to the French population, and his address carefully explained why Ukraine was instrumental to France’s and Europe’s security. This included graphics and images on the state of the “Russian existential threat” and the frontline. While saying he supported “any peace-driven agendas”—an only implicit reference to the US-Russia talks—Macron clarified that France would not accept any “abandonment of Ukraine” amid “declining American support” and uncertainty. Appealing to France’s values and history, Macron called for an all-encompassing national effort and outlined a positive agenda of prioritizing the reinforcement of national and European defense and reindustrialization. This address—in which tax increases were ruled out for now—was well received in much of the French press, and it will likely reinforce his political leverage against a hung parliament and a party weakened by an electoral defeat in 2024. 

Perhaps most important was Macron’s statement that the “future of Europe cannot be settled in Washington or in Moscow.” The speech painted France’s long-standing aims of being the driving force of a more sovereign Europe, one that would emerge in a stronger position against its adversaries. At the same time, the French president sought to redefine the contours of a new transatlantic relationship. France has been at the forefront of proposing new solutions to gaps left by the US retreat from Europe from a political, economic, military, and industrial point of view. One of them is security guarantees, where the line of effort will continue this week with France hosting European joint staffs.

Finally, Macron recalled France’s “particular status” as a nuclear power while further underlining the European dimension of French vital interests. That statement reflects the overlapping nature of national and European security interests. This doctrine is not new. It rules out France sharing nuclear decision-making with other nations, as Macron clarified Wednesday night. But in the current context, Macron’s speech is a call for deeper discussions among France and other European nations.

—Léonie Allard is a visiting fellow at the Atlantic Council’s Europe Center, previously serving at the French Ministry of Armed Forces.

***

The most far-reaching takeaway from Macron’s address to the nation was what it might suggest about the potential extension of the French nuclear deterrent to include other European nations as well. France and the United Kingdom are the only states in Europe possessing nuclear weapons, which they currently use solely for national deterrence. Other European NATO allies rely on the United States’ nuclear umbrella through NATO’s nuclear-sharing arrangement. However, with the United States challenging its European allies with its increasingly transactional foreign and security policy, calls for a stronger European role in defense—including nuclear deterrence—are growing louder. Merz also raised this issue just before his election, indicating a possible significant shift in Germany’s stance on this matter. 

The main conclusion from these developments is that we are potentially witnessing the dawn of a new era of not only novel experiments regarding nuclear arrangements in Europe but of nuclear proliferation in general. 

—Justina Budginaite-Froehly

Thursday, March 6—European leaders meet in Brussels

In the European Council’s announcements on defense and Ukraine, we are seeing both the potential and limits of the European Union. Defense and security issues have been and remain the remit of member states. But when it comes to financing Europe’s much-needed rearmament, the EU is an obvious and important part of the solution to the funding needs of many member states. No one country has the capabilities to do this effort itself, and by working together with the EU’s twenty-seven members and leveraging the financial firepower of its institutions, such as the European Investment Bank, economies of scale can be achieved. 

Analysts will slice and dice the EU-speak of the summit conclusions and look for big and small differences emerging from the closed-door conversations among leaders. But the scope and speed of agreement on controversial issues, such as joint borrowing for defense and more flexible debt and deficit rules to allow for greater military spending, are a significant strategic signal that Europe is stepping up to bolster its own security. The process is slow, technical, and bureaucratic. Many details still have to be negotiated. But it’s nothing shy of extraordinary that Europe has been moving so quickly on these proposals now. 

On other big geopolitical questions such as Europe’s support for Ukraine, the limits of the EU are on full display with Hungary’s veto of any conclusions on Ukraine. In the current setup where unanimity rules, Hungary can and will continue to play spoiler. The EU’s twenty-six remaining members put out their own conclusions, complete with promises for further and predictable aid to Ukraine. But as long as Hungary abuses the veto system, the EU’s ambitions on Ukraine remain limited.

—Jörn Fleck 

***

The EU is finally stepping up through the ReArm Europe initiative, which von der Leyen outlined ahead of Thursday’s meeting in Brussels. This is an important step in providing member states with greater fiscal space for defense spending. However, while it alleviates some national budget constraints, it remains a limited measure. What the EU truly needs is a genuine European initiative that includes financing, stronger coordination, and a coherent industrial defense policy.

One of the most glaring inefficiencies in European defense remains the lack of interoperability. It is astonishing that different types of ammunition are being used for the same weapons systems, rendering them incompatible. This fragmentation weakens Europe’s ability to respond effectively to security threats and underscores the urgent need for standardization and joint procurement. Despite the growing momentum for deeper European defense cooperation, political spoilers such as Hungarian Prime Minister Viktor Orbán and Slovakian Prime Minister Robert Fico are likely to hinder progress at the EU level. As a result, much like the UK-France-led reassurance initiative, we may see a coalition of the willing emerge to push forward on European defense integration.

All eyes are now on the upcoming White Paper on European Security and Defense, which is expected to shape the EU’s strategic approach in the coming years.

—Roderick Kefferpütz

How should the US view these developments?

These developments should be welcomed in Washington. After decades of pushing for European allies to step up on defense, Washington should take note of the seriousness with which efforts are moving to approve the EU’s initiative to mobilize European joint borrowing, adapt debt rules to accommodate greater defense spending, and streamline procurement and cooperation. 

Some in the US defense policy bubble will have their usual fits about a Europe that answers the United States’ call for it to take greater responsibility but does so through the European Union rather than NATO. But there should be much to Washington’s liking in this EU effort. Cohesion and complementarity with NATO goals are mentioned throughout the Council’s conclusions, and many European allies, especially on the frontlines, will push for this for strategic reasons of keeping NATO and the United States engaged. Depending on the exact terms, the US defense industry is also likely to benefit from an expanding defense pie. What Washington won’t get is European allies that pay and do more for their own defense but don’t demand the adequate say for greater burden-sharing.

The Trump administration can take some credit for having pushed Europe’s actions and ambitions. But the White House should also note the deep frustration from across Europe with the idea of US abandonment—not just of Ukraine but of the transatlantic alliance.

—Jörn Fleck

***

This is a watershed moment for the US-European partnership. Not only does the relationship need to be rebuilt under a fundamentally new contract, but it must also be completely rethought. Europeans are proving this week that they have the tools necessary to step up to the plate, support themselves, and support Ukraine. Europe should certainly expect a reorientation by the Trump administration, especially regarding security. Hopefully, the steps taken by the EU over the past week encourage the United States to remain committed to the health of the US-European partnership. The United States wants a stronger and more capable ally, and if the EU can put real meat on the bones of its announcements this week, then Washington could have just that.

—Rachel Rizzo is a nonresident senior fellow at the Atlantic Council’s Europe Center.

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Although the details of the negotiation process that began recently in Riyadh remain opaque, reports are already circulating about various potential formulas for using these funds. According to insiders, one proposal suggests allocating a portion of the reserves to support reconstruction in the approximately one-fifth of Ukrainian territory currently occupied by Russian forces. In practice, that would mean the return of the frozen assets to Russia.

Kyiv would strongly oppose any such move, as it would be seen as contradicting both Ukraine’s national interests and the interests of the victims of Russian aggression. This underlines the high stakes as negotiations evolve and the opposing sides debate the fate of Russia’s frozen assets.

Since February 24, 2022, reserves of the Russian Central Bank have represented the largest frozen pool of Russian sovereign assets. Kyiv has consistently called for their full transfer to fund the Ukrainian war effort and compensate for war damage inflicted by Russia. G7 countries have repeatedly reaffirmed their stance that the frozen assets will remain immobilized until Russia pays for the damage it has caused in Ukraine.

This position has effectively placed responsibility on Ukraine and Russia to negotiate a political settlement including war reparations. Over the past three years, significant work has been undertaken to elaborate legal grounds for the confiscation of the frozen Russian assets in Ukraine’s favor, but no decisive action has been taken to seize them outright.

Instead, as a temporary measure, Ukraine has received interest accrued on these funds, which were placed in deposit accounts in 2024. Additionally, G7 leaders agreed to provide a $50 billion loan to be repaid in the coming years using proceeds from the frozen reserves. This arrangement represents a substantial achievement. It has also fueled speculation that the Russian assets will remain untouched until the loan is fully repaid, which could take 10 to 15 years.

As the world watches the Russian invasion of Ukraine unfold, UkraineAlert delivers the best Atlantic Council expert insight and analysis on Ukraine twice a week directly to your inbox.

The start of peace talks in Saudi Arabia, spearheaded by the United States, has shifted the political calculus surrounding the use of the frozen Russian funds. Potential proposals to channel them into Ukraine’s reconstruction, including reconstruction projects in Russian-occupied territories, would mark a striking departure from previous policy. While this would no doubt be framed as a pragmatic step toward resolving the conflict, many would see it as a major concession to Moscow.

At first glance, this approach may appear designed to set a balance between competing interests. In reality, it risks undermining the very principles on which the international response to Russia’s aggression has been built.

Since 2022, there has been broad consensus that Russia, as the aggressor state, bears full responsibility for the consequences of the war, including the obligation to compensate for all damages, irrespective of the circumstances under which they occurred. This has been reaffirmed in a UN General Assembly resolution, one of Ukraine’s key diplomatic achievements at the United Nations.

Any compromise that allows Russia access to its frozen reserves, even indirectly, would set a dangerous precedent for the division of responsibility over war-related damages. While some might argue that the money ultimately belongs to Russia and that partial access does not amount to a strategic loss for Ukraine, this perspective ignores a fundamental reality: These frozen assets were supposed to serve as leverage to compel Russia to accept its legal obligations, including reparations. Allowing Moscow to regain control over even a fraction of the frozen assets would weaken that leverage and allow the aggressor to benefit at the expense of its victims.

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