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Von der Leyen Nominated for Second Term as EU Commission President

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EU leaders have nominated Ursula von der Leyen, the current European Commission head, for a second five-year term during a summit in Brussels. Estonian Prime Minister Kaja Kallas has been selected as the EU’s next foreign affairs chief, and former Portuguese Prime Minister António Costa has been chosen as the next chairman of EU summits. All three candidates are from centrist, pro-EU factions.

The European Parliament will vote on the nominations of Ms. von der Leyen and Ms. Kallas. Von der Leyen is from Germany’s centre-right, Costa is a socialist, and Kallas is a liberal. This leadership package represents continuity for the EU amid geopolitical uncertainty, despite a recent surge in support for hard-right parties in the European Parliament elections.

Italy’s Prime Minister Giorgia Meloni has shown resistance, stating that the plans ignore the successes of hard-right parties like her own. Meloni, who heads the right-wing European Conservatives and Reformists (ECR) bloc, abstained from voting for von der Leyen and voted against Costa and Kallas. Despite the ECR becoming the third largest group in the European Parliament, Meloni was not included in the nomination discussions.

Meloni expressed frustration, arguing that European voters had asked for a different direction. Without naming names, she criticized those who believe in oligarchy as the only acceptable form of democracy.

Von der Leyen will need 361 votes from the European Parliament for confirmation. Support from the centre-right European People’s Party, liberals, and social democrats could give her enough backing, but it will be close. Diplomats suggest that von der Leyen might seek Meloni’s support by offering Italy a powerful commission post.

Von der Leyen expressed gratitude for her nomination and highlighted the importance of supporting Ukraine in its conflict with Russia, a task that may become more complex if Donald Trump wins the upcoming US presidential election.

Kallas, known for her strong support of Ukraine and criticism of the Kremlin, acknowledged the significant responsibility of her new role. Some critics are concerned that her firm stance on Russia could pose challenges.

Costa praised his colleagues and emphasized the importance of European unity and resilience. He will replace Belgium’s Charles Michel, and Kallas will succeed Spain’s Josep Borrell.

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G7 to Use Frozen Russian Assets for $50 Billion Ukraine Loan

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The G7 has agreed to utilize frozen Russian assets to raise $50 billion (£39 billion) for Ukraine to aid in its defense against Russian forces. President Joe Biden emphasized this decision as a signal to Russia that the support for Ukraine remains steadfast. However, Moscow has warned of “extremely painful” retaliatory actions. The funds, anticipated to be available by the end of the year, are intended to support Ukraine’s war effort and economic stability in the long term.

At the G7 summit in Italy, Ukrainian President Volodymyr Zelensky and Biden signed a 10-year bilateral security agreement between the US and Ukraine, which Ukraine hailed as “historic.” This agreement involves US military and training aid but does not commit US troops to combat. It aims to enhance Ukraine’s defense capabilities, support its defense industry, and aid in economic and energy recovery. It also stipulates consultations at the highest levels in case of future Russian attacks on Ukraine to decide necessary support measures.

Separately, about $325 billion in Russian assets were frozen by the G7 and the EU following Russia’s 2022 invasion of Ukraine. These assets generate approximately $3 billion annually in interest. The G7 plan involves using this interest to cover the annual interest on a $50 billion loan for Ukraine, sourced from international markets.

President Biden, at the summit in Puglia, Italy, reiterated that the $50 billion loan would support Ukraine and send a strong message to Russian President Vladimir Putin. Zelensky expressed gratitude for the continued support from the US and other allies, calling the security deal with the US the strongest since Ukraine’s independence in 1991. Other G7 leaders, including UK Prime Minister Rishi Sunak, praised the loan deal as transformative.

The $50 billion loan compares significantly with the $61 billion in US military aid agreed upon in May. A senior White House official noted the loan would support various needs, including military, budget, humanitarian, and reconstruction efforts. While the frozen funds’ interest is seen as a symbolic victory for Ukraine, some in Kyiv had hoped for the release of the entire $300 billion frozen fund. However, the European Central Bank opposed this, citing risks to international order.

The funds from the loan will not immediately impact the war, as they are expected later in the year. Ukraine continues to seek more immediate military aid, such as air defense systems and F-16 fighter jets, which could start arriving in the summer. Zelensky mentioned that the new security agreement includes US shipments of these aircraft.

The loan arrangement symbolizes a significant move where Russia’s frozen assets are repurposed to support Ukraine’s defense. Although this marks a turning point, it is unlikely to change Russia’s stance on the war. Most of the frozen Russian central bank assets are in Belgium, and international law prevents their direct confiscation for Ukraine’s benefit. Russia has condemned the West’s actions as criminal and has hinted at severe retaliatory measures. European investors have around €33 billion stuck in Russia, complicating the situation further.

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France to sue teen for falsely accusing school head in headscarf row

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France’s prime minister has announced that a teenage girl will face legal action for falsely accusing her headteacher of hitting her during a dispute over her wearing an Islamic headscarf. The headteacher resigned following death threats received after the incident.

This incident comes amidst heightened concerns over Islamist threats to French schools following the murders of two teachers, including Samuel Paty in 2020. The headteacher, unnamed publicly, cited safety concerns in his resignation letter sent to colleagues. Two individuals were detained for making death threats, though they had no direct connection to the school.

The police found no evidence to support the girl’s allegations, prompting Prime Minister Gabriel Attal to announce that she will be sued for false accusations. Politicians across the political spectrum condemned the hate campaign targeting the teacher.

Additionally, several Paris schools were closed due to bomb threats, with some investigators considering the possibility of Russian disinformation involvement. Prime Minister Attal previously warned of Russian efforts to destabilize France’s support for Ukraine.

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Germany to cut green spending to meet budget rules

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German Chancellor Olaf Scholz has announced that his coalition reached an agreement on the budget following a month of crisis talks. The decision comes after Germany’s constitutional court declared next year’s budget illegal for violating laws on new borrowing. The government plans to adhere to low deficit commitments by cutting certain green subsidies, including ending solar energy and electric car subsidies earlier than initially planned.

Last month, the constitutional court ruled that the 2024 budget violated a clause prohibiting Germany from running a deficit exceeding 0.35% of GDP. Although the deficit was a small portion of total spending, around €17bn or 3.8% of the €450bn budget, negotiations to address the gap were challenging. The coalition parties disagreed on whether to cut spending or suspend debt rules for the fifth consecutive year.

Ultimately, the coalition agreed to reduce subsidies for green energy, construction, and transportation spending. Chancellor Scholz emphasized that the government remains committed to its environmental goals but acknowledged the need to achieve them with reduced funding. The cuts will accelerate the phase-out of subsidies for electric car purchases and solar energy infrastructure, as well as change the funding structure for Germany’s railways.

Reduced spending on the electrical grid will lead to higher electricity costs for consumers. However, approximately €3bn in subsidies to polluting industries will be cut, and the carbon emission prices for companies will increase, partially offsetting the environmental cutbacks.

While the German government, a major supporter of Ukraine in Europe, assured that support for Ukraine would remain unaffected, it will send about €8bn in aid next year. All three coalition parties claimed victories in the spending agreement, with the Social Democrats limiting cuts to the welfare state, the Free Democrats preventing new borrowing, and the Greens asserting that core environmental aims are maintained despite some rolled-back schemes.

Germany’s political culture strongly opposes debt and deficits, with an aversion to high spending. However, some economists argue that this aversion has resulted in persistent underinvestment in crucial infrastructure. Despite this, Germany has one of the lowest public debts among major developed countries.

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