During intense consultations at the European Council, Chancellor Friedrich Merz provided a mixed assessment of the current European challenges last Friday. The discussions focused primarily on the future EU budget, the continent’s competitiveness, support for Ukraine, EU expansion, and the situation in the Middle East.
Looking ahead to negotiations on the European Union’s next Multiannual Financial Framework (MFF), Merz reaffirmed Germany’s rejection of the current proposal from the European Commission. While the German government is eager to finalize negotiations by 2026 to ensure planning certainty from 2028 onward, the current draft is described as “unaffordable and unbalanced.” Crucially, Germany-along with other net contributors-strictly rejects the inclusion of joint debt. Merz acknowledged at the beginning of the meeting that reaching a minority position is possible, but unanimity is necessary. He urged the upcoming Irish Presidency of the Council to present a significantly scaled-back and viable proposal for all member states.
Another central theme of the summit was the economic strength of Europe. According to Merz, there is broad agreement among member states that the EU’s competitiveness must be the highest priority. Moving forward, the European Commission will be required to submit a “progress report” to the European Council before every meeting to review the status of reforms. This review particularly concerns reducing bureaucratic burdens for businesses and citizens, mandating that Europe become faster and more efficient to compete internationally.
Linked closely to the competitiveness debate is the issue of global economic imbalances. Heads of state and government reached a consensus to better protect the European Union against distorting market practices from other economic blocs, presumably China. Consequently, the European Commission received two specific mandates: first, to confidently represent the EU’s interests to trading partners, and second, to develop existing trade defense instruments and assess new ones.
Merz voiced sharp criticism regarding currency imbalances, referencing states and economic blocs whose currencies are significantly undervalued against the Euro and the US Dollar. Such distortions, he pointed out, impair fair competition and ultimately harm the economies concerned. The Chancellor revived the idea of international talks, recalling historical currency agreements such as the Plaza Accord of the 1980s.
The situation in Ukraine once again dominated the summit. Ukrainian President Volodymyr Zelenskyy, who traveled personally to Brussels, provided European leaders with a detailed update on the military situation. The Chancellor assessed that the frontline dynamics have improved in the last few weeks in favor of Ukraine. Merz spoke about a changing momentum in the war and emphasized the need for serious diplomatic efforts. He noted that key elements for potential peace talks have already been developed with French President Emmanuel Macron and Ukrainian President Zelenskyy, which have broad backing among European partners. At the G7 summit earlier in the week, consensus was reached with US President Donald Trump to continue supporting Ukraine while simultaneously increasing pressure on Russia. The message to Moscow is clear: Russia must now engage in serious negotiations. In the Chancellor’s view, the responsibility for the next step rests solely with the Kremlin. However, he stressed that a decision on who should represent Europe in potential negotiations has not yet been made. First, Russia’s willingness to negotiate must be established. The EU, he emphasized, is not a neutral mediator, but stands firmly on Ukraine’s side.
Optimistically, Merz discussed the expansion of the European Union. The first negotiation chapter with the Republic of Moldova was recently opened, and he advocated for accelerating the integration of other candidate countries. The Chancellor announced that the European Council will discuss the future of expansion policy in detail in October, with a particular focus on the Western Balkans. Merz promoted his concept of “associated membership” for Ukraine. This model would allow the country to have stronger political integration before full EU membership. Drawing parallels to the period of German reunification, when East German representatives initially served as observers in the European Parliament, he stated that this solution could be achieved without amending European treaties. Nevertheless, he noted that Ukraine cannot currently become a full EU member due to the ongoing war.
Finally, the situation in the Middle East was addressed by the heads of state and government in Brussels. Merz reported that the EU welcomes efforts toward a ceasefire and calls for its permanent adherence. The German Chancellor called on the Israeli government to refrain from further escalation through the expansion of Israeli settlements in the West Bank, a position he conveyed multiple times during discussions with Prime Minister Benjamin Netanyahu. However, Merz made clear that the German government rejects any suggestions for trade measures against Israel.
