But while the G7 was dominated by the world’s hottest issues ― the Iran peace plan, military support to Ukraine and sanctions against Russia ― the European meeting is purposely intended to allow leaders to take a step back. As their final gathering before the summer break, the summit will aim to answer the China trade question and provide at least some impetus to breaking a deadlock that’s already emerged over the bloc’s next seven-year budget, something that’s shaping up to be the biggest internal negotiation in Brussels this year.
So this meeting gives leaders like France’s Emmanuel Macron, Germany’s Friedrich Merz and Italy’s Giorgia Meloni, who attended the G7 earlier in the week, and the 24 others, an opportunity to think more strategically. The continent’s waning economic might gnaws away at the EU but frequently gets nudged aside as leaders fight fires instead. Likewise, the next seven-year budget doesn’t kick in until the start of 2028, but getting a deal among the 27 governments, let alone with the European Parliament, which must happen afterward, is notoriously devilish, and needs a steer from the top.
A firmer approach
The EU’s governments seem to be falling into two camps. While the two main topics at this summit ― global economic competitiveness and the bloc’s central budget that includes roughly €2 trillion to spend on projects as diverse as farming subsidies, cultural initiatives and new roads ― don’t appear to have much in common at first glance, the dividing line between national capitals is strikingly similar.
Broadly speaking, the governments in the northern and western portion of Europe want a smaller EU budget. Traditionally, they’ve been called “frugals” for their preference to keep a tight hand on the purse strings. Now they call themselves “the friends of modernization” in recognition of how they want the cash spent in different ways. Governments in the south and east generally wish for a bigger pot of cash in Brussels, and now push to protect traditional spending priorities. They call themselves the “friends of cohesion” ― cohesion being EU jargon for investment in Europe’s less-developed regions.
For the first camp, which includes Germany, Sweden, the Netherlands, Austria and several others, China’s rise, Russia’s war in Ukraine and U.S. President Donald Trump’s transactionalism have fundamentally changed the debate.
In their view, Europe is being squeezed from all sides. Chinese manufacturers have become dominant in sectors the EU once dominated, from the auto industry to clean-energy tech. At the same time, the U.S. has deployed tariffs and increasingly sought to attract investment and production away from Europe.