Breaking: Germany's CDU/CSU of Friedrich Merz agrees with Social Democrats and Greens on a gigantic new debt package for defense, infrastructure and climate

The deal paves the way for historic changes to Germany's debt brake next week amid new security challenges (Russia, Trump) 2/ Details of the agreement are expected to emerge soon as party groups meet at 1 pm in the Bundestag to discuss the deal.

The changes to Germany's constitution and the debt brake will be voted next week, with a thin majority of just about 30 votes. That will be a crucial vote.

Latest: Germany‘s pro-Putin BSW misses entry into Parliamentary by a whisker (4.97%).

This increases the likelihood of a stable German government as Friedrich Merz will only need one coalition partner (Social Democrats). 2/ For context: Had the BSW — which frequently peddles pro-Putin narratives and calls for halting military aid to Ukraine — made it into Parliament, it would have changed majorities and forced Merz to form a coalition with both SPD and Greens.

That would have been problematic…

It‘s happening! After 25 years of negotiations, the EU is about to sign its mega trade & political partnership deal with South America‘s Mercosur bloc.

Contrary to what critics say, I‘d argue it‘s not only geopolitically crucial but also good for farmers & environment. Thread 1/ 2/ How did we get here? After talks started in 1999, negotiations dragged on forever.

Finally, an agreement “in principle” was reached in 2019. Yet Bolsonaro ruled in Brazil, the Amazon was burning and the deal became untenable without additional environmental safeguards.

As Olaf Scholz meets NATO Secretary General Mark Rutte in Berlin today, he opposes a membership perspective for Ukraine.

Now a counter proposal has popped up in my discussions with officials in Berlin: Ukraine should take a "neutral" status like Finland had for decades ... 1/ 2/ The (unofficially) voiced proposal comes amid talk in Berlin of setting up a "contact group" together with China, India and Brazil to negotiate a peace solution with Russia.

Giving Ukraine a NATO membership perspective would make such peace talks impossible, the thinking goes

Important shift by Olaf Scholz:

A person "familiar" with the German gov's position confirms to POLITICO's Berlin Playbook that the Chancellor did indeed mean with yesterday's remark that Ukraine could strike back with Western weapons on Russian soil.
politico.eu/newsletter/ber… 2/ Scholz's spokesperson Steffen Hebestreit now on the record: Ukraine's "defensive action is not limited to one's own territory, but also includes the territory of the aggressor."

"I had the impression that the Chancellor was not surprised by what Macron said."

Breaking: Vice Chancellor Robert Habeck said Germany should not block Poland's request (if one is made) to send its Leopard tanks to Ukraine.

"Germany should not stand in the way when other countries make decisions to support Ukraine, regardless of what decision Germany makes." So, it looks like the ball is now in Warsaw's court.

A German spokesperson said that so far there has been no request by Warsaw to allow donating Polish Leopard tanks to Ukraine.

It seems a bit of a chicken game where everyone's pointing with their finger at the others.

2/

Greece and Germany are "no longer in a relationship between weak and strong, between borrower and lender," said PM Kyriakos Mitsotakis in Athens next to Chancellor Scholz.

Yet he cautioned that both sides still need to find a "positive" solution on Greek demands for reparations. Greece's Mitsotakis said that EU energy/gas price spat must be solved without an extraordinary leaders' summit in November.

"It would be terrible if that came back to us [EU leaders]. This must be resolved at the level of the energy ministers," Mitsotakis said.

2/

The next episode in the Franco-German drama: Macron and Scholz meet today in Paris — but while 🇩🇪 announced there would be a joint press conference, 🇫🇷 declined to host one.

That would be quite a rebuke, similar to what Orbán recently faced in Berlin.
politico.eu/article/olaf-s… I wrote “would be” a rebuke, because my smart colleague @cleacaulcutt in Paris reckons that if things go well between Scholz and Macron, the latter might spontaneously put on a press conference to show goodwill.

If not, things would inevitably look awkward/bad between both.

2/

In what sounds like a swipe against U.S. push for decoupling from China, Scholz said in Brussels that he wants to maintain close trade ties with Beijing

"The EU prides itself on being a union interested in global trade and it does not side with those who promote deglobalization" Asked about a report that he wants to force through China's purchase of a Hamburg port terminal against criticism and warnings from his own government and intelligence services, Scholz said that "nothing has been decided yet. There are still many questions to be clarified."

2/

More EU debt? Fresh signs emerged early this morning from EU summit in Brussels that Germany and Netherlands are willing to explore a new EU finance instrument like SURE — based on loans, not grants — if existing money pots like the Recovery Fund or RePowerEU aren't enough.

1/ Such EU financing might be needed to cushion the fallout of the energy crisis in some countries that can't afford big relief packages like Germany's €200 billion "Doppelwumms."

Following first day of summit, 🇩🇪 Chancellor Olaf Scholz left the door open to such a solution...

2/

What happened yesterday between Berlin and Paris is truly concerning, not just for Franco-German partnership but the entire EU.

Following growing tensions and the inability to agree on energy & defense, 🇫🇷 and 🇩🇪 postponed a long-planned summit. Macron cancelled Scholz [THREAD] The official reason given by Paris and Berlin are "difficulties on the agenda of some ministers."

It's a wild excuse, although partly true (at least five German ministers, including FM Baerbock, had complained that the summit date next Wednesday clashes with their holidays)

2/

Orbán said some wild things in his Berlin interview.

My highlight is his reply to whether it’s not contradictory that Hungary benefited so much from civil rights & liberties in past 30 years but is now restricting them:

“I haven’t thought about that yet. That’s a good question” It’s minute 44 of the video below.

Other remarkable statements:
- US & Russia must negotiate Ukraine’s future (thus Donald Trump is “hope for peace”)
- truce can best be achieved by not sending so many weapons to 🇺🇦
- war wouldn’t have started with Merkel

It's incredible. In my interview last Friday, I asked Defense Min Lambrecht why Berlin doesn't deliver at least armored vehicles like the "Dingo" to Ukraine — as France does.

Lambrecht insisted 🇩🇪 could not spare a single Dingo. Under pressure, she now agreed to send 50 [Thread] The "Dingo" saga is yet another example of how the German government, when it comes to military support for Ukraine, continuously stonewalls and comes up with all sort of excuses why they can't do more — until they ultimately, when pressure gets too strong, cave and do more.

2/

Big communication blunder by 🇩🇪 FM Baerbock

“If we don’t get the gas turbine, then we won’t get any more gas, and then we won’t be able to provide any support for Ukraine at all, because then we’ll be busy with popular uprisings.” She immediately backtracked but damage was done. Baerbock immediately said she had been “exaggerating,” and she repeated this later, also stressing the high level of public support in 🇩🇪 for arms deliveries to Ukraine.

The Foreign Ministry said it’s important to listen to her full remarks for context (and they’re right).

2/

Speaking from home office with a terrible light setup, Economy Minister Robert Habeck warns that Germany will face tough challenges for the coming two winters due to gas shortages.

Says 🇩🇪 will curb gas consumption to fill gas storages by 75% in September and 95% by November. Habeck rejects Russia‘s claims that its “a guarantor of energy security.”

“On the contrary, Russia is increasingly proving to be a factor of uncertainty in the energy system … In fact, Russia is using its power … to blackmail Europe and Germany.”

2/

Can’t make this up: Just as we’re reporting from the NATO summit that Italy mulls to finally step up its weapons deliveries to Ukraine (concretely, I heard 🇮🇹 might send three “Panzerhaubitze 2000” howitzers), traffic police stopped three such howitzers “bound for Ukraine”…

1/ …close to Naples because the vehicles transporting them lacked registration papers and maintenance.

🇮🇹 Defense Min said the howitzers were en route to Germany for an “exercise” — which might also mean grouping them together with 6 howitzers that 🇩🇪 and 🇳🇱 are sending to 🇺🇦

2/

In addition to 🇪🇺 membership candidacy for Ukraine and Moldova, EU leaders will also discuss wider reforms at their summit this Thursday and Friday.

But don't put your hopes too high: "Many EU countries" see perspective of EU treaty changes "skeptical," said German official.

1/ In a sign of how low expectations are, draft conclusions for the summit only say that leaders "take note of the proposals" that were brought forward by the Conference on the Future of Europe.

There's talk of an "effective follow-up," but that's kicking the can down the road.

2/

Breaking: German Chancellor Olaf Scholz supports granting Ukraine and Moldova EU membership candidate status.

"Germany supports a positive decision for Ukraine and also Moldova" by EU leaders, the chancellor said at press conference in Kyiv. Backing also from leaders of France, Italy and Romania who also were at the joint press conference with Ukraine's Zelenskyy.

“All four of us support the status of immediate candidate for membership,” said France's Macron.

However, not yet clear what will be the conditions.

2/

Press conference of Olaf Scholz 🇩🇪 with leaders of 3 Baltic countries in Vilnius now.

Lithuanian President Gitanas Nausėda sets the tone: "Our determination, our ability to react, our ability to decide, will decide in which Europe we will live in the next decades..."

1/ "... That's why we must defend our values and our peace with all the means we have, to be on the right side of history. We must act, and we must act now."

(Subtle message to 🇩🇪 Chancellor Scholz who's speaking next!)

2/

Big Bundestag debate on Ukraine this morning: Opposition leader Friedrich Merz accuses Chancellor Scholz of ignoring parliamentary resolution to send "heavy weapons."

"More than a month after this resolution, the promised weapons have not been delivered to Ukraine to this day." Chancellor Scholz speaking now, says "we will continue to support the Ukrainians for as long as is necessary, with all the options that we have put in place."

2/

German Foreign Minister Annalena Baerbock arrived in Kyiv today, as the first 🇩🇪 cabinet member in Ukraine since the outbreak of the war.

Baerbock is visiting Bucha and meeting her counterpart Dmytro Kuleba later today.

Chancellor Olaf Scholz is not planning to go anytime soon. In Bucha, Baerbock said she’s shocked about crimes committed under 🇷🇺 occupation:

“We owe it to these victims to not only remember them, but to bring the perpetrators to justice. That’s what we will do as an international community. It’s the promise we can & must make here.”

2/