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GOOD MORNING. EU leaders are in town for a historic summit at which one of them is openly sabotaging the EU’s support for Ukraine in the face of Russia’s brutal and illegal war of aggression. Hungarian Prime Minister Viktor Orbán has made a bet that the West is weak and will eventually give up — and is now doing all he can to make his prophecy come true.
Seat at the table: As Jens Geier, the leader of the German Social-Democrats in the European Parliament put it: Thanks to Orbán, Russian President Vladimir “Putin is also sitting at the summit table.”
Breakfast with Viktor: Against that backdrop, this morning, Council President Charles Michel will meet with French President Emmanuel Macron, German Chancellor Olaf Scholz and Orbán himself, in an attempt to find a way forward. The breakfast comes on top of a meeting late last night, where Michel met with Macron, Scholz and Commission President Ursula von der Leyen to discuss a common line.
PREPARE FOR A MARATHON: Leaders and diplomats on Wednesday warned the two-day EUCO summit could go into overtime. “It’s money, it’s unanimity, it’s crucial, it’s history, so you can expect this to be a bit longer,” said a senior EU official.
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Mariah Kallas: Estonian PM Kaja Kallas warned that if necessary, leaders will talk “until Christmas.” Translation: All she wants for Christmas is EU.
Follow along … with POLITICO’s traditional EUCO live blog.
More on the summit below. But amid all the doom and gloom, we’ll start with some more positive news today.
GERMANY AGREES BUDGET DEAL 
BERLIN DOUBLES UKRAINE MILITARY SUPPORT DESPITE BUDGET HOLE: The leaders of Germany’s three-party ruling coalition on Wednesday agreed on a new draft budget for 2024 after weeks of tense negotiations following a court ruling that blew a €60-billion-hole in the country’s finances.
The key takeaway for the EU: Despite painful cuts, Europe’s biggest and richest country is vowing to maintain its support for Ukraine — even as it is pushing to weaken the EU’s joint defense aid in Brussels.
Untouched priority: Ukraine’s survival. The budget deal allows Germany to keep its promise of doubling next year’s military aid to Ukraine to €8 billion from €4 billion. It’s a sign of how serious countering Russia’s war is for Social-Democrat Chancellor Olaf Scholz and his liberal and Green coalition partners, who accepted painful cuts to each of their own priorities to facilitate that goal.
Shoulder to shoulder with Kyiv: Scholz on Wednesday also stressed that Germany will step up by increasing its support to Ukraine if America or other allies step back, or if Russia makes advances on the battlefield.
Emergency debt: Scholz opened the door to suspending Germany’s constitutional debt brake next year by declaring an emergency “if the situation worsens … for example because the situation on the front deteriorates or because other supporters reduce their aid to Ukraine or because the threat to Germany and Europe increases further, we will have to respond to this.”
Why it matters: Unlike other big Western countries such as the U.S. or France, support for Ukraine in Germany remains high. There’s cross-party consensus that defending the country is crucial for the EU’s own security and the West’s credibility worldwide, from the Social-Democrats to the Liberals and Greens to the opposition center-right CDU and CSU.
Steadfast support: In Ukraine’s darkest hour — with morale fading, U.S. support wavering and Orbán actively sabotaging the EU’s aid package — Berlin is sending a strong signal that it won’t budge an inch, and is ready to double down if others give up.
By the numbers: According to the Kiel Institute, which tallied up military aid to Ukraine up to October 31, Germany is the second-highest donor after the U.S., with €17.1 billion. That’s compared to the U.K.’s €6.6 billion, France’s €0.54 billion, Italy’s €0.69 billion and Spain’s homeopathic €0.34 billion.
Snarky side note: As one EU diplomat pointed out via text message, it’s remarkable that the southern countries, who argue they need laxer debt limits to finance defense, have sent much less military support than so-called frugals like Denmark (€3.5 billion), the Netherlands (€2.5 billion) and Sweden (€2.1 billion).
But where’s that German leadership in Brussels? Berlin’s doggedness on Ukraine clashes with its absence of leadership in Brussels — where Germany is burying the EU’s attempts to step up joint military aid for Ukraine, as Playbook reported earlier this month.
Going it alone: “Notwithstanding everything Germany did over the last 12 months it won’t be Orbán but Scholz who ends up halting EU military aid to Ukraine,” a diplomat told my colleague Jacopo Barigazzi in reference to the German chancellors’ attempt to discount bilateral support from contributions to the European Peace Facility.
CUTTING SUBSIDIES AND RAISING TAXES: Berlin had to cut about €17 billion in its 2024 budget, as my colleague Hans von der Burchard reports. Much of this was done by culling subsidies for solar cell production, electric cars, as well as on diesel in the agricultural sector — even as government officials say they are aware of the risk posed by farmer protests.
Germany will also introduce a tax on jet fuel for flights inside the country, and a tax on single-use plastic. And people will also pay more for electricity, as the government won’t have money to subsidize transmission costs as originally planned.
More cuts: The budget deal also significantly increases a national carbon emissions levy, from the current €30 per ton to €45 as of next year (instead of €40 per ton, as initially planned). This will likely prove controversial as it will increase costs for fuel and oil and gas heating.
What was saved in the budget deal: Germany will maintain subsidies for the construction of semiconductor plants and to support clean energy, for example by paying state aid to transition steel plants from natural gas to hydrogen. Households can also rely on state funds to switch to climate-friendly heat pumps and away from fossil fuel boilers.
EU-UKRAINE AT THE EUCO
WILL EU UN-INVITE ZELENSKYY? Speculation was rife in Brussels that Ukraine’s President Volodymyr Zelenskyy would join the EU summit in person today. He was in Oslo on Wednesday — just a two-hour flight away.
Zelenskyy was keen to attend, two diplomats said, and leaders in Brussels were willing to invite him. But there was a catch — and you can probably guess what, or rather who, the problem was.
Specter of Orbán: At a meeting of EU countries’ representatives, several ambassadors expressed reservations about inviting Zelenskyy to the EUCO, according to the two diplomats mentioned above. Their fear was that the Ukrainian’s presence could antagonize Orbán and cause him to dig his heels in even further.
Bad omen: Will the summit start with a big symbolic cave-in from the EU’s 26 other leaders, due to fears about Putin’s best European buddy?
ON UKRAINE’S ACCESSION: Some EU leaders seem ready to partly give in to Orbán’s “red line” and delay the start of accession negotiations with Ukraine, according to senior officials and diplomats. Two told Playbook that leaders might vow to open the negotiations in March, but that Orbán wants a longer delay.
We’ll start once you’re ready: The latest draft conclusions for the summit, seen by Playbook, still include a decision to “open accession negotiations with Ukraine and with the Republic of Moldova,” but with the addition that the Council would only “adopt the respective negotiating frameworks once the measures set out in the Council conclusions of 12 December 2023 are taken.” Those measures include strengthening the rule of law and limiting oligarchs’ influence.
Hungary wants delay until after June: Two senior officials told Playbook that Orbán has signaled he doesn’t want the EU to open accession negotiations before the EU election in June, arguing the decision could hurt his party’s results.
Add that to the list of excuses. It’s just the latest justification from Budapest, after Orbán first argued that his blockade was due to Ukraine’s rule-of-law and corruption problems — which many saw as a joke given Orbán’s government keeps hitting new lows in international democracy and corruption indices.
Will EU leaders buy the new argument? Or will they recall that it was Orbán himself who created that narrative, telling Hungarians in coordinated propaganda campaigns that the EU’s sanctions on Russia were to blame for the cost-of-living crisis, that helping Ukraine would only deepen their economic woes and that its EU accession was against Hungary’s “national interest.”
Time for sanctions? EU leaders are not yet ready to isolate Orbán — they might avoid him during the summit’s photo ops, but politically they are still willing to accommodate him. That will change if the summit fails, officials and diplomats tell Playbook. Some recall that in 2000, EU countries sanctioned Austria for bringing far-right politician Jörg Haider into government — showing that the EU can act when it wants to.
WHY DO GERMANY AND FRANCE ACCOMMODATE ORBÁN? In conversations with Playbook, officials and diplomats pointed out that both countries have strong business interests in Hungary. In the retail sector, Orbán’s government has already proven it is willing to squeeze German, French and other players, or even force them to sell their businesses to Hungarians. And there’s lots more damage Orbán could wreak.
French firm Framatome is involved in the construction of new Russian nuclear reactors in Hungary. “France wants to take over construction of the entire nuclear power station,” a senior EU official said. According to Hungarian media, Framatome’s share in the Hungarian power plant has grown significantly over the past months, after Germany banned Siemens from being involved in the Russian-led project.
Russian reactors’ French soul: Framatome, which is majority French state-owned, will now reportedly supply the control units of the two new reactors, which Hungary’s Foreign Minister Péter Szijjártó called the “soul” of the power plant. Framatome will reportedly also supply the giant steam turbines that generate the electricity. And Hungary’s parliament recently also approved a law that will allow Framatome to supply French-made nuclear fuel rods as an alternative to Russian ones.
For Germany, it’s about the cars: Berlin, meanwhile, may fear what Hungary could do to German factories. German car-makers have major production sites in Hungary that benefit from preferential treatment; BMW is expected to open a new factory in 2025. According to Germany’s foreign office, “around 300,000 Hungarians” work for some 3,000 German companies active in Hungary.
WHY THE PROMISE OF ACCESSION MATTERS SO MUCH: The prospect of membership is the biggest support the Union can give Ukraine, an EU diplomat said. “Let’s not forget that a part of the reason this war started — apart from whatever went [on] in the head of Putin — is Ukraine turning to the West.”
AS LONG AS IT TAKES? Europe’s true beliefs on Ukraine will be put to the test at this summit, my colleague Barbara Moens writes in a curtain-raiser.
The EU is now testing the limits of the promise “as long as it takes,” said Lithuania’s Foreign Minister Gabrielius Landsbergis, one of Ukraine’s staunchest supporters. “Apparently as long as it takes means as long as we can agree. If we cannot, obviously that will have huge repercussions, first of all in Ukraine, but not just there.”
Now read this: As leaders gather in Brussels today, “they must recognize that lasting peace and stability relies on bringing Ukraine into the EU,” writes former NATO chief Anders Fogh Rasmussen, the founder and chairman of Rasmussen Global, in this opinion piece for POLITICO.
ISRAEL-GAZA AT THE EUCO
SANCTIONS ON ISRAELI SETTLERS: EU leaders will also discuss the Middle East at their summit. In a letter obtained by Playbook, Belgium’s PM Alexander De Croo, Ireland’s Taoiseach Leo Varadkar, Malta’s leader Robert Abela and Spain’s PM Pedro Sánchez call for “travel bans and asset freezes on violent settlers who are attacking and displacing Palestinian communities” in the West Bank.
Why it matters: The EU’s promise of supporting a two-state solution becomes void if the EU allows Benjamin Netanyahu’s government to make a Palestinian state impossible by actively supporting settlers, diplomats said.
Sanctions on Hamas: In a separate letter, the foreign ministers of France, Germany and Italy call for sanctions on Hamas, to hit the terror group’s finances and help in “delegitimizing Hamas internationally, which in no way represents the Palestinians.” Tell that to the increasing percentage of Palestinians who support Hamas.
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IN OTHER NEWS
FIRST, OVER IN THE US — HOUSE MOVES TO IMPEACH BIDEN: House Republicans on Wednesday formally greenlit an impeachment inquiry into Joe Biden, their biggest step to date toward trying to remove the U.S. president from office. My Stateside colleagues have the details.
BACK TO BRUSSELS — QATARGATE UPDATE: Eva Kaili and Francesco Giorgi, two of the highest-profile suspects in the Qatargate corruption probe, have launched an all-out media and legal assault to bring down the investigation. And they may very well succeed, report POLITICO’s Elisa Braun, Gian Volpicelli and Eddy Wax.
BULGARIA BUDGES: Shortly after POLITICO’s Victor Jack reported that Bulgaria had imported Russian oil above a G7 and EU price cap from August to October, the country’s lawmakers on Wednesday took the first step toward ending a sanctions exemption that has raised millions for Moscow.
X TARGETED BY PRIVACY COMPLAINT: Elon Musk’s X may face an investigation after the noyb privacy group this morning lodged a complaint against the social media network for allegedly violating Europe’s data protection rulebook. Noyb is going after the platform formerly known as Twitter for unlawfully collecting its users’ sensitive data including their political views and religious beliefs so that companies and organizations can microtarget them with ads to influence their opinion, Clothilde Goujard reports.
Irony alert: The complaint was triggered following revelations the Commission itself targeted ads about its controversial law on child sexual abuse online at groups of users including users categorized as “anti-Christian” or those interested in Italian leader Giorgia Meloni.
TODAY’S TOP LISTEN: Alexander Yu, Taiwan’s new top diplomat in Washington and a former envoy to the EU, tells POLITICO’s Power Play podcast that the U.S. and its allies must “not look the other way” in the face of potential aggression from China. Listen here.
**Playbook kommt nach Berlin! POLITICO is bringing our award-winning policy journalism to the arena of German politics, in German. From the Bundestag and key institutions all the way to each Bundesländer, Berlin Playbook has got you covered for what’s to come in a momentous 2024 for European politics. Hier anmelden.**
AGENDA
— European Council summit. Arrivals from 8:30 a.m. … roundtable at 10 a.m. Draft agenda. Watch.
— European Parliament plenary concludes. Highlights: Debate on the outcome of the COP28 U.N. Climate Change Conference, with European Commissioner for Equality Helena Dalli and Spanish Secretary of State for the EU Pascual Navarro Ríos from 9 a.m. … Debate on EU-Ukraine solidarity lanes from 10 a.m. Full agenda. Watch.
— Governing Council of the European Central Bank meets in Frankfurt. Press conference with EIB chief Christine Lagarde from 2:45 p.m. Watch.
— Court of Justice of the EU delivers judgment in state aid case C-457/21 P Commission v Amazon.com and Others, about tax rulings in Luxembourg.
— NATO chief Jens Stoltenberg received Slovak Prime Minister Robert Fico at NATO HQ in Brussels. Press conference at 10 a.m. Watch.
— NATO Deputy Secretary-General Mircea Geoană in France. He’ll meet officials including President of the National Assembly Yaël Braun-Pivet, Secretary-General for Defense and National Security Stéphane Bouillon and Secretary-General of the Ministry for Europe and Foreign Affairs Anne-Marie Descȏtes … as well as with CEO of Dassault Aviation Eric Trappier and Senior Executive Vice President of Thales Pascale Sourisse.
— European Economic and Social Committee plenary session continues. EESC President Oliver Röpke chairs. Agenda. Watch.
BRUSSELS CORNER
WEATHER: 7C and cloudy.
YULE LOVE THIS: Get into the Christmas spirit with a ride on the 92 tram, which will be decorated inside and out from now until January 5, and will be carrying a very special passenger: Santa. “Passengers can meet Santa and have their photo taken with him on board the tram,” STIB’s spokesperson An Van hamme said. Every Wednesday for the rest of the month, Santa’s elves will also board the Christmas tram to hand out candy canes. And in case you’re wondering who is responsible for the lovely carols being played on board, Playbook’s got the inside scoop: It’s the STIB Christmas choir. Details here.
AMBASSADOR RESHUFFLE: Poland’s Law & Justice-appointed ambassador to the EU, Andrzej Sadoś, was summoned to Warsaw on Wednesday and will not accompany new PM Donald Tusk at today’s European Council summit, my colleague Bartosz Brzeziński writes in to report.
Sacked? Officially, Sadoś has not been fired, but his duties will be taken over by a familiar face in Brussels: Piotr Serafin, who headed Tusk’s Cabinet when he was president of the European Council.
Don’t let the door hit you on the way out: Sadoś’ absence is tantamount to a dismissal, insiders at Poland’s permanent representation to the EU told Bartosz. “Good riddance, everyone is happy he’s gone,” one diplomat said of his outgoing boss, who became an ambassador in 2018.
BIG CONSULTANCY NEWS: BPI is acquiring European consultancy firm BOLDT, the companies announced this morning. BOLDT will be known as BOLDT, A BPI Company, while BPI will rebrand to Bully Pulpit International.
NEW JOB: Boeing’s Liam Benham beat out MSD’s Julie Vermooten in the race to chair the American Chamber of Commerce to the EU (which our colleague Sarah Wheaton profiled in EU Influence last week). Benham took up the post Tuesday, succeeding Zeger Vercouteren of Johnson & Johnson.
BIRTHDAYS: MEP Vangelis Meimarakis; Former MEP Daniela Aiuto; Former Danish Prime Minister Helle Thorning-Schmidt; Norbert Funke from the Caucasus, Central Asia, and Mongolia Regional Capacity Development Center; Ambassador Nawaf Alenezi, head of mission of Kuwait to the EU and NATO; Rob Placek of the British Embassy in Washington; U.S. Agency for Global Media’s Joan Mower.
THANKS to Clothilde Goujard, Hans von der Burchard, Jacopo Barigazzi, and Playbook producer Seb Starcevic.
**A message from EFPIA: Resilience begins with research: For Europe to prosper, industry needs conditions that makes the region an attractive place to invest. Ensuring that Europe remains competitive while benefiting from open global supply chains is the best way to ensure resilience. To enhance health system sustainability and resilience requires investment in skills and talent to mitigate workforce shortages and deliver appropriate and high-quality care. Strengthened prevention and immunisation programmes can reduce the burden of communicable diseases and prepare for future pandemics, while a comprehensive EU approach on chronic and rare diseases can help prevent, diagnose and reduce the burden of these conditions. Robust pull incentives can enable long term R&D in novel antibiotics that will help tackle antimicrobial resistance – a looming health crisis facing Europe and the world. The much-needed digitalisation of healthcare delivery, and connectivity between healthcare institutions, will support health systems to deliver better, more resilient care. Read more.**
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