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LEADERS FROM ACROSS the European Union have just completed two days of talks in Cyprus ahead of the next seven-year EU budget.
Discussions at the informal meeting of the European Council were dominated by the impact of the war in Iran on Europe, including how it affects security, finance and energy.
Meanwhile, battle lines were drawn over the upcoming €2 trillion budget, with more frugal nations attempting to contain spending.
Speaking after today’s talks, President of the European Commission Ursula von der Leyen said that the events of the past month have taught the leaders a “hard truth”.
“Our security is not just related. It is intrinsically linked,” she said.
“A threat to a merchant vessel in the Strait of Hormuz is a threat to a factory, for example, in Belgium. So today, I propose that we move beyond reactive crisis management.”
She said the EU must consider expanding the scope of missions, while a structural cooperation of scaling up defence production should be implemented to combat the threat of drones.
“Together, let us build a region where peace is not merely the absence of war, but the presence of a secure and prosperous future for all our citizens.”
Separately, European Council President António Costa stressed that the immediate reopening of the Strait of Hormuz without restrictions is “vital” for the world.
“The Strait of Hormuz must immediately reopen without restrictions and without tolling, in full respect of international law and the principle of freedom of navigation. This is vital for the entire world,” he said.
He said that under the leadership of France, together with the UK, a coalition of more than 50 countries, is preparing the multilateral defensive mission to restore freedom of navigation in the Strait of Hormuz when the necessary security conditions are met.
“European Union is not part of the conflict, but we will be part of the solution,” he said.
Leaders from Lebanon, Egypt, Syria and Jordan as well as the secretary general of the Gulf Cooperation Council, were also in Nicosia today to meet their European Union counterparts.
Costa stressed the importance of closer ties with the Middle East following the war in Iran.
“The current situation clearly underscores how closely Europe’s security is linked with that of the Middle East, and how vital our cooperation on security and defence has become,” he said.
He summed up Europe’s response to the current geopolitical environment in three sentences.
“We are supporting Ukraine in its defence against Russian aggression. We are playing an active role in achieving lasting peace to the Middle East, we are protecting our citizens and companies from economic shocks, and we are preparing the ground for an ambitious long term European Union budget.”
The European Commission last year proposed a budget of €2 trillion to pay for the bloc’s operations, from farm subsidies to research funding, for the 2028-2034 period.
But many EU countries aren’t keen to chip in what would represent a sizeable increase on the current budget.
German Chancellor Friedrich Merz ruled out higher debt and said it was time for the EU to choose its battles, while Dutch prime minister Rob Jetten said the budget amount proposed by the commission “needs to be significantly reduced”.
Speaking to reporters this morning, Micheál Martin “there will have to be compromise” when it comes to the budget.
“It’s difficult to reconcile everybody’s priorities with the available budget, and indeed, some think the budget is too high as it is. Others think it’s not high enough. So those are the challenges,” he added.
He said he would be highlighting Ireland’s priorities in any discussions on the budget, particularly the Common Agricultural Policy and competitiveness.
The Taoiseach said it is expected that the bulk of the work on the budget will be done during Ireland’s six-month term holding the sPresidency of the EU.
He also said Ireland would be “very strongly opposed to any move on the corporate tax” when it comes to own resources in the Multiannual Financial Framework (MFF).
Own resources are designated revenue streams from member states that fund the budget. The 2028-2034 MFF aims to introduce new own resources, including corporate tax.
Martin said the government will “work very hard” to bring the MFF to a conclusion.
“That’s why I’m meeting the various Prime Ministers in advance of the European Union presidency, to just understand their individual priorities as countries,” he added.
He also said the government will negotiate “very strongly” on behalf of farmers and agriculture.
“It’s the one major part of the overall EU budget where we derive substantial funding, we’re net contributors overall but of course, we benefit from the single market, and that’s why the competitiveness agenda is important.”
The Taoiseach said last night that there was “a lot of pessimism” amongst EU leaders about the potential medium-term impact of the war in Iran on supply and prices.
During a press conference today, Von Der Leyen said that since the beginning of the conflict, Europe’s bill for imported fossil fuels has increased by over €25 billion.
“We need to reduce our over-dependency on important fossil fuels, because these make us vulnerable in crisis, and we need to boost our homegrown, affordable, clean energy sources,” she said.
She said that by the summer, the EU will present an electrification action plan with an “ambitious target” to increase independent energy sources in Europe.
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