Sarah Wheaton (2:19)

And as you discussed with Ian yesterday, it's completely unprecedented for a leader to backtrack on a deal that they made. But that's where we're at now. And leaders are gonna see if they can get him to agree to it a second time. How's that gonna go?

Zora Sheftolovich (2:33)

Yeah, I mean, essentially the way leaders see it is he's already agreed and there is no agreeing to it a second time because that's unheard of. The fact is that that decision has been made. But in practice what's happened is that he, he's effectively holding this loan hostage. And what he has said is that until oil starts flowing through the Druzhba pipeline, which is that oil pipeline that takes Russian oil from Russia through Ukraine to Hungary and Slovakia, unless oil starts pumping through there again, he's not going to allow this money to flow to Ukraine. So yesterday the EU sent a delegation of experts from the commission and also from nations to have a look and check out what's going on with this pipeline. And that is seen as kind of a key to unlocking this money for Ukraine. So the idea is basically these experts are going to go and they're going to check whether a, the pipeline is actually damaged, which is what Ukraine has said, and then check how long it's going to take and how it's going to be fixed. And so the idea is basically on the one hand we've got this carrot for Viktor Orban in the form of figuring out what's going on with the pipeline. And that is the thing that he wants to sort of sell as a win ahead of his April election. And on the other hand, they're going to really push him to stick to his word.

Sarah Wheaton (3:42)

Yeah, I mean, we're hearing increasing frustration from top EU figures about Orban kind of going back on his word. We heard Germany's Foreign Minister, Johannes Wodeful, warn during a closed door foreign affairs meeting on Monday that Hungary's obstructionism could no longer be tolerated. And Sweden's Europe Minister, Jessica Rosenkranz, actually just told our colleague Nick Winicker that her country was open to putting Article 7 on the, on the table. That's basically this nuclear option that we talk about of removing voting rights from a country.

Zora Sheftolovich (4:14)

Yeah, but the problem with Article 7 is that it requires unanimous approval from the other 26 countries. And we know that Orban is protected by his friend Fico, who's from Slovakia, Robert Fitzo, the Prime Minister. But also there may be other countries that might sort of look at this and think, oh, I don't know, if I vote in favor of using Article 7 against Hungary, who knows, Maybe tomorrow it'll be me. So it's a tough sell, that one. But, look, ultimately the question is whether this pressure campaign and this Druzhba kind of olive branch will be enough to get Orban to move. And at this point in time, it's too early to say those talks are still happening. One of the things that the EU wants is for more pressure to be put on orban via the EU's leaders. Some of the heavy hitters like Friedrich Merz, the German chancellor, and maybe Emmanuel Macron, the French president, they think maybe the two of them could move the dial a little bit. But with Viktor Orban so close to that Hungarian election on April 12, there's just no telling what is going to be politically expedient. And he may even relish that fight because he can then, you know, put up some videos, as he likes to do, and tell his audience how he's standing up to the man in Brussels.

Sarah Wheaton (5:20)

We have. So domestic politics in Hungary are essentially holding up EU action in Ukraine. And meanwhile, kind of the broader agenda of this Yuko, which was meant to be about competitiveness, has been completely taken over, basically by Trump and Israel's war in Iran.

Zora Sheftolovich (5:37)

Yeah, and this is like the Yuko curse, because last time we had Trump's threats to Greenland, which essentially consumed all the oxygen in the room. This time, it's this war, which has oil prices skyrocketing because the Strait of Hormuz is closed and the 20% of the world's oil goes through there. It's not just oil that countries are concerned about, because also it's a key strait for the transport of fertilizers. So all in all, there's a lot of kind of fear and worry at the EU table, particularly because the EU was cut out of this decision. But ultimately, you know, there isn't much that Europe can do. They can just sit on the sidelines.

Sarah Wheaton (6:13)

Yeah. And that's where we're seeing divisions emerge in the eu. I mean, we're kind of at this moment now where even boilerplate language is becoming a source of division. So people like Spanish Prime Minister Pedro Sanchez, who have been very forceful in saying this war is against international law, his camp wants that type of language to be in the European Council conclusions, which is kind of this formal document that all the leaders endorse at the end of this meeting. But another group of countries, including Germany, they're like, hey, do we really need to antagonize Trump on this particular topic right now? It'll just make him angry. And, hey, we have this EU US Trade deal that we're trying to sort out, and we'll talk about that in a minute. But the reality is that even on these basics that you can't, can't get on one page.

Zora Sheftolovich (6:59)

Yeah. That's not the only disagreement when it comes to this particular war. I mean, a key issue at this European Council summit, and in general in Europe right now, is how to respond to the surge in energy prices. And again, there's lots of views there, because you've got some countries that have taxes on energy, some that don't. You have some countries that want to subsidize industry that is heavily reliant on energy, some that don't. The EU has sort of indicated, look, there are options available on the table that countries can take, and they've presented them. Ursula von der Leyen, the European Commission president, has sort of given people some options and some ideas and said, look, there is stuff you can do, but ultimately it's a difficult one because we saw that last time there was a big energy crisis, it actually led to a lot of inflation. Yeah.

Sarah Wheaton (7:44)

And we're seeing this, this big picture existential debate play out. We have one school of thought that says, hey, high energy prices, it's time to dive more into renewables. Countries like Denmark, Finland, Portugal, Spain and Sweden, they're going to be pushing that, and they want to defend Europe's landmark emissions trading system. That's the system that requires factories and power plants to pay for their warming pollution. But then, on the other hand, countries that rely on fossil fuels, like Italy and Poland are like, hey, actually, let's use this moment to make some adjustments to the emissions trading system. And they're not alone. Just yesterday, ahead of the summit, we saw a bigger group of 10 countries say, hey, commission, you're supposed to look at the emissions trading system this summer, but let's move this review up to, to May because we have some real issues here.

Zora Sheftolovich (8:34)

Yeah, I mean, that's politically expeditious to put this on the table now. And certainly the ETS has some enemies who've been trying to kill the baby. As one particular enemy of the ETS told me the other night, he said, the baby's dead. Baby was the ets, but is it dead? We'll see. Well, it's going to be a big summit, Sarah. I suspect you and I are going to be up quite a long time.

Sarah Wheaton (8:55)

I'm already pouring another mug of coffee.

Zora Sheftolovich (8:57)

I'm going to have two. Okay, Sarah, let's get to our second story today. It's this vote happening in the European Parliament on the EU US Trade deal. That's that deal that was struck by Ursula von der Leyen and Donald Trump at the Turnbury Golf course, or golf curse, as I like to call it sometimes. And it was a pretty lopsided deal, favored the US Pretty heavily. There was a lot of criticism, but ultimately it's what the big EU countries wanted. Because they were afraid of a trade war.

Sarah Wheaton (9:26)

Yeah, exactly. And so today in the European Parliament, we're seeing the trade committee vote on part of it, basically whether to implement the EU's end of the bargain. That means removing tariffs on a wide range of U.S. industrial goods. We're talking machinery, industrial equipment, construction materials, furniture.

Zora Sheftolovich (9:44)

Yeah. And in return, the US was meant to ease its tariffs, especially on steel related products.

Sarah Wheaton (9:49)

Yeah. So the EU reached this deal with with Trump eight months ago, but it's been stuck.

Zora Sheftolovich (9:55)

Yeah, it's been stuck because MEPs are pretty hesitant because basically there's unpredictability in the US firstly from Trump himself, who keeps threatening more tariffs. Essentially when he was threatening to take Greenland by force, he threatened countries with tariffs. And also because there is a pretty significant instability as a result of court rulings that have struck down key parts of his tariff policy. So the question mark that the EU has is that MEPs are dealing with right now. Can you actually trust the US to uphold its end of the bargain?

Sarah Wheaton (10:27)

But interestingly, we're seeing a lobbying push from Washington for once. They actually seem kind of worried that Europe is not going to go along. A key moment was a call between U.S. trade Representative Jamison Greer and Bernd Lange. He's a key trade mep. The US signaled that it could scale back some steel related tariffs because they were worried that this wasn't going to go through. As our trade colleagues have reported, that reassurance helped bring the Socialists and Democrats on board and once they moved, a broad majority was able to form.

Zora Sheftolovich (10:57)

Yeah. So it looks like now probably the deal is going to move forward. Do we know if it's going to pass today?

Sarah Wheaton (11:03)

Yeah, so today we expect it to pass. But the plenary vote, when all the MEPs have to vote up or down, that is the big question mark.

Zora Sheftolovich (11:11)

And when's that happening?

Sarah Wheaton (11:12)

There's still a disagreement on timing, so the center at European People's Party wants it next week, but others want to wait until later in the spring. So we'll have to see what they hash out behind the scenes there.

Zora Sheftolovich (11:22)

Yeah, maybe Jamison Graham might pick up the phone again. I mean, I think the very fact that that phone call got made is a pretty interesting point, because Donald Trump has always been very bombastic on trade and on all of his tariff threats. I think this kind of shows that the US is starting to feel the isolation that it has essentially imposed upon itself on the global scale. And the geopolitics of that isolation, I think it's starting to feel it. But let's see. Let's see what happens. Sarah. Our final story today is a super Belgian problem. Did you know that Belgium is the world's top exporter of frozen fries?

Sarah Wheaton (12:01)

I mean, Belgians will remind me of that every day.

Zora Sheftolovich (12:04)

And you've got a fiance who's right there to. To do that reminding. Well, listen, there was a bumper potato crop in 2025, and what that means is that there's just too many potatoes. The Belgians have nowhere to put them except the streets of Rue de la Loire, where they burn them in protest at EU farm policy.

Sarah Wheaton (12:22)

Yeah, my colleague Katrina Khatova wrote about this the other day, and she looked into it. Basically, they did dump all those potatoes on the streets during the protest because they have too many. It's so bad that frozen fry factories are shutting down, laying people off or kind of cutting down their production because they have a glut. But there's good news.

Zora Sheftolovich (12:44)

Go on. Is it that they've invited me to their factory to eat all their frozen fries because I'm down?

Sarah Wheaton (12:49)

I think they would. They would be glad to hear that. But the Colombians are also potentially going to be eating these frites because they had tried to block dumping, basically saying that Belgium and some other European countries were offloading their over capacity of potatoes on Latin American markets. And a ruling by the World Trade Organization basically said, nope, this is fine. So now the Colombians have had to lift those restrictions.

Zora Sheftolovich (13:15)

Well, maybe the golden years of the potato sector might be back. Hey, Sarah, what's going to be on EU Confidential tomorrow? Well, I hope you, Zoya, I'll be there.

Sarah Wheaton (13:26)

I'm pinning you down now to be with me at the Yuko later tonight. Also, Anne McAvoy is planning to interview UN Secretary General Antonio Guterres, who is also in town to discuss current issues with the leaders.

Zora Sheftolovich (13:38)

Yeah, he's going to be at that Yuko. And look, he may have some views as to how to unblock that Strait of Hormuz. Who knows? Well, before we go today, we've got a special birthday. It's former European commissioner and former Italian prime Minister Mario Monti. Guess how old he's turning.

Sarah Wheaton (13:54)

39.

Zora Sheftolovich (13:55)

Oh, you are too kind, Sarah. He's 83.

Sarah Wheaton (13:58)

I didn't say whether it's his first 39th birthday or his 40th.

Zora Sheftolovich (14:02)

Well, some of us are on our 10th, folks. That's just about it for us today. But if you've got a question or a comment, a burning inquiry, if you want to know what we like to eat, our favorite fruits, our favorite way to eat potato. Mine is fried. Send them to us on our WhatsApp numbers in the show notes, review us, rate us, and keep listening. We love you guys.

Emily Schulthuis (14:33)

Hey, this is Emily Schulthuis. I'm the senior editorial director of POLITICO's live journalism events. On Tuesday here in Brussels, we're diving into Europe's efforts to compete on the global stage on everything from energy policy to simplification to defense and security. Zoya will be there for a live recording of the podcast Register to join us in person for the competitive Europe summit or follow the discussions live on Politico Euro.