Greece to seek €1.2 bln in EU defense loans under SAFE mechanism, says PM
Greece will submit a proposal on Tuesday to join the European Union’s new SAFE financing mechanism, seeking at least €1.2 billion in low-interest loans to strengthen national defense and support its defense industry, Prime Minister Kyriakos Mitsotakis said on Monday.
Parliament to debate farm subsidies scandal
The Parliament will decide, on Tuesday and Wednesday, the type of committee, or committees, it will set up to investigate the illegal farm subsidies affair.
https://www.ekathimerini.com/politics/1276608/parliament-to-debate-farm-subsidies-scandal
Riot police scuffle with demonstrators on Greek island during visit by Israeli cruise ship
Scuffles broke out between riot police and demonstrators on the Greek island of Rhodes Monday during a protest against the war in Gaza while an Israeli cruise ship was docked at the island, local media reported.
Banks and credit expansion: Greece among the top performers in the eurozone
Disbursements of new loans to small and medium-sized enterprises (SMEs), which form the backbone of the Greek economy, are increasing. Specifically, according to converging estimates, new business loan disbursements to SMEs by the four systemic banks increased at a rate of around 16% in the first half of the year, reaching 1.21 billion euros. These loans concern businesses with an annual turnover of up to 2.5 million euros
ATHEX: Bourse drops on US deal letdown
European disappointment on the trade deal between the European Commission and the US overturned the early relief and led to losses for most bourses, the Greek one included. The benchmark of the Athens stock market closed on Monday at the day’s lowest point, with banks taking most of the beating and turnover remaining close to Friday’s lows. The week of second-quarter financial results has just started for many blue chips and will likely set the short-term trend for the next few sessions.
https://www.ekathimerini.com/economy/1276618/athex-bourse-drops-on-us-deal-letdown
KATHIMERINI: The “bill” of US tariffs for Greece
TA NEA: US tariffs: painful compromise
EFIMERIDA TON SYNTAKTON: OPEKEPE scandal: Ruling party New Democracy involved in several cases
RIZOSPASTIS: The government and the state are following a policy that facilitates wildfires
KONTRA NEWS: Europe was totally humiliated by Trump
DIMOKRATIA: Clash between Defense Minister Dendias and PM MItsotakis
NAFTEMPORIKI: The collateral damage of the deal between EU and Trump
DRIVING THE DAY
READ THE SMALL PRINT: There’s been a lot of justified criticism of the EU-U.S. trade deal, which saw 15 percent duties slapped on European exports (mostly) across the board, with no equivalent duties imposed on American products. But some of the other concessions were cunningly vague … assuming that was the intention.
We’re good for it, promise: Most notably, Commission President Ursula von der Leyen seems to have played a blinder with her pledge to invest $600 billion in the U.S. Far from being one to closely parse flattering figures, Donald Trump may well have been won over by the bumper pledge — which in reality, as POLITICO’s Gregorio Sorgi reports, is an estimate “based on detailed discussions with different business associations and companies” to determine their “investment intentions,” per one senior EU official. Read: It’s a load of hot air, at least for now.
Speaking of hot air … The commitment to buying some $750 billion on U.S. oil and gas over three years is equally dubious, energy reporter Victor Jack reports.
Full-scale capitulation: As for the tariff breakdown, few are hailing the deal as a stonking great win. Spanish PM Pedro Sánchez endorsed it “without any enthusiasm.” German Chancellor Friedrich Merz, without conviction, highlighted the exclusion of auto sector tariffs as a silver lining. Italy’s Giorgia Meloni could only weakly assert that the duties wouldn’t be “devastating.”
French PM François Bayrou was the most vehement, writing on X that it was a “dark day when an alliance of free peoples, united to assert their values and defend their interests, resigns itself to submission.” (Giorgio Leali’s story on that here.)
The commentariat was no less miffed. “It’s fairly obvious that we basically gave up a whole lot for nothing, and the question is, could we have done better?” former IMF chief economist Olivier Blanchard told my colleague Carlo Martuscelli, before answering his own rhetorical question: “Yeah. I think we could have done better.” He warned that the worst was yet to come, as rerouted Chinese goods threaten to flood the internal market after being shut out of the U.S.
INTO THE WEEDS: For those interested in the broader consequences, my POLITICO colleagues have this exhaustive breakdown of the implications of the trade deal, with sector-by-sector analysis.
There are few standout winners. Tariffs will be reduced to zero for aviation exports and chip equipment, and the EU’s hard-fought digital rulebook will be left intact. Losers include steel manufacturers — saddled with a 50 percent tariff — and auto-makers, who are stuck with a lower-than-expected 15 percent tariff that could still cost up to 70,000 jobs as plants are forced to relocate, as one industry analyst told mobility reporter Jordyn Dahl.
Beginning of the end: But the main thing that emerges is how many details there remain to thrash out. Per the preliminary agreement on Sunday there is not yet, for instance, a set duty for pharma and food products. However, officials expect a 15 percent tariff on the former, with exemptions for “some generics,” and continued haggling over the latter, with the possibility of the EU reducing existing tariffs on “non-sensitive” food imports in exchange for concessions, but decidedly not beef. On steel, EU officials hope the bloc might be able to persuade Washington to join forces against producers in Turkey, China, Indonesia and Egypt.
Making the sausage: Questions linger over the merits of the EU’s approach, and eventhe U.S. administration was privately harsher in its assessment than Trump’s own warm words let on. Over the first 13 virtual and in-person meetings, the EU didn’t make the U.S. a single offer, a senior U.S. official told POLITICO’s Ari Hawkins. “The president was just completely frustrated by their lack of momentum; they were really … meeting and talking, but not doing anything. Then he sent the letter and everything changed — they realized he was serious, they realized they had significant risk if they didn’t come to the table.”
SHIFTING SANDS
NO RELIEF FOR GAZANS: The bloodshed in Gaza continued Monday, with Israel’s forces killing at least 78 Palestinians, including dozens who were seeking food and medicine at aid stations, according to the Associated Press. That’s despite Israel’s announcement of a “humanitarian pause,” which was restricted to several non-combat zones.
Sea change in Washington: The situation is so dire that even Trump was moved to action, acknowledging alongside British Prime Minister Keir Starmer in Scotland that “real starvation” was occurring in the enclave and vowing to set up easily accessible “food centers.”
BRUSSELS ACTS, SORT OF: For months, the EU has been trying to work out whether and how to take meaningful action against Israel in recognition of what a growing number of countries regard as a humanitarian disaster unfolding in Gaza. EU High Representative Kaja Kallas launched a review of the bloc’s association agreement with Israel, which found Prime Minister Benjamin Netanyahu’s government was in breach of its human rights obligations under the terms of the deal.
But there was no consensus on how to respond, and an agreement which Kallas struck included assurances from Israel that new aid routes would be opened up to get supplies to Palestinians in Gaza. That means for the past month or so, not much has moved at an EU level. Until last night …
Horizon scanning: On Monday, the European Commission proposed to suspend part of the association agreement under which Israel has access to the bloc’s flagship research and development program, Horizon Europe.
What’s at stake: The suspension is focused on the European Innovation Council, a €10.1-billion program under Horizon Europe, my colleague Pieter Haeck reports. It would affect Israeli entities participating in the EIC Accelerator, which allows the Commission to take a stake in research-heavy and capital-intensive tech startups. Suspending this would be the EU’s first concrete action to curtail its cooperation with Israel.
Not so fast: In order to do any of this, though, the Commission’s plan needs a qualified majority of EU countries to support it. At a meeting of ambassadors last week, four countries — including big guns Germany and Italy — spoke out against taking action, Tim Ross reports. Ambassadors will first need to discuss the idea, potentially as soon as Wednesday, before a final decision is taken and there’s no date set for that yet.
Watching Berlin: As is so often the case, the key player in all this is the German leader — and Friedrich Merz is showing signs he might change his tune. Germany has historically been one of the EU’s staunchest supporters of Israel, but Merz has been more critical of Netanyahu’s approach. On Monday Merz warned of a “catastrophic” humanitarian crisis in Gaza.
“We reserve the right to take such steps,” the chancellor said, when asked by a reporter if Germany could allow the suspension of the EU association agreement with Israel.
Hit Israel on trade next: The Netherlands — traditionally also among Israel’s supporters in Europe — has been leading the drive to review the association agreement. Dutch PM Dick Schoof said he would support the Horizon suspension and push for further measures, including on trade.
Israeli officials are aghast at what they see as a counterproductive move. President Isaac Herzog hit back at Schoof on X, saying: “It will be a HUGE mistake if EU takes such steps especially in light of Israel’s ongoing and upgraded humanitarian efforts.” And Israel has been warning the EU in private not to escalate its response.
U.K. TURNS A CORNER ON GAZA: Britain, meanwhile, became the latest to inch toward recognition of Palestinian statehood in response to the devastation. On Monday, Business and Trade Secretary Jonathan Reynolds told Sky News that the U.K. would seek to recognize some kind of Palestinian state before the next general election, while ensuring any recognition isn’t “tokenistic” and contributes to peace efforts.
Mood swing: The change of heart from the British political leadership (more on that here) comes amid a similar shift among the country’s Jewish leadership, which has been largely pro-Israel since the Hamas attacks on Oct. 7, 2023. But the tide is turning.
Not just Hamas: Richard Ferrer, editor-in-chief of the influential Jewish News, told Playbook he maintains his support for Israel’s war against Hamas in principle, and continues to largely blame the militant group for the suffering of ordinary Gazans. But he acknowledged the crisis is also “Israel-made,” arguing that Netanyahu’s government is incapable of achieving its stated military objectives without inflicting mass suffering.
Flow-on effects: “Outside our community we face record antisemitism,” he said. “Inside, we are struggling to absorb the scale of suffering in Gaza. The skeletal, starving children. These pictures bypass religion and community.” Highlighting those tensions, he said a recent Jewish News editorial condemning Israeli policy provoked accusations of “betrayal” from some readers, and boycotts from some advertisers.
Taking a different view was Daniel Grossman, who dramatically quit the Board of Deputies, the U.K. Jewish community’s largest communal body, in May, and now accuses Israel of genocide. Grossman told Playbook that Israeli policy had led him to reappraise his initial support of the Jewish state, and blasted former colleagues who still refuse to budge. “It’s easy to be blinded,” he said. “It’s been a gradual process of really challenging any preconceived mythology or attachment.”
ON THE EASTERN FRONT … Trump slashed his deadline for Russian President Vladimir Putin to reach a peace deal with Ukraine from 50 days to two weeks, Ketrin Jochecová and Dan Bloom report.
Arms, arms: European countries are considering borrowing billions from the EU to buy weapons for Ukraine, Gregorio reports. Reminder: Today is the deadline to apply for the new €150 billion Security Assistance Facility for Europe (SAFE) loans-for-weapons scheme.
Bridge too far: Meanwhile in an interview with the FT, the EU’s Transport Commissioner Apostolos Tzitzikostas (again) warns roads around the continent aren’t fit for moving military supplies. Currently, “If we want to move military equipment and troops from the western side of Europe to the eastern side, it takes weeks and in some cases months,” he said. (We’ve been writing about this one for years.)
WARS YET TO BE FOUGHT
MORE TRUMPIAN STRUGGLES AHEAD: As the dust settles on trade war negotiations (reams of small print notwithstanding), EU capitals are bracing themselves for further contortions to appease the U.S. president. After the summer break, as budget negotiations kick into gear, one issue will stick out like a sore thumb: how to meet NATO’s demand that governments amp up defense spending to an eye-watering 5 percent of gross domestic product.
Everyone’s in on it: It’s already widely acknowledged that 1.5 percent in defense-related expenditure is largely a way to “pretend to arrive at 5 percent without doing so,” as one Italian official put it to Playbook. But as for the commitment to raising overall spending on core defense to 3.5 percent of GDP, government pledges are set to collide head-on with political reality as leaders try to square that commitment with increasing pressure on welfare.
MYOPIA IN MADRID: In Spain, the scandal-battered government has pledged to hit 2 percent by the end of this year and raise its total military expenditures to around €34 billion. But even within the governing coalition there’s skepticism that Prime Minister Sánchez can keep his promise to do so without cutting social spending, especially since he hasn’t been able to pass a budget since 2022, as my colleague Aitor Hernández-Morales tells me.
PARADOX IN PARIS: French President Emmanuel Macron, for his part, earlier this month announced plans to double his country’s defense budget from 2017 levels by 2027. He said the sum would be paid for by increased economic activity, even as he too continues to struggle to push billions of euros in cost-saving measures through the National Assembly.
RELUCTANCE IN ROME: Giorgia Meloni, as ever, has tried to strike a delicate (if dubious) balance. Italian Defense Minister Guido Crosetto has been a vocal supporter of an enlarged and better-funded NATO, but he’s seen as a pragmatist who will ultimately give way to the political priorities of Meloni, who has vowed not to divert a cent from Italy’s squeezed public services, especially health care.
Pushback on the cards: The defense ministry is set to push for increases in defense spending of around 0.15 percent of GDP — around €4 billion — annually until the 3.5 percent defense target is met, people familiar with the matter told Playbook. But ministry and industry sources acknowledge other priorities will likely take precedence if it comes down to it — many are banking on Italy accessing the EU’s loans-for-arms program to make ends meet. The trick will be to make sure Trump doesn’t notice. (Let’s hope he doesn’t read Playbook.)
MEGA MUDDLE
MOLDOVA BOUNCE: The organizers of a hard-right Make Europe Great Again (MEGA) conference were left fuming when an attendees was barred from entering Moldova, where the event is being held. Non-attached Czech MEP Ondřej Dostál said he was “deported” after arriving in Chișinău, the capital of the EU candidate country, which has faced an onslaught of Russian interference ahead of its upcoming elections.
Friends forever: Dostál was one of the handful of MEPs who flew to Moscow for a military parade in May and has voted against support for Ukraine, while criticizing the EU’s Russia sanctions. After being turned away — reportedly on public order and national security grounds — Dostál received vocal support from Fernand Kartheiser, the Luxembourgish MEP who was expelled from the right-wing ECR group after taking the same trip to Moscow.
Coming to a city near you: It’s not immediately clear who organized the MEGA conference from its lorem ipsum-strewn website, but the branding is eerily similar to that of a summit hosted back in January by the ECR — although the group told Playbook it wasn’t involved. The MEGA conference organizers did not respond to Playbook’s request for comment.
IN OTHER NEWS
U.S.-CHINA RELATIONS: American and Chinese officials met in Stockholm on Monday for talks on their trade spat ahead of Trump’s Aug. 12 tariff deadline for Beijing. The goal was to extend the deadline by three months to give negotiators more time to reach a resolution. Reuters has more.
Clear as mud: Trump took to Truth Social to deny he’s seeking a meeting with China’s President Xi Jinping, saying: “I am not SEEKING anything! I may go to China, but it would only be at the invitation of President Xi, which has been extended. Otherwise, no interest!”
Bowing to Beijing on Taiwan: Trump’s administration denied permission for Taiwan’s President Lai Ching-te to stop in New York on his way to Central America, after Beijing objected to the visit, the FT reports.