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The truth behind the €64.6-billion budget deal agreed by EU leaders

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The truth behind the €64.6-billion budget deal agreed by EU leaders

The European Union might soon add an additional €64.5 billion to its common budget. But it comes with fine print.

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The top-up was for months the object of fierce bargaining among member states, each of whom, mindful of the upcoming elections to the European Parliament, pushed hard to see their wish list come true.

The negotiations kicked off in June, soon after the European Commission unveiled its proposal, and culminated in an extraordinary summit on 1 February, where Viktor Orbán, under tremendous pressure from his fellow leaders, lifted his monthlong veto.

“We had certainly some difficult choices to make, but we had a very good result,” European Commission President Ursula von der Leyen said after the meeting.

Once the gridlock broke, a new figure emerged: the bloc’s budget for 2021-2027, worth €2,018 billion in current prices (including €806.9 billion for the COVID-19 recovery fund), will be given an additional €64.6 billion until the remainder of the period.

The political deal is a considerable downgrade from the €98.8 billion top-up originally envisioned by the Commission. The executive argued the public coffers had been exhausted by the economic shockwaves of the pandemic, Russia’s invasion of Ukraine, the energy crisis, record-breaking inflation and devastating natural disasters, leaving the budget deprived of financial flexibility to react to unforeseen events.

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But from the very onset, the €98.8-billion draft was met with strong resistance from member states, who would have been compelled to provide more than €65 billion in brand-new contributions. Rising interest rates, sluggish growth and diminishing revenues made the idea of writing such a cheque to Brussels all the more intolerable. 

Diplomats haggled hard over how to cut down the fresh money to the bare minimum, playing a game of mix-and-match to plug the gaps.

So what’s new and what’s old in the budget top-up? Let’s break down the numbers.

Ukraine Facility: €50 billion

Boosting aid for Ukraine is the raison d’être of the revised budget. In fact, it was the only envelope that leaders left intact.

Under the agreement, the EU will establish the Ukraine Facility to provide the war-torn nation with €50 billion between 2024 and 2027 to keep its economy afloat and sustain essential services, such as healthcare, education and social protection.

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The pot will combine €17 billion in non-repayable grants and €33 billion in low-interest loans, meaning member states will only subsidise the former. The money for the loans will be borrowed by the Commission on the markets and later repaid by Ukraine.

Brussels will roll out the Facility in gradual payments to guarantee reliable and predictable financing. In return, Kyiv will be asked to carry out structural reforms and investments to improve public administration, good governance, the rule of law and the fight against corruption and fraud – all of which can help the country advance its EU membership bid.

In a small concession to Viktor Orbán, the only leader who opposed the Ukraine aid, leaders will hold a debate every year to assess the Facility’s implementation, but this high-level discussion will not be subject to a vote (or possible veto). “If needed,” the deal says, leaders might invite the Commission to review the package in two years.

If the co-legislators agree swiftly on the regulation that underpins the Facility, Brussels will send Kyiv the first tranche in early March.

Migration management: €9.6 billion

This envelope survived the negotiations almost unscathed and it’s easy to see why: migration management is a key priority shared by all countries, particularly those in Southern Europe who bear the brunt of irregular arrivals.

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The Commission originally asked for €12.5 billion to cover expenses on border control, relations with the Western Balkans, and the hosting of millions of Syrian refugees in Turkey, Syria, Jordan and Lebanon. The executive said the extra money was needed to realise the ambitions of the New Pact on Migration and Asylum, the holistic reform of the bloc’s migration policy that is nearing the finish line.

Leaders mostly agreed and granted €9.6 billion. “Migration is a European challenge that requires a European response,” they said in the deal.

New technologies: €1.5 billion

The EU is intent on being a leading player in the cutthroat race for cutting-edge technologies. For that, it needs money – a lot of money.

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The Commission – fulfilling a grand promise made by President Ursula von der Leyen – designed the Strategic Technologies for Europe Platform (STEP) to finance avant-garde projects and promote EU-made high-tech. STEP was designed to help all member states, from the richest to the poorest, access much-needed liquidity in equal conditions.

Von der Leyen initially asked €10 billion for STEP to reinforce ongoing programmes like InvestEU and the Innovation Fund. But leaders shot down the idea and allocated only a meagre fraction: €1.5 billion to prop up the European Defence Fund (EDF).

Unforeseen crises: €3.5 billion

Since the early days of 2020, the bloc has been engulfed in back-to-back crises. From a lethal airborne disease to floods and fires that wrought untold havoc, Brussels has had a hard time adapting its tight budget to a ballooning list of expenses.

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In its original proposal, the Commission requested €2.5 billion to bolster the Solidarity and Emergency Aid Reserve, which is triggered to deal with major natural disasters, and €3 billion for the Flexibility Instrument, which, as its name suggests, can be used to respond to any sort of critical situation.

Despite the worsening effects of climate change and a strong diplomatic push from Greece, a country badly hit by wildfires, leaders did not go all the way: their deal earmarks €1.5 billion for emergency aid and €2 billion for the Flexibility Instrument.

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Interest payments: zero

As a result of the aforementioned crises, the EU had to press the pedal to the metal on its joint borrowing, most notably to build the COVID-19 recovery fund.

The €800-billion plan, which will be rolled out until 2026, comes with a considerable bill of interest payments, which drastically swelled as inflation hit double digits and the European Central Bank retaliated with consecutive rate hikes.

Facing a lofty invoice, the Commission pleaded with member states to add €18.9 billion to the budget review, an amount that immediately raised eyebrows. (The figure to cover overrun costs is variable and is now estimated at €15 billion.)

In the end, leaders opted for a three-step “cascade mechanism.” First, money will come from the existing provisions within the recovery fund. If this is not enough, Brussels will draw funds from programmes that are underperforming and the Flexibility Instrument. If this is still not enough, the third step will kick in and create an instrument financed by “de-commitments,” financial envelopes that were unspent or cancelled.

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Only when all of this has failed will the cascade hit leaders as the Commission will be entitled to ask member states to provide direct contributions.

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Redeployments: €10.6 billion

All the numbers listed above make a total of €64.6 billion but there’s a catch: countries will only cough up €21 billion. How is it possible?

Besides the €33 billion in loans from Ukraine, which involves the Commission and Kyiv, member states decided to shift €10.6 billion from ongoing EU initiatives: €4.6 billion from Global Europe, €2.1 billion from Horizon Europe, €1.3 billion from assistance to displaced workers, €1.1 billion from agriculture and cohesion funds, €1 billion from EU4Health and €0.6 from a special reserve to cushion Brexit disruption.

Speaking on condition of anonymity, a senior Commission official said the overnight cuts to Horizon Europe, the bloc’s flagship research programme, and EU4Health were unfortunate and “difficult to swallow.”

“At this point in time, it’s impossible for us to really tell you what this will mean in practice,” the official said about the potential effects of the €10.6-billion redeployment push. 

In the case of EU4Health, the chop represents about 27% of the money left in the envelope, established less than four years ago in response to the pandemic. The demanded changes to both Horizon and EU4Health are likely to enrage the European Parliament, which needs to co-approve the budget review.

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“This is something that is not easy,” the senior official added. But “we will religiously follow what the legislators decide.”

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Map: 7.5-Magnitude Earthquake Shakes the South Pacific Ocean

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Map: 7.5-Magnitude Earthquake Shakes the South Pacific Ocean

Note: Map shows the area with a shake intensity of 4 or greater, which U.S.G.S. defines as “light,” though the earthquake may be felt outside the areas shown.  All times on the map are Eastern. The New York Times

A major, 7.5-magnitude earthquake struck in the South Pacific Ocean on Tuesday, according to the United States Geological Survey.

The temblor happened at 12:37 a.m. Eastern about 103 miles west of Neiafu, Tonga, data from the agency shows.

U.S.G.S. data earlier reported that the magnitude was 7.6.

As seismologists review available data, they may revise the earthquake’s reported magnitude. Additional information collected about the earthquake may also prompt U.S.G.S. scientists to update the shake-severity map.

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Aftershocks in the region

An aftershock is usually a smaller earthquake that follows a larger one in the same general area. Aftershocks are typically minor adjustments along the portion of a fault that slipped at the time of the initial earthquake.

Quakes and aftershocks within 100 miles

Aftershocks can occur days, weeks or even years after the first earthquake. These events can be of equal or larger magnitude to the initial earthquake, and they can continue to affect already damaged locations.

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When quakes and aftershocks occurred

Source: United States Geological Survey | Notes: Shaking categories are based on the Modified Mercalli Intensity scale. When aftershock data is available, the corresponding maps and charts include earthquakes within 100 miles and seven days of the initial quake. All times above are Eastern. Shake data is as of Tuesday, March 24 at 1:37 a.m. Eastern. Aftershocks data is as of Tuesday, March 24 at 2:50 a.m. Eastern.

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Iran conflict tests Pakistan amid own border clashes as Islamabad touted as venue for US-Tehran talks

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Iran conflict tests Pakistan amid own border clashes as Islamabad touted as venue for US-Tehran talks

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Pakistan is walking a tightrope as the Iran war intensifies, with that balance growing more precarious with each passing day.

Islamabad has so far pursued cautious diplomacy, condemning the strikes on Iran, while simultaneously urging de-escalation. But analysts warn it cannot remain insulated from competing pressures.

“Pakistan is putting itself forward as a mediator between the U.S. and Iran, but unconvincingly,” Edmund Fitton-Brown, a senior fellow at the Foundation for Defense of Democracies told Fox News Digital. “Its own record of staying out of military entanglements is unimpressive.”

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At the forefront of the tensions is a new defense agreement with Saudi Arabia, which states that aggression against one will be treated as a threat to both. Widely seen as one of Pakistan’s most consequential defense agreements, it commits the country to Riyadh, while risking confrontation with Iran.

Shia Muslims holding portraits of Iran’s slain supreme leader Ayatollah Ali Khamenei take part in an anti US-Israel protest in Islamabad on March 6, 2026.  (Aamir Qureshi/ AFP via Getty Images)

Pakistan, the only nuclear-armed Muslim state, already has troops stationed in Saudi Arabia for training and defense support and has said there is “no question” of coming to the kingdom’s aid.

“Remember, Pakistan is geographically part of both South Asia and Central Asia, as well as the wider Gulf/MENA region too. Pakistan has always pursued peace, dialogue and order because we know what war does to our region,” Mosharraf Zaidi, spokesperson for foreign media to the Pakistani prime minister, told Fox News Digital.

Within days of the war’s outbreak, the country’s army chief, General Asim Munir, made an “emergency” visit to Saudi Arabia, where top officials discussed joint responses to Iranian strikes. It was the first true test of the pact.

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Relations are strong between the two nations, and Riyadh remains a key economic lifeline for Islamabad. Saudi Arabia has already been making arrangements to support energy supplies, as war-driven fuel disruptions hit import-dependent Pakistan.

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Yet Pakistan’s relationship with Iran is equally critical. 

The two share a 565-mile border along with deep trade ties and significant religious connections. 

Pakistan is home to the world’s second-largest Shiite community after Iran. Pro-Iran regime protests in the wake of Supreme Leader Ayatollah Ali Khamenei’s assassination turned deadly, forcing military intervention and curfews.

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Maintaining ties with Tehran is crucial for containing domestic tensions and staving off an insurgency from the minority Baloch community there.

Iran is also an important economic partner to Pakistan, which has been facing a severe economic crisis. The two conduct significant trade, with a new goal of $10 billion by 2028.

Pakistan’s foreign minister has held “constant conversations” with his Iranian counterpart throughout the conflict. And last week, a Pakistani oil tanker transited the essentially blockaded Strait of Hormuz. Analysts noted it was the first non-Iranian cargo ship to do so since tensions escalated, suggesting that safe passage may have been negotiated. Officials add that more Pakistan-bound oil tankers are likely to cross the strait in the coming days.

A screenshot of a marine traffic terminal showing vessels in the Strait of Hormuz on March 4, 2026. (Kpler/Marine Traffic)

Most of Pakistan’s crude and LNG imports pass through the Strait of Hormuz. But as the war grinds on, analysts warn Pakistan’s room for neutrality is shrinking. 

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Pakistan recently went against Iran, backing a Gulf-led resolution at the United Nations condemning regional aggression. Russia and China abstained.

Meanwhile, Iran’s foreign minister just called for regional coordination in separate ​calls with Pakistan, Turkey and Egypt.

Shia Muslims holding portraits of Iran’s slain supreme leader Ayatollah Ali Khamenei take part in an anti US-Israel protest in Islamabad on March 6, 2026.  (Aamir Qureshi/ AFP via Getty Images)

At the same time, Islamabad must also navigate relations with Washington, yet another key partner.

Under President Donald Trump’s second term, Pakistan has sought closer relations with the U.S., even floating his name for the Nobel Peace Prize.

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Questions are also emerging in Washington. During a White House briefing, Press Secretary Karoline Leavitt said the administration was coordinating with the Pentagon to assess whether Pakistan is supporting Iran, while describing India as a “good actor.”

India’s positioning has added further pressure, with Prime Minister Narendra Modi’s recent visit to Israel.

Indian Prime Minister Narendra Modi meets with Prime Minister of Israel Benjamin Netanyahu in New Delhi, India on Feb. 25, 2026. (Photo by Press Information Bureau (PIB)/Anadolu via Getty Images)

“There is no contradiction in being absolutely committed to peace, dialogue and order. The strong relationships Pakistan has with the United States, with Saudi Arabia, with Iran and with China are a testament to Pakistan’s commitment,” the Pakistani prime minister’s spokesperson, Zaidi said.

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So far, Pakistan has effectively positioned itself at the forefront of mediation efforts to end the ongoing conflict, leveraging its ties with all three powerhouses.

Reports indicate that high-level talks between the U.S. and Iran are set for Islamabad as early as this weekend.

“Pakistan wants to matter to the U.S. and to be a better partner than India. Because the Afghan Taliban have alienated Islamabad since 2021, there are few remaining sore points between the U.S. and Pakistan, with the latter able to present as an ally against terrorism,” Fitton-Brown said. “And most regional parties want to see the crisis end sooner rather than later. But nobody wants to see the Islamic Republic strengthened in Iran.”

The spiraling war comes at a critical time for Pakistan’s already stretched military. Tensions with India remain elevated, while border clashes, airstrikes, drone attacks and rising civilian casualties have become the norm with once friendly neighbor Afghanistan.

The nations nosedived into an “all-out war,” just days before the Iran conflict broke out, and the violence shows no signs of easing after fresh Pakistani strikes recently hit the Afghan capital city of Kabul.

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Afghan Taliban fighters patrol near the Afghanistan-Pakistan border in Spin Boldak, Kandahar Province, following exchanges of fire between Pakistani and Afghan forces. (REUTERS/Stringer/File Photo)

“This geography and the region’s history is why Pakistan steadfastly rejects India’s efforts at regional hegemony, it is why Pakistan is pursuing a termination of the Afghan Taliban regime’s support for terrorist groups,” Zaidi said. “We seek a complete cessation of terrorism emanating from territory currently controlled by the Afghan Taliban.”

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With Pakistan already managing tensions on both its eastern border with India and its western frontier with Afghanistan, a destabilized Iran could push that strain further.

“If Islamabad is destabilized, it will be extremely bad news regionally and globally,” Edmund Fitton-Brown told Fox. “The idea of a nuclear power under jihadi rule doesn’t bear thinking about.”

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Von der Leyen clinches Australia trade deal

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Von der Leyen clinches Australia trade deal

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European Commission President Ursula von der Leyen on Tuesday sealed a free-trade agreement with Australian Prime Minister Anthony Albanese, slashing tariffs on most EU goods and farm exports.

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The deal marks another win for Brussels as it races to diversify trade ties and lock in strategic partners amid rising global tensions.

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The pact will save the EU €1 billion a year in duties, the Commission said, with exports projected to climb as much as 33% over the next decade.

Agriculture proved a flashpoint, with EU farmers already pushing back against the Mercosur trade agreement and a legal challenge from MEPs threatening ratification.

Tariffs will eventually fall to zero on products including cheese (over three years), wine, some fruit and vegetables, chocolate and processed foods.

On the toughest issues — beef and sheep, which sank talks in 2023 — Australia agreed to quotas of 30,600 and 25,000 tonnes a year, respectively.

A safeguard mechanism will allow the EU to shield sensitive sectors if a surge in Australian imports harms the bloc’s market.

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Beyond agriculture, the agreement opens access to Australia’s critical raw materials, including aluminium, lithium and manganese.

Brussels also failed to scrap Australia’s luxury car tax. Instead, 75% of EU electric vehicles will be exempt.

The deal is a geostrategic push

The Commission expects strong export gains in key sectors, including dairy (up to 48%), motor vehicles (52%) and chemicals (20%).

Brussels has prioritized the deal as it builds partnerships in the Indo-Pacific, where China’s influence has become central. A security and defence partnership with Canberra was also announced Tuesday.

“The EU and Australia may be geographically far apart but we couldn’t be closer in terms of how we see the world,” von der Leyen said, adding: “With these dynamic new partnerships on security and defence, as well as trade, we are moving even closer together.”

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Since Donald Trump returned to power in 2025, trade agreements have taken on sharper geostrategic weight for the EU as it seeks new markets.

In 2025, Brussels struck deals with Mexico, Switzerland and Indonesia. The Mercosur pact was also signed earlier this year and will be provisionally applied from 1 May despite a European Parliament legal challenge.

More could follow. Talks are ongoing with the Philippines, Thailand, Malaysia, the United Arab Emirates, and countries in Eastern and Southern Africa, von der Leyen told EU ambassadors on 9 March.

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