Welcome back to The Capitals. This is Eddy Wax, with Nicoletta Ionta – who is reporting from Strasbourg this week, alongside our triple-named colleagues Magnus Lund Nielsen and Sofía Sanchez Manzanaro. If you’re in town, say hello.
Forget Ursula von der Leyen’s State of the Union address. The true “milestone for European democracy” lands in three days: this newsletter relaunches under a brand-new name. You’ll see it here first.
We’ve also been working on your reading experience. Later this week, look out for a refreshed Euractiv website with a new look and added features.
Need-to-knows:
- France: PM François Bayrou will resign today after losing a confidence vote
- Ukraine: EU and US discuss coordinated sanctions against Russia
- Norway: Labour Party wins re-election, fending off populist surge
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In the capital
Bye. Rue. In that order. France is staring into a political abyss after lawmakers crushed centrist Prime Minister François Bayrou in a confidence vote, forcing him to resign today. Emmanuel Macron said he would name a successor within days.
A triumphant Marine Le Pen was largely responsible for Bayrou’s downfall – but she, too, is fighting for survival. Her appeal against a court ruling barring her from public office for defrauding the European Parliament of millions of euros will be heard next January. A defeat would likely end her 2027 presidential ambitions.
Bayrou also authored much of his own demise. The verbose veteran – infamous for once slapping a child in public – called for the vote thinking he could corral opposition support by playing the adult in France’s financial melodrama.
Convinced of his presidential destiny, he styled himself as a prophet foretelling that his austerity budget was the country’s only path out of a debt crisis. “You have the power to overthrow the government,” Bayrou told MPs before the vote yesterday, but not “to erase reality.”
That raises the question: Is France truly on the brink of a financial meltdown?
Analysts are sceptical. “France is facing a political crisis – but not a financial crisis,” said Nicolas Véron, a senior fellow at Bruegel and the Peterson Institute for International Economics.
Still, instability is weighing on growth and investment in the EU’s second-largest economy, and Paris’ soaring national debt levels pose longer term risks, my colleague Thomas Møller-Nielsen writes in his analysis.
What next? Macron could pick another centrist as a temporary fix or turn to the Socialists, though they may lack sufficient parliamentary support. He has already ruled out more radical options such as new elections or resigning himself.
France’s traditional alternation of centre-left and centre-right governments has collapsed, replaced by the rising influence of the extremes.
Whoever takes the poisoned chalice at Hôtel Matignon will face a parliament paralysed by three rival blocs – far left, centre, and far right – and the same struggle to pass a 2026 budget in a country unaccustomed to coalition-building.
Former PM Gabriel Attal, one of four since 2024, urged parties last night to agree on some basic principles before Macron hurls another candidate into the woodchipper. That semi-permanent fix, he argued, could carry France through until 2027.
Or it could fail.
Norway’s centre left claws back momentum
The Norwegian Labour Party has won re-election, securing four more years in government after fending off a surge from the populist far right.
With 99% of the votes counted, the centre left was projected to take 89 seats against 80 for the centre right, ensuring PM Jonas Gahr Støre remains in office, Jacob Wulff Wold reports.
The election – dominated by debates over the cost of living, oil fund investments, and Donald Trump’s influence – saw the Progress party nearly double its support but fall short of power.
Várhelyi: US open to pharma talks
In an exclusive interview, Health Commissioner Olivér Várhelyi told Euractiv’s Brenda Strohmaier and Thomas Mangin that the Trump administration is beginning to see the pharmaceutical industry as a unique sector, raising hopes for stronger EU-US cooperation and drug tariffs below 15%.
Since he returned to office for a second term, the US president has put pressure on Europe’s health industry by imposing tariffs and fuelling the anti-vaccine movement.
“We are increasingly convincing our friends and colleagues in Washington that the pharmaceutical industry is completely different from the automotive industry,” Várhelyi said, suggesting that “over time and through additional discussions” US tariffs on medicines could be reduced.
Lucky number 19
Europe’s 19th sanctions package against Russia might get a boost from Donald Trump.
EU sanctions envoy David O’Sullivan was in Washington on Monday to coordinate new sanctions with US officials, a throwback to the early days of the war when Brussels designed many of its measures directly with Joe Biden’s administration. Trump’s newfound cooperativeness could mark a turning point.
The Commission pushed back against US Treasury Secretary Scott Bessent’s claim on NBC News that von der Leyen had spoken to Trump on Friday – the call never happened, though she did speak to US Vice President JD Vance.
The new EU package – which could come later this week, according to two diplomats – is expected to tighten the net on sanctions circumvention, pile pressure on Russian banks and energy firms, blacklist more shadow fleet vessels, and open talks on restricting certain exports to third countries. It may also introduce tougher guidelines on issuing tourist visas to Russians, the diplomats said – a longstanding demand from Czechia.
Sandu to sing her reform tune
Moldovan President Maia Sandu is set to address the European Parliament in Strasbourg today, ahead of parliamentary elections on 28 September already marred by Russian disinformation.
With more than a million Moldovans – about a third of the population – living abroad, Sandu is eyeing the diaspora vote to carry her across the line. It was Moldovans abroad who also secured her a second term in last November’s presidential election.
She will be keen to remind European leaders of her country’s rapid reform record. Brussels has sought to keep Moldova and Ukraine moving in lockstep in their EU accession bids, but Hungary’s persistent veto against Kyiv has darkened the outlook for both candidates, leaving Chișinău as collateral damage.
“Moldova and Ukraine were granted candidate status at the same time, they are following each other,” Marie Bjarre, Denmark’s minister for EU affairs, told me recently. “It’s not fair that we only open [the next stage of negotiations] with Moldova.”
Hansen and Šefčovič head to India
EU Commissioners Christophe Hansen, responsible for agriculture and food, and Maroš Šefčovič, in charge of trade, travel to New Delhi this week for the 13th round of trade talks with India, with hopes of finalising a deal by year’s end.
Agriculture remains a sticking point, with India reluctant to open its market to imports given farming’s central role in its economy and labour market. In June, Hansen told Euractiv that if New Delhi insists on excluding products deemed “sensitive” to imports – notably dairy and rice – the EU would retaliate by blocking additional Indian sugar imports.
The visit is scheduled for Thursday and Friday, a senior EU source told my colleague Sofia Sanchez Manzanaro.
Will Parliament say “genocide”?
As MEPs prepare to debate the Gaza war today, they remain split over whether to label Israel’s actions “genocide.”
The Socialists, who first used the term this summer, want Parliament to produce a non-binding resolution stating there is “clear evidence of genocide in Gaza.” But an EPP lawmaker told The Capitals the group would torpedo the entire text if the word appeared, a stance echoed by a spokesperson for the ECR.
That makes it likely the fragile text will collapse when it comes to a vote on Thursday. For now, talks in Strasbourg continue.
The capitals
BERLIN 🇩🇪
Germany is facing a sharp rise in legal challenges to asylum decisions, according to an analysis by Deutsche Richterzeitung. Around 76,646 new proceedings were filed in the first half of 2025 – already exceeding the total for 2023. While first-time asylum applications have halved, drawn-out cases lasting more than six months are hampering deportations and complicating Berlin’s efforts to curb irregular migration. France and Spain have now overtaken Germany as the EU countries with the most asylum requests, according to the European Union Agency for Asylum.
MADRID 🇪🇸
Israel slapped entry bans on two Spanish ministers on Monday over their criticisms of its Gaza offensive, accusing the socialist government here of “pursuing a hostile, anti-Israel line.” The move came as PM Pedro Sánchez unveiled fresh measures – including a permanent arms embargo and a block on Israeli-bound ships and planes carrying fuel and ammunition from Spanish territory – which he framed as steps to stop the “genocide” in Gaza.
PRAGUE 🇨🇿
Romania, the Czech Republic, and Hungary have moved to dismantle a Belarusian spy ring. This capital expelled a diplomat accused of working for Minsk’s intelligence services, while Bucharest arrested a suspect accused of passing state secrets to Belarus. The case has reignited Czech calls to restrict Schengen free movement for Russian and Belarusian diplomats, a proposal still blocked by Germany, Italy, and Hungary despite broad support from other EU states.
HELSINKI 🇫🇮
Dmitry Medvedev, Russia’s former president and outspoken Kremlin hawk, accused Finland of “preparing for war” against Moscow since joining NATO. In a column published by the state news agency TASS, he claimed that Helsinki was building military structures in Lapland, near the Russian border, to serve as a “bridgehead for an attack,” and dismissed the country’s defence strategy as “stupidity, lies, ingratitude.”
ROME 🇮🇹
In this capital, Italy and the US have formalised an energy security partnership, centring on liquefied natural gas as Europe seeks alternatives to Russian supplies. The declaration, signed by Energy Minister Gilberto Pichetto Fratin and US Interior Secretary Doug Burgum, called American LNG “vital” to the continent’s diversification strategy and highlighted the reliability of Atlantic shipping routes. While light on specifics, the agreement commits to strengthening infrastructure, curbing volatility, and also gestured toward collaboration in AI and nuclear power.
LISBON 🇵🇹
Mayor Carlos Moedas deflected blame for the Glória funicular derailment that killed 16 people, telling SIC in an interview that “no error” was linked to his office and promising to resign if credible evidence emerges. The comments followed President Marcelo Rebelo de Sousa’s assertion that Moedas bears political responsibility; the mayor countered that Carris, the public transit operator that runs the funiculars, operates independently, though the city is a stakeholder.
Also on Euractiv
Europe – economist Andrea Dugo of ECIPE argues in an op-ed for Euractiv – is living its own version of Adam McKay’s 2021 satire Don’t Look Up: the comet has been spotted, but leaders are still debating as if time were infinite.
Mario Draghi’s diagnosis of low innovation, weak capital markets, and regulatory knots was clear a year ago, yet most of his 176 proposals remain in drawers.
While the U.S. and China race ahead in AI, quantum, and green tech, Europe lingers – risking its welfare state, its influence, and even its democratic strength.
Agenda
➡ Costa visits Latvia, Lithuania, and Poland
➡ Informal meeting of agriculture ministers continues in Copenhagen
➡ College of Commissioners meeting in Strasbourg
➡ Parliament’s rapporteurs for the MFF hold press briefing in Strasbourg
➡ Parliament plenary session in Strasbourg on Ukraine, Gaza, wildfires in southern Europe, the European Social Fund, changes to regional and development funds, cohesion policy, CBAM simplification, violence in Serbia, strengthening Moldova’s resilience against Russian hybrid threats, and recent terrorist attacks in Colombia
Contributors: Magnus Lund Nielsen and Sofía Sanchez Manzanaro in Strasbourg, Aurélie Pugnet, Jeremias Lin, Nick Alipour, Jacob Wulff Wold, Elisa Braun, Susana Venceslau
Editors: Christina Zhao, Sofia Mandilara
