New research from KPMG International is urging banks and retailers to form strategic partnerships—or risk falling behind—as businesses attempt to keep up with the rapid pace of change in the payments space.

The report, Partnering for payment modernization by KPMG International, includes responses from 500 banks and 500 retailers to assess their progress on payment modernization. It identifies that while costs are high and modern technology continues to disrupt; a better ecosystem of partnerships between banks, retailers, technology providers and regulators can help improve operations and enhance the payments experience for customers.

The survey reveals that 54 percent of retailers believe that payment modernization is crucial to the future of their business, including delivering major efficiency and operational gains. However, just over half (53 percent) of retailers believe that their banks understand their payment modernization goals, with 45 percent saying their banks are proactively delivering payment solutions tailored to their needs. With the average retailer planning to increase modernization budgets by 2.5 percent over the next year, there is scope for more cohesion and development in the area. Banks don’t disagree, with 51 percent believing that the future winners in payments will be those with the best ecosystems. 60 percent of banks also indicate an increase in spending this year, with 21 percent reporting expected increases of five to nine percent over their existing budgets.

Furthermore, it was found that common goals across both sectors include the replacement of legacy payment infrastructure, enhancing fraud prevention and meeting customer expectations. High implementation costs and budget constraints were noted as the top barrier for those starting out on their payment journey (66 percent in banking and 69 percent in retail), while 62 percent in the banking sector also noted outdated legacy infrastructure and technical debt as a major frustration. As they mature their payments modernization capabilities, each sector highlighted meeting customer demand as the main concern (41 percent of banking leaders and 35 percent of retail leaders).

Isabelle Allen, Global Head of Consumer, Retail and Leisure at KPMG International, said: “The quest by consumers for ever faster, lower friction and more secure payment options is relentless and fueling innovation and disruption. Banks and retailers cannot afford to work in isolation or indulge in traditional vendor-customer relationships. The future of payments will likely be defined by a broader ecosystem which extends beyond banks and retailers, to include technology providers, regulators, fintech startups and consumers themselves. Success should be measured by the way companies access new technologies, reduce costs, share expertise, fill skill gaps, accelerate time to market, and mitigate risks.”

Investing in the future of payments

The importance of modernizing payment systems is reflected in the level of capital now being channeled into these programs. The data indicates that banks spent an average of US$96.9 million on payment modernization over the past fiscal year, demonstrating the magnitude of the transformation underway across the industry. Full-service and corporate banks lead the investment charge, allocating US$151.1 million and US$146.7 million, respectively.

On the retail side, hypermarkets and warehouse clubs report the highest levels of investment due to their high-volume, low-margin models, which rely on fast, efficient checkout processes. Online retailers also invest heavily to support their digital business models. At the same time, more traditional segments (such as department and specialty stores) invest less, likely reflecting limited budgets and customer preferences. Some of the biggest increases over the next year will be invested by those seeking to catch up; department and discount stores will boost spending by over three percent, while supermarkets are targeting increases of nearly four percent.

Modern technology is a key disruptorThe report highlights the length to which modern technology, mainly AI and digital currencies, are disrupting payments systems and processes. It states that in three years, the lion’s share of banks will be using AI-enabled biometrics to secure payments and agentic AI to process transactions autonomously. AI is also expected to catapult fraud detection to new levels, with 85 percent of banks saying they will turn to AI for instant risk resolution. Seventy-eight percent of respondents also noted the use of behavioral and contextual data to create personalized services, and 71 percent noted that extracting insights from payment data for pricing and liquidity decisions will be the top AI uses that will grow the fastest over the next three years.

In addition, 60 percent of banks are currently upgrading core systems to support programmable money and digital ledgers, with 76 percent looking to do this over the next three years. The banking industry will also focus much of their attention on using Central Bank Digital Currencies (CBDCs) for atomic settlement for SMEs, alongside efforts to establish stablecoin and token fintech platforms.

Harnessing regulatory shifts

Rather than viewing compliance as a cost or constraint, the report finds that leading retailers are harnessing regulatory shifts to advance their growth strategies. Seventy-nine percent of the leaders (versus 37 percent of those just beginning their modernization journey) say they collaborate with regulatory bodies to help shape effective regulations that foster innovation. Leaders are also highly focused on implementing a range of payments regulations. They are particularly ahead of beginners in anti-fraud regulations and those for new payment types, such as digital wallets and BNPL (Buy Now, Pay Later). The data also suggests they are making more progress meeting international standards such as ISO 20022.

Geoff Rush, Global Head of Banking and Capital Markets at KPMG International, said: “With the rise of digital currencies, it is increasingly clear that the future of payments lies in dynamic and value-driven ecosystems and partnerships — banks, fintechs, retailers and tech companies, for example — where banks play a key orchestration role in providing a variety of services on top of advanced technology and modern payment infrastructure. Such alliances amongst these sectors should be encouraged by shared goals around operational efficiency, fraud prevention and regulatory compliance. The big question is, who will be the first to tie up some of these strategic partnerships and really differentiate themselves?”

The post Why Strategic Partnerships Set to Reshape Payments Industry Says KPMG appeared first on European Business & Finance Magazine.

Brett Schklar is a technology expert known for helping organisations move beyond AI hype and focus on measurable business value. As CEO of AI-First Leadership and author of AI Without the BS, he works with senior leaders to build practical frameworks that turn experimentation into execution. His approach centres on governance, culture and return on AI rather than surface-level adoption.

As a technology speaker addressing global audiences, Brett challenges the assumption that deploying generative AI guarantees competitive advantage. Instead, he urges businesses to scrutinise pilots, empower employees from the ground up and treat AI literacy as a strategic priority. His work focuses on sustainable transformation, incremental performance gains and leadership accountability.

In this exclusive interview with the London Keynote Speakers Agency, Brett discusses the myths that continue to shape AI decision-making, the structural changes organisations must put in place to drive growth and why confidence, not fear, will determine who achieves a genuine return on AI.

Where Are Leaders Most Often Misjudging Risk and Return on AI?

Brett Schklar: “There are a lot of AI myths that I talk about in the speeches, but one of the most important points is not actually a myth, it is a fact, that 95% of all new generative AI pilots fail. That is not a myth.

“There are other myths. AI is going to take us over. AI is replacing humans. There is some truth and some fiction to that.

“But the most important myth that needs to be overcome is that deploying AI is an automatic formula for success, and that if you are not doing it, you are missing out.

“Companies that are looking at technologies, evaluating them, and looking for that return on AI before they jump in will help reduce that 95% of AI initiatives that are failing.”

What Practical Strategies Should Organisations Adopt to Drive Growth Through AI?

Brett Schklar: “There are a couple of practical AI strategies for business growth that I help companies put together and organise. One is that this transformation needs to happen top down and bottom up at the same time.

“Employees need to feel empowered and autonomous to explore new technologies and capabilities that will help them in their role. At the same time, leadership, the CEOs and business leaders, need to give employees the freedom to look at innovation and technologies that can really help.

“This is not about getting 40% gains overnight or 50% gains overnight. It is about allowing every employee to get 1% better. Those small, incremental gains will continue to add up.

“The second big thing we must have in place as a strategy for leveraging AI for business growth is to build either a centre of excellence or a steering committee within the company, made up of cross-organisational functions and people who are most passionate about what AI can do for the business.”

How Is AI Reshaping Workplace Innovation in Practice?

Brett Schklar: “AI is doing a lot to drive workplace innovation. It is the essence of workplace innovation, but it is doing it in a way that is different from what we expect.

“A lot of companies think AI is going to create huge gains in a very short amount of time, 20% gains, 30% gains, more efficiency, better targeting, more growth.

“The reality is that AI helps drive businesses forward by empowering each employee to look at what AI can do in their job to get them 1%, 2% or 3% better.

“These small gains across an entire organisation are better than a large initiative forced from the top down, which can get stalled, slowed down and face resistance.”

What Core Message Do You Want Audiences to Take Away?

Brett Schklar: “My hope is that when people are in my sessions or in my keynote, they take away a couple of things.

“First, it is possible to overcome the fear of AI that has been ingrained in our brains since the early 1920s through Hollywood and the broader fear of AI. We can overcome that.

“Second, as employees build more confidence and comfort in these generative AI tools, the AI IQ, or AIQ, elevates across the organisation.

“If you remove the fear of AI and empower employees to ramp up their AIQ, then you are headed towards a really good formula for a return on AI.”

This exclusive interview with Brett Schklar was conducted by Tabish Ali of the Motivational Speakers Agency.

The post Brett Schklar: Why 95% of AI Pilots Fail — and How to Fix It appeared first on European Business & Finance Magazine.

Investors are wary as they brace for further volatility sparked by unpredictable US trade policy and the fallout from AI advances. London’s FTSE 100 is on the back foot in early trade, with more pessimism seeping through following sharp falls on Wall Street.

Nevertheless, the blue‑chip index is still showing resilience, particularly compared to indices stateside, helped by solid corporate results. Chemicals giant Croda and medical supplies firm ConvaTec surprised on the upside and also showed optimism about the outlook. Utility companies are also proving a draw for investors in the uncertain climate.

Jitters over the impact of new artificial‑intelligence‑powered tools on some incumbents are spreading, with the cyber‑security industry now reeling from the effects. Developments released by Anthropic have been like a wrecking ball through realms of listed companies, with Claude Code Security still wreaking havoc on cyber firms.

CrowdStrike shares fell sharply for a second session, bringing others down with it, amid worries the new tool can easily replicate some of its services. The wider economic impact is also a fear factor, given the potential for deep job losses, and labour markets have already been weakening. While this would ordinarily help lift hopes for faster interest rate cuts, sticky inflation won’t make that course of action quite so easy.

Focus is turning to President Trump’s State of the Union address tonight for clues about future US trade policy. Investors are bracing for another twist in the tariff tale. The blanket 10% global duties have come into force, but the threat of upping these to 15% is still dangling.

Plus, the President and his team appear to be looking at other options in the trade arsenal, including considering imposing new tariffs under the pretext of national security on industrial sectors such as large batteries, chemicals, power grids and telecoms equipment. The President won’t want to lose face against trade opponents, which is why relying on the TACO trade, and the expectation he’ll ‘chicken out’, bears risks.

The State of the Union address could also see Trump justify the military build‑up in the Gulf and potentially a fresh attack on Iran. Oil prices are hovering near seven‑month highs as tense negotiations are set to resume on Thursday, with the threat of military action still high. The concern is that it would not just disrupt shipments from Iran, but oil supplies across the region.

Another niggle of worry which risks turning into a bigger headache is unwelcome developments in the private credit market. Blue Owl Capital, a major player in private credit, changed the withdrawal mechanism for one of its funds, prompting a share slide amid concerns there could be deeper problems in the market, to which large institutions like pension funds are exposed.

It comes after the collapse of First Brands and Tricolor, a car‑financing company. Blue Owl has brushed off concerns, saying it is returning capital to investors more rapidly under the new agreement. In this more anxious environment, any hint of a problem is sending investors scuttling for cover, and checking for sufficient diversification and high‑quality exposure is sensible.

The post FTSE 100 Dips as AI Shock and Tariff Fears Rattle Markets appeared first on European Business & Finance Magazine.

Quick Answer: Life insurance has become the engine powering private capital’s expansion into credit markets. Firms like Apollo, Blackstone, and KKR use policyholder premiums to fund lending operations, profiting from the spread between what they earn on investments and what they owe policyholders. But as newcomers pay increasingly aggressive prices to enter the market — exemplified by Aquarian Capital’s $4.1 billion acquisition of Brighthouse Financial — regulators and industry veterans are warning that the model’s risks are growing faster than its safeguards.

The trade that built modern private capital is deceptively simple. Buy a life insurer. Take control of the investment portfolio backing its policyholder obligations. Redirect that capital into higher-yielding private credit — direct loans, structured finance, asset-backed securities — and pocket the difference between what the investments return and what the insurance liabilities cost. The policyholder gets their annuity or pension payment. The asset manager keeps the spread.

Apollo Global Management pioneered this model when it merged with its insurance arm Athene in 2022, creating what has since become the template for an entire industry. Athene provides Apollo with permanent capital — roughly $300 billion in assets that do not need to be fundraised, do not face redemption windows, and do not depend on investor sentiment. Instead, they flow in steadily as Americans buy annuities, roll over pensions, and plan for retirement. Apollo’s asset management division then deploys that capital into the private credit opportunities it originates, creating a closed loop: insurance funds lending, lending generates returns, returns service insurance obligations, and the spread is profit.

The model has been extraordinarily successful. Apollo’s assets under management have grown to nearly $1 trillion. Its retirement services division, powered by Athene, accounted for a significant share of the firm’s earnings in 2025. Competitors noticed. Blackstone acquired a majority stake in Everlake (formerly Allstate Life Insurance) and built its own insurance-backed lending platform. KKR acquired Global Atlantic for $12 billion. Brookfield took over American National Insurance. Ares, Carlyle, and a growing list of mid-tier firms followed, each seeking the same prize: a captive pool of long-duration capital that could be invested in illiquid, higher-yielding assets without the constraints of traditional fund structures.

Life insurance has become, in effect, the lifeblood of the private capital industry — the source of cheap, stable funding that makes the economics of private credit work at scale.

The Aquarian Question

The Brighthouse Financial deal crystallised the anxiety that has been building across the industry for months. Aquarian Capital, a New York-based holding company backed by Abu Dhabi’s Mubadala sovereign wealth fund and RedBird Capital Partners, agreed in November 2025 to acquire Brighthouse for $4.1 billion — roughly $70 per share in an all-cash transaction. Brighthouse, spun off from MetLife in 2017, carries more than $230 billion in promises to policyholders and other liabilities. It had reported net losses, struggled with stagnating annuity sales, and was widely considered a complex and troubled asset.

Apollo and Carlyle had both examined the deal and walked away. Other asset managers who independently valued Brighthouse came up with figures roughly half what Aquarian paid. One senior executive who reviewed Aquarian’s investor presentation described the reaction as unanimous horror. Aquarian’s thesis was essentially to take the Apollo playbook and accelerate it — use Brighthouse’s enormous liability base to fuel a lending and investment operation, profiting from the spread at a scale that justified the premium.

Brighthouse shareholders approved the merger in February 2026. Regulatory approvals are pending. The deal is expected to close later this year.

The concern is not that the model itself is flawed. Apollo has operated it profitably for years, with $34 billion in regulatory capital at Athene and a track record of matching assets to liabilities. The concern is what happens when the model is replicated by firms with less experience, thinner capital buffers, and greater appetite for risk — firms arriving late to the insurance-backed credit trade and paying increasingly aggressive prices to get in.

The Systemic Question

The Bank for International Settlements published research estimating that publicly traded North American life insurers would face a capital shortfall of approximately $150 billion if their portfolios were marked to market under stress conditions. The finding underscored a structural issue: private credit assets held by insurers are inherently harder to value, less liquid, and more opaque than the government bonds and investment-grade corporate debt that life insurers traditionally held.

Regulators have responded, though slowly. The National Association of Insurance Commissioners introduced new rules in 2026 increasing capital charges for certain categories of private credit held by affiliated insurers. State regulators in New York and Virginia have raised concerns about the more permissive capital treatment offered by Iowa, where several private equity-affiliated insurers are domiciled. And the question of related-party investments — where insurers invest in assets originated by their own parent companies — remains deeply contentious. Athene holds roughly 12% to 18% of its assets in related-party investments, depending on how the calculation is performed. Some competitors hold significantly more: KKR’s Global Atlantic at 22%, Brookfield’s American National at 30%, Blackstone’s Everlake at 35%.

UBS chairman Colm Kelleher has publicly warned of a looming systemic risk in the insurance sector. Apollo CEO Marc Rowan dismissed the claim, arguing that most private credit held by insurers is investment grade and that the hysteria around the asset class is disconnected from the substance. Both men are talking their book. The truth is likely somewhere between them — and the answer depends entirely on what the next credit cycle looks like.

The Stress Test

The insurance-backed credit model does not have a built-in expiry date, but it has a vulnerability that functions like one: if credit losses spike, if interest rates move sharply, or if regulators tighten capital requirements beyond what current portfolios can absorb, the spread that makes the entire model profitable could compress or vanish. And unlike a hedge fund, an insurer cannot simply gate redemptions. It has obligations to policyholders — contractual, regulated, and in many cases guaranteed by state insurance funds.

The executives watching Aquarian’s Brighthouse deal are not worried because one firm overpaid for one insurer. They are worried because the pattern — latecomers paying premium prices for complex insurance liabilities, planning to invest aggressively to cover the cost — is the kind of behaviour that historically precedes a correction.

The private capital industry has built an extraordinary machine. Insurance provides the fuel. Private credit provides the engine. The spread provides the profit. But machines built for calm conditions are tested by turbulence. And the people closest to this one are starting to say, quietly but clearly, that they are nervous — and that they are right to be.

The post Why Private Capital’s Insurance Addiction Is Starting to Crack appeared first on European Business & Finance Magazine.

QUICK ANSWER What’s happening? European manufacturers are lobbying to preserve the EU’s Carbon Border Adjustment Mechanism (CBAM) after the European Commission proposed giving itself “discretionary powers” to suspend parts of the carbon tariff regime. Why it matters: For the first time, heavy industry is fighting to save a climate law, warning that proposed “kill switch” powers threaten €100 billion in decarbonization investments. What’s next: The industry revolt exposes fundamental tensions between climate ambition and regulatory flexibility as CBAM enters its critical implementation phase.

In an extraordinary reversal of traditional business-Brussels dynamics, European heavy industry is mounting a fierce campaign to protect the EU’s Carbon Border Adjustment Mechanism (CBAM) from being weakened by the very institution that created it. Manufacturers from fertilizers to cement are warning against introducing a kill switch into the just-launched CBAM scheme, as the European Commission seeks discretionary powers to suspend parts of the new measure.

The revolt rstarted earlier this year represents a pivotal moment in European climate policy, where industrial lobbying has shifted from opposing environmental regulations to defending them against regulatory uncertainty.

The “Kill Switch” Controversy

The EU executive wants to grant itself the power to exempt goods from the just-launched carbon border adjustment mechanism (CBAM), which requires importers of certain products to pay for planet-warming pollution emitted during the production process. Industry leaders describe this proposed flexibility as a “kill switch” that could undermine the entire framework.

The timing is particularly contentious. CBAM successfully entered into force on January 1, 2026, following a coordinated deployment across all EU Member States, integrating seamlessly with National Customs Import Systems. After three years of transitional reporting, companies finally face financial obligations under the system.

From 2026, EU importers need to buy and surrender CBAM certificates corresponding to the CO2 emissions embedded in their exports, priced in line with the EU’s carbon market, at around €70-€100 per tonne of CO2. This price mechanism creates genuine competitive pressure for cleaner production methods, which industry now wants to preserve.

Why Industry Wants Climate Rules Protected

The industrial defense of CBAM reflects a sophisticated understanding of competitive dynamics in global markets. European manufacturers have invested billions in decarbonization technologies based on CBAM’s promise of level playing field protection. The proposed exemption powers threaten this investment thesis.

Manufacturers worry the European Commission is undermining the bloc’s new carbon tariff regime, a key pillar of EU climate policy, warning the move is throwing investment plans into disarray and threatening much-needed decarbonization projects.

The industrial logic is clear: if CBAM can be suspended at political discretion, the regulatory certainty needed for long-term capital allocation disappears. This creates what economists call “regulatory risk premium” – the additional return demanded by investors to compensate for policy uncertainty.

Scope and Scale of CBAM’s Impact

CBAM initially applies to imports of certain goods whose production is carbon-intensive and at most significant risk of carbon leakage: cement, iron and steel, aluminium, fertilisers, electricity and hydrogen. These sectors represent some of Europe’s most strategically important industrial capacity.

More than 12,000 economic operators submitted applications for CBAM authorization until January 7, 2026, with over 4,100 successfully obtaining authorized declarant status. In the mechanism’s first week alone, 10,483 Import Customs Declarations with CBAM goods were validated automatically, covering 1.66 million tonnes of goods.

The scale demonstrates CBAM’s immediate operational significance for European supply chain management and industrial competitiveness.

Investment Implications and Market Response

Industry’s defense of CBAM reflects deeper concerns about European competitiveness. The carbon border adjustment was designed to address “carbon leakage” – the relocation of production to countries with weaker climate policies. Without robust enforcement, European manufacturers fear renewed competitive disadvantages.

Countries like Brazil and Turkey have introduced domestic carbon-pricing policies in response to CBAM’s signals, while the United Kingdom is implementing its own Carbon Border Adjustment Mechanism starting in 2027. This global momentum toward carbon pricing validates the industrial argument that CBAM creates positive competitive dynamics.

The proposed exemption powers could undermine this momentum by signaling that EU climate policy lacks credible commitment. Financial markets price political risk into long-term investments, making regulatory consistency essential for industrial transformation.

Global Trade and Diplomatic Pressures

The “kill switch” proposal emerges amid intense international pressure on CBAM. The United States has pressured the bloc to withdraw the law, saying it will create massive trade barriers among transatlantic partners, while China, India, Russia, and South Africa have voiced opposition, calling it protectionism.

These diplomatic pressures likely influenced the Commission’s desire for flexibility mechanisms. However, industry argues that discretionary exemption powers would create worse outcomes than consistent enforcement, even amid trade tensions.

The industrial position reflects sophisticated game theory: credible commitment to CBAM enforcement encourages global decarbonization, while exemption possibilities incentivize continued lobbying against the mechanism.

Strategic Implications for European Business

The industry revolt over CBAM’s potential weakening signals a fundamental shift in European business-government relations around climate policy. Rather than reflexively opposing environmental regulations, leading industrial voices now recognize that consistent policy frameworks create competitive advantages over regulatory uncertainty.

This evolution reflects the maturation of European climate policy from cost burden to strategic asset. Companies that have invested in decarbonization now depend on policy consistency to realize returns on those investments.

Around €1.5 billion in CBAM revenues are expected by 2028, according to the Commission, creating substantial fiscal stakes alongside industrial interests. The proposed Temporary Decarbonisation Fund demonstrates how CBAM revenues could support further industrial transformation.

Looking Forward: Policy Credibility and Investment Confidence

The outcome of this industry-Commission standoff will determine CBAM’s credibility as a long-term policy framework. Industry’s unprecedented defense of climate regulation reflects genuine concerns about investment security in an uncertain global trade environment.

For European businesses navigating 2026’s economic landscape, CBAM’s integrity matters beyond climate considerations. The mechanism represents a test of EU institutional capacity to maintain consistent policy frameworks despite external pressures.

The resolution will likely influence broader debates about European industrial strategy and the role of regulatory certainty in maintaining competitive advantages. As global trade tensions intensify, European industry’s demand for policy consistency offers valuable insights into business priorities beyond immediate cost considerations.

The unprecedented spectacle of heavy industry lobbying to preserve climate regulation demonstrates how policy certainty has become as valuable as policy content in driving long-term business strategy.

The post EU Industry Revolts Over €100bn Carbon Tax — But the Real Story Is Different appeared first on European Business & Finance Magazine.

The European Commission announced its RESourceEU Action Plan in December, 2025, committing €3.5 billion in funding to critical raw material (CRM) projects. By Anna Dodd.

Citing risky dependencies on China, the European Commission aims to have Europe and its allies gaining control over CRM projects across the supply chain. China has long dominated the CRM pipeline – from extraction to processing to manufacturing of final products – which poses a risk to Europe’s energy transition goals. But, the Asian superpower has also shined in military security — a salient subject in recent years.

The past year saw China restrict exports on a range of critical minerals and rare earths — first in April 2025, and then again in October 2025. Although these restrictions were mainly implemented in response to United States tariffs under President Donald Trump, the impacts of Chinese restrictions were felt globally, including within the European Union. 

“[China’s] stronghold creates dependencies for the EU and other partners that are increasingly weaponised for geopolitical purposes,” reads a European Commission communication.

From raw materials to critical raw materials

There was a time when these resources were simply that — resources. When did raw materials like copper, rare earths, and magnesium gain the qualifier of “critical”? 

Henry Sanderson, a journalist and author specializing in clean energy and critical minerals, credited Trump as a major player in the global focus towards critical raw materials, dating back to 2017. 

Although the EU released its first raw materials list in 2011, “Trump really catalyzed this focus on critical minerals in his first administration,” said Sanderson, while in conversation with European Business Magazine. The author pointed to a 2017 executive order which called on the US Department of Commerce to develop a critical minerals federal strategy. 

“But it didn’t receive the global attention that it probably should have done at the time.”

Having campaigned under an anti-renewables stance, Trump’s focus on these materials rather stems from his long-held opposition to American reliance on foreign imports, according to Sanderson. But China’s retaliatory measures on U.S. tariffs last year is what has brought renewed attention to this subject more recently.

“I think that highlights some of the weaknesses of [western] democracies — they wait for issues to bubble up till they reach crisis mode, and then they take action,” he said. “But certainly for Trump, since his first time around, he’s been focused on critical minerals.” 

A renewed view on European security

According to the Commission, critical raw materials are essential for a number of geopolitical priorities: clean energy, digital transitions, food security, and defense and aerospace.

A legal expert specializing in corporate energy and mining regulation noted that the narrative surrounding critical raw materials has transformed in recent years.

“Rearmement and massive investments in defense will likely spillover into critical minerals,” said the expert, choosing to remain anonymous for privacy reasons. 

“Much of the infrastructure that is needed for defense, like drones, AI systems, radar and missile guidance — it’s quite metals-intensive and power hungry … If Europe is really serious about rearming and reinforcing its strategic autonomy, it cannot do so while remaining reliant on Chinese electric vehicle batteries and rare earth magnets.” 

But before EU security and military returned to mainstream geopolitical discussions, critical raw materials had already been identified as strategic for the green energy transition. 

The expert observed this change: “What concerns me professionally is that the energy transition is not fueling this trend anymore. Yes, rare earth and battery metals are kind of like the new oil, but resource control itself is the new bargaining power,” he said.

“The question is whether democracies can build secure, ethical, and competitive supply chains fast enough and without resorting to the same extractive zero-sum game they claim to oppose.”

The European stake 

Where countries like the United States and China have been in the critical raw materials business for some time now, the European Union has been late to join. China has been particularly active in Africa, not only taking a leading role in critical raw materials mining, but also investing substantially in various infrastructure projects through its Belt and Road Initiative (BRI). 

Eszter Szedlacsek is a climate policy expert with Vrije Universiteit Amsterdam and research fellow with the Africa Policy Research Institute. She highlighted that comparing China’s influence in Africa to the European Union’s is difficult. 

Under the European Union’s Critical Raw Materials Act (CRMA), several bilateral partnerships in Africa are outlined. “But these are quite opaque,” said Szedlacsek. “So their success and whatever impact they have and however they can compete with the Chinese influence really depends on how they will be implemented.” 

And although the strategic projects in Africa outlined in the CRMA are much more concrete, they are minimal in comparison to China. “Four projects in the entire African continent, it’s not too extensive,” said Szedlacsek, adding, however, that the EU brings its own unique value.

“How the EU tries to differentiate itself is through local value addition, supporting industrialization locally in African countries,” she said.

Similarly, Arthur Leichthammer, a policy fellow for geoeconomics at the Jacques Delors Centre, added that price is not the only consideration when it comes to competition with China. “They’re not competing on price,” he said. “You will not compete on price.” 

Other factors come into play, such as ensuring a safe and reliable trading partner. 

“There are resilience criteria that must be priced in,” said Leichthammer. “If you would assume a frictionless trade, you would just keep on buying from China … you will not be able to rely on China for continuous supply.” 

Cooperating with the United States

In spite of Trump’s recent rhetoric surrounding Greenland and the possibility of a U.S. acquisition – which was met with widespread European opposition – the American government indicated a more collaborative attitude at its February 4, 2026 Critical Minerals Ministerial, seemingly reframing the country’s approach to international relations — at least on the subject of critical raw materials. 

“Today the United States, together with our partners and allies, has set out to reshape the global market for critical minerals and rare earths,” reads the government communication. 

Echoing similar statements from the RESourceEU Action Plan, the U.S. government announced collaboration with over 50 countries, as well as the European Commission. 

“The [critical minerals and rare earths market] is highly concentrated, leaving it a tool of political coercion and supply chain disruption, putting our core interests at risk. We will build new sources of supply, foster secure and reliable transport and logistics networks, and transform the global market into one that is secure, diversified, and resilient, end-to-end.” 

In a joint press statement, the nature of the collaboration between the European Commission and the United States is explained in further detail. Within the next 30 days, a Memorandum of Understanding “aimed at boosting critical minerals supply chain security” will be signed between the two parties.  

What this collaboration means for critical raw materials development in Greenland, demonopolizing China’s role within the market, and the EU’s RESourceEU Action Plan has yet to be seen. 

The post Europe’s Critical Minerals Race Heats Up as Green Transition Faces Geopolitical Risk appeared first on European Business & Finance Magazine.

Quick Answer: As the EU phases out Russian gas by 2027, Greece is leveraging its geography, two operational LNG terminals, and deepening ties with Washington to become the entry point for US liquefied natural gas into southeastern and central Europe. The Vertical Corridor — a pipeline network running from Greek terminals through Bulgaria, Romania, and Moldova to Ukraine — is the infrastructure bet that could make it happen.

For decades, Thrace sat at the southeastern edge of Europe as a geopolitical afterthought — remote, underfunded, and largely ignored by Brussels. Today it is at the centre of a multibillion-euro energy redesign that could reshape how gas flows across the continent.

The catalyst is straightforward. The EU has legislated a full ban on Russian gas: spot LNG imports are already prohibited, long-term LNG contracts end in January 2027, and pipeline gas must cease by September 2027. Before Russia’s full-scale invasion of Ukraine, Moscow supplied roughly 40% of the bloc’s natural gas. By the first half of 2025, that share had fallen to 13%, but still represented over €15 billion in annual payments. Europe needs replacement supply at scale, and it needs infrastructure to deliver it to the countries most exposed — particularly in central and eastern Europe.

Greece’s pitch is that it can be the front door.

Two Terminals, One Corridor

The country operates two LNG receiving facilities. The first is the Revithoussa terminal on a small island west of Athens, originally built in 1999 and expanded in 2018, with a regasification capacity of roughly 5.1 billion cubic metres per year. The second is the Alexandroupolis FSRU — a floating storage and regasification unit that began commercial operations in October 2024 with a maximum capacity of 5.5 billion cubic metres annually, equivalent to 50–55 LNG tanker deliveries per year.

From these two entry points, regasified LNG flows northward through the Vertical Corridor, a cross-border pipeline network connecting Greece with Bulgaria, Romania, Moldova, and Ukraine. The corridor was assembled largely from existing infrastructure after 2022, when Russia cut off gas supplies to Bulgaria after Sofia refused to pay in roubles. Five national transmission operators — Greece’s DESFA, Bulgaria’s Bulgartransgaz, Romania’s Transgaz, Moldova’s VestMoldTransgaz, and Ukraine’s GTSOU — now coordinate capacity along the route, including a dedicated monthly booking product for deliveries from Greek terminals to Ukrainian underground storage facilities.

The same corridor can serve Hungary, Slovakia, and potentially Austria and Italy via the Trans Adriatic Pipeline (TAP), which already carries Caspian gas from Azerbaijan through Greece to southern Europe.

US Money, US Gas

Washington has thrown significant weight behind the project. US LNG now accounts for nearly 60% of the EU’s total LNG imports, and the Turnberry trade deal struck last July included a pledge that the EU would purchase $750 billion in US energy products over three years. Greece’s energy minister Stavros Papastaurou has framed the relationship in explicitly strategic terms, positioning energy security as a cornerstone of transatlantic cooperation.

The financial backing is concrete. EXIM and the US International Development Finance Corporation have both expressed interest in financing a second FSRU at Alexandroupolis. The planned unit, named FSRU Thrace, has received environmental approval from the Greek government and would sit alongside the existing facility. Gastrade, the operator of the Alexandroupolis terminal, is leading the development.

However, the project carries a price tag of approximately €600 million — a sum its management says cannot be raised without European institutional support or US financing. A dedicated meeting organised by the US Department of Energy in Washington in late February brought together energy ministers and industry representatives from central and eastern European countries, alongside a European Commission delegation led by EU energy director general Ditte Juul Jørgensen. Financing for the Vertical Corridor was the top agenda item.

The Risks

Greece’s ambitions are not without complications. The Chatham House think tank has cautioned that long-term dependence on US LNG carries economic and environmental risk. Unlike pipeline gas, US LNG is traded on free-on-board terms, meaning sellers can redirect shipments to the highest bidder anywhere in the world. Greece and its neighbours would remain exposed to global price volatility regardless of how much terminal capacity they build.

European gas demand is also expected to decline as the energy transition accelerates, raising the possibility that new LNG infrastructure becomes underutilised. The Revithoussa terminal historically operated well below capacity even during periods of peak domestic demand.

There is also the question of Brussels. The European Commission has until recently resisted financing new gas infrastructure on the grounds that it conflicts with climate neutrality targets. That stance is softening under pressure from member states and the reality that natural gas will remain part of Europe’s energy mix as a bridge fuel for years to come. The outcome of that debate — expected to crystallise in 2026 — will determine whether projects like FSRU Thrace receive the European co-financing they need to proceed.

For now, Greece holds a geographic advantage that no amount of policy debate can relocate. It sits at the intersection of US supply and central European demand, with infrastructure that already works and expansion plans that have both Washington’s backing and Brussels’ attention. Whether it becomes Europe’s permanent gas gateway — or an expensive bridge to nowhere — depends on decisions being made in the next 12 months.

The post Why Greece Could Become Europe’s Most Important Gas Hub appeared first on European Business & Finance Magazine.

European Business Magazine caught up with  Ruben Miessen, Co-Founder and CEO of legal tech startup, LegalFly to discuss company LEGALFLY positions itself as “agentic AI” rather than just a legal copilot.

In practical terms, what does that mean for an in-house legal team using the platform day-to-day — and why does that distinction matter commercially?

The distinction between legal co-pilot and agentic AI is important. The way we see it, a ‘legal co-pilot’ is something that has been trained to speak ‘legalese’ and is therefore limited to a very conversational interface. For example, these enable users to undertake simple Q&A-like use cases, which are relatively simple — therefore a legal co-pilot cannot be used to execute the legal work required by an in-house team.

It is our ambition to integrate LEGALFLY within the existing suite of tools used by internal legal teams, and to mimic their current workflows as precisely as we possibly can – something that a co-pilot cannot do.

We therefore position ourselves as ‘agentic AI’. We build workspaces within a setup of more than a dozen agents, which have each been developed in a unique way to mimic very specific legal tasks. We have an agent that is conversational and used for onboarding; agents that you can drag and drop a contract on and it will output a version with risks flagged on individual cards; a red lines / redraft class that you can then insert into a Word document to redraft any contract in a matter of seconds. This broad service is something that cannot be achieved with a co-pilot in a solely conversational interface. We’re doing this because we want to empower our in-house clients. LEGALFLY executes all the core legal work we can (about 80% of an in-house legal team’s work), enabling them to refocus their time on more strategic tasks.

In addition, we’re about to take this one step further. The Discovery agent (which is our conversational interface) acts as the intake of legal work, and whatever question you pose in Discovery, it will route it to all the other agents. Therefore, when you ask a question and insert a contract, Discovery will activate all agents and convert the contract into a red line document and a workflow which is no longer conversational – like Microsoft Co-pilot. We have also integrated with email: customers can send any email to LEGALFLY, for example forward a contract, and one minute later LEGALFLY will reply with a red line rewritten contract, based on your internal company policies.

Building features is handy, but ultimately this has a huge impact on company ROI by speeding up internal processes. A legal copilot is limited in its capabilities. For example, it might be able to offer first line legal support from an advisory perspective, but we didn’t want to build a solution which only advises. We wanted a product that gets things done, which is only possible through an agentic solution. We’re aiming for an ROI of at least 10x on the licence cost for the client, versus what they are saving in legal spend. More broadly, we’ve already witnessed a significant macro-shift in the market, where legal spend is being pulled away from law firms and ASLPs, and invested in legal tech solutions to make the internal team more efficient and enable them to handle a broader range of legal tasks, versus simply outsourcing it to a service provider.

In legal tech, data security and confidentiality are arguably more important than raw AI capability. How did you architect LegalFly to win trust from enterprise legal teams, and how does that differ from the way big US foundation-model vendors approach legal workflows?

There are two elements to my answer here: accuracy and legal depth, and data security.

First, on accuracy and legal depth: generalist solutions are good, but they have a high error rate – currently sat at 31% with solutions like Co-pilot or ChatGPT. So, whilst AI might be useful to carry out more creative work, you simply cannot take the risk in legal tasks.

The legal depth of the solution is extremely important. LEGALFLY is legally trained in 35 jurisdictions, with live access to over 250 government portals which feed the platform directly at the source, to track and incorporate any changes across the legal landscape which have been published by public and government agencies.

Whenever LEGALFLY provides advice, every answer is grounded in a reputable, authoritative source. This means that the legal professional using the tool can very easily verify sources within seconds by clicking on the link. On top of that we run a confidence check in the background, offering a secondary back-up from our internal knowledge base. If LEGALFLY is not confident, it will not offer any answer, or if unsure, will answer with a disclaimer which tells the user to seek further legal counsel. This is a crucial distinction from LLMs which currently may hallucinate answers to achieve a goal.

Second, on data security: one of our principal design cores is an anonymisation model that can even be deployed on premises. This model redacts all sensitive data from every single document or contract before an AI agent is connected – we’re the only provider globally that does this. This is one aspect which is highly sought after by sensitive industries and as a result, I’m very proud to say we’re working with several governments, including the government of Luxembourg. These are the type of client very concerned about security when deploying AI on their most sensitive documents. But thanks to our unique approach, we can help them feel comfortable around using AI in legal tasks.

We also care deeply about data sovereignty, so we offer a wide range of deployment options, including single tenancy which we host in every region, whether that’s mainland Europe, the UK, Middle East, or US.

You’ve built LegalFly in Belgium, with operations in London and Dubai, rather than San Francisco. What advantages — and constraints — come with building a legal-AI company in Europe, especially around regulation, data sovereignty, and enterprise sales?

Europe has a tendency toward hyper-regulation. This means it’s tougher to bring legal AI solutions to market in Europe, compared to the US. But the benefit is that as soon as we get it right here, then we can get it right anywhere, because Europe operates one of the strictest legal frameworks in the world.

As a Belgian company, we benefit from understanding complexity. We have six jurisdictions in one small country, and three official languages, which all need incorporating into training. An additional plus is that the European Commission is headquartered in Belgium, which gives us greater access to the legal system and legal policymakers in the region too.

From a commercial perspective, it can be tough. There are 27 member states of the European Union, all with different cultures, languages, jurisdictions in which we need to train LEGALFLY. Development comes with its own challenges, which in the short term slows us down versus a US company. But in the longer term, it puts us in a unique position. If you look at the clients we’re already selling to, they’re working across all those jurisdictions we already know by heart, so we’re building with that knowledge and those requirements taken into consideration. In terms of data sovereignty, we host data in the UK, Germany, UAE, and US, with the capability to do further deployment should that be required.

However, one key constraint is on fundraising, which is certainly tougher when building in the EU than the US. Thankfully, this hasn’t affected LEGALFLY. For us, VC was inbound for both our Seed and Series A rounds and continues to arrive.

When companies like Agristo or Duvel Moortgat deploy LegalFly, where do they see the fastest and biggest return on investment — cost reduction, risk management, deal velocity, or something else?

This depends on which team you are looking at: to expand, Legafly is indeed solely focused on working with in-house teams (96% of clients are in-house or public sector), but we’re not just selling to their legal teams. LEGALFLY works with Legal, Procurement, Compliance, and depending on the client, the Claims team. In most cases, at present, we’re working with Legal and Procurement teams, and in most cases, we work with both. But each team has its own requirements.

In Legal, the incentives are a little different: it’s usually purely about cost prediction, with significant reduction of reliance on the costly third-party legal counsel. If you’re asking the Procurement team, it’s mostly about deliverables; with other important considerations being deal velocity, cost reduction and reducing risk.

When we talk about cost reductions, it’s important to distinguish that it’s not about reducing the size of the legal team, because even in large organisations, internal legal teams are already rather small, operating with an intense amount of pressure. Instead, it’s about giving the in-house team independence from their legal counsel and shifting that legal budget spend from the law-firm to only spending a fraction on the AI. That’s not to say the law firm will be cut out entirely, as there will remain some specialised tasks, like litigation, but many other functions can be brought in-house.

With Microsoft, Google, and OpenAI all moving aggressively into legal and compliance workflows, what is LegalFly’s long-term moat — and how do you avoid being commoditised as “just another AI layer” inside Word and Outlook?

We have a strategic partnership with Microsoft, where clients can buy a LEGALFLY licence through Microsoft.

But why did Microsoft become interested in this partnership? We have all seen multinationals, such as Microsoft, add AI into every existing solution and product. They have achieved their success by being world-leading generalists. However, the one area where it would be difficult to sell a generalist solution is in legal. Microsoft’s existing product suite is not legally trained; plus, a legal co-pilot is not an agentic legal operating system, so it has zero capability to actually ‘do’ any legal work, besides advice — and even then, it may even hallucinate.

LEGALFLY’s ability to anonymise documents — especially sensitive documents — is also key to our success. Despite current behaviour, it remains unsafe to upload documents to ChatGPT or Co-pilot, particularly in a legal environment.

That is exactly why Microsoft has decided to partner with us, specifically for those Legal and Procurement teams. We’re definitely not just another AI layer. Inside Outlook we’re a legally verified solution to undertake legitimate legal tasks.

Do you see LegalFly remaining a best-in-class legal automation platform, or evolving into something closer to an AI operating system for corporate legal and compliance functions across Europe?

Last week, we launched V3 of LEGALFLY as an operating system. The more time we spent working with our clients’ amazing Procurement teams, the more we learned specifically about the processes and tasks we want to build an agent for.

We’ve now reached a point whereby we have built an agent for any task an in-house legal team is undertaking. As a result, our clients can spend an entire day within the LEGALFLY platform, so it essentially became a de facto legal operating system.

We have also ensured LEGALFLY is easy to use across platforms: it can be used as an agent, as a web platform, in Microsoft Word, to email, to Slack, through Teams. Therefore, we’re deeply integrated through any system on which our clients prefer to work.

Looking ahead, how do you think AI will change the structure of legal teams in large European companies — fewer lawyers, different skill sets, or simply much higher leverage per lawyer? And where does LegalFly fit into that future?

I don’t foresee a huge structural change for in-house, corporate legal teams. This is largely because they are already rather small, so there’s not a huge amount to change! To speak from experience — we meet with the world’s largest public institutions, airlines, construction companies, banks, insurance firms, and so on — the amount of legal work, and the number of risks that these small-and-mighty internal teams are defending the company against, is surprising!

So, whilst I don’t foresee a change for internal teams, I am certain that there will be a big change in the structure of law firms or ASLPs, where we expect junior hiring freezes, and slimmer law firms overall. This is because in-house teams will be powered by AI, putting a lot more work in-house, and therefore less money into the pockets of the law firms, which will significantly increase over time. Secondly, those law firms are becoming much more efficient, so you won’t need a full army of lawyers, even in the prestigious magic circle firms. It won’t make sense anymore.

The post What ‘Agentic AI’ Really Means for In-House Legal Teams — and Why It Matters appeared first on European Business & Finance Magazine.

Quick Answer: The European Parliament’s trade committee convenes an emergency meeting today (Monday 24 February) to decide whether to freeze ratification of the EU-US Turnberry Agreement. The deal — 15% on EU goods, zero on US industrial goods — was negotiated under IEEPA authority the Supreme Court has now struck down. France’s trade minister called for a “united approach.” The UK’s separately negotiated 10% rate has been erased by a flat 15% global tariff that treats all partners the same.

The Turnberry Agreement was supposed to be ratified this week. Instead, the European Parliament’s trade committee will spend Monday morning deciding whether it is even worth saving.

Committee chairman Bernd Lange announced on Sunday that he would propose suspending all legislative work on the deal until the EU receives what he called a “comprehensive legal assessment and clear commitments from the US.” He described the current state of US trade policy as “pure customs chaos,” adding that nobody can make sense of what Washington’s tariff regime actually looks like from one day to the next.

The trigger was Friday’s Supreme Court ruling, which struck down President Trump’s use of the International Emergency Economic Powers Act to impose tariffs. The IEEPA was the legal authority underpinning the Turnberry Agreement, reached last July when European Commission President Ursula von der Leyen visited Trump’s Scottish golf resort. The deal capped US tariffs on most EU exports at 15% — among the lowest rates offered to any trading partner — while the EU agreed to eliminate tariffs on all US industrial goods and open quotas for American agricultural products.

Within hours of the Supreme Court decision, Trump signed an executive order imposing a replacement 10% global tariff under Section 122 of the Trade Act of 1974. By Saturday morning, he had raised it to 15% — the statutory maximum — via a Truth Social post. The headline rate happens to match what the EU negotiated. But the legal architecture is entirely different, and the implications for Europe are severe.

The Uniformity Problem

Section 122 requires tariffs to be applied on a non-discriminatory basis. Every country faces the same rate. That means the carefully negotiated concessions in the Turnberry Agreement — the specific product exemptions, the agricultural quotas, the pharmaceutical carve-outs — have no legal mechanism under the new authority. The EU is paying 15% on most goods, but so is everyone else. The preferential treatment that justified the political cost of accepting a lopsided deal has evaporated.

The European Commission initially pushed back against any suggestion the deal was dead. In a statement on Sunday, it insisted that it expects the US to honour the terms of the joint statement. EU Trade Commissioner Maroš Šefčovič spoke with US Trade Representative Jamieson Greer and Commerce Secretary Howard Lutnick over the weekend, seeking what the Commission called “full clarity” on what the new tariff regime means for existing commitments.

France struck a sharper tone. Trade minister Nicolas Forissier told the Financial Times that Europe has the tools to respond, citing the Anti-Coercion Instrument — the EU’s trade “bazooka” — which could target US technology companies through export controls, procurement bans, and tariffs on services. Forissier called for a united approach rather than bilateral deals, a pointed message at a moment when some member states might be tempted to cut side deals with Washington.

The UK’s Vanishing Advantage

Britain is in an even more awkward position. Prime Minister Keir Starmer’s government had secured a 10% tariff rate — the lowest of any major trading partner — along with specific carve-outs for the UK’s steel, automotive, and pharmaceutical sectors. Officials spent months framing this as evidence that a conciliatory approach to Washington could deliver tangible results.

The move to a uniform 15% rate under Section 122 obliterated that advantage overnight. One Capital Economics analyst described the increase as an effective rebuke to nations that had accepted deals at lower rates. The UK government said on Friday that it expects its “privileged trading position” to continue, but acknowledged it is ultimately a matter for the US to determine whether past agreements still stand.

What Happens Next

The Turnberry Agreement’s ratification had already been frozen once, in January, after Trump threatened tariffs linked to his ambitions for Greenland. The Parliament unfroze the process in early February, with a vote originally scheduled for Tuesday 24 February. That vote is now almost certainly postponed.

Even if the committee decides not to kill the deal outright, the 150-day lifespan of Section 122 tariffs creates a structural problem. These duties expire in late July unless Congress extends them. The administration plans to use the interval to launch Section 301 investigations into major trading partners and expand Section 232 national security probes, building alternative legal foundations for longer-term tariffs. But none of that will produce results within the Turnberry ratification timeline.

The EU is being asked to ratify a trade agreement whose legal basis has been ruled unconstitutional, whose tariff rates are now applied universally rather than preferentially, and whose future depends on authorities that have not yet been invoked. For a Parliament already divided over the deal’s asymmetry — zero tariffs on US goods entering Europe, 15% on European goods entering America — that may be one too many reasons to walk away.

The emergency meeting starts this morning. The deal may not survive it.

The post EU-US Trade Deal Been Thrown Into Doubt After Trump Tariffs appeared first on European Business & Finance Magazine.

Quick Answer: The European Parliament has approved a €90 billion loan to Ukraine for 2026-2027, funded through joint EU debt backed by the bloc’s budget. Of that, €60 billion is earmarked for defence procurement and €30 billion for budget support. Ukraine will only repay the loan once Russia pays war reparations. For European defence contractors, reconstruction firms, and Ukrainian industry alike, this is the single largest financial commitment in the war’s history — and it reshapes the business landscape on both sides.

On 24 February — the fourth anniversary of Russia’s full-scale invasion — the European Parliament held an extraordinary plenary session in Brussels and formally approved the largest financial support package the EU has ever assembled for a non-member state. The €90 billion Ukraine Support Loan covers 2026 and 2027 and passed under urgent procedure with 458 votes to 140.

The numbers are significant. But the structure, where the money goes, and what it signals for European fiscal policy matter more for businesses trying to understand what comes next.

What the Money Actually Covers

The €90 billion breaks into two streams. Sixty billion euros goes to defence — strengthening Ukraine’s defence industrial capacity and procuring weapons, ammunition, and military equipment. The remaining €30 billion provides macro-financial assistance: budget support to keep the Ukrainian state functioning, paying salaries, pensions, and funding the institutional reforms required on Kyiv’s path toward EU membership.

The defence allocation is the more consequential figure. Under the loan’s terms, procurement must be sourced in principle from Ukrainian, EU, and European Economic Area defence industries. Derogations allow sourcing from other countries only when specific equipment is unavailable from European suppliers. This is explicit industrial policy: the EU is using Ukraine’s wartime needs to build out its own defence manufacturing base.

The IMF estimates Ukraine’s total funding gap for 2026-2027 at approximately €136 billion. The EU’s €90 billion covers two-thirds. The remaining third is expected from G7 partners, though US commitments remain uncertain following the withdrawal of direct military aid.

How It’s Funded — and Why That Matters

The loan is funded through common EU debt, raised on capital markets and backed by the bloc’s budget. The EU has issued joint debt before — notably during the pandemic recovery fund — but each instance moves the bloc closer to a normalised model of shared borrowing that countries like Germany have historically resisted.

That Germany agreed is itself a signal. Berlin’s longstanding opposition to Eurobonds has softened under wartime pressure, and analysts at the European Council on Foreign Relations have noted the Ukraine loan may pave the way for future joint debt issuance in areas like defence spending and industrial resilience.

Debt service costs are estimated at roughly €1 billion for 2027, rising to €3 billion per year from 2028. Crucially, Ukraine is not required to repay the principal until Russia pays war reparations — a condition that may never be met, effectively making this a grant in legal disguise. The EU has reserved the right to use approximately €210 billion in immobilised Russian central bank assets to cover repayment if necessary. Hungary, Slovakia, and the Czech Republic secured full exemptions from all financial obligations, including interest payments.

What It Means for European Business

For Europe’s defence industry, the €60 billion procurement stream is transformative. Companies across the EU and EEA are now preferred suppliers for a two-year, fully funded pipeline of military orders covering ammunition, armoured vehicles, drone systems, communications equipment, and logistics infrastructure. Firms in France, Germany, Sweden, Italy, Spain, and the Baltic states stand to benefit most directly, though the requirement to source from European industry creates opportunities across the entire supply chain.

The Competitiveness Council — meeting this same week — is debating the European Competitiveness Fund and emergency plans for industrial resilience, feeding into the broader push to reshore defence manufacturing.

Beyond defence, the €30 billion in budget support sustains Ukraine as a functioning economic partner. European exporters, insurers, logistics firms, and financial institutions with Ukrainian exposure benefit from the certainty that Kyiv can meet its obligations. The loan also supports Ukraine’s integration into the EU regulatory framework, reducing friction for European firms operating across the border.

What It Means for Ukrainian Business

For Ukraine, the loan buys time and stability. The country’s 2026 budget allocates €57 billion to defence and security, of which €51.6 billion is expected to be covered by in-kind military assistance. Without the EU loan, Kyiv would have faced a funding cliff in spring 2026 — weakening its negotiating position and destabilising its domestic economy.

The budget support component allows Ukrainian businesses to operate in an environment where government contracts are honoured, civil servants are paid, and basic infrastructure is maintained. For the country’s tech sector, agricultural exporters, and reconstruction contractors, this is the difference between a functioning economy and collapse.

Reconstruction is the longer-term prize. The World Bank estimates Ukraine’s total recovery needs at over $480 billion. The EU loan does not directly fund reconstruction, but it keeps the country solvent enough to begin planning for it — and the requirement to source defence equipment from European and Ukrainian industry creates a template for how reconstruction contracts may be structured.

Peace talks between the US, Ukraine, and Russia in the UAE in late January produced no breakthrough. Until they do, this €90 billion is the financial architecture keeping Ukraine in the fight and at the table.

The post The EU’s €90bn Bet on Ukraine But Who Actually Profits? appeared first on European Business & Finance Magazine.