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Merry Christmas from Brussels!

Welcome to this special edition of The Capitals, where our Christmas gift to you is a snapshot of what is happening across Europe during the festive period. The Euractiv newsroom and our network are ready with an expert overview of what is happening, where, why, and what will or could happen next year. 

You can also enjoy a summary of the EU’s key policy portfolios, with a particular focus on the key moments of the last 12 months and what we can expect in 2025.

Today, unwrap our analysis of the state of the EU economy amid political uncertainty in the Union's two largest economies, Germany and France. 

As the clock strikes 12 on 31 December, the EU will crash into a 2025 already marked by unprecedented upheaval as the two countries (and the others) grapple with political crises, wars raging at the EU’s borders, and tariff-loving protectionist Donald Trump set to enter the White House.

Analysts who spoke to Euractiv’s Jonathan Packroff and Thomas Moller-Nielsen formulated different scenarios for how the EU economy will fare, which largely depend on forthcoming political developments.

“With France and Germany currently in this political instability, nothing will really move in Europe,” analyst Carsten Brzeski, global head of macro at ING Research, commented.

Trump’s return in January adds another layer of complexity. He will likely try to pressure the EU to choose between Washington and Beijing.

EU capital in focus
Click on the picture to read the story |  [Antonio Masiello/Getty Images]

As Germany and France take first and second place when it comes to drama in politics, Italy is experiencing a moment of relative calm. 

While Prime Minister Giorgia Meloni is experiencing criticism for her increasingly right-wing policies and issues related to the judiciary and a rather cursed Albania-Italy migrant deal, she and her government remain stable.

Reporting from Rome, Alessia Peretti writes about Meloni’s political transformation, her high ambitions to be the bridge between the EU and the US, and her policy focus on escalating her battle against Europe’s Green Deal.

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In other news from Europe
Click on the picture to read the story |  [CHRISTOPHE PETIT TESSON/EPA-EFE]

Eric Lombard, a banking and insurance expert and France’s third economy and finance minister in a year, has taken on France’s most demanding job: drafting and adopting a budget for 2025.

Théo Bourgery-Gonse provides everything you need to know about the country’s new economy minister.

Also, take a look at a story by Thomas Mangin regarding the new ministers responsible for health-related portfolios.

In Athens, the Greek authorities are on high alert after Turkish press reports quoted Transport Minister Abdulkadir Uraloğlu saying that Ankara is eyeing a maritime zone agreement with Syria’s new regime, similar to the one with Libya.

The latter triggered strong reactions in Athens as it ignored the existence of the island of Crete.

The EU has declared the Turkey-Libya maritime deal illegal because it “infringed upon the sovereign rights of third States.”

As Greece’s maritime borders may be affected by the new Turkey-Syria deal, diplomatic sources in Athens commented that Syria is in a transitional situation, which does not legitimise any such agreement. 

The sources also said the EU has been notified and is monitoring the situation.

Meanwhile, a Russian cargo ship called Ursa Major sank in the Mediterranean Sea overnight after an explosion ripped through its engine room, and two of its crew are still missing, the Russian Foreign Ministry said on Tuesday.

Going north, the Danish government announced on Tuesday plans to invest billions in Arctic defence, including new drones, ships, and expanded sledge patrols in Greenland. 

This announcement follows renewed comments from US President-elect Donald Trump earlier this week about his wish for American "ownership and control" over Greenland.

Greenland’s Prime Minister, Múte Egede, firmly rejected the notion on Monday (23 December), stating, "We are not for sale and will never be for sale," a stance fully supported by the Danish government. 

A government spokesperson also reportedly joked to the New Yorker that perhaps Denmark should purchase the US (with the exception of the Trump government), which could transform it into a “great nation”.

Meanwhile, Defense Minister Troels Lund Poulsen acknowledged the timing as ironic but emphasised the need for greater Danish presence and cooperation with the US to monitor Greenland's vast territory. 

The investment includes two new Thetis-class inspection ships, long-range drones, expanded Sirius sled patrols, and additional Arctic Command personnel.

While Greenland's government remains open to further collaboration with the US, Egede underlined that such partnerships must align with Greenland's values and sovereignty.

Furthermore, Trump threatened to demand control of the Panama Canal be returned to Washington, hinting at China’s growing influence, Afp reported. 

Panama's President Jose Raul Mulino replied that the canal is not under direct or indirect control from China, the EU, or the US.

In Chișinău, Maia Sandu was sworn in for a second term of EU-hopeful Moldova on Tuesday, warning of a “harsh winter.”

In Kosovo,  President Vjosa Osmani shed light on why the country’s Central Election Commission (CEC) may have voted against Serb List’s participation in the upcoming Kosovo elections, stating they are linked to “terrorist acts, acts of aggression and violation of the constitutional order”, as well as not recognising the country’s sovereignty and refusing to use its official name. 

On Tuesday, the US, EU, UK and Germany expressed concern over the decision and called for the certification process based on legal standards and procedures, not politics. 

However, Osmani responded, “Every decision issued by the CEC must be respected as part of the commitment to the rule of law and the preservation of institutional integrity.”

Serb List has appealed the decision by the CEC, and the results are expected to be announced in the coming days. The party has boycotted previous elections and was previously headed by Milan Radoicic, who admitted to masterminding a 2023 ‘terrorist’ attack in the north of Kosovo.

***

[Edited by Sarantis Michalopoulos, Alice Taylor-Braçe, Charles Szumski]

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