BRUSSELS – Defence spending is anticipated to be a central topic at today's EU summit, as leaders gather to discuss Europe's efforts to enhance military capabilities amidst rising tensions regarding capital markets integration.

This marks the second summit within a month, following significant proposals from the European Commission aimed at bolstering Europe’s military posture and streamlining capital markets, unveiled just yesterday.

Key discussions are expected to focus on advancing both initiatives, although EU diplomats have indicated that a separate statement regarding ongoing support for Ukraine is likely to emerge, with unanimous backing anticipated from all EU member states except Hungary, mirroring the situation from two weeks ago.

European Council President António Costa noted the potential for discussions to extend into a second day, as deliberations are likely to cover both topics comprehensively.

As the war in Ukraine continues, President Volodymyr Zelenskyy is expected to provide EU leaders with insights into Kyiv’s perspective on the conflict and the peace process.

EU diplomats predict a stronger stance in the summit's communiqué regarding Ukraine, reflecting a growing acceptance of a framework that may operate with 'EU minus Hungary' on certain issues.

In recent drafts of the summit conclusions, proposals related to Ukraine have been delineated into distinct documents to clarify the bloc's position.

While detailed discussions on a potential European contribution to future peacekeeping missions may be limited, leaders will likely explore measures to verify compliance with any ceasefire and potential military aid, including the proposed 'Kallas plan' which seeks to mobilize between €20 billion and €40 billion in military support for Ukraine.

France, Italy, and Spain, consistently significant players in military aid, remain hesitant to calibrate their contributions based on economic leverage, complicating negotiations.

In tandem with discussions of military readiness, the Commission revealed its 'Readiness 2030' initiative, underscoring the urgent need for Europe to achieve war preparedness within the next five years, coinciding with assessments of Russia's potential regrouping timeline.

To facilitate this, plans are underway to allocate €800 billion towards defence procurements, although in-depth discussions on this initiative are not expected due to time constraints.

EU leaders are also poised to address a proposed €150 billion loan scheme intended for joint purchases of military equipment produced within the EU, a plan that notably excludes foreign entities, including companies from the US, UK, Norway, and Turkey.

On the topic of capital markets, leaders are poised to approve measures aimed at reducing regulatory burdens and promoting integration within the EU's single market, though limited time will likely restrict comprehensive discussions.

A significant area of contention remains around central supervision at the capital markets level; larger member states, led by France, advocate for a centralized oversight mechanism to facilitate substantial investments, while smaller nations, particularly Luxembourg, express concerns about potential overreach.

Luxembourg’s Prime Minister, Luc Frieden, is set to raise this issue during summit discussions, which may lead to confrontations with French President Emmanuel Macron.

However, some EU officials anticipate a calmer dialogue compared to previous contentious meetings.

Yearly migration assessments will also feature in the summit agenda, concentrating on procedural formalities rather than substantive policy changes, despite ongoing pressures experienced by the tourism sector during regulatory reforms.

Pre-summit discussions regarding a new returns regulation are expected, with a renewed focus on the 'safe third country' policy concept.

Additionally, during evening discussions, leaders will initiate preliminary dialogues concerning the EU's long-term budget for the years 2028-2034, with the European Commission expected to present the first draft by July ahead of extensive negotiations likely to continue towards 2027. This budget discourse follows a notoriously challenging negotiation period that recently concluded amidst the pandemic and significant electoral shifts within member states.

In a broader context, the EU’s response to climate change and biodiversity preservation will also be scrutinized, particularly concerning its forest biomass policy which could impede the bloc's aspirations for carbon neutrality by 2050. A report stresses the necessity for transformative policies to address ongoing deforestation, land degradation, and the dichotomy between climate strategies and environmental realities.

As pressures mount for the EU to modify its biomass energy strategy, the sustainability and regulatory frameworks around forest management remain focal points for ongoing EU discussions.