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Regional Summary

When Allies Become the Problem America’s European allies now spend as much energy managing Washington as they do confronting Moscow. From Davos to Abu Dhabi to Brussels, governments that staked their security on American protection spent this week scrambling not against Russian aggression but against American unpredictability — and finding that domestic fractures made it harder. Ukraine’s shift is the starkest case. Volodymyr Zelensky’s blistering speech at Davos, calling Europe “fragmented” and “lost,” was not mere frustration but a strategic pivot: having concluded that Brussels cannot deliver, he is betting on American-led talks with Russia, sending Kyrylo Budanov, his intelligence chief, and Rustem Umerov, his defence minister, to Abu Dhabi for trilateral negotiations. Yet even as Kyiv courts Donald Trump’s favour, it is hedging ruthlessly. The appointment of Mr Budanov, the intelligence chief trusted by more Ukrainians than Mr Zelensky himself, to run the president’s office looks less like routine reshuffle than the opening move in a succession plan. A wartime leader who escalates offensives, negotiates through his former adversary’s patron, and installs a potential heir knows the ground is shifting beneath him. Poland shows how divided government turns managing the alliance into farce. Radosław Sikorski, the president-elect, secured an invitation to Mr Trump’s Peace Council and reassurance that American troops would stay; days later Mr Trump insulted 44 Polish soldiers killed in Afghanistan. The public brawl between Mr Sikorski and Donald Tusk, the prime minister — each accusing the other of either kneeling to or alienating Washington — did more damage to Poland’s credibility than Mr Trump’s original slight. That the country’s central bank is buying gold at record pace, aiming for 700 tonnes, hints at a quiet bet that neither alliance nor currency union can be wholly trusted. Polling suggests the coalition’s junior partners may not survive the next election, meaning the government trying to navigate Washington and Brussels could soon be replaced by one less inclined to navigate at all. The smaller allies faced the sharpest version of the dilemma. When Mr Trump threatened tariffs over Greenland, Estonia — which spends 5% of GDP on defence precisely because it depends on American protection — sided with Denmark, confirmed participation in Arctic military drills Mr Trump had warned against, and yet rejected any European defence structure that might dilute NATO. The message was principled but precarious: defy America on sovereignty, defer to it on defence structures, and hope the contradiction holds. Finland performed a similar dance, with Petteri Orpo, the prime minister, extending a meeting with Xi Jinping, China’s president, while coordinating EU countermeasures against American tariffs, and Alexander Stubb, the president, joining the eight-nation statement defending Greenland — all while Brussels placed Helsinki under formal budget discipline partly because its F-35 purchases exceeded fiscal limits. The cost of being a good ally can put you in breach of being a good European. Domestic politics compound every external challenge. In the Czech Republic, Radek Vondráček, the far-right speaker of parliament and the country’s third-highest official, manipulated headlines to inflame anti-Ukrainian sentiment and called a Ukrainian flag on Charles Bridge a “provocation,” prompting the Senate to pass an unprecedented resolution of rebuke. In Romania, George Simion, leader of the far-right Alliance for Romanian Unity (AUR), cut a Greenland-shaped cake at a Washington reception, triggering outrage that only confirmed his party’s 35% polling lead. Latvia’s coalition fractured again over wartime compensation legislation, its 17th prime-ministerial crisis in 33 years of independence, even as it tried to accelerate Rail Baltica, the regional rail project, and deepen military ties with Poland. Gitanas Nausėda, Lithuania’s president, hedged on joining Mr Trump’s Peace Council while fending off a European Parliament resolution condemning his government’s moves against the public broadcaster. In each case, leaders committed to Western integration found their room to act narrowed not by enemies but by coalition partners, constitutional rivals, or populist challengers at home. Eastern Europe’s security-focused states built their post-Cold War order on the assumption that American power and European institutions would pull in the same direction. That assumption has broken down. Governments must now play Washington against Brussels, hedge military commitments with gold reserves and arms-industry share sales, and manage domestic populists who see in American disruption not a threat but an opportunity. The alliance still holds, but its members are learning that dependence on a protector who demands loyalty without offering predictability is not partnership — it is exposure.

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Country Summaries

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UkraineUkraine

Ukraine is a wartime state recalibrating its Western strategy while shifting to a more aggressive military posture and, possibly, preparing for a change of leadership. At Davos this week, President Volodymyr Zelensky delivered an unusually harsh speech calling Europe “fragmented” and “lost,” likening the situation to “Groundhog Day.” Europe, he said, looked “lost trying to convince the US president to change,” and President Donald Trump “will not listen to this kind of Europe.” (Multiple outlets) The frustration had a purpose. After meeting Mr Trump separately, Mr Zelensky announced they had agreed on post-war American security guarantees for Ukraine, though territorial questions remain unresolved. Days later, trilateral negotiations between Ukrainian, Russian, and American delegations began in Abu Dhabi. Ukraine sent a senior team including Intelligence Chief Kyrylo Budanov and Defence Minister Rustem Umerov. Mr Trump’s envoy Steve Witkoff and his son-in-law Jared Kushner held three hours of talks with President Vladimir Putin. The Kremlin confirmed the format but said Russia would keep fighting until a diplomatic settlement was reached. (ABC Australia) The new format suggests Ukraine may be shifting toward American-mediated rather than European-led conflict resolution. Even as it negotiates, Ukraine is preparing to hit harder. General Oleksandr Syrskyi announced Ukraine would conduct offensive operations in 2026, arguing that “victory cannot be achieved through defence alone.” He reported that Russian drone production had reached 404 Shaheds daily with plans to reach 1,000, while Ukrainian forces had liberated 430 sq km near Pokrovsk in recent counteroffensives. (RBC Ukraine) Defence Minister Mykhailo Fedorov went further, setting a goal of inflicting 50,000 Russian battlefield deaths monthly, up from the current 35,000. He announced plans for drone-assault units, an artificial intelligence (AI) system called Mission Control to integrate combat data, and the delivery of 40,000 interceptor drones this month. (Kyiv Post) The most striking move, though, was domestic. Mr Budanov, the former military intelligence chief, was appointed head of the President’s Office, replacing Chief of Staff Andriy Yermak. Some analysts call it a “tectonic shift.” Mr Budanov is widely trusted — some polls show more so than Mr Zelensky — and is known for surviving ten assassination attempts and directing major operations against Russia. The appointment is being read as potentially launching “Operation Successor,” though Mr Zelensky has hedged by installing a Mr Yermak ally as Mr Budanov’s successor at military intelligence, cutting him off from his old power base. (The Week)

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PolandPoland

Poland’s cohabitation government struggled this week to present a unified response when President Donald Trump disparaged NATO allies’ role in Afghanistan, exposing the coordination problems that now complicate the country’s most vital alliance relationships. The crisis began promisingly. President Karol Nawrocki met with Mr Trump at Davos and received an invitation to join the Peace Council, with Mr Trump confirming that US troops would remain in Poland. Mr Nawrocki emphasised that constitutional procedures would require parliamentary approval before Poland could join international organisations. (TVN24) But days later, Mr Trump claimed that NATO allies had “stayed behind front lines” in Afghanistan — a comment that dishonoured 44 Polish soldiers killed in the conflict. Polish officials were criticised for their delayed response, and the episode created sharp tensions between Mr Nawrocki and Prime Minister Donald Tusk over how to respond to their most important ally. (TVN24) The feuding became public and personal. Mr Tusk accused Mr Nawrocki of “kneeling” to foreign leaders, while the president attacked Mr Tusk’s history of European alignment. Even the German press noted the damage to Poland’s international image. (TVN24) The episode highlighted how cohabitation constrains Poland’s diplomatic coordination just as the country tries to maintain its strategy of maximising alliances across Washington and Brussels. Poland is also hedging its bets in other ways. National Bank of Poland Governor Adam Glapiński announced plans to expand the country’s gold reserves from 550 to 700 tonnes, which would place Poland in the global top ten for gold holdings. The bank was the world’s largest central bank gold buyer in 2024, adding over 100 tonnes. (NBP) On the energy front, Orlen Upstream Norway discovered the Sissel gas field with an estimated 6.3-28.3m barrels oil-equivalent, potentially yielding nearly 1bn cubic metres of gas for Poland. (Business Insider Polska) Domestically, the cohabitation problems reflect deeper shifts in Polish politics. Polling shows the Civic Coalition leading at 31.2% versus Law and Justice’s 27.3%, but coalition partners the Polish People’s Party (PSL) and Poland 2050 are below the electoral threshold. Combined right-wing parties could control parliament despite the coalition’s individual lead, with far-right entities approaching king-maker status for 2027.

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FinlandFinland

Finland faced the predicted collision between its NATO military buildup and EU fiscal rules this week as Brussels placed it under formal deficit procedure, forcing corrective measures by April 2026. The EU Council’s decision requires Finland to implement fiscal corrections partly because F-35 fighter costs hit earlier than expected, contributing to deficit overruns. Finance Minister Riikka Purra said Finland was prepared to implement additional measures if the European Commission demands them, potentially requiring up to €1.4 billion in additional austerity by 2027. (YLE) The procedure validates the structural tension between Finland’s defence spending ramp toward 3% of GDP by 2029 and EU fiscal constraints. Even as fiscal limits tightened, Finland pursued active diplomacy across multiple fronts. President Alexander Stubb used the World Economic Forum to address what he called the “new world order,” participating in panels on Ukraine’s future and holding bilateral meetings with the presidents of Azerbaijan, Armenia, Israel, and Switzerland. When President Donald Trump threatened 10% tariffs on eight European countries including Finland over Greenland, Mr Stubb joined seven other nations in a statement supporting Danish and Greenlandic sovereignty. (Presidential Office) The week’s most striking diplomatic move was Prime Minister Petteri Orpo’s visit to Beijing, where his meeting with President Xi Jinping extended from a planned 30 minutes to 50 minutes after his historical knowledge impressed the Chinese leader. Mr Orpo made Ukraine his “absolute top priority” in discussions and raised human rights concerns, demonstrating Finland’s approach of maintaining dialogue with major powers while firmly holding Western positions. During the trip, he also promoted Finnish exports, praising dairy growth that now sees “truckloads of Finnish butter going to France for croissant baking” as Valio’s exports reached €513 million across 50 countries in 2024. (Government Communications Department, 2026-01-25; Maaseudun Tulevaisuus) Finland coordinated closely with EU partners in managing the Trump tariff crisis. Mr Orpo participated in an emergency informal European Council meeting, calling the threats “based on incorrect conclusions” and warning that the EU must prepare countermeasures if negotiations fail. (Government Communications Department) The response showed Finland using its institutional positions — including its Organisation for Security and Co-operation in Europe (OSCE) chairmanship — to coordinate multilateral resistance to unacceptable behaviour from allies.

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EstoniaEstonia

Estonia chose EU solidarity over avoiding US displeasure this week when President Donald Trump threatened to seize Greenland from Denmark. Despite extreme dependence on American security guarantees, Foreign Minister Margus Tsahkna participated in emergency EU meetings in Brussels emphasising European unity behind Denmark. Prime Minister Kristen Michal also attended an emergency European Council meeting to discuss the transatlantic crisis. (postimees.ee) For a Baltic state that spends 5% of GDP on defence precisely because of Russian threats, siding against America represented a remarkable prioritisation of alliance principles over bilateral accommodation. Estonia doubled down on this stance in military matters. When Mr Trump threatened higher tariffs on countries sending troops to Greenland, Defence Minister Hanno Pevkur confirmed Estonia would proceed with planned participation in Denmark’s Arctic Endurance military drill anyway. There was no need, he said, to link economic matters to military exercises. (news.err.ee) At the same time, Mr Pevkur and other officials rejected European defence concepts that could weaken NATO primacy, expressing scepticism about EU defence capabilities independent of the alliance and emphasising that military planning must remain within NATO frameworks rather than duplicating structures. (err.ee) The message was clear: Estonia would stand by its allies even against American pressure, but not by building alternative security arrangements. Meanwhile, Estonia experienced a minor setback in European institutional representation. Madis Müller, the president of the Bank of Estonia, was not selected for the European Central Bank vice president role, with eurozone finance ministers choosing Croatian candidate Boris Vujcic instead. Mr Müller’s term ends in June. (err.ee) The failed bid represents a missed opportunity for Estonian influence in eurozone monetary policy leadership.

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LithuaniaLithuania

President Gitanas Nausėda declared Ukraine’s EU membership by 2030 a strategic Lithuanian interest during an official visit by President Volodymyr Zelensky that underscored Lithuania’s role as Kyiv’s strongest advocate in Brussels. Mr Nausėda committed to focusing on Ukrainian accession during Lithuania’s 2027 EU Council presidency and confirmed €1 billion in total military aid. The visit included discussions of military cooperation and energy support, cementing Lithuania’s position as Ukraine’s most reliable champion within EU institutions. (ukrinform.net) Even as Lithuania deepens its Ukraine commitment, it is navigating the unpredictability of the Trump administration through careful European coordination. Mr Nausėda publicly supported a joint eight-nation European statement criticising President Donald Trump’s tariff threats over the Greenland dispute with Denmark, emphasising solidarity and dialogue over confrontation. (delfi.lt) When Mr Trump informally invited Lithuania to join his Board of Peace, Mr Nausėda said Lithuania would consult Nordic-Baltic partners before deciding, noting that some participating countries’ involvement “seems grotesque” while keeping options open. (lrt.lt) At home, Lithuania faces pressure on its democratic institutions from two directions. The European Parliament passed a resolution condemning Lithuania’s public broadcaster law amendments and expressing solidarity with Lithuanian Radio and Television (LRT), prompting Prime Minister Ingrida Ruginienė’s advisor to criticise Lithuanian Members of the European Parliament (MEPs) for “going the path of state discrediting.” Mr Nausėda said European Parliament resolutions cannot solve LRT’s operational problems. (etaplius.lt) The government also had to distance itself from coalition partner Dawn of Nemunas after its leader Remigijus Žemaitaitis physically pushed a young person during a public meeting in a Vilkaviškyje library. Ms Ruginienė’s office condemned the behaviour, generating fresh commentary about governance standards with the controversial partner. (lrt.lt)

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Czech RepublicCzech Republic

The Czech Republic’s democratic institutions face a sharp test as tensions over Ukraine policy expose friction between the country’s Western commitments and its populist coalition dynamics. The crisis centres on Parliament Speaker Tomio Okamura, leader of the far-right Freedom and Direct Democracy party and holder of the country’s third-highest constitutional office. Mr Okamura manipulated article headlines to remove context about business opposition to Ukrainian worker restrictions, called the Ukrainian flag display on Prague’s Charles Bridge a “provocation,” and made other anti-Ukraine statements throughout the week. (Novinky.cz) The remarks were striking not just for their content but for coming from a senior constitutional officer while the Czech Republic remains formally committed to supporting Ukraine. The response was swift and institutional. The opposition-controlled Senate passed a resolution strongly distancing itself from Mr Okamura’s “false and offensive statements,” reaffirming Czech support for Ukraine and the country’s participation in European Union and North Atlantic Treaty Organisation structures. Senate Chairman Miloš Vystrčil posted the resolution on social media, making the rebuke official and public. (Ukrinform.net) The move showed that the country’s institutional safeguards remain effective even when populist coalition partners occupy senior positions. The friction extends beyond rhetoric to concrete policy. Chief of General Staff Karel Řehka confirmed the military had recommended transferring four L-159 aircraft as a gift to Ukraine, stating the transfer would not threaten Czech security. President Petr Pavel had announced the possibility during a visit to Kyiv. But Prime Minister Andrej Babiš ultimately blocked the transfer, citing Czech Air Force needs. (Militarnyi.com) The episode illustrates the cohabitation tensions constraining Czech Ukraine support: the military and presidency remain supportive, but the coalition government is reluctant to deliver concrete aid. Czech industry achieved a breakthrough that enhances the country’s strategic weight. Czechoslovak Group raised €3.8bn in the world’s largest defence industry IPO on Euronext Amsterdam, with shares surging 32% on debut to reach a market cap over €30bn. The listing made CSG owner Michal Strnad worth roughly $37bn, cementing his position as the wealthiest person in Central and Eastern Europe. (Reuters.com) The success establishes the Czech Republic as a major player in global defence production, complementing its traditional automotive manufacturing strength.

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LatviaLatvia

Latvia’s governing coalition cracked again this week, the latest fracture in a country that has had 17 prime ministers in 33 years of independence. Prime Minister Evika Siliņa acknowledged “disagreements” after her coalition partner the Greens and Farmers Union (ZZS) voted with opposition parties to pass controversial compensation law amendments, forcing the New Unity party to request a presidential veto. President Edgars Rinkēvičs returned the legislation to parliament for reconsideration. (tvnet.lv) The split follows the familiar pattern of chronic instability that has plagued Latvia’s coalitions since 1991, even as the country maintains one of Europe’s strongest defence commitments and deepest institutional integration with the West. That integration continued through routine channels this week. Defence Minister Andris Sprūds visited Warsaw to discuss joint military exercises with his Polish counterpart, exploring regular Polish presence in Latvia and continued cooperation on drone procurement. (tvnet.lv) Mr Rinkēvičs attended the World Economic Forum in Davos, participating in discussions on Ukraine’s EU membership and reaffirming Baltic energy independence from Russia. The president also commemorated the 35th anniversary of the 1991 barricades, emphasising that “the state is not just borders and buildings but people.” (tvnet.lv) On the economic front, Ms Siliņa announced a 260 million euro budget allocation for the Rail Baltica project, emphasising the need to accelerate construction and seek additional EU funding from the new multiannual budget. (tvnet.lv) The government also acknowledged it might provide more state funding to national airline airBaltic, though the company is seeking private partners and considering an IPO. (delfi.lv) Meanwhile, the cabinet implemented European Media Freedom Act requirements into national law, ensuring transparency in state advertising funding to media outlets. (government cabinet)

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RomaniaRomania

Romania’s far-right leader sparked fierce condemnation this week when he celebrated President Donald Trump’s Greenland rhetoric, exposing both his party’s Trumpist drift and the strength of the country’s pro-Western consensus. Alliance for the Union of Romanians (AUR) leader George Simion was filmed cutting a Greenland-shaped cake decorated with an American flag at a Washington event hosted by a fringe conservative group. The stunt triggered widespread outrage across Romania’s political spectrum, with critics calling it treasonous and comparing it to cutting a cake shaped like Romanian territory. (adevarul.ro) The backlash underscored Romania’s unwavering Western alignment even as Mr Simion’s party consolidates support. After an extraordinary European Council meeting, President Klaus Iohannis announced unanimous EU solidarity with Denmark and Greenland, plus joint EU-NATO investments in Arctic defence and a six-month extension of suspended tariffs on America. (digi24.ro) Romania’s military modernisation continues apace. The armed forces are deploying an American-made Merops counter-drone system after successful testing in Ukraine, where it intercepted over 1,000 Shahed drones. The system costs $15,000 per interceptor versus $35,000 for a Shahed drone, and Romania follows Poland as the second NATO member to procure it. (thedefensepost.com) The deployment is part of Romania’s $20+ billion defence spending programme as it expands its role as NATO’s southeastern anchor. The country’s acute fiscal crisis continues to demand careful coordination between monetary and fiscal authorities. National Bank Governor Mugur Isărescu maintained the policy rate at 6.5% citing uncertainties, while meeting Prime Minister Ilie Bolojan to discuss budget preparations and macroeconomic stability. Central bank officials suggested rate cuts might be possible in the second half of 2026 if inflation falls as projected. (zf.ro) Romania faces the EU’s worst deficit at 9.3% of GDP. The political backdrop remains volatile. A January poll by CURS showed AUR leading with 35% voter support, followed by the Social Democrats at 23% and the Liberals at 18%. In trust ratings, Călin Georgescu — the far-right candidate whose victory was annulled in 2024’s presidential election — leads with 36%. The poll reflects deep institutional distrust, with 76% of Romanians believing the country is heading in the wrong direction. (ezs.ro)