Some European officials are trying to calm fears of a trade war over a recently passed US climate-subsidy law as the third EU-US Trade and Technology Council meets today outside Washington. Amid talk of a breakthrough with the US, the real response will come from the EU. Commission President Ursula von der Leyen yesterday pushed for the bloc to change its state aid rules and consider green transition funding. Internal Market Commissioner Thierry Breton, who pulled out of the TTC at the last minute, is angling for a “sovereignty fund.” The meeting’s latest draft conclusions were changed to note the “preliminary” progress made on the US law. - Jillian Deutsch and Kevin Whitelaw

What's Happening

After Cap | Ukrainian President Volodymyr Zelenskiy called the $60 per barrel price cap on Russian crude a sign of weakness toward Moscow, as a Kremlin official warned Russia could “somewhat reduce output” in response. The design of the cap, which kicks in today, makes clear the US and EU want Russia’s oil to keep flowing. Here’s everything you need to know about what could change.

Balkan Dreams | Joining the EU remains an elusive dream for countries in the Western Balkans -- and people in Albania, Serbia, North Macedonia, Bosnia-Herzegovina and Montenegro are starting to become more vocal in their disillusionment. The EU has taken notice and is holding a summit tomorrow in Albania’s capital, Tirana, to try to demonstrate its commitment to the region. 

Busting Evaders | The EU’s chief prosecutor, who forged a reputation for cracking down on corrupt politicians in her native Romania, says she’s itching to get to work tackling Russian sanctions evaders — as soon as the bloc gives her the authority. “We could start as early as today if we had the legal instruments,” she told us. 

Santa Rally? | After the euro’s best month since 2010, traders counting on a traditional year-end rally may be disappointed. The currency tends to gain against the dollar in December, but after a surge of more than 5% in November, the bar for further seasonal cheer is much higher.

Missed Target | Germany will fail to meet a NATO guideline of spending 2% of gross domestic product on its military next year and again from 2026 onwards, a new analysis shows. Procurement problems and entrenched bureaucracy have hampered the spending drive. Meanwhile, Germany has earmarked some €10 billion to buy 35 F-35A Lightning II fighter jets, according to a government document we’ve seen. 

In Case You Missed It

Military Ambitions | Ukrainian troops practiced mine-sweeping in one of the first exercises offered by the EU’s new training mission, part of a shift by the bloc to undertake more defense initiatives since Russia launched its war. While NATO as an alliance has held back from offering lethal support, the EU is making one of its boldest forays into active military support.

Communism’s Ghosts | Democratic backsliding in Poland and Hungary is bringing back bitter personal memories of repression to the EU’s top watchdog for the rule of law. Commission Vice President Vera Jourova told us that listening to Hungarian students and teachers talk about “persecution” reminds her of her parents’ treatment in communist Czechoslovakia.

Cash Influx | The Czech Republic, rocked by protests over Ukraine, has discovered a way to counter pro-Moscow propaganda: Throw money at people’s economic worries. A cash injection amounting to $8.5 billion effectively defused some of the EU’s largest anti-government demonstrations.

Bon Voyage | Paris reopened its most iconic airport terminal as France prepares to welcome millions of visitors for the 2024 summer Olympics while the travel industry struggles to recover from the fallout of the pandemic. The two-year project cost €250 million and created an additional 36,000 square meters of passenger space.

Chart of the Day

Following Brexit, exporters in the UK experienced significant changes to their ability to trade with the EU. The UK Trade Policy Observatory estimates that UK exports to the EU decreased by 14% after the UK-EU Trade and Cooperation Agreement went into effect on Jan. 1, 2021. Certain sectors — like the UK fashion industry — were particularly hard hit by the reintroduction of tariffs, cross-border regulations and other customs formalities. 

Today's Agenda (All times CET)

• Eurogroup ministers meet in Brussels, with news conference around 7 p.m.
• US-EU Trade and Technology Council meeting in College Park, Maryland, with press event at 8:20 p.m. 
• 11 a.m. EU climate chief Frans Timmermans holds news conference in Katowice, Poland
• 1:30 p.m. Council President Charles Michel and Slovenian Prime Minister Robert Golob hold news conference
• Financial regulation chief Mairead McGuinness speaks at EU crypto conference in London