EU seeks Ukrainian grain for Egypt as part of Cairo support deal

Good morning. Israel is “expanding ground operations” in Gaza after a weekend of heavy bombing of the territory, provoking widening fissures inside the EU.

In Japan, the latest attempt to finally agree an EU-Australia trade deal, ending five years of negotiations, fell apart. 

Today, Laura reveals the link Brussels is trying to forge between Ukraine and Egypt to strike an agreement with Cairo, while my climate colleague uncovers the EU’s dirty fossil fuel secret behind its green proclamations.

Follow the grain

The EU is looking into the possibility of using shipments of grain or fertiliser from Ukraine as part of a wider deal on migration and economic support for Egypt, writes Laura Dubois.

Context: Brussels is negotiating an economic support deal with Egypt, as capitals worry the Israel-Hamas conflict could lead to a further increase in migration. EU countries have been keen to work with northern African countries to keep people from crossing the Mediterranean, as irregular arrivals have risen.

“Egypt is very open to a comprehensive partnership,” European Commission president Ursula von der Leyen said following the EU summit on Friday where migration was discussed. She said the agreement would follow “a similar blueprint” as the one sealed earlier this year with Tunisia, which included money for border management and economic support.

Details of the proposed agreement are secret, but two EU officials told the Financial Times that it could include provisions for food imports, a major economic risk factor for Cairo and its 110mn people even before the outbreak of conflict on its north-eastern border.

One particular avenue the EU is exploring concerns using the corridors established for exports from Ukraine to funnel agricultural products to Egypt, EU council president Charles Michel told journalists, specifically mentioning fertiliser. 

Michel said that officials were working with Ukraine to do something “extremely helpful” for Egypt.

The commission has broad backing from EU leaders regarding the deal. “We will need agreements with the states of transit and origin . . . to ensure that irregular migration declines,” German chancellor Olaf Scholz said after the summit, also suggesting returns of failed asylum seekers as a desirable outcome.

One thing the Egypt agreement won’t refer to, however, is migration from Gaza. Egyptian president Abdel Fattah al-Sisi has repeatedly said he did not want to take in refugees from the territory, and the message has arrived in European capitals too.

“I am sure that Egypt will not take in refugees from Gaza. Other countries in the region won’t either,” Scholz said. He added that countries might however take injured people who had to be transferred to hospital for treatment. 

Chart du jour: Limited capacity

Ireland is considering limits on how long Ukrainian refugees can stay in state-sponsored accommodation, in the first major test of solidarity after more than 20 months of EU support for those fleeing Russia’s invasion.

Carbon bombs

The EU has once again set out to be the most ambitious negotiator at the UN’s COP28 climate conference, but campaigners say the bloc needs to pay closer attention to its own backyard, writes Alice Hancock.

Context: Countries gather this week for “pre-COP”, the final meeting of ministers before the UN’s annual climate summit in Dubai in December. Talks are most heated over an agreement to eliminate fossil fuels and how a fund for compensating countries most impacted by climate change will be structured.

The EU’s climate chief Wopke Hoekstra outlined on Friday that Brussels’ key priorities were a global agreement to triple renewables deployment and a doubling of energy efficiency measures, plus an accord on phasing out “unabated” fossil fuels — those that burn without storing the emissions through carbon capture technologies.

Later this month the bloc will also join the UK in pressing for an end to international fossil fuel subsidies at the OECD.

But a study by Friends of the Earth Europe, due to be published next month and seen by the FT, suggests the EU must lay down tougher rules to prevent its own businesses supporting pollution abroad.

Based on data from January, the NGO found that European financial institutions (including Switzerland and the UK) held over €118bn in fossil fuel bonds and shares. It also discovered that of 425 fossil fuel extraction projects likely to emit more than 1 gigaton of carbon dioxide emissions in their lifetime, EU companies were involved in at least a quarter.

The cumulative potential emissions of these “carbon bomb” projects totals more than 330 GtCO₂, according to FOE.

To put that into context: the EU’s 27 member states only have space to emit 19.94 GtCO₂ equivalent between 2021 and 2030 if the bloc is to meet its emission reductions targets, per European Commission forecasts.

Negotiators in Brussels are currently working on a due diligence law that should force companies to cut emissions in their supply chains, targeting an agreement in December. But lawmakers are struggling to agree on the inclusion of financial institutions and the sanctions for non-compliance.

What to watch today

1. European commission president Ursula von der Leyen in North Macedonia and Kosovo.

2. Nordic Council begins its annual meeting in Oslo.

Now read these

• Jobseeker: Outgoing Dutch prime minister Mark Rutte said he was open to becoming Nato’s next head. DHFM got the scoop. Here’s an English version.

• Bank ‘faultline’: The rising fragmentation of Europe’s banking system heightens financial vulnerability, the ECB’s supervision head warns the FT.

• Flabby euro: It’s time for EU capitals and the commission to tackle Europe’s economic and monetary slippage, writes Jacques de Larosière.