Deep Budget Rift Exposes European Union’s Internal Fractures Amid Global Upheaval

Economic

Summary:

The EU's proposed €2 trillion budget for 2028–2035 is triggering significant internal discord, as traditional beneficiaries resist funding cuts while strategic reallocation toward defense, research...

A Historic Budget Pivot for a Changing Continent

As geopolitical tensions, technological rivalry, and economic instability reshape the global order, the European Union is pushing forward with its most ambitious and controversial budget overhaul to date. The proposed multi-annual financial framework for 2028–2035, worth €2 trillion, marks a radical shift from legacy agricultural and regional subsidies toward strategic investment in defense, innovation, and global competitiveness.

This transformation signals a Europe that no longer sees itself primarily as a welfare mechanism for lagging regions but as a bloc preparing for existential challenges cybersecurity, technological sovereignty, energy transition, and military readiness.

New Priorities and the Decline of Legacy Subsidies

Symbolically and structurally, the EU is moving away from its historical budget pillars. The Common Agricultural Policy (CAP), once accounting for 70% of total expenditure, will see a further 20% reduction, down from its current share of 30%. Likewise, the so-called "cohesion funds" for poorer regions face a 10% cut, with both funding streams merged into a single "national envelope" a move intended to grant member states greater fiscal autonomy.

The European Commission justifies this consolidation as a way to boost flexibility and avoid redundant program overlap. However, critics in the European Parliament warn that such flexibility may dilute transparency, erode predictability, and weaken protections for traditionally supported groups, particularly small farmers and regional authorities.

Farm lobbies across the bloc have condemned the CAP cuts, warning of risks to food security. Regional leaders express concern that merging subsidies may increase competition for limited funds, exacerbating internal inequalities.

Strategic Reallocation Intensifies Inequality Concerns

While legacy funding faces cutbacks, areas tied to Europe’s strategic future receive major boosts. A proposed €409 billion European Competitiveness Fund includes a dramatic increase in science research spending up to €175 billion and a fivefold surge in defense investment to €130.7 billion. Sizable allocations are also expected for green tech, digital infrastructure, and health innovation.

Yet these competitive funding mechanisms raise distributional concerns. Advanced member states home to major startups, elite research universities, and established industrial ecosystems are poised to win a disproportionate share of new funding. This design could further marginalize smaller economies and less developed regions, intensifying the gap the EU has historically tried to close.

A Fractured Political Landscape: North–South Divide Resurfaces

Opposition from net contributors, particularly Germany, reveals growing cracks in fiscal consensus. Berlin firmly rejects both the expansion of the overall budget and renewed proposals for collective EU borrowing. Germany, along with the Netherlands and Sweden, insists that the €800 billion joint debt issued during the pandemic remain a one-time emergency tool not a precedent for future fiscal integration.

Germany also demands the continuation of the "rebate mechanism" that reduces its net contribution an arrangement the European Commission wants to eliminate for fairness. This has become a key point of contention, highlighting diverging visions of shared responsibility within the bloc.

Controversial New Revenue Sources Spark Debate

To finance the revamped budget, the Commission proposes new EU-wide taxes, including levies on e-waste, small import parcels, tobacco, and profits of large corporations. While these proposals aim to enhance fiscal independence and reduce reliance on national contributions, critics argue they run counter to the competitiveness agenda by increasing the regulatory burden on businesses.

A particularly divisive proposal involves tying budget disbursement to compliance with EU rule-of-law principles. Under this model, member states must demonstrate adherence to democratic governance, judicial independence, and anti-corruption standards to access funds. Hungary has already seen hundreds of millions of euros frozen under this mechanism.

Critics argue this approach creates political leverage for Brussels but risks alienating already Euroskeptic governments. Cities like Budapest, caught between domestic centralization and EU restrictions, face double barriers to accessing essential development funds.

The EU at a Crossroads: Reform or Fragmentation

The sweeping budget proposal reflects an EU attempting to transition from a solidarity-focused structure into a leaner, more strategically oriented bloc. For proponents, it is a vital reset one that aligns the Union with 21st-century priorities and strengthens its global stance. For detractors, it represents a dangerous reordering that sidelines social cohesion in favor of technocratic ambition.

While debates will continue well into the legislative process, the stakes are clear. Europe's internal unity is being tested not by external threats alone, but by its own redefinition of purpose, priorities, and power. The outcome of these negotiations will shape the Union's identity for decades to come.

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Economic

AI’s Power Appetite Reshapes Energy Infrastructure

As artificial intelligence continues to fuel a rapid expansion of global data centers, the surge in electricity demand is prompting major U.S. tech firms to secure their own energy sources. To avoid dependency on overstretched national power grids, these companies are increasingly turning to self-sufficient natural gas and hydrogen power plants. This move toward distributed energy systems is creating a significant opening for South Korea’s industrial and clean energy sector.

Doosan Energy has become one of the primary beneficiaries of this shift. According to energy industry sources, the firm recently secured a contract to deliver three high-capacity gas turbines each with up to 380 MW output for a U.S. data center project commissioned by a major American tech conglomerate. Delivery is scheduled between 2027 and 2028, marking a critical step in Doosan’s expansion from domestic projects to the competitive North American market.

Global Turbine Market and South Korea’s Competitive Entry

Only five companies globally can manufacture utility-scale gas turbines: GE Vernova (U.S.), Siemens (Germany), Mitsubishi Power (Japan), Ansaldo (Italy), and Doosan Energy (South Korea). With AI pushing global demand for energy-dense, decentralized power solutions, and with capacity constraints affecting traditional players like GE and Siemens, South Korean firms are seizing the gap.

Gas turbines play a pivotal role in high-output electricity generation. By combusting natural gas or hydrogen, they generate high-temperature, high-pressure gas streams that spin generators, supplying electricity directly to data centers. Doosan’s entry into the U.S. market signifies a diversification of energy procurement options and a rebalancing of global turbine manufacturing power.

Hydrogen Fuel Cells: A Resilient Backup and Sustainable Ally

Alongside gas turbines, hydrogen fuel cells are gaining traction as sustainable, high-efficiency energy sources that complement the needs of always-on digital infrastructure. Unlike batteries, hydrogen fuel cells continuously generate electricity through electrochemical reactions between hydrogen and oxygen, achieving operational efficiency up to 95% and allowing uninterrupted power supply without the need for recharging.

Doosan Fuel Cell, SK Ecoplant, and HD Korea Shipbuilding & Offshore Engineering are among the South Korean leaders positioned to benefit from this trend. Doosan Fuel Cell, in particular, has already commercialized large-scale hydrogen fuel cell power plants, including Busan Green Energy and Daesan Hydrogen Fuel Cell facilities completed in 2020.

The company’s roadmap includes expanding manufacturing capabilities, with a 50 MW plant under development in partnership with British firm Ceres Power. By mid-2025, Doosan had invested over 155 billion won into this venture, aligning production capacity with rising demand from AI-linked infrastructure development.

Hydrogen Push Accelerates with Corporate Backing

In parallel, SK Ecoplant has installed hydrogen fuel cells at its own Bupyeong data center, using them as auxiliary power systems. Meanwhile, HD Korea Shipbuilding’s newly formed subsidiary, HD Hydrogen, represents another strategic pivot. With a 140 billion won investment in July 2024 and a €72 million acquisition of Finnish fuel cell systems firm Convion, HD Hydrogen is fast-tracking its commercialization pipeline.

This industry-wide pivot aligns with forecasts from the International Energy Agency (IEA), which projects that much of the new energy demand from U.S. data centers over the next decade will be met by natural gas-powered plants. Given the long construction timelines of data centers (typically 18 months), Korean firms that can scale up quickly with proven technology and reliable partnerships are positioned for significant gains.

Strategic Implications: From Export Manufacturing to Global Energy Players

The ongoing AI boom is not just transforming data science it is redrawing the global energy landscape. For South Korea, this represents a rare convergence of industrial strength and geopolitical relevance. Doosan Energy and its peers are transitioning from equipment suppliers to central players in the decarbonized, decentralized, and data-driven power architecture of the future.

Moreover, the cross-border nature of these deals particularly with leading U.S. technology firms positions South Korean companies not just as manufacturers but as co-architects of a new energy paradigm. As U.S. firms race to secure clean, independent power sources for AI computing, Korean firms are fast becoming indispensable partners in building resilient, scalable energy ecosystems.

A Technological Shift Becomes a National Advantage

The AI-driven energy transformation is unlocking strategic opportunities for South Korea’s advanced manufacturing and clean energy sectors. With gas turbines and hydrogen fuel cells at the heart of data center infrastructure, firms like Doosan Energy, Doosan Fuel Cell, SK Ecoplant, and HD Hydrogen are emerging as key suppliers to the world’s next-generation power systems.

What began as a domestic industrial effort has now positioned Korea at the intersection of energy security, digital transformation, and global supply chain realignment. As the AI race continues, so too does the rise of Korea’s energy champions on the international stage.

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Economic

Cryptocurrency

Political Endorsement Moves the Digital Euro Closer to Reality

In a landmark decision, the European Council has adopted a formal position in support of the digital euro, enabling legislative negotiations with the European Parliament and European Commission. This approval marks a major step toward the creation of a central bank digital currency (CBDC) within the eurozone, with legislation targeted for adoption by May 2026.

The decision follows a wave of institutional momentum. The European Central Bank (ECB) has already concluded its technical assessment phase, and the European Commission had previously endorsed the initiative. Now, with the Council’s backing, trilogue negotiations can proceed to draft a robust legal and regulatory framework for the digital currency.

Strategic Response to a Shifting Global Financial Landscape

At its core, the digital euro project is not merely a technological upgrade but a strategic response to growing geopolitical and economic pressure. With global digital payment systems increasingly dominated by non-European tech giants and U.S.-based financial infrastructure, the ECB views a digital euro as a tool to reinforce monetary sovereignty and ensure the EU’s competitiveness in a rapidly digitizing financial ecosystem.

The retail version of the digital euro, if legislated successfully, is expected to launch no earlier than 2029 or possibly by 2030, according to ECB estimates. This timeline reflects the technical, legal, and political complexity of integrating a new form of public money into the existing European financial landscape.

Divisions Within the Banking Sector and Political Arena

Despite institutional support, the path forward remains politically contentious. Members of the European Parliament (EP), including digital euro rapporteur Fernando Navarrete, have expressed skepticism, questioning the necessity and efficiency of such a costly and complex initiative.

Preliminary cost estimates are already raising eyebrows. The ECB’s own deployment budget could reach €1.3 billion, while the commercial banking sector may face additional burdens of €4–18 billion, excluding further infrastructure adjustments required by retailers and payment platforms. These figures highlight significant friction between policy ambitions and industry realities.

Commercial banks are particularly wary, citing the limited demonstrated demand for a retail digital euro. Many argue that private-sector alternatives, such as the European Payments Initiative (EPI) and its Wero digital wallet, already fulfill key market functions, making a central bank-issued currency redundant or potentially disruptive.

Balancing Public and Private Money

The ECB, however, continues to assert that a sustainable and resilient financial system must be built on the coexistence of public and private forms of money. In this vision, the digital euro complements rather than replaces commercial bank money, serving as a publicly issued anchor to maintain trust, stability, and uniformity in times of systemic stress or market fragmentation.

This principle of complementarity is crucial to rebut fears that the digital euro would crowd out banks’ roles or threaten their deposit bases. The ECB argues that failing to establish a sovereign digital currency may expose Europe to long-term vulnerabilities, especially if dollar-backed stablecoins expand their influence across global markets.

Geopolitical Ramifications and the Sovereignty Argument

Beyond its monetary policy implications, the digital euro is increasingly framed as a geopolitical necessity. Unlike the U.S., where private firms are driving the adoption of stablecoins with limited federal oversight, the EU is pursuing a state-led model to assert greater control over digital finance infrastructure.

This divergence underscores a key strategic concern: in a global financial order where data, infrastructure, and currency influence converge, dependence on non-European systems could erode the EU’s autonomy. A digital euro is thus positioned as a bulwark against this loss of control—a tool to secure Europe's role in shaping the rules of the future financial architecture.

From Digital Innovation to Monetary Autonomy

The European Council’s endorsement of the digital euro sets the stage for one of the most consequential financial reforms in the EU’s history. Though significant legislative and technical hurdles remain, the project is increasingly framed not merely as an innovation initiative but as a response to structural shifts in global finance.

Whether the digital euro becomes a functional and accepted part of Europe’s monetary system will depend not only on its technical design but on the EU’s ability to align political consensus, market integration, and citizen trust. In doing so, it seeks to reclaim monetary sovereignty and safeguard its strategic position in a rapidly evolving international order.

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Political

UK Prime Minister Keir Starmer and US President Donald Trump discussed Ukraine and Gaza during a pre-Christmas phone call on Sunday, according to a statement released by Downing Street in London.

Starmer also updated Trump on the choice of a new British ambassador to Washington after Peter Mandelson was fired in September over his relationship with the late disgraced financier and sex offender Jeffrey Epstein.

The appointment of career diplomat Christian Turner "would further deepen the relationship between the two countries," Starmer told Trump, according to the readout of the call.

Turner will take over from James Roscoe, who has filled the role on an interim basis. His almost 30 years of government service involves previous experience in Washington. He was first secretary in the embassy from 2002 to 2006 under ambassadors Christopher Meyer and David Manning in the aftermath of Sept. 11, 2001 terrorist attacks on the US when George W. Bush was president.

Starmer's efforts to keep Trump close are being tested by tariffs on British steel, a stalled agreement on technology cooperation and Trump's decision to sue the British Broadcasting Corp. for at least $10 billion over a misleading edit in a documentary last year. The BBC has apologized but says it plans to fight the case.

Starmer and Trump began their call Sunday by reflecting on the war in Ukraine, according to the Downing Street readout.

Starmer "updated on work by the Coalition of the Willing to support any peace deal and ensure a just and lasting end to the hostilities," a spokeswoman said. "Turning to the Middle East, the leaders discussed the situation on the ground in Gaza."

"The leaders wished each other a Merry Christmas and looked forward to speaking again soon."

Source: Bloomberg

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Economic

Profitability Remains Elusive in a Low-Rate Environment

Digital banks in Southeast Asia continue to face an uphill battle in turning a profit, even years after their launch. In markets like Singapore and Malaysia, where digital banking has matured faster than in other regional economies, no digital bank including high-profile names like GXS Bank, MariBank, and Trust Bank has yet achieved profitability. Interest rate cuts across key markets are compressing net interest margins, undermining the banks’ ability to retain deposits, which remain their primary source of funding.

The strategic disadvantage is compounded by the policy shifts from central banks, which are increasingly adopting dovish stances in response to global uncertainty. Analysts note that without offering competitive interest rates, digital banks will struggle to attract and maintain deposit bases. In Malaysia, for instance, some digital banks once offered up to 5% annual interest to attract customers far above the average 1.2% offered by traditional banks. However, as monetary easing accelerates, these banks have been forced to cut rates, making them less attractive to depositors.

Falling Deposits and Limited Product Diversification

The deposit flight is already evident. According to a Maybank report, digital banks in Malaysia experienced a decline of 5% to 17% in deposits from December 2024 to June 2025. A similar trend is unfolding in Singapore, where GXS Bank has reduced its flagship savings rate from 3.48% at launch in mid-2023 to just 1.08% per year. These trends suggest a direct correlation between reduced interest offerings and the erosion of deposit bases.

The limited scope of product offerings is another issue. Digital banks are often heavily reliant on savings products and lack broader financial services such as investment and insurance lines. While some players like GXS and MariBank have ventured into lending and investment services, they still trail traditional banks in revenue diversity. Industry leaders argue that for digital banks to reach profitability, they must develop higher-margin services such as micro-SME loans and embedded finance solutions that seamlessly integrate lending into platforms like ride-hailing or e-commerce.

Credit Risk Grows in Vulnerable Segments

Digital banks have generally focused on underserved populations, including gig workers and small enterprises with limited access to formal banking services. While this strategy is socially valuable, it exposes these lenders to elevated credit risks particularly in periods of economic volatility.

According to McKinsey and Bloomberg Intelligence, digital banks’ limited access to borrower credit histories and reliance on alternative data makes it difficult to accurately assess risk. As regional trade weakens and import competition intensifies due to tax disparities particularly with rising inflows of low-cost Chinese goods microbusiness margins are being squeezed. This macroeconomic deterioration increases the risk of non-performing loans.

In Indonesia, for example, consumer bad debt rose 25% year-over-year in Q3 2025. Macquarie analysts warn that the current macro climate is unfavorable for expanding unsecured personal lending, particularly when underwriting data is incomplete or unreliable.

Regulatory Caution and Delayed Momentum

Regulators across the region are observing the sector’s difficulties with growing concern. The Philippines reopened digital bank license applications in early 2025 after a three-year pause, with plans to authorize four new players. However, the response was muted, and by November the window closed without any clear additions. Even so, experts remain cautiously optimistic due to the country’s tech-savvy, youthful population and its large unbanked demographic, which represents a significant growth opportunity if challenges are overcome.

Thailand, by contrast, has taken a more conservative route. The central bank only issued three digital banking licenses in June 2025 and imposed strict requirements. Digital entrants must partner with traditional banks and demonstrate robust governance and fraud prevention capabilities factors that slow down innovation but aim to safeguard consumers. Despite Thailand’s strong digital user base, this cautious approach reflects the regulator’s desire to prevent systemic risks before the sector scales.

Cross-Border Investments and Consolidation Trends

Foreign tech giants are also entering the fray. South Korea’s Kakao Group acquired a stake in Indonesia’s Superbank in 2023 and recently joined forces with Siam Commercial Bank to pursue a digital bank license in Thailand. Such moves underscore the region’s perceived long-term potential despite current setbacks.

Meanwhile, industry consolidation appears imminent. As product offerings converge and competition intensifies, smaller digital banks may struggle to survive independently. Mergers and acquisitions could become a strategic necessity, particularly in markets like Indonesia where fragmentation is diluting profitability. Larger players may absorb smaller banks to expand customer ecosystems and cut acquisition costs.

Embedded finance is emerging as a promising path forward, offering digital banks the chance to monetize user engagement through tailored credit solutions embedded in everyday digital transactions. This could involve offering microloans directly within ride-hailing or e-commerce apps, thereby aligning lending activity with user behavior and reducing risk through contextual data.

Survival Hinges on Ecosystem Integration and Revenue Innovation

Southeast Asia’s digital banks are at a critical juncture. While the region still offers fertile ground for financial inclusion, the current operating environment marked by falling interest rates, rising credit risk, and limited product depth is constraining their ability to achieve profitability. Success will depend on whether these institutions can pivot from deposit-driven models toward diversified revenue streams and embedded, data-driven lending solutions.

In the long term, digital banks that secure partnerships with larger ecosystems and invest in high-margin services will be better positioned to navigate regulatory scrutiny, economic volatility, and an increasingly competitive landscape. Their future rests not on technological novelty alone, but on the sustainable integration of financial services into the digital lives of Southeast Asia’s evolving consumer base.

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Washington’s Market Leverage Reshapes Global Pharma Pricing

In a historic policy shift, the United States under President Donald Trump has brokered a sweeping series of voluntary agreements with leading pharmaceutical firms both American and European to significantly reduce the price of prescription drugs sold in the U.S. The strategy reflects a calculated use of the country’s massive consumer base to exert influence over global pricing practices, transforming America’s drug affordability landscape while simultaneously reshaping industry dynamics.

The core of these agreements lies in voluntary price reductions offered by pharmaceutical companies in exchange for a three-year exemption from proposed tariffs on imported drugs. These deals are conditional on continued investments and production expansion within U.S. borders. This not only curbs prices but also addresses structural vulnerabilities in domestic pharmaceutical supply chains.

Strategic Concessions Signal Corporate Realignment

Among the most notable commitments is Bristol Myers Squibb’s pledge to provide its top-selling blood thinner, Eliquis, free of charge to patients enrolled in Medicaid. The move is both financially and symbolically significant, given Eliquis's market share in cardiovascular prescriptions.

Other firms are following suit with tailored programs. Gilead has initiated a discounted access plan for its hepatitis C cure, Epclusa. Sanofi has announced it will slash prices by nearly 70% for several infection, cardiovascular, and diabetes medications when sold through direct platforms such as the forthcoming TrumpRx. Merck will apply similar price cuts to its diabetes drugs Januvia, Janumet, and Janumet XR for patients paying out-of-pocket.

Amgen, meanwhile, is broadening its direct-to-consumer offerings by including Aimovig, a migraine treatment, and Amjevita, a biosimilar for autoimmune conditions, with monthly price reductions of 60% and 80% respectively.

All these medications, among others, will soon be listed on TrumpRx, a direct-sale platform launching in January 2026, which is set to alter the conventional distribution and pricing model across the industry.

Causal Links Between U.S. Pressure and Global Pharma Compliance

The timing and structure of these agreements suggest a direct causal relationship between U.S. policy threats and the industry's rapid realignment. Faced with rising bipartisan criticism over drug affordability and looming trade penalties, pharmaceutical firms have opted to concede on pricing in the short term to preserve long-term market access and political goodwill.

The U.S. remains the most lucrative pharmaceutical market worldwide. A 2024 Rand Corp. study found that American prescription drug prices are nearly three times higher than those in other developed countries, with branded drugs costing four times as much. President Trump has leveraged this disparity to justify a return to “most favored nation” policies aiming to equalize prices by driving up costs abroad or down at home.

The administration’s executive order in May reinstating this doctrine sent a clear signal that the U.S. would no longer tolerate what it frames as free-riding by foreign health systems. In response, pharmaceutical companies opted to lower prices domestically rather than risk losing their foothold in the U.S. altogether.

Europe’s Dependency on the American Market Becomes Apparent

The implications extend far beyond American borders. Even pharmaceutical giants headquartered in Europe rely heavily on U.S. sales. Of the ten largest European pharmaceutical companies, half derive most of their revenue from the American market. For instance, Roche, Novo Nordisk, GSK, Argenx, and UCB all have a critical dependence on U.S. consumer demand.

AstraZeneca, the largest component of the FTSE 100 index, currently earns 42% of its global revenue from the U.S. and aims to grow this share as it targets $80 billion in annual revenue by 2030. The collective compliance of these firms with the Trump administration's pricing demands is therefore not simply a goodwill gesture, but a calculated move to protect their primary revenue stream.

Policy Objectives Extend Beyond Affordability

While the public narrative centers on lowering drug prices, a deeper analysis reveals that the administration’s objectives are more expansive. The embedded condition requiring continued investment and production within the U.S. points to a deliberate strategy to repatriate pharmaceutical manufacturing and reduce dependency on foreign suppliers.

This push aligns with broader geopolitical goals of economic resilience, job creation, and strategic autonomy in critical healthcare infrastructure. In this sense, the drug pricing agreements reflect a dual-function approach achieving immediate affordability gains for American patients while reinforcing long-term national industrial priorities.

From Corporate Influence to Government Command

These unprecedented agreements mark a fundamental shift in the balance of power between multinational pharmaceutical corporations and the U.S. federal government. The readiness of drug makers to accept profit cuts, offer free medications, and comply with manufacturing mandates reveals the United States’ unmatched ability to shape global health economics through market leverage.

More importantly, this evolving dynamic underscores a larger narrative: America is reasserting sovereign control over its healthcare system by demanding affordability, domestic investment, and accountability from foreign and domestic firms alike. In doing so, it reinforces its central role in the global pharmaceutical ecosystem not only as the largest buyer but increasingly as the rule-setter.

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Russia-Ukraine Conflict

● Talks focused on aligning U.S., European, and Ukrainian positions

● U.S. peace plan includes security guarantees and economic rebuilding for Ukraine

● Uncertainty remains if Russia will accept proposed terms

Talks held between U.S., European and Ukrainian officials over the last three days in Florida aimed at ending Russia's war in Ukraine were productive and focused on aligning positions, U.S. special envoy Steve Witkoff said on Sunday.

U.S. President Donald Trump has been pressuring Ukraine and Russia to come to an agreement on ending the nearly four-year-old conflict as soon as possible, but Russia wants to keep the Ukrainian areas it has seized and Kyiv has refused to cede ground.

After meeting Russian President Vladimir Putin's special envoy Kirill Dmitriev on Saturday, Witkoff and Trump adviser Jared Kushner met on Sunday with officials from Ukraine and Europe, and then separately with the Ukrainian delegation, led by senior official Rustem Umerov.

Witkoff, in a social media post, called Sunday's talks "productive and constructive" and focused on a "shared strategic approach between Ukraine, the United States and Europe."

He did not mention his talks with the Russians.

The meetings in Miami were the latest in a series of talks between the U.S., Russia and Ukraine on a U.S.-drafted 20-point plan to end the war.

Witkoff said the U.S.-Ukraine meeting focused on four key points: further development of the 20-point plan, a multilateral security guarantee framework, a U.S. security guarantee framework for Ukraine, and further development on economics and prosperity to rebuild Ukraine.

Negotiators focused especially on "timelines" and "sequencing of next steps," Witkoff said.

U.S., Ukrainian and European officials earlier this week reported progress on security guarantees for Kyiv as part of the talks to end the war, but it remains unclear if those terms will be acceptable to Moscow.

"Peace must be not only a cessation of hostilities, but also a dignified foundation for a stable future," Witkoff said.

Prior to the Miami meeting, U.S. intelligence continued to indicate Putin has not abandoned his ambitions of taking over Ukrainian territory, according to six people familiar with the intelligence.

In response to a Reuters report on Friday, Director of National Intelligence Tulsi Gabbard said on X that U.S. intelligence assessments have shown Russia "does not currently have the capability to conquer and occupy all of Ukraine, let alone Europe."

Senator Lindsey Graham, a South Carolina Republican and close ally of Trump's, said on NBC's "Meet The Press" on Sunday it was still unclear if Putin would accept the current deal.

If he does not, Graham said, the Trump administration should adopt an approach similar to its recent actions with oil tankers near Venezuela and "seize ships that are carrying sanctioned Russian oil."

A Russian refusal to accept the current proposal should also lead to labeling "Russia a state sponsor of terrorism for kidnapping 20,000 Ukrainian kids," Graham said.