Good morning. The Trump administration is exploring options including “utilising the US military” to acquire Greenland, the White House said last night, marking a step-up in US pressure to gain control of the semi-autonomous Danish territory.

At the same time, France and the UK yesterday committed to a “legal framework” to put boots on the ground in postwar Ukraine to protect any ceasefire agreed with Russia, at a meeting of Kyiv’s allies in Paris that saw the US offer “proposed support” to any European-led reassurance force.

Today, our trade and finance reporters explain Brussels’ €45bn bung to EU farmers in a last-ditch bid to win support for the Mercosur trade deal from reluctant capitals, and our central Europe correspondent reports on a U-turn on Ukraine support from the Czech Republic’s prime minister.

Peace offering

EU member states are preparing to finally swallow the Mercosur trade pact as Brussels tables a range of sweeteners for EU agriculture ministers meeting today, write Andy Bounds and Paola Tamma.

Context: The European Commission intends to pacify farmers who say their incomes will be hit by competing with imports from the South American bloc. Italy and France have delayed signing the trade deal over the farmers’ concerns.

Ahead of a meeting of agriculture ministers to discuss farmers’ woes, Brussels yesterday proposed allowing member states to funnel an extra €45bn to farmers in a new seven-year budget from 2028, which is currently being negotiated.

The money would be taken from reserve funds supposed to be deployed after 2030 — a move that could reduce funding for other areas, and counter the commission’s goal of creating a more flexible EU budget.

The commission had originally proposed cutting the funds guaranteed to farmers by around 20 per cent in the next budget. The additional money would make up for about half of that shortfall.

Italian premier Giorgia Meloni yesterday welcomed the move, saying that “the common sense approach to supporting European agriculture, pursued with determination by the Italian government, is increasingly being listened to in Brussels.”

The proposal should pave the way for Italy to back the Mercosur deal, which would allow a qualified majority of member states to approve it in a vote on Friday.

The EU has also agreed safeguards to avoid market disruption from imports from Mercosur members Brazil, Argentina, Uruguay and Paraguay.

French President Emmanuel Macron also welcomed the additional funds, but France has made additional demands to back the deal. While the country’s vote will not make a difference if Italy approves, it is politically important as the EU’s second-biggest member state.

Paris wants tighter safeguards, so the EU can reimpose tariffs if prices fall by 5 per cent, rather than 8 per cent, according to French officials.

It also wants permission to ban imports of crops that are grown with pesticides banned in the EU, which trade experts say would break the terms of the deal. However, two commission officials said a temporary exemption might be granted.

Finally, France demands a year’s delay to a new carbon border tax on fertilisers, which is increasing import prices.

A commission spokesman said: “We remain in dialogue with our member states in view of signing the agreement with Mercosur as soon as possible.”

Chart du jour: Treasure trove

European banks are in line for a €30bn boost to interest income over the next two years, thanks to loan growth and hedging.

U-turn

One month after returning to office, Czech Prime Minister Andrej Babiš has dropped his threat to halt a Prague-led initiative supplying ammunition to Ukraine — as long as it is not funded with Czech money, writes Raphael Minder.

Context: Eurosceptic billionaire Babiš returned to power at the helm of a coalition government after campaigning to end the ammunition procurement initiative launched in 2024 by the government of pro-EU predecessor Petr Fiala.

Also strongly supported by Czech President Petr Pavel, a former Nato commander, Prague’s initiative collects international funds to procure artillery shells from third countries in order to supply Ukraine and help ease its ammunition shortages as it battles Russia’s invasion.

But Babiš accused Fiala of wasting public money by boosting Czech military support for Ukraine, telling the FT last summer that the ammunition initiative was “just marketing and absolutely not done transparently”.

After attending the Paris meeting of Ukraine’s allies yesterday, Babiš however announced that the talks had convinced him to “not disrupt the ammunition initiative” and continue the role of procurement co-ordinator without Czech funding.

“This is the new normal that we should expect from Prague under Babiš, with mixed messages: he wants to be part of the select club of the coalition of the willing [of Ukraine’s allies], while also allowing his ministers and junior coalition partners to tap into anti-Ukrainian feelings at home,” said Milan Nič, a senior research fellow at the German Council on Foreign Relations.

What to watch today

1. Cyprus hosts an event in Nicosia with EU officials and foreign leaders to mark the beginning of its six-month EU presidency.

2. EU agriculture ministers hold an informal meeting in Brussels.

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