By Bas van Geffen, Senior Market Strategist at Rabobank

Russian officials have drafted a memo that pitches a re-convergence of US and Russian interests. The proposal consists of seven points, including cooperation on critical raw materials and energy, and the possibility that Russia could return to the US dollar settlement system.

The memo was conveniently ‘leaked’ during an informal retreat of EU leaders to discuss the future of the bloc, and ahead of the Munich Security Conference. It’s a plan that Europe and China would hate, but President Trump may love the idea – especially with “preferential conditions for US companies to return to the Russian market” to sweeten the deal.

It’s unclear if any of these points were ever pitched to Trump. And why would Russia be so eager to return to dollar settlements, after the US has demonstrated willingness to cut them off? So, it’s likely that the Russians are simply trolling as European leaders attended their very own Castlefest – “Where fantasy becomes your reality” – to discuss the future of European industry.

The European summit was an informal one, so no decisions were taken. However, President of the European Commission Von der Leyen promised to present a “One Europe, One Market” roadmap at the next formal summit, in March. Despite the inclusion of “one” in the title –twice even–, it increasingly looks like a multi-speed EU is the way forward.

Both Von der Leyen and European Council President Costa expressed their preference to move forward with all 27 EU member states. However, they acknowledged that this often means that the EU moves at the pace of the slowest. To avoid this, they supported the use of “enhanced cooperation,” if all member states cannot agree on common goals.

This legal instrument allows nine or more member states to push ahead with reforms, while others can still join at any time. “Enhanced cooperation” has been in place since the 1999 Treaty of Amsterdam and has been used several times since – most recently to adopt a new financing program for Ukraine (the €90 billion for 2026–2027). So, it is perhaps being considered as an option to speed up decision-making.

In particular, Von der Leyen believes that this may be required for the adoption of the 28th regime, a harmonized set of corporate legislation across the bloc to make it easier to scale up across borders – although the fact that this will coexist next to national law (its not the “One Regime”) may add some complexity as companies have to choose between the two regimes.

That’s not the only dimension along which EU member states may start to diverge. Von der Leyen has said that if no progress is made on the Savings and Investment Union this year, she will push ahead with a smaller group of countries. And several member states have renewed calls for Eurobonds to further increase investments in Europe. However, German Chancellor Merz has been vehemently opposed. Could this become another matter of “enhanced cooperation,” and if so, what would a Eurobond-ex-Germany look like?

Clearly, our reasoning above suggests that Eurobonds are probably a less suitable candidate for enhanced cooperation as they are “very divisive” (as Meloni described them); have much more profound consequences for ‘fiscal sovereignty’; and may affect or even harm the non-cooperators. Or, in the case of countries like Germany holding out, could potentially hinder the success of a Eurobond.

In any case, whether Eurobonds make the list or not, it is clear that in an attempt to strengthen the Union, the EU is now willing to move less in unison. Whether these multispeed developments in the bloc end up strengthening or damaging the EU remains to be seen. But it is arguably a better shot at reforming the European economy – and doing so with sufficient speed – than trying to get consensus amongst all 27.

The formal summit in March will have to prove whether European leaders stop LARPing and truly start to act on some of these ideas.

Meanwhile, concerns over Europe’s competitiveness are more acute, especially due to high energy costs for companies. Even though commodity prices have eased compared to previous years, European producers still face significantly higher energy costs than competitors in the US and China.

At yesterday’s meeting, EU leaders concentrated on ways to bring these costs down and highlighted the need for a thorough ETS review, citing volatility and speculation as factors undermining affordability. Carbon prices reached €90/MT in January, far above the European Commission’s 2020 projection of €32–65/MT. Several leaders pointed to that gap as evidence that reform is needed.

These concerns are amplified by geopolitical developments. President Trump’s repeal of the 2009 EPA “endangerment finding” –the legal basis for US greenhouse‑gas regulation– illustrates a sharp shift in US climate policy. The administration argues the move will lower vehicle prices, with estimates of $2,400 to $3,000 in savings per car, underscoring the growing policy divergence that puts further competitive pressure on Europe.

But while the EU is still discussing how to provide a better business climate for industry and AI startups, AI is not waiting for word from the ivory tower. Artificial intelligence continues to advance.

Investor sentiment on software developers was already souring on concerns that AI can replace many of these products. These advancements are being extrapolated. Microsoft AI CEO Suleyman told the Financial Times that “Most white-collar work will be fully automated by an AI within the next 12 to 18 months.” Investors, too, seem to be looking at which roles, companies, or even sectors could be next. The S&P 500 lost 1.6% yesterday after an AI-scare hit the transport sector, and the AI-driven selloff continued into the Asian session.

Tensions in Asia could also spark further bouts of risk-aversion. The US signed a trade deal with Taiwan, which lowers US import tariffs to 15% in return for large investments in the US semiconductor industry, purchases of US LNG and oil, as well as lower tariffs on US exports. But the deal is sure to anger Beijing.

And the relationship between Japan and China is under renewed pressure too, after Japan seized a Chinese fishing boat and arrested its captain.