The EU's 27 leaders have agreed to extend sanctions on Russia for another six months, resolving fears that Kremlin-friendly Hungary would let the measures lapse, officials said.
The decision at a summit in Brussels yesterday means that the EU's sweeping sanctions over the war in Ukraine, including the freezing of more than €200 billion in Russian central bank assets, will remain in force until at least early 2026.
It comes after officials said they were preparing contingency plans to keep the bloc's economic punishments on Moscow in place should Hungarian Prime Minister Viktor Orbán refuse to budge.
EU counterparts had feared a refusal by Hungary to renew the measures could impede the leverage the bloc holds over Russia as the United States presses peace efforts.
Mr Orbán took the decision to the wire the last time the sanctions, which need to be extended every six months, came up for renewal in January.
But while the EU made sure its existing measures will remain in place, it failed to get clearance on a new package of sanctions due to a blockage by Hungary's ally Slovakia.
At the summit, Slovakia's Prime Minister Roberto Fico refused to greenlight the new round of sanctions due to a separate dispute with Brussels over plans to cut off imports of Russian gas by the end of 2027.
Slovakia remains dependent on Russian gas imports and earns money from transit fees for supplies piped across its territory.
Mr Fico held talks with EU chief Ursula von der Leyen yesterday but failed to get the concessions that he wants and announced he would hold approval of the sanctions package.
Ukraine's President Volodymyr Zelensky urged EU leaders in a video address to adopt the strong package "targeting Russia's oil trade, shadow tanker fleet, banks and supply chains that bring equipment or parts for making weapons".
Officials say, however, that a push to lower a price cap on Russian oil exports has been shelved after the United States failed to back the push as part of a broader G7 initiative.
Trade talks
Meanwhile Ms von der Leyen did not rule out that tariff talks with the United States could fail, saying "all options remain on the table" as the EU leaders discussed new proposals from Washington on a trade deal.
Time could be running out for the bloc to find a common position before a respite on higher tariffs threatened by US President Donald Trump expires on 9 July, which will impact exporters from cars to pharmaceuticals.
However, the White House said Mr Trump could extend a July deadline for higher tariffs on imports.
Press Secretary Karoline Leavitt told reporters the "deadline is not critical".
European leaders were meeting to decide whether they want to push for a quick trade agreement or keep fighting for a better deal, with the EU's two biggest economies apparently at odds.
German Chancellor Friedrich Merz urged the EU to do a "quick and simple" trade deal rather than a "slow and complicated" one.
But in a separate briefing, French President Emmanuel Macron, while also wanting a quick and pragmatic trade deal, said his country would not accept terms that were not balanced.
All tools must be used to ensure a fair deal and if the US baseline rate of 10% remained in place, then Europe's response would have to have an equivalent impact, he said.
"Our goodwill should not be seen as a weakness," Mr Macron added.
French officials have argued the commission should take a firmer stance including by targeting US services.
Taoiseach Micheál Martin said there is a strong appetite at EU level for a trade deal with the United States.
Mr Martin said "every effort has to be made to get a landing zone that we can live with".
"It's not ideal. It's not optimal. Europe doesn't want tariffs, but we have to deal with the situation that is before us," he added.
Similarly, Mr Merz said European leaders were "basically united" on concluding the Mercosur trade deal with the South American trade bloc, but Mr Macron said he could not support the deal in its current form.
Ms Von der Leyen said yesterday the EU had received the latest US document for further negotiations and the bloc was still assessing it.
"We are ready for a deal. At the same time, we are preparing for the possibility that no satisfactory agreement is reached," she told reporters, adding: "In short, all options remain on the table."
No specifics were immediately available on the document, which one EU diplomat described as a "two-pager, principle agreement", adding the United States did not want to get into specific industrial sectors.
The bloc is already subject to US import tariffs of 50% on its steel and aluminium, 25% for cars and car parts along with the 10% tariff on most other EU goods that Mr Trump has threatened could rise to 50% without an agreement.
The European Union has agreed, but not imposed, tariffs on €21 billion of US goods and is debating a further package of tariffs on up to €95 billion of US imports.
Among the EU rebalancing options is a tax on digital advertising, which would hit US giants like Alphabet Inc's Google, Meta, Apple, X and Microsoft and eat into the trade surplus in services the US has with the EU.
The EU leaders also discussed ideas to carve out a new form of trade cooperation with Asia-Pacific countries that would be a way of reforming what they see as an ineffective World Trade Organisation.
Mr Merz said the idea was in its early stages but could include mechanisms to resolve disputes as the WTO was meant to do.
"You all know that the WTO doesn't work any more," he said.
