from 2028. Allow me to also add that the proposal is, from a German point of view, unaffordable, and it is imbalanced. The next proposal, which we're going to expect from the next presidency, has to be below the present proposal.
The Irish presidency was tasked to submit an acceptable proposal. We are going to constructively engage in the debates and discussions in the coming weeks. Yesterday, we also talked about competitiveness of the European Union. For us all, it is a pivotal topic that is going to be on the agenda of every single council meeting.
The Commission president is going to submit a so-called progress report ahead of every Council meeting, and upon which we can also react and readjust, so that you will have an understanding that we will have to take decisions this year and next year.
Also referring to bureaucratic burden and focusing on relieving the bureaucratic burden for our companies and citizens. Also, global economic imbalances was on the agenda. We all agreed that we need to protect ourselves against imbalances and practices which distort the markets. We have clout in the world, and we want to use this clout. And against this backdrop, we tasked the Commission with the two following aspects. First, the Commission is going to have to take an assertive stance when it comes to defending our interests in a constructive dialogue.
And second, the Commission should refine our trade defense instruments and actually add on. The EU needs to have effective instruments at its disposal in order to effectively defend our interests around the globe.
It was also important that we engaged in an exchange with the Ukrainian President Volodymyr Zelensky. He gave us a very detailed report on developments on the front lines. The situation has shifted positively for the benefit of Ukraine. The dynamics of this terrible war are changing. We talked about how we can make progress on the path towards peace in Ukraine. It was important for me to focus on substantial matters and priorities in our diplomatic efforts. We made important progress. Keir Starmer, Emmanuel Macron, and myself discussed key aspects of possible peace talks in London recently.
There is broad support in Europe for this. And for the first time in his second presidential term, we agreed with President Trump at the G7 summit in Evian. We want to ramp up our support for Kyiv and increase the pressure on Moscow. The message to Russia is clear. It is time to engage in serious negotiations. It's only up to Moscow.
And this is progress which is also welcomed by our European partners. And this is progress we achieved together with the US in the G7 format. We also discussed a possible format. Peace negotiations have to encompass Ukraine, Russia, Europe, and the US.
It's not a time to decide now who speaks on Europe's behalf. First, we need to be in agreement on the matter and then we discuss formats. One step at a time. I also see positive dynamics in the topic of enlargement. Last week, we opened the first cluster for Ukraine and Moldova. Yesterday, we initiated the opening of other clusters and at my request, we're going to talk about this in more detail during the European Council meeting in October.
Also, as far as the Western Balkans is concerned, it is important that we decide not whether we accelerate accession processes, but how we can accelerate the accession processes. Over lunch, we also discussed the Middle East. We share our view that the ceasefire that was negotiated between Iran and the US needs to also hold in the south of Lebanon. And we call on Israel and the Israeli government to refrain from further settlements in the West Bank. And I reiterate this in my meetings with Netanyahu.
We also discussed trade measures, and I rejected these proposals on behalf of the Federal Government. In conclusion, we had two important meetings this week: the G7 and the European Council meeting. I just also thanked President Macron for his very successful presidency in the G7 format. And I thanked him for being able to pass a leader statement and adopt a leader's statement. And this is thanks to his engagement and also on the European side, the members who are also represented in the G7 format.
France, Italy, and Germany were closely coordinated and we also addressed this together with the UK and assume that we are also going to continue our good cooperation in the coming weeks and months. And time and again we will also discuss matters with Poland, especially when it's about Ukraine. And allow me to reiterate, of course, I also would like to inform and include smaller and medium-sized European members, especially also when it affects neighboring countries in Eastern Europe.
So we've shown that we as Europeans, that we're capable to act also in the big format of the G7 but also in the big gathering of the heads of state and government in the European Union. After intense deliberations I go home with a feeling and a sentiment that international cooperation works well in Europe but also in the G7 format and this is the prerequisite for us lending a positive contribution to peace in the world. Thank you so much, Mr. Fischer.
Thank you very much, Mr. Chancellor. There seems to be disagreement on who should be at the negotiating table for Europe should there be peace talks and negotiations between Russia and Ukraine. Do you see, despite this disagreement, still enough backing for the E3 to continue this process? And does the E3 have its own channels of communication to Russia, or is there complete silence on these challenges?
Well, allow me to tell you that we don't inform publicly on this, but the E3 was actually gathered upon the explicit wish of Ukraine and there is an internal logic that the fact that the UK, France and Germany cooperate closely is due to the fact that we are major players in Europe. We make a major contribution militarily in support of Ukraine. We're number one and it's been the explicit request of Ukraine that these three countries play a coordinating role. We do that.
The UK, as a country which is no longer part of the European Union, has to be on board. Still, it's an important NATO partner in Europe and we discuss many, many important issues also in the run-up to the NATO summit in Ankara. These are very important formats. We also involve Italy, of course, and Poland and other member states of the European Union, of course.
We don't have to decide who will speak on the EU's behalf. We will decide that when there's time for that, of course. The president of the European Council, Antonio Costa, has to play an important role. He makes sure that we have good discussions within the European Union, that we're well organized in preparation and well prepared for the discussion in the council. But for that, no further decisions need to be made right now. Mr. Rinke.
Thank you, Mr. Chancellor. Could you specify and talk about the instruments you would like to see? You mentioned currency manipulation. And another question: the US started an inquiry into pharmacy prices and higher tariffs on pharmacy products. Could you elaborate on that?
Well, I would assume that the United States sticks to the agreements we have as far as the reimbursement by insurance companies of modern pharmaceutical companies is concerned. That is a decision we take. Should the United States want more information on that, we're happy to provide this information, but it's a question of reimbursement within the insurance company and it's a domestic matter. We need to discuss this in Germany.
Now regarding the question pertaining to the formats. I talked about this in my introductory statement. I think we found a very good rhythm as to how we lead and have these discussions and we make an effort. It's all in our interest to bring this war to an end.
I couldn't hear what the journalist was asking. I'm sorry, I didn't understand you correctly. Now you refer to the instruments the Commission needs to prepare for the upcoming Council meeting. I mentioned the topic of the currency exchange rates in the G7 format also with broad approval of the American side because America is affected, the US are affected by that as well. We compete in some cases with currency areas which have currencies that are not appreciated enough.
And I recalled the fact that there have been cases like this in the past decades, and we had corresponding discussion formats to deal with these issues. An agreement was taken at the Plaza Hotel in New York, and an agreement was concluded in Paris. Before we had the European currency union, we had the European currency system. There were certain corridors for exchange rates. This is something I envisage here as well.
We don't want to play the blame game. We want to sort of do away with these imbalances. These are not to the detriment of our trading partners, but they're also to the detriment of purchasing power at home. So it is in no one's interest in the long run to have such distortions in various currencies. So we need to have these talks, and it's in our interest to have these discussions.
Thomas Gutschker, Frankfurter Allgemeine Zeitung. Allow me to ask a follow-up question regarding the possible negotiations with Russia. First, we need to have an agreement on the matter, then we discuss the issue of formats. Are you in disagreement within the E3 and with Ukraine? Which questions remain open? And on the enlargement process, you said that you expect this debate to start in October. You already submitted your proposals and represented your proposals. And I'm referring to the associated membership for Ukraine, there is a lot of criticism among the EU member states. There are arguments, people who say you shouldn't prefer Ukraine over the Western Balkans, and it's not right to introduce an observer status. Is the proposal dead before you really are able to discuss it?
Well, you need to have an agreement with Russia to engage in negotiations, and you need to also decide on who will be part of these negotiations. And Ukraine needs to decide that. Ukraine is the country which is affected, and Ukraine decides who will stand by her side and lead these negotiations. The European Union is not a mediator. We're a party on the side of Ukraine, and then Ukraine will decide who will negotiate alongside Ukraine. We're not at this point yet, and I reiterate it's exclusively up to Russia to take this decision and engage in negotiations.
As far as the enlargement process is concerned, due to lack of time, we didn't discuss this in detail because the agenda was very full, and it took a long time. So, we submitted two papers. I made a proposal regarding the associated membership of Ukraine in my letter to the Commission President and the Council President. I also included the Western Balkans. I also submitted a non-paper together with Emmanuel Macron going into more detail.
An associative membership works without amending the treaties and we have role models. In 1990, one year after European elections, we included a territory to the European Union after German unification, which was not represented in the European institutions. And for the GDR, and then the East German federal states, we introduced an observer status. We had 18 observers from the former GDR with observer status. And this did not require treaty changes.
My proposal actually focused exactly on that, to make something possible that was feasible without amending and changing treaties. Anything else would be an illusion. We will not achieve a treaty change, an amendment to treaties in Europe at this point in time. And this has to be coordinated also when it comes to the Western Balkans. There I don't want different speeds, or different restrictions, different progress reports.
A country like Ukraine, a country at war, cannot become a member of the European Union, but it could be an associated member of the European Union, and later on a full member. The situation is different in the context of the Western Balkans. We've been negotiating for more than 20, almost 20 years. At least one country, Montenegro, is actually ready to accede. The clusters have been completed.
There are good reasons to say: should we enlarge step-by-step, or every country at the same time? So, the proposals are at the table, and there's a large number of colleagues who are grateful that we have emerged from this frustration of the past year when we had the last summit on the Western Balkans here in Brussels and no one really knew what to do with the states in the Western Balkans. And the attempt by Emmanuel Macron and myself was to actually move beyond that and submit a proposal as to how we can make progress here.
Let me reiterate that when you sit at this table and the Prime Minister of Croatia, Andrej Plenković, which is the last country to accede 13 years ago to the European Union, and he's the most senior Prime Minister sitting at the table, and this example shows how much time has passed and it's long overdue to enlarge and have these countries accede. Mr. Fichtner.
Thank you very much. Mr. Fichtner is my name. You also mentioned the topic of simplification, reducing red tape. You didn't specifically talk about this in detail. Do you still believe that you will achieve tangible results? Which countries are the ones who step on the brake, if you will?
Well, I didn't just gloss over it superficially, but I clearly said it in my brief introductory remarks. It's one of the main topics that we dealt with at this council meeting. The Commission is going to propose a progress report ahead of every council meeting. We talk about readjustments and we discuss how we can make progress. I did mention that, but let me tell you now.
We talked about the 28th regime, the simple rules applying to startups. This idea continues to be right. We want to actually promote this idea and we agree that we want to enable this to happen by the end of the year. So it played a big role today and yesterday to actually make progress and actually work hard. Of course, there are people and countries which actually step on the brake, but we need to move beyond. We need to implement what Enrico Letta and Mario Draghi told us. We need to implement what they told us.
Federal Chancellor, on the topic of China, you're walking a tightrope. On the one hand, you want to avoid a trade war. At the same time, pressure is high to do something because the figures have evolved dramatically as far as the trade imbalance is concerned. How do you want to avoid that the Chinese are going to feel provoked by these measures and react now already? And could you actually talk in more detail about this exchange rate corridor? Who discusses what with whom?
Well, generally, we talked about geo-economic imbalances. We respect and acknowledge that when there are countries which invest heavily in research and development, which make progress technologically wise, we accept the fact when productivity is higher than in Europe, it's a competition that we actually have to face up, a challenge we have to live with. We need to make an effort to become better and become good again.
But when we're seeing high subsidies in sectors which are flooding markets, when we see that individual countries have 13, 14% of the world's demand and at the same time have 30, 40% of industrial production, when they're subsidizing overcapacity, and when the whole thing is accompanied by a currency which is not freely convertible and doesn't participate in the capital markets because the capital market is isolated, and then we're talking about market distortions and distortions of competitiveness that are not acceptable. We need to discuss this. I do that when traveling to countries with which we engage in trade and I expect that this is accepted.
And about the exchange rate corridors, allow me to recall the IWS system. Whether it's the right format remains to be seen, but on the European side and the transatlantic side we have experience with dialogue formats on exchange rates and essentially these are good experiences we've had and we need to address this topic. And I think it's in our mutual interest to address this topic because a currency that is kept artificially low actually has an effect on purchasing power domestically. And of course this is a dialogue and a discussion that needs to take place and it's in our mutual interest.
Mr. Lindner, last question. Thank you very, very much. Jan Lindner, Süddeutsche Zeitung. Mr. Chancellor, first question on the MFF, very briefly. Could you talk about the specific numbers? What are we discussing and talk about actually specifically? And second question on the MFF: what are you going to do in the coming months in order to achieve this goal, to conclude this by the end of the year? Could you elaborate on that and assess this?
The year 2026 is something that I cannot foresee and assess, but I talked about this in cabinet. We're going to discuss this again in close coordination with the federal cabinet and also my finance minister. We want to conclude this in the year 2026 in order to have planning security, especially for the funds available to the agricultural sector and cohesion funds. And those who benefit from that need to have the planning security start in 2028.
Of course, the funds need to be available, but they will not be cut entirely. There will be changes, but these changes will need to be communicated in a timely fashion. I don't want to discuss numbers and predict numbers and the extent that we're cutting. That depends on the distribution of funds. We have three pillars. We have the agricultural policy and the cohesion policy and they're going to be combined in regional partnership programs. Then we will have competitiveness and the corresponding fund and we will have the funds for trade and foreign policy.
And the distribution and the priorities are not discussed yet and the same holds true for the revenue. The Commission has made a proposal for the own funds and own revenue. We need to look at the individual states. So a whole range of very complex questions await us.
And the proposal submitted by the Commission or the European Parliament to agree on a sum of 1.6 or 1.7 billion euro for the next seven years is not feasible. It's not affordable. I told the colleagues, I'm not talking about the net contribution but what this would mean for the European contribution to the budget of the European Union. This proposal that we have is a proposal that would require 15 to 20 billion more in our budget annually and this is not feasible in our budget. And I think if you look at the numbers, and this is why I proposed and I talked about these numbers in the council, not for the first time. I said this last year before Christmas as well. I told the colleagues they should know what is possible and what is not possible. Well, thank you very much. Have safe travels. See you next time.
During this council meeting, a whole range of important topics were discussed, topics that are of tremendous importance to the European Union overall. Let me begin with the multiannual financial framework, a big priority for us. I want to conclude this in the year 2026 because then we have planning security for the time starting from 2028. Allow me to also add that the proposal is, from a German point of view, unaffordable and it is imbalanced. The next proposal which we're going to expect from the next presidency has to be below the present proposal.
The Irish presidency was tasked to submit an acceptable proposal. We are going to constructively engage in the debates and discussions in the coming weeks. Yesterday we also talked about competitiveness of the European Union. For us all it is a pivotal topic that is going to be on the agenda of every single council meeting. The Commission president is going to submit a so-called progress report ahead of every council meeting and upon which we can also react and readjust, so that you will have an understanding that we will have to take decisions this year and next year.
Also referring to bureaucratic burden and focusing on relieving the bureaucratic burden for our companies and citizens. Also, global economic imbalances was on the agenda. We all agreed that we need to protect ourselves against imbalances and practices which distort the markets. We have clout in the world and we want to use this clout. And against this backdrop we tasked the Commission with the two following aspects. First, the Commission is going to have to take an assertive stance when it comes to defending our interests in a constructive dialogue. And second, the Commission should refine our trade defense instruments and actually add on. The EU needs to have effective instruments at its disposal in order to effectively defend our interests around the globe.
It was also important that we engaged in an exchange with the Ukrainian President Volodymyr Zelensky. He gave us a very detailed report on developments on the front lines. The situation has shifted positively for the benefit of Ukraine. The dynamics of this terrible war are changing. We talked about how we can make progress on the path towards peace in Ukraine. It was important for me to focus on substantial matters and priorities in our diplomatic efforts. We made important progress. Keir Starmer, Emmanuel Macron and myself discussed key aspects of possible peace talks in London recently.
There is broad support in Europe for this and for the first time in his second presidential term, we agreed with President Trump at the G7 summit in Evian. We want to ramp up our support for Kyiv and increase the pressure on Moscow. The message to Russia is clear. It is time to engage in serious negotiations. It's only up to Moscow. And this is progress which is also welcomed by our European partners and this is progress we achieved together with the US in the G7 format. We also discussed a possible format. Peace negotiations have to encompass Ukraine, Russia, Europe and the US.
It's not a time to decide now who speaks on Europe's behalf. First we need to be in agreement on the matter and then we discuss formats. One step at a time. I also see positive dynamics in the topic of enlargement. Last week we opened the first cluster for Ukraine and Moldova. Yesterday we initiated the opening of other clusters and at my request we're going to talk about this in more detail during the European Council meeting in October. Also as far as the Western Balkans is concerned, it is important that we decide not whether we accelerate accession processes, but how we can accelerate the accession processes.
Over lunch we also discussed the Middle East. We share our view that the ceasefire that was negotiated between Iran and the US needs to also hold in the south of Lebanon and we call on Israel and the Israeli government to refrain from further settlements in the West Bank and I reiterate this in my meetings with Netanyahu. We also discussed trade measures and I rejected these proposals on behalf of the federal government.
In conclusion, we had two important meetings this week, the G7 and the European Council meeting. I just also thanked President Macron for his very successful presidency in the G7 format. And I thanked him for being able to pass a leader statement and adopt a leader's statement and this is thanks to his engagement and also on the European side the members who are also represented in the G7 format. France, Italy, and Germany were closely coordinated and we also addressed this together with the UK and assume that we are also going to continue our good cooperation in the coming weeks and months.
And time and again we will also discuss matters with Poland especially when it's about Ukraine and allow me to reiterate of course I also would like to inform and include smaller and medium-sized European members especially also when it affects neighboring countries in Eastern Europe. So we've shown that we as Europeans that we're capable to act also in the big format of the G7 but also in the big gathering of the heads of state and government in the European Union. After intense deliberations I go home with a feeling and a sentiment that international cooperation works well in Europe but also in the G7 format and this is the prerequisite for us lending a positive contribution to peace in the world. Thank you so much, Mr. Fischer.
Thank you very much, Mr. Chancellor. There seems to be disagreement on who should be at the negotiating table for Europe should there be peace talks and negotiations between Russia and Ukraine. Do you see, despite this disagreement, still enough backing for the E3 to continue this process and does the E3 have its own channels of communication to Russia or is there complete silence on these challenges?
Well, allow me to tell you that we don't inform publicly on this, but the E3 was actually gathered upon the explicit wish of Ukraine and there is an internal logic that the fact that the UK, France, and Germany cooperate closely is due to the fact that we are major players in Europe. We make a major contribution militarily in support of Ukraine. We're number one and it's been the explicit request of Ukraine that these three countries play a coordinating role. We do that.
The UK as a country which no longer is part of the European Union has to be on board. Still, it's an important NATO partner in Europe and we discuss many, many important issues also in the run-up to the NATO summit in Ankara. These are very important formats. We also involve Italy, of course, and Poland and other member states of the European Union, of course. We don't have to decide who will speak on the EU's behalf. We will decide that when there's time for that, of course. The president of the European Council, Antonio Costa, has to play an important role. He makes sure that we have good discussions within the European Union, that we're well organized in preparation and well prepared for the discussion in the council. Apart from that, no further decisions need to be made right now.
Mr. Rinke. Thank you, Mr. Chancellor. Could you specify and talk about the instruments you would like to see? You mentioned currency manipulation. And another question: the US started an inquiry into pharmacy prices and higher tariffs on pharmacy products. Could you elaborate on that?
Well, I would assume that the United States sticks to the agreements we have as far as the reimbursement by insurance companies of modern pharmaceutical companies is concerned. That is a decision we take. Should the United States want more information on that, we're happy to provide it, but it's a question of reimbursement within the insurance company and it's a domestic matter. We need to discuss this in Germany.
Now regarding the question pertaining to the formats, I talked about this in my introductory statement. I think we found a very good rhythm as to how we lead and have these discussions and we make an effort. It's all in our interest to bring this war to an end.
I couldn't hear what the journalist was asking. I'm sorry, I didn't understand you correctly. Now you refer to the instruments the Commission needs to prepare for the upcoming council meeting. I mentioned the topic of the currency exchange rates in the G7 format also with broad approval of the American side because America is affected, the US are affected by that as well. We compete in some cases with currency areas which have currencies that are not appreciated enough.
And I recalled the fact that there have been cases like this in the past decades and we had corresponding discussion formats to deal with these issues. An agreement was taken at the Plaza Hotel in New York and an agreement was concluded in Paris before we had the European currency union. We had the European currency system. There were certain corridors for exchange rates. This is something I envisage here as well.
We don't want to play the blame game. We want to sort of do away with these imbalances. These are not to the detriment of trading partners but they are also to the detriment of purchasing power at home. So it is in no one's interest in the long run to have such distortions in the various currencies. So we need to have these talks and it's in our interest to have these discussions.
Thomas Gutschker, Frankfurter Allgemeine Zeitung. Allow me to ask a follow-up question referring to the possible negotiations with Russia. First we need to have an agreement on the matter then we discuss the issue of formats. Are you in disagreement within the E3 and with Ukraine? Which questions remain open? And on the enlargement process, you said that you expect this debate to start in October. You already submitted your proposals and represented your proposals. And I'm referring to the associated membership for Ukraine. There is a lot of criticism among the EU member states. There are arguments, people who say you shouldn't prefer Ukraine over the Western Balkans and it's not right to introduce an observer status. Is the proposal dead before you really are able to discuss it?
Well, you need to have an agreement with Russia to engage in negotiations and you need to also decide on who will be part of these negotiations and Ukraine needs to decide that. Ukraine is the country which is affected and Ukraine decides who will stand by her side and lead these negotiations. The European Union is not a mediator. We're a party on the side of Ukraine and then Ukraine will decide who will negotiate alongside Ukraine. We're not at this point yet and I reiterate it's exclusively up to Russia to take this decision and engage in negotiations.
As far as the enlargement process is concerned, due to lack of time, we didn't discuss this in detail because the agenda was very full and it took a long time. So, we submitted two papers. I made a proposal regarding the associated membership of Ukraine in my letter to the Commission President and the Council President, I also included the Western Balkans. I also submitted a non-paper together with Emmanuel Macron going into more detail.
An associative membership works without amending the treaties and we have role models. In 1990, one year after European elections, we included a territory to the European Union after German unification, which was not represented in the European institutions. And for the GDR and then the East German federal states, we introduced an observer status. We had 18 observers from the former GDR with observer status, and this did not require treaty changes.
My proposal actually focused exactly on that to make something possible that was feasible without amending and changing treaties. Anything else would be an illusion. We will not achieve a treaty change, an amendment to treaties in Europe at this point in time. And this has to be coordinated also when it comes to the Western Balkans. There I don't want different speeds or different restrictions, different progress reports.
A country like Ukraine, a country at war, cannot become a member of the European Union, but it could be an associated member of the European Union and later on a full member. The situation is different in the context of the Western Balkans. We've been negotiating for more than 20, almost 20 years. At least one country, Montenegro, is actually ready to accede. The clusters have been completed.
There are good reasons to say: should we enlarge step-by-step or every country at the same time? So the proposals are at the table and there's a large number of colleagues who are grateful that we have emerged from this frustration of the past year when we had the last summit on the Western Balkans here in Brussels and no one really knew what to do with the states in the Western Balkans and the attempt by Emmanuel Macron and myself was to actually move beyond that and submit a proposal as to how we can make progress here.
Let me reiterate that when you sit at this table and the Prime Minister of Croatia, Andrej Plenković, which is the last country to accede 13 years ago to the European Union and he's the most senior Prime Minister sitting at the table and this example shows how much time has passed and it's long overdue to enlarge and have these countries accede. Mr. Fichtner.
Thank you very much. Mr. Fichtner is my name. You also mentioned the topic of simplification, reducing red tape. You didn't specifically talk about this in detail. Do you still believe that you will achieve tangible results? Which countries are the ones who step on the brake, if you will?
Well, I didn't just gloss over it superficially but I clearly said it in my brief introductory remarks. It's one of the main topics that we dealt with at this Council meeting. The Commission is going to propose a progress report ahead of every council meeting. We talk about readjustments and we discuss how we can make progress. I did mention that, but let me tell you now, we talked about the 28th regime, the simple rules applying to startups. This idea continues to be right. We want to actually promote this idea and we agree that we want to enable this to happen by the end of the year. So it played a big role today and yesterday to actually make progress and actually work hard.
Of course, there are people and countries which actually step on the brake, but we need to move beyond. We need to implement what Enrico Letta and Mario Draghi told us. We need to implement what they told us.
Federal Chancellor, on the topic of China, you're walking a tightrope. On the one hand, you want to avoid a trade war. At the same time, pressure is high to do something because the figures have evolved dramatically as far as the trade imbalance is concerned. How do you want to avoid that the Chinese are going to feel provoked by these measures and react now already? And could you actually talk in more detail about this exchange rate corridor? Who discusses what with whom?
Well, generally, we talked about geo-economic imbalances. We respect and acknowledge that when there are countries which invest heavily in research and development, which make progress technologically wise, we accept the fact when productivity is higher than in Europe, it's a competition that we actually have to face up, a challenge we have to live with. We need to make an effort to become better and become good again.
But when we're seeing high subsidies in sectors which are flooding markets, when we see that individual countries have 13, 14% of the world's demand and at the same time have 30, 40% of industrial production, when they're subsidizing overcapacities and when the whole thing is accompanied by a currency which is not freely convertible and doesn't participate in the capital markets because the capital market is isolated, and then we're talking about market distortions and distortions of competitiveness that are not acceptable. We need to discuss this. I do that when traveling to countries with which we engage in trade and I expect that this is accepted.
And about the exchange rate corridors, allow me to recall the IWS system. Whether it's the right format remains to be seen, but on the European side and the transatlantic side we have experience with dialogue formats on exchange rates and essentially these are good experiences we've had and we need to address this topic, and I think it's in our mutual interest to address this topic because a currency that is kept artificially low actually has an effect on purchasing power domestically. And of course this is a dialogue and a discussion that needs to take place, and it's in our mutual interest.
Mr. Lindner, last question. Thank you very, very much. I'm Distelhoff, Süddeutsche Zeitung. Mr. Chancellor, first question on the MFF, very briefly. Could you talk about the specific numbers? What are we discussing and talk about actually specifically? And second question on the MFF, what are you going to do in the coming months in order to achieve this goal, to conclude this by the end of the year? Could you elaborate on that and assess this?
The year 2026 is something that I cannot foresee and assess, but I talked about this in cabinet. We're going to discuss this again in close coordination with the federal cabinet and also my finance minister. We want to conclude this in the year 2026 in order to have planning security, especially for the funds available to the agricultural sector and cohesion funds. And those who benefit from that need to have the planning security start in 2028.
Of course, the funds need to be available, but they will not be cut entirely. There will be changes, but these changes will need to be communicated in a timely fashion. I don't want to discuss numbers and predict numbers and the extent that we're cutting. That depends on the distribution of funds. We have three pillars. We have the agricultural policy and the cohesion policy and they're going to be combined in regional partnership programs. Then we will have competitiveness and the corresponding fund and we will have the funds for trade and foreign policy.
And the distribution and the priorities are not discussed yet and the same holds true for the revenue. The Commission has made a proposal for the own funds and own revenue. We need to look at the individual states. So a whole range of very complex questions await us.
And the proposal submitted by the Commission or the European Parliament to agree on a sum of 1.6 or 1.7 billion euro for the next seven years is not feasible. It's not affordable. I told the colleagues, I'm not talking about the net contribution but what this would mean for the European contribution to the budget of the European Union. This proposal that we have is a proposal that would require 15 to 20 billion more in our budget annually and this is not feasible in our budget. And I think if you look at the numbers, and this is why I proposed and I talked about these numbers in the council not for the first time. I said this last year before Christmas as well. I told the colleagues they should know what is possible and what is not possible. Well, thank you very much. Have safe travels. See you next time.
During this council meeting, a whole range of important topics were discussed, topics that are of tremendous importance to the European Union overall. Let me begin with the multiannual financial framework, a big priority for us. I want to conclude this in the year 2026 because then we have planning security for the time starting from 2028. Allow me to also add that the proposal is, from a German point of view, unaffordable and it is imbalanced. The next proposal which we're going to expect from the next presidency has to be below the present proposal. The Irish presidency was tasked to submit an acceptable proposal. We are going to constructively engage in the debates and discussions in the coming weeks.
Yesterday we also talked about competitiveness of the European Union. For us all it is a pivotal topic that is going to be on the agenda of every single council meeting. The Commission president is going to submit a so-called progress report ahead of every council meeting and upon which we can also react and readjust, so that you will have an understanding that we will have to take decisions this year and next year. Also referring to bureaucratic burden and focusing on relieving the bureaucratic burden for our companies and citizens. Also, global economic imbalances was on the agenda.
We all agreed that we need to protect ourselves against imbalances and practices which distort the markets. We have clout in the world and we want to use this clout. And against this backdrop we tasked the Commission with the two following aspects. First, the Commission is going to have to take an assertive stance when it comes to defending our interests in a constructive dialogue. And second, the Commission should refine our trade defense instruments and actually add on. The EU needs to have effective instruments at its disposal in order to effectively defend our interests around the globe.
It was also important that we engaged in an exchange with the Ukrainian President Volodymyr Zelensky. He gave us a very detailed report on developments on the front lines. The situation has shifted positively for the benefit of Ukraine. The dynamics of this terrible war are changing. We talked about how we can make progress on the path towards peace in Ukraine. It was important for me to focus on substantial matters and priorities in our diplomatic efforts. We made important progress. Keir Starmer, Emmanuel Macron and myself discussed key aspects of possible peace talks in London recently.
There is broad support in Europe for this and for the first time in his second presidential term, we agreed with President Trump at the G7 summit in Evian. We want to ramp up our support for Kyiv and increase the pressure on Moscow. The message to Russia is clear. It is time to engage in serious negotiations. It's only up to Moscow. And this is progress which is also welcomed by our European partners and this is progress we achieved together with the US in the G7 format. We also discussed a possible format. Peace negotiations have to encompass Ukraine, Russia, Europe and the US.
It's not a time to decide now who speaks on Europe's behalf. First we need to be in agreement on the matter and then we discuss formats. One step at a time. I also see positive dynamics in the topic of enlargement. Last week we opened the first cluster for Ukraine and Moldova. Yesterday we initiated the opening of other clusters and at my request we're going to talk about this in more detail during the European Council meeting in October. Also as far as the Western Balkans is concerned, it is important that we decide not whether we accelerate accession processes, but how we can accelerate the accession processes.
Over lunch we also discussed the Middle East. We share our view that the ceasefire that was negotiated between Iran and the US needs to also hold in the south of Lebanon and we call on Israel and the Israeli government to refrain from further settlements in the West Bank and I reiterate this in my meetings with Netanyahu. We also discussed trade measures and I rejected these proposals on behalf of the federal government.
In conclusion, we had two important meetings this week, the G7 and the European Council meeting. I just also thanked President Macron for his very successful presidency in the G7 format. And I thanked him for being able to pass a leader statement and adopt a leader's statement and this is thanks to his engagement and also on the European side the members who are also represented in the G7 format. France, Italy, and Germany were closely coordinated and we also addressed this together with the UK and assume that we are also going to continue our good cooperation in the coming weeks and months.
And time and again we will also discuss matters with Poland especially when it's about Ukraine and allow me to reiterate of course I also would like to inform and include smaller and medium-sized European members especially also when it affects neighboring countries in Eastern Europe. So we've shown that we as Europeans that we're capable to act also in the big format of the G7 but also in the big gathering of the heads of state and government in the European Union. After intense deliberations I go home with a feeling and a sentiment that international cooperation works well in Europe but also in the G7 format and this is the prerequisite for us lending a positive contribution to peace in the world. Thank you so much, Mr. Fischer.
Thank you very much, Mr. Chancellor. There seems to be disagreement on who should be at the negotiating table for Europe should there be peace talks and negotiations between Russia and Ukraine. Do you see, despite this disagreement, still enough backing for the E3 to continue this process and does the E3 have its own channels of communication to Russia or is there complete silence on these challenges?
Well, allow me to tell you that we don't inform publicly on this, but the E3 was actually gathered upon the explicit wish of Ukraine and there is an internal logic that the fact that the UK, France, and Germany cooperate closely is due to the fact that we are major players in Europe. We make a major contribution militarily in support of Ukraine. We're number one and it's been the explicit request of Ukraine that these three countries play a coordinating role. We do that.
The UK as a country which no longer is part of the European Union has to be on board. Still, it's an important NATO partner in Europe and we discuss many, many important issues also in the run-up to the NATO summit in Ankara. These are very important formats. We also involve Italy, of course, and Poland and other member states of the European Union, of course. We don't have to decide who will speak on the EU's behalf. We will decide that when there's time for that, of course. The president of the European Council, Antonio Costa, has to play an important role. He makes sure that we have good discussions within the European Union, that we're well organized in preparation and well prepared for the discussion in the council. Apart from that, no further decisions need to be made right now.
Mr. Rinke. Thank you, Mr. Chancellor. Could you specify and talk about the instruments you would like to see? You mentioned currency manipulation. And another question: the US started an inquiry into pharmacy prices and higher tariffs on pharmacy products. Could you elaborate on that?
Well, I would assume that the United States sticks to the agreements we have as far as the reimbursement by insurance companies of modern pharmaceutical companies is concerned. That is a decision we take. Should the United States want more information on that, we're happy to provide it, but it's a question of reimbursement within the insurance company and it's a domestic matter. We need to discuss this in Germany.
Now regarding the question pertaining to the formats, I talked about this in my introductory statement. I think we found a very good rhythm as to how we lead and have these discussions and we make an effort. It's all in our interest to bring this war to an end.
I couldn't hear what the journalist was asking. I'm sorry, I didn't understand you correctly. Now you refer to the instruments the Commission needs to prepare for the upcoming council meeting. I mentioned the topic of the currency exchange rates in the G7 format also with broad approval of the American side because America is affected, the US are affected by that as well. We compete in some cases with currency areas which have currencies that are not appreciated enough.
And I recalled the fact that there have been cases like this in the past decades and we had corresponding discussion formats to deal with these issues. An agreement was taken at the Plaza Hotel in New York and an agreement was concluded in Paris before we had the European currency union. We had the European currency system. There were certain corridors for exchange rates. This is something I envisage here as well.
We don't want to play the blame game. We want to sort of do away with these imbalances. These are not to the detriment of trading partners but they are also to the detriment of purchasing power at home. So it is in no one's interest in the long run to have such distortions in the various currencies. So we need to have these talks and it's in our interest to have these discussions.
Thomas Gutschker, Frankfurter Allgemeine Zeitung. Allow me to ask a follow-up question referring to the possible negotiations with Russia. First we need to have an agreement on the matter then we discuss the issue of formats. Are you in disagreement within the E3 and with Ukraine? Which questions remain open? And on the enlargement process, you said that you expect this debate to start in October. You already submitted your proposals and represented your proposals. And I'm referring to the associated membership for Ukraine. There is a lot of criticism among the EU member states. There are arguments, people who say you shouldn't prefer Ukraine over the Western Balkans and it's not right to introduce an observer status. Is the proposal dead before you really are able to discuss it?
