European negotiators have begun a tense round of pre-Marseille bargaining over how to divide a Middle East reconstruction package now expected to exceed three billion euros, with Germany and France quietly resisting demands from Italy, Greece and Spain that a larger share of the bill be redirected back to southern member states already absorbing refugee, shipping and energy costs from the six-week Iran war. The opening positions, exchanged in a Sherpa-level meeting in Brussels on Tuesday, set the stage for a politically charged conference in Marseille on May 6 and 7 that European Union officials had hoped would project unity.

The dispute, described in unusually candid terms by diplomats from four member states, is not over the headline figure announced last week by High Representative Kaja Kallas, which committed the bloc to a 1.2-billion-euro humanitarian and reconstruction contribution over eighteen months. That envelope, three diplomats said, was always understood as a floor. The disagreement is over a second tranche of roughly two billion euros that France wants to mobilize from European Investment Bank guarantees and the European Peace Facility, and over which national capitals get credit for what.

"There is a French version of generosity and a German version of generosity, and the rest of us are paying for both," said an Italian diplomat involved in the negotiations, speaking on condition of anonymity to describe internal talks. "Marseille will be a beautiful conference. What matters is the spreadsheet that arrives the week before."

Frontline costs versus reconstruction headlines

At the heart of the wrangling is a question European finance ministries have been quietly modeling since the ceasefire took effect on April 15: how to value the costs that southern and eastern member states absorbed during the war itself. Italy hosted more than 14,000 evacuated nationals from the Gulf and Lebanon; Greece's port of Piraeus handled the bulk of rerouted commercial traffic; Spain absorbed a smaller wave of dual nationals returning from Lebanon and Iraq.

A draft non-paper circulated by Italy's foreign ministry over the weekend, and seen by reporters in Brussels, proposes a "war-impact coefficient" that would weight each member state's required contribution to the second tranche according to documented wartime expenditures. Under the formula, Italy's share would fall by roughly 380 million euros, Greece's by about 210 million and Spain's by 160 million. Germany and France would together absorb most of the rebalancing.

"The principle is simple and the principle is fair," Italian Foreign Minister Antonio Tajani said in remarks at a security conference in Rome on Tuesday evening. "Countries that bore the operational burden of the war should not be asked to bear the reputational burden of the peace at the same rate as those that watched from a distance." Tajani did not name Germany directly, but Italian officials privately said the remark was aimed at Berlin's preferred framework, which weights contributions by gross national income alone.

The German finance ministry's response was carefully calibrated. A spokeswoman, Annika Reuter, said Berlin "welcomes constructive proposals from all partners" but emphasized that gross national income remained the bloc's primary basis for shared-burden funding. "Ad hoc coefficients designed for particular crises tend to outlast the crises themselves," Reuter said. German officials acknowledged some adjustment was likely but said the Italian formula went substantially further than Berlin was prepared to accept.

French politics shape the package

French President Emmanuel Macron, whose government is hosting the Marseille conference and has invested heavily in its symbolism, faces a domestic constraint that other capitals have begun to factor in. A bruising loss for his coalition in last month's Senate by-elections and a stalled budget reconciliation in the National Assembly have left him with limited room to commit additional French national funds, even as he positions France as the bloc's leading reconstruction voice.

"The Élysée wants Marseille to be remembered as a French peace conference, but the Matignon has to write checks the parliament will approve," said Hélène Boucher, a senior fellow at the Jacques Delors Centre in Paris. "That tension is why Paris is so eager to load the package onto European Investment Bank guarantees, where the national budgetary impact is deferred and diffuse." Boucher said the eventual compromise would likely combine a modest war-impact coefficient with an expanded EIB envelope, giving Italy and Greece partial relief without forcing Berlin to formally abandon its preferred framework.

Smaller states press their case

Beyond the Italy-Germany axis, smaller member states have begun to press claims of their own. Poland and the Baltic states, worried about any structural diversion of bloc attention from Ukraine, have insisted on language guaranteeing that Marseille funding will not come at Kyiv's expense — a concern Polish Foreign Minister Radoslaw Sikorski reiterated on Polish state radio Tuesday morning. "There is no reconstruction in Iraq if there is no security in Europe," Sikorski said. "We are happy to support a generous package, provided the architecture does not quietly cannibalize a different generous package that is keeping Europe whole."

Cyprus and Malta, which absorbed a disproportionate share of returning third-country nationals routed through the eastern Mediterranean, have requested a dedicated facility for processing costs. Cypriot Foreign Minister Constantinos Kombos said his government had submitted documentation totaling 84 million euros in unbudgeted wartime expenditures and expected "full and prompt reimbursement, not symbolic acknowledgment."

Gulf donors, expected to contribute at least as much as the European package, have stayed out of the intra-European dispute. A Saudi delegation that visited Brussels on Friday reportedly told counterparts that Riyadh's preference was for a single, coordinated European interlocutor at Marseille rather than separate national pledging tracks.

Officials said the bloc's permanent representatives would meet again Friday in Brussels to narrow the gaps, with a second Sherpa round penciled in for early next week. A senior diplomat from a southern member state said the next ten days would determine whether Marseille opened with a public dispute or merely a private one. "We can manage either," the diplomat said. "But the closer we get to the cameras, the more expensive disagreement becomes."