Brussels Edition: Caught Between Two Evils

(Bloomberg) -- Welcome to the Brussels Edition, Bloomberg’s daily briefing on what matters most in the heart of the European Union.

Figuring out how to react to the disastrous defeat of the Brexit deal won’t be easy for EU ambassadors gathering in Brussels this morning. The bloc’s options are limited. They don’t want Britain to crash out with no deal, but aren’t prepared to give U.K. lawmakers the concessions that would prevent this. They’re also loathe to drag out divorce talks after thousands of hours were spent at the negotiating table to no avail. But if Britain asks for more time, can the EU really say no without coming across as punitive to a country it wants to keep as an ally? All eyes will be fixed again on London tonight.

What’s Happening

Cyber Espionage | Chinese companies can try to convince the West they aren’t fitting products with espionage tools, but it may not prevent them from losing lucrative 5G contracts. EU ambassadors meeting behind closed doors in Brussels today are due to sign off to a joint communique, seen by Bloomberg, underlining the bloc’s commitment to cyber-security, including in public procurement.

Female President | Women interested in leading the European Central Bank, come forward. EU government envoys are set to sign a letter addressed to the European Parliament (a copy of which we’ve seen), committing to take gender balance into consideration when appointing a new ECB president and board member later this year. The last time such promises were made, it didn’t go well. 

Gmail Status | Is Gmail a telecommunications service? It’s a question the EU’s top court will debate at a hearing today. The answer could pave the way for closure to a years-long dispute in Germany, where the Federal Network Agency has argued since 2012 that Google’s email service should be considered a telco and thus liable to the appropriate regulations.

Edible Oil | Limits on the use of palm oil, a biofuel crop linked to deforestation, will be outlined today by the European Commission. Malaysia and Indonesia, the world’s biggest producers, will no doubt closely watch the decision — which will define which fuels can be counted toward EU renewable-energy targets — and could retaliate.

In Case You Missed It

To Tax or Not to Tax? | In the EU, it depends. Traders of European shares could soon get slapped with a financial-transaction tax after finance ministers edged closer to an agreement yesterday. The same can’t be said for tech giants, as the officials gave up on a long-standing effort to tax them collectively. What they did agree to do was add 10 countries to a blacklist of countries they allege are tax havens. See which ones here.

German Paralysis | President Donald Trump’s America First policy is forcing Germany to make an impossible choice between the U.S. and China — pitting the force behind the country’s modern economic success against the key to its future growth. The result is political paralysis at a time when Germany’s allies are looking for political leadership.

Vestager’s Ambitions | European Commissioner for Competition Margrethe Vestager has confidence in spades — and many believe she may have her eye on the EU’s most powerful job. That idea isn’t universally loved in Brussels, Aoife White reports.

Grounded Jets | European authorities halted flights of Boeing Co.’s 737 Max aircraft, joining operators in Asia, Africa and Latin America following a deadly crash in Africa on Sunday. Questions are swirling around the future of the newest version of the 737 family, a cash cow that generates almost a third of the company’s operating profit.

Carrying On | Brexit isn’t stopping citizens from the EU’s poorest nations from searching for higher pay in the U.K. More people moved to Britain from Bulgaria and Romania in the year through September than all of the bloc’s western members combined.

Chart of the Day

The number of women in senior management positions has increased in the EU, and the employment rate for women has climbed to an all-time high of 66 percent, according to the European Commission and the European Institute for Gender Equality. Still, women’s salaries average 16 percent less than those for men, according to the Commission.

Today’s Agenda

All times CET.

• 11 a.m. Eurostat to release industrial production reading for January
• EU ambassadors in Brussels meet to discuss Brexit
• EU’s competition chief Margrethe Vestager due to give a speech at the 10th annual European Financial Services Stakeholder Round Table in Brussels
• EU top court rules in a challenge by Poland seeking to annul EU rules forcing the reduction of national emissions of certain atmospheric pollutants
• EU top court hears arguments in a dispute referred to it by a German court, which is seeking guidance on whether Google's Gmail email service can be regulated by Germany’s network agency 

--With assistance from Stephanie Bodoni and Ewa Krukowska.

To contact the editor responsible for this story: Daliah Merzaban at dmerzaban@bloomberg.net, Chris Reiter

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