Brussels Edition: How to Solve the EU’s Banking Problem

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

A meeting of euro-area finance ministers in Brussels today had been tipped as the moment to finally break the deadlock on the contentious issue of bank deposit insurance and sign off on reform of the bloc’s bailout fund. Instead, thanks to coalition tensions in Germany and Italy, those ambitions now look uncertain. Failure to agree on a deal could force EU leaders to take some tough decisions when they meet next week, or — more likely — push talks further into the future.

What’s Happening

Climate Crisis | The world’s average temperature is rising faster than previously thought. That prospect has united UN Secretary General Antonio Guterres and activists at a climate conference in Madrid, while a meeting of European energy ministers in Brussels today will try to revive efforts to meet the 2030 targets.

Fresh Cash | Greece is set to get the green light to receive around 800 million euros in cash for debt relief today after a report by its creditors on its post-bailout progress indicated the country is on track to meet its fiscal and reform targets. But the larger question of whether such funds can be used for investment rather than debt repayment will only be answered in the summer.

Laundering Defense | EU finance ministers meeting tomorrow in Brussels will call for a common agency to fight money laundering, in a bid to confront a wave of scandals in the European banking system.

NATO Spat | Donald Trump and Emmanuel Macron sparred in front of reporters over Turkey’s future in NATO and other differences, hours after the U.S. president assailed his French counterpart for “ very nasty” comments about the military alliance. Read more on what’s behind Trump’s U-turn on NATO.

Balsamic Vinegar | The producers of Italy’s famous Aceto Balsamico di Modena vinegar enjoy an EU-wide protection that allows only them to make the condiment and sell it under that name. It’s now up to the EU’s top court to decide whether others should be prevented from marketing vinegar-based products using just parts of the name, such as “Balsamico” or “Aceto Balsamico.”

In Case You Missed It

Another Hawk | Isabel Schnabel, Germany’s nominee for the ECB’s Executive Board, told EU lawmakers that she would probably have opposed restarting quantitative easing had she been a policy maker in September. That marks an interesting twist in her application to become one of the region’s monetary guardians after she spent the past weeks defending the ECB’s policies in public. Meanwhile, euro-area finance ministers aren’t keen on negative rates.

French Reforms | Macron began his presidency in 2017 pledging to send shockwaves through the French economy by making labor cheaper, more flexible and better skilled. Two-and-a-half years later, business leaders in the region with the country’s lowest jobless rate are experiencing both the successes and shortcomings of the president’s ambitions.

Tit-for-Tat | Macron’s government said that the EU will retaliate if the U.S. follows through on a threat to hit about $2.4 billion of French products — including sparkling wine and handbags — with tariffs over a dispute over taxing tech companies.

Nordic Backlash | Finnish Prime Minister Antti Rinne was forced to step down just six months into his term after a key political ally withdrew its support, once again showing that shutting extreme parties out of the political discourse doesn’t always work.

Flight Shame and Sleepers | Romanticized by movies like “Murder on the Orient Express,” sleeper trains had all but disappeared in Europe. Now, some of their magic is being revived, with the help of flight shame.

Chart of the Day

Chinese students far out-stripped peers in every other country in a survey of reading, math and science ability, pointing to a reserve of future economic strength and highlighting the struggle advanced economies face to keep up. The PISA study of 600,000 students in 79 countries shines a light on the difficultly of improving education, sometimes irrespective of the resources that are dedicated to it.

Today’s Agenda

All times CET.

• 9 a.m. EU energy ministers meet in Brussels
• 9:30 a.m. EU top court rules in a challenge by Poland’s largest gas company PGNiG SA over a 2016 decision that it says would broaden Gazprom PJSC’s access to the German Opal gas pipeline
• 3 p.m. Euro-area finance ministers meet in Brussels to discuss ESM reform, banking union and Greek post-bailout report
• 3:30 p.m. German Economy Minister Altmaier, French Finance Minister Le Maire speak at automotive suppliers association event in Brussels
• EU Commission President von der Leyen delivers the College readout of the first meeting of her new team
• NATO summit concludes in London

--With assistance from Zoe Schneeweiss, Ewa Krukowska, Nick Rigillo and Alexander Weber.

To contact the editor responsible for this story: Emma Ross-Thomas at erossthomas@bloomberg.net, Iain Rogers

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