Brussels Edition: Hungarian Model

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

Hungarian Prime Minister Viktor Orban was evoked in the video that brought down the ruling coalition in neighboring Austria. In the run-up to the European Parliamentary elections, the standard bearer of the far-right was visited by Austria’s deputy leader. That’s the same Heinz-Christian Strache who, in leaked footage, discussed trading government contracts for cash, along with plans to build an Orban-like media juggernaut. But while scandal ended Strache’s career, it has barely touched Orban, who has built Europe’s biggest propaganda machine and gone the farthest in dismantling democracy’s guardrails in the EU.

What’s Happening

Top Jobs | Angela Merkel is preparing for a clash with France as she pushes Germany’s most ambitious bid yet for a top EU job. Her thinking is that if her Bavarian ally Manfred Weber can’t lead the EU Commission, a German should run the ECB instead. The Chancellor’s demands may be a parting shot from a leader approaching the end of her tenure, but they come with the justification that Germany, has repeatedly let its partners name such positions.

Chinese Resilience | As the global trade war escalates, China has a message to a U.S. president with a notoriously short attention span: “We have been holding on for 5,000 years,” said Zhang Ming, the Chinese Ambassador to the EU. “Why not another 5,000?” China’s resolve to “defend its legitimate rights and interests” against U.S. bullying is “unwavering” and it can take any pain from the impact of Trump’s tariffs, Beijing’s envoy in Brussels told us. 

Huawei Ban | Senior European Huawei executives are set to call out Donald Trump’s executive order to blacklist the company when they speak in Brussels today. China’s largest telecoms equipment maker says it hopes to keep close ties with European governments and business partners as the U.S. measures reverberate across the global supply chain, hitting some of the biggest component-makers.

WTO Push | The U.S., EU and Japan are pushing for an agreement on measures to curb state-support of industries with the goal of eventually limiting how much China backs its private companies. The move on industrial subsidies is part of an effort to modernize global trade rules that’s expected to top the agenda at meetings between trade ministers from the three economies in Paris this week.

In Case You Missed It

Snap Poll | Ukraine’s newly appointed president, Vodymyr Zelenskiy, immediately moved to dissolve parliament and call a snap election yesterday as he seeks to consolidate power following his rapid rise from TV comedian to the country’s top politician. Calling a ballot for as early as summer will be tricky, though, as the current ruling parties staged a tactical move last week to cling to power.

Brexit Plans | Theresa May is weighing up plans to win the support of opposition Labour politicians for her Brexit deal, including potentially a much tighter customs relationship with the EU. The approach is a risky one for May as it could trigger resignations from her Cabinet, but — if she sees it through — it could signal some movement at last in the tedious divorce process. 

Upending Rules | Matteo Salvini kicked off the week by opening fire on several fronts ahead of the EU elections, as tensions within Italy’s populist government escalated over immigration and other issues. Salvini vowed to change EU rules in order to push through his promise of a 15% flat tax for everyone, adding to his threats to challenge the EU spending limits that spooked financial markets.

Austrian Nationalists | Chancellor Sebastian Kurz will appoint technocrats and senior civil servants to replace ministers from the nationalist Freedom Party, who made good on their threat to resign if Interior Minister Herbert Kickl was dismissed. Kickl wouldn’t rule out that lawmakers from his party may now back a vote of no confidence against the chancellor in parliament.

Chart of the Day

Even though the EU is the world’s second-biggest economic power, it has to pay in dollars for most of what it buys. The bloc invoiced 56% of its total imports in the greenback last year, according to Eurostat. The dollar’s dominance is increasingly seen as a problem in Brussels because it limits the bloc’s room to achieve foreign policy objectives. It also complicates the transmission of the European Central Bank’s monetary policy across euro-area financial markets.

Today’s Agenda

All times CET.

• 9:30 a.m. The EU Court of Justice rules in a suit against Hungary by the European Commission accusing the country of violating EU law with new rules that disproportionately restricts investors of agricultural land from benefiting of their investment 
• 12:30 p.m. Huawei holds event in Brussels where the company’s EU chief is expected to address the U.S. Executive order
• Informal meeting of EU environment ministers in Bucharest, Romania continues
• EU’s European affairs ministers gather in Brussels to prepare next EU Summit, discuss EU Commission’s recommendations about how to strengthen rule of law
• EU Commission President Jean-Claude Juncker delivers the opening speech at the 14th Congress of the European Trade Union Confederation (ETUC) in Vienna
• OECD releases Economic Outlook on 36 member countries and other major economies

--With assistance from Natalia Drozdiak, Stephanie Bodoni, Zoltan Simon, Nikos Chrysoloras and Flavia Krause-Jackson.

To contact the editor responsible for this story: Zoe Schneeweiss at zschneeweiss@bloomberg.net, Andrew Blackman

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