Brussels Edition: Soviet-Style Planning

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

As Soviet as it sounds, the European Union works with five-year plans. This morning, the bloc’s envoys in Brussels begin a three-day marathon session to debate the EU’s strategic agenda for 2019-2024. The five-page draft we’ve seen builds on the platitudes leaders agreed to at their Summit in Romania last month. You would be excused for dismissing it as just another gab-fest if it didn’t feed into discussions for the allocation of the bloc’s next trillion-euro budget — so there’s a lot at stake. Two things stand out in the draft: a fortress-Europe approach to migration and the explicit acknowledgement that climate change is now an “existential threat.”

What’s Happening

Russian Hacking | Ambassadors in Brussels are also due to discuss the hacking of the EU’s embassy in Moscow and the alleged failure of the bloc’s foreign-policy chief to promptly inform member states about it. The EU now has a cyber-sanctions regime in place, and — in theory — it could do something about it, although countries such as Hungary, Italy and Cyprus might balk at more punitive measures targeting Russia. 

Spy Catchers | There’s one EU country banking on Russian spies, well sort of. Estonia is abuzz with talk that Christopher Nolan — the director of “Inception” and “Dunkirk” — will add Tallinn to the list of locations alongside those in the U.K. and Italy for his new movie, Tenet. Little is known about the film’s plot other than its espionage theme.

Swiss Accord | EU diplomats will also discuss today the bloc’s reaction to the Swiss government’s lukewarm endorsement of a framework accord that’ll govern Bern’s relations with Brussels. Still, that positive nod on Friday may be just enough to avert the risk of the country’s equity market being cut off from EU investors at the end of this month. 

Iran Sanctions | The U.S. administration is weighing sanctions against the Iranian financial body set up as a go-between for humanitarian trade with Europe, a move likely to sever the economic and humanitarian lifeline that France, Germany and the U.K. have sought to create for Tehran. The new sanctions, if they take effect, would probably derail faltering European efforts to sustain some trade with Iran by avoiding the use of U.S. dollars or the American financial system.

In Case You Missed It

Moldova’s Revolution | Spying allegations notwithstanding, the EU and Russia appear to be on the same side on an emerging situation in Moldova, one of Europe’s poorest countries. Brussels and Moscow are supporting a coalition in the former Soviet republic to block a party backed by the country’s richest man from coming into power.

Mon Dieu | Cyber attacks against the EU are one thing, but taking on French wine is nothing short of sacrilege. This time, the perpetrator is U.S. President Donald Trump, who reiterated his thinly-veiled threats of taking punitive measures against France’s most cherished export product. 

Tory Leadership | In the U.K., the Conservative leadership race burst to life as candidates set out their visions for delivering Brexit. Meanwhile, the British economy is shrinking and the pound’s depreciating amid concerns that the next prime minister is more likely to lead the country out of the EU without an exit deal. 

Fashion Showdown | If you think the infighting in the U.K. is brutal, you obviously haven’t been following the showdown in the Italian fashion industry. While Giorgio Armani remains a force to contend with and is one of the last creative titans in the sector, can he survive the Gucci onslaught of extravagant aesthetics that has seduced young luxury shoppers? Here’s our take. 

Chart of the Day

European companies aren’t doing enough to slow deforestation, buying commodities such as soybeans and palm oil from sources that aren’t environmentally responsible, according to sustainable trade initiative IDH. As forests shrink to produce timber and make room for crops, there are fewer trees to absorb carbon dioxide and other greenhouse gases.

Today’s Agenda

All times CET.

• 8:30 a.m. European and Latin American and Caribbean (LAC) policy makers speak at Bruegel event as the EU and Mercosur close in on free-trade agreement
• 11 a.m. Scottish First Minister Nicola Sturgeon speaks at Brussels event on “Brexit and beyond — Where next for Scottish-EU relations?”; Sturgeon also meets EU Commission President Jean-Claude Juncker
• 12 p.m. Lunch event at Dutch permanent representation in Brussels on the capital markets union with European Commission official Mario Nava 
• 7 p.m. Juncker and Albanian Prime Minister Edi Rama hold joint press conference
• EU envoys in Brussels discuss alleged hacking of EU’s embassy in Moscow with EU foreign policy chief Federica Mogherini
• EU government envoys meet in Brussels to discuss the bloc’s strategic agenda for the years ahead
• EU diplomats discuss state of relations with Switzerland and whether to extend equivalence regime allowing access to the Swiss stock market for EU-based traders beyond the end of this month 
• French president Emmanuel Macron, German Chancellor Angela Merkel speak at the 100th anniversary of the International Labor Organization
• After Mario Draghi said rate cuts and more QE have been raised in discussion at the ECB, a plethora of Governing Council members speaking today have a chance to endorse or reject the latest revelations: Olli Rehn in Helsinki, Klaas Knot in Amsterdam, Ewald Nowotny in Vienna and Yannis Stournaras in Athens
• Bloomberg’s flagship tech conference Sooner Than You Think kicks off in London today, featuring tech executives from PayPal, Slack, Mozilla, Uber, Google and others as well as officials such as Ireland’s privacy watchdog.

--With assistance from Natalia Drozdiak.

To contact the editor responsible for this story: Vidya N Root at vroot@bloomberg.net

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