Brussels Edition: The Next Big Thing

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

Forget the miniature euro-area budget agreed on Friday and the Eurogroup meetings of finance ministers which dominated the EU’s agenda for the past decade: it’s all about climate now. Infighting over an EU leaders’ communique on climate change this week and the global differences to be laid bare at a key United Nations’ gathering in Bonn starting today show how environmental policy is fast becoming the next big thing. Arresting — and adapting to — climate change will demand such a profound transformation of economies and such a vast reallocation of resources (in the order of trillions) that it will make all other policy debates appear trivial. Some are finally getting it.

What’s Happening

World Affairs | EU foreign ministers today will seek to prepare their response to Jared Kushner’s anticipated Middle-East peace plan and the prospect of U.S. lawsuits against European companies in Cuba. They will also likely be scratching their heads over U.S. allegations that Iran attacked oil tankers in the Persian Gulf, while Tehran is due to announce a further retreat from its nuclear deal.

Sintra Blues | A sense of unfinished business is likely to overshadow this week’s gathering of European Central Bank officials at the final summer academic retreat of Mario Draghi’s reign. Policy makers and economists will convene in Sintra, a royal holiday resort in southwest Portugal, to celebrate two decades of the euro zone while pondering what tools they have left to defend the economy from a barrage of U.S. trade threats and political strife such as Brexit.

Salvini in D.C. | Italy’s Matteo Salvini is in Washington today and hopes to meet as many of his heroes in the U.S. administration as possible, including  the president himself. The populist deputy premier is eager to cast Italy as Donald Trump’s most reliable ally in Europe, at a time when there’s a vacuum created by Brexit uncertainties and thorny U.S. relations with Germany’s Angela Merkel and Emmanuel Macron of France.

Parallel Currency | Back home, Italian officials keep debating the merits and drawbacks of mini T-Bills, despite EU warnings that anything resembling a parallel currency would be illegal and dangerous. Lorenzo Totaro reports that another parallel currency appears to be floating around already, used by the goodfellas of the Italian mafia, and it’s the old lira.

In Case You Missed It

Car Deal | As Fiat Chrysler and Renault move on from their failed merger talks, a revival of discussions would depend on overcoming at least two major obstacles: “political conditions in France,” and Japanese backing (or lack thereof). Here’s our latest from the derailed mega deal.

Gas Crisis | Ukraine is warning European nations to prepare for a gas crisis amid skepticism it will agree on a new transit contract with Russia before the current deal expires at the end of this year. More than a third of Europe’s gas comes from Russia, and most of that goes through Ukraine’s Soviet-era pipelines.

Banking Lifeline | Finance ministers from Germany and France said Europe is ready to deal with any new banking crisis after an agreement in the wee hours of Friday to install a permanent lifeline to the euro area’s crisis fund. Let’s see if they are going to eat their words.

Polish Goldilocks | Boasting the surging growth of an emerging economy alongside inflation more akin to a developed market, Poland has for years been the envy of Europe. That “Goldilocks” combination, however, won’t be around much longer. Here’s why.

Chart of the Day

The U.S. secured more access to the EU’s beef market after the bloc persuaded Australia, Argentina and Uruguay to cede chunks of an import quota. American farmers will be entitled to almost 80% — or 35,000 metric tons — of the annual EU quota on hormone-free beef over seven years. The deal marks a bit of good news for the U.S. agriculture industry, which has suffered from Trump’s trade fights.

Today’s Agenda

All times CET.

• 8:30 a.m. EU foreign ministers meet in Luxembourg to discuss situation in Sudan, security policy effectiveness; at 1:30 p.m., ministers have working lunch on developments in the Middle East with Jordanian Foreign Minister Safadi. Press conferences due at 3 p.m. and 5 p.m.
• 11 a.m. EU Commission President Juncker in Erfurt, Germany, addresses the Thuringia state parliament; then visits Rasdorf, receives the Point-Alpha-Preis awarded by the Point Alpha Stiftung, and delivers a speech
• 12 p.m. EU trade chief Malmstrom presents Commission’s annual report on trade and investment barriers
• Deputy Italian PM Salvini visits Washington
• French President Macron meets new Ukrainian President Zelenskiy in Paris
• ECB forum starts in Sintra; ECB's Hernandez De Cos speaks in Santander
• Finland’s Finance Ministry publishes its latest economic forecasts, the first from the new government
• German antitrust chief Mundt and EU antitrust economist Valletti speak at London event

To contact the editor responsible for this story: Heather Harris at hharris5@bloomberg.net, Iain Rogers

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