Brussels Edition: Between Osaka and a Hard Place

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

Here’s how Europe decides who’ll lead its key institutions: big countries stitch up a deal on the other side of the world and those cut out of the loop have their arms twisted or are won around with the promise of perks until they fall into line. The horsetrading between parties, countries and ambitious politicians started yesterday in Brussels and is still dragging on as this newsletter hits your inbox. A deal, should they reach one, will leave bruises, bring divisions to the fore and set the tone for the next chapter of the European project. Stay tuned to Bloomberg.com for all the latest news as the drama unfolds.

What’s Happening

Over to Finland | The summit drama marks a tumultuous start for the Finnish presidency of the EU, which officially kicks off today. EU divisions over climate policy, a looming hard Brexit and the threat of U.S. tariffs targeting European cars mean that the Finns will have a lot on their plates during their six-month rotation at the helm of the bloc. 

Brexit Battle | Jeremy Hunt will seek to burnish his Brexit credentials today as he sets out his strategy for preparing the U.K. for a no-deal departure from the EU. The foreign secretary, who campaigned for the “remain” side in 2016’s referendum, will use a speech in London to lay out the plan, with both he and Boris Johnson seeking to lure hardcore Brexiteers in the final stretch of the race to succeed Theresa May.

Italian Tussle | Italy’s cabinet meets today to approve a budget update as it races to avoid a penalty from Brussels over its debt pile. Failure to offer sufficient compromises would most likely mean the Commission will recommend opening a disciplinary procedure for Italy tomorrow. 

 Swiss Exclusion | For Switzerland, it’s the first day of trading without an "equivalence" recognition from the EU for its stock exchanges. The opening bell will ring at 9 a.m. Zurich time and investors will be watching to see whether Europe’s fourth-largest stock market experiences any price distortions or a shortage of liquidity.

In Case You Missed It

Trade Win | Europe and the Mercosur group of Argentina, Brazil, Paraguay and Uruguay struck a free-trade deal after 20 years of talks, notching up a major win in a global market-opening drive that counters the protectionism of Donald Trump. The deal follows groundbreaking EU free-trade accords with Canada and Japan and adds political momentum to negotiations with Australia and New Zealand. 

Turkish Threats | Turkey accused forces loyal to Libya’s eastern commander, Khalifa Haftar, of capturing six of its citizens and threatened to take military action in the conflict-ravaged North African country unless they’re freed. The escalation risks drawing NATO’s second-largest military force deeper into what’s rapidly becoming the Middle East’s latest proxy conflict to control an oil-rich country divided between two rival administrations.

Drink to That | We know it’s still Monday, but it’s the first of July, Brussels is sunny, and after this dreadful summit, it may come in handy. Bloomberg Pursuits has 12 recipes for the perfect summer cocktails. From coconut daiquiri to a refreshing Sandia Fairy, we have one for every occasion. 

Chart of the Day

Even the quickest visit reveals that Venice is no longer a living city, with scores more tourists than actual Venetians crowding its lagoon, bridges and walkways. Today there are just one third as many Venetians as 50 years ago. It’s tourists that are killing it, but the city is addicted to their cash, Chiara Albanese, Giovanni Salzano and Federico Vespignani explain.

Today’s Agenda

All times CET.

• 11 a.m. Eurostat to release May unemployment reading for the euro area 
• Finnish presidency of the EU kicks off
• ESM Secretary General, Kalin Anev Janse speaks at the Annual Meeting of the New Champions, World Economic Forum, Dalian
• EuroWorkingGroup of senior finance ministry officials to discuss EU Commission’s economic policy recommendations for Italy, Greece and other member states 
• Bank of Finland conference featuring ECB Chief Economist Philip Lane, Governing Council members Olli Rehn, Klaas Knot and Pablo Hernandez de Cos, Federal Reserve Vice Chairman Richard Clarida and People’s Bank of China Governor Yi Gang
• European Central Bank Vice President Luis de Guindos speaks in Frankfurt

--With assistance from Alexander Weber.

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

©2019 Bloomberg L.P.