Brussels Edition: Greece Reloaded

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

Four years ago today, Alexis Tsipras won a referendum that pushed Greece to the brink of leaving the euro area. It was the apogee of power for the firebrand premier, and it’s been going mostly downhill ever since. Polls suggest that this Sunday will mark the end of his rule in a national ballot that is projected to catapult mainstream leader Kyriakos Mitsotakis to the top. The Greek adventure shows how the realities of office are one way to demystify populism. Whether it’s the best way or not is measured by the cost such policies carry for institutions and the economy. 

What’s Happening

Nuclear Iran | Also on Sunday, the deadline that Iran has handed to European nations to offer economic guarantees in return for not restarting uranium enrichment expires, escalating a crisis that threatens to collapse what’s left of the 2015 nuclear accord that Donald Trump quit last year. Diplomats are telling us not to expect much, as European powers are eager to take this slowly, delaying as long as possible in the hope of a miraculous resolution. 

Week Ahead | In other de-escalation news, EU finance ministers meeting next week are expected to agree (some of them rather grudgingly) with the Commission’s assessment that Italy’s latest commitments are sufficient to avert an immediate launch of an infringement procedure over Rome’s debt. Also next week, we expect quarterly economic forecasts to show whether a rebound is foreseen after the recent disappointing quarters. 

German Malaise | Speaking of weakness, Europe’s largest economy has seen its manufacturing sector weighed down for more than a year amid global trade spats, and data due today is likely to show that German factory orders declined once again in May. The slowdown is having wider ramifications for the euro-area economy as policy makers consider further support measures, with one European Central Bank official stating earlier this week that the days of calling the weakness “temporary” are over.

Free Money | Investors are so keen to find a safe home for their cash that they’re paying the German government to take it, and that makes the nation’s reluctance to borrow increasingly puzzling. Yields are now below zero for 85% of German sovereign debt, but the government continues to reduce its already relatively low deficit, despite a slowing economy that could arguably benefit from a fiscal boost.

In Case You Missed It

Top Jobs | Getting chosen by EU leaders was only part of the job. Ursula von der Leyen and Christine Lagarde still need to jump through a bunch of bureaucratic hoops before they become head of the Commission and the ECB. Here’s a look at the process and the timeline ahead.

Easier Competition | Germany, France and Poland are pushing plans to facilitate big mergers in the EU, after the bloc shot down an intended tie-up this year between Siemens and Alstom to create a European champion to compete with China. A joint paper released by the three countries falls short of suggesting a veto power for national governments over the Commission, but says member states should become more involved in merger policy.

Connected Cars | EU member states scrapped rules proposed by the Commission mandating — soon to be outdated — WiFi technology as the basis for how future connected cars talk to each other. The ruling is a victory for 5G technology as countries around the world prepare for the ultra-fast wireless networks, which will power everything from self-driving automobiles to smart factories.

Quiz Answer | The top European official with a taste for peanut M&Ms is none other than Lagarde, who was known to get out the chocolate threats (in their distinctive yellow bag) and pass them around euro-area ministers when Greek debt discussions threatened to get out of control. This and other juicy details about Lagarde’s tenure at the IMF at the peak of the Greek crisis feature in this summer’s must-read book by our very own Viktoria Dendrinou.

Chart of the Day

Brussels Edition: Greece Reloaded

As Lagarde departs from the IMF, the unwritten agreement that has placed a European in the top job since the institution was created at the end of World War II is unlikely to change. But history also suggests it might be time for someone other than a French national to take the position. Just one other country, Sweden, has filled the position more than once, and that was half a century ago.

Today’s Agenda

All times CET.

  • 10:30 a.m. Commission President Jean-Claude Juncker meets Finland’s Prime Minister Antti Rinne in Helsinki
  • 11 a.m. Informal meeting of ministers responsible for competitiveness in Helsinki
  • EU foreign policy chief Federica Mogherini participates in Western Balkans Summit in Poznan, Poland

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