Brussels Edition: In Europe’s Defense

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

Not least among the EU policies annoying Donald Trump these days is a plan for greater defense cooperation in the bloc. The U.S. worries the push will undermine NATO and put American companies at a disadvantage in the hunt for weapons deals. Member state envoys will debate the thorny issue today, delving into the kinds of restrictions that might be placed on third-country participation in defense projects and what to do about companies registered in the bloc but owned by outsiders. It’s not only U.S. defense giants who will be watching developments closely — those in the EU’s soon-to-be ex, Britain, could also be affected. 

What’s Happening

Fort Trump | For all the transatlantic animosity, there’s at least one EU country that Trump is getting cozier with: Poland. President Andrzej Duda visits the White House today, where the two leaders are expected to unveil plans to increase American military presence in the former Communist-bloc country. Poles see this as a deterrent to Russian aggression, but the Kremlin may consider it a provocation.

American Visitors | The U.S. president’s niceties end there. Just this week he took aim at French wine and then yesterday, in response to a Bloomberg opinion piece, blamed overtourism in Europe on the dollar’s relative strength. He just may have jinxed it for American travelers; a recent change to credit-card swipe fees in Europe means they may lose the perk of being exempt from foreign-exchange fees during their stays.

Not Ready | While the contest to succeed Theresa May is in full swing, the European Commission will once again remind member states and businesses that they must prepare for all Brexit outcomes. A draft of a communication being presented today identifies insurers and payment providers as being partially unprepared for a potential no-deal divorce at the end of October.

Italian Surprise | Italy is determined to cut its deficit and avoid an EU infringement process over the state of its finances at all costs — at least that’s what Prime Minister Giuseppe Conte and Finance Minister Giovanni Tria say. But Italian media report that the populist strongmen running the coalition government are getting increasingly exacerbated by the assertive stance of the two moderates and could have an unpleasant surprise in store for Brussels. 

In Case You Missed It

Swiss Stocks | With less than three weeks before Swiss stock exchanges are set to lose access to investors in the EU, the bloc is keeping the pressure on Bern to approve an accord governing relations with the union. Swiss officials are expected to travel to Brussels to try to finalize a deal before a crucial EU Commission meeting on June 18. 

Android Options | Google is still grappling with how to give phone users the chance to opt for competing browser and search apps in the wake of an EU order to boost competition, according to the bloc’s antitrust commissioner, who discussed the issue with an apparent dose of sarcasm.

Judging Hungary | Hungary’s parliament refused to oust the head of the court administration, cementing in power Prime Minister Viktor Orban’s appointee who was criticized for abusing power. The vote means Hungary’s premier is ring-fencing the judicial overhaul carried out in the last decade that brought his nation to a standoff with the EU. 

Spanish Obstruction | Pedro Sanchez kicked off a round of talks with rivals in a bid to remain Spain’s prime minister as parties to his right repeated pledges to obstruct him. The conservative People’s Party and liberals Ciudadanos insisted on stonewalling Sanchez’s efforts, complicating his ability to govern.

Chart of the Day

Amid escalating protectionism around the globe, investors haven’t been this bearish on the state of the export-oriented German economy since 2010, according to a Sentix index. The result indicates recession is “therefore just around the corner.” 

Today’s Agenda

All times CET.

• 11:30 a.m. European Council President Donald Tusk and North Macedonia President Stevo Pendarovski to give joint press statement
• EU foreign policy chief Federica Mogherini meets North Macedonia’s Pendarovski
• Envoys meet to discuss terms for third-country participation in bloc’s joint defense projects
• Commission President Jean-Claude Juncker to give keynote at EPP Group Study Days in San Sebastian, Spain
• Budget Commissioner Guenther Oettinger to speak at German-American transatlantic conference in Berlin
• ECB President Mario Draghi and IMF Director Christine Lagarde among speakers at conference in Frankfurt
• Polish President Andrzej Duda visits White House
• EU Commission discusses euro-area reforms, non-performing loans, hard-Brexit preparations and disinformation

--With assistance from Alexander Weber.

To contact the editor responsible for this story: Daliah Merzaban at dmerzaban@bloomberg.net, Chris Reiter

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