Brussels Edition: The Plunge

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

On the fourth anniversary of the election that catapulted Alexis Tsipras to power in Greece, the International Monetary Fund and EU creditors are poised to issue (separate) statements on the state of Europe’s most-indebted nation and one-time epicenter of the region’s financial crisis. Unlikely to feature in their analyses is the 98% plunge in Greek bank stocks — whose biggest holders are taxpayers — since Tsipras’s election. Separately, a historic vote in parliament on the Macedonian dispute, which has been delayed to today, is all but sure to squeak through.

What’s Happening

Iran Deal | It’s finally happening — despite the threat of U.S. retaliation. Officials representing the EU’s 28 governments are set to discuss in Brussels today a draft text on a Special Purpose Vehicle to contend with Iranian sanctions, ensuring companies can safely trade in non-sanctioned sectors such as medicines, foodstuffs and some financial business. The bloc’s governments could formally adopt the text at their next regular meeting, as soon as Monday. 

Week-Ahead | Mario Draghi’s testimony at the European Parliament on Monday and eurozone growth data on Thursday are the highlights in a week otherwise dominated by Brexit. The GDP report will reveal the health of the European economy at the end of 2018, when doubts emerged over the sustainability of the current path of expansion. Anything below the 0.2% pace of the third quarter would be the weakest in almost six years.

Brexit Crossroads | Next week will be the most crucial week for Brexit since, well, the last most-crucial week. By Tuesday night we should have a slightly clearer idea of where the U.K. is headed as the British Parliament votes again on the exit deal. No one knows for sure what will happen next if it’s defeated, but a Brexit delay is one of the likelier options. The European Parliament will debate the fallout in Brussels the following day.

Polish Scandal | Poland’s central bank Governor, Adam Glapinski, is being pulled back into a bribery scandal rocking the country’s establishment in this election year. While the governor has until now successfully dodged suggestions of any foul play, he’s increasingly in trouble, as the scandal is undermining the nationalist ruling Law & Justice party’s clean-hands pledge and risks its re-election bid.

In Case You Missed It

Romanian Brokers | Steering EU business for the first time as holder of the bloc’s six-month rotating presidency, Romania is keen to help bolster the fragile trans-Atlantic truce. It will use its presidency to push for negotiations with the U.S. on cutting industrial tariffs as the bloc seeks to keep at bay the threat of American duties on EU cars, the country’s trade minister told us.

Italian Slapdown  | Italy has been picking public fights with France and Germany. In Davos, its government got a dressing down from European colleagues. The Dutch Prime Minister Mark Rutte could barely contain his annoyance over Italy’s budget compromise with the European Commission — the second scathing rebuke by the Netherlands on the matter this week. 

Saving People | Italy was also accused by Germany’s defense minister of sabotaging a migrant-rescue mission in the central Mediterranean Sea, in a sharp escalation of exchanges between Berlin and Rome. At the heart of the flap is Italy’s refusal to allow asylum seekers into its ports, a decision that has upended EU efforts, spearheaded by Chancellor Angela Merkel, to share the burden of taking in migrants.

Macron’s Campaign | French President Emmanuel Macron, the main focus of the populists’ anger, is in campaign mode as he looks to calm passions stirred up by the Yellow Vest protests. Out and about in the French heartlands with a series of marathon meetings to debate local issues like speed limits for cars, pensions, hospitals and fishermen’s rights, Macron may be on to something, if polls since he started are anything to go by. 

Chart of the Day

Sinking water levels on Germany’s industrial rivers probably shaved at least 0.7 percentage point off economic growth last year, adding to a series of shocks that almost tipped Europe’s biggest economy into a recession. JPMorgan economist Greg Fuzesi estimated the impact of the high temperatures and low rainfall that dried up waterways hindering transport and curbing production processes that use river water for cooling.

Today’s Agenda

All times CET.

• EU Commission President Jean-Claude Juncker, EU Council President Donald Tusk, meet Jacinda Ardern, Prime Minister of New Zealand
• Weekly cabinet meeting of Belgian federal government
• EU Competition chief Margrethe Vestager attends the gold medal award ceremony in Dublin and receives a “Gold Medal for Outstanding Contribution to Public Discourse” by the Trinity College Historical Society; participates in the Citizens’ Dialogue at the Trinity College
• 3 p.m. IMF releases statement following first post-bailout monitoring mission to Greece. EU Commission, European Stability Mechanism, European Central Bank also likely to issue a statement following a trip of bailout auditors in Athens 

--With assistance from Ian Wishart, Sotiris Nikas and Craig Stirling.

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

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