Crippling Divisions Mar the EU’s Credibility: Balance of Power

(Bloomberg) --

The protracted fight over who to name for the European Union’s top jobs is becoming a nightmare. And it couldn’t come at a worse time, with a hard Brexit looming along with the threat of U.S. tariffs on cars.

After almost 20 hours of inconclusive talks yesterday, German Chancellor Angela Merkel said her hope was that, after a bit of sleep, EU leaders meeting in Brussels would find a solution. It’s hard to see how.

Eastern member states joined with Italy and even some of Merkel’s center-right allies to shoot down the most promising package, built around Dutch Socialist Frans Timmermans. While leaders will doubtless find a compromise, the struggle has exposed divisions that show how difficult EU business will become as the new commission tries to wrestle with enemies inside and outside the bloc.

The wrangling, a result of political fragmentation from May’s EU parliamentary elections and following a decade of battles over issues ranging from Greece to migrants, now puts the EU’s credibility in question.

It’s a risk that’s front and center for all of the bloc’s leaders, with French President Emmanuel Macron reminding his counterparts yesterday that “we give an image of Europe that’s not a serious one.”

Global Headlines

Tipping point? | There’s one obvious winner from last night’s violent protests in Hong Kong: Beijing. The demonstrators who succeeded in halting a controversial extradition bill now risk losing support and boosting Carrie Lam, the pro-Chinese leader they despise. Police stepped in to clear the streets with tear gas after protesters wearing hard hats and protective goggles smashed their way into the Legislative Council, spray-painting “HK IS NOT CHINA” on the walls and draping a colonial-era flag over the dais.

Huawei pressure | The U.S. semiconductor industry spearheaded an extensive lobbying campaign to convince President Donald Trump to ease his ban on American sales to Chinese tech giant Huawei, Jenny Leonard and Ian King report. It argued the prohibition threatened national security because it jeopardized the sector's success by showing that U.S. companies are unreliable partners and forcing foreign firms to seek components elsewhere.

Off balance | Democratic presidential contender Bernie Sanders insists that higher taxes needed to pay for his Medicare-for-All proposal would save people money overall by lowering health costs. But, as Laura Davison reports, for many Americans, that wouldn't be true. Households that spend a lot on health care would be most likely to see the benefit, while the 181 million with employer-sponsored coverage could miss out. Even those receiving Medicaid could pay more.

Dividing line | The two candidates vying to become Britain’s next prime minister travel to Northern Ireland today, where they can expect to be grilled over how to solve the question of the Irish border, a key issue holding up a Brexit agreement. Meanwhile, Jeremy Hunt said he wouldn't suspend Parliament to force through a no-deal Brexit, demarcating his position from Boris Johnson's as the Tory rank-and-file decide which man to back.

Rainy day cache | Turkey has started stockpiling crucial spare parts for American-made weapons in case Congress sanctions it over a contentious Russian missile purchase, Selcan Hacaoglu reports. The U.S. has been threatening penalties since 2018 after President Recep Tayyip Erdogan decided to buy the S-400 missile-defense system, a competitor to American-made Patriots.

What to Watch

• Robert Mueller’s grudging appearance before House committees this month represents the best chance Democrats have to revive their stymied probes into the president's activities, Billy House reports.
• Australia’s parliament resumed today for the first time since May’s election, with Prime Minister Scott Morrison under pressure to turn the country’s weakening economy around.

And finally ... Crown Prince Mohammed bin Salman’s move to include healthy living in his plan to transform Saudi society has provided an unexpected boost — to Scotland's salmon industry. As Rodney Jefferson and Donna Abu-Nasr report, the aim is to change dietary habits in a place where lamb dominates and hypertension, heart problems and diabetes affect one in five people.

--With assistance from Kitty Donaldson, Karl Maier and Kathleen Hunter.

To contact the editor responsible for this story: Ruth Pollard at rpollard2@bloomberg.net, Michael Winfrey

©2019 Bloomberg L.P.