The EU’s top diplomat faces some rough treatment in the European Parliament today over his trip to Moscow in the wake of Russia’s jailing of opposition leader Alexey Navalny. Josep Borrell choosing this moment for the first visit by an EU foreign-policy chief to Moscow since 2017 was always going to provoke objections from eastern member states wary of any outreach. Russian Foreign Minister Sergei Lavrov flagrant exploitation of a joint press conference with Borrell on Feb. 5 for propaganda purposes didn’t help. Behind all the noise lie two quiet truths: the EU has a penchant for realpolitik, and a desire for as much first-hand information as possible about President Vladimir Putin’s Russia before the bloc’s leaders discuss ties with the country — and possibly more sanctions against it — in March. 

What’s Happening
Tit for Tat | While on the subject of Russia, several European governments expelled diplomats from the country in retaliation for similar actions by the Kremlin last week. Russia said the moves by Germany, Poland and Sweden were unjustified and unfriendly.

Lagarde’s Call | ECB President Christine Lagarde pledged monetary support for the economy amid extended coronavirus lockdowns and said governments must do the same. While the outlook is highly uncertain, the ECB chief noted that the start of vaccination campaigns across the euro area “provides the eagerly awaited light at the end of the tunnel.”

Fast Start | In under one week, Mario Draghi has managed to bring together warring parties from across the political spectrum in Italy, boosting financial markets and projecting a new image for the country. In many ways, that’s more than his predecessor managed in over two years.

Grand Plans | Meanwhile, Bloomberg reports that Italy’s next prime minister has told lawmakers he will push for a common euro-area budget after getting the job. Draghi plans to make that a priority goal for his government.

Tesla Effect | Elon Musk surprised the automotive establishment when he selected a small town in eastern Germany for Tesla’s first European car factory. The politician who drew him there tells us in an interview that he now wants to turn the region into a major electric-vehicle supply hub.

In Case You Missed It
Brexit Blow | Intercontinental Exchange plans to move its 1 billion-euro daily market for European carbon-emissions contracts to the Netherlands from London in a blow to the U.K.’s attempts to build a green finance powerhouse after Brexit. 

Restrictions Continue | Germany needs to keep coronavirus restrictions in place for the time being as new infections are likely to remain above the government’s target in coming days. The country’s contagion rate is “coming down and it’s coming down in an encouraging way” but not enough to unwind current restrictions next week, Health Minister Jens Spahn said.

No Go | Austria took the unusual step of warning against domestic travel to the Alpine province of Tyrol after virologists detected surging infections from a more vaccine-resistant coronavirus mutation. Almost 500 confirmed and suspected cases of the South African mutation have been detected in the region, turning it into the new European epicenter for the variant.

Financing Pharma | The French government said it will provide another 300 million euros to quickly increase the production of vaccines and treatments for Covid, extending its previous pledges of state aid for the pharmaceutical sector. 

Looking Around | Intesa Sanpaolo may consider small acquisitions in wealth management and private banking in Europe to strengthen some of its core activities. Italy’s biggest lender could consider buying “boutique” operators, small players or teams of private bankers in locations where there are “a lot of Italians,” Chief Executive Officer Carlo Messina told Bloomberg TV.

Chart of the Day

ECB President Lagarde has presided over an unprecedented flood of monetary stimulus in the euro area and, as a consequence, conditions in financial markets have never been looser. With banks failing to pass on low borrowing costs in full, the supply of and demand for credit have taken a hit. The Governing Council may be forced to increasingly focus on the central bank's targeted longer-term refinancing operations to incentivize lending, especially if demand remains weak as the recovery advances, according to Bloomberg Economics.

Today’s Agenda
All times CET.

• 3 p.m. EU Foreign Policy Chief Borrell discusses the political turmoil in Russia, including Navalny’s case and country-wide protests, with EU lawmakers
• 4:45 p.m. Joint press point after meeting between NATO Secretary General Jens Stoltenberg and Ukraine's Prime Minister Denys Shmyhal at NATO Headquarters
• EU Parliament likely to condemn the rollback on abortion rights in Poland