Europe will have to decide soon when it’s going to get serious again about bringing deficit and debt levels under control. The EU’s Stability and Growth Pact will be reinstated next year after a pandemic suspension. Member states will need to address the credibility problem they had in the past as they review the fiscal rules. The pact lacks teeth, critics say, because its enforcement mechanism is weak. Sanctions have never been applied, including when Spain and Portugal became the first countries to officially breach the limits. And some governments argue that member states should be able to define their own policies to return to sound finances. These issues will come up today when euro-area finance ministers resume their discussion on the fiscal rules. They will also assess whether the aid-for-reforms crisis tool and post-bailout surveillance system require tweaks.

— Jorge Valero and Kevin Whitelaw

What’s Happening

Eyeing Moscow | European powers are increasingly worried that even if Vladimir Putin doesn’t invade Ukraine he’ll create a “new normal” of heightened tensions. The U.S. and allies are exploring how they’d react to various scenarios, including Russia keeping some troops on the Ukraine border for longer, carrying out cyberattacks in Europe or undertaking activities designed to undermine Ukraine from within.

Cyber Exercise | The EU began testing its cyber-defense responsiveness on Friday with a simulated attack on a fictitious Finnish power company. The six-week exercise comes amid concerns about the bloc’s capabilities to react to a major cyber incident and just as Ukraine fell victim to a real attack. A Ukrainian probe said “all evidence” pointed to Russia being behind last week’s hacking of government websites.

German Diplomacy | In the latest diplomatic push, Germany’s new Foreign Minister Annalena Baerbock travels to Kyiv today to meet with Ukraine’s president and foreign minister before talks tomorrow in Moscow with her Russian counterpart Sergei Lavrov. Before leaving Berlin, Baerbock reiterated that Russian aggression against Ukraine will have consequences while stating that Germany wants “substantial and stable” relations with Moscow. Read our take on her trip here.

Blame Game | Russia isn’t responsible for the energy crisis in Europe, according to Deputy Prime Minister Alexander Novak, who said that Moscow has “delivered significantly more” to clients such as Germany and Turkey that had exhausted their contracted limits. He blamed the EU for moving away from long-term contracts, after the International Energy Agency accused Russia of holding back supplies and driving up gas prices.

Energy Bills | As the market signals high energy prices will persist beyond the winter, the stopgap measures adopted by governments across Europe may not be enough. Public finances are already stretched after two years of pandemic, and analysts predict that more governments will be forced to target their support for specific groups.

In Case You Missed It

Tax Deal | Germany is pushing to implement the global agreement on a minimum tax of 15% for multinationals in January 2023 as countries committed to late last year. According to WirtschaftsWoche magazine, tax officials from the federal and state governments held initial talks this month to start preparing the ground. EU finance ministers will discuss the implementation of the tax deal in the bloc tomorrow.

Serbia Vote | Serbia took a step closer to joining the EU as voters in the Balkan nation overwhelmingly approved a change in the constitution to create a more independent judiciary in line with the bloc’s standards. Serbia has sought EU membership for more than a decade, though the country’s dispute with its former province Kosovo has proved a stumbling block for accession talks.

New Name | There’s growing talk in Europe that the worst pandemic of the past century may soon be known in another way — as endemic. Health experts, however, are preaching caution, saying there’s too much uncertainty about how Covid-19 will evolve, how much immunity society has built up and potential damage if people stop being careful.

No-Vax Fines | Austria will impose fines on those without Covid vaccinations from mid-March after a transition phase that starts in February, Chancellor Karl Nehammer said. Adults unwilling to get inoculated will face penalties of as much as 3,600 euros. Greece today will start fining people 60 and over who aren’t vaccinated — the monthly 100 euro fine will be imposed directly by the nation’s tax authorities.

Climate Rigor | The key lawmaker for the EU’s climate-goals regulation is seeking more stringent tools to ensure that each member states cuts emissions in line with the bloc’s overarching aim of carbon neutrality. Jessica Polfjard, a Swedish member of the EU Parliament, drafted amendments that would require the European Commission to submit a report detailing a net zero-compatible pathway.

Chart of the Day

Germany’s Christian Lindner may be the biggest name to make his debut at a gathering of euro-area finance ministers in Brussels today, but he’s far from alone: His newly appointed counterparts from the Netherlands, Austria and Luxembourg will also make their initial appearances in the club of countries that use the single currency. Tomorrow, they are joined by the eight finance chiefs of the broader EU, four of whom — from the Czech Republic, Sweden, Romania and Bulgaria — are also there for the first time.

Today’s Agenda

All times CET

• Eurogroup meeting in Brussels with a news conference scheduled for 7 p.m.
• c. 1 p.m. German Foreign Minister Baerbock news conference with Ukraine counterpart in Kyiv
• 4 p.m. German Chancellor Scholz, Spanish Premier Sanchez joint news conference after talks in Madrid
• 6 p.m. Commission President von der Leyen, Council President Michel, and French President Macron participate in memorial ceremony for David Sassoli in Strasbourg
• 7:30 p.m. Candidates for European Parliament president announced
• 8 p.m. EU foreign policy chief Borrell briefs European Parliament panel on Ukraine
• EU agriculture and fisheries ministers meet in Brussels
• European Parliament opens plenary session

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