The case numbers in Europe are more jaw-dropping than at any point during the pandemic. Germany, France and Italy alone reported almost 800,000 cases on Tuesday, showing that the restrictions that have dominated life on the continent for almost two years are having little effect on slowing the spread of the omicron variant. But with curbs looking porous or even futile, some European governments are pushing for a change of tack: treating the virus as an endemic, rather than a pandemic. With frustration among vaccinated people in the region growing about the slow return to normal life, the policy debate is now starting to move beyond the current wave — with a focus on how to prepare for a potential resurgence later this year, especially if it’s a harder-hitting strain.

— John Ainger

What’s Happening
No Details | Some governments in Europe want to avoid a group-wide debate for now on which sanctions the bloc would pick against Russia in case of an invasion of Ukraine, out of concern it would only advertise potential differences, we’re told. But that’s sparking concern in Washington that the EU is missing a chance to deter Russian aggression. 

Divided Allies | U.S. President Joe Biden acknowledged what his top aides have so far said only in private: that NATO allies are divided about what to do if Russia takes action against Ukraine that falls short of an invasion. During a press conference yesterday, he said he expects Russia to "move in" on Ukraine, but a minor incursion would lead the allies "having to fight about what to do and not do.”

Staying Friends | President Emmanuel Macron said the only way for France to remain friends with the British government is if London respects its post-Brexit commitments. Setting out the priorities of France’s six-month presidency of the EU, Macron told European lawmakers in Strasbourg yesterday that Europe and the U.K. “must get back on the path of trust.” 

Forest Fight | The French EU presidency is kicking off three days of meetings between the bloc’s environment and energy ministers in Amiens today. The bulk of the action is set to come tomorrow and Saturday, when ministers will discuss how to make sure the green transition is fair, but watch out for any views on how the EU can best stop deforestation in other parts of the world.

In Case You Missed It
Bonds Resurface | Borrowing costs are rising. For the first time since before the pandemic, the benchmark rate on a 10-year German government bond climbed above 0%, a sign that investors are beginning to brace for less stimulative monetary policy from the European Central Bank. Does it mark the beginning of the end to the sub-zero world that has dominated in Europe for years?

Merkel’s Rejection | Former German Chancellor Angela Merkel has rejected an offer from United Nations Secretary General Antonio Guterres to help develop and manage global public goods, like oceans and the ozone layer, according to news agency DPA. During a phone call in recent days, she thanked him and let him know it wasn’t for her.

Quick Draw | EU internal market chief Thierry Breton likened the Digital Services Act to regulate online content as “a new sheriff in town,” hammering home his point with a modified clip from Clint Eastwood’s classic “The Good, the Bad and the Ugly.” But for some, his tweet may have backfired, after the parody drew questions whether using the Hollywood snippet itself undercut copyright rules.

Telecom Spat | Deutsche Telekom won an EU court bid for compensation in a dispute over interest on a cartel fine paid when rates went negative. The EU General Court, the bloc’s second-highest tribunal, awarded the company 1.8 million euros in compensation “for the harm which it suffered.”

Chart of the Day

Italian Prime Minister Mario Draghi and French President Macron have endorsed a plan for changing the EU’s fiscal framework. While it’s unlikely to be implemented in full, Bloomberg Economics calculations show that the proposed changes are consistent with a significant loosening of fiscal policy compared with existing rules. They would increase investment spending and help the euro-area economy recover from future shocks.

Today’s Agenda
All times CET.

• 10 a.m. German Foreign Minister Annalena Baerbock holds talks with U.S. Secretary of State Blinken, France’s Le Drian and U.K.’s Cleverly on Russia/Ukraine and Iran
• 11 a.m. Commission President Ursula von der Leyen delivers speech to World Economic Forum by video
• 1 p.m. Baerbock, Blinken bilateral talks followed by joint news conference at around 2:15 p.m.
• 3:50 p.m. Blinken speech at Atlantik-Bruecke event
• 4:30 p.m. German Chancellor Olaf Scholz holds talks with Blinken
• Energy Commissioner Kadri Simson meets Ukrainian Energy Minister German Galushchenko
• European Parliament announces result of Digital Services Act vote