Brussels Edition: A Most Unusual Negotiation

Bloomberg’s daily briefing on what matters most in the heart of the European Union

The U.K. hasn’t even left yet but attention is already turning to the second stage of Brexit negotiations — and it’ll likely look much like the first. There’s time pressure again because Prime Minister Boris Johnson wants a deal this year. The EU says it’s doable, but it won’t be comprehensive. We can look forward to the same old rows about trade-offs and sequencing — sorting out an agreement on fishing quotas before moving on, for example. This won’t be a trade negotiation in the classical sense, with tariffs and quotas, but rather arguments about maintaining a level-playing field, alignment of standards and a back-and-forth on how far the U.K. can diverge. 

What’s Happening
Iranian Tussle |
Europe’s ties to Iran risk becoming collateral damage in the widening confrontation between the Middle Eastern country and the U.S. While Europe’s move to trigger a formal dispute-resolution mechanism is intended to salvage a moribund nuclear deal, the intervention could intensify differences, Golnar Motevalli reports from Tehran.

Libyan Stakes | As efforts to resolve the conflict in Libya falter and the oil-producing nation sinks deeper into civil war, German Chancellor Angela Merkel on Sunday will host leaders from the region as well as Russia and Turkey in a high-risk bid to halt hostilities. Failure would cast further doubt over European leverage in hot conflicts among its neighbors.

Italian Roads | Italy’s government may start talks as early as this week on stripping the country’s main toll-road operator Autostrade of its licenses. The issue has divided the parties in the ruling coalition and its predecessor since the deadly collapse of a bridge in Genoa.

5G Backlash | Is the electromagnetic radiation from next-generation telecoms networks a risk to our health? Although there’s little evidence to support such fears, protests from Bristol to Berlin are stalling the roll out of 5G infrastructure in Europe. Read more about the controversy. 

In Case You Missed It
Chinese Ban |
On the subject of 5G, the U.K. vowed to keep Huawei and other Chinese companies out of “critical national infrastructure.” The EU is finalizing its own “toolbox” of measures to mitigate the risk that 5G equipment providers could use their access to advanced networks to allow espionage or sabotage by non-European governments. 

I Spy | Talking about spies, British and French security agencies shouldn’t be given unfettered access to phone and internet data, according to an adviser to the EU’s top court  who warned that intercepting private communications is only allowed in a “limited and discriminate” manner. Governments are struggling to find a balance between protecting people against terrorist threats and preserving privacy.

German Weakness | Germany’s economy made a slight recovery in the fourth quarter, ending a year in which the country was dragged to the brink of recession. The outlook for 2020 is barely better, with carmakers including Volkswagen under pressure to make good on electric-vehicle investments and manufacturers such as Siemens under pressure to adapt to climate change. At least Merkel did reach a coal-exit deal late last night. 

Fresh Air | A clean-air revolution is unfolding in one of the most polluted cities in the most polluted country in the EU. Here’s how Krakow is turning into an oasis within the fumes near Poland’s southern border.

Chart of the Day
The EU made Poland an offer it may find hard to refuse: some 27 billion euros in investments to encourage Warsaw to jump on the bandwagon and commit to eliminating carbon emissions like its EU peers. The estimated bonanza is part of a 100 billion-euro “Just Transition Mechanism” proposed by the EU’s executive arm to help fund the move to climate neutrality.

Today’s Agenda
All times CET.

  • 9:30 a.m. EU’s top court gives a non-binding opinion in a final bid by Hungary to overturn a 2015 Commission decision to temporarily bar the government from levying progressive taxes on retailers and tobacco companies 
  • 9:30 a.m. EU lower court rules in appeal by Iberpotash against a 2017 EU state-aid decision 
  • Antitrust chief Margrethe Vestager , delivers a keynote speech on “digital development” at the Børsen Impact 2020 conference in Copenhagen
  • MEPs will assess progress made by EU ministers in determining whether rule of law and European values are at risk in Hungary and Poland. A resolution will be put to the vote on Thursday.
  • Trade Commissioner Phil Hogan speaks on transatlantic relations at the the Center for Strategic and International Studies in Washington
Nikos Chrysoloras and Ian Wishart