With Angela Merkel’s exit looming after September’s national election in Germany, results in two regional votes yesterday don’t bode well for those in her conservative bloc aspiring to succeed her. The German chancellor’s Christian Democratic Union crashed to its worst results ever in Baden-Wuerttemberg and Rhineland-Palatinate, as voters vented their frustration over the government’s handling of the pandemic and the slow pace of vaccinations. The state polls, the first in Germany since the onset of the pandemic a year ago, also reflect a scandal in the CDU over money made in face-mask deals, with the Greens the big winner. In the Netherlands, debate ahead of this week’s national election has also been dominated by criticism of the government’s coronavirus strategy, with protests in recent weeks against the country’s lockdown, including one yesterday broken up by police. 

What’s Happening
Fiscal Taps | Euro-area finance ministers meeting virtually today are expected to pledge to keep fiscal policy supportive through 2022. With output not expected to return to pre-crisis levels until the middle of next year, or even later for some harder-hit countries, finance chiefs largely agree that easing up on spending prematurely should be avoided. But as they look at shifting from blanket support to more targeted measures, they face tough choices.

Astra Woes | AstraZeneca’s European vaccine nightmare is worsening, with several countries halting shots over safety fears as further delivery delays prompt governments around the world to hoard doses. Ireland and northern Italy yesterday joined a growing list of about a dozen countries or regions moving to suspend the shot over concerns about possible side effects from two batches. The drugmaker said there’s no evidence its vaccines increase she risk of blood clotting.

Russian Tightrope | As EU leaders prepare to review the bloc’s strategy on Russia this month, some of the most senior officials in Brussels are privately advocating a shift to a less combative approach. While a rapprochement isn’t in the offing, discussions among the bloc’s top foreign policy officials reveal stark differences between their thinking and that of member states that say the Kremlin’s actions are only getting worse.

Policy Choices | Christine Lagarde will address EU lawmakers this week, just after the ECB pledged to ramp up buying government debt in coming months in a bid to contain rising bond yields. That’s as central bankers from Washington to Tokyo will this week confront the enthusiasm of investors betting on a return of inflation, delivering policy responses ranging from cautious tolerance to interest-rate increases.

Dutch Vote | Dutch Premier Mark Rutte will likely hold onto his job after Wednesday’s election, but the big question is how long it will take to form a ruling coalition among the 37 parties contesting the ballot. Piecing together a government could take months, and the result will dictate the new administration’s top priorities. Here are the five main points to keep an eye on ahead of the vote.

In Case You Missed It
Virus Update | More than 359 million Covid-19 vaccine doses have been administered globally, according to data collected by Bloomberg. In Europe, vaccine production will meet targets as increased supplies from Pfizer offset any shortages in AstraZeneca shots, according to EU Industry Commissioner Thierry Breton, while details on a proposed vaccine certificate will be presented on Wednesday. Here’s the latest.

Fair Share | Austrian Chancellor Sebastian Kurz and his colleagues from the Czech Republic, Slovenia, Bulgaria, Latvia and Croatia demanded EU talks on what they claim is an uneven distribution of vaccines. The issue is expected to be discussed at a summit next week. 

Last Hurrah | Italians rushed to parks, central shopping streets and hair salons before most of the country heads back into lockdown today to try to curb a surge in coronavirus cases to three-month highs. Italy, the European epicenter of the initial outbreak a year ago, has suffered more than 100,000 deaths, the most in Europe after the U.K.

Complacency Risks | The danger of success is that it can breed complacency, and some British officials are getting concerned. With the speed of the U.K.’s inoculation program, there are indications that the public may be giving up on the lockdown. Coupled with dates for the reopening of the economy, that potentially risks another spike in the disease, some medics warn.

Chart of the Day

Australia’s Mathias Cormann was selected to head the OECD, defeating Sweden’s Cecilia Malmstrom in a closely contested race. As secretary general of the Paris-based organization, the former Australian finance minister wins a seat at the top table of international economic diplomacy. Malmstrom was long seen as a front-runner given her experience as EU trade commissioner. The OECD hasn’t had a European leader for a quarter of a century, despite countries from the bloc making up a majority of the membership.

Today’s Agenda
All times CET.

• 1:45 p.m. NATO Secretary General Jens Stoltenberg speaks to EU lawmakers 
• 2 p.m. Informal video conference of foreign affairs and home affairs ministers
• 3 p.m. Euro-area finance ministers meet by video conference 
• The European Parliament’s Environment, Public Health and Food Security Committee will hold a debate on Covid-19 variants with representatives from the European Medicines Agency, the European Centre for Disease Prevention and Control and the World Health Organisation