As Europe seeks to strengthen ties with Asian nations to diversify supply chains and rally support against Russia, the EU will propose a €10 billion investment package to countries in the region at a first ever summit with the Association of Southeast Asian Nations today. The sum will support projects on infrastructure, energy, transport and digital, we’re told by EU officials. Vietnam and donors led by the EU are also due to finalize a $15 billion climate-financing package at the summit. Leaders aim to forge a common approach to current challenges including Russia’s invasion of Ukraine and the assertive behavior of China in the South China sea. - Natalia Drozdiak and Jorge Valero

What's Happening

German Response | Germany plans to respond to the US’s green subsidy push by streamlining how existing EU funds are distributed and increasing incentives at the national level. Their proposal pushes back against calls from countries including France for more aggressive bloc-wide measures in response to the U.S.’s $369 billion climate law, people familiar with the plan tell us.

Grand Coalition | Denmark is forming its first so-called grand coalition since the 1970s, after the longest talks to form a government in the Nordic country’s modern history. The Social Democrats will lead the minority coalition with Mette Frederiksen continuing as prime minister. In a rare turn of events, her party will share power with its traditional opponent, the center-right Liberals as well as the Moderates. She plans to present the cabinet’s political agenda today and new ministers tomorrow.

Russian Shells | The Dutch Green Left and Labor parties want to further limit the use of shell companies in the Netherlands by wealthy Russians and businesses by abolishing trust offices altogether. The two parties came up with a list of measures to make the Netherlands less attractive for criminal money and companies seeking to evade taxes, according to a proposal we’ve seen.

French Pension Fight | French President Emmanuel Macron risks setting off economically paralyzing social upheaval after getting cornered into a battle over the final piece of his reform puzzle: making the French work longer and retire later. Labor and student groups have already put France’s president on notice that they’ll strike over his pension plans.

NATO Defenses | NATO is weighing how to bolster its air and missile defenses to combat threats like the commercially available drones and cruise missiles Russia has deployed in Ukraine. The range of threats the alliance faces has increased over the past decade, with the ability for both state actors like Russia but also terrorist groups to procure and weaponize drones in the thousands, the deputy commander of NATO’s Allied Air Command said in an interview.

In Case You Missed It

Qatar Cash | Belgian police have seized more than €1.5 million ($1.6 million) in cash as part of their expanding probe into a corruption scandal involving the European Parliament and Qatar. The European Parliament voted to remove one of its vice presidents, Eva Kaili, after she was charged in the probe.

Macron Lobbies | Emmanuel Macron is pushing French companies to take an active role in Ukraine’s reconstruction effort after international donors he convened pledged €1 billion in emergency aid to help Ukrainians through the winter. 

Data Deal |  EU regulators took a big step toward ending the legal limbo that imperiled transatlantic data flows worth billions of dollars and sparked threats of an EU withdrawal from social network giant Meta. The US now ensures an “adequate level” of data protection, the commission said as it unveiled proposals to replace a previous accord.

Estonian Push | Estonia’s top diplomat called for the “complete isolation” of Russia’s financial system and an oil-price cap that would cripple the nation’s energy producers, extending punitive measures to cover the whole economy. Urmas Reinsalu said the EU needed to go much further in providing Kyiv with weapons and funding — and isolating Moscow. 

Curbing Extremists | Germany is speeding up efforts to make it easier to dismiss extremists from the armed forces following last week’s raids that swept up members of a far-right group allegedly plotting to overthrow the government. The defense ministry is drafting legislation that will mean members of the military can be ejected if they reject Germany’s constitution and the “free democratic basic order.”

Chart of the Day

A cold week in Europe is sending short-term power prices soaring as grid operators balance supply and pay power stations to keep the region’s lights from flickering. Even with government caps on energy bills across the region, cold temperatures come at a high cost to consumers, who need to spend at already-record prices per unit — now largely set by regulators and governments — to keep their homes warm and lights on. Milder weather is expected across Europe next week, helping to ease demand.

Today's Agenda (All times CET)

• 9 a.m. Commission briefs European Parliament on upcoming summit
• 9 a.m. EU foreign policy chief Josep Borrell speaks at EU-NGO Forum 2022
• 10:30 a.m. Commission briefs European Parliament on EU response to US climate law
• 11:00 a.m. EU-ASEAN leaders arrive for summit in Brussels