Brussels Edition: UK takes heat

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

Boris Johnson sparked a backlash both at home and in Brussels with his latest Brexit gambit. Among his own Conservative Party lawmakers, he’ll find plenty of skeptics uneasy about breaking international law by overriding the Northern Ireland Protocol. “There is frustration about why now and how we are proceeding,” according to Stephen Hammond, a former cabinet minister. Johnson is also infuriating many of the Northern Ireland businesses he’s claiming to be defending. Today, the EU’s chief Brexit negotiator, Maros Sefcovic, will brief ambassadors on the bloc’s detailed response — including potentially unfreezing infringement proceedings against the UK and suspending the trade agreement. But he’ll also continue to plea for a negotiated solution, fully aware of Johnson’s precarious political position in pushing a controversial bill he may not have the votes to pass.

What’s Happening
Hollow Arsenal |
Russia is scraping across the country to find manpower and weapons, including old tanks based in the Far East, having used up much of its military capacity in the first 100 days of its invasion of Ukraine, we’re told. Moscow may be only a few months from needing to slow operations for a major regroup. Read more about Russia’s troubles.

Immense Destruction | Ukraine has suffered $4.3 billion in damage to farmland, machinery and livestock as a result of Russia’s invasion, according to a report from the Kyiv School of Economics. About half of the “already immense” destruction from the war comes from pollution caused by mines and unharvested crops, the report said. Almost a quarter of the total — $926 million — accounts for damage done to farm machinery due to military activity and occupation.

Cow Burps | The EU will struggle to meet its methane emission targets unless it reduces the amount of cattle in the region, according to a new study. Together with more than 100 countries, the bloc pledged last year to help reduce discharges of one of the most potent greenhouse gases by 30% by 2030, but tackling leaks from gas and oil facilities will only take it so far. To achieve the goal, citizens may need to change their diets.

Carbon Shield | The EU should strengthen a mechanism to prevent excessive carbon price spikes as part of its reform of its emissions trading system, according to a French proposal we’ve seen. Paris is attempting a compromise that would ensure companies avoid sharp moves in prices as member nations sign off on a plan for greater pollution reductions.

On the Roof | Fiat’s legendary test track on the roof of its former Lingotto factory in Turin is ready for its new life. Visitors to the new Pista 500 will be able view art installations or even do yoga among meadow-like beds of flowering grasses. And, surprisingly, cars will once again make their rounds on the roof on a test track for electric vehicles.

In Case You Missed It
Dollar Dominance
| The ECB said it’s doubtful that sanctions against Russia will diminish the importance of the US dollar and the euro in the global financial system, as some have speculated. It also said in a report yesterday that the international role of the common currency had remained stable last year, and that a more complete euro area would help.

Israeli Ties | The EU continues to explore two major energy projects with Israel as it works to reduce its reliance on Russian fossil fuels. One is a power cable connecting Israel with Cyprus and Greece, the other a pipeline for natural gas and hydrogen in the eastern Mediterranean, Commission President Ursula von der Leyen said yesterday in Israel. She visits Egypt and Jordan today.

Gas Rebuttal | Two crucial committees of European lawmakers rejected labeling gas and nuclear power plants as green energy sources, marking a win for climate campaigners and environmentally conscious investors who have protested against the commission's plans to use them as transitional technologies. The process now moves to a vote in the wider parliament next month, where a similar result would torpedo their inclusion.

Drug Issues | Fighting drug problems is getting more complex as innovation leads to the development of different substances and new trafficking routes. The EU is facing a situation “characterized by high availability and greater diversity in patterns of drug consumption,” Alexis Goosdeel, who runs the European Monitoring Centre for Drugs and Drug Addiction, said in a report yesterday.

More Shots | The EU will buy almost 110,000 doses of a monkeypox vaccine, Health Commissioner Stella Kyriakides said yesterday. The jabs will be available quickly to member states most in need and delivered from the end of June.


Chart of the Day

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The ECB is expected to raise interest rates in quarter-point increments following a hike of twice that size planned in September, according to economists we surveyed. The central bank has pledged to lift borrowing costs for the first time in more than a decade in July, and respondents said it will increase them further at each of this year’s three remaining meetings. But, after the larger move policy makers have penciled in for September, they’ll revert to smaller steps, including two in the first half of 2023 — in February and June — the poll showed. Learn more here.

Today’s Agenda
All times CET.

  • 11 a.m. NATO Secretary General Jens Stoltenberg holds news conference ahead of defense minister meetings

  • 12 p.m. Von der Leyen makes press statement with Egyptian President Abdel Fattah Al-Sisi

  • 5 p.m. Czech Prime Minister Petr Fiala presents priorities of his country’s EU presidency

  • WTO ministerial conference in Geneva

— Katharina Rosskopf
 
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