As she prepares to leave the stage, Angela Merkel is worried about what some EU leaders and lawmakers are up to. She’s concerned their push against Poland leaves no room for compromise and could end in disaster. She sees a possible worst-case scenario with Poland exiting the EU, as well as authoritarianism bolstered in a country that would become more subject to outside influences, according to a person familiar with her thinking. Dutch Prime Minister Mark Rutte wants a harder stance, insisting the EU should be focused on democracy and the rule of law. Speaking on behalf of the Benelux countries, Belgian Foreign Minister Sophie Wilmes says “opening an infringement case is a given, but it’s not enough.” We’re told that European Council President Charles Michel held calls with several leaders in recent days, including Poland’s Mateusz Morawiecki, in which he said he wants to avoid talking about Poland at this week’s summit — though he expects it will be brought up anyway. The gathering in Brussels will come only days after Morawiecki used an appearance before the European Parliament to accuse the EU of overstepping its authority and indulging in “financial blackmail.”

— John Follain

What’s Happening
Russian Gas | Russia is signaling it won’t go out of its way to offer European consumers extra gas to ease the energy crisis unless it gets something in return: regulatory approval to start shipments through the controversial Nord Stream 2 pipeline. Russia wants German and EU approval to begin using the pipeline to Europe, people close to state-run gas giant Gazprom and the Kremlin tell us. 

Brexit Talks | A new round of post-Brexit talks started yesterday in Brussels, with European Commissioner Maros Sefcovic and British Brexit Minister David Frost due to touch base — in person or virtually — at the end of the week, an official told us. Expect negotiations, whose focus includes unpacking what the Commission proposals mean in practice, to alternate weekly from now on between Brussels and London.

Potash Sanctions | Belgium is trying to water down EU sanctions on Belarus’s potash industry, in a bid to ease difficulties companies within the bloc face in implementing the measures, according to a letter we’ve seen. Diplomats in Brussels have written to other EU member states, requesting a loosening of restrictions on Belarusian potash to allow for changes to the potassium content of fertilizer imports.

Fiscal Workload | The Commission launched a public consultation on the Stability and Growth Pact, a fiscal framework that dictates countries’ debt and deficit levels. The EU, which suspended the SGP in March 2020 to give member states the flexibility to react to the Covid-induced recession, is considering new exceptions to allow for climate-linked investments. 

Flexibility Meaning | European Central Bank officials seeking “flexibility” for their future stimulus plans can’t quite agree on whether that means room for maneuver — or room for potential expansion. We take a look at how the discussion is developing before a likely decision in December. 

In Case You Missed It
City Prospects | The City of London will prosper outside the EU, British Prime Minister Boris Johnson said in an interview with Bloomberg Editor-in-Chief John Micklethwait. The premier noted that job losses and disruption to capital flows have been lower than feared. He expects Britain and the EU will work together to protect their intertwined financial markets.

Power Stripping | Russian President Vladimir Putin will participate in next week’s Group of 20 summit in Rome via videolink, the Kremlin said. He told Italian Prime Minister Mario Draghi that the pandemic has worsened in Russia and that it’s more appropriate for him to remain because attending the summit would require a significant number of officials to travel with him, according to a G-20 official.

Power Stripping | Czech lawmakers began the process of relieving President Milos Zeman of his duties due to poor health, a development that may smooth the way for the opposition to unseat his ally prime minister. Zeman, 77, was rushed into intensive care on Oct. 10, a day after a group of center-right political forces defeated Premier Andrej Babis’s party and vowed to lead a new ruling coalition.

Turkey Summons | Turkey summoned the ambassadors of 10 countries, including the U.S. and Germany, for demanding the release of Osman Kavala. The philanthropist and businessman remains jailed four years after he was charged with attempting to overthrow the government. The rare move underscored how the case is seen as a key test of the independence of Turkey’s judiciary and the rule of law. 

EU Jobs | Commission President Ursula Von der Leyen is getting scrutiny from the EU’s ombudsman over officials who quit for public-sector jobs. The ombudsman says regulators should be checking more carefully for potential conflicts of interest, citing officials who have left the competition unit for law firms that help companies fight off antitrust investigations.

Chart of the Day

Shareholders are treating European asset managers with caution amid signs the industry is facing a regulatory crackdown on its claims around environmental, social and governance investing, according to a fresh analysis. Deutsche Bank’s asset management arm DWS, investigated in the U.S. and Germany, has denied it misstated the scope of its ESG business and has yet to recover from a 14% share-price slump triggered by an investor panic.

Today’s Agenda
All times CET.

• 9:05 a.m. European Parliament debates the agenda for the EU leaders summit and the upcoming U.N. Climate change conference in Glasgow
• 3 p.m. NATO Secretary General Jens Stoltenberg delivers press conference ahead of North Atlantic Council meetings
• 4 p.m. Commission President Von der Leyen, Council President Michel, Slovenia’s Janez Jansa participate in the Tripartite Social Summit via video conference
• Eurostat releases inflation data for September
• Energy Commissioner Kadri Simson delivers a speech at pre-COP26 event Race to Zero Europe