Brussels Edition: Wrangling Over a Response

Welcome to the Brussels Edition, Bloomberg’s daily briefing on what matters most in the heart of the European Union


After failing this week to agree on a joint plan to mitigate the economic impact of the coronavirus pandemic, EU finance ministers will resume talks today in an effort to bridge their differences. Chief among them: the terms attached to credit lines from the euro-area bailout fund. With thousands dying and many more sickening each day, the bloc can scarcely afford another impasse, let alone one over just a few words. But domestic political pressures, as ever, loom large and could ultimately threaten Europe’s ability to successfully manage the virus fallout.

What’s Happening

Virus Update | In Spain, fatalities and cases rose to the highest in four days, dashing hopes of a sustained reduction from last week, while Italian new cases climbed to a three-day high, complicating government plans to start easing the lockdown. The EU said 11 cruise ships carrying a total of 8,000 passengers will arrive at ports in the region over the next few days, and recommended an extension travel restrictions until May 15.

How to Reopen? | European leaders are starting to plan for looser restrictions nationally and will be hoping their plans go more smoothly than their implementation. Italy is taking the lead, reviewing an approach that foresees the full return to normal life taking months. A draft EU document, meanwhile, said that any relaxation of confinement will trigger new cases. This is how the whole thing may end.

Apocalypse Now | As European officials slug it out via teleconference, the economy is hurtling toward a severe recession. France’s economy shrank the most since World War II in the first quarter and is set to contract by 6% this year. In Germany, March car sales plunged nearly 40% from a year earlier and leading research institutes predicted a contraction of almost 10% in the second quarter. The picture is not much better beyond Europe’s borders.

Banking Pleas | Banks in Europe are testing officials’ pledges for open-ended action to counter the economic impact of the virus with a new round of demands for regulatory relief. Financial firms are asking the ECB for permission to strip out some of the recent wild swings in stock and bond prices when calculating the risks their trading operations face, meaning they could set less aside for potential losses.

Spanish Crisis | Spain’s spiraling health crisis risks morphing into a political one for a Prime Minister Pedro Sanchez, who is finding little support in the country of 47 million for the government’s strategy to tackle the virus. Here’s a picture of what it’s like in neighborhoods across the country.

In Case You Missed It

Tracking Apps | With the race on to come up with mobile phone apps to track people who’ve been exposed to the coronavirus, the EU is set to draw up an approach to help make data from individual countries more comparable — perhaps by even developing a single app across the bloc. What does it mean for your privacy?

Lagarde's Call | ECB President Christine Lagarde again urged European governments to step up and deliver a strong fiscal response to address the economic fallout from the virus. “Solidarity is in fact self-interest,” she wrote in a newspaper op-ed published across the region.

Takeover Shield | The German government agreed to tighten protections for companies from foreign takeovers, enabling the blocking of acquisitions that present “potential interference,” a lower threshold than before, which envisaged a security threat. It comes as the economy takes a battering, while the EU has also issued guidelines on enacting bloc-wide rules.

Polish Judges | Poland was ordered by the EU’s top court to “immediately suspend” its controversial disciplinary regime for judges as the bloc continues to face democratic challenges from Hungary to the Czech Republic. The Polish ruling Law & Justice party is attempting to discipline judges and pass legislation cracking down on magistrates who question the government’s actions.

Jumanji Cities | Across the world, animals are reclaiming the space vacated by humans as they shelter indoors. In Barcelona, wild boar, a familiar sight for citizens on the city’s outskirts, have made their way to Diagonal Avenue, a major thoroughfare, while cows maraud across Corsican beaches. Check out the amazing photos.

Editor’s Note: We will be taking a break for the long weekend. Your next Brussels Edition will be published on Tuesday.

Chart of the Day

The coronavirus pandemic could cause a deeper collapse of international trade flows than at any point in the postwar era, the World Trade Organization said. In its pessimistic scenario, the volume of global goods trade could drop by as much as 32% this year with the possibility of a 24% increase next year. In this situation, world GDP could shrink by as much as 8.8% in 2020 and expand by 5.9% in 2021.

Today’s Agenda

All times CET.

  • 5 p.m. Video conference of EU finance ministers

The American-Hellenic Chamber of Commerce organized on Tuesday, June 2, a virtual roundtable discussion, entitled “East Med the trilateral partnership (Greece-Israel-Cyprus) and its role in regional energy security and economic cooperation in the age of Covid-19 and beyond”.

Speaking in the virtual roundtable discussion, Cyprus Minister of Energy, Commerce and Tourism, Georgios Lakkotrypis underlined that Cyprus, Greece and Israel, share common principles, as well as a joint vision for the future. As he said, the Cyprus-Greece-Israel trilateral cooperation instigated further multilateral alliances in the region.

Minister Lakkotrypis expressed the view that the three countries’ determination to find joint solutions reinforces the confidence of the energy companies, which intend to invest in the energy field of the region. As he said, following the approval of the intergovernmental agreement for the construction of the EastMed pipeline by the Greek Council of Ministers, the Cyprus House of Representatives will soon proceed to its approval too.

During the discussion Lakkotrypis underlined that the Republic of Cyprus remains firm in its will for a solution to the Cyprus Problem, calling repeatedly on Turkey to return to the negotiation table. Turkey’s negation to discuss the open issues, as well as its unfounded invocation of the international Law, proves that its accusations about the Greece-Cyprus-Israel trilateral cooperation are also unfounded, Lakkotrypis said.
On his part, Greek Minister of Energy and Environment Kostis Hatzidakis expressed the view that while the Greece-Cyprus-Israel cooperation is focused on the fields of natural gas and electric energy, the three countries could further their cooperation in the environmental and the green agenda issues.

As regards Turkey’s recent moves in the energy field, Hatzidakis stressed that the Greek government remains decisive against Turkish provocativeness, while making clear that the Greece-Cyprus-Israel alliance is not aimed against any country, but rather promotes regional stability and peace.

During his speech, Israeli Minister of National Infrastructures, Energy and Water Resources Yuval Steinitz said that the energy field plays a decisive role in the Greece-Cyprus-Israel trilateral cooperation. He also expressed the view that the EastMed pipeline –while being an ambitious project– represents the best and most secure solution for the transport of natural gas. EastMed constitutes a long-term investment, the construction of which is absolutely viable, Steinitz suggested.

US Assistant Secretary of State for Energy Resources Francis Fannon speaking at the roundtable discussion, stressed the importance of ending all provocative actions that could undermine the investors’ trust and the political stability in the region. Concerning Turkey’s recent actions in Cyprus’ EEZ and on the possibility of attempting oil explorations in the Greek Continental Shelf, Fannon said that according to the international law all islands have an EEZ and a Continental Shelf. “We are not commenting on future actions that may happen or not, but we are encouraging states to stop provocative actions, behaviors and statements. Turkey is an important country and we want that it preserves its Western orientation”, Fannon said.



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