Presented by Fair Standards Alliance
Brussels Playbook
By SUZANNE LYNCH
with ZOYA SHEFTALOVICH
GOOD WEDNESDAY MORNING. Suzanne Lynch in the driving seat today gearing up for a busy day in Brussels, with the European Commission due to announce a flurry of initiatives on defense and financial services ahead of Thursday’s EU summit.
Europe — and the world — are still grappling with the outcome of Tuesday’s much-anticipated phone call between U.S. President Donald Trump and Russia’s Vladimir Putin, which failed to yield a full 30-day ceasefire. Ukrainian President Volodymyr Zelenskyy said last night that it was clear Moscow was opposed to a ceasefire; he hoped to speak to Trump to find out more details of what he and Putin discussed. We’ll be watching for any further response from the Ukrainian leader when he meets Finnish President Alexander Stubb in Helsinki today.
I’ll be back in the hot seat Thursday morning.
DRIVING THE DAY: EU’S DEFENSE BAZOOKA Share on Twitter Share on Facebook Share on Linkedin Share on Handclap
REARM UPDATE: Two weeks after European Commission President Ursula von der Leyen revealed her ReArm Europe plan, the EU’s executive body will today unveil new details on how the proposal will work as Brussels tries to up its defense game.
**A message from the Fair Standards Alliance: Don’t Throw EU Industry Under the [omni]Bus. Industry in Europe urges EU co-legislators to disapprove the Commission’s intention to withdraw the regulation on standard essential patents (SEP Regulation): without it, innovative businesses stand no chance at fair access to essential infrastructure such as 5G, Europe’s strategic dependencies will continue deepening.**
Playing it safe: At the heart of the proposal is a €150 billion loan scheme known as SAFE. According to a draft of the proposal seen by my defense and finance colleagues, the Commission will open the door to foreign allies such as South Korea, Japan and potentially the U.K. and Canada to play a role. (While loans will only be available to EU countries, friendly states from outside the bloc can take part in joint weapons purchases.)
Keeping it in the family: In a nod to France, which has argued that EU defense initiatives should be limited to European companies, the Commission is offering preferential treatment to European companies, Gregorio Sorgi, Jacopo Barigazzi and Giovanna Faggionato report. The proposal requires that a minimum 65 percent of funds must be spent on weapons components manufactured in Europe and Ukraine.
What to watch for: Any role for the U.S. or its defense companies. With Europe confronting the reality that Washington is not the security partner it once was, some countries are quietly questioning America’s trustworthiness. Just this week, Portugal said it’s reconsidering purchasing F-35 jets given Trump’s policy shifts.
Loosening the fiscal rules: Amid the blizzard of announcements this lunchtime, the Commission will also outline how countries’ military spending will get special treatment under the EU’s budget rules. Defense spending up to a maximum of 1.5 percent will be exempt each year. But as our FS team reports, the Commission will propose a four-year limit to that.
Speaking of which: Germany followed through on its plan to throw budgetary caution to the wind, with the parliament on Tuesday passing a landmark bill that paves the way for billions of euros in debt-financed spending on infrastructure and defense. The upper house will sign off on Friday. The move marks a U-turn in the fiscal policy of the EU’s biggest economy after years of self-imposed austerity under a debt brake.
Whiter shade of pale: Also out today is the Commission’s defense white paper, which may get lost in all the noise. Though it had been due to be unveiled with much fanfare, many of the proposals have already been announced given the rapidly developing events in Ukraine.
Damp squib: One point of contention is common debt, with several member countries vehemently opposed to any idea of eurobonds — a topic that could make for some tetchy discussion points among leaders Thursday.
READING PUTIN Share on Twitter Share on Facebook Share on Linkedin Share on Handclap
THE BARE MINIMUM: Tuesday’s much-anticipated phone call between Trump and Putin lasted 90 minutes. But it didn’t deliver on a key objective of the U.S. — making the shooting stop, as Jamie Dettmer writes. Instead, Putin agreed to stop hitting Ukraine’s energy infrastructure for 30 days. Shortly after the call, Russia launched a drone assault over Kyiv and other Ukrainian cities.
New round of talks: Trump’s envoy Steve Witkoff told Fox News on Tuesday that he laid the ground in two face-to-face meetings lasting more than seven hours with Putin in Moscow last week. The billionaire real estate developer said the Kremlin has agreed to a pause in fighting covering energy and other infrastructure and the Black Sea, and that American and Russian representatives will meet to hammer out the details in Jeddah, Saudi Arabia this Sunday. “Beyond that, we’ll move to a full ceasefire,” Witkoff said. He didn’t specify whether Ukraine will be invited to this second round of negotiations. Reuters wrote it up.
The Trump trap: Matthew Shoemaker, a former U.S. intelligence officer and national security specialist, warned that Trump risks playing into Putin’s hands by allowing Russia to deploy the “classic Cold War-era Soviet tactics” of slow-walking the talks. Read the full analysis from POLITICO’s Tim Ross.
Berlin reacts: German Chancellor Olaf Scholz and French President Emmanuel Macron gave their initial reactions to the phone call at a joint press conference in Berlin, where they met on Tuesday. Scholz welcomed the 30-day pause on striking energy targets but called for a “complete ceasefire for Ukraine” as quickly as possible.
Copenhagen reacts: As Trump and Putin were talking, Denmark’s Prime Minister Mette Frederiksen aired her doubts about Moscow’s willingness to end the war in a Playbook interview. Europe’s only option was to rearm as fast as possible to deter a “very aggressive” Russia, she said.
Bearish on Moscow: “I’m not very optimistic about Russia because when I look at their behavior, it’s so much against humanity and against Europe and everything we believe in — they have to prove that they want to live a normal neighboring life with us in Europe,” she told Nick Vinocur in her office in Copenhagen.
Call for self-reliance: To deter Moscow, the EU needs to become totally self-reliant on defense within the next three to five years, Frederiksen said. Read Nick’s full story here.
Tip-toeing around Greenland: The Danes have been grappling with Trump’s ambitions to obtain Greenland, which is part of the Kingdom of Denmark. Frederiksen didn’t address the threats directly — the last time she did back in 2019, Trump called her “very nasty” — but demanded respect for the island’s sovereignty.
Not for sale: “Greenland is part of the territory of the Kingdom of Denmark, full stop,” Frederiksen said. “I expect that everybody respects sovereignty and our territorial integrity and our borders. It’s not for sale.”
HELPING STRENGTHEN KYIV’S HAND: The U.K. and EU are negotiating to accelerate arms shipments to Ukraine ahead of a potential ceasefire, Britain’s Foreign Secretary David Lammy told Bloomberg in an interview. “What we want is an end to all fighting, not a period in which Putin is able to rearm and go again,” Lammy said.
KEEPING MEMBERSHIP IN SIGHT: Meanwhile, six northern European countries have said the EU must urgently set out a clear roadmap for Ukraine to become a full member of the bloc, amid growing fears that Hungary is seeking to undermine Kyiv’s chances.
In a joint letter obtained by POLITICO’s Gabriel Gavin, top diplomats from Sweden, Finland, Denmark, Latvia, Lithuania and Estonia called on Brussels to produce “concrete proposals on how to decisively advance Ukraine’s accession process.” Full letter here.
MAXING OUT THE SINGLE MARKET Share on Twitter Share on Facebook Share on Linkedin Share on Handclap
PLAYING CATCH-UP: It’s long been heralded as the EU’s biggest asset, but attempts to beef up the single market in finance have never managed to get over the line, amid squabbling from member countries and reluctance to cede power to Brussels.
Don’t call it a rebrand: Today the Commission is out with its latest effort: a new proposal for a “savings and investment union,” a revamp of the long-stalled capital markets union that has been on the boil for the best part of a decade as a way to unlock growth.
Thinking of the people: It’s all about giving European citizens a friendly nudge to put more of their savings into capital markets, the Commission insists. Europeans have an eye-watering €10 trillion on deposit, mostly at very low rates, while across the Atlantic, American savers squirrel their money into investment accounts. It’s a similar story for businesses, which in Europe are overly dependent on bank lending for funding.
Channeling Draghi: Much of today’s announcement chimes with last year’s landmark report on European competitiveness by former Italian Prime Minister Mario Draghi. “Integrating Europe’s capital markets to better channel high household savings towards productive investments in the EU will be essential” to kick-start productivity, the wise man of European competitiveness proclaimed.
The details: Our finance team scooped an early draft of the proposal on March 6, with lots of juicy details. It included the controversial proposal to move toward centralized supervision of capital markets, though it stopped short of suggesting a single EU supervisor — a no-no for many countries.
All eyes on Thursday: But as Kathryn Carlson writes in our Morning Financial Services newsletter, while today is a major day for the EU’s capital markets, Thursday’s leaders’ meeting could prove more decisive when countries give their first response. Last night a senior EU official said the debate over central supervision “will not be solved” at this week’s summit.
**You focus on your work—we’ll track the Agriculture & Fisheries Council for you. Get expert coverage and actionable insights from our team of journalists with the Pro Agriculture & Food newsletter. Ask your free trial here**
WAR RETURNS TO GAZA Share on Twitter Share on Facebook Share on Linkedin Share on Handclap
CEASEFIRE ON THE LINE: Israel’s resumption of military strikes on Gaza has plunged the region into renewed violence and disarray and killed more than 400 people. Israeli Prime Minister Benjamin Netanyahu blamed Hamas for not releasing the remaining hostages abducted on Oct. 7, 2023, and said in a statement last night that it was “only the beginning.”
EU response: European Council President António Costa said he was “shocked and saddened” by the latest attacks and the many civilian casualties, and called for the ceasefire to be respected. There was no response from von der Leyen, though a Commission spokesman called on Hamas to release all hostages and for Israel to show restraint and resume humanitarian aid to Gaza.
Playbook interview: Speaking to Playbook in Brussels Tuesday, Philippe Lazzarini, head of the United Nations Relief and Works Agency for Palestine Refugees (UNRWA), described the developments as “a terrible setback which can only bring more suffering, more despair.”
“The ceasefire has always been extraordinarily fragile, but it’s a deep, deep disappointment” that the war has resumed, Lazzarini said, calling the situation in Gaza post-apocalyptic even before the latest strikes.
Background: UNRWA found itself in the eye of the storm last year following allegations that some of its staff members were involved in the Oct. 7 Hamas attack. Lazzarini, who was in Brussels for the Commission’s Syria donor conference, said his agency acted “extremely swiftly” after the allegations were made and an investigation was initiated by the U.N.’s highest oversight body. He noted that most of UNRWA’s donors — including the EU, which gave €92 million last year — have resumed contributing to the agency. But not the U.S., which is traditionally its biggest funder.
Getting food in: Meanwhile, Carl Skau, deputy executive director of the U.N. World Food Program (WFP), told my colleagues Paula Andrés Richart and Bartosz Brzeziński there’s a fear the latest Israeli bombardment “is the beginning of a new phase” that could impact the agency’s ability to get food into Gaza.
New reality: “During the 42 days of ceasefire we managed to move some 7,000 trucks … almost 50,000 metric tons of food, into the strip, and we have packed every warehouse we can get our hands on,” he said in an interview, adding that the organization will have to assess if it can continue with its work and what the conditions will be.
**Curious about what the Digital Networks Act holds for the competitiveness of the telecom sector? Join us for POLITICO Live's event "Scaling up Europe’s telecom sector" on March 27 when our speakers will dive into this hot topic and much more. Register to watch online!**
IN OTHER NEWS Share on Twitter Share on Facebook Share on Linkedin Share on Handclap
SCOOP — EU RUSHES TO CONTAIN SYRIAN CAMPS: The EU’s diplomatic arm will hold an emergency meeting on Thursday to figure out how to deal with 55,000 ISIS-linked detainees, some of whom are EU citizens, after Washington abruptly paused much of its aid to two camps in Syria, Antoaneta Roussi reports.
WEBER TIGHTENS GRIP: European People’s Party leader Manfred Weber will run unopposed for another three-year term at the top of Europe’s largest and most powerful political faction. As Max Griera and Sarah Wheaton report in this must-read, his broad reign over both the European umbrella party and the EPP group in the European Parliament is set to become even more deeply entrenched, despite concerns about the conflict of interest implicit in his dual role, as well as his overtures to hard-right figures. Read their full story here.
HUAWEI LATEST:Four people were charged as part of an alleged cash-for-influence campaign by Chinese technology giant Huawei, the Belgian prosecutor said Tuesday. A fifth person charged with money laundering was released under conditions. New searches also took place at the European Parliament in Brussels on Monday, where some offices had already been sealed following earlier raids on March 13.
Learning curve: Parliament President Roberta Metsola said Tuesday evening that reforms introduced in the wake of Qatargate helped the institution identify alleged corruption in the latest case. “I want the Parliament to continue to be open but I want to make sure that there are rules in place,” Metsola said in an interview with Euractiv, my colleague Max Griera reports.
FREEDOM UNDER FIRE: Jamie Dettmer, Csongor Körömi and Nicholas Vinocur take you inside the scramble to save Radio Free Europe from Trump.
ERDOĞAN STRIKES: Turkish authorities detained Istanbul Mayor Ekrem İmamoğlu, President Recep Tayyip Erdoğan’s main rival, as part of a corruption investigation, local media reported this morning. The move came after İmamoğlu’s university diploma was annulled on Tuesday, with commentators seeing that as a move by Erdoğan to prevent İmamoğlu from challenging him.
CYPRUS BREAKTHROUGH: United Nations Secretary-General António Guterres hailed the first “meaningful progress” since 2017 on the future of Cyprus. Reuters has the details.
AGENDA Share on Twitter Share on Facebook Share on Linkedin Share on Handclap
— Coreper I at 9 a.m.
— Informal Coreper II, Permanent Representatives Committee at 10 a.m.
— Tripartite Social Summit. European Commission President Ursula von der Leyen and European Council President António Costa participate.
— Econ committee meeting in the European Parliament; includes an exchange of views with Commission Executive Vice President Stéphane Séjourné and Financial Services Commissioner Maria Luís Albuquerque at 11 a.m.
— Committee on Civil Liberties, Justice and Home Affairs meeting in the European Parliament; includes exchange of views with Migration Commissioner Magnus Brunner at 11 a.m.
— European Commission Executive Vice President Raffaele Fitto meets with EESC President Oliver Röpke at 1 p.m.
— EU High Representative Kaja Kallas speaks at the Foreign Information and Information Manipulation Conference at 2 p.m.
— European Parliament President Roberta Metsola receives U.N. Secretary-General António Guterres at 2 p.m. … President of Cyprus Nikos Christodoulides at 4 p.m. … and Finnish Prime Minister Petteri Orpo at 6:40 p.m.
— António Costa receives President of Cyprus Christodoulides at 5:30 p.m.
— Informal dinner between von der Leyen, Costa and Guterres at 7:30 p.m.
BRUSSELS CORNER Share on Twitter Share on Facebook Share on Linkedin Share on Handclap
WEATHER: High of 17C, sunny.
TAKING TO THE STREETS: Teachers at the European schools in Brussels are protesting today against unfair contracts and a lack of union representation, the Brussels Times reports. They will gather at 9:30 a.m. near the Berlaymont and proceed to the office of European schools Secretary-General Andreas Beckmann on Rue de la Science. The teachers previously held a two-hour strike on Feb. 20, with about 250 people participating.
MORE STRIKES: Belgian train drivers’ union ASTB-SACT announced new strikes in the coming months until the end of summer. The first strike will occur for six consecutive days in April, the union said on Facebook. From May until August, the union plans to organize two-week strikes every month to protest cost-cutting measures planned by the federal government and changes to the retirement age.
GREEN RAFTS ALONG THE CANAL: The Port of Brussels is expanding an initiative to enhance biodiversity along the Brussels Canal by installing over 200 square meters of floating green islands at the Béco basin, near the Jules De Trooz bridge and around the Brussels Cruise Terminal. It follows a 2022 pilot project that began with a vegetated raft near the Brussels Royal Yacht Club.
BIRTHDAYS: MEP Susanna Ceccardi; former MEP Clara Ponsatí Obiols; European Parliament’s James Maher; former European Commissioner and Italian PM Mario Monti; European External Action Service’s Giuseppe Porcaro; Éda Pogany from Syngenta; former Prime Minister of Georgia Giorgi Gakharia.
THANKS TO: Jacopo Barigazzi, Gregorio Sorgi, Max Griera, Nick Vinocur, Seb Starcevic, Playbook editor Alex Spence, reporter Elena Giordano and producer Catherine Bouris.
**A message from the Fair Standards Alliance: Don’t Throw EU Industry Under the [omni]Bus. Dozens of businesses from a variety of sectors call on EU co-legislators to disapprove the European Commission’s intention to withdraw the regulation on standard essential patents. TheSEP Regulation is balanced and modest but does many things to make the currently complex and messy system fairer and more transparent for innovators that bring smart products and services to every sphere of European people’s lives. Businesses and consumers in Europe already pay billions to holders of patents for standardised connectivity technologies that are predominantly based overseas. Innovative industry often must go to court to be able to use standardised technologies such as 4G on fair terms. TheSEP Regulation is not “red-tape”: it simplifies the fragmented regulatory environment and reduces burden, providing a way to avoid costly litigation. 64 companies and associationsurgethe EUto advance, not withdraw theSEP Regulation.**
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