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Brussels Edition: Leaders vs. Orban

Welcome to the Brussels Edition, Bloomberg's daily briefing on what matters most in the heart of the European Union.EU leaders called today'

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

EU leaders called today's summit with a single aim: convince Viktor Orban to drop his veto on aid for Ukraine. The Hungarian prime minister has kept them in suspense — and the stakes couldn't be higher. Kyiv is running short on weaponry and finances are tight as vital assistance from Europe and the US is held up. Some diplomats believe Orban is using the aid as leverage to get some of the €20 billion in EU funding blocked over rule-of-law concerns. The EU offered him an annual review mechanism for Ukraine aid to address his concerns but ruled out veto power, we're told. 

Jillian Deutsch

What's Happening

Ammunition Delay | The EU acknowledged it was forced to delay its ambitious target of sending 1 million artillery rounds to Ukraine by March, despite a boost to Europe's capacity. Latvian Defense Minister Andris Spruds told us that the goal of 1 million rounds "will be reached in the coming months and certainly by the end of the year." 

Farmer Protests | Farmers plan to bring their protest to the door of EU institutions during today's summit. French President Emmanuel Macron will raise the issue on the summit sidelines. The EU already delayed plans that would require farmers to leave more of their land fallow to improve biodiversity, a key point pushed by French farmers' unions. 

Red Sea | The EU will start a naval operation in mid-February called "Aspides" to escort commercial ships in the Red Sea to protect them against attacks from Houthi rebels. There are still a number of details to iron out including which country would take command of the mission.

Climate Election | This June's Parliament elections have the potential to disrupt one of the strongest forces for climate action. The Parliament pushed through some of the most aggressive decarbonization plans, but voters are leaning toward climate-skeptic right candidates. The result could threaten the EU's climate agenda. 

Around Europe

Hedging Concerns | Hedge funds have come under increased scrutiny in Europe. Regulators warned about funds with exposure to mortgage bonds and average gross leverage in excess of 2,000%, a position so large it risks impacting markets.  

Citizen Bonds | Prime Minister Giorgia Meloni is leaning harder on Italians to keep the country afloat by buying more bonds. The move has helped her start the year on a strong footing, but analysts warn the country is still vulnerable due to public debt and anemic growth.

Interest Cuts | Inflation is slowing in key European markets, a move that could allow the ECB to cut interest rates in coming months. German consumer prices rose less than expected and France showed a faster slowdown. ECB officials warned the fight against inflation isn't over yet. 

Currency Fight | Kosovo's currency dispute could deepen a rift with Serbia. Kosovo's premier warned that new rules enforcing the euro as the country's sole currency are "non-negotiable" after the US and the EU said the regulations may disrupt payments to ethnic Serbs. 

Chart of the Day

Company bosses in Europe plan to shift at least some of the burden of rising costs to their customers, according to a survey of CEOS published by EY. More than half expect their cost of doing business to increase this year, with over four-fifths looking to pass at least half of the additional expenses on to consumers. Monetary officials are just wresting back control of an historic surge in inflation across the bloc that was fueled in part — they say — by firms raising prices excessively. 

Today's Agenda

  • EU leaders' summit in Brussels
  • NATO Secretary General Jens Stoltenberg to visit US Special Operations Command headquarters in Tampa, Florida
  • Commission Vice President Maros Sefcovic and Commissioner Didier Reynders receive US Trade Representative Katherine Tai

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