Crypto News: Brussels Edition: A hot-air threat

Welcome to the weekend issue of Brussels Edition, Bloomberg's daily briefing on what matters most in the heart of the European Union. Join us on Saturdays for deeper dives from our bureaus across Europe.

VILNIUS — A large white balloon carrying a box wrapped in plastic sheeting drifted across the border from Belarus last weekend and landed at Lithuania's main airport.

Unsurprisingly, the Baltic nation was a bit spooked, particularly with elections fast approaching on Oct. 13.

Luckily, the balloon's cargo turned out to be only Belarus-made cigarettes destined for tobacco smugglers in the EU.

A meteorological balloon with contraband from Belarus intercepted by Lithuania's border authorities. Source: Lithuanian government

Tensions are high on the bloc's eastern border, with the Baltic region working to bolster its defenses ever since Russia invaded Ukraine.

The balloons are actually a frequent phenomenon. An estimated 250 of them crossed over from Belarus into Lithuania just last month, border authorities say. A single balloon can deliver some 1,500 packs of Belarus-made cigarettes.

But they're being taken more seriously these days, particularly after a spate of airspace violations, including when a Russian army drone crashed in neighboring Latvia just last month after veering over from Belarus.

Authorities reacted quickly to reassure Lithuanians that such balloons don't pose a threat.

After Lithuania built a border fence with Belarus stretching across 550 kilometers and closed some crossings last year, smuggling across land became effectively impossible. Smugglers have now taken it up to the skies instead, employing drones, small aircraft and weather balloons.

The Lithuania-Belarus border fence in Poskonys, Lithuania. Photographer: Paulius Peleckis/Getty Images Europe

The balloons can reach high-altitudes and confuse border radar but they have no navigation system, meaning landing sites are unpredictable. GPS signals inform smugglers of the cargo's location for pickup.

Cheap smokes from Belarus then make their way into the black market. An investigation by the National Tobacco Producers Association showed that illegal cigarettes accounted for 26% of Lithuania's tobacco market in the second quarter.

While border guards are equipped with anti-drone equipment, authorities are still figuring out what's to be done about the balloons.

Defense Minister Laurynas Kasciunas rejected having the army use pricey missiles to neutralize the non-threatening balloons. He wants to avoid situations like when NATO jets were scrambled over Latvia last month to intercept an object crossing over from Belarus that turned out to be a flock of birds.

The border guards and the police say they don't have a mandate to take down the balloons but new legislation is being developed to allow the use of guns.

Three days after the Vilnius airport balloon landing, a similar cigarette-laden delivery arrived at a military compound. The next day, another landed at a different base, prompting the army to put out a Facebook post to make clear that the nation's threat-level hasn't changed.

The army added that it's unclear whether this is a new method of trolling by Belarus, or simply an unwavering dedication of smugglers to keep Lithuanians smoking.

— Milda Seputyte, Lithuania reporter

Russian Missiles Killing Ukrainian Civilians Are Full of US Tech

On the morning of Aug. 19, 2023, 6-year-old Sofiya Holynska and six others were killed in a town square in northern Ukraine by a Russian missile. When Ukrainian missile investigators combed through the wreckage, they found a module from the Iskander's SN-99 navigation system that contained components made by four Western companies.

The Big Russia Bet Minting Frozen Fortunes for Retail Investors

An estimated 100,000 European retail investors have money tied up in special accounts in Russia that hold in excess of $16 billion. Some bought before the invasion; others saw a once-in-a-lifetime opportunity to buy on the cheap when it crashed Russian markets and sent Wall Street giants running for the exit. But it's out of reach as long as sanctions are in place.

The Mission to Rescue Vital Crops in Europe's Nation of Farmers

Dry-out sunflowers are pictured on a field near Alexandria, Romania this summer. Photographer: Daniel Mihailescu/AFP/Getty Images

Romania accounts for about a third of all farms in the EU but depleting water supplies are jeopardizing the country's role in the food supply chain. In recent weeks alone, images of parched land from searing summer heat turned into those of deadly floods across the region. Climate experts say it's just the beginning.

Europe's Cash-Strapped Governments Turn to Corporate Profits

France and Italy want to squeeze more tax from companies to bring bloated budget deficits under control and ensure their credibility with bond investors. Across Europe, extra money is needed to fill the hole caused by multiple crises and politicians who don't want to ask voters to pay more are targeting cash-rich firms and the wealthy.

How a Short Seller's Attack Threatens a Spanish Family Company

For more than eight decades, the descendants of Josep Antoni Grífols Roig ran the pharmaceutical company he founded in the wake of the Spanish Civil War. But following a critical report from New York short seller Gotham City Research in January, shares in Barcelona-based Grifols tumbled by a third—and today the family is on the cusp of losing control.

Monday: Euro-area finance ministers meet in Luxembourg
Tuesday: EU finance ministers meet in Luxembourg
Wednesday: Hungarian Prime Minister Viktor Orban presents his government's EU presidency program to the European Parliament; Ukrainian President Volodymyr Zelenskiy attends summit of southeast European countries in Croatia
Thursday: US President Joe Biden begins four-day visit to Germany; EU interior ministers meet in Luxembourg
Friday: Nobel Peace Prize awarded in Oslo; MED9 leaders meet in Paphos, Cyprus; EU justice ministers meet in Luxembourg

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