Brussels Edition: Putin’s new allies

Populist and nationalist elements are rising across central and eastern Europe, which risks playing into Putin's hands

View in browser

Welcome to the Brussels Edition, Bloomberg's daily briefing on what matters most in the heart of the European Union. One consequence of the nationalist lurch spreading across central and eastern Europe is that several states are moving closer to Russia. The timing couldn't be worse for Ukraine. With its forces looking stretched, the last thing the government in Kyiv needs is an erosion of European unity and a potential decline in military and financial support. While the EU is insisting it won't abandon Ukraine, Russian President Vladimir Putin sees an emerging wave of current, or likely future, leaders who might turn out to be convenient allies. Or, at least, less adamant about supporting Kyiv. With US President Donald Trump pushing for negotiations to end the war, Putin will be cheering the rightward shift. — Michal Kubala

What's Happening

Holding Fast | With the US aiming to ditch climate-friendly policies, the EU, China, UK and Canada are vying for the role of green leader. China is investing massively in the transition and Brazil is preparing to lead the global dialogue on energy during the upcoming COP 30 summit, leaving Europe to try to stay the course even amid rising support for populists and climate sceptics. Double Spending | Ramp-up artillery-shell production, bolster air defenses, border security and more. That's what four member states that border Russia — Lithuania, Estonia, Latvia and Poland — say the EU urgently needs to do, according to a paper we've seen. That would mean doubling military spending. They identified at least €100 billion of investment needs and proposed ways of financing the defense push — though some steps remain controversial. A Re-Suspension | The EU has again suspended its WTO case against China over alleged economic coercion of Lithuania. The bloc filed a case after Beijing orchestrated an embargo against the Baltic state because of its official contact with Taiwan. To avoid having the proceeding lapse, which would anger the US and some member states, they resumed the case last week, only to pause it again. Shunning Bitcoin | It's unlikely that an EU member state would add Bitcoin to its monetary reserves, according to European Central Bank President Christine Lagarde. Her comment came after Czech central bank Governor Ales Michl said his institution would look into using cryptocurrency in the bank's currency stocks.

Around Europe

Merkel Speaks | Former German Chancellor Angela Merkel's reprimand yesterday of her own party's leader, conservative frontrunner Friedrich Merz, for leaning on far-right backing to push through a parliamentary resolution on migration jolted the election race. With less than four weeks to go before the Feb. 23 ballot, Merz is taking his hard-line immigration shift to the next level today, pushing ahead with a vote on a migration law that will again need far-right support to pass. Student Threat | Serbian President Aleksandar Vucic is facing an unfamiliar challenge in the student-led protests that are rocking the country — youth-driven demonstrations beyond what the leader faced in the past. With anger growing, they appear to pose the biggest threat yet to Vucic's rule. Cable Cuts | The Baltic Sea likely hasn't seen the last of undersea cable damage, according to Alexander Stubb. The Finnish president said more desruction is "very likely" as ongoing investigations seek to find out if recent breaches of subsea cables were committed intentionally or not. Restoring Confidence | A successful Novo Nordisk weight-loss drug trial provided much-needed relief to the Danish company, but the 40% hit its stock has taken since June means it still has a steep hill to climb to soothe investors. Attention now turns to its annual results, due next week.

Chart of the Day

The ECB moved to bolster demand and inject life into Europe's sluggish economy with an additional interest-rate cut to 2.75%. Despite a recent uptick in inflation, policymakers remain committed to the easing strategy — and we're told they may stop describing their monetary stance as "restrictive" in March. Still, while the reduction in interest rates aims to stimulate the EU's economy, the bloc's growth forecasts remain moribund.

Today's Agenda

NATO chief Mark Rutte meets the EU college of commissioners EU justice ministers hold informal meeting in Warsaw

Like the Brussels Edition? Don't keep it to yourself. Colleagues and friends can sign up here. How are we doing? We want to hear what you think about this newsletter. Let our Brussels bureau chief know.

Follow Us

Like getting this newsletter? Subscribe to Bloomberg.com for unlimited access to trusted, data-driven journalism and subscriber-only insights. Want to sponsor this newsletter? Get in touch here. You received this message because you are subscribed to Bloomberg's Brussels Edition newsletter. If a friend forwarded you this message, sign up here to get it in your inbox. Unsubscribe Bloomberg.com Contact Us Bloomberg L.P. 731 Lexington Avenue, New York, NY 10022