Brussels Edition: War nears Europe

Hostilities in the Middle East edge closer to Europe

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Welcome to the Brussels Edition. I'm Sam Stolton, EU competition reporter with Bloomberg, bringing you the latest from the EU. Make sure you're signed up. Europe risks being dragged into another war as hostilities in the Middle East edge closer to home. A UK airbase in Cyprus was targeted by drone strikes this morning in an attack that came just hours after Prime Minister Keir Starmer granted the US permission to use British facilities in the region. Cyprus — the member state currently holding the EU's rotating presidency — said it was not the target of the attack. President Nikos Christodoulides separately said that the country is "not participating in any way and does not intend to be part of any military operation." After the European Commission condemned Iran's "indiscriminate military strikes" that followed the initial US and Israeli operations, President Ursula von der Leyen was set to lead a meeting today of the security college of the EU executive arm to discuss its position further. Ursula von der Leyen Photographer: Simon Wohlfahrt/Bloomberg Behind closed doors, the 27-member bloc is also mulling any knock-on effects that the hostilities in the Middle East could have on Russia's ongoing war in Ukraine. Munitions used in the Iranian strikes may have an impact on US stockpiles and potentially on American support to Ukraine, according to a senior EU official and people familiar with the matter. On the other side, strikes on Iranian weapons stocks could result in a decrease of arms deliveries to Russia — with Moscow likely to concentrate its own resources on the Ukrainian conflict, the people added. Meanwhile, European nations are readying their defenses. The E3 group of leaders comprising France, Germany and the UK said over the weekend they would enable "necessary and proportionate defensive action to destroy Iran's capability" to attack their interests in the Middle East. And while European nations weigh their response, the conflict is wreaking havoc on markets. European natural gas earlier surged amid fears of a major disruption to global energy supplies, while the possibility of prolonged turmoil and higher oil prices are giving investors fresh reasons to pivot to safe‑haven trades such as Treasuries, gold and the Swiss franc. For his part, US President Donald Trump told the New York Times he intends for the bombardment of Iran to continue for the next four to five weeks. This means oil shipments running through the Strait of Hormuz could remain halted, thereby risking further surges on energy prices in the near future. The Latest Despite initial forecasts indicating public finances were in check, Italy didn't manage to meet the EU's 3% deficit ceiling last year, an unexpected setback for Prime Minister Giorgia Meloni's government. Power-industry lobby group Eurelectric asked Commission President Ursula von der Leyen not to tamper with the system that determines electricity prices, warning it could hold back investment and raise bills. The US dollar's traditional role as the currency of choice in times of uncertainty is increasingly in question, ECB Governing Council member Joachim Nagel said yesterday. Belgium's special forces yesterday boarded and seized an oil tanker from the "shadow fleet" that Russia uses to circumvent Western sanctions imposed over its war in Ukraine.   Aluminium Bahrain BSC is buying the largest smelter in Europe, a big-ticket deal at a time when the Gulf country and its neighbors are weathering attacks from Iran. Seen and Heard on Bloomberg Iran, the United States and Israel are preparing for their conflict to last, Lina Khatib, an associate fellow at Chatham House's Middle East and North Africa Program told Bloomberg Radio. For Iran it is "an existential war", she said, "I don't think Israel or the United States will put up with the presence of the Iranian Islamic Republic regime anymore and this is it. So for me, I think this really could be the final war with this Iranian regime." Chart of the Day Hungarian opposition leader Peter Magyar is campaigning to win over voters in remote villages like Vamosmikola to secure a victory over Prime Minister Viktor Orban. Opinion polls show Magyar's Tisza party is gaining support, with one poll putting Tisza 20 percentage points ahead of Orban's Fidesz party, due to issues such as corruption, poor public services, and economic stagnation. Coming Up EU Competition Chief Teresa Ribera speaks at Mobile World Congress in Barcelona this afternoon French President Emmanuel Macron delivers speech about nuclear dissuasion from a submarine base later today Commission President Ursula von der Leyen, European Council President Antonio Costa, Eurogroup chief Kyriakos Pierrakakis, ECB President Christine Lagarde meet in Brussels tomorrow Final Thought Giorgia Meloni, at the Chigi Palace in Rome, on Feb. 25. Photographer: Alessia Pierdomenico/Bloomberg Giorgia Meloni, like everyone else on the planet, is trying to work out what to do about AI. "Politics is moving too slowly and artificial intelligence is advancing very quickly," she said in an interview in the 16th century Chigi Palace in Rome, surrounded by artifacts from Italy's storied past. "I see enormous risks." Like the Brussels Edition? Don't keep it to yourself. Colleagues and friends can sign up here. 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