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GREETINGS and welcome to Brussels Playbook. I’m Nick Vinocur and I’ll be your host this morning — please feel free to ask me about the specials. We’ll be talking about the economy as we prepare to studiously digest 400 pages of the Draghi report, but in our household the big news is the arrival of our new kitten, Klio. She’s just landed in Brussels from Italy and, like some of her countrymen, is still debating whether to eat the local food. Benvenuta, Klio!
Sarah Wheaton will be in the driver’s seat for Tuesday’s Playbook.
REPORT ON EUROPE’S COMPETITIVENESS FINALLY LANDS: It’s the day at least some people have been waiting for: Former European Central Bank chief Mario Draghi will present his highly trailed report on Europe’s competitiveness later this morning after months of delays. It’s expected to be packed full of ideas on how Europe can stave off decline and start competing more effectively against the U.S. and China — not much of which has yet leaked out.
When you should wake up: Draghi will present his report during a press conference at 11 a.m. Brussels time.
What to expect: The report is allegedly a cool 400 pages long, with lots of graphics (he is an economist, let’s not forget) and will include a blaring headline call to invest some €900 billion into the European economy, ASAP. Expect suggestions from Draghi on how this could be funded, for instance via taxes raised directly by the EU (not an insane concept — EU countries already send a percentage of VAT income to Brussels).
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Also: The report pitches new prudential rules to incite risk-averse Europeans to start making wilder bets. For a much more detailed preview, read this take by my top financial services colleague Giovanna Faggionato.
The question being whispered around town is: Will any of this matter? As one EU diplomat put it to Playbook, “We tend to say that anticipation is killing us. In this, anticipation is killing it” — the report, that is.
Timing, dude: Indeed, while the Draghi report was originally due to be published in June — when it might have fueled some public debate before the European Parliament election, or at least before Commission President Ursula von der Leyen spelled out her political guidelines — it’s now landing after she has already previewed much of her agenda, when the structure of the new Commission has been set, and the EU bubble is preparing to obsess over commissioner hearings due mid-October (we get our kicks where we can).
Have I seen this movie? Speaking to diplomats last week, Draghi let slip that he was pleased to see some of his ideas had already found their way into von der Leyen’s political guidelines and would also feature in the mission letters of the incoming commissioners. Which suggests that some of his report, if not all, will have a whiff of déjà vu about it (though von der Leyen herself insists she hasn’t read it yet).
Context is key: Then there are the politics of the moment which, as far as Draghi is concerned, are no bueno.
Now or nevah: In the few glimpses he has provided Brussels of his report, the key message from the man known as “Super Mario” is that Europe needs a radical wake-up call combined with powerful medicine to avoid entering terminal economic decline and being eaten for breakfast by the world’s economic superpowers, China and the United States.
Nah, mate: But a quick vibe check shows that the sense of urgency and Hamiltonian decisiveness Draghi wants from Europe just isn’t there. On the contrary, many (not all) EU capitals are in a miserly, inward-looking and short-termist mood.
Busy with other things: Germany’s ruling coalition wants nothing to do with EU budget increases; France only just named a prime minister after months of deadlock; the Netherlands is dead against new EU spending — to say nothing of where Italian, Spanish or Portuguese preoccupations lie.
Skepticism: “We keep hearing about this call for multi hundreds of billions of euros,” quipped the same diplomat as above, who was granted anonymity to speak freely. “But how feasible is that in an environment where the Germans have a budget crisis, the Dutch have said they want to lower their contribution to the EU and the French lack a government?”
Oof: Here’s what Sven Giegold, the German state secretary for climate and economy, had to say about the Draghi report a few days ago: “We will not get this budget. So therefore we have to think more creatively, how to make use of existing pots of money,” he told a meeting at the Bruegel think tank.
Crisis needed: Indeed, having been shocked into action following Russia’s invasion of Ukraine and the Covid-19 pandemic, the EU has lost its sense of urgency. What could change that?
Trump effect? One national government official mused to Playbook that Donald Trump’s reelection as U.S. president could be the nudge needed, because the bloc’s slow-but-steady economic decline doesn’t seem to be doing it.
Just take a look at the car sector. Germany’s Volkswagen is considering the unprecedented step of shutting factories in Germany amid poor sales, while the Audi factory here in Brussels seems to be headed the same way.
BRETON TALKS CARS: As Draghi releases his report, Internal Market Commissioner Thierry Breton is due to meet today with representatives of Europe’s automotive value chain for a check-in on how they are managing the shift to electric propulsion.
Sad times: Breton is due to paint an alarming picture composed of stagnating EV sales, falling market share of European EVs, dropping battery production, and drastically uneven infrastructure (all the countries of Central and Eastern Europe combined have less charging infrastructure than Belgium). “The picture is not rosy,” he plans to deadpan at the gathering in Brussels today, according to prepared remarks seen by Playbook.
Move over, Monti: So is the Draghi report due to follow in the footsteps of the Letta and Monti reports before it — becoming an elegant doorstop? The cynical view is “yes, and fast.”
EU-colored glasses on: The less cynical view is that such reports have, on occasion, prefigured historic EU reforms, like the Werner report, written by Luxembourg’s then-PM, which called for a single EU currency way back in 1970; or the Delors report, published in 1989, which kicked off the European Economic and Monetary Union.
Bottom line: Those were headier, more idealistic times. The Draghi report lands in the midst of a rightward swing in EU power, rising anti-immigration sentiment and creeping anxiety about world affairs. That could yet change, but it will require EU leaders to will Draghi’s vision into being. They’re not there yet.
Now read this: Draghi’s report could usher in a grand restructure in the spirit of the Soviet era’s Perestroika or America’s post-World War II New Deal, writes our Senior Finance Editor Izabella Kaminska.
COURTING SOUTH KOREA AS A EUROPEAN ALLY: Dutch Defense Minister Ruben Brekelmans and Czech Foreign Minister Jan Lipavský are in South Korea for a conference today on setting boundaries on the use of AI in the military. There’s a broader context: Surrounded by North Korea, China and Russia, South Korea is among the West’s closest Asian allies, Stuart Lau writes in to report.
Getting weapons fast: Seoul has been a reliable partner for Poland, for instance, when it comes to supplying ammunition, tanks and rocket launcher systems. According to Brekelmans, who spoke to Stuart on Sunday, South Korea will be a potential partner for the Netherlands, which last week pledged an additional €2.4 billion per year to bring the annual defense budget up to €24 billion. That money will go “a lot more in innovation,” the minister said, adding: “We of course want to also scale up our own industry, and we know that Korea is very good at this, and also they are able to deliver very quickly — much more quickly than some European companies.”
Watch out for the drones: Dutch deals to buy more F35 fighter jets or Leopard tanks, for instance, will include unmanned systems and drones where the innovation budget will go, Brekelmans said, adding: “I think these are also areas in which South Korea also has a lot of expertise.”
Chip war with China: The Netherlands also sees the need to engage regional allies like South Korea and Japan as the U.S. keeps up the pressure on the Dutch to further restrict exports of advanced semiconductor-making machines to China. Last week, The Hague agreed to further limit ASML’s sales to China, triggering furor from Beijing. To that, Brekelmans said: “We do see a risk of the way in which China is developing its military capabilities and also using the most modern technologies and the most advanced chips, so we share some of the concerns that our U.S. partners have.”
EVERYONE’S FAVORITE GUESSING GAME: Ahead of Ursula von der Leyen handing out the key jobs in her next European Commission, there’s one thing everyone wants to know: Who’ll get what? Based on dozens of conversations with officials (and newsroom brainstorming), check out POLITICO’s educated guesses.
FRONTRUNNERS FOR SLOVENIA’S BRUSSELS JOB: Following Tomaž Vesel’s early exit, speculation is abuzz about who might be Slovenia’s new (female) pick for European commissioner. Per ace colleague Gregorio Sorgi, the key names in frame are: Tanja Fajon, foreign minister; Marta Kos, diplomat and ex-ambassador; and Marjeta Jager, deputy director-general for international cooperation and development at the European Commission.
BARNIER’S MISSION: One of the first tasks for Michel Barnier, the former Brexit negotiator who’s just been named France’s new prime minister, is to reassure Brussels that Paris is slashing its massive debt, before it’s hit with an EU punishment, my colleague Giorgio Leali reports. Barnier must also quickly come up with a budget for next year.
Scale of the task: France is facing a so-called excessive deficit procedure for breaching EU rules on public spending last year. Its deficit ― the difference between how much it spends and how much it brings in ― stood at 5.5 percent of GDP in 2023, well above the 3 percent required by EU rules. The perspective looks gloomy this year too, with the risk the deficit could even get worse. La Tribune du Dimanche reported on Sunday that Paris had already asked Brussels to extend the Sept. 20 deadline for submitting its plan to reduce the deficit.
ROOM RATERS, BUT FOR EU INSTITUTIONAL SECURITY: Emptying pockets. Removing your belt. Taking your computer out of your bag. Doing these things has become part of the rather stultifying ritual of entering an EU institution. But does it have to be so? Not according to Sven Giegold, Germany’s state secretary for climate and the economy. He’s gotten so frustrated with the onerous and — at times — baffling security rituals when entering various branches of the European Commission that he’s graded them and shared his conclusions with Playbook …
The worst offender: DG Connect. There’s no use sugarcoating it. Giegold reckons the security at the DG in charge of tech and communication sucks. Overall, it rates a C+, but entry into the building gets a bruising C-. Giegold justifies the grade by writing that “security staff didn’t know their own management” and noting the “long waiting times.”
Next up: The Berlaymont, which earns an oh-so-meh B-. Giegold has a lot to say about the Commission HQ, including this dagger (which does trigger our absurdity sensors): “Leaving the building requires assistance from three security officers.” And this puzzler: “Scanner does not stop you with a metallic belt which is regarded as dangerous in DG Comp.” Strange, indeed.
Also earning a B-: DG Climate. Giegold, a Green, goes easier on DG Climate, but does call out “inattentive security” as well as the fact someone was “hit by door when leaving.” DG COMP also gets a B-.
The B team: The Council and the European Parliament come in for a damning-by-faint-praise grade of B.
Topping the tally: The only DG’s security which really emerges from this audit with its head held high is DG Energy, which ranks an A- (entry and exit warrant the same score). So what does it take? Not having a security check, apparently.
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SÁNCHEZ IN CHINA AMID FEAR OF TRADE WAR: Spanish Prime Minister Pedro Sánchez is in Beijing to meet with Chinese President Xi Jinping in the hopes of improving economic relations. After the EU imposed tariffs on Chinese electric cars earlier this summer, Beijing responded by launching an anti-dumping investigation into European pork — worrying Madrid because China is the world’s second-largest importer of Spanish meat, Aitor Hernández-Morales writes in to report.
Channeling Manu: Concerns over the Chinese response to Brussels’ tariffs have led EU leaders like France’s Emmanuel Macron to take steps to defend national industry. During Xi’s visit to Paris earlier this summer, the French president raised the matter of Beijing’s anti-dumping probe into European brandy. Whatever Macron said to Xi appears to have worked: Last week Chinese authorities announced tariffs on French cognac would not be applied for the time being. Spanish authorities told POLITICO that Sánchez and Xi enjoy a relationship based on “mutual respect” and that they were hopeful the prime minister would score a deal similar to Macron’s.
ROAMING DRONE: Latvia’s defense ministry said an unmanned Russian drone had crashed in the Rēzekne region in the east of the country having flown in through Belarus. The country’s armed forces also informed the NATO chain of command about the incident. Read more here.
Putin’s Iranian friends with benefits: Tehran delivered more than 200 Fath-360 ballistic missiles to Russia this week, the FT reports.
SPOTLIGHT ON GEORGIA: Next month Georgians will choose between the Russia-leaning ruling Georgian Dream party and the pro-Western opposition in a parliamentary election. But while the opposition campaign is focused on foreign policy, ordinary Georgians are more concerned with the soaring cost of living and their homes falling apart, reports my colleague Dato Parulava.
VENEZUELA LATEST: Edmundo González, considered by many including the U.S. to have been the real winner of the recent election in Venezuela, has fled the country and been granted asylum in Spain. More here.
— Commission President Ursula von der Leyen and Mario Draghi hold a press conference on the Report on the Future of EU Competitiveness at 11 a.m. Watch here.
— Commission Vice President Margaritis Schinas in Yerevan, Armenia; meets with Ararat Mirzoyan, Armenia’s minister of foreign affairs; Nikol Pashinyan, Armenia’s prime minister; Vahagn Khachaturyan, Armenia’s president; and Mher Grigoryan, Armenia’s deputy prime minister.
— EU High Commissioner Josep Borrell in Egypt; meets with Abdel Fattah el-Sisi, Egypt’s president; Abdel-Meguid Ahmed Abdel-Meguid Sakr, Egypt’s field marshal and defense minister; and Abbas Kamel, director of the Egyptian General Intelligence Service. Borrell will also visit the joint EU/UNICEF project at the Sheikh Zuweid Hospital, meet with the Egyptian Red Crescent Society, and inaugurate an EU/UNICEF project.
— Enlargement Commissioner Olivér Várhelyi in Budapest, Hungary; participates in the Interparliamentary Conference for the Common Foreign and Security Policy and the Common Security and Defense Policy; gives speech at 10:30 a.m. Watch.
— Health Commissioner Stella Kyriakides holds a video conference call with Mark Holland, Canada’s health minister, to launch the EU-Canada Health Policy Dialogue; receives Olga Kikou, director of the European Institute for Animal Law and Policy.
— Energy Commissioner Kadri Simson in Pretoria, South Africa; meets with Kgosientsho Ramokgopa, electricity minister, and Parks Tau, trade minister, at 1:30 p.m. Watch.
— Budget Commissioner Johannes Hahn in Singapore; meets with government representatives and investors.
— Home Affairs Commissioner Ylva Johansson in Egypt; meets with Badr Abdelatty, Egypt’s foreign minister.
— Internal Market Commissioner Thierry Breton meets with representatives from the auto industry.
WEATHER: High of 20, showers.
UBER STRIKE: Brussels taxi drivers who use Uber are boycotting the platform during peak hours to protest working conditions, Belga News Agency reported. It’ll mean longer wait times and fewer ride options in the city, so plan ahead. This may be the time to bike to work or get your daily steps in — unless, of course, you’re lucky enough to have a driver waiting for you.
BIRTHDAYS: John Clarke, the Commission’s former director of international affairs; AP’s Matt Lee; Ole Funke of the federal chancellery of Germany.
THANKS TO: Aitor Hernández-Morales, Stuart Lau, Giorgio Leali, Gregorio Sorgi, Playbook reporter Šejla Ahmatović and producer Dean Southwell.
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