Nadia Calviño in pole position as EIB leadership race reaches finale

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Good morning. A scoop to start: EU member states are set to agree new powers to completely stop Russian gas imports nearly two years after Moscow’s full scale invasion of Ukraine, according to the legal text seen by the Financial Times.

EU finance ministers ended negotiations at around 3am this morning having failed to strike a deal on new debt and deficit rules for member states. The ministers made progress towards a compromise but remain stuck on technical details, with more talks set to take place before the end of the year.

From dinner last night to breakfast this morning, our finance correspondent tells us what to expect from today’s deliberations on the next head of the European Investment Bank. And Estonia’s health minister tells us that countries should get priority over companies in Brussels’ pharmaceutical policies.

Have a good weekend.

The EIB crown goes to . . . 

Despite the failure to clinch a difficult deal on fiscal rules last night, Spain’s Deputy Prime Minister Nadia Calviño could yet have reason to celebrate today: being crowned the next president of the European Investment Bank. But don’t count your chickens yet, writes Paola Tamma.

Context: To become EIB chief, any candidate needs the uphold of at least 18 EU countries representing 68 per cent of the bank’s share capital. The field is crowded: Denmark’s EU commissioner-on-leave Margrethe Vestager is the other frontrunner. Sweden, Italy and Poland have their own candidates in the race.

“I am quite confident we can finalise the informal political process,” said Vincent Van Peteghem yesterday. The Belgian finance minister is chairing the selection process.

Calviño can count on Germany’s backing, but it’s not 100 per cent certain that she fulfils both criteria, mostly because of France’s reluctance to openly uphold her. French finance minister Bruno Le Maire said he would disclose Paris’ position this morning.

What’s more, Italy objected to her nomination on Monday, according to people with knowledge of the process, thwarting the goal to achieve a consensus candidate.

That’s significant, as the three biggest economies each hold 18 per cent of the bank’s share capital. But if Rome were the only large holdout, it would not be enough to block her path to guide the Luxembourg-headquartered institution.

The bank is the world’s largest multilateral lender and has become instrumental to follow EU policy goals, from the green transition to helping Ukraine, financing projects for €75bn in 2022. Its presidency, which was once an afterthought, has now become one of the top jobs, fought over by EU countries.

Calviño has kept her cards close to her chest during the selection process, and avoided making the details of her leadership pitch public. But a letter she sent to EIB in August and seen by the FT leaned heavily on promoting her role leading Spain’s “ambitious economic policy agenda”.

A decision must be taken by the end of this year, when incumbent EIB president Werner Hoyer steps down.

Chart du jour: Waste of space

Commercial property owners prospered in the world of cheap debt that made real estate investment relatively attractive. But that high has led to a predictable reckoning as interest rates have risen. And European landlords have emerged as a focus of trouble.

Drug deals

The drug industry is not happy with the EU’s blockbuster reform of its pharmaceutical legislation, which it says will reduce competitiveness.

But Estonia’s health minister says it will ensure poorer member states will get access to more treatments at cheaper prices, writes Andy Bounds.

Context: The European Commission in April proposed the first overhaul of its pharmaceutical rules for 20 years. The big aim was to “level up” across the 27 member states with carrots and sticks to get companies to make drugs available to those with lower health budgets.

The industry has attacked a scheme to cut the exclusivity period for new drugs unless they are available EU-wide within two years. Typically, big countries such as Germany approve new treatments first since they can afford them and have the size of population to be an attractive market.

While Germans could get 104 new drugs approved between 2015-17 by 2018, Estonians only had 28, according to commission data.

“All European patients should be equal,” Estonia’s health minister Riina Sikkut told the FT. “Currently, some markets are more attractive than others. Why shouldn’t there be a single market for pharmaceuticals?”

Efpia, the industry group, has said allowing cheap generics on the market sooner would reduce their return on novel treatments,

A report for Efpia published last month found research spending in the EU would drop by €2bn annually, while about 50 out of the 225 treatments expected to be discovered over the next 15 years would not exist because they would not be economically viable.

The legislation is being debated by the European parliament’s environment committee.

What to watch today

1. Meeting of EU finance ministers.

2. Meeting of EU competitiveness council, in research and space format.

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