| Welcome to the Brussels Edition, Bloomberg's daily briefing on what matters most in the heart of the European Union. The EU may already this year start punishing rule-of-law offenders with a new sanctions tool that could see countries lose out on billions of euros in funding, far ahead of expectations. Vera Jourova, the Commission vice president in charge of values, is helping draft guidelines on how the bloc will implement its new authority to penalize countries that don't uphold democratic standards. One option will be to freeze funds from the EU's 1.8 trillion-euro stimulus program before they've been disbursed, Jourova told us in an interview. That means Poland and Hungary, the bloc's troublemakers when it comes to backsliding on democratic standards, could be deprived of cash they would otherwise receive from the pot to finance the post-pandemic recovery. — Stephanie Bodoni and Viktoria Dendrinou What's HappeningSafe & Effective | Countries including Germany and France will start using AstraZeneca's Covid-19 vaccine again after the EU drug regulator said it's safe to use and reiterated that the benefits outweigh the risks. It remains to be seen whether the hiatus did irreparable damage to the vaccine's reputation, and how much of an impact it will have on Europe's stuttering inoculation push. Turkey Talks | As EU leaders prepare to debate EU-Turkey relations at their summit next week, EU Council President Charles Michel will hold a call today with Turkish President Recep Tayyip Erdogan. Their discussion will focus on ensuring stability in the Eastern Mediterranean and developing a mutually beneficial relationship, and will also likely touch on the recent exploratory talks between Turkey and Greece, as well as the Cyprus settlement process and developments in Libya. Sanctions Afoot | Turkey is also set to feature heavily during next week's meeting of EU foreign ministers, with human rights remaining a key sticking point between the two sides. Russia will also be discussed — while Joe Biden and Vladimir Putin are trading barbs — though China is not on the agenda, despite plans to sanction officials and entities over the treatment of Uyghurs in Xinjiang. Pollution Levy | France pledged to promote EU efforts to put a charge on emissions-intensive imports when it takes over the bloc's rotating presidency next year. The Commission plans to propose a draft law on the so-called Carbon Border Adjustment Mechanism in June — an import levy that would help avoid a phenomenon where producers move to regions with laxer pollution rules. The biggest challenge will be to ensure the new mechanism is compatible with WTO rules. Danish Shift | Denmark's central bank will switch from operating a single negative interest rate to three by the end of this week, joining several peers in the region which have overhauled frameworks in a bid to fine-tune their policy levers. The measures are designed to help fulfill the central bank's sole mandate of protecting the krone's peg to the euro, responding to fluctuations in money-market rates that flowed from the wide spread in its rates. In Case You Missed ItStimulus Call | Christine Lagarde urged EU governments to make sure to roll out their joint spending plan on time to safeguard the region's recovery. Her call comes as the ECB is stepping up the pace of its pandemic bond-buying program for the next three months to prevent higher yields further undermining this year's revival. Covid Passports | The EU faces a tough task in seeking to introduce so-called Covid-19 passports by June to get people traveling again, the owner of France's busiest airport told us. The sluggish and uncoordinated roll-out of health passes at airlines and other companies suggests that the bloc's target is "very, very ambitious," according to Franck Le Gall, operations chief at Groupe ADP, which runs dozens of hubs including Paris-Charles de Gaulle. Divorce Time | Hungarian Prime Minister Viktor Orban's Fidesz party withdrew from the EU's biggest political group, finalizing a break that has exiled the nationalist leader from the continent's mainstream. The resignation letter pre-empted the ouster of Fidesz from the center-right European People's Party, and EPP President Donald Tusk did little to conceal the rift, tweeting that "Fidesz has left Christian Democracy. In truth, it left many years ago." Awkward Chat | Boris Johnson and Ursula von der Leyen held a phone call Wednesday evening after EU efforts to secure vaccine supplies ramped up tensions between London and Brussels. Their exchange came as the bloc's governments remain divided over a controversial proposal that would restrict exports of vaccines to countries that don't reciprocate or that already have high inoculation rates. Less Trade | Irish trade with Britain plunged in January, as companies grappled with the fallout from the U.K. leaving the EU. The drop in imports was due in part to challenges complying with customs requirements, while other factors include stockpiling of goods in preparation for Brexit and a reduction in trade volumes due to the impact of Covid-related restrictions. Chart of the Day The global middle class shrank for the first time in decades last year because of the Covid-19 pandemic, with almost two-thirds of households in developing economies reporting they suffered a loss in income, according to two new estimates based on World Bank data. Researchers at the Pew Research Center found that the ranks of the global middle class — those earning $10-$50 per day — fell by 90 million people to almost 2.5 billion last year. That helped swell the ranks of the poor, or those living on less than $2 a day, by 131 million. Today's AgendaAll times CET. - 10 a.m. German Chancellor Merkel participates in online German-Ukrainian Business Forum
- 11 a.m. Germany's Greens party presents its program for the September national election
- 13:15 p.m. EU Council President Michel and EU Commission President von der Leyen hold video conference with Turkish President Erdoğan
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