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Once more to the breach, dear friends. Angela Merkel will be back in Turkey today for her second visit in five months. To put this in perspective, the German chancellor had been twice in five years before the migration crisis hit. And it is only five days since she last met Ahmet Davutoglu, the Turkish premier. This is urgent business.

Turkey is the lynchpin of Ms Merkel’s migration strategy and it is floundering. Even with rough seas, arrivals to Greek islands are still running at roughly 2,000 a day. With spring (and German state elections) approaching, there are just weeks left to avert a migration surge that forces Ms Merkel’s hand. That would leave November’s EU deal with Turkey – including bold promises of visa liberalisation and €3bn in funding – all but stillborn.

It took a while, but the penny has dropped in Ankara. Read more

Peter Spiegel

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Mr Renzi, left, during his visit last week with Germany's Angela Merkel in Berlin

Sometimes it seems not a day goes by without Matteo Renzi, the Italian prime minister, picking a fight with Brussels. For a while, it was his angry denunciation of its slow response to the refugee crisis. Then he accused the EU of a “double standard” on Russian gas pipelines. More recently, he held up a €3bn EU aid package to Turkey. And he’s been blaming new EU rules for his country’s mounting banking crisis. But the most critical fight he’s been waging was on full display yesterday: his attempt to get more wiggle room for Italy’s 2016 budget.

Pierre Moscovici, the European Commission’s economic chief, was the man in the firing line this time, since yesterday was his semi-regular appearance to unveil the EU’s latest economic forecasts. In the run-up to Mr Moscovici’s announcement, Pier Carlo Padoan, the Italian finance minister, laid down his marker: he wanted a decision quickly that would allow Rome more flexibility to spend a bit more than EU rules normally allow. But Mr Moscovici was having none of it. Mr Padoan would have to wait until May for a decision, along with every other eurozone minister.

In what appeared a fit of mild Gallic pique, Mr Moscovici also noted that “Italy is the only country in the EU” that had already been given special dispensation under new budget flexibility guidelines – it is able to miss its structural deficit target by 0.4 per cent in order to implement Brussels-approved economic reforms – and it was now coming back repeatedly for more. Read more

Peter Spiegel

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Mr Kenny with Irish president Michael Higgins after formally dissolving parliament Wednesday

To date, no eurozone leader who has guided his country through a bailout has emerged politically unscathed on the other side. Portugal’s Pedro Passos Coelho was deposed as prime minister in November after inconclusive general elections. Earlier last year, Greece’s Antonis Samaras suffered a similar fate at the hands of leftist Alexis Tsipras. And Spain’s Mariano Rajoy is looking increasingly unlikely to win back the premiership in Madrid after informing King Felipe VI this week that his coalition-building efforts were going nowhere. Can Enda Kenny end the losing streak?

The Irish prime minister asked for parliament to be dissolved yesterday, setting the stage for a three-week sprint to election day on February 26. Mr Kenny is already touting his economic record, and to any outsider, that would seem to be enough to put him over the top. Ireland is expected to be the fastest-growing economy in the EU in 2016, which would be the third year running. Its unemployment rate of 8.6 per cent, while still high, is lower than the eurozone average and well below the 14.7 per cent rate when Mr Kenny assumed office in 2011.

Despite that record, opinion polls have stubbornly shown his Fine Gael party unable to get much above 30 per cent, a good-sized decline from the 36 per cent they took in the last general election. More troublingly for Mr Kenny is the demise of his coalition Labour party, which has seen its support cut in half. Without Labour, it’s unclear who Fine Gael would go into coalition with – which could produce a similar result to that faced by Mr Rajoy and Mr Passos Coelho, who emerged from their elections atop the largest party, but one too small to cobble together parliamentary majorities. Read more

Peter Spiegel

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Donald Tusk, left, arrives at Downing Street for dinner with David Cameron on Sunday

There is a time in every EU policy debate when the technical becomes the political. That’s what happened yesterday when, after months of painstaking work by some of London and Brussels’ most seasoned mandarins, European Council president Donald Tusk published a 16-page “New Settlement for the United Kingdom within the European Union”. The EU’s political leaders now have two weeks to decide whether they will sign onto the deal before a high-stakes summit where the agreement is to be finalised.

For those following the debate closely, there were few surprises. Critically, Mr Tusk’s proposal includes an “emergency brake” that will allow David Cameron, the British prime minister, a four-year limit on benefits to newly-arriving EU migrant workers – at least for a while, since how long he can keep that brake engaged remains to be negotiated. Also left unclear is the efficacy of a second “emergency brake” that would allow London to force eurozone decisions onto the agenda of an EU summit. How and when that brake can be pulled is a sticking point with France, which wants to make sure Britain cannot veto further eurozone integration efforts.

But by in large, the substantive fight is over and things now move into the realm of the political, both inside Westminster and in other EU capitals – most of which got their first look at Mr Tusk’s draft at the same time as the rest of the world. In London, the political hothouse that always develops over Europe heated up quickly. Even within Mr Cameron’s own cabinet, there were grimaces – and open challenges – among known euroceptics like Chris Grayling, leader of the House of Commons, and Iain Duncan Smith, the work and pensions secretary. Avowed Brexiteers were less constrained. Steve Baker, leader of the Conservatives For Britain group, accused Mr Cameron’s Europe minister of being “reduced to polishing poo”. The reviews were about as kind in Britain’s popular press. The cover of the best-selling Sun tabloid shouts this morning: “Who do EU think you are kidding Mr Cameron?” The equally influential Daily Mail calls the renegotiation deal “The Great Delusion!” on its cover. Read more

Christian Oliver

Miguel Arias Cañete, the EU’s energy commissioner, will have to choose his words carefully next week.

On February 10, he will release the European Commission’s long-awaited “gas package”, and he must manage expectations among an unusually varied bunch of interests. There are eastern Europeans who want assurances that they will be safer in the face of any supply cut by Russia. The Norwegians need comforting too, looking for signs that there will still be EU demand for their gas in the years ahead. Environmentalists want Brussels to stress that the longer term trajectory is a greener, more efficient continent burning less gas.

According to an early draft of the plan seen by Brussels Blog, there appears to be a little bit for everybody – but not yet enough to keep everybody happy. Take Norway. It wants to want to maintain its status as the EU’s favourite gas provider. But their companies need assurances that Europe has a long-term appetite for gas at a time they’re looking to invest in infrastructure in the Barents Sea, above the Arctic circle. Just in case the message wasn’t getting through, Oslo wrote to Mr Arias Cañete about the issue again last week. Read more

Peter Spiegel

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For most of Europe, the sharp decline in oil prices since the summer has been an economic boon, lowering costs for everyone from energy-intensive manufacturers to run-of-the-mill consumers. But the one place in Europe where the free-fall has been no boon at all has been the Kremlin treasury, where oil and gas sales account for more than half of revenues. Already, Russian officials have announced a 10 per cent cut in spending for this year’s budget, and have toyed with the possibility of aggressively hedging against future losses. Now comes word that President Vladimir Putin may be putting pressure on seven of Russia’s largest state-owned companies – including energy giant Rosneft and airline Aeroflot – to at least partially privatise as a way to raise funds. Read more

Peter Spiegel

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Mr Cameron and Mr Juncker at the prime minister's official country residence last year

David Cameron, the British prime minister, is due in Brussels today for a meeting with Jean-Claude Juncker – a session so important that he cancelled a trip to Denmark and Sweden in order to sit down with the European Commission president in person. The two men have a famously difficult relationship – Mr Cameron actively opposed Mr Juncker’s election as president, and was one of only two leaders to vote against him at a 2014 summit. But it’s less than three weeks before a high-stakes EU summit where Mr Cameron hopes to get a renegotiation deal that changes the UK’s relationship with Europe. So Mohammed must go to the mountain.

For months, the main sticking point in the British renegotiation talks – which have taken Mr Cameron on a grand European tour from Berlin to Bucharest – has been benefits for EU workers in the UK. Mr Cameron wants to prevent EU migrants from receiving in-work benefits for four years, something that would appear to run directly counter to EU treaties’ non-discrimination requirement.

The latest option under consideration is actually one that has been debated for several months – an “emergency brake”. The original idea would have allowed Britain (and other countries) to limit immigration from other EU members if it can prove government services like healthcare or schools were becoming overwhelmed by the strain. As our Brexit watcher Alex Barker reports, the new twist is that the “emergency break” would allow countries to limit work benefits, rather than immigration. In the past, Downing Street has been lukewarm to the “emergency brake” idea, especially since it would likely need vetting from Brussels before the brake can be pulled. But with time running out, and alternate “Plan B” options limited, Mr Cameron may be warming to the idea. Read more

Peter Spiegel

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The other shoe has finally dropped. After months of subtle and not subtle warnings, Brussels has taken its first step towards green-lighting border checks across Europe for up to two years – and pushing Greece towards a de facto suspension from Schengen. The European Commission’s report into Greece’s borders found “serious deficiencies” in how Athens manages its external frontier. Those two words – “serious deficiencies” – are key, since they are explicitly used in the code governing the EU’s passport-free Schengen travel zone if Brussels wants to dictate new border measures aimed at restoring “overall functioning” of the bloc. As with all EU rules and regulations, the process of moving from what happened yesterday to border checks is complicated and filled with further rounds of back-and-forth between Brussels and Athens. But the Schengen code also makes clear that such a report is the first step. Read more

Peter Spiegel

Portugal's new finance minister, Mario Centeno

The complicated procedure and baffling code words that are part of the European Commission’s annual evaluation of eurozone budgets can sometimes make it seem like Brussels is intentionally obfuscating their views on national budgets.

But under the EU’s crisis-era rules, all spending plans must be submitted for approval by the commission’s economics directorate before they can be sent to national parliaments for consideration – one of the most powerful levers Brussels now had in its battle to get debt and deficits in the eurozone back under control.

That’s why the letter sent to the Portuguese finance ministry this week, filled with jargon and confusing benchmarks, is worth taking a look at. We got our hands on the letter and have posted it here.

Under EU rules, eurozone governments are supposed to submit their budget for review by mid-October. But that happened to coincide with last year’s Portuguese parliamentary elections, held October 6, which delayed Lisbon’s submission for months – nearly four months, to be exact. Its 2016 budget was only sent to Brussels last Friday. Read more

Peter Spiegel

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Migrants attempt to enter Macedonia from the Greek side of the border on their way north

In many ways, it is a threat that has more bark than bite. Although Greece has been part of Europe’s Schengen bloc since 2000, it has the almost unique status of sharing no land border with another member of the passport-free travel zone (Iceland doesn’t, either). For that reason, suspending Greece from Schengen would probably have no direct effect on the unrelenting influx of refugees from Turkey’s shores into Germany and points north. Although the noise surrounding such a suspension has risen in recent days, only those who fly from Athens into the rest of Europe would find their travel disrupted, and there are not many migrants who have been lining up at the Aegean Airlines ticket desk to book an aisle seat to Munich. (The price of a plane ticket may actually be cheaper, but this video explains why refugees can’t fly commercial.)

That’s why newfound support for EU aid to Macedonia so it can beef up its border defences with Greece has suddenly become the hot topic within many interior ministries and the European Commission. It would achieve what governments up north have long wanted – to keep refugees inside Greece, where they can be processed and, if they qualify, relocated across the EU – while not broaching the politically toxic topic of Schengen expulsion.

In a letter sent yesterday, Jean-Claude Juncker, the European Commission president, gave his full-throated support to the Macedonia plan: “I welcome your suggestion,” Mr Juncker wrote to Miro Cerar, the Slovenian prime minister who has been driving the concept. Although legally, Brussels itself cannot currently send such aid to a non-EU member, Mr Juncker said individual member states should “support controls on the border with Greece through the secondment of police/law enforcement officers, and the provision of equipment.” Read more

Peter Spiegel

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Spain's King Felipe VI, left, receives Mariano Rajoy on Friday amidst coalition talks

At the height of the eurozone crisis, it almost seemed on Brussels summit days that the EU gathering itself was not the most important meeting in town. Many focused instead on the pre-summit gathering of Europe’s centre-right political family, known as the European People’s party (EPP).

For a time, that assembly included not only the leaders of the Franco-German power axis (Angela Merkel and Nicolas Sarkozy), but also of the eurozone’s two other large economies (Spain’s Mariano Rajoy and Italy’s Silvio Berlusconi, and then Mario Monti). Almost every country under siege was there, too, including Portugal (Pedro Passos Coelho), Ireland (Enda Kenny), Cyprus (Nicos Anastasiades) and of course Greece (Antonis Samaras). For good measure, two of the most important non-eurozone countries were also represented (Poland’s Donald Tusk and Sweden’s Fredrik Reinfeldt).

But after another weekend of fast-moving developments in Spain, when Mr Rajoy essentially gave up on his efforts to retain the premiership, that lineup could easily be reduced to Ms Merkel and a handful of leaders viewed either as quasi-pariahs (Hungary’s Viktor Orban) or far from the EU’s main power centres (Mr Anastasiades, Mr Kenny and Bulgaria’s Boyko Borisov). Read more

Jim Brunsden

Mr Moscovici, right, chats with Mr Juncker. He will present the new tax measures next week.

Next week, the European Commission will take its latest step in its ongoing quest to move beyond the LuxLeaks corporate tax avoidance scandal that has periodically dogged President Jean-Claude Juncker.

Pierre Moscovici, the EU’s tax policy chief, is set to unveil a flurry of proposals aimed at tackling so-called base erosion and profit shifting: in other words the aggressive tactics used by multinationals to shrink their tax bills by as much as possible. This morning, we’ve done a story about the new proposals, which we obtained. But we’ve also now posted them here for others to read.

The so-called LuxLeaks revelations emerged shortly after Mr Juncker became commission president in November 2014, and dogged his early days in office. They documented how during his two decades as Luxembourg prime minister, up to 340 multinational companies, ranging from Ikea to Pepsi, funnelled profits through the tiny country to lower their tax bills to as little as 1 per cent.

The commission has embarked on a wave of regulatory changes to close loopholes, including making a renewed push for the longstanding EU goal of having a common consolidated corporate tax base for companies. It is also pursuing high profile competition cases against tax deals Luxembourg and others struck with multinationals such as Apple, Amazon and Fiat.

Most recently, the European Commission ordered Belgium to recoup about €700m from 35 multinational companies that have benefited from the country’s generous fiscal incentive scheme.

Mr Moscovici’s plans, which are outlined in a 13-page summary posted here, enshrine international agreements reached by the Organization for Economic Cooperation and Development into EU law, and in some cases go even further – notably when it comes to restricting the ability of companies to shift of profits from parent companies to lightly taxed subsidiaries. Read more

Peter Spiegel

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Austria's Faymann, left, with Merkel and Turkish prime minister Ahmet Davutoglu in November

Germany has received the most attention and Hungary the most denunciation, but in many ways it has been the country in between that has served as the bellwether of Europe’s ongoing refugee crisis. Back in September, Austria became one of the first countries along the “Western Balkan route” to find itself awash in migrants after Germany unexpectedly announced it was re-imposing checks on its southern border. A month later, it became the first country inside the EU’s passport-free Schengen zone to reconstruct fences at the border with another Schengen member, neighbouring Slovenia. Then last week it started turning away asylum seekers – though only those who admitted they were trying to get to Scandinavia.

But yesterday, the Austrian government may have taken its most significant step yet by announcing it would cap the number of asylum claims it will accept. Werner Faymann, the Austrian chancellor, said the country would only allow 37,500 to be admitted this year, down from 90,000 who applied for asylum status in 2015. Over the next four years, the limit will be 127,500. “We cannot in Austria take in all asylum seekers,” Mr Faymann said in Vienna. Frankfurter Allegemeine Zeitung has this excellent analysis piece that points out Mr Faymann long resisted such a cap, but was forced into the announcement by mounting pressure from within his own government.

The move raises serious legal questions, since the Geneva Convention on refugees – of which Austria is a founding signatory – prevents countries from expelling asylum seekers without a hearing, unless they can find a reason on national security grounds. Asked if the European Commission had come to a legal opinion on such quotas, a spokeswoman said it hadn’t – though only because up to now no country had sought such caps. But she hinted Geneva, which is incorporated into EU law, could present a roadblock. “We don’t practice pushbacks, we do not turn away people without first assessing their asylum applications on an individual basis, and this is the process that’s carried out across the EU,” said Natasha Bertaud, the commission’s spokeswoman on refugee issues. Read more

Duncan Robinson

After weeks of waiting, Gunther Oettinger has replied to a letter from the Polish justice minister that compared the German commissioner’s criticism of Poland’s media reforms with. . . the Nazi’s crimes of the second world war.

The letter, which we’ve posted here, is surprisingly polite, with a perky hand-written “Dear Colleague!” to start. This marked a shift in tone from the original missive from Zbigniew Ziobro, who tartly complained last week:

You [Oettinger] demanded that Poland be placed under ‘supervision’. Such words, spoken by a German politician, have the worst possible connotations for Poles. For me, too. I am the grandson of a Polish officer who, during World War II, fought in [Poland’s] underground Home Army against ‘German supervision’.

But Brussels is determined not to get into a war of words with Warsaw. This tactic was tried and failed with Viktor Orban, the populist leader of Hungary, who was happy to spar in public with the commission over his reforms while becoming increasingly popular at home.

 Read more

Christian Oliver

This is Monday’s edition of our new morning Brussels Briefing. To get it every day in your email inbox, sign up here.

Iran's foreign minister Javad Zarif, right, with EU diplomatic chief Federica Mogherini

With “implementation day” for the Iranian nuclear deal passing this weekend, the EU is wasting no time in staking its claim in what could become a high-stakes, cut-throat transatlantic commercial competition over modernising Iran’s oil industry. Miguel Arias Cañete, the EU’s energy commissioner, yesterday attempted to seize the initiative by announcing Brussels would send a “technical assessment mission” to Tehran next month, adding he looked forward to establishing a “high-level energy dialogue” sometime thereafter.

Although much of the diplomatic attention has focused on Tehran and Washington for more than a year, Europe’s diplomats fought a long and often thankless battle to help secure the deal. There has always been an intense debate about whether Tehran would be grateful towards the EU as a result. Would the Iranians finally take a softer line on European investment in the energy sector? Or would they wait? Would they keep Iran’s prime assets for US investors, holding out for the real prize: the reopening of the American embassy in Tehran?

One of the EU’s priorities is to push to improve the terms of upstream contracts, which were a major disincentive to investment for the European oil majors in the early 2000s. Companies such as BP, Royal Dutch Shell, Total, Repsol and Statoil all sought to gain a foothold in Iran in the early part of the millennium, but found the obstacles were commercial as well as political. Read more

Peter Spiegel

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Greek finance minister Euclid Tsakalotos (left) and eurogroup chief Jeroen Dijsselbloem

Eurozone finance ministers gather in Brussels today for their first eurogroup meeting of the year, and Greece is at the top of the agenda. Not too long ago, that very fact would have sent financial markets into paroxysms. But 2016 isn’t 2015, and thus far Athens’ new €86bn bailout programme has been chugging along comparatively smoothly. But could that change? Eurozone officials have always viewed the first quarter of this year as a crunch point when three elements must come together: completing the new programme’s first review; hashing out a deal on debt relief; and convincing the International Monetary Fund to join in for a third rescue.

At today’s eurogroup meeting, ministers will focus on the first of those tasks, and much of the discussion will be where it was during the far-more-contentious negotiations six months ago: pension reform. Under the new bailout, Athens must find €1.8bn in annual savings, and they’re not quite there yet.

In a memo the Syriza-led government has circulated in Brussels, officials note last year’s agreement talks of €1.8bn in “savings” not “cuts”, and they are proposing to close the gap by increasing employer payments into the system rather than slashing benefits. The European Commission appears willing to work with that, but the IMF remains sceptical – increased payments will raise labour costs and hit competitiveness. There are also concerns that Syriza is protecting middle-class pensioners, giving them incentives to retire early, rather than just the working poor.

Still, people briefed on the talks say Brussels believes it’s a blueprint they can work with. One senior EU official called the proposal “very ambitious”, particularly its consolidation of Greece’s mish-mash of pension funds into a master fund for all.

But a more difficult problem may be lying around the corner. One key pillar of the programme is Athens’ promise to get to a primary surplus – revenues minus spending when interest on debt isn’t counted – of 3.5 per cent of economic output by 2018. As it stands, Greece is about 1 per cent short of that goal, and measures to get to the 2018 target must be included in the 2016 budget. That will take a lot of heavy lifting. Read more

Jim Brunsden

After receiving two pointed letters from Warsaw, Timmermans seeks a meeting with minister

For days, EU officials had been signaling they would only issue a strongly-worded démarche to Warsaw for its new laws that critics argue undermine democratic norms. But on Wednesday, the European Commission took the unexpected step of moving forward with a formal “rule-of-law procedure” to determine whether the two new laws – one dismissing the management of state TV and radio broadcasters, the other limiting the powers of the constitutional court – pose a “systemic threat” to European norms.

Frans Timmermans, the commission vice-president in charge of rule-of-law issues, announced the decision after Wednesday’s meeting of the 28 commissioners. But he also formally notified Warsaw in a letter that we got our hands on and posted here.

Mr Timmermans letter comes in response to two missives from Warsaw that were far more pointed – including a particularly invective-filled one sent by justice minister Zbigniew Ziorbro on Monday – effectively telling the Dutchman to butt out of Poland’s internal affairs.

EU officials insist that the decision to move forward with the review were unrelated to the impolitic letters. Instead, they say, commissioners felt the procedure would lend some structure to their dialogue with Warsaw; otherwise, it would have remained unclear how either side would proceed. Read more

Peter Spiegel

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Flag-waving protesters demonstrate against Poland's new media law in Warsaw last week

“I regarded your letter as an attempt to exert pressure upon the democratically elected parliament and government of the sovereign Republic of Poland.” Not a phrase you’d normally expect in official governmental communications between two ministerial-level politicians in the EU. But it was part of an invective-filled response to Frans Timmermans, the European Commission’s first vice-president, from Polish justice minister Zbigniew Ziobro sent Monday night ahead of today’s highly-anticipated European Commission debate on two new laws that many critics believe undermine rule of law in Warsaw.

Despite the tendentious tone of the letter in response to questions on legal changes that will make it difficult for the country’s constitutional court to overturn legislation – and a similarly direct letter from senior diplomat Aleksander Stepkowski in response to concerns about a new Polish media law – officials tell us that Brussels is likely to keep its powder dry at today’s meeting, at least for now. Read more

Peter Spiegel

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It wasn’t so much what she said, it was how she said it. On Monday, Margrethe Vestager, the European Commission’s feared competition chief, announced her latest in a series of cases cracking down on sweetheart tax deals offered to multinationals by ordering Belgium to claw back €700m in illegal tax breaks to at least 35 companies.

The decision itself had been flagged up a month ago by Belgium’s finance minister, Johan Van Overtveldt, so it wasn’t really a surprise. But in announcing the decision, Ms Vestager went out of her way to highlight a common trait of those able to avoid taxes through the Belgian scheme (about €500m of the €700m). “Most of the companies benefiting are European; it is also European companies that avoided the majority of the taxes under the scheme, which they now have to pay,” she said at a midday news conference.

The statement stood out because it comes after American officials have privately raised concerns over the fact that three of the four initial cases in her corporate tax crackdown targeted US companies: Apple, Amazon and Starbucks. Last month, she expanded the list to include McDonald’s. The private grumbling became public in September when Robert Stack, the US Treasury’s man in charge of international tax policy, broke cover to complain about how the investigation would affect American corporate tax revenues, and Ms Vestager acknowledged that she had flagged up European companies in the Belgian scheme to emphasise her services’ impartiality. Read more

Duncan Robinson

The Polish government has sent a punchy defence of its media reforms to Brussels, accusing the EU of getting its facts wrong and warning of the “undesirable effects” any crackdown on Warsaw will bring.

The letter to the European Commission’s first vice president Frans Timmermans, which can be read in full here, lays out Poland’s defence of its decision to sack senior management at state media outlets. Read more