Welcome to the Brussels Edition, Bloomberg’s daily briefing on what matters most in the heart of the European Union.

NATO plans to hold a short summit focused on delivering what US President Donald Trump asked for: a commitment to spend 5% of GDP on defense. But beyond this number, deeper shifts are underway as NATO reorganizes with one goal: deterring Russia. The allies are discussing for the first time combining the alliance’s ballistic missile shield with other integrated missile-defense assets, we’re told. This is part of an effort to shield NATO’s eastern flank from attack, a move likely to stoke tensions with Russia. Meanwhile the alliance is also expanding its satellite surveillance capacities to scan large swaths of land in order to monitor military movements in Ukraine and on Russia’s borders with its eastern members, top commander Pierre Vandier told us.

—Jorge Valero and Andrea Palasciano

What’s Happening

Iran Strikes |  Israel launched waves of airstrikes against Iran’s nuclear program and ballistic-missile sites early this morning, a major escalation in the standoff between the two adversaries. Oil surged as much as 13% over fears of a wider war in a region that accounts for a third of global crude production.

Green Warriors |  As Europe tries to increase its geopolitical weight, regulatory influence beyond the region’s borders is among its assets. The bloc and the UK, which has similar rules, are playing outsize roles as the world’s top sustainability regulators. Still, some proposed changes on ESG reporting requirements pushed by EU lawmakers could put the sustainability agenda at risk.

Nuclear Challenges | The EU’s ambition to scale up nuclear energy as part of its 2050 climate neutrality goal will cost €241 billion, according to a draft EU document we’ve seen. While more than 80% of that would be used to build new reactors, market-based instruments to fund the expansion are still “lacking,” the draft says, underscoring the challenges facing Europe’s nuclear renaissance.

Cycle Ending | The ECB’s interest-rate cutting campaign may soon be over, as medium-term inflation is stabilizing around the 2% target, Executive Board member Isabel Schnabel said. ECB Vice President Luis de Guindos said in another speech that “compared with the situation a year ago, our concerns have shifted from high inflation to slow growth.”

Different Mindset | European banks are increasingly becoming more comfortable with getting involved in the EU’s rearmament efforts. Internally, banks have been changing guidelines and policies to ensure that they can work with a sector long seen as a reputational risk, officials at some of the region’s biggest banks told us.

Around Europe

Testing Resilience | Spanish Prime Minister Pedro Sanchez’s senior adviser Santos Cerdan resigned yesterday after a court asked him to testify voluntarily over bribery and influence peddling allegations. Cerdan denied wrongdoing. Speaking at a press conference later, the Socialist premier dismissed calls for an early election and announced an external audit of his party’s accounts and a reshuffle of its leadership. 

Using Loopholes | Lithuania accused Russian importers of using medical sanctions exemptions to buy goods for Moscow’s military. “We have witnessed parts for motor vehicles, refrigerators, copying machines and other types of microelectronics being exported directly to Russia claiming that these are bound for medical use in Russia,” Deputy Foreign Minister Gabija Grigaite-Daugirde told us.

Costly Invasion | Russia has likely suffered 1 million causalities since the start of its full-scale invasion of Ukraine, the UK said. The toll includes around 250,000 Russian soldiers who were killed or are presumed dead.

Crunch Time | Germany’s race to fill its vast gas storage sites ahead of next winter is entering crunch time after one of the country’s largest facilities failed to find buyers. That left the Breitbrunn underground facility, the fourth biggest in the country, two-thirds empty and at a very high risk of falling well short of its 80% target by November.

Chart of the Day

As Bulgaria prepares to adopt the euro, the country is split in half: while politicians point to benefits like increased investment and lower borrowing costs over time, many citizens worry that prices will climb in the short term. For millions of Bulgarians who lived through economic crises, their currency — the lev — is more than just bills and coins, it’s a symbol of stability. 

Today’s Agenda

All times CET

• 7 a.m. Doorsteps ahead of meeting of EU home affairs ministers in Luxembourg
• 9 a.m. NATO Secretary General Mark Rutte meets Swedish Prime Minister Ulf Kristersson in Stockholm
• IEA energy efficiency conference in Brussels