Thursday, 31 January 2008

SocGen: Europe’s Enron?

As the Economist points out today, it’s quite a feat to push France’s attention-hungry president off the front pages these days. But a young low-level trader in Paris has managed to do just that.

Last week it emerged that a rogue trader named Jérôme Kerviel has cost France's most venerable bank, Société Générale, more than $7-billion. For France, and indeed for all of Europe, Kerviel’s story has been captivating. Those at the top of the economic ladder see him as an evil genius, a scheming traitor who duped his vigilant employer by hiding his thieving through complex manoeuvring. Others, particularly on the French left, see him as a modern day Robin Hood, exposing the weaknesses of French capitalism.

Though SocGen, the biggest economic success story in a nation known for its mistrust of capitalism, has tried to portray the crime as genius in its deception, Kerviel’s own court testimony reveals that it was anything but. According to the French press, Kerviel has testified that his thieving began as early as 2005, merely by creating fake trades and pocketing the money himself. He also says it should have been obvious to his superiors because he was openly reporting making as much as €600,000 in a single day, a ludicrous amount for a trader to be making legitimately.

Tuesday, 29 January 2008

The return of Berlusconi?

The past week has been a shattering, if not entirely unexpected week for Italy’s center left. The country’s premier, Romano Prodi, resigned last week after losing a confidence vote in the senate.

Today Italy’s president Giorgio Napolitano met with Prodi’s arch rival, controversial conservative leader Silvio Berlusconi, who has been demanding early elections in which he could potentially reclaim power.

Prodi had been in power for two years, and in some ways it was surprising he had even lasted that long. His center-left coalition won power in April 2006 with a slim majority, and even then his fractious coalition seemed doomed from the start. In February 2007 Prodi had to resign as prime minister after losing a key foreign policy vote over Prodi's stance that Italy should continue to provide troops in Afghanistan, and over Prodi’s support of an expansion of an American military base in Vicenza, in northern Italy. Prodi then had to form a new government to hold on to power.

Friday, 25 January 2008

EU considers concession to Serbia to influence election

The diplomatic maneuvering over Serbia’s upcoming election got a little more interesting today. It has emerged that the EU is considering signing an ‘interim pact on trade and cooperation’ with Serbia before the February 3 presidential election.

The move is an attempt to give a boost to the pro-Europe incumbent, Boris Tadic. It is also a first step in granting concesions to Serbia (toward its entrance into the EU) in exchange for it allowing the breakaway republic of Kosovo to declare independence.

This type of interim pact would normally not go into force until the EU signed a Stabilisation and Association Agreement with Belgrade, but such an agreement requires the signature of all 27 member countries and the Netherlands and Belgium have refused to sign it unless Serbia hands over a war crimes suspect, former Bosnian Serb military commander Ratko Mladic, charged with genocide for the 1995 Srebrenica massacre of 7,000 Bosnian Muslims. Serbia has refused to do so.

Thursday, 24 January 2008

British MEPs say global warming is bunk

It strikes me that if people in Britain actually knew anything about their MEPs (Member of European Parliament) they might be a bit embarassed about some of the things that come out of their mouths. But seeing that the British often hand-select MEPs who don't think the European Union should exist at all, it shouldn't be surprising that they might say some things to offend.

The climate change plan has been the pride and joy of EC President Barroso, since he sees it as a sure-fire way for the EU to gain popularity. Many have pointed out that in order to restore the European public's trust and enthusiasm for the EU project, the union needs to highlight the areas in which union would do the most good. Since the economic arguments don't seem to be making much headway with the broader public (in fact it's been used as a main criticism of the EU, only protecting business interests and all that), the two areas which would be popular would be global warming and protecting the public from terrorism. Only a large block with a unitary policy could make real productive progress in either of these areas.

Janet Daley on the UK's obsession with the US election

This was a very funny piece on NPR's On the Media this week. The Daily Telegraph's Janet Daley gives her take on why the UK has been obsessed with this presidential election. You can listen to it here:



But there's three important things I think Daley didn't mention:

1) The UK isn't alone in its fascination with this election cycle, this has been a world-wide phenomenon and especially true in Europe.

2) The UK's foreign policy is inextricably linked to that of the US, insofar as the UK has to do whatever the US tells it to. So Brits have a huge stake in this election.

3) The US election result in 2004 was a complete shock in the UK. For whatever reason, all of the media coverage here in the runup to the vote was saying that Bush was finished. I remember all my British friends talking at the time as if it was a sure thing Bush would be voted out, when the reality was it was anything but certain. So this time around, the Brits are making an effort to pay closer attention so they don't have the rug pulled out from under them again.

I wonder if the inordinate amount of US election coverage here will make some Brits think about how unfortunate it is that the outcome of an election in which they are not allowed to participate will have a huge effect on their lives. Or, perhaps it will result in a hunger for a new kind of politics in Westminster, as Daley seems to be suggesting here.

Wednesday, 23 January 2008

EU unveils climate change package

At long last, the European Commission unveiled its much anticipated energy and climate change package today, and it's a doozy.

As reported on Certain Ideas of Europe, the plan promises to deliver steep cuts in greenhouse gases, job security for heavy energy users like steel works, a whopping increase in renewable energy production, lots more biofuels and greater energy security, with reduced dependence on unstable energy suppliers. The overarching theme is to make Europe the leader in combating global climate change.

But as the Economist points out, even as they were unveiling the new policy one of their main policy goals - a common European energy policy - was again being thwarted right in their backyard. Today Serbia’s government agreed to sell its oil and gas company, NIS, to Russia’s Gazprom. It's one more step toward Russia's goal of building a pipeline called "South Stream" to send gas directly into the EU. Gazprom has also done similar deals with EU members Italy, Hungary and Bulgaria. All of this is a direct challenge to the European pipeline project Nabucco, which would bring gas to Europe from Iran and Azerbaijan via Turkey, reducing EU dependence on Russia.

The energy and climate change package is in many ways just as much about giving Europe a common energy policy as it is about combating climate change. The hope is that if the EU could get enough energy weight that the smaller countries won't be tempted to do individual deals with Gazprom. It could work, but the Nabucco project so far seems to be going nowhere while Russia is churning ahead. And a future in which the EU is dependant on Russia for its energy needs is a future no one in Brussels wants to see. Well, maybe no one except the Russian ambassador.

Tuesday, 22 January 2008

Will the US recession spread to Europe?

As Wall Street opens after the Martin Luther King weekend, the world is waiting with baited breath to see what happens after the opening bell. The US traders had the day off yesterday, but rather than relaxing they probably spent it in horror as they watched markets across the globe plunge amid fears of a US recession. Markets in Europe suffered their biggest one-day losses since the September 11th attacks. When trading opened this morning in the East the Asian markets took an absolute nose dive. In response the US Federal Reserve made an emergency rate cut early this morning US time, an eye-popping three-quarters of a percent. It helped the European markets bounce back slightly but it was too late for the close of the Asian markets.

So far it doesn’t seem to have done the trick for this morning’s Wall Street trading, probably the most closely watched in years. The Dow fell immediately after the bell, dropping 441.72 points at one point. The Nasdaq and S & P 500 were down more than 3 percent just in the first half hour.

All of this of course is in response to a panic over the fact that the US is either about to enter a recession or it is already in one, sparked by the subprime loan crisis. But aside from the markets, how vulnerable is the rest of the world to this coming economic crisis in the US? The subject has been the topic of much speculation in Europe over the past week.

Monday, 21 January 2008

Time for Serbia to pick a side

The Serbian presidential election over the weekend could hardly have been encouraging for Brussels. Ultranationalist candidate Tomislav Nikolic emerged the winner with 39.4 percent of the vote, beating the 35.4 percent of incumbent candidate Boris Tadic. Since neither candidate won a majority, a second round of voting will be held in two weeks.

The election is being closely watched because it has huge implications for the future of the Balkans. The Serbian people can choose either Mr. Nikolic, who wants closer ties with Russia and is opposed to NATO, the US and the EU, or Mr. Tadic, who wants Serbia to join the EU and wants it to distance itself from Russia. In short, the election will determine whether Serbia takes the path toward Russia or the path toward the EU.

The 61 percent turnout – the highest since the fall of Milosevic in 2000 – shows how seriously the Serbs are taking the vote, and the result of the weekend shows that they are almost evenly split over which direction Serbia should take.

Friday, 18 January 2008

Europe’s far right calls for ban on mosques

Far-right groups in Belgium, Germany and Austria today launched a drive calling for a ban on the building of new mosques in order to stop the spread of radical Islam in Europe.

Belgium's far-right Vlaams Belang has joined with radical groups from Austria and Germany to launch a Charter to, “fight the Islamisation of West-European cities.” They announced their new coalition Thursday in the Flemish city of Antwerp. Vlaams Belang’s Filip Dewinter told Radio Netherlands Worldwide, “"We are not opposed to freedom of religion but we don't want Muslims to impose their way of life and traditions over here because much of it is not compatible with our way of life."

Tensions between Muslim communities and the majority populations in Western Europe have been growing in recent years as these largely secular societies struggle to absorb populations with deeply held religious beliefs. The crisis has been exasperated by incidents such as the 2004 murder of Dutch filmmaker Theo Van Gogh (a relative of Vincent Van Gogh) by a jihadist after Van Gogh made a movie dealing with violence against women in Islamic societies. Tensions between Muslims and the secular Dutch have been particularly strong since then.

Monday, 14 January 2008

After Lisbon signing debacle, Brown shifts tone on Europe

In a move that can be expected to generate cheers of praise and some sighs of relief in Brussels, Gordon Brown today gave a strongly worded defense of Britain’s place in Europe, signaling a shift in tone from an administration which has so far seemed to be avoiding any discussion about the EU.

In a speech on the global economy delivered to business leaders this morning, Brown promised a policy of “full engagement” with the European Union and said that if Britain were to “retreat to the sidelines” of Europe, as some members of the Conservative Party are demanding, it would jeopardize Britain’s trade, jobs and the very foundation of the British economy itself.

It is the first time Brown has strongly condemned domestic criticisms of Britain’s membership in the union, criticism which is very popular in the British press and among right-leaning politicians. Brown has never been perceived to be particularly Euro-friendly. As chancellor in 2005, Brown derided the federalist ambitions of the original constitution, saying that EU leaders must accept that people are more attached to "national values" than an "outdated" federalist ideal.

Friday, 11 January 2008

Obama's loss: the view from Europe

Given that I wrote about Europe's reaction to Obama's win in Iowa last week, I thought it logical to now write about its reaction to his loss this week. Just from personal observation, I've been surprised at the huge level of relief being expressed by most people I know here in the UK. It seems that though they were impressed with and surprised by Barack's win, they are still rooting for Hillary to win the Democratic nomination. In fact I don't know a single European who actively wants Obama to win.

Part of this of course is that they know Hillary, they adored Bill Clinton and are eager to see a return to the Clinton years. They know almost nothing about Obama, and being removed from the domestic situation in the US they can't quite understand the enthusiasm for a man who has outlined little of his actual platform or policy plans.

Tuesday, 8 January 2008

Obamania: the view from Europe

It’s been interesting to watch the European coverage of Barack Obama’s mammoth victory in Iowa over the past few days. Beyond the fact that it is such big news here, what has been notable is what the European press is emphasizing in their coverage.

Had the Iowa caucus passed without any extraordinary result, say with a Hillary and Mitt win, it still would have been a major focus here. After all, US presidential elections are followed worldwide with great attention, and this is particularly true in Europe. With the US being the world’s lone superpower, it’s just a bizarre quirk of history that the decisions made by a few thousand people in Iowa every four years have a dramatic effect on the entire globe. Yet the European coverage of the primary season has switched into hyperactive gear this year not only because the continent is so eager for new leadership in the US, but also because of the surprise ascendancy of two previous unknowns in the first contest.

Of course, the fact that Huckabee and Obama won the Iowa caucuses wasn’t a huge surprise to many living in the US, as this result was largely expected weeks before the vote (though the margin of the victories was a surprise). But here in the UK, for instance, nobody knew who Huckabee was until Thursday and only the most current events-savvy Brits knew much about Obama. In fact the presumption here has been that Hillary Clinton was guaranteed to be the next US president.

Monday, 7 January 2008

French president to marry supermodel

The French press reported today that President Nicolas Sarkozy is going to marry the celebrity model Carla Bruni in February, just two months after they met.

French media first breathlessly reported the budding relationship in December when the two made a highly visable trip to Euro Disneyland. The relationship is all the more interesting because Sarkozy was just divorced by his wife Cecilia in October. At that time the public also learned that the marriage had been effectively over throughout the presidential election but it was kept a secret for fear of how it would affect the vote.

The Elysée Palace refused to comment yesterday on the news, but Bruni's mother, Marisa Borini, told the Italian press last week that President Sarkozy had asked her for her daughter's hand.

Friday, 4 January 2008

Iowa: what it all means

For everyone in London who is asking me - yes, I was as surprised by the Iowa primary result as you all were! For the past several days I’ve heard speculation that Hillary was going to come in third in the first US primary in Iowa but I didn’t believe it. After all, Hillary has been the natural front-runner for the entire contest up to this point, and the recent assassination of Benazir Bhutto was only supposed to shore up her inevitability as she portrayed herself as the candidate of strength and experience.

But the result I woke up to this morning is truly shocking, and has to have sent the Clinton camp into a tail spin. But it isn’t there mere fact that she placed third that has to have them in a panic, it’s the sheer magnitude of the way she was beaten. In fact when you look at the exit polling, the numbers are truly astonishing.