Bershidsky's View From Europe
Here's today's look at some of the top stories on markets and politics in Europe.
Economy takes back seat to Syria at G20 summit.
The first day of the G20 summit in Saint Petersburg was dominated by a fruitless discussion on Syria, in which the European Union scored a point for the host, Russian President Vladimir Putin, an opponent of military intervention against Syrian leader Bashar al-Assad. European Council President Herman van Rompuy said the Syrian crisis should be addressed "through the UN process" and that there is "no military solution." Even the Pope weighed-in, saying in a letter to Putin as the summit host that the pursuit of a military solution was "futile." U.S. President Barack Obama looked isolated, with relatively few leaders supporting an attack on Assad. Meanwhile, the BRICS countries (Brazil, Russia, India, China and South Africa), for example, agreed to set up a $100 billion stabilization fund for their currencies, with China providing most of the reserves. There is no point in the world leaders wasting more time on Syria at this summit. They might achieve something on the economy, though.
Germany's top business daily predicts resignation of legendary VW chairman.
Handelsblatt, Germany's leading business newspaper, reported that Ferdinand Piech, 76, chairman of the board at Volkswagen Group, will retire in the next few months because of health problems, ceding his job to current chief executive Martin Winterkorn. Piech, a grandson of Ferdinand Porsche, is the man who grew VW Group to vie with Toyota as the world's biggest car maker. He stepped down as chief executive in 2002, but still enjoys an exalted status at the company and in the automotive world in general. His resignation would trigger a serious management reshuffle at VW. The Wolfsburg-based company has denied the report, saying Piech is in the best of health and will remain chairman "for a long time," yet Handelsblatt has stood by its story. Piech has taken care to leave a lasting legacy, but Volkswagen without him would be a bit like Apple without Steve Jobs.
U.K. spy agency followed NSA in breaking widely used Internet encryption.
The Guardian published a new batch of classified documents provided by National Security Agency leaker Edward Snowden. The latest files from the NSA and its U.K. counterpart, the GCHQ, show that in 2010, the U.S. agency succeeded in defeating encryption technology used by major Internet companies to protect their customers' private data and correspondence. The GCHQ, for its part, decrypted the traffic of the "big four" service providers: Hotmail, Google, Yahoo and Facebook. Putin once made it a condition of Snowden's stay in Russia that he "stop working against the interests of the United States." That was clearly a mockery: Snowden has kept up a steady stream of revelations since being given temporary asylum in Moscow. He has already made his point, however: Using major Internet service providers is not safe. The ball is in these providers' court. They need to prove they are taking their users' compromised privacy seriously.
Vodafone to boost investment in Italy in wake of Verizon sale.
The U.K.-based telecom group Vodafone plans to invest heavily in Italy, after selling its share of Verizon Wireless in the U.S. One consequence of the $130 billion deal is that Vodafone acquires Verizon's 23 percent stake in Vodafone Italy, making the country the group's second biggest market in Europe. According to Vodafone chief executive Vittorio Colao, Italy will be a big part of "Project Spring," a plan to invest $7.1 billion in improving network quality and developing 4G networks. Vodafone is bursting with cash after the Verizon deal. In Italy, neither Telecom Italia nor Telefonica has comparable resources. The planned Italian investment may be just the beginning of a Vodafone blitzkrieg through Europe, where rivals will have a hard time matching the U.K. group's spending.
Burned Russian businessmen vie for Bank of Cyprus board seats.
On September 10, the Bank of Cyprus will hold its first shareholders' meeting since the island's banking sector was rescued by the EU and large depositors were forced to accept bank shares in lieu of their money. The meeting will elect a maximum of 18 people to the board of directors and candidate lists made public before the shareholder vote include seven Russians. The best-known of these is Vladimir Strzhalkovsky, Putin's old colleague from the Leningrad KGB, who received a $100 million golden parachute after being dismissed as chief executive of Norilsk Nickel, the world's top palladium producer. Part of that money was apparently stuck in the Cyprus bank. Analysts have estimated that Russians held almost half of the large deposits in Cyprus before the island's banking system collapsed. The deposits were part of Russia's epic capital flight, expected to reach $70 billion this year. The people behind it, some of them with close ties to the Kremlin, never meant to make their Cyprus accounts public. Now they have to, in order to make the most of their forced "investment".
(Leonid Bershidsky, an editor and novelist, is a Bloomberg View contributor. He can be reached at email@example.com).