Bershidsky's View From Europe
Here is today's look at some of the big stories on markets and politics in Europe:
IMF warns EU the Greek bailout will be costlier.
The international bailout of Greece faces a cash shortfall of $14.6 billion by the end of 2015, the International Monetary Fund said in a 195-page report, and 2014's financing gap will be as large as $5.8 billion. The European Union, meaning mostly Germany, will have to write off more Greek debt so Greece can pay back IMF loans. Unless that happens, the IMF will not be able to disburse more aid. The report comes just days after the Fund released the latest bailout tranche of $2.4 billion, and two months before a German general election. Officials in the Angela Merkel government, facing voter indignation, have been telling their Greek counterparts to forget about further debt write-offs. Meanwhile at the IMF, Latin American representatives have been openly calling the Greek bailout a failure and a waste of money that could be used to help poorer countries. The Brazilian member of the IMF board abstained when the latest disbursement was approved. Yet the EU and the IMF have spent too much on saving Greece to back out now. They will have to keep throwing good money after bad, hoping to avoid even bigger losses on the Greek debt, which now stands at 176 percent GDP.
Legendary ThyssenKrupp boss dead at 99.
Berthold Beitz saved hundreds of Jews from death camps during the Holocaust and engineered the 1999 merger that formed ThyssenKrupp, a pillar of German industry. He could have retired long ago, but even at 99 he worked two hours a day, running the Krupp Foundation, ThyssenKrupp's largest shareholder, which appoints half of the the industrial group's board members. His death comes in the worst year ever for the German company: For the first time in its history, it has not paid a full-year dividend for 2012 after sustaining a loss of $6.5 billion, mainly because of writeoffs on a disastrous steel project in the U.S. and Brazil. ThyssenKrupp has also suffered from corruption and price fixing scandals. For the foundation, the lack of dividends means the need to consider cutting its lavish humanitarian programs.
Spanish group sells London's Luton airport.
The Spanish holding company Abertis, which has interests ranging from toll roads to telecommunications, has sold off almost all its airports, the latest being Luton near London. Aena, also a Spanish company, paid $666 million for Luton; Abertis says it made almost no profit on the deal. Earlier, Abertis got rid of airports in Florida, Sweden (Stockholm's Skavsta) and Wales (Cardiff). The group's only remaining assets of this kind are in Mexico and Montego Bay, Jamaica. It has been almost a fire sale: Abertis hired investment bankers to conduct a review its airport assets as recently as February, 2013. The exercise has clearly shown that, with falling passenger traffic and local authorities demanding more investment in the hubs, airports are not worth owning.
French Oysters dying from new disease.
The $800 million French oyster industry has suffered a new blow. After a herpes virus started killing off young oysters four years ago, forcing producers to jack up prices about 40 percent since 2008, oyster farmers finally saw signs of an improvement in 2012. But now, adult oysters almost ready to be marketed are dying off at an alarming rate. At some farms, 50 to 80 percent of the three-year-old shellfish have perished in the last six weeks. Marine biologists believe the deaths have been caused by a bacterium called the vibrio aesturianus. Whether this is the beginning of a lasting new epidemic or just a reflection of this year's climate conditions, oyster prices are expected to keep rising sharply as producers struggle to keep their businesses afloat.
Russia drops out of international transit system.
On August 14, the Russian customs service will stop honoring TIR Carnets, the documents used by all hauling companies in accordance with the 1975 United Nations Customs Convention to guarantee the payment of import duties. The customs service says the international system is not working in Russia because the guarantor under the TIR scheme, the local organization of the International Road Transport Union, is accumulating debts. The debt amount, however, is laughable, less than $1 million. Importers theorize that the customs service is merely trying to drum up business for Rostek, a company it formed to provide various services at the border. Rostek issues its own duty guarantees at a price higher by an order of magnitude than the TIR Carnets. Though many operators will be willing to pay Rostek's rates to avoid supply disruptions, and others will switch to railroads and ports as an alternative to long-haul trucking, this fall will likely see higher import prices and temporary shortages of some imported goods in Russia.
(Leonid Bershidsky, an editor and novelist, is a Bloomberg View contributor. Follow him on Twitter.)