Bershidsky in Europe: Merkel Tapped for 11 Years
Here's today's look at some of the top stories on markets and politics in Europe:
NSA tapped Merkel's phone for more than 10 years
Der Spiegel reports that the U.S. National Security Agency tapped Angela Merkel's mobile phone between 2002 and the summer of 2013, a few weeks before U.S. President Barack Obama's visit to Berlin. Merkel's calls were monitored from the U.S. embassy in Berlin by a joint unit of the NSA and the Central Intelligence Agency, called the Special Collection Service. Meanwhile, The Wall Street Journal reported, citing unnamed U.S. officials, that a White House internal review last summer uncovered the Merkel tap and similar arrangements involving other world leaders and put a stop to them without informing Obama of their existence. So far, the White House has been remarkably clumsy in handling the tapping scandal. Trying to shift blame or pointing to accepted intelligence practices will not help re-establish trust with America's European allies. It's time Obama brought himself to apologize and agree to a reset of intelligence cooperation with the Europeans.
Athens home to best-performing bond funds
Three Athens-based funds investing in Greek government bonds, one run by NBG Asset Management and two by Eurobank Asset Management, have shown returns of more than 100 percent in the last 12 months. They bought the Greek bonds at the height of the nation's debt crisis and held on to them when everyone else saw them as toxic. The fund managers bought the bonds for as little as 12 cents to the euro, but now they are up to 53 cents, and the funds have performed better than any others tracked by Morningstar. This feat by three small funds will draw even more investors to Greek and other southern European assets, which are already more fashionable than the region's economic situation warrants.
Vivendi to buy out Lagardere from Canal+
Vivendi, Europe's biggest media and entertainment group, is close to acquiring the publisher Lagardere's 20 percent share of TV group Canal + for about $1.38 billion. Lagardere is shedding assets, selling 10 of its 39 magazines, and is therefore willing to get rid of the minority stake after fighting with Vivendi for years over the lack of dividends. After the deal goes through, Vivendi will end up with 100 percent of Canal +. In an ironic twist, news of the deal comes just as Jean-Marie Messier, the man who turned a boring French utility into glamorous Vivendi, is due to appear in court to appeal the suspended three-year sentence he received in 2011, for misleading shareholders about the company's precarious financial position. Messier's appetite for huge deals in the 1990's and early 2000's drove Vivendi to the edge and it is still getting rid of unneeded assets, seeking to concentrate on media and entertainment. It was Messier who acquired Canal + for Vivendi. He must have been right about a few things, then: He just got a little carried away.
Alrosa IPO brings in $1.3 billion
The Russian state-owned diamond monopoly Alrosa placed 16 percent of its shares for $1.3 billion, a Lazard fund becoming the company's biggest private shareholder with a 3.7 percent stake. The company eschewed London and New York, placing is shares on the Moscow Exchange to boost its importance in the eyes of international investors. Alrosa is now the biggest listed diamond company in the world, South African De Beers' trading history now only a distant memory. That makes the company's valuation surprisingly low. The Russian bank TCS, specializing in consumer loans, soaked up $1.1 billion with its IPO just over a week ago, obtaining a valuation of $3.2 billion. Alrosa dwarfs TCS, not even a top-50 bank in Russia, in terms of revenue and profit, but then TCS did its IPO in London, not Moscow.
Billionaire prime minister's ally wins Gerogia presidency
Giorgi Margvelashvili of the Georgian Dream party won the October 27 presidential election with 62 percent of the vote, his rival David Bakradze of the United National Movement trailing with 21.9 percent. Margelashvili is an ally of Georgia's billionaire prime minister Bidzina Ivanishvili, who was known as Boris for most of his life as he made his fortune in Russia. Bakradze was backed by outgoing president Mikhail Saakashvili, responsible for the brief 2008 military conflict with Russia. Georgian Dream, which is conducting a gradual rapprochement with Moscow while trying to keep Georgia on a European integration path, has now consolidated its power in the small but strategic post-Soviet state. Ivanishvili, the wealthiest man in Georgia, has spent freely on humanitarian causes and churches, and Georgians love him as a benefactor. Though he will step down as prime minister soon after the presidential election, he will become a kind of benevolent grey cardinal making sure his proteges do not do anything rash like start another war with Russia.
(Leonid Bershidsky can be reached at email@example.com).