Bershidsky on Europe: Spy Charges Hit Russia
Here's today's look at some of the top stories on markets and politics in Europe:
Russia allegedly spied on guests of G20 summit
According to reports in the Italian press, guests of last month's G20 summit in St. Petersburg were given USB drives and phone chargers which contained spying software. European Council President Herman van Rompuy submitted the gadgets for testing to EU security services in Brussels, and they asked German experts for help. The technicians from Bonn allegedly found the devices infected with Trojans capable of gathering and transmitting information from computers and phones. It was not clear which guests of the summit received the USB drives: The British prime minister's office, for one, said David Cameron had not been given one. In any case, Russia denied the allegations. President Vladimir Putin's spokesman Dmitri Peskov called them an attempt to distract attention from U.S. spying on world leaders. The U.S. National Security Agency now also denies that it spied on millions of Europeans, saying European intelligence services voluntarily supplied phone records to the U.S. Be that as it may, any politician with sensitive information on his computer or phone ought to have them checked for spyware. It is also safe to assume that any phone conversation is unsafe. One bunch of spooks or another will be interested.
France suspends "ecotax"
French Prime Minister Jean-Marc Ayrault announced the suspension, for the third time, of the "ecotax" on large vehicles that was due to come into effect from 2014. The decision followed clashes between protesters and police in Brittany last weekend. Ayrault stressed that the levy has not been abolished, merely postponed -- the government wants to rework it, introducing different tax rates for different regions. The message from the French people is clear: A tax burden of 46 percent gross domestic product is as much as they can bear. The highly unpopular Socialist government has lost its ability to raise taxes, and the only way it can cut the budget deficit is by curbing spending.
Italian recession enters third quarter
Antonio Golini, head of Italy's official statistical agency Istat, said the nation's gross domestic product fell by "a limited amount" in the third quarter of 2013. Official quarterly data are not expected for another two weeks, but Golini's statement makes it clear that Italy, unlike Spain, is not yet out of recession. Industrial production in the euro area's third biggest economy is still 25 percent below the pre-crisis peak, and public debt is expected to top 132 percent of GDP by the end of the year. Prime Minister Enrico Lette has succeeded this month in derailing his fractious coalition ally Silvio Berlusconi's bid for an early election, but all the fight seems to have gone out of him after the victory, just when it was time to present a budget. The government's version is complacently high on the spending side.
Nokia sells record number of smartphones
The Finnish mobile phone producer said it sold 8.8 million Lumia smartphones in the third quarter of 2013, more than ever before and 19 percent more than in the previous quarter. That is still below the company's break-even target, 50 million Lumias a year, but it is an optimistic sign for Microsoft that the take-up rate of its mobile operating system, which the Lumias run, is increasing. Nokia's deal with Microsoft, in which the latter acquires the Finnish firm's mobile phone business, will not be closed until the first quarter of 2014, so the Finnish company is still carrying the phone unit's losses. Its management's thoughts, however, are far away: the discussions at Nokia are all about what to do with Microsoft's cash, $7.2 billion of it, when it finally comes in. As to that, nothing has been decided yet. Some of the cash will probably be distributed to shareholders, and the rest could be used to bolster the company's large and modestly profitable network equipment business.
Europe's biggest CO2 emitter changes strategy
Peter Terium, chief executive of German energy company RWE, Europe's biggest CO2 emitter, announced a radical change of strategy, saying that from now on the company will only grow in renewable energy. Terium vowed that RWE would no longer open any power plants running on fossil fuel and that it would bring down energy production from conventional sources from more than 50 percent of the total to 20 percent by 2020. The strategy shift is hardly voluntary: Germany's heavily subsidized renewable energy industry has brought down energy prices so that up to 40 percent of RWE's conventional plants are losing money. The company's cash flow is barely sufficient to service its $48 billion debt. RWE is planning an asset sell-off and job cuts to avert a cash crunch. Under the circumstances, the new policy is largely a declaration by the management that it accepts the new reality and will try to make sure it does not kill the company.
(Leonid Bershidsky is a Bloomberg View contributor. He can be reached at firstname.lastname@example.org).