Bershidsky on Europe: German Surplus Probed
Here's today's look at some of the top stories on markets and politics in Europe:
EU to review 'excessive' German surplus
The European Commission is set to launch a formal review of the German economy because for the last three years, the country has run a current account surplus of more than 6 percent, a number considered excessive under new EU rules. The goal of the procedure is to put pressure on Germany to increase domestic demand. Apparently, the EU's economic commissioner Oli Rehn is siding with the U.S. Treasury in accusing Germany of causing deflation throughout Europe with its strong focus on exports. Although the Commission does not have the clout to impose radically different economic policies on Germany, the EU's strongest member and euro area's financial pillar, the probe shows a deepening rift between German and EU officials. Germany opposed a recent European Central Bank rate cut, and it maintains that there is nothing wrong with export orientation because it creates jobs. Trying to impose a more southern European type of financial behavior on Germany is counterproductive, though: It will only make Germans resentful and weaken the union.
EU agrees on 2014 spending
The EU's governing institutions have agreed with the 28 member states that Brussels will have $181 billion to spend in 2014, six percent less than this year. The EU budget accounts for about 2 percent of united Europe's public spending, but it is still a lot of money, which is why the U.K., Sweden, the Netherlands and Denmark called for cuts. The resulting reduction, agreed in marathon talks that only ended in the early hours of Nov. 12, was enough to show the EU's commitment to austerity. It is, however, relatively insignificant if one considers the fact that in 2012, 4.8 percent of the EU budget was misspent, according to the bloc's Court of Auditors, which has just published its annual report.
Germany details plans on Nazi art trove
German officials laid out their plans for dealing with the 1400 works of art discovered in the apartment of Munich resident Cornelius Gurlitt, the son of a prominent art dealer who once helped the Nazis sell off "degenerate" art. According to the German authorities, the provenance of 970 of the works would be researched, 590 of them as works possibly looted by the Nazis from Jews and other persecution victims. As a first step, Germany released a list of 25 works likely to have been illegally taken by the Nazi regime from their rightful owners, including drawings by Rodin and Delacroix, and a Chagall painting. The paintings and drawings found to be illegally procured will be listed on a government site. A full list of the 1400 works of art is still not forthcoming, though. Gurlitt is likely to keep much of his cache because the statute of limitations on Nazi art theft has long expired. That should not, however, stop the German authorities from making a deal with him that would allow art lovers to see the collection exhibited, if not entirely restored to rightful owners' heirs.
Vodafone increases investment plan
The U.K.-based mobile operator Vodafone, which next year will be looking to spend some of its $130 billion proceeds from the sale of a stake in Verizon Wireless, intends to invest $11.2 billion in infrastructure, $1.6 billion more than previously announced. The company intends to spend $4.8 billion on service improvements in its European 3G and 4G networks, $2.4 billion on similar projects in emerging markets and $1.6 billion to buy or build fixed-line networks for broadband services. The rest of the money will go into the mobile operator's enterprise business and a retail expansion. Vodafone saw its revenue and profit go down in the six months to September, mainly because of tough competition in Europe. Executives understand that success hinges on service quality and a fast 4G rollout, so spending some of the Verizon cash on improvements is a logical move.
Far-right protesters unleash violence in Warsaw
An Independence Day march in the Polish capital erupted in violence as balaclava-wearing far-right activists burned cars, attacked a left-wing squat and the Russian embassy. Police had to use rubber bullets to break up the riot. Disturbances of this kind are almost an Independence Day tradition in Poland, yet this year the ultra-nationalists did the most damage. Poland is only one of a number of European countries where the extreme right is on the ascendant. France, too, saw rightist violence on Nov. 11, leading to the arrest of 73 people in Paris. Governments are for the most part unsure what to do about the rise of aggressive nationalism, emboldening the thugs. Sooner or later action will need to be taken, as it was in Greece, where the leaders of the local extreme right party, Golden Dawn, stand accused of running a criminal organization.
(Leonid Bershidsky is a Bloomberg View contributor. He can be reached at email@example.com).