Bershidsky on Europe: Saab Beats Boeing
Here's today's look at some of the top stories on markets and politics in Europe:
Saab wins Brazilian fighter jet contract, beats Boeing and Dassault
Sweden's Saab landed a surprise win in Brazil's tender for a new fighter jet, beating out Boeing and France's Dassault. The French company lost because its Rafale fighter was more expensive than Saab's Gripen, and the Swedes proposed a higher level of technology transfer. The French company has yet to sign a single export deal for Rafale, and the loss is painful economically. For Saab, the $4.5 billion deal confirms the new generation Gripen's success: The jet is already used by several emerging nations. As for Boeing, the loss of one of the biggest military contracts the emerging world has to offer is very likely due to National Security Agency leaker Edward Snowden's revelations of American spying in Brazil, including on President Dilma Rousseff and her staff. The spying scandal's fallout is not going to be limited to angry newspaper columns and political speeches: This is not the last time it will hurt an American company.
Fifty top foreign companies in France sound an alarm
The heads of the French divisions of 50 multinationals, including Procter & Gamble, Microsoft, Siemens, Shell, Sony, Unilever, Dow Chemical and other major companies, signed an appeal to the French government saying that in recent years they had found it "increasingly hard to convince our head offices to invest and create jobs in France." The signatories, who employ 150,000 people and oversee more than $137 billion in annual turnover, are also responsible for a third of French exports and 29 percent of the country's R&D spending. In the appeal, they decried the "complexity and instability of the legislative and regulatory environment", inflexible labor laws that make restructuring companies next to impossible, and "a cultural mistrust of the market economy." The multinationals called on the French government to soften labor laws and stabilize the tax environment, making retroactive taxes impossible and studying the consequences before introducing new taxes. The industrialists sounded fed up with the way the country has been governmed, but then so are most French people. The socialist government needs to listen.
Venezuelans buy big Spanish bank after a hot contest
The Venezuelan financial group Banesco acquired NCG Banco from the Spanish government for $1.37 billion. NCG is the biggest bank in the poor region of Galicia and was nationalized in the aftermath of the 2008-2009 financial crisis. Banesco bought it bad loans and all. The competition for the Spanish bank was fierce, with local powerhouses such as Santander and Caixabank fighting against U.S. private equity funds J.C. Flowers and Oaktreet Capital Management. The demand shows how highly investors rate the Spanish government's bank cleanup efforts. Next, Spain will be selling Bankia, a much bigger institution that blew up during the crisis after its portfolio of real estate loans went sour. The NCG deal is a successful test case for that privatization.
The EU regulates e-cigarettes for the first time
The 28 EU governments and the European Parliament agreed on new tobacco legislation, which for the first time includes regulation of electronic cigarettes. Under the deal, e-cigarettes are not to be classified as medicinal products as the European Commission suggested. Refillable e-cigarettes may be banned if at least three member states prohibit them. The deal is also exceptionally tough on traditional cigarettes, banning flavors such as menthol from 2020, and calling for 65 percent of the pack to be covered with health warnings. The European regulators are going down the prohibition path blindly, without a clear picture of the effects. They do not know whether e-cogarettes encourage people to start smoking, as some believe, but they are already willing to ban their advertising.
Turkish prime minister fights back after allies' arrest
Turkey's Prime Minister Recep Tayyip Erdogan responded vehemently to a corruption probe in which 52 of his allies, including the sons of three cabinet ministers, were arrested on Dec. 17. Erdogan called the arrests part of a criminal conspiracy by some top bureaucrats meant to undermine him. "We will not allow political engineering," Erdogan said. "They are taking steps to try and become a state within a state. We will definitaly expose this organization." The organization he means consists of the followers of U.S.-based Islamic preacher Fethullah Gulen. Six ranking officers were fired from Istabul police in a move seen as Erdogan's retaliation against the Gulenists. The prime minister used to avoid a public fight with the powerful faction, but now the conflict is in the open, amounting to a leadership struggle in the ruling party, AKP. So far, Erdogan's position appears more secure than his rivals', but if he wins the factional struggle, Turkey will be a step closer to a full-blown dictatorship.
(Leonid Bershidsky can be reached at email@example.com).