Bershidsky on Europe: Erdogan Under Pressure
Here's today's look at some of the top stories on markets and politics in Europe:
Erdogan expects graft probe to expand to his family
Turkish Prime Minister Recep Tayyip Erdogan told reporters he saw himself as "the real target" of the corruption investigation that snagged the children of three of his ministers and a number of top bureaucrats, prompting him to replace half the cabinet this week. According to Erdogan, prosecutors are planning to investigate an education foundation run by members of his family. A lead prosecutor in the case, for his part, is angry at Erdogan loyalists for hampering the probe. "Suspects have been allowed to take precautions, flee and tamper with the evidence," Muammar Akkas said in a document sent out to Turkish media. He was promptly taken off the case. The political conflict in Ankara continues to escalate, and if Erdogan's family members are indeed implicated in the corruption scandal, his political survival will be in question: He has forced loyal ministers to resign in just such a situation.
Arcelor-Mittal reshuffles management team in favor of Mittal
The world's biggest steel producer, Luxembourg-based Arcelor-Mittal, is reorganizing to speed decision making. Only regional business units will remain. These will mostly be controlled by executives of the aggressive Mittal organization, which took over the very European Arcelor in 2006. Lakshmi Mittal grew up in an Indian hovel with an earthen floor, and he has little patience for old-boy cultures. Still, it took his group almost seven years to digest Arcelor. Mittal's son Adityam, now chief financial officer of the European unit, is seen as his father's potential successor.
Siemens to print gas turbine parts
Next month, the German industrial conglomerate Siemens will start using 3D printers to produce gas turbine parts. In some cases, this will speed up turbine repair from 44 weeks to just four. Medical equipment companies have already used the technology to produce hip replacements and dental components, but Siemens will be the pioneer in using printers to make making components large industrial equipment. Other companies, such as GE Aviation and Rolls-Royce, are only preparing to introduce the technology within the next three years. So far, 3D printing only makes economic sense for the small-scale manufacturing of complex and expensive parts, but as more producers adopt the technique, it is likely to develop into a true disruptive technology faster than anyone could predict.
Sales of million-pound homes in U.K. set record
Sales of properties worth more than 1 million pounds ($1.64 million) in the U.K. have surpassed the 2007 record by 10 percent in 2013: 9,700 such deals were recorded. Of these, 70 percent occurred in London. In the Chelsea area, there were 202 such transactions at the average price of $5.2 million. Though the British economy is buoyant by current standards, the real estate market, especially in London, is now too bubbly. Perhaps it is time for the Bank of England to raise interest rates, especially since recent polls show Britons wouldn't be opposed.
Champagne prices increased by a third over 10 years
Champagne sales, meanwhile, seem to be losing their fizz: In 2013 they will have fallen for a second consecutive year, to about 300 million bottles. The $6 billion industry, however, is not feeling pressured: On the contrary, the 4 percent drop in quantity, following a similar one in 2012, is due to the fact that producers are going upmarket, following the demand for better quality wine in foreign markets. The price of champagne has grown 31 percent between 2002 and 2012, according to FranceAgriMer, largely thanks to exports to the U.S., Japan, the U.K. and the Middle East. These markets account for about 25 percent of champagne producers' sales. The French may grumble all they want about foreigners' poor taste in wine, but it is overseas sales that are driving the sparkling wine industry to shift its focus from quantity to quality.
(Leonid Bershidsky can be reached at email@example.com).