Bershidsky's View on Europe

Leonid Bershidsky is a Bloomberg View columnist. He was the founding editor of the Russian business daily Vedomosti and founded the opinion website
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Here's today's look at some of the top stories on markets and politics in Europe:

Potash war heats up with arrest of Uralkali chief.

Vladislav Baumgertner, CEO of Russia's Uralkali, one of the world's biggest producers of the fertilizer component potash, was arrested in Belarus and charged with abuse of power, a crime carrying a prison term of up to 10 years. This is a surprise move by Belarussian dictator Alexander Lukashenko in a market war unleashed by Uralkali a month ago, when the Russian company left the BPC consortium, its joint venture with Belaruskali. In 2012, BPC controlled 42 percent of the global potash market, but late last year Lukashenko allowed Belaruskali to sell outside the consortium, leading Uralkali to break it up. Potash producers from Germany to Canada watched in horror as their shares plummeted following the move: Uralkali with its low production costs could afford a price war with prices dropping from $400 to less than $300, while Belarus would suffer huge losses. Potash makes up 8 percent of the cash-strapped country's exports. Russian deputy prime minister Igor Shuvalov called Baumgertner's arrest "inappropriate," but Russia will need to negotiate to free the hostage. For all potash producers, it might mean a respite from the price war. Paradoxically, European and North American companies may profit from a blunt power play by a dictator who is not welcome in Western capitals.

Europeans prepare to back U.S. on military action in Syria.

As the United States and Russia canceled their planned meeting on Syria, a U.S. led military intervention against Syrian President Bashar al-Assad has become a distinct possibility. European leaders are working with Washington to organize the action. U.K. Prime Minister David Cameron cut short his vacation and returned to London, apparently to call a Parliament session to approve Britain's participation in a military operation. French Defense Minister Jean-Yves Le Drian is trying to drum up support for action in the Gulf: President Francois Hollande has asked him to extend his trip to the region and make a stop in the United Arab Emirates. The U.S. and its allies are likely to limit themselves to targeted airstrikes, which may well encourage Libya-style chaos in Syria. Still, they can ill afford the costs of even a small war. Russia, which is firmly opposed to a military solution, is the only major nation benefiting from the tensions: The threat of another Middle Eastern conflagration drives up the price of oil, Russia's major export.

Accor to name private equity executive as CEO.

Europe's largest hotel chain by sales, Paris-based Accor, is likely to name Sebastien Bazin as its CEO. Bazin, who is French, is now employed by Los Angeles-based private equity firm Colony Capital, a shareholder in Accor. Colony is going long on European real estate, hoping to cash in on future growth: Its founder Tom Barrack has said he plans to invest $6.7 billion in European properties in the next two years. Accor, by contrast, needs to shed some of its plentiful real estate: its capital spending is heavier than its rivals'. As head of the hotel chain, Bazin may work with his former long-time employer to develop a win-win solution.

Loewe to lower prices dramatically to save the company.

Loewe, the last major TV producer in Germany, announced it would leave the luxury market segment to avoid being driven out of business. "Our prices are 100 to 300 percent higher than market averages, and we're expecting to cut the gap to 20-30 percent," a company spokesman said. Loewe, founded in 1923, has seen most of its German rivals fail as Asian producers came to dominate the market. Now, it enjoys temporary protection from creditors as it seeks an investor to save it. The deadline for the search is October. Conventional wisdom says luxury goods manufacturers weather economic crises well because their wealthy clients retain their expensive tastes. This, apparently, does not apply to the makers of such mundane appliances as TV sets. The quality of mass-market models is so high that few people see the point of paying more for high-end brands.

London estate agency of crisis fame announces IPO.

Private equity firm BC Partners bought the real estate agency Foxtons in May 2007, right before housing prices tanked, for $584 million, most of it borrowed. Partners in the firm have reportedly referred to the company as "the F word". Now, a listing on the London Stock Exchange is planned for Foxtons, with its 9 branches in London and two in Surrey. It is expected to bring in $87 million, enough for the company to pay all its debts. The IPO, if it succeeds, will value Foxtons above its 2007 price, and there is nothing impossible about that: The London real estate market is recovering fast. In the 12 months to June, prices here rose 6.9 percent. This is a modest bubble: In the rest of the U.K., housing prices have kept pace with the economy as a whole. Hapless pre-crisis investors have to seize the day to recover some of the value destroyed in 2007 and 2008, but that does not mean the boom will hold up long enough for the new shareholders to make money.

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