Bershidsky on Europe: Turmoil in Ukraine
Here's today's look at some of the top stories on markets and politics in Europe:
Ukrainian protests get out of control
More than 300,000 people took to the streets in Kiev after riot police used rubber sticks to dispel a student rally in favor of joining the EU. The more aggressive protesters stormed and took the mayor's office but failed to get into the presidential administration building. Police used tear gas and truncheons, and about 150 people were injured. Opponents of President Viktor Yanukovych say these are no longer mere protests but a revolution. Some of Yanukovych's allies have defected from his parliamentary faction, and he may lose his fragile majority in parliament. If that happens, the opposition will push for early parliamentary and presidential elections. This is no longer about Ukraine's abandoned association pact with the EU: a large number of Ukrainians want regime change. The question is who will emerge as the single leader strong enough to challenge Yanukovych, and whether that leader gets the support of Ukraine's oligarchs - a necessary condition of winning and holding on to victory.
Italian state fund favored for Versace stake
Fondo Strategico Italiano, the state-controlled Italian private equity fund, is said to be the front-runner in the bidding for a minority stake in fashion house Versace. The founding family, which now owns 100 percent of Versace, is expected to make a decision on its equity partner by the end of the year. The deal is likely to value the fashion house at $1.16 billion. Even if the Italian fund wins the bidding war against Bahrain-based FinvestCorp, U.S.-based Blackstone and Paris-based Ardian, Versace will be bought with Middle Eastern money. Fondo Strategico has a joint venture with Qatar to invest in Italian lifestyle businesses: furniture, fashion, food and tourism. In these times of austerity, it is the Arabs who support European luxuries.
Europe's most recommended brands are foreign
The Boston Consulting Group surveyed 32,000 people in Germany, France, Spain, the U.K. and the U.S. for its new Brand Advocacy Index, a study centering on the effect of word-of-mouth on brand equity. The surprising discovery is that the most recommended brands in the major European countries are often not local. In the U.K., France and Spain, the car brand that people most often recommend to friends is Volkswagen, but in Germany it is Skoda. In the U.K. the most advocated retail chain is German-based Aldi, and in France it is another German retailer, Lidl. Generally, the most recommended brands are not necessarily the biggest in the market. Value for money is a better indicator of word-of-mouth success. Companies that offer good value can save on advertising: Sincere consumer advocacy actually works better. Up to 74 percent of Britons and Spaniards and 62 percent of the French trust friends' recommendations when they decide what to buy.
Deutsche Telekom plans to cut up to 8000 jobs
Deutsche Telekom is planning to eliminate 6000 to 8000 jobs in its T-Systems IT unit. This is part of a major restructuring drive by T-Systems chief executive Reinhard Clemens, who wants to refocus the 29,000-strong company on cloud services rather than IT outsourcing, which is now the main pillar of its business. News of the downsizing comes soon after the defense unit of Airbus announced plans for large staff cuts, also mainly in Germany. Local power companies are also planning large layoffs. Germany's low unemployment rate of just 5.2 percent appears to be in for an uptick. And the jobs that are disappearing are highly qualified ones.
Croatia votes to ban same-sex marriages
The EU's newest member, Croatia, voted in a referendum to amend the constitution so that marriage is defined as a union between man and woman. The proposal was carried by two-thirds of the vote in the predominantly Catholic country, though the Social Democratic government had come out strongly against it. The referendum's outcome shows how hard it is for Europe to present a united front: The traditions of the 28 member countries are too different. While France recently allowed gay marriages despite nationwide protests, Croatia has done the exact opposite over the objections of a vocal minority.
(Leonid Bershidsky can be reached at firstname.lastname@example.org).
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