Bershidsky on Europe: Moscow to Bail Out Ukraine
Here's today's look at some of the top stories on markets and politics in Europe:
GlaxoSmithKlineto scrappayoffs to doctors
U.K.-based pharmaceutical giant GlaxoSmithKline responded to a spate of recent corruption accusations by moving to eliminate bonuses that the company's sales people give to doctors, based on the number of prescriptions they write. GSK is also phasing out speaker fees for doctors who agree to promote its drugs to colleagues and payments for doctors' travel to conferences. All these practices are widespread in the pharmaceutical industry and are blatantly corrupt: They create conflicts of interest. GSK's pioneering decision to change its ways is laudable, but would be more so if it didn't follow a $3 billion fine from U.S. regulators for marketing violations and a campaign against the U.K. firm in China.
Ukrainian president in Moscow to ask for rescue loan
Ukrainian President Viktor Yanukovych is facing a rebellion at home as the nation nears a currency devaluation and a possible default on its external debt. The EU and the International Monetary Fund have refused to provide quick financial aid. Russia is Yanukovych's only hope, and Russian officials have indicated that a $15 billion loan is possible, with the first $5 billion tranche to be released before the end of the year. It is unclear what strings are attached to the loan Yanukovych is to discuss with Russian counterpart Vladimir Putin. The latter has pushed for Ukraine to join Russia's customs unioin with Belarus and Kazakhstan, but Yanukovych cannot publicly agree to such a deal without triggering more protests at home, where he is expected to pursue European integration. It is likely that the political terms of the loan will not be made public: Russia hopes Yanukovych will stay in the saddle and not try to cheat his Kremlin benefactors.
Norway to treatBitcoin as assets
Norwegian tax authorities decided that Bitcoin does not fall under the definition of money and should be treated as an asset, meaning that investors have to pay capital gains tax when they sell Bitcoin at a profit. This is an even tougher approach than the one recently taken by Germany, which declared Bitcoin a "unit of account" and began charging capital gains tax on sales of the digital currency held for less than a year. Indeed, the recent Bitcoin boom has nothing to do with the currency's use as a medium of exchange: It was caused mainly by speculators in China. Paradoxically, the more countries regulate Bitcoin as an asset, hitting speculators with taxes, the more likely it is to revert to its original purpose of facilitating payments.
Bundesbank chief says monetary policy not enough for euro area
Speaking ahead of an EU summit this week, Bundesbank chief Jens Weidmann said the euro area only had one tool to help economic recovery: monetary policy, and that was not enough. "It's the responsibility of other policymakers to contribute to convergence," Weidmann said. "Monetary policy is not a substitute for government action." At the summit, Germany is backing a proposal that euro area countries be bound by "contracts" that would regulate a wide range of economic policies, from industrial innovation to labor regulation. France and southern European nations want the contracts to contain financial incentives, while Germany believes negative motivation will do. While common economic policies make sense for countries using a single currency, the inevitable loss of sovereignty will provide ammunition for nationalist, eurosceptic politicians who are already on the rise throughout the euro area. Germany, however, has no choice but to push for common policies now: It needs cash for the new coalition government's increased spending plans, so it can spare less for poorer European neighbors.
EU signs immigration deal with Turkey
Turkey agreed to take back some immigrants who entered the EU illegally through Turkish territory. In exchange, the EU promised to start the process of eliminating visas for Turks. The agreement does not cover refugees, so it is unclear how many illegal immigrants will be sent back to Turkey, and the visa-free travel talks may take years to complete, but the agreements are a welcome sign that Turkey is still interested in some degree of European integration. Under Prime Minister Recep Tayyip Erdogan, Turkey reoriented itself toward the Muslim world, a major loss for the European cause that can be partly remedied with the cancellation of visas. In the same way, Europe could easily help Ukraine stop its backslide into Russia's orbit by opening its borders to Ukrainians without giving them access to the common labor market. EU officials are too stingy with the one commodity people in the developing world really want from them: The freedom to travel in Italy, Spain and France and feel they are welcome there.
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Leonid Bershidsky at email@example.com