Bershidsky on Europe: Arab White Knight for Alitalia

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.

UAE carrier close to taking over Alitalia.

Etihad Airways of Abu Dhabi is close to taking over the chronically cash-strapped Italian flag carrier, Alitalia. The two companies said they were "in the final stage of due diligence." In the next 30 days the companies hope to agree on a common strategy for getting Alitalia out of the red after losses of $3.4 billion in the last five years, $400 million of it in 2013. Alitalia needed a white knight after its shareholder Air France KLM refused to take part in a recent capital call. The Italian government was eager to avoid having to bail out the airline again and Prime Minister Enrico Letta helped broker a deal with Etihad, which may end up acquiring 49 percent of Alitalia. The Abu Dhabi company already holds stakes in four European airlines, including Air Berlin and Aer Lingus of Ireland. Carriers and aircraft producers alike are increasingly looking to the Middle East for cash. The oil-rich region is turning into a global center of the air travel industry. The question is whether the Arab investors will be able to fix the loss-making European companies' business models. Putting Alitalia right is a challenge that has defeated everybody else.

Major French business delegation heads for Iran.

A delegation of more than 100 French companies including oil giant Total, car maker Renault, mobile carrier Orange and railroad engine manufacturer Alstom, is visiting Tehran to explore business opportunities opening up as Iran negotiates a deal on its nuclear program. Following Iranian President Hassan Rouhani's charm offensive at the World Economic Forum in Davos, foreign investors, primarily Europeans ones, are looking at returning to Iran, or establishing their presence there for the first time. Even though oil sanctions remain in place, car makers can now operate more freely in the Islamic Republic, and Renault and French competitor PSA Peugeot Citroen, which once had a big presence in the Iranian market, are not about to miss their chance. Even for Total, there are opportunities in the petrochemical industry. The French tour is the biggest of its kind so far, but quieter activity has been under way since December -- U.S. companies, too, are reported to be making tracks to Iran. No major deals have been announced yet, however: So far, it's all about reconnaissance. Though it is tempting to take Iran's new openness at face value, there is no reason to believe the fundamentalist nation will give up the aggressive policies that led to the international sanctions.

West presents its Ukraine plan to opposition leaders.

Ukrainian government and opposition representatives attending a security conference in Munich at the weekend were told that the EU and the U.S. could put together an economic aid package for Ukraine, if it managed to restore domestic political consensus. EU foreign policy chief Catherine Ashtontold The Wall Street Journal the package "won't be small," and that Ukraine would not have to comply with tough International Monetary Fund requirements to receive it. Now that Russia has suspended the next tranche of its $15 billion aid package pending the formation of the next Ukrainian government, the West is making its move to regain influence in Eastern Europe's biggest nation. Ukrainian opposition politicians were given to understand the aid would be contingent on their inclusion in the government. They also received private assurances that the U.S. and European countries were working to block the foreign bank accounts of corrupt Ukrainian officials. Western diplomats, however, are forced to work with President Viktor Yanukovych, who was legally elected until 2015: They are just pushing both sides toward a compromise. Until a specific amount of money is on the table and the conditions for its disbursement are specified, there is little reason for Yanukovych to swing toward the EU. The parliamentary opposition, meanwhile, is losing the last shreds of credibility with its supporters rallying in the streets of Ukrainian cities. At this point, no amount of external interference, from Russia or the West, can help resolve the political crisis. It is up to Ukrainians to find at least a temporary solution and then talk to both Moscow and Brussels to determine a long-term game plan.

800,000 French internet accounts hacked .

Orange, the major French telecom operator, admitted that the personal data of 800,000 of its internet customers were stolen on Jan.16 after hackers gained access to the client area of the site. The security breach follows the Target data theft in the U.S., a credit card disaster in South Korea, the hacking of 16 million German e-mail addresses - all in just the first month of 2014. The French accounts were hacked using phishing, a method that relies on sending out realistic-looking emails purportedly from technical support, providing a link for the customer to click on. It is one of the oldest tricks in the book, but users keep falling for it. As serious breaches multiply, however, Internet companies cannot keep writing them off to the ignorance and carelessness users. They need to find a foolproof solution to phishing.

Intesa Sanpaolo to set up internal ' bad bank' .

Italy's second-biggest bank, Intesa Sanpaolo, is about to set up an internal "bad bank" to work through some of its $74 billion worth of non-performing loans. New chief executive Carlo Messina's plan roughly follows that of Royal Bank of Scotland chief Ross McEwan. Like Intesa's recent early repayment of $49 billion in crisis financing to the European Central Bank, the "bad bank" could help repackage Intesa for investors and regulators, signaling it was starting with a clean slate. Moves like this, however, are mainly window-dressing. Splitting the balance sheet into "good" and "bad" assets provides more clarity for investors, but creates no value. Banks that have successfully put the 2008 crisis behind them, such as the U.K.-based Lloyds, did not resort to this optical illusion - they simply wrote down or sold the non-performing assets. Lloyds says its 2013 profit will beat market expectations, and the U.K. government may soon be able to further reduce its 33 percent stake in the bank.

(Leonid Bershidsky writes on Russia, Europe and technology for Bloomberg View. Follow him on Twitter.)

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.

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Leonid Bershidsky at

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