Bershidsky on Europe: Merkel Backs "Euronet"

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:

Merkel backs NSA-free "European Internet."

In her weekly podcast, German Chancellor Angela Merkel said she supported calls to set up a European telecommunications network that would make it unnecessary to send data for processing or storage to the U.S. Putting all the servers and transmission cables in Europe would make the infrastructure subject to European data protection laws. Merkel said she would discuss this with French President Francois Hollande. "Above all, we will talk about European providers that offer security for our citizens, so that one should not have to send emails and other information across the Atlantic," the chancellor said. She also lashed out against Google and Facebook for "going where privacy is at its lowest," meaning Ireland where both companies have their European headquarters. In the aftermath of the U.S. National Security Agency electronic spying scandal, European politicians may end up fragmenting the Internet and establishing boundaries where users have never had to face them. All in the name of privacy and data protection, of course. And it won't all be the fault of understandably paranoid European leaders who don't want their phones tapped by the NSA. The U.S. should make a no-spying deal with its European allies and make life easier for its leading companies and their customers.

European startup financing slows down .

A study by two French companies, the tech investor Clipperton Finance and the social networks consultants Digimind, shows that startup financing in Europe decreased 5 percent in the second half of 2013 to $2.77 billion. More than $1 billion of that was raised by startups in the U.K., with Germany a distant second at $627 million. About 65 percent of the money went to technology companies and 29 percent to the life sciences sector. The biggest deals, like the $250 million investment in Spotify, were done by U.S. funds. Europe is dependent on the U.S. for financing its innovative businesses, and that gives it a distinct competitive disadvantage: U.S. investors will always look close to home first and overseas second. Besides making threatening noises about ending U.S. hegemony, European governments ought to take a closer look at the real reasons why the old continent lags behind the U.S. in tech development.

Ukraine protesters retreat in exchange for amnesty.

Pro-European protesters in Kiev and other Ukrainian cities grudgingly fulfilled the terms of a compromise between President Viktor Yanukovych and the parliamentary opposition. On Sunday, they ceded the government buildings they had seized in almost three months of marching and street fighting, including the Kiev mayor's office. They also retreated from Grushevsky Street, the scene of the most violent clashes between demonstrators and riot police, which resulted in at least three deaths. In exchange, the authorities agreed to lift criminal charges against 268 protesters. Yanukovych's side signaled its willingness to do so even though the protesters refused to leave downtown Kiev, where they have sealed off the main street with barricades. Sunday's events are a victory for Yanukovych: The protesters are retreating without having won any political concessions. The President is not stepping down, calling an early election or ceding any powers to the cabinet or parliament, as the opposition has demanded. He may yet hang onto power until the end of his term in 2015 if he refrains from inflaming the street confrontations.

Barroso tells Scots the EU may not let them in.

European Commission President Jose Manuel Barroso warned Scotland that if it votes to secede from the U.K. in September, it will be "difficult or not impossible" for it to join the EU. Barroso pointed out that Spain, with its own secession troubles in Catalonia, has even held up the recognition of Kosovo despite all the international agreements setting it up as a separate country. Getting an independent Scotland admitted to the bloc would send an even stronger message to separatists elsewhere, from the Flemish in Belgium and the Basques in France to the Sami in the Nordic countries. Barroso is just being realistic, like U.K. finance minister George Osborne, who said recently that Scotland would not be able to keep the pound as its currency if it split off. If the Scottish nationalists harbored the illusion that secession could be seamless, they are now being reminded of the facts of life. A strong "no" vote is almost assured, anyway, but the warnings are far from useless: They make voters think about the consequences of buying nationalist rhetoric.

Former hostage CEO gets $12 million payoff .

Vladislav Baumgertner, the former chief executive of Russian potash giant Uralkali, will get a $12 million golden parachute. That should be enough to compensate him for his troubles: Last year Baumgertner announced his company would pull out of a cartel deal with its long-time partner Belaruskali, owned by the state of Belarus, and was promptly arrested in that country's capital, Minsk. Since last August, Baumgertner has been in jail and then under house arrest in Belarus and Russia, where he was extradited. The cartel's breakup caused panic in the global potash market, which feared a ruthless price war. Uralkali's biggest shareholder, billionaire Suleiman Kerimov, was forced to sell the company. Bill Doyle, chief executive of Uralkali's U.S. competitor Potash Corp., called Baumgertner's move "the single dumbest thing that I've ever seen." But one of the biggest payoffs in Russian corporate history proves the former Uralkali chief may not be so dumb after all.

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Leonid Bershidsky at