Bershidsky on Europe: Election Surprises in France, Turkey
Here's today's look at some of the top stories on markets and politics in Europe.
National Front wins big in French municipal elections.
Sunday's second round municipal elections in France led to 14 far-right politicians claiming mayoral offices, 11 of them members of Marine Le Pen's National Front. It is the best electoral showing in the extreme right party's history: Its previous record was in 1995 when it won three towns. Though the National Front fielded candidates in a small minority of municipalities, it won 7 percent of the overall vote. The center-right UMP won 46 percent and the ruling Socialists took 40 percent, scoring their biggest victory in Paris, which elected its first woman mayor, Anne Hidalgo. Although the election results are terrible for President Francois Hollande, who will probably fire Prime Minister Jean-Marc Ayrault after the poor showing, Hidalgo's victory shows that the Socialists as a party can still put up a good fight. It is also encouraging, both for them and for their arch-rivals in the UMP, that the towns that the National Front is preparing to run are, for the most part, small. Whoever heard of the proud cities of Cogolin, Hayange or Bollene? In bigger cities like Avignon and Perpignan, where Le Pen's partner Louis Aliot ran for mayor, the National Front lost, though its candidates led in the first round. Le Pen's National Front is still a marginal phenomenon, but the main parties will need to fight harder to contain it.
Erdogan wins big in local polls.
Turkish Prime Minister Recep Tayyip Erdogan, who banned Twitter and YouTube ahead of Sunday's local elections seen as a kind of referendum on his rule, has received enough support to claim victory. Erdogan's AK party received at least 45 percent of the nationwide vote, compared to less than 30 percent for the opposition Republican People's Party. AK scored bigger than in the 2009 elections, in which it won 38.8 percent of the vote. AK is also likely to hold Istanbul. Though Erdogan's illiberal moves and the numerous corruption allegations against him and his family, which surfaced on the social networks, appeared to signal his weakness in a months-long fight with the followers of emigre cleric Fethullah Gulen, Turkish voters decided otherwise. There was a record turnout because of all the political strife, which makes AK's triumph all the more remarkable. People are still willing to reward it for the economic improvements it brought and disregard the talk, and even proof, of corruption. Now Erdogan is likely to take part in Turkey's first direct presidential election in the fall. His methods, unacceptable in most democratic countries, have proved effective.
Greek parliament triumphs liberalization, unlocks aid.
The Greek parliament approved a package of liberalization bills needed to unlock an $11.4 aid tranche. It took the legislators 14 hours to arrive at this result, and prominent politicians such as former Prime Minister George Papandreou still approvesagainst the bills. They are meant to cut pubic health care costs, make it possible to negotiate wages with the employees of specific companies, not nationwide unions, and liberalize some government-controlled markets. They also allow for the privatization of the country's two main ports and railroad, as well as the bailed-out Eurobank, which has been waiting for permission to make a capital call. Leftist parties see in these moves the destruction of Greece's workers and gradual sell-off of strategic assets, but they are long-overdue: A bankrupt country cannot afford a generous social safety net or too many state-held assets. What Greece does need is a boost to business, and with the government adopting painful but necessary policies, investors are willing to pitch in: Recent recapitalization efforts by Greek banks, for example, have been quite successful.
Eurozone inflation voted.
The annual inflation rate in 18 eurozone countries dropped to its lowest level since 2009 in March: A puny 0.5 percent. The European Central Bank, whose inflation target is just below 2 percent, keeps repeating that low inflation is not deflation and there is no need for drastic action. Even now, the ECB may not cut its interest rate or even introduce negative interest on deposits to make banks lend more. Because Easter holidays come later this year than they did in 2013, the ECB may hope for a price bump in April. The trend, however, is clear: Price growth in the euro area is sliding toward zero. If that is not a major problem for growth in the ECB's view, why keep the 2 percent inflation guidance at all?
African digital money to lowest since 2009 in Europe.
U.K. mobile operator Vodafone is about to try in Europe something that worked out well in sub-Saharan Africa: A virtual currency tied to one's mobile phone. It is called M-Pesa, or mobile money in Swahili. Launched in Kenya in 2007, the service allows payment by text message for everything from bills to market produce. No bank account is needed to use it, and it is linked to the ordinary national currency, so it does not have the independence or volatility of Bitcoin. Vodafone now operates M-Pesa in Tanzania, Egypt, Lesotho, Mozambique and India. Now, the company has obtained a European e-money license to launch it, initially, in Romania and possibly other East European countries. For people with small incomes making mainly small payments, mobile payment systems work better than traditional banking because they are much less cumbersome and the transfers are cheap. Even for the developed world, M-Pesa and its equivalents may soon become interesting products for people's daily financial needs, helping mobile operators to recoup losses from falling text messaging revenues.
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Leonid Bershidsky writes on Russia, Europe and technology for Bloomberg View. Follow him on Twitter at @Bershidsky.
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