Bershidsky on Europe: Art Returns to Nazi Dealer's Son
Here's today's look at some of the top stories on markets and politics in Europe.
Russia threatens to make Ukraine prepay for gas.
Russian Prime Minister Dmitri Medvedev suggested that Russia demand prepayment from Ukraine for the natural gas it supplies, since the neighboring country already owes $2.2 billion for previous supplies. President Vladimir Putin, however, replied that consultations should be held first, "considering the complex situation in which Ukraine finds itself and our unfinished negotiating process with the EU." This is typical Putin: His actions, such as the annexation of Crimea and the destabilization of Ukraine's southeastern regions, are a major reason for the "complex situation." Among other things, starting this month, Russia has raised the price of gas for Ukraine from $268.5 to $485.5 per 1000 cubic meters, more than European Union customers pay. Ukraine intends to stop buying Russian gas for now and negotiate the price. Both sides know, however, that the issue is political and the future of Russian gas supplies is linked to a much broader deal that will determine relations between Russia, Ukraine and the EU post-Crimea.
British minister resigns after over claiming expenses.
U.K. Culture, Media and Sport minister Maria Miller resigned after a parliamentary watchdog told her to repay $9,700 in expenses she had over claimed on her mortgage in 2008 and 2009. Miller was also told to apologize -- and made a 30-second formal apology that angered many in parliament. Prime Minister David Cameron defended Miller and wanted her to stay in her job, and that is likely to damage his standing with the public ahead of the European Parliament elections in May: A poll showed that 62 percent of Britons thought he had handled the affair "badly" and 32 percent "very badly." In the end, finance minister George Osborne apparently prevailed on Cameron to let Miller go, because the scandal over her expense account had become a major distraction for the Conservative government. The word "distraction" even figured in her resignation. She was not convicted of any conscious wrongdoing: It was just that the media's pursuit of the story was so relentless that there was no other option for Miller but to step down. This is a very European case of public opinion mattering more than the facts.
Hollande completes leadership reshuffle.
French President Francois Hollande is said to hate firing people. After his Socialist Party's resounding defeat in recent municipal elections, however, he has radically reshuffled the cabinet, and now has also replaced his chief of staff. He has brought his classmate Jean-Pierre Jouyet to the Elysee Palace from the finance ministry. Jouyet is not only a close friend of the president who "speaks Hollande fluently", in the words of an insider, but also an experienced, accomplished civil servant who knows the French bureaucracy well and knows how to manage it. In addition to the key appointment, Hollande also revealed the list of 14 new junior ministers. With all the frantic activity looking as if this were the beginning, not the middle of Hollande's presidential term, it might seem the famously indecisive French leader is out of his comfort zone. In fact, he is trying to recreate it by bringing into government people he knows well, such as another classmate Michel Sapin, the finance minister, and ex-wife Segolene Royal, the environment minister. What they intend to do together, however, may be very much like what the previous lineup did: Make mild, slow changes while insisting the EU should get off France's back about its high budget deficit.
German authoritiesreturn confiscated art to Nazi dealer's son.
Cornelius Gurlitt, 81, the son of a prominent art dealer to the Nazis, is getting his collection of 1280 paintings, drawings and sculptures back. The collection, which includes works by Picasso, Matisse and major German expressionists, was discovered two years ago when German authorities suspected Gurlitt of tax evasion and searched his apartment in Munich. Investigators confiscated the art, suspecting much of it was Nazi loot. Gurlitt, who had lived off the collection and loved nothing else in his life, fought the confiscation and eventually succeeded in making a deal with the prosecutors. According to the deal, a special government task force will have a year to determine which of the artworks had been stolen by the Nazis and who stood to inherit them. Gurlitt agreed to hand over those works, though he was not legally obligated to do it. What with the handover and the war of claims that is already unfolding, it will be years before the public is allowed to see the enormous collection. In fact, it may never be displayed in its entirety. That is grossly unfair: An exhibition should have been a condition of any deal.
Deutsche Bank to raise top managers' base salaries.
Deutsche Bank is considering raising the base salaries of its management board members by more than a third in response to EU regulations capping bankers' bonuses at twice their fixed salary. The raise will mean that the salaries of the co-chief executives, Anshu Jain and Juergen Fitschen, will increase by about $1.3 million a year. If they receive twice the base in variable compensation for 2014, they will actually make more than they did last year, when they made $3.17 million each in salary and $7 million each in bonuses. Deutsche Bank's proposed plan highlights the problems of the bonus cap: In the end, it will lead to top bankers' making more money in bad years. Regulators should be more interested in the variable pay of mid-level executives at investment banks, which sometimes exceeds their base pay by a factor of 15, encouraging these largely unknown people to take huge risks.
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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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