| A look at what’s happening around Europe  The EU
Concerns about the US sub-prime mortgage market and general credit fears led to sharp turbulence on Europe’s bourses in August. Concerns were exacerbated by the €204bn the European Central Bank spent over three days in mid-August to support the market, by large banks having to bail out some hedge funds, and by Germany needing to rescue its troubled IKB Deutsche Industriebank.  Poland
After months of infighting and uncertainty that has slowed reforms and investment, the ruling coalition headed by Law and Justice collapsed. Elections are to be held almost two years early, with 21 October the most likely poll date. Poland’s socialist SLD party is still languishing in opinion polls, while two populist parties, Self-Defence and the League of Polish Families, merged in an effort to surpass the 5% barrier needed to enter parliament. Western investors hope the most pro-business party, Civic Platform, headed by Donald Tusk, will win the largest share of seats. The only certainty is that the next government will again be a right-wing coalition.  Turkey
The Banking Regulation and Supervision Agency blocked attempts by a Greek-Turkish consortium (Greece’s Alpha Bank and Turkey’s Anadolu Group) to acquire Alternatifbank or ABank, reportedly because of the presence of a former head of Greek intelligence on the board of Alpha Bank. The move may also have been prompted by the fact that Greek banks are already strongly represented in Turkey, which has previously bought Tekfenbank and Finansbank. The consortium had initially proposed the €368m takeover last November. Former foreign minister Abdullah Gül was finally elected president after three rounds of voting in the 550-seat parliament. He won the support of a majority of MPs despite the army making further veiled comments about the threats to democracy posed by Gül (Gül was once a member of Refah, a banned Islamist precursor to the governing AK party, and his wife wears a headscarf). Gül used his inauguration address to reiterate his promise to uphold Turkey’s secular traditions.  UK
The opposition Conservative Party announced comprehensive tax proposals aimed at abolishing inheritance tax, raising the top level of income tax and implementing business-friendly tax cuts, including lowering the corporation tax from 30% to 25%. The party has said it will fund the cuts by cutting some £14bn (€20.7bn) in red tape and by taxing foreign lorries on UK roads, which could raise £10bn. The party is keen to prioritise low taxation and reduced bureaucracy, both of which have risen dramatically – though surreptitiously – under Labour.  The Netherlands
Thousand of job losses are expected in several countries following Akzo Nobel’s acquisition of its rival ICI. The Dutch manufacturing giant paid €9.87 a share or €11.8bn for ICI, one of the UK’s best-known names, and some critics suggest that this over-valued the company. ICI helping create plastic and perspex in the early 1900s, but the company is now better known as the maker of Dulux, the UK’s best-selling paint brand. Amsterdam-based Akzo Nobel is involved in healthcare and chemicals and employs nearly 62,000 people worldwide.  Greece
As Greece recovered from forest fires that left over 65 people dead and devastated much of the Peloponnese countryside, voters went to the polls on 16 September. Prime Minister Costas Karamanlis called the election six months earlier than scheduled to gain a mandate for new reforms. As well as its allegedly slow response to the fires, the right-of-centre New Democracy government’s popularity has been badly dented by a series of high-level corruption scandals and resistance to its reforms, which have hit the overstaffed public sector hard. Polls suggest the contest against the socialist Pasok party will be extremely tight. New Democracy currently holds 165 seats in the 300-seat parliament.  Germany
For the first time in 20 years, the government secured a fiscal surplus for the first half of 2007 of €1.2bn against a deficit of €23bn in the first half of 2006, although for the year a small deficit is still expected to show. Observers say the surplus reflects growing tax revenues generated by Germany’s economic recovery and bodes well for growth continuing into 2008, although there are fears that growth could be undermined by concerns about the banking sector that became apparent during the period of stock market volatility in August.  Ukraine
Ukrainians celebrating 16 often-tumultuous years of independence prepared for early elections on 30 September. Observers say the result is uncertain and may yet again fail to resolve the ongoing political crisis, which has derailed reforms and widened the geo-political split between the eastern, southern and western parts of the country. With voters facing a choice between various pro-Western parties and the statist, pro-Russian Party of the Regions, the most likely outcome remains another fragile coalition.  Romania
KazMunaiGaz bought 75% of Romania’s leading oil company, Rompetrol, for €1.95bn in a move that will give the state-owned Kazakh company control of Rompetrol’s 630 petrol stations, located across Romania and in a further five European countries, in addition to a number of other assets. In an expression of Romania’s long-held ambivalence towards Russia, Rompetrol chief executive Dinu Patriciu pointed out that the sale “created an energy bridge [to Europe] that does not depend on Russia”.  Russia
In a further demonstration of the state’s intolerance of private sector success in the energy sector, Russian prosecutors called for the arrest of Russneft chief executive Mikhail Gutseriyev. They allege he is guilty of “illegal business activity” and that his company owes some €586m in back taxes. The company produces some 300,000 barrels of oil a day and is considered one of Russia’s most successful private oil firms after Lukoil. As CNBC European Business went to press, Gutseriyev was alleged to have fled the country. |