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March 2008
News & Views
Radar
A look at what’s happening across
A look at what’s happening across Europe
France
The direction of President Nicolas
Sarkozy’s domestic strategy became
clearer after he was presented with a
radical economic reform plan prepared
by a team of international economists,
aimed at speeding deregulation and
holding back the growth of the state.
The plan, which would see most public
spending frozen for five years and
which was welcomed by Sarkozy, could
cut unemployment by 3% to 5% and
add 1% a year to GDP. Unions and other
parties expressed opposition. France is
expecting GDP growth of 2% this year,
above the Eurozone average but below
what Sarkozy promised during his
election campaign last year.
Echoes of the 1995 Barings crisis, after an apparent rogue trader racked up losses in excess of €5bn on trades in equity derivatives, at France’s second largest bank Société Générale, prompting an emergency cash-call on shareholders. Like Nick Leeson, Jérôme Kerviel originated from the middle office, giving him an understanding of how to evade detection, creating a complex web of transactions that made unravelling his trades difficult. There were calls for improved regulation of banks’ internal security and fraud detection systems.
Italy
The 20-month-old centre-left
governing coalition of Romano Prodi
fell after it failed to secure a vote of
confidence in the senate, having earlier
won the support of the lower house.
There are now fears Italy faces a period
of instability, with left/right divisions
hindering legislation. Silvio Berlusconi
called for early elections, confident that
he will return as prime minister.
Hardline nationalist Tomislav Nikolic
pushed ahead of his moderate rival
Boris Tadic in the first round of
presidential elections, which observers
say are a referendum on Serbia’s
relations with the West. Nikolic favours
closer ties with Russia, while Tadic
wants the signing of a Stabilisation and
Association agreement with the EU,
as a first step towards membership.
The next round on 3 February will be
crucial, its outcome dependent on
how nationalist PM Vojislav Kostunica
advises his supporters to vote. The
former Serbian province of Kosovo is
expected to declare its independence in
February or March, with the EU divided
over whether to recognise it.
President Mikheil Saakashvili was
inaugurated for a second term after
elections in early January gave him
a first round victory over Levan
Gachechiladze. The event was marred
by opposition protests that the contest
was not free and fair, though Western
observers have refuted this, and
by Russia’s continued attempts to
destabilise Georgia. Saakashvili has
said his government will continue
with the radical free market reforms
that have boosted growth and foreign
investment, although the benefits of
these have yet to reach much of the
population. Parliamentary elections are
due later this year, which may weaken
his domination of the political scene.
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