The Economist: Europe

Europe

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•  Portugal’s problems: The next special case? 02 Feb 2012, 18:03

  SINCE the start of the euro crisis, a hope has been that a way could be found to support governments that were temporarily short of cash (because of skittish bond investors) but that had public finances that were otherwise sound. The €489 billion ($643 billion) of cheap cash that the European Central Bank lent in December to banks for three years may prove such a scheme. With the promise of more long-term ECB loans to come, borrowing costs for euro-zone governments have fallen sharply, in part because banks have put some of the money to work by buying high-yielding bonds (see article).It is damning, in such propitious circumstances, that Portugal has not shared in the rush. Even as yields in other trouble spots, such as Ireland, Italy and Spain, have plunged since the start of the year, Portugal’s have risen. In part this is because its bonds were downgraded to junk status on January 13th by Standard & Poor’s, a ratings agency, forcing funds that can only hold investment-grade bonds to sell. The surge in yields on two-year Portuguese bonds is a sign that bondholders fear they will have to accept the kind of losses that Greece is still negotiating with its private-sector investors. When bond prices fall in anticipation of uniform losses, the implied yields on short-dated bonds rise by more...

  

•  Germany’s intelligence services: Protection racket 02 Feb 2012, 18:03

  GERMANY’S intelligence services failed to detect a gang of neo-Nazis who murdered ten people over several years. Never mind. They have a vice-president of the Bundestag in their sights.Times are awkward for the 17 Offices for the Protection of the Constitution, as the domestic intelligence agencies are known (one at federal level and one for each of the 16 states). The “Zwickau cell” killed with impunity until two of its members shot themselves in November after fleeing a bank robbery. Perhaps that is because the spooks were busy watching the Left Party, the fourth-largest in the Bundestag. The federal office is monitoring 27 of its deputies, including Petra Pau (a Bundestag vice-president) and a member of the committee that oversees the intelligence services. The party, or affiliated groups, are also targets in most states. This constitutes “defamation of the opposition”, complained Jan Korte, a legislator on the watch list.There are reasons to keep an eye on the Left Party. It is the direct descendant of East Germany’s communists and expanded westward by attracting disgruntled Social Democrats. Although the party espouses “democratic socialism” it harbours some groups that seem unsure about democracy. It has seats in 13 state legislatures and has helped govern, mostly pragmatically, three eastern states. The federal agency has been watching it since 1995.The fuss erupted...

  

•  Pollution in the Netherlands: Dirty dikes 02 Feb 2012, 18:03

  But don’t swim in it

  ON A cold morning, when the mist rises over the canals that criss-cross the countryside, spreading over the woods and flatlands, the Netherlands does not feel like a sink-hole of pollution. But the ice-encrusted water is brimming with nitrates and phosphates, and the air is clogged with particulate matter.The country’s poor environmental record is revealed in a report by Natuur & Milieu, an advocacy group. Rather than conduct its own measurements the group collected data from various official agencies. Its report shows the Dutch lagging behind their European peers for quality of air, soil and surface water, stuck in fossil-fuel dependency, and with exceptionally high carbon emissions.On Yale University’s Environmental Performance Index, the Netherlands comes 20th out of the 27 EU countries. It scores particularly badly on the quality of its soil, where those phosphates and nitrates linger in large quantities. They seep into surface water, the quality of which is also below EU guidelines. Emissions of nitrogen monoxide and dioxide are triple the EU...

  

•  French politics: And they’re off 02 Feb 2012, 18:03

  

  FRANCE’S president, Nicolas Sarkozy, has not yet officially declared his candidacy, nor held a campaign rally. The third-placed contender and leader of the far-right National Front, Marine Le Pen, has yet to secure the support needed to appear on the ballot paper. Yet with less than three months before polling day the race for the presidency is well and truly under way.Fully 15 candidates have declared, although some may drop out before the first round of voting on April 22nd. They include a Green (Eva Joly), an anti-capitalist allied to the Communists (Jean-Luc Mélenchon), a Gaullist former prime minister (Dominique de Villepin), a Catholic traditionalist (Christine Boutin) and other fringe characters. But only four have any chance of making it into the second round run-off on May 6th: François Hollande, the Socialist candidate, Mr Sarkozy, Ms Le Pen, and François Bayrou, a centrist.

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•  Spain’s regions: The centre tries to hold 02 Feb 2012, 18:03

  

  IT IS a huge, gleaming spaceship moored imperiously in an old riverbed. But Valencia’s iconic City of the Arts and Sciences complex floats on a tempestuous sea of regional debt.The dazzling masterpiece, by Santiago Calatrava, a local architect, is a reminder of the buoyant optimism that swept through this eastern region during Spain’s boom years. But as Mariano Rajoy, the new prime minister, gets to grips with the country’s fiscal problems, all eyes are on the regional governments that funded glittering projects like this.Mr Rajoy’s centre-right People’s Party (PP), which took power in December, largely blames the regions, which provide key services and account for a third of the country’s public spending, for Spain’s failure to meet last year’s budget-deficit target agreed with the EU. Definitive data is absent, but the government says it missed the goal of 6% of GDP by at least two percentage points. The regions had been told to limit their deficits to 1.3%. FEDEA, a think-tank, reckons Valencia was one of the worst offenders, with an estimated deficit of 4.2%. Moody’s, a ratings agency, has reduced the...