Here's today's look at some of the top stories on markets and politics in Europe.
Europe faces 20 years of energy price gap with the U.S.
The International Energy Agency's chief economist Fatih Birol says Europe faces at least another 20 years of high gas and electricity prices, and will lose a third of its global market share of energy-intensive exports, mainly to the U.S. with its newly abundant supplies of oil and gas. The dire prediction concerns 30 million people working in industries that consume a lot of energy, such as steel and petrochemicals. Right now, gas prices in Europe are three times as high as in the U.S., and electricity is twice as expensive for industrial consumers. European industrialists blame this on environmental subsidies meant to develop renewable energy sources, and Germany is already posed to scale back its green policies. The IEA, however, believes the problem is both simpler and harder to solve: High import prices on natural gas, mainly from Russia. The only way for Europe to reduce prices at this point is to work shale gas deposits and build nuclear power plants. One other way would be to seek political rapprochement with Russia, but that is hardly feasible given the EU's vast ideological differences with President Vladimir Putin's regime.
Fiat Chrysler withholds dividend.
Now that Fiat has full control of its U.S. subsidiary, the company will operate under the name Fiat Chrysler Automobiles NV. As things stand, however, it might as well be called "Chrysler and a bunch of other, useless stuff." The company reported higher profit in the fourth quarter, $1.78 billion, up from $300 million a year earlier, because of a Chrysler tax benefit and growing truck and SUV sales in North America. In Europe, Fiat's home base, the company took more losses and wrote down about $532 million in assets, including spending on new platforms for Alfa Romeo and Maserati cars, saying it was working on different ones now. The company decided to pay no dividends to save cash for the completion of the all-important Chrysler deal. Fiat Chrysler's basic problem is that the Chrysler model range is too American in look, feel and fuel consumption to do well in Europe, and Fiat, Lancia, Alfa and Maserati are too quaint to interest the mass consumer in the U.S. But even in their traditional home market, Fiat's cars are doing so badly that selling the operation to some Chinese firm interested in technology transfer might actually be a better idea than trying to be another Volkswagen or Toyota with global ambitions.
Dispute in Peugeot family over Dongfeng deal.
Although the supervisory board of French automaker PSA Peugeot Citroen approved the entry of the French state and the Chinese carmaker Dongfeng into the company's capital, its head Thierry Peugeot is protesting vehemently against the deal. The Peugeot family now holds a 25 percent stake in PSA and 38 percent of the voting rights, but the deal would make the family, the state and Dongfeng equal partners with a 14 percent each. Thierry Peugeot wants the family to keep control. He believes PSA could raise the needed capital in the market and from existing shareholders, and that Dongfeng could remain a partner with a smaller stake. Thierry wrote an angry letter to his cousin, Robert, who heads the family holding, FFP, saying, "I am worried about the exit strategy you seem to want to implement. I believe the Peugeot family must continue to support the company and not ignore it." Thierry Peugeot, however, appears to be outnumbered, and the deal is likely to go through as agreed. Accepting Chinese companies as equal partners makes sense for European carmakers struggling to expand their global reach. The PSA-Dongfeng deal won't be the last of its kind.
Rate hike fails to halt Turkish lira decline.
Turkey's Central Bank moved decisively to raise all three of its key rates late on Tuesday, surprising analysts with its willingness to do something Prime Minister Recep Tayiip Erdogan has many times insisted the country must resist. Turkey's currency, the lira, spiked briefly on the news but is now trading lower than immediately before the rate hike, at about 2.3 to the U.S. dollar. The momentum is against it, and that means hard times are ahead for Turkish companies and banks, which are heavily indebted in foreign currency. The higher rates, meanwhile, will hamper growth. While Erdogan says he will be patient before releasing his "plan B or plan C", but a downward economic spiral risks ending his brilliant political career, or turning him into an outright dictator.
France tells restaurants to disclose food origins.
The French parliament passed a law ordering restaurants to mark on their menus which dishes are produced in-house. The "fait maison" mark will be reserved for dishes made on the premises. According to Sylvia Pinel, the handicrafts minister, the idea is to "promote the work of restaurant professionals who are focused on quality." If properly applied, the law promises many revelations to restaurant customers unaware of how much of what they eat is bought ready-made and heated up, or assembled from semi-finished products in restaurant kitchens. It should also become more difficult for restaurants to save on chefs without sacrificing their reputation. Much will depend on how the new rules are applied: restaurant lobbies say they are "waiting for specifics" of the law – in other words they want to know what loopholes there will be.
(Leonid Bershidsky writes on Russia, Europe and technology for Bloomberg View. Follow him on Twitter.)
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