In Berlin, it's better to have a Belgian bank account than a German one

While banks in Germany rake in ATM fees from customers of other German banks, EU law forbids them from charging citizens of other EU countries.

It's a 'Brussels week' for me this week, I'm in town to shoot a few videos and moderate some conferences. As the Autumn draws on, I'm finding myself here more often than I'm in Berlin. But this is fine, since I have apartments in both cities. 

Strictly speaking, when I'm in Brussels I am "home". This is still my primary address - my Belgian phone is still my primary number, and I still use a Belgian bank account for all transactions. And actually, this last fact has made my life in Berlin easier.

The car chancellor

Allegations of nefarious influence have abounded this week in Brussels, with German chancellor Angela Merkel accused of controlling the Council of Ministers, and automaker BMW accused of controlling her.

So who's really pulling the strings? And how did we get here?

On Monday, Germany overturned a deal on car emission limits in some very unusual circumstances, somehow convincing several other member states to switch positions on a deal that had already been agreed in June.

On Tuesday, it was revealed that Merkel's Christian Democratic Union (CDU) party received a donation of €690,000 from the Quandt family, which owns 46.7% of BMW, just days before Monday's fateful meeting. The revelation has prompted German media to dub Merkel "the car chancellor" and question whether hers is a pay-for-play government.

A gift from a partial stakeholder of an automaker might not have raised eyebrows were it not for the very heavy-handed and unusual way Germany has gone about trying to avoid this emissions limit at the last moment - a limit the industry has known was coming since 2008. 

In terms of how Germany has worked to change this EU proposal, the country has technically not violated any rules. But Berlin has become involved in this legislation at two highly inappropriate times that are outside the normal legislative procedure – during the Commission drafting of the proposal and during a vote to rubber-stamp an already-agreed deal.

Bank battle: New York vs London

Yesterday's news that US regulators are investigating yet another British bank for illegal activity has provoked a roar of indignation and incredulity from the City of London. Today a member of the British parliament accused the US government of launching the string of investigations in order to weaken the British banking sector.

“I think it's a concerted effort that's been organised at the top of the US government,” fumed Labour MP John Mann to British media. “I think this is Washington trying to win a commercial battle to have trading from London shifted to New York.”

This week the New York State regulator charged the British bank Standard Chartered of money laundering $250 billion in funds aimed for Iran. The US has a trade embargo against Iran, and under US law all companies publicly traded in the US, including Standard Chartered, must comply. The money laundering went on for nearly a decade, the regulator alleges.

The announcement comes just weeks after the US Congress held highly confrontational hearings of British-based HSBC executives over allegations that HSBC was laundering money for Mexican drug cartels. Earlier this summer London-based Barclays bank was discovered to have been manipulating libor rates – the rates at which banks lend to each other.

'Occupy London' pits bishop against bishop in Church of England

Today I paid a visit to the 'Occupy the London Stock Exchange' protestors who have camped out outside St. Paul's Cathedral in central London. It was a fascinating visit, I sat in on a 'general assembly' and also observed a conversation between an occupier and a banker that was being filmed for a British TV station. But what is perhaps the most interesting to me about the Occupy movement in London is the strange standoff it's not found itself in with the Church of England.

The 'occupy movement' has spread from its initial manifestation in August at Wall Street in New York to cities around the globe. On 15 October activists in London decided to stage their own version in the city's financial quarter ("the city"), the second most important financial centre in the world after Wall Street. They initially tried to occupy Paternoster Square, which is where the London Stock Exchange sits. But because the UK courts had already granted an injunction against public access to that particular square, police blocked their access to it.

So the 3,000 protestors moved to the nearby small open space next to St. Paul's Cathedral, the massive domed city landmark in the city built by Christopher Wren in 1697. The police surrounded the protestors in order to protect the cathedral. But the canon of St. Paul's told the police to leave. He said the church had decided to allow the protestors to protest peacefully on their land.

Just Lips service?

So the Euro is saved, for now. At 4am European leaders finally emerged from their talks to tell the fatigued journalists that after hours of very difficult negotiations, they had come to an agreement that will give the markets what they are demanding.

Perhaps it was the late hour, or the fact that the Polish presidency had closed the press bar at 11pm, but the journalists covering the summit initially greeted the announcement with scepticism. Many questioned whether the "bazooka" just unveiled really had the firepower to shield Spain and Italy from collapse. After all, this was not the first time the press had been held captive until late into the night in the Justus Lipsius building - or 'Just Lips' as I like to call it - to be told at the break of dawn that the euro would be saved. So in the end, was this just lip service? Or was this the decisive action the markets needed to see?

The agreement has three prongs:

• Private banks holding Greek debt will accept a loss of 50% on their Greek bonds
• The eurozone's main bailout fund (the European financial stability facility or EFSF) will be leveraged to €1 trillion.
• Italy will implement reforms to bring down the country's staggering debt, including a lowering of the retirement age.

EU gets tough with Switzerland

Any Swiss citizen working in the EU, or vice versa, should take note of some stern language used toward Switzerland by EU foreign ministers in Brussels yesterday. Warning Switzerland that the system of bilateral agreements that govern the Alpine country's relationship with the EU has "clearly reached its limits," the ministers called the current arrangement incoherent and unwieldy. Switzerland, they warned, is in danger of losing its rights for free movement of goods, persons, services, and capital with its neighbours.

Switzerland's relationship with the EU is governed by a complex system of bilateral agreements which make the country a sort of "semi-member state". Switzerland has to follow certain areas of EU law, but doesn't have to follow others. It participates in the free movement provisions of EU law, which means that any EU citizen can work in Switzerland, and vice versa. It also participates in certain common market rules, but is not part of the customs union (which is why you can buy tax-free goods when flying from Switzerland to elsewhere in Europe). At the same time, as a non-EU member it gets no European Commissioner, has no vote in the European Council and does not have MEPs in the European Parliament.

Switzerland Opens the Bank Floodgates

Europe may be continuing to wage its battle against Switzerland and Liechtenstein over banking secrecy, but after a Swiss government decision yesterday it looks like it may have been the US that has delivered the knock-out blow to the Alpine tax haven system. Switzerland's uunprecedented decision to let UBS turn over their clients' banking details to the US could open the floodgates for governments demanding previously secret bank details, causing the whole system of secret bank accounts to come crashing down like an avalanche.

Since 1934 Switzerland has relied on a pledge of secrecy to fill the coffers of its massive banking system. According to the Swiss Banking Association, 27 percent of all privately held offshore assets are located in Switzerland. The result has been that the country's economy is heavily reliant on the banking industry, with two of the world's largest financial institutions, Credit Suisse and UBS, being the pride of the country. The US Internal Revenue Service had filed criminal charges against UBS, accusing it of helping Americans avoid paying US tax by opening Swiss bank accounts and demanding that it hand over client data. Under Swiss law UBS wasn't allowed to turn over those records, so UBS petititioned the government to allow it to do so, saying that if they didn't their very existence would be at risk. Yesterday the Swiss Financial Market Supervisory Authority said it would allow the release, throwing Swiss market analysts into a panic. Many are saying the government's decision was unnecessary and premature, and could put the whole Swiss banking system at risk.

But the pressure on Switzerland to reform its banking secrecy laws has been steadily mounting for the past several years. Germany in particular has been aggressively pursuing the issue, leading the efforts to force Liechtenstein's hand by stalling its Schengen Zone membership until it makes concessions on the issues. Last year the German finance minister even made the argument that Switzerland should be put on a blacklist of tax havens. The EU has also been looking to end what it views as a no-longer-acceptable tax island within its borders. This month the EC introduced a proposal to end anonymity for bank accounts within the EU. But since such secrecy is already illegal in most EU countries anyway, many analysts think the proposal is actually being made with the intention of extending the legislation to Switzerland and Liechtenstein, which both have bilateral treaties with the EU locking them in to many decisions made in Brussels.

But although Europe's been gunning for the tax havens for some time, it looks like it is the IRS that's delivered the knock-out punch. The Swiss government was at pains today to insist that the ruling is an isolated case and will have no bearing on such negotiations with the rest of Europe. But it's undeniable that the decision is likely to encourage the EU and individual countries to pursue similar criminal action against Swiss banks in order to force their hand. And now that the precedent has been set, it will be hard for the Swiss government to block those requests in the future. As the economic crisis continues to worsen, governments will be keen to grab additional revenue wherever they can. Some of that may now come from unpaid taxes sitting in Swiss banks.

Rioting in Iceland

When there's rioting in Iceland, you know we're in trouble. The small Scandinavian country in the middle of the Atlantic isn't usually associated with domestic strife, but rather high quality of life and abundant natural resources. But yesterday thousands of people took to the streets to protest the government's handling of the economy, which has plunged in recent months as a result of the larger global turmoil. Gross national product is down two-thirds, there has been a 45 percent rise in unemployment and the country is defaulting on loan repayments. In October the country's financial system collapsed and its currency plunged under the weight of billions of dollars in foreign debt taken on by its banks.



These weren't just mild demonstrations. Riot police had to fight with a large number of violent protesters outside the country's parliament. Pepper spray was fired at the protesters and 30 arrests were made.

Coming on the heels of the riots in Greece last month, many in Europe are becoming increasingly worried that the economic turmoil could lead to violent clashes between disaffected people and their governments across the continent. Eastern Europe is seen as particularly vulnerable to such violence, with some even predicting a "spring of discontent" in the region to be around the corner.

Eastern Europe has been hit hard by the financial crisis, especially Bulgaria, Romania and the Baltic states - all recent EU entrants. As the Guardian recently reported, incidents have been steadily increasing. Last week police in Vilnius, Lithuania had to tear-gas a crowd of demonstrators protesting tax rises and benefit cuts designed to save the state from bankruptcy. Sofia, Bulgaria has also seen recent widespread violence in which 150 people were arrested. Riga, Latvia has seen street battles as well.

These Eastern European economies are increasingly experiencing unexpected turmoil after years of posting double-digit growth. Their anger will likely be compounded by the fact that they were expecting that growth to continue, particularly after they joined the EU. The post-cold war governments are still new and relatively weak, and could be unprepared to deal with widespread unrest. And the increasing hostility isn't just being directed at the governments. Attacks on minorities are also becoming increasingly common, particularly against Roma (gypsy) communities. Recently 700 members of the far-right Workers' Party in the Czech Republic fought with police when they were prevented from marching on a Roma area.

Of course Iceland is just about as far as you can get from Eastern Europe without leaving the continent. If the global economic turmoil can cause rioting in a country with one of the highest quality of life ratings in the world, could rioting be far behind in the major Western economies? And even if it isn't, how will the major economies of Western Europe respond to growing political unrest to their east, in countries with which they are now united? Clearly the EU has an obligation to help Eastern Europe through the financial turmoil, but if the situation becomes fundamentally dangerous, can the EU do anything to stem the violence without a proper policing military force?

The "spring of discontent" will be an anxious time for Europe.