Here’s the latest EU scandal – yes, with the new Commission not even a week old! – and it might be a biggie. It broke this morning:

Oooh, «accords secrets» – secret accords! They’re linked with that “343,” that’s the number of multinational companies to which the Luxembourg granted sweetheart tax deals to come and operate there. This has just emerged from a leak from the offices of Pricewaterhouse Coopers there, which itself earned handsomely in taking up the role of negotiating with the Luxembourg government on those companies’ behalf for these tax-breaks. According to the report cited in this piece in the Tribune de Genève,

While in Luxembourg the tax rate for companies is officially 29%, which is decent [honnête] in international terms, that often passes below 1% after negotiations with the tax authorities.

The important thing to remember here is that multinationals routinely distort their official accounts, through tricks that go under the general name of transfer pricing, to show as much income as they can as coming from a place like Luxembourg where it is subject to the least taxation. Of course, the income has really been overwhelmingly earned elsewhere, in other countries – and those countries thereby effectively have had legitimate tax revenues stolen from them, in often mind-boggling quantities.

The company names sampled in this brief piece are what you would expect: Apple, Amazon, Heinz, Pepsi, Ikea, Deutsche Bank, and also a handful of Swiss companies (as this Swiss newspaper notes): UBS, Credit Suisse, Lombard Odier private bankers (remind you at all of “odious”?), and others. Indeed, with respect to the American companies on this list, their management has to cheat governments out of taxes using techniques like these, in order to increase earnings – otherwise they can be sued by shareholders for breach of fiduciary duty! Behold the face of late twentieth-century/twenty-first century Capitalism!

What really makes this development juicy is of course the identity of the brand-new President of the European Commission, Jean-Claude Juncker, who was Prime Minister of Luxembourg from 1995 to 2013 when presumably all or at least most of these sweetheart tax-deals were negotiated. Now, it’s true that it was pressure from the outgoing Commission that recently Ireland to close its notorious “double Irish” tax loophole (well, at least over the next four years) that enables multinationals to evade enormous amounts in taxes owed elsewhere. The legal justification wielded was that such generous tax terms in effect amounted to “state aid,” which is forbidden to EU member-states.

That same rationale can obviously be brought to bear now on these Luxembourgish arrangements. But will it? As @TeacherDude puts it:

Juncker is going to have to change his spots, and quick. This development is precisely the last thing the EU needs after last May’s elections that saw so many new MEPs elected from extremist parties, reflecting a souring on the EU on the part of the European electorate. Already Marine Le Pen, whose Front National is prominent among those extremist parties, is calling on Juncker to resign from his very new Commission President position .

Are you constantly on the look-out for the offbeat, even bizarre European event/festival/occasion to attend, both for the sake of the experience itself and for wowing your friends when you tell them about it later? Then consider the annual Luxembourg duckrace (website in French):

(Don’t worry, this YouTube video soon straightens itself out by turning 90° to the proper orientation. Also, just dig the announcer speaking in Luxembourgish!)

As you see, a more-accurate name for this would be The Rubber Duck Race: a load (~10,000) of classic yellow* rubber ducks (each with a number affixed at its bottom) is dumped with great ceremony upstream into the brook called the Pétrusse. This was once the mighty river that through the eons carved out the tremendous and picturesque canyon that gives Luxembourg a topography like no other city, but which in modern times has been tamed to flow meekly over a concrete riverbed down at the bottom of the gorge, a shadow of its former self and thereby a prominent instance of Man triumphing over Nature.

Nonetheless, it still has enough water flowing to function, in effect, as an idiosyncratic once-per-year lottery. For people pay €5 for each duck they wish to “sponsor” (“You will have up to 30 minutes before departure of the first wave to register, train and coach your champion,” the website declares), and those that emerge first downstreat at the finish line win prizes. This year’s run happened just yesterday, and the results indicate that a Renault Twingo automobile was the prize for first place, an electric bike for second, and so on down the line for the first 30 finishers.

Naturally, this is all done for charity. This year a pair of institutions for abused children and for children with cancer were the beneficiaries of the funds raised.

* Most are indeed yellow, although it’s clear from the video that the organizers are willing to make some gestures towards duckie diversity and multi-culturalism.

Sure, it’s the cheap, easy, cynical view to adopt that the bail-out/splintering of the French/Belgian/Luxembourgish bank Dexia, worked out over the weekend, is just going to be the first of many such episodes. Then again, it’s also the de rigueur statement for any finance minister involved to make under such circumstances – “No, I don’t think so, certainly not French banks” – such as that which French finance minister François Baroin uttered when asked by reporters if there would be any others.

Of course there will be others. For heaven’s sake, there were already two others (i.e. European bank nationalizations) happening even as Dexia hogged the headlines the past few days. (Details here, in English: namely a Greek bank – surprise! – that was nationalized after getting in trouble over money-laundering, and a Danish bank that made foolish real estate loans.) And now we have further explicit confirmation of this from Kleis Jager at the Dutch newspaper Trouw: French prepare in secret for more misery.

Topped by an unfortunate photo of current (unelected) Belgian Prime Minister Yves Leterme and France’s PM François Fillon with sly, conspiratorial smiles on their faces, Jager’s piece tells of how, even before Dexia, the French government realized that it needed to get ready to save at least “two or three” big banks – preferably by forcing them to sell themselves to outsiders with big money.

(Just as Luxembourg did with its part of Dexia, selling it to the Qataris, for example. You’ve got to admire the Luxemburgers, though – on the very Sunday (9 October) that Dexia was collapsing, finance ministers were feverishly meeting, and Qataris were presumably being wined-and-dined, they were also holding their national elections!)

Wait, you want names? No problem: according to Trouw, the French had in mind specifically BNP Paribas, Société Générale and Crédit Agricole as the banks where they would need to intervene. No Dexia on that list! But all of these have done good business through the years – “good” so far – providing loaned money to not only Greece, but also Spain and Italy.

To be fair, this is not Jager’s scoop, but rather one he credits to the French paper Journal du Dimanche. BNP Paribas and Société Générale immediately issued denials once the latter had published its report. But I refer you again to Finance Minister François Baroin’s comments cited above.

Yes! Finally! The country-treatment (within the “Europa XL” series of cultural portraits of EU member-states commissioned by the Danish newspaper Politiken, etc., etc.) you’ve all been waiting for: Luxembourg!

Well, it’s at least the portrait I’ve been looking forward to doing. Check it out: The Luxembourgois poet Jean Portante actually lists as his choice for “Object” the local language, Lëtzebuergesch. A very good choice, as you’ll see if you care to read on further, although apparently everyone there (or who is really from there at least) speaks French and German as well.

I’ve also noticed that Politiken recently added Malta to their Europa XL master-index page. I might give that one a pass, unless I get any fervent reader requests to the contrary. I do know a very attractive, vivacious Maltese living here in Amsterdam (I don’t think she reads €S, though), but Roberta B. on her own ordinarily would hardly be enough of a justification to inflict a 10-point cultural review of Malta on you, or for that matter on myself. I would, however, like to inflict Roberta on myself (not you.) On the other hand, I don’t in fact know anyone from Luxembourg, and so that should convince you of my incorruptible and highly-objective standards when it comes to choosing material to cover on these pages.

Back to the grand duchy, then: our resident expert on Luxembourg is the poet Jean Portante, son of Italian immigrants to that country. (more…)

Once again Iraq is causing divisions within NATO. This time it’s between the Poles and the Germans. In one respect, this is nothing new: Chancellor Schröder’s SPD-Green administration had always made it clear that it would not support a war in Iraq, in any way, even if it were given official United Nations approval – e.g. if the so-called “Second Resolution” had passed the Security Council. On the other hand, Poland was one of the few nations (the others including only Australia and Albania) to actually send troops to contribute to the military effort of the War in Iraq. In fact, Polish commandos did some rather good work in securing Iraqi oil platforms offshore in the Persian Gulf once hostilities got under way.

But the war phase is now over, and the occupation phase has begun. (more…)

Germany was the odd-man-out at the recent defense summit between the German and French presidents and Belgian and Luxembourgian premiers: Chancellor Schröder’s government has been the one trying the hardest for a rapprochement with the American administration after the divisions caused by the War in Iraq. Indeed, as Anke Bryson notes in the Frankfurter Algemeine Zeitung Weekly, both Schröder and his foreign minister Joschka Fischer wanted to keep this “mini-summit” a low-profile affair, out of respect for the sensibilities of the Bush Administration – “but the publicity damage had already been done.”

We’ve seen how elements of the French press took this meeting seriously, while the Belgian press was more cynical, doubting that anything would ever come of this summit taking place on its own soil. Whatever the sotto voce protestations of German officials, they did accept the invitation to attend the Brussels meeting and did show up there. It’s time to check the German press’ reactions. (more…)

Belgium provided the locale for this week’s meeting of the German, French, Belgian, and Luxembourgian heads of state to discuss the new European defense initiative. What do the Belgian papers have to say? (more…)

The heads of state of France, Germany, Belgium, and Luxembourg met yesterday in Brussels to launch a new European defense initiative for a multinational force to flesh out the European Union’s foreign and security policies. Presidents Chirac and Schröder and Prime Ministers Verhofstadt and Juncker took pains to emphasize that they were not acting against NATO nor against that alliance’s senior partner, the United States.

Of course, besides Luxembourg, it is true that these were the European countries in the forefront of opposition to America and its “coalition of the willing” as they undertook their assault on Iraq. And many do intrepret this as an anti-NATO gesture – the Times of London‘s foreign editor Bronwen Maddox speaks of a “direct hit on Nato” and “payback time” for these four countries. What do the countries involved have to say for themselves? (more…)