German Government Gives Bank Billion-Euro Bailout

The German government is to bail out the troubled IKB bank to the tune of 1 billion euros. It is the second cash injection for IKB, one of the many German casualties of the US subprime crisis.

The list of casualties from the US subprime crisis is long and keeps getting longer. Financial institutions around the world have announced massive write-offs due to the credit crunch, with German banks such as WestLB and Sachsen LB being particularly hard hit by their exposure to obscure subprime-related investment vehicles.

Now the German government has stepped in to help out one particularly troubled bank. German Economy Minister Michael Glos announced Wednesday that the government, via the state-owned KfW banking group, will bail out the beleagured IKB Deutsche Industriebank AG to the tune of 1 billion euros ($1.46 billion).

Glos said that the Dusseldorf-based bank needs a total of 1.5 billion euros as a result of losses resulting from the subprime crisis. Other banks and investors will have to come up with the remaining money, he said, adding that it was still not clear "who will be taking part and for how much."

Finance Minister Peer Steinbrück warned that allowing IKB to go bankrupt would raise the risk of "a significant loss of confidence in Germany's entire financial sector."

 

Also from Der Spiegel:

The Liechtenstein Connection

With one bigwig already toppled for tax evasion and hundreds more likely waiting their turn, all roads lead to the tiny principality of Liechtenstein. According to SPIEGEL sources, Germany's largest post-war economic scandal started with a single intelligence source.

It is rapidly becoming one of the largest economic scandals ever in Germany's post-World War II history. As many as 900 wealthy Germans -- many of them well-known -- might be involved. Berlin may have been shorted up to 4 billion euros in taxes. And the accusatory finger is pointing increasingly at what many feel is rampant greed among of many of Germany's top earners -- and at a handful of banks and foundations in the tiny principality of Liechtenstein that help the affluent hide their assets...

 

EU Seeks Deal with Cuba

The European Union and Cuba are strengthening their diplomatic ties. Now a German-led delegation in Cuba is exploring the dictatorship's willingness to make concessions to the EU, in the form of allowing a non-government organization to open its doors in Havana.

[ ... ]

It is Monday, Feb. 4, and Martin Schulz, the German head of the center-left Social Democrat faction in the European Parliament, has come to Havana in an effort to improve relations between Europe and Cuba.

To that end, he is sitting in front of Carlos Lage, a balding, deeply tanned man. Lage, 56, is the executive secretary of the Council of Ministers and one of the key members of the Cuban government. Photos of Fidel Castro, and revolutionary leader Ernesto Che Guevara hang in the reception area outside his office. Che is long dead and Fidel is seriously ill. Those who follow the country closely believe that Lage will soon be a more important man than he already is.

Schulz, 52, is here to explore whether the European Union can set aside its protracted diplomatic conflict with the Caribbean dictatorship. The meeting with Lage is the high point of his four-day visit, but it starts off on a sour note.

Cuba to Europe: You're America's Lackeys

Despite the fact that the European Union's sanctions against Cuba are currently suspended, Lage complains that the fact they exist in the first place is an outrage. He tells Schulz that Cuba is not prepared to offer anything in exchange for the permanent removal of the sanctions. The Europeans, he says, are nothing but America's lackeys.

It takes Schulz a few minutes to recover from the attack, but then he shoots back: "Let me tell you how your country is viewed in Europe. You impose the death penalty. You torture and lock up political prisoners. Cuba is a dictatorship." The meeting doesn't appear to be heading in the direction of mutual understanding.

The two men spend the next hour and a half arguing. "It was a killer meeting," Schulz says on the steps of the palace after emerging from Lage's office. "We gave each other a run for our money."

Nevertheless, the verbal sparring could mark a milestone. Schulz proposed to the Cuban government that if the communists offered a sign of their willingness to open up, the EU would slacken its rigid position.

It is an attempt that goes beyond Cuba. At issue is the question of whether a policy of mutual understanding can convince dictatorships to make concessions. Views on this question vary widely within Germany's grand coalition government...