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Germany

That Billion-Dollar War Between The EU And U.S. Just Got Nastier

Brussels punishes Apple and the call from Washington follows promptly: Deutsche Bank owes them $14 billion. The race for the White House doesn't help matters.

That Billion-Dollar War Between The EU And U.S. Just Got Nastier
Anja Ettel and Holger Zschäpitz

BERLIN — Washington's answer to Brussels was already prepped ahead of time. In late August, U.S. Treasury Secretary Jacob Lew had quite openly announced retaliatory measures in case the European Commission wound up forcing American tech giant Apple to pay billions in back taxes. He clearly stated the U.S. would "consider potential responses" if the EU confirmed a major penalty.

Well, now we see that Germany would get a taste of what that answer would be, with news that the U.S. Justice Department was seeking a $14 billion fine from Deutsche Bank for its role in propping up the housing market in the run-up to the 2007 market crash.

The already tense relationship between Europe and the U.S. has been ratcheted up yet again. After the tough negotiations concerning the Transatlantic Trade And Investment Partnership (TTIP) free trade agreement, which is currently on hold, after billion dollar fines for Volkswagen and the Deutsche Bank on the one hand, and Apple on the other hand, we are now facing a high-stakes showdown bound to undermine both economic spheres.

It's not the first time that Washington and Brussels have battled over the appropriate responses to economic transgressions among the world's biggest companies. But compared to the past, fines and claims are now reaching a whole new dimension.

Microsoft for instance was hit for 1.9 billion euros in total from three different European cases in 2004, 2008 and 2013. Intel too had to pay $1.9 billion in 2009 at the behest of Brussels for abuse of its dominant market position. And U.S. authorities demanded that the French bank BNP Paribas pay penalties of $9 billion in 2014 for defying rules towards doing business with Iran, Sudan and Cuba.

No crushing Apple

But with the protagonists Apple and Deutsche Bank, the fight has clearly reached a new level. The case of the smartphone kings of Cupertino is particularly touchy. If Apple wanted to repatriate the money earned abroad to the U.S., the tech giant would have to pay taxes here in Europe. Which means that the money would be lost from American coffers.

In the global tax competition, Apple could become an emblematic gateway to far more targets. The EU now has started to review tax payments of other U.S. giants like Amazon, which has prompted such wide-ranging protests from the American corporate world.

In a common appeal, 185 chief executives have addressed the 28 European member governments asking for Apple's debts and the EU commission's claims to be shelved. But only in exceptional cases does EU law allow the governments to overrule one of the Commission's decisions, requiring a unanimous decision among the 28 concerned countries. French Finance Minister Michel Sapin has already clearly expressed his opinion on this situation, considering the EU's actions "completely legitimate."

But the fight over taxes is just one element in the financial showdown. Behind the scenes, even bigger questions have arisen around industrial policy, whether it is Google, Volkswagen or Facebook at stake: Which company is in charge, who is too big, whose market power should be reduced?

The digital revolution means economic battles are being newly defined. Those who own the data can make the rules. All sides try to find advantages for their companies.

In the case of Deutsche Bank, this is not entirely true. The institute lost its former market power a long time ago. The claim from Washington basically refers to dubious mortgage business the bank — like nearly all of the big financial institutions — should have executed years before the global financial crisis. Top U.S. competitors have mostly settled. But the proceeding against Deutsche Bank stands out: Germany's top lender is not only the first foreign bank that should be condemned in connection with this. It's also the first European bank that would have to dig that deep into its pockets.

More than that: In contrast to former cases the news about the U.S. government's request leaked out in the press ahead of time. Deutsche Bank was therefore obliged to officially confirm the $14 billion claim in a statement, even though the real amount would most likely be much lower. This means the message was most probably deliberately made public by Washington.

During the current U.S. presidential election campaign, which is being led in an extremely populist way, politics are also clearly trying to score against Europe. This was amplified in a week during which the American public already had to cope with the selling of U.S. agrochemical and agricultural biotechnology corporation Monsanto to the German holding Bayer.

"America and Europe apparently have new transatlantic common ground — populism being on the rise in the Old and the New World," says the former U.S. ambassador in Berlin, Richard Kornblum. "Now the next chapter of our formerly united and hopeful transatlantic vision might begin."

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Society

What's Spoiling The Kids: The Big Tech v. Bad Parenting Debate

Without an extended family network, modern parents have sought to raise happy kids in a "hostile" world. It's a tall order, when youngsters absorb the fears (and devices) around them like a sponge.

Image of a kid wearing a blue striped sweater, using an ipad.

Children exposed to technology at a very young age are prominent today.

Julián de Zubiría Samper

-Analysis-

BOGOTÁ — A 2021 report from the United States (the Youth Risk Behavior Survey) found that 42% of the country's high-school students persistently felt sad and 22% had thought about suicide. In other words, almost half of the country's young people are living in despair and a fifth of them have thought about killing themselves.

Such chilling figures are unprecedented in history. Many have suggested that this might be the result of the COVID-19 pandemic, but sadly, we can see depression has deeper causes, and the pandemic merely illustrated its complexity.

I have written before on possible links between severe depression and the time young people spend on social media. But this is just one aspect of the problem. Today, young people suffer frequent and intense emotional crises, and not just for all the hours spent staring at a screen. Another, possibly more important cause may lie in changes to the family composition and authority patterns at home.

Firstly: Families today have fewer members, who communicate less among themselves.

Young people marry at a later age, have fewer children and many opt for personal projects and pets instead of having children. Families are more diverse and flexible. In many countries, the number of children per woman is close to or less than one (Singapore, Taiwan, South Korea, Hong Kong among others).

In Colombia, women have on average 1.9 children, compared to 7.6 in 1970. Worldwide, women aged 15 to 49 years have on average 2.4 children, or half the average figure for 1970. The changes are much more pronounced in cities and among middle and upper-income groups.

Of further concern today is the decline in communication time at home, notably between parents and children. This is difficult to quantify, but reasons may include fewer household members, pervasive use of screens, mothers going to work, microwave ovens that have eliminated family cooking and meals and, thanks to new technologies, an increase in time spent on work, even at home. Our society is addicted to work and devotes little time to minors.

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