Economy

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 â€" 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 â€" like nearly all of the big financial institutions â€" 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 â€" 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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Paying tribute to the victims of the attack in Kongsberg

Terje Bendiksby/NTB Scanpix/ZUMA
Carl-Johan Karlsson

The bow-and-arrow murder of five people in the small Norwegian city of Kongsberg this week was particularly chilling for the primitive choice of weapon. And police are now saying the attack Wednesday night is likely to be labeled an act of terrorism.

Still, even though the suspect is a Danish-born convert to Islam, police are still determining the motive. Espen Andersen Bråthen, a 37-year-old Danish national, is previously known to the police, both for reports of radicalization, as well as erratic behavior unrelated to religion.

Indeed, it remains unclear whether religious beliefs were behind the killings. In an interview with Swedish daily Dagens Nyheter, police attorney Ann Iren Svane Mathiassens said Bråthen has already confessed to the crimes, giving a detailed account of the events during a three-hour interrogation on Thursday, but motives are yet to be determined.

Investigated as terrorism 

Regardless, the murders are likely to be labeled an act of terror – mainly as the victims appear to have been randomly chosen, and were killed both in public places and inside their homes.

Mathiassens also said Bråthen will undergo a comprehensive forensic psychiatric examination, which is also a central aspect of the ongoing investigation, according to a police press conference on Friday afternoon. Bråthen will be held in custody for at least four weeks, two of which will be in isolation, and will according to a police spokesperson be moved to a psychiatric unit as soon as possible.

Witnesses have since described him as unstable and a loner.

Police received reports last year concerning potential radicalization. In 2017, Bråthen published two videos on Youtube, one in English and one in Norwegian, announcing that he's now a Muslim and describing himself as a "messenger." The year prior, he made several visits to the city's only mosque, where he said he'd received a message from above that he wished to share with the world.

Previous criminal history 

In 2012, he was convicted of aggravated theft and drug offenses, and in May last year, a restraining order was issued after Bråthen entered his parents house with a revolver, threatening to kill his father.

The mosque's chairman Oussama Tlili remembers Bråthen's first visit well, as it's rare to meet Scandinavian converts. Still, he didn't believe there was any danger and saw no reason to notify the police. Tlili's impression was rather that the man was unwell mentally, and needed help.

According to a former neighbor, Bråthen often acted erratically. During the two years she lived in the house next to him — only 50 meters from the grocery store where the attacks began — the man several times barked at her like a dog, threw trash in the streets to then pick it up, and spouted racist comments to her friend. Several other witnesses have since described him as unstable and a loner.

The man used a bow and arrow to carry the attack

Haykon Mosvold Larsen/NTB Scanpix/ZUMA

Police criticized

Norway, with one of the world's lowest crime rates, is still shaken from the attack — and also questioning what allowed the killer to hunt down and kill even after police were on the scene.

The first reports came around 6 p.m. on Wednesday that a man armed with bow and arrow was shooting inside a grocery store. Only minutes after, the police spotted the suspect; he fired several times against the patrol and then disappeared while reinforcements arrived.

The attack has also fueled a long-existing debate over whether Norwegian police should carry firearms

In the more than 30 minutes that followed before the arrest, four women and one man were killed by arrows and two other weapons — though police have yet to disclose the other arms, daily Aftenposten reports. The sleepy city's 27,000 inhabitants are left wondering how the man managed to evade a full 22 police patrols, and why reports of his radicalization weren't taken more seriously.

With five people killed and three more injured, Wednesday's killing spree is the worst attack in Norway since far-right extremist Anders Breivik massacred 77 people on the island of Utøya a decade ago.

Unarmed cops

As questions mount over the police response to the attack, with reports suggesting all five people died after law enforcement made first contact with the suspect, local police have said it's willing to submit the information needed to the Bureau of Investigation to start a probe into their conduct. Police confirmed they had fired warning shots in connection to the arrest which, under Norwegian law, often already provides a basis for an assessment.

Wednesday's bloodbath has also fueled a long-existing debate over whether Norwegian police should carry firearms — the small country being one of only 19 globally where law enforcement officers are typically unarmed, though may have access to guns and rifles in certain circumstances.

Magnus Ranstorp, a terrorism expert and professor at the Swedish Defence University, noted that police in similar neighboring countries like Sweden and Denmark carry firearms. "I struggle to understand why Norwegian police are not armed all the time," Ranstorp told Norwegian daily VG. "The lesson from Utøya is that the police must react quickly and directly respond to a perpetrator during a life-threatening incident."

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