In Sunday's French Election, Put Options Play an Unexpected Role

 | Apr 21, 2017 | 9:00 AM EDT
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With the first round of the French presidential election set to take place on Sunday, the result will depend on how the French will react to the latest terrorist attack in Paris, in which one policeman was killed and two others were seriously injured. But another attack, which took place earlier this month in Germany, ought to play at least an equal role.

Terrorist attacks have become a fact of life for many European countries. Extremist parties have seized the opportunity to incorporate these tragedies in their anti-immigration and often downright xenophobic rhetoric.

Take Marine Le Pen, the leader of the far-right National Front party, who is set to enter the runoff of the French presidential election. Three days ago, seeing that she was losing ground in opinion polls to centrist rival Emmanuel Macron, she pledged to end all immigration to France.

However, using terrorist attacks as reasons to implement extreme policies can backfire. The credibility of politicians who do this could suffer serious blows when it turns out that the attacks they reference were not terrorist in nature.

If some previously undecided French voters, scared by the recent Paris attack, suddenly believe it is a good idea to vote for Le Pen, they would do well to keep themselves up to date with the latest twists in the story of another attack, the one on the bus of German soccer team Borussia Dortmund on April 11.

Le Pen herself used that attack as an example of how the "Islamist threat" has risen in Europe, in a speech on April 14. Just like Nigel Farage, the leader of extremist UKIP party who campaigned for Brexit in the U.K., Le Pen is skilled at inducing fear in voters' minds by subtly, or sometimes not so subtly, connecting negative events with immigrants.

"France needs to protect itself. The Islamist threat has risen during the five-year mandates of Sarkozy-Fillon and Hollande-Macron," she said in reference to her rivals, Francois Fillon and Macron, the latter being the favorite to enter the runoff with her.

"Today, all over Europe, the attacks multiply. Over the past few weeks, Saint Petersburg, London, Stockholm and the day before yesterday Dortmund, were hit," Le Pen said.

However, undecided French voters should take a look at the latest statement from German prosecutors about the Dortmund attack.

It says the suspect, 28-year-old German and Russian national Sergej W., took out a personal loan on April 3 and on April 11 used the money to buy 15,000 put options on the shares of Borussia Dortmund, which trades on the Frankfurt Stock Exchange under the symbol BVB.

"If the shares of Borussia Dortmund had fallen massively, the profit would have been several times the initial investment," the prosecutor's office statement said. The suspect was charged with attempted murder.

It sounds like money, rather than religious fanaticism, was behind that attack. The fact that Le Pen listed it as part of the "Islamist threat" serves as proof to undecided voters that she has no regard for justice and is quick to bend facts to suit her extremist narrative.

Between two attacks this month, one seemingly motivated by terrorism, the other by money, French voters must decide: Will they give in to fear and go with extreme candidates, or will they, like the Dutch last month, close ranks against populism? The fate of the eurozone depends on the answer.

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