The EU's 27 leaders have already started discussing about the future of the European Union and the UK PM complained she was not invited.
France's Socialist PM Manuel Valls presented some of the main points of what the French government wants in an article in the FT.
He complained that the French army is acting as a de facto EU army and wants the EU to do more, as EU , for control of the EU borders and security inside the EU (remember te terrorist incidents in France).
He wants a US type (ESTA) but at the same does not want the EU to become federal like the US.
He is also against the intra EU posting of (EU) workers because they bypass member states' national labour standards.
He also wants corporate tax rates among the member states to converge and says that if not all member states agree that should established with those that agree. That of course will require Treaty changes because income, personal and company, is not a competence of the EU. So in effect he is proposing something like a Taxation Protocol (such as the Social Protocol the UK vetoed at Maastricht in 1991 and thus became valid for all except the UK, later Blair's UK joined in). What is not clear at all is what incentive members that agree will have to agree to such a change. Eg Ireland. Give up its low corporate tax rates that attract US and other companies in return for what? And that shows not only the inadequacy of piecemeal approaches to the EU as well as the tight spot the EU is in.
Please see other recent posts on what the EU needs.
Valls talks of EU financing of digital and tech innovation as a means to give the EU more growth. Too little and probably mis-targetted. In my opinion the EU economy must start to work better as system and that requires systemic improvements not piecemeal approaches.
Valls also thinks the CETA agreement between the EU and Canada is good for the EU (currently blocked by a veto by Belgium's Wallonia) and wants a US-EU deal that benefits the EU, thus implying the one negotiated is not. One has to note that neither Trump nor Clinton are very pro free trade.
Of course each member state is putting forward its own key requests out of a potential change in the EU Treaty. Previous Treaty changes not only suffered from rejection by member states but also from a piecemeal approach.
The Visigrad 4 (Poland, Hungary, Czech Rep. and Slovakia) want less Europe (less EU). The process to Treaty revision will be long and hard because after all Euroscepticism is higher than recent times.
One has to keep in mind that M. Valls is a Socialist and after next year's Presidential election the President will most likely not be a Socialist (Hollande) and thus M. Valls will not longer be a PM.
Sunday, October 23, 2016
Friday, October 21, 2016
Wave Goodbye to Global Street
In October 2012 I was sitting on the ledge of a store in Oxford Street, London, watching the world go by. Literally. In 30' or less, you could experience a parade of people from all continents, more impressive than the Olympic Games parade (and w/o flags). I called it "Global Street".
With an immigration policy more open than the US and probably any other country in the world (feel free to e-mail me to correct me if you have data that another country was more open in its immigration policy, I am not aware of one), due to its EU membership and a liberal non EU immigration policy, the UK was for years the "new America" (what America used to be before Ellis Island closed down).
Now it is not anymore (you have been reading in the news why and also consult other posts if you haven't).
So what country is now going to be the heart of real globalization (because you cannot have globalization without free movement of the human capital too)? Any ideas? There is a market opportunity for a country to become that. It will draw investment and business too, like the UK did (and will lose now). Of course, English has to be part of the package, because English is the lingua franca and that makes it even more difficult for a country to implement (see eg Germany).
What Theresa May has done and is doing to the UK is sad but to be fair it is merely taking the UK out of the leadership position it had in true globalization. Immigration policies like the one Tories are cooking up (they started before the Brexit ref re non EU migration, a 35,000 threshold for employment for non EU economic migrants) are the norm in the world, sadly. And many countries have worse ones. We are nowhere close to true globalization. And even further due to the new UK.
With an immigration policy more open than the US and probably any other country in the world (feel free to e-mail me to correct me if you have data that another country was more open in its immigration policy, I am not aware of one), due to its EU membership and a liberal non EU immigration policy, the UK was for years the "new America" (what America used to be before Ellis Island closed down).
Now it is not anymore (you have been reading in the news why and also consult other posts if you haven't).
So what country is now going to be the heart of real globalization (because you cannot have globalization without free movement of the human capital too)? Any ideas? There is a market opportunity for a country to become that. It will draw investment and business too, like the UK did (and will lose now). Of course, English has to be part of the package, because English is the lingua franca and that makes it even more difficult for a country to implement (see eg Germany).
What Theresa May has done and is doing to the UK is sad but to be fair it is merely taking the UK out of the leadership position it had in true globalization. Immigration policies like the one Tories are cooking up (they started before the Brexit ref re non EU migration, a 35,000 threshold for employment for non EU economic migrants) are the norm in the world, sadly. And many countries have worse ones. We are nowhere close to true globalization. And even further due to the new UK.
Thursday, October 20, 2016
He wants his Britain back
A British friend wrote:
"After parents being told by schools to fill in forms to identify their kids as 'foreign born', the home office suggesting firms should keep a tally of non Brit employees, HMRC cutting off online tax returns unless you have a UK passport and landlords being threatened with imprisonment for renting to unregistered 'foreigners' I simply don't recognise my country any more!
It's more like China or North Korea than what used to be Great Britain.
I want MY country back!"
To be fair, these things may not be unprecedented, but they mark a very different Britain than the Open Britain my friend was used HIS Britain to be.
He is a liberal democrat, of course.
"After parents being told by schools to fill in forms to identify their kids as 'foreign born', the home office suggesting firms should keep a tally of non Brit employees, HMRC cutting off online tax returns unless you have a UK passport and landlords being threatened with imprisonment for renting to unregistered 'foreigners' I simply don't recognise my country any more!
It's more like China or North Korea than what used to be Great Britain.
I want MY country back!"
To be fair, these things may not be unprecedented, but they mark a very different Britain than the Open Britain my friend was used HIS Britain to be.
He is a liberal democrat, of course.
Brexit: The Bottom Line
The UK ref result showed that there is a large % of Britons who lack the
education and skills to be employed or well employed and have been
feeling left out of the open economy that Britain had become.
Funny thing for a country that claims to have good unis. The main problem is secondary education of course.
And the result is that May, 18 points ahead in the polls, is creating for them a Britain the goods and services of which few will buy.
Funny thing for a country that claims to have good unis. The main problem is secondary education of course.
And the result is that May, 18 points ahead in the polls, is creating for them a Britain the goods and services of which few will buy.
Lobbying, Public Affairs or Advocacy?
In the US, they call it lobbying. When the White House burnt was destroyed by a fire, the US [resident was staying in a DC hotel and representatives of interests hang out in the lobby and the corridors to talk to him and his aides, hence the term lobbying.
In Europe, it is referred to as Public Affairs. That applies mostly to companies and associations.
Causes and NGOs tend to use the term Advocacy.
Is there really a difference?
Well, let's start from the basics. Legislation, laws, affect us all. They determine what we cannot and can do. As citizens and as economic operators. In other words, they set the framework for our lives. Laws are drafted by civil servants (lets refer to them as policy makers) and they are approved by legislators.
In principle, all have the right to have a say on draft law as well as policy papers that precede them (called White and Green papers in the UK and the EU). If the opinion comes with a rationale attached to it, so much for the better.
In Brussels, thousands of people every day go about the business of public affairs and advocacy. What do they actually do?
They monitor legislative proposals that are either being drafted or in the EU's complex legislative pipeline. They inform their companies and other organisations around the EU (and outside the EU) on what is happening. That allows for the impact to be examined. Then they form opinions, official or not, and try to pass them on to the policy makers and the legislators.
In my book, lobbyists use connections - friends in the right places to affect policy. Public Affairs relies more on marketing. Advocacy uses anything they it can think of, including demonstrations and media stunts. That is because advocates tend to use public opinion much more than others do.
When I was working at a well known European business organisation in Brussels, I used to think how much time we spent deliberating opinion papers on draft laws and how little to market them. I used to envy for example Greenpeace for using many PR tools that business normally does not.
I believe that policy makers and legislators have not only a right but also an obligation to hear the opinions of citizens. All of them. And that is why I have written that a lobbyists' register is unfair, because full time "lobbyists" tend to register and thus the casual opinion holder is kept out of face to face meets with the policy makers and legislators. Instead, all meets and topics of any meeting of policy makers and legislators should be recorded in a "diary" and the compiled database should be publicly available. That is if transparency is to be really pursued.
It would also help if all public affairs and advocacy sides published their opinions. Many do. Plus we of course have consultations by eg the European Commission where citizens and organisations submit their written opinions/views.
That of course makes for a very complicated legislative process. And the only people who keep their eyes on the ball are policy makers, legislators and public affairs and advocacy professionals. Because the nitty gritty is too complex for even most journalists to keep up with. That is one of the reasons the average voter feels left out.
But what makes advocacy so different is that it has the culture of creating messages that are appealing to the media and the public opinion out of "boring" policy and legislative issues. And that is something many public affairs professionals would like to do too, if they were culturally permitted to.
The timing for that is good, because what the EU and most countries want is to produce more growth and employment and who knows how this is done better than the companies, small, medium and large. They create the GNP and the jobs, at least in the current political-economic system in Europe.
In Europe, it is referred to as Public Affairs. That applies mostly to companies and associations.
Causes and NGOs tend to use the term Advocacy.
Is there really a difference?
Well, let's start from the basics. Legislation, laws, affect us all. They determine what we cannot and can do. As citizens and as economic operators. In other words, they set the framework for our lives. Laws are drafted by civil servants (lets refer to them as policy makers) and they are approved by legislators.
In principle, all have the right to have a say on draft law as well as policy papers that precede them (called White and Green papers in the UK and the EU). If the opinion comes with a rationale attached to it, so much for the better.
In Brussels, thousands of people every day go about the business of public affairs and advocacy. What do they actually do?
They monitor legislative proposals that are either being drafted or in the EU's complex legislative pipeline. They inform their companies and other organisations around the EU (and outside the EU) on what is happening. That allows for the impact to be examined. Then they form opinions, official or not, and try to pass them on to the policy makers and the legislators.
In my book, lobbyists use connections - friends in the right places to affect policy. Public Affairs relies more on marketing. Advocacy uses anything they it can think of, including demonstrations and media stunts. That is because advocates tend to use public opinion much more than others do.
When I was working at a well known European business organisation in Brussels, I used to think how much time we spent deliberating opinion papers on draft laws and how little to market them. I used to envy for example Greenpeace for using many PR tools that business normally does not.
I believe that policy makers and legislators have not only a right but also an obligation to hear the opinions of citizens. All of them. And that is why I have written that a lobbyists' register is unfair, because full time "lobbyists" tend to register and thus the casual opinion holder is kept out of face to face meets with the policy makers and legislators. Instead, all meets and topics of any meeting of policy makers and legislators should be recorded in a "diary" and the compiled database should be publicly available. That is if transparency is to be really pursued.
It would also help if all public affairs and advocacy sides published their opinions. Many do. Plus we of course have consultations by eg the European Commission where citizens and organisations submit their written opinions/views.
That of course makes for a very complicated legislative process. And the only people who keep their eyes on the ball are policy makers, legislators and public affairs and advocacy professionals. Because the nitty gritty is too complex for even most journalists to keep up with. That is one of the reasons the average voter feels left out.
But what makes advocacy so different is that it has the culture of creating messages that are appealing to the media and the public opinion out of "boring" policy and legislative issues. And that is something many public affairs professionals would like to do too, if they were culturally permitted to.
The timing for that is good, because what the EU and most countries want is to produce more growth and employment and who knows how this is done better than the companies, small, medium and large. They create the GNP and the jobs, at least in the current political-economic system in Europe.
The EU without the UK: Careers
The ref result (Brexit) has certainly caused a need for companies to readjust strategy. Those that using the UK to produce inside the EU Single Market have good reason to re-adjust their plans. So do companies that using the UK as their European QHs.
Workers in the EU have good reason to do the same.
There are good reason why EU nationals have been job hunting in the UK.
a) Language
b) Location of EU production facilities and European HQs.
c) Other reasons
all leading to a very exciting and competitive market for jobs, especially executive ones.
A recent job advert for Communications Manager in a UK heavy regulated industry quoted a salary of 80,000-100,000 GBP. Where in the EU can you get that kind of salary. Not that many job markets.
The way Brexit is progressing, it seems a good scenario that new entrants in the UK job market from the EU will have to fulfill the same type of conditions US and Canadian (for example) workers do: Find a job of 35,000 of more.
For experienced professionals, especially in management, that is not a great hurdle to overcome. But it may be for younger ones.
Plus, a key strategic question is whether these jobs are going to remain in the UK or move to other EU locations or simply cease to exist.
The answer to that question is not easy (readers with some expertise on this issue, e CEOs or HR pros, are welcome to send me their view, nickpana2017@gmail.com).
Most of the jobs though are for the UK market. A Marketer hired in the UK manages the product for the UK market, an HR pro deals with in the UK operation, CEOs are "country managers". Inter-national posts in Marketing and HR exist but they are relatively small in numbers. Some corporations have European level senior managers, some regional ones some both. But the teams are comparatively small. Same in PR and Finance. A regional CEO traditionally has a Finance and a Marketing "adviser".
Are these teams based in the UK right now? Again, informed readers are invited to send me their views.
Consultancies may have to move, to be close to where the decisions are made at European level. Amsterdam seems a good choice, many multinationals have European HQs in the NL already. Some in Belgium.
If one takes a look at executive jobs advertised on LinkedIn and job sites (Monster, Stepstone, etc) one sees that most exec ads outside the UK require the national language. A good number does not.
My guesstimate is that Marketing and Finance (corporate) are more mobile. In PR and HR the requirement to know the national market is stronger. And Sales of course.
To executives/managers who speak English and German and French and Dutch and are willing to relocate, Brexit will probably not cause much trouble.
But where the executive jobs will go, that is to be seen.
I have not addressed the issue for City and Finance people. Will analysts, traders and fund management move to Germany? Luxembourg?
For non executive jobs, I will do a separate analysis.
But one thing is for certain, 5-10 years from the now London and the UK are not going to be the employment paradise it has been for many years until the Brexit ref.
PS. The above are going to also affect UK business schools and other uni programmes.
Workers in the EU have good reason to do the same.
There are good reason why EU nationals have been job hunting in the UK.
a) Language
b) Location of EU production facilities and European HQs.
c) Other reasons
all leading to a very exciting and competitive market for jobs, especially executive ones.
A recent job advert for Communications Manager in a UK heavy regulated industry quoted a salary of 80,000-100,000 GBP. Where in the EU can you get that kind of salary. Not that many job markets.
The way Brexit is progressing, it seems a good scenario that new entrants in the UK job market from the EU will have to fulfill the same type of conditions US and Canadian (for example) workers do: Find a job of 35,000 of more.
For experienced professionals, especially in management, that is not a great hurdle to overcome. But it may be for younger ones.
Plus, a key strategic question is whether these jobs are going to remain in the UK or move to other EU locations or simply cease to exist.
The answer to that question is not easy (readers with some expertise on this issue, e CEOs or HR pros, are welcome to send me their view, nickpana2017@gmail.com).
Most of the jobs though are for the UK market. A Marketer hired in the UK manages the product for the UK market, an HR pro deals with in the UK operation, CEOs are "country managers". Inter-national posts in Marketing and HR exist but they are relatively small in numbers. Some corporations have European level senior managers, some regional ones some both. But the teams are comparatively small. Same in PR and Finance. A regional CEO traditionally has a Finance and a Marketing "adviser".
Are these teams based in the UK right now? Again, informed readers are invited to send me their views.
Consultancies may have to move, to be close to where the decisions are made at European level. Amsterdam seems a good choice, many multinationals have European HQs in the NL already. Some in Belgium.
If one takes a look at executive jobs advertised on LinkedIn and job sites (Monster, Stepstone, etc) one sees that most exec ads outside the UK require the national language. A good number does not.
My guesstimate is that Marketing and Finance (corporate) are more mobile. In PR and HR the requirement to know the national market is stronger. And Sales of course.
To executives/managers who speak English and German and French and Dutch and are willing to relocate, Brexit will probably not cause much trouble.
But where the executive jobs will go, that is to be seen.
I have not addressed the issue for City and Finance people. Will analysts, traders and fund management move to Germany? Luxembourg?
For non executive jobs, I will do a separate analysis.
But one thing is for certain, 5-10 years from the now London and the UK are not going to be the employment paradise it has been for many years until the Brexit ref.
PS. The above are going to also affect UK business schools and other uni programmes.
Monday, October 17, 2016
What happened to beautiful Greece?
A recent article in a German newspaper suggested Greece should be given a last debt haircut and be left to float outside the Euro.
According to Greek press reports, a prominent IMF executive recently claimed that Greece is "beyond repair".
A member of the EU since 1981 and the Eurozone since 2003, Greece decided not to leave the Euro after the deficit and debt crisis started in 2009 and do an unprecedented "internal devaluation" instead. In effect it was supposed to emulate currency devaluation inside a currency zone, ie bring down salaries, prices of goods, services and assets such as real estate, thus rendering the economy more competitive. Note that Greece had never had a trade surplus at least since it joined GATT (now WTO) in the late 1940s.
So how was Greece surviving all those years before the crisis? Well, there was a large volume of money sent from abroad (diaspora), tourism and shipping. When Greece joined the EEC and its Common Market, imports from the other 9 at that time grew due to the removal of tariffs and quotas. Even more imports came as the EEC expanded and the Single Market made intra-EU trade easier.
Why did Greece's exports to the rest of the EEC/EU not rise significantly due to EEC membership? Because the bulk of its industry was (and still is to this day, largely) inward looking and un-competitive . One of the reasons is Greece's geo location (without land borders with the rest of the EU) and sheer transport distance from the EU's lucrative German market. But we will come back to the factors of Greece's lack of competitiveness.
The internal devaluation programme, coupled with a re-adjustment programme, was decided the Greek government and the IMF, the European Central Bank and the European Commission. It included reform of the public sector, market liberalisation (opening up of activities and professions) and other things. In return it replaced the debt from the bonds by debt to the IMF and the Eurozone states. It also gave Greece money to survive because it was running a budget deficit was more than 10% at that time (3% is the Eurozone limit).
The programme overshot and caused the GNP to drop 26%! And unemployment rose to 18% in 2011 and 27% in 2013! These figures are worse than the US Great Depression.
In 2016, unemployment is 23% (No. 2 Spain's is 19.5%). Salaries, pensions and real estate prices have taken a dive. Product prices have stabilised but did not drop of course. Greece managed to have a trade surplus year in spite of the EU-Russia embargo in 2014, partly due to the decline of imports because of the drop in consumer demand.
Many attribute Greece's problems to political corruption. That is too simplistic an explanation. Greece's competitiveness status, as is the case with all economies, is a net result of many and complex factors. Over-legislated, fully bureaucratic, too dependent on the public sector for employment and sales (via procurement), too SME in composition, the Greek economy is maybe Division 4 in the European league. Firms are too small and too busy operating in red tape Greece to have enough energy left for exporting, intra and extra EU. It has been way easier to be an importer than an exporter in modern Greece.
In 2015 the PM gave people a referendum on Juncker's proposals re the Greek economy and people rejected it 62-38 but most Greeks are pro EU and pro Euro. Many think that if Greece was to leave the Euro, people would not be able to buy basic food and medicine since, they claim, "Greece imports everything" thus "everything" will become too expensive or simply not available when the new currency starts devaluing after a Euro exit. They are looking at what is happening in the UK and saying "Imagine what would happen here".
So whatever happened to all those EU funds that Greece has received from the EU as "regional policy' since the 1990s? A lot went to training but most went to roads and other infrastructure. But much of this modern infrastructure has too high user charges for the average citizen and company in crisis Greece! Many in Greece have retired early but unemployment benefits last only 12 months and are approx. 400 Euros, after that you get zilch. So how do most of the 23% unemployed survive? Good question. You see people dumpster diving in crisis Athens, you did not before 2009.
Is Greece "beyond repair"? Should it be given a new debt haircut and be left to drift away from the Eurozone? Will there be a huge rise in exports to kickstart the heart of the economy and the job market if Greece abandons the Euro? Is Greece in coma or recovering 2009-present?
You can debate the issue in the Eurodebates Facebook group: https://www.facebook.com/groups/151087171628655/
420,000 Greeks have emigrated since the crisis started.
One third of the remaining Greeks are now living below the poverty line due to joblessness, depressed wages and other factors. No one knows exactly how many are homeless. Pray for them, in any case.
According to Greek press reports, a prominent IMF executive recently claimed that Greece is "beyond repair".
A member of the EU since 1981 and the Eurozone since 2003, Greece decided not to leave the Euro after the deficit and debt crisis started in 2009 and do an unprecedented "internal devaluation" instead. In effect it was supposed to emulate currency devaluation inside a currency zone, ie bring down salaries, prices of goods, services and assets such as real estate, thus rendering the economy more competitive. Note that Greece had never had a trade surplus at least since it joined GATT (now WTO) in the late 1940s.
So how was Greece surviving all those years before the crisis? Well, there was a large volume of money sent from abroad (diaspora), tourism and shipping. When Greece joined the EEC and its Common Market, imports from the other 9 at that time grew due to the removal of tariffs and quotas. Even more imports came as the EEC expanded and the Single Market made intra-EU trade easier.
Why did Greece's exports to the rest of the EEC/EU not rise significantly due to EEC membership? Because the bulk of its industry was (and still is to this day, largely) inward looking and un-competitive . One of the reasons is Greece's geo location (without land borders with the rest of the EU) and sheer transport distance from the EU's lucrative German market. But we will come back to the factors of Greece's lack of competitiveness.
The internal devaluation programme, coupled with a re-adjustment programme, was decided the Greek government and the IMF, the European Central Bank and the European Commission. It included reform of the public sector, market liberalisation (opening up of activities and professions) and other things. In return it replaced the debt from the bonds by debt to the IMF and the Eurozone states. It also gave Greece money to survive because it was running a budget deficit was more than 10% at that time (3% is the Eurozone limit).
The programme overshot and caused the GNP to drop 26%! And unemployment rose to 18% in 2011 and 27% in 2013! These figures are worse than the US Great Depression.
In 2016, unemployment is 23% (No. 2 Spain's is 19.5%). Salaries, pensions and real estate prices have taken a dive. Product prices have stabilised but did not drop of course. Greece managed to have a trade surplus year in spite of the EU-Russia embargo in 2014, partly due to the decline of imports because of the drop in consumer demand.
Many attribute Greece's problems to political corruption. That is too simplistic an explanation. Greece's competitiveness status, as is the case with all economies, is a net result of many and complex factors. Over-legislated, fully bureaucratic, too dependent on the public sector for employment and sales (via procurement), too SME in composition, the Greek economy is maybe Division 4 in the European league. Firms are too small and too busy operating in red tape Greece to have enough energy left for exporting, intra and extra EU. It has been way easier to be an importer than an exporter in modern Greece.
In 2015 the PM gave people a referendum on Juncker's proposals re the Greek economy and people rejected it 62-38 but most Greeks are pro EU and pro Euro. Many think that if Greece was to leave the Euro, people would not be able to buy basic food and medicine since, they claim, "Greece imports everything" thus "everything" will become too expensive or simply not available when the new currency starts devaluing after a Euro exit. They are looking at what is happening in the UK and saying "Imagine what would happen here".
So whatever happened to all those EU funds that Greece has received from the EU as "regional policy' since the 1990s? A lot went to training but most went to roads and other infrastructure. But much of this modern infrastructure has too high user charges for the average citizen and company in crisis Greece! Many in Greece have retired early but unemployment benefits last only 12 months and are approx. 400 Euros, after that you get zilch. So how do most of the 23% unemployed survive? Good question. You see people dumpster diving in crisis Athens, you did not before 2009.
Is Greece "beyond repair"? Should it be given a new debt haircut and be left to drift away from the Eurozone? Will there be a huge rise in exports to kickstart the heart of the economy and the job market if Greece abandons the Euro? Is Greece in coma or recovering 2009-present?
You can debate the issue in the Eurodebates Facebook group: https://www.facebook.com/groups/151087171628655/
420,000 Greeks have emigrated since the crisis started.
One third of the remaining Greeks are now living below the poverty line due to joblessness, depressed wages and other factors. No one knows exactly how many are homeless. Pray for them, in any case.
More and Leaner Europe and the EU's Sacrificial Lamb
In the past three posts I have argued that:
a) If the EU was growing faster and had less unemployment then there would be fewer Eurosceptics.
b) The road to more Europe is paved with argumentation on growth and jobs not values and EU defense considerationσ ("The economy stupid!").
c) More Europe is needed in income tax matters and other matters that will make the EU economy more "single".
Something has to give though. In any every great campaign, such as the Greeks' to Troy, there has to be a sacrificial lamb.
On the quest for more Europe we may have to do that.
A good candidate is the European Commission!
Doing away with the European Commission would please many Eurosceptics, since this institution is the epitomy of "Brussels" and the "unelected EU bureaucrats". Of course the European Commission is a small public service, the city of Birmingham alone has more employees! Plus the Commissioners are chosen by elected governments and approved as a team by the MEPs. But that matters little. Sacrifices have to be made. The goal is more Europe, we need that.
We need more Europe but that does not mean a more bureaucratic or an over-legislated Europe. We have too many laws, be they EU or national. We need fewer laws in a Europe that grows more.
So assume that we do away with the Commission. Can we actually do that? Can we live without a DG for Employment, a DG for Trade, a DG for Transport, etc? Who will do those tasks?
What tasks? The tasks of analysing EU policy needs and coming up with policy proposals.
There lies the trick. We will still have technocrats doing that but for example as a Secretariat of the Council of the EU. People will not continue to work en masse in Brussels but will be split up around the capitals. Yes, you guessed it, what we really need to do is break up the Brussels Bubble, the hated symbol of EU federalism. And we should do so in order to promote more Europe, ie federalism! Tricky, huh?
Plus we need to stop transfer of EP meetings from Strasbourg to Brussels. In fact we should start having EP Plenaries around the EU!
So here are some elements of the sneaky plan:
a) Europe ministers of the member states serve as members of the EU government. They do not have fixed 5 year terms, why should they?
b) We do not need a Juncker, Tusks will do and they will be appointed by the PMs but approved by the EP.
c) We should not elect MEPs, the MEPs should be chosen via some system from among the national MPs.
Why? Because Eurocrats and MEPs get and are separated from the national levels. They have become the Bubble. The new Bubble must cover the whole EU.
The Council would initiate draft EU laws and the MEPs would vote on them. A lot of that can be done via telework, so that MEPs stay in touch with the national realities, spend as little time as possible in an EU Bubble.
Complicated? Not really. Plus this type of thing will give Eurosceptics something to feast on while the EU engine federalises tax systems and other elements we spoke about in the three previous posts.
The idea is more but a leaner Europe. We have nearly created a DC in Brussels and that has cultivated the ground for European Trumps.
Look at how the Eurogroup works. Lean and mean.
A policy aim would be to remove EU and national legislation from the EU and a special task force could be set up, temporarily, for that. Comprised of national civil servants, mostly at least.
That task would be huge and to push it forward we need a brand new policy machine.
Do I really mean this whole idea?
Not really, but it was worth presenting it as food for thought.
The EU will probably remain as it is, Bubble and all, and will not do anything for income tax issues or other things that can help the EU economy grow and create more and better jobs and thus a more popular EU. And who knows where we will all be five years from now.
a) If the EU was growing faster and had less unemployment then there would be fewer Eurosceptics.
b) The road to more Europe is paved with argumentation on growth and jobs not values and EU defense considerationσ ("The economy stupid!").
c) More Europe is needed in income tax matters and other matters that will make the EU economy more "single".
Something has to give though. In any every great campaign, such as the Greeks' to Troy, there has to be a sacrificial lamb.
On the quest for more Europe we may have to do that.
A good candidate is the European Commission!
Doing away with the European Commission would please many Eurosceptics, since this institution is the epitomy of "Brussels" and the "unelected EU bureaucrats". Of course the European Commission is a small public service, the city of Birmingham alone has more employees! Plus the Commissioners are chosen by elected governments and approved as a team by the MEPs. But that matters little. Sacrifices have to be made. The goal is more Europe, we need that.
We need more Europe but that does not mean a more bureaucratic or an over-legislated Europe. We have too many laws, be they EU or national. We need fewer laws in a Europe that grows more.
So assume that we do away with the Commission. Can we actually do that? Can we live without a DG for Employment, a DG for Trade, a DG for Transport, etc? Who will do those tasks?
What tasks? The tasks of analysing EU policy needs and coming up with policy proposals.
There lies the trick. We will still have technocrats doing that but for example as a Secretariat of the Council of the EU. People will not continue to work en masse in Brussels but will be split up around the capitals. Yes, you guessed it, what we really need to do is break up the Brussels Bubble, the hated symbol of EU federalism. And we should do so in order to promote more Europe, ie federalism! Tricky, huh?
Plus we need to stop transfer of EP meetings from Strasbourg to Brussels. In fact we should start having EP Plenaries around the EU!
So here are some elements of the sneaky plan:
a) Europe ministers of the member states serve as members of the EU government. They do not have fixed 5 year terms, why should they?
b) We do not need a Juncker, Tusks will do and they will be appointed by the PMs but approved by the EP.
c) We should not elect MEPs, the MEPs should be chosen via some system from among the national MPs.
Why? Because Eurocrats and MEPs get and are separated from the national levels. They have become the Bubble. The new Bubble must cover the whole EU.
The Council would initiate draft EU laws and the MEPs would vote on them. A lot of that can be done via telework, so that MEPs stay in touch with the national realities, spend as little time as possible in an EU Bubble.
Complicated? Not really. Plus this type of thing will give Eurosceptics something to feast on while the EU engine federalises tax systems and other elements we spoke about in the three previous posts.
The idea is more but a leaner Europe. We have nearly created a DC in Brussels and that has cultivated the ground for European Trumps.
Look at how the Eurogroup works. Lean and mean.
A policy aim would be to remove EU and national legislation from the EU and a special task force could be set up, temporarily, for that. Comprised of national civil servants, mostly at least.
That task would be huge and to push it forward we need a brand new policy machine.
Do I really mean this whole idea?
Not really, but it was worth presenting it as food for thought.
The EU will probably remain as it is, Bubble and all, and will not do anything for income tax issues or other things that can help the EU economy grow and create more and better jobs and thus a more popular EU. And who knows where we will all be five years from now.
Saturday, October 15, 2016
What Europe (really) needs (Part III)
What Europe (the EU) needs is a performing economy. An economy with high growth and low unemployment. Vibrant demand for good and services, good wages and much more. Potent export skills.
The EU is doing well. But not well enough, as we discussed in previous parts. Not well enough for Europeans to be content.
The EU Single Market came about on 1/1/1993 after an immense legislative exercise that set the framework for it. Trade of goods and services has no barriers, no border controls, no customs, no national product standards, etc.
19 of the 28 members share a single currency and economic stability constraints (eg re max allowable budget deficit).
The EU has a common trade policy and in addition to WTO membership (members are WTO members too) it has trade agreements with many countries that offer better terms than WTO rules do.
EU exports but the EU also imports. Goods as well as services. And workers.
Why is EU the not growing at 3, 4 or 5%?
One could argue that there is not "room" for such growth nowadays, either internal or via exports. Export genius Germany is growth at about 2%, Why is average unemployment at 8.1% and not at 5% or less? Why are people forced to accept mini jobs when they want proper ones? Why are social security systems costing so much and benefits are being cut to achieve better public finances?
Are companies in the EU, large, medium, small and mini, satisfied with the current situation? Independents?
To a large extent, they are not.
If you talk to very small firms and independents in the US you will hear that it is not easy doing business in the US "Internal Market" of 50 states either. There, too, states have their laws, their sales tax rates and their own professional qualifications (as nurses who wanted to go work in Katrina stricken states found out, for example).
So what can the EU do to have a better economy and make its people and companies happier?
Lets keep mind that:
a) Income taxation for person and companies is a national competence and problems are dealt via bilateral agreements based on an OECD model.
b) VAT rates are not uniform, there are brackets and each state chooses its exact ones.
c) Companies that do not just trade but have operations in more than one EU states purchase social security nationally, there is EU wide state insurance agency.
One way for the EU to grow is to adopt a more protectionist trade policy. But member states such as Germany will not agree.
Ireland and others will not agree on an EU wide corporate tax regime.
There is no EU wide policy on migration or an EU INS.
Products and services sold in the EU Marker have to be labelled and provide consumer info in 23 languages.
These are the main areas where systemic improvements can be made in the EU economy.
Yet, all these toy with the national sovereignty of the member states.
Do the Dutch want to have the same social security system as the Spaniards and the Greeks?
Do the Greeks and the Italians want to have the same tax system (and tax rates/brackets) as the Germans or the Swedes?
Economies of scale is one of the arguments.
An EU wide tax agency and an EU social security agency could economise enough costs to pass the savings on to the people.
Have you also noticed that the TV stations you watch, the electricity company, the water supplier and other services and goods you buy do not have common provider in more than one state? Why is that? Do we realise the cost of that? Financial (direct) as well as economic?
To make the European economy better we need European companies, European independents, European workers, European consumers, European taxpayers, European social security clients, European water drinkers, European electricity consumers. We need them. An issue is how to get them with the least further loss of the feeling of sovereignty.
Let us not forget way before the Brexit ref, the French narrowly accepted the Maastricht Treaty, the Danes voted on it twice, the Irish re-voted on Treaties a couple of times and the French and the Dutch rejected the EU Constitutional Treaty in 2005.
In most EU states the number of Eurosceptics is at an all time high. Some may change their mind if the see concrete economic benefits from more Europe some will not.
But the battle needs to be fought on economic and employment/jobs arguments not the ones used now. In that sense, It's the Economy ....!
One way to please Eurosceptics is to offer them concessions in other areas. Eg, the European Commission could be reformed and depend more on detached national civil servants, maybe it should be up to the Council or the EP to initiate legislation. After all, one could argue that Europe needs less legislation and fewer laws, be they EU or national. Because over-legislation and red tape is a key area that holds back growth and job creation. But these topics will be addressed in tomorrow's post (A Leaner Europe).
Feel free to join
my PublicAffairsEurope https://www.facebook.com/groups/npeuropeanaffairs/ Facebook group to discuss this issue if you are a Public Affairs professional
or
my Eurodebates https://www.facebook.com/groups/151087171628655/ Facebook group if you are a citizen.
The EU is doing well. But not well enough, as we discussed in previous parts. Not well enough for Europeans to be content.
The EU Single Market came about on 1/1/1993 after an immense legislative exercise that set the framework for it. Trade of goods and services has no barriers, no border controls, no customs, no national product standards, etc.
19 of the 28 members share a single currency and economic stability constraints (eg re max allowable budget deficit).
The EU has a common trade policy and in addition to WTO membership (members are WTO members too) it has trade agreements with many countries that offer better terms than WTO rules do.
EU exports but the EU also imports. Goods as well as services. And workers.
Why is EU the not growing at 3, 4 or 5%?
One could argue that there is not "room" for such growth nowadays, either internal or via exports. Export genius Germany is growth at about 2%, Why is average unemployment at 8.1% and not at 5% or less? Why are people forced to accept mini jobs when they want proper ones? Why are social security systems costing so much and benefits are being cut to achieve better public finances?
Are companies in the EU, large, medium, small and mini, satisfied with the current situation? Independents?
To a large extent, they are not.
If you talk to very small firms and independents in the US you will hear that it is not easy doing business in the US "Internal Market" of 50 states either. There, too, states have their laws, their sales tax rates and their own professional qualifications (as nurses who wanted to go work in Katrina stricken states found out, for example).
So what can the EU do to have a better economy and make its people and companies happier?
Lets keep mind that:
a) Income taxation for person and companies is a national competence and problems are dealt via bilateral agreements based on an OECD model.
b) VAT rates are not uniform, there are brackets and each state chooses its exact ones.
c) Companies that do not just trade but have operations in more than one EU states purchase social security nationally, there is EU wide state insurance agency.
One way for the EU to grow is to adopt a more protectionist trade policy. But member states such as Germany will not agree.
Ireland and others will not agree on an EU wide corporate tax regime.
There is no EU wide policy on migration or an EU INS.
Products and services sold in the EU Marker have to be labelled and provide consumer info in 23 languages.
These are the main areas where systemic improvements can be made in the EU economy.
Yet, all these toy with the national sovereignty of the member states.
Do the Dutch want to have the same social security system as the Spaniards and the Greeks?
Do the Greeks and the Italians want to have the same tax system (and tax rates/brackets) as the Germans or the Swedes?
Economies of scale is one of the arguments.
An EU wide tax agency and an EU social security agency could economise enough costs to pass the savings on to the people.
Have you also noticed that the TV stations you watch, the electricity company, the water supplier and other services and goods you buy do not have common provider in more than one state? Why is that? Do we realise the cost of that? Financial (direct) as well as economic?
To make the European economy better we need European companies, European independents, European workers, European consumers, European taxpayers, European social security clients, European water drinkers, European electricity consumers. We need them. An issue is how to get them with the least further loss of the feeling of sovereignty.
Let us not forget way before the Brexit ref, the French narrowly accepted the Maastricht Treaty, the Danes voted on it twice, the Irish re-voted on Treaties a couple of times and the French and the Dutch rejected the EU Constitutional Treaty in 2005.
In most EU states the number of Eurosceptics is at an all time high. Some may change their mind if the see concrete economic benefits from more Europe some will not.
But the battle needs to be fought on economic and employment/jobs arguments not the ones used now. In that sense, It's the Economy ....!
One way to please Eurosceptics is to offer them concessions in other areas. Eg, the European Commission could be reformed and depend more on detached national civil servants, maybe it should be up to the Council or the EP to initiate legislation. After all, one could argue that Europe needs less legislation and fewer laws, be they EU or national. Because over-legislation and red tape is a key area that holds back growth and job creation. But these topics will be addressed in tomorrow's post (A Leaner Europe).
Feel free to join
my PublicAffairsEurope https://www.facebook.com/groups/npeuropeanaffairs/ Facebook group to discuss this issue if you are a Public Affairs professional
or
my Eurodebates https://www.facebook.com/groups/151087171628655/ Facebook group if you are a citizen.
Friday, October 14, 2016
It's the European economy stupid (What Europe needs Part II)!
Does Bill Clinton aide's old motto apply in Europe as well?
Of course it does.
The EU28's growth performance has not been too bad in recent years. But they could have been better and Draghi is trying to his part with ultra low central Euro rates by the ECB.
Unemployment averages are between 10.1% (for the Eurozone) and 8.5% (for the whole of the EU). But rates vary a lot among the member states.
I propose that people are not satisfied with the current economic situation.
For example:
They want better salaries, more and better clients in addition to better public services. Public finances in many member states have been tightened for years now. Belgium, running a 2.8% deficit, is the most recent country with a government in crisis. The Spanish have for months now been trying to form a new government, after two elections.
UKIP, Front National, AfD, The 5 star movement and PVV are among the Eurosceptic parties in Europe that are doing well.
Many citizens complain that their taxes or social contributions are being used to fund the poor, migrants, non EU and intra EU, as well as other member states (eg the Greeks).
Many complain that migrants, non EU and intra EU, are taking their jobs and/or keeping salaries low.
Members states complain that others (eg Ireland) are offering too low tax rates and take business away from them.
Citizens and member states complain that they are paying too much towards the EU budget and financing public works in other member states.
A Eurocrat friend who read my analysis that the UK is going lose the Single Market for just 800,000 EU foreigners' jobs told me, privately, "let them lose it for not knowing what teamwork is about". It is true that British governments have not displayed much EU team spirit neither have many UK citizens.
But what is to be said of the 98% of 42% of Hungarian voters who turned up at the polls and rejected the EU refugee plan?
Or of some Germans and Dutch tourists who have refused to pay restaurant bills in Greece or at Greek restaurants in their own countries claiming "you owe us money".
Do these kinds of things happen in the US? Maybe they do, but not that we know of.
But how are EU citizens who have the types of complaints listed above going to accept "more Europe"? Is it possible?
I argue that if the EU was growing by let's say 4 or 5% or of course more per year, many would. Of course many would still be concerned about "directives from Brussels" but less.
If the EU was making everyone effectively better off, they would be more pro EU. When the pie is small people argue for the pieces.
So far, what the EU leaders have called for is more Europe in defense matters. Who dares talk of an EU tax system or an EU social security system, for example.
The EU has a common trade policy but most people do not pay much attention to that (some do, eg about the EU-US deal).
So how is the EU going to make more money for all?
The EU spends money on regional policy, training, even has a fund for helping people who lose their jobs, but that is not what we mean.
Tomorrow: Ways the EU can make more money for all
Of course it does.
The EU28's growth performance has not been too bad in recent years. But they could have been better and Draghi is trying to his part with ultra low central Euro rates by the ECB.
Unemployment averages are between 10.1% (for the Eurozone) and 8.5% (for the whole of the EU). But rates vary a lot among the member states.
I propose that people are not satisfied with the current economic situation.
For example:
They want better salaries, more and better clients in addition to better public services. Public finances in many member states have been tightened for years now. Belgium, running a 2.8% deficit, is the most recent country with a government in crisis. The Spanish have for months now been trying to form a new government, after two elections.
UKIP, Front National, AfD, The 5 star movement and PVV are among the Eurosceptic parties in Europe that are doing well.
Many citizens complain that their taxes or social contributions are being used to fund the poor, migrants, non EU and intra EU, as well as other member states (eg the Greeks).
Many complain that migrants, non EU and intra EU, are taking their jobs and/or keeping salaries low.
Members states complain that others (eg Ireland) are offering too low tax rates and take business away from them.
Citizens and member states complain that they are paying too much towards the EU budget and financing public works in other member states.
A Eurocrat friend who read my analysis that the UK is going lose the Single Market for just 800,000 EU foreigners' jobs told me, privately, "let them lose it for not knowing what teamwork is about". It is true that British governments have not displayed much EU team spirit neither have many UK citizens.
But what is to be said of the 98% of 42% of Hungarian voters who turned up at the polls and rejected the EU refugee plan?
Or of some Germans and Dutch tourists who have refused to pay restaurant bills in Greece or at Greek restaurants in their own countries claiming "you owe us money".
Do these kinds of things happen in the US? Maybe they do, but not that we know of.
But how are EU citizens who have the types of complaints listed above going to accept "more Europe"? Is it possible?
I argue that if the EU was growing by let's say 4 or 5% or of course more per year, many would. Of course many would still be concerned about "directives from Brussels" but less.
If the EU was making everyone effectively better off, they would be more pro EU. When the pie is small people argue for the pieces.
So far, what the EU leaders have called for is more Europe in defense matters. Who dares talk of an EU tax system or an EU social security system, for example.
The EU has a common trade policy but most people do not pay much attention to that (some do, eg about the EU-US deal).
So how is the EU going to make more money for all?
The EU spends money on regional policy, training, even has a fund for helping people who lose their jobs, but that is not what we mean.
Tomorrow: Ways the EU can make more money for all
Thursday, October 13, 2016
What Europe needs
While still recovering from the shock of the UK referendum result and trying to deal with the UK's demands re its post Brexit status, the European Union of 27 rest is trying to figure out its future.
I have often described the EU as road construction and maintenance work in progress.. The EU is a project that has been under almost continuous construction since its founding (as EEC). The result is that it has never reached a completion stage.
Eurosceptics not only in the UK but also in the other 27 would argue that the EU has gone too far and needs to either move backwards or dissolve - call it quits.
Public opinion around the EU has in recent years become more eurosceptic and there is good reason for that.
a) Although it involves many people from the member states, either government officials or representatives of business, trade unions and other interest groups, for most of the citizens and companies Brussels is indeed a remote Bubble. Add to that the very complex and lengthy legislative processes of the EU (directives and regulations).
b) Fiscal austerity proponents at national levels as well as the EU level have promoted an agenda that has greatly affected people's lives. Brussels gets blamed for much of that, directly and indirectly.
What the EU needs in growth and growth. And, of course, competitiveness. In theory, that is a win-win proposition. Growth benefits everyone, business, employees, media (ad revenue), other parties and of course politicians, especially the ones in government. In practice, not. Many benefit from troubled times.
How is Europe going to have more growth?
By having an EU structure that works better, not at the EU level only, but at all levels.
A structure that makes more economic and employment sense. If that happens, then the EU will gain much more popularity than it enjoys today.
Is that type of EU more federal than today's EU? Hm. Yes and No.
I will come back to ways the EU can make more economic and employment sense.
I have often described the EU as road construction and maintenance work in progress.. The EU is a project that has been under almost continuous construction since its founding (as EEC). The result is that it has never reached a completion stage.
Eurosceptics not only in the UK but also in the other 27 would argue that the EU has gone too far and needs to either move backwards or dissolve - call it quits.
Public opinion around the EU has in recent years become more eurosceptic and there is good reason for that.
a) Although it involves many people from the member states, either government officials or representatives of business, trade unions and other interest groups, for most of the citizens and companies Brussels is indeed a remote Bubble. Add to that the very complex and lengthy legislative processes of the EU (directives and regulations).
b) Fiscal austerity proponents at national levels as well as the EU level have promoted an agenda that has greatly affected people's lives. Brussels gets blamed for much of that, directly and indirectly.
What the EU needs in growth and growth. And, of course, competitiveness. In theory, that is a win-win proposition. Growth benefits everyone, business, employees, media (ad revenue), other parties and of course politicians, especially the ones in government. In practice, not. Many benefit from troubled times.
How is Europe going to have more growth?
By having an EU structure that works better, not at the EU level only, but at all levels.
A structure that makes more economic and employment sense. If that happens, then the EU will gain much more popularity than it enjoys today.
Is that type of EU more federal than today's EU? Hm. Yes and No.
I will come back to ways the EU can make more economic and employment sense.
Wednesday, October 12, 2016
UK: Is it worth losing the EU Single Market over 800,000 workers?
Reading the recent Brexit related speeches by May, Rudd and Davis an informed reader cannot help wondering what the anti free movement fuss is all about.
Stats show that only 2.1 million foreign nationals in the UK are a result intra EU free movement ie EU nationals. That is around 30% of total migrants and a mere 3% (roughly) of the population.
Plus according to stats, at least 1.3 million UK nationals live in the rest of the EU. That means a net "import" of maximum 800,000 workers as a result of the UK's participation in the four freedoms of the EU Single Market.
The benefit is tariff and quota as well as customs free access of UK goods and services to the Single Market, for goods a 42% of total UK exports. Never mind the benefits of the City as part of the Single Market for capital. Add to that the urge for companies to leave a non Single Market UK and you have a clearer picture of free movement costs and benefits.
Thus the UK can well leave the EU and still be in the Single Market via the EEA or if Norway vetoes it via a special deal.
The rest (the non EU) migration has nothing to do with EU membership or the Single Market one.
This is a point that soft Brexit proponents need to keep reminding the government as well as the UK public opinion not only before Article 50 is triggered but also during the negotiations.
Stats show that only 2.1 million foreign nationals in the UK are a result intra EU free movement ie EU nationals. That is around 30% of total migrants and a mere 3% (roughly) of the population.
Plus according to stats, at least 1.3 million UK nationals live in the rest of the EU. That means a net "import" of maximum 800,000 workers as a result of the UK's participation in the four freedoms of the EU Single Market.
The benefit is tariff and quota as well as customs free access of UK goods and services to the Single Market, for goods a 42% of total UK exports. Never mind the benefits of the City as part of the Single Market for capital. Add to that the urge for companies to leave a non Single Market UK and you have a clearer picture of free movement costs and benefits.
Thus the UK can well leave the EU and still be in the Single Market via the EEA or if Norway vetoes it via a special deal.
The rest (the non EU) migration has nothing to do with EU membership or the Single Market one.
This is a point that soft Brexit proponents need to keep reminding the government as well as the UK public opinion not only before Article 50 is triggered but also during the negotiations.
Monday, October 10, 2016
May's Labyrinth
Theresa May's conference speech made waves. Especially her citizen of the world comment directed at multinationals and elites.
Combined with speeches by David Davis and Amber Rudd, the Tory government released an image that shocked, both inside Britain and outside.
Not only did a signal that a hard Brexit was the aim but an anti-global one as well.
As ex LibDem MEP Graham Watson pointed out on Facebook the certainty May's speech emitted was that companies were better off outside the UK.
Rudd's proposal that companies would have to publicly declare the ratio of foreign staff in the UK came with the qualification "I am not racist but".
Davis warned that migrants who do not add value to the UK would not be welcome. Critics were quick to point out that migrants are more prone to work and burden the system less.
Merkel and Hollande were quick to point out that a hard Brexit would not give the UK access to the Single Market. Merkel also pointed out to German industry that pressure from European business associations to keep the UK in the Single Market without free movement should be resisted.
The rationale is clear. If the UK gets a Single Market deal without free movement, everyone will start wanting their own a la carte EU.
A UKIP MEP even pointed out that the government's anti immigration proposals went "too far"!
LibDems pointed out that there is no specific mandate re immigration given by the referendum result. That all it said was EU exit, nothing about migration or EEA membership.
So why is May, allegedly an ex-Remainer, adopting such a hardball stance?
Obviously, her government's position will take voters away from UKIP. But it my lose many to the LibDems.
Is she catering to the ultra anti EU side of her party?
Is it a negotiation tactic?
So far, the EU has been adamant. No free movement no Single Market.
42% of UK exports go to the Single Market, 14% of its exports to the UK.
And what about free movement of capital and of services.
Is it surprising that the proposal for have companies declare their ratio of foreign staff has been taken back?
May is on a dangerous path. She is making companies puzzled in addition to scaring EU nationals in the UK. Is this the pro business party that the Tories used to be?
The UK industry needs the Single Market, at least in its present structure of goods produced. It cannot afford a trade deal of the Serbia-EU type.
Is May going to continue to cater to the anti-immigration, anti-establishment vote?
It's a long way to the March triggering of Article 50 date.
The financial markets' reaction to May's speech is indicative of the situation.
To be fair, May's policy proposals on immigration are not unprecedented in Europe and the world. But when a country with a rather liberal view of the world and open to migrants decides to radically change course, what May got is what she should have expected.
The UK's economic model needs the European HQs and production facilities of companies. So far, May's words are damaging this model. What does her cabinet really have in mind.
Probably, nothing. And that's the problem.
Combined with speeches by David Davis and Amber Rudd, the Tory government released an image that shocked, both inside Britain and outside.
Not only did a signal that a hard Brexit was the aim but an anti-global one as well.
As ex LibDem MEP Graham Watson pointed out on Facebook the certainty May's speech emitted was that companies were better off outside the UK.
Rudd's proposal that companies would have to publicly declare the ratio of foreign staff in the UK came with the qualification "I am not racist but".
Davis warned that migrants who do not add value to the UK would not be welcome. Critics were quick to point out that migrants are more prone to work and burden the system less.
Merkel and Hollande were quick to point out that a hard Brexit would not give the UK access to the Single Market. Merkel also pointed out to German industry that pressure from European business associations to keep the UK in the Single Market without free movement should be resisted.
The rationale is clear. If the UK gets a Single Market deal without free movement, everyone will start wanting their own a la carte EU.
A UKIP MEP even pointed out that the government's anti immigration proposals went "too far"!
LibDems pointed out that there is no specific mandate re immigration given by the referendum result. That all it said was EU exit, nothing about migration or EEA membership.
So why is May, allegedly an ex-Remainer, adopting such a hardball stance?
Obviously, her government's position will take voters away from UKIP. But it my lose many to the LibDems.
Is she catering to the ultra anti EU side of her party?
Is it a negotiation tactic?
So far, the EU has been adamant. No free movement no Single Market.
42% of UK exports go to the Single Market, 14% of its exports to the UK.
And what about free movement of capital and of services.
Is it surprising that the proposal for have companies declare their ratio of foreign staff has been taken back?
May is on a dangerous path. She is making companies puzzled in addition to scaring EU nationals in the UK. Is this the pro business party that the Tories used to be?
The UK industry needs the Single Market, at least in its present structure of goods produced. It cannot afford a trade deal of the Serbia-EU type.
Is May going to continue to cater to the anti-immigration, anti-establishment vote?
It's a long way to the March triggering of Article 50 date.
The financial markets' reaction to May's speech is indicative of the situation.
To be fair, May's policy proposals on immigration are not unprecedented in Europe and the world. But when a country with a rather liberal view of the world and open to migrants decides to radically change course, what May got is what she should have expected.
The UK's economic model needs the European HQs and production facilities of companies. So far, May's words are damaging this model. What does her cabinet really have in mind.
Probably, nothing. And that's the problem.
Tuesday, September 27, 2016
What Boris Johnson doesn't get (or want to get)
Why
would any logical human want to buy goods and services of a country or visit a
country that wants his/her money but not him/her there to live/work?
The EU is spreading this principle via the membership of the EU's Single Market. It has made EEA members such as Norway and non EEA Switzerland accept that.
That is what Boris eg does not get (or pretends he does not) and V. Schauble offered to explain to him by explaining the EU Treaty recently.
The emerging rule of the game in the world is: If you want absolutely free trade of goods and services and movement of capital then accept freedom of movement of people too and the EU is promoting it.
Well done EU. That is a cause others should promote too. It is a human value cause, that humans are no less in freedom of movement rights than capital or goods and maybe one day this may be part of the WTO.
The EU is spreading this principle via the membership of the EU's Single Market. It has made EEA members such as Norway and non EEA Switzerland accept that.
That is what Boris eg does not get (or pretends he does not) and V. Schauble offered to explain to him by explaining the EU Treaty recently.
The emerging rule of the game in the world is: If you want absolutely free trade of goods and services and movement of capital then accept freedom of movement of people too and the EU is promoting it.
Well done EU. That is a cause others should promote too. It is a human value cause, that humans are no less in freedom of movement rights than capital or goods and maybe one day this may be part of the WTO.
Monday, September 26, 2016
EU Single Market: A French operation in Italy
How well is the EU Single Market for services working sur le terrain?
August 2012. Trying to find the TGV ticket office at the Garibaldi train station in Milano.
Main ticket guiches would not sell you those tckets.
Finally, I found it hidden near one of the platforms.
The reason, apparently, is that is a French operation in an Italian city.
August 2012. Trying to find the TGV ticket office at the Garibaldi train station in Milano.
Main ticket guiches would not sell you those tckets.
Finally, I found it hidden near one of the platforms.
The reason, apparently, is that is a French operation in an Italian city.
The UK's competitive advantage
What good in a UK which is not part of the EU market for not only goods but services and capital as well and where you cannot recruit the best European and world talent?
That is why a reported very large % of CEOs in the UK are considering moving their companies post referendum.
And that is an issue Theresa May and her team must address ASAP.
Mrs May has recently claimed that she wants to make the UK a leader/champion for global trade. That is nice and useful, but if the UK was to launch a campaign within the WTO to further liberalise world trade, it will take years and years to achieve that.
If she means creation of regional agreements, eg with the Commonwealth, that is nice but they too will take years and what is the trade gain in value? The EU market (sans the UK) is still the most lucrative one in the world, ahead of the US.
If she means bilateral trade deals, well many are doing such already and they, too, take years. And she does not have the trade negotiators for it.
Plus, trade usually covers just goods, what about the City's and UK services export needs?
Theresa May needs to come up with answers and do it fast.
That is why a reported very large % of CEOs in the UK are considering moving their companies post referendum.
And that is an issue Theresa May and her team must address ASAP.
Mrs May has recently claimed that she wants to make the UK a leader/champion for global trade. That is nice and useful, but if the UK was to launch a campaign within the WTO to further liberalise world trade, it will take years and years to achieve that.
If she means creation of regional agreements, eg with the Commonwealth, that is nice but they too will take years and what is the trade gain in value? The EU market (sans the UK) is still the most lucrative one in the world, ahead of the US.
If she means bilateral trade deals, well many are doing such already and they, too, take years. And she does not have the trade negotiators for it.
Plus, trade usually covers just goods, what about the City's and UK services export needs?
Theresa May needs to come up with answers and do it fast.
Sunday, September 25, 2016
Brexit for the City and UK services
Liam Fox pointed out this week:
- "First, if we take the top 10 markets where the UK has a trade surplus only one of them, Ireland, is in the EU.
- "And if we look at the 10 markets with which the UK has a trade deficit, seven out of the 10 are in the EU. It is, therefore, very much in the interests of other EU states that Britain and they makes a success of Brexit and our new relationship."
That implies that the EU will want to strike a good trade deal with the UK.
That's fair enough. The EU has a good trade of goods deal with Serbia. Also Canada.
But will a trade deal cover the needs of the City and services exporters? That is the 1 trillion pound question!
Meanwhile, two European finance ministers offered to give Boris Johnson free tutoring on the EU Lisbon Treaty after he claimed that freedom of movement is not an integral part of the EU Single Market.
It is clear that the UK cannot achieve the access Norwegians services have in the EU market without offering free movement as part of the deal.
Without free movement it can get some sort of deal bu nothing that emulates that type of access for the City and for other UK services.
Services is what turns a goods trade deficit into a surplus for goods+services.
- "First, if we take the top 10 markets where the UK has a trade surplus only one of them, Ireland, is in the EU.
- "And if we look at the 10 markets with which the UK has a trade deficit, seven out of the 10 are in the EU. It is, therefore, very much in the interests of other EU states that Britain and they makes a success of Brexit and our new relationship."
That implies that the EU will want to strike a good trade deal with the UK.
That's fair enough. The EU has a good trade of goods deal with Serbia. Also Canada.
But will a trade deal cover the needs of the City and services exporters? That is the 1 trillion pound question!
Meanwhile, two European finance ministers offered to give Boris Johnson free tutoring on the EU Lisbon Treaty after he claimed that freedom of movement is not an integral part of the EU Single Market.
It is clear that the UK cannot achieve the access Norwegians services have in the EU market without offering free movement as part of the deal.
Without free movement it can get some sort of deal bu nothing that emulates that type of access for the City and for other UK services.
Services is what turns a goods trade deficit into a surplus for goods+services.
Wednesday, September 21, 2016
Theresa May's Borders
Theresa May's UN speech, two days before the World Peace Day, preaching to UN members from all over the world that it is their "duty" to control migration flows was not very helpful for Britain's world image. Plus won;t bring any results. Few if any countries have the intent, let alone the resources, to do what she asks for.
People fleeing war or political persecution or wanting to improve their lives will continue to cross borders and go to extreme lengths to reach Britain and other "attractive" countries.
They will continue to arrive by boats to Greece and Italy aiming to reach mainly Britain or Germany.
Why is Britain such an attractive destination. I have not seen a thorough analysis of that. Brexiters will say: The NHS. Yet Germany and other countries have better systems. Maybe it is the language and BBC World!
In any case, May is promoting to the world an image that is not only not one of an Open Britain. And while many will rush to specify that a) migration of people and b) trade of goods and services and movement of capital and investment are not the same thing, many others will claim that they go hand in hand, at least in terms of image to the world.
People fleeing war or political persecution or wanting to improve their lives will continue to cross borders and go to extreme lengths to reach Britain and other "attractive" countries.
They will continue to arrive by boats to Greece and Italy aiming to reach mainly Britain or Germany.
Why is Britain such an attractive destination. I have not seen a thorough analysis of that. Brexiters will say: The NHS. Yet Germany and other countries have better systems. Maybe it is the language and BBC World!
In any case, May is promoting to the world an image that is not only not one of an Open Britain. And while many will rush to specify that a) migration of people and b) trade of goods and services and movement of capital and investment are not the same thing, many others will claim that they go hand in hand, at least in terms of image to the world.
Monday, September 19, 2016
Does triggering Art 50 mean Brexit?
The Liberal Democrats, with +20,000 members since the ref and the highest number of members since 1993 (but still at 8-9% in the opinion polls) have pledged that they will offer the British people a referendum on the final Brexit deal.
One detail though: Once Article 50 has been invoked, it cannot be revoked. Thus the new ref can be on the type of Brexit deal not on Brexit per se.
Now, friends have argued that various legal opinions are around on that issue and that the author of the actual Article 50, as well as members of the ECJ have said that there is nothing in any of the treaties that says a member state can't withdraw its intention to leave the EU after invoking Art.50 and before the 2 year time period is up.
Well, while I fully understand the predicament the EU cannot spend years negotiating a deal and then have the whole thing scrapped. Plus, by the next UK elections (2020), it will be all over, the triggering and the two years. The issue is to avert the triggering and that can happen if the current government gets a no confidence vote.
One detail though: Once Article 50 has been invoked, it cannot be revoked. Thus the new ref can be on the type of Brexit deal not on Brexit per se.
Now, friends have argued that various legal opinions are around on that issue and that the author of the actual Article 50, as well as members of the ECJ have said that there is nothing in any of the treaties that says a member state can't withdraw its intention to leave the EU after invoking Art.50 and before the 2 year time period is up.
Well, while I fully understand the predicament the EU cannot spend years negotiating a deal and then have the whole thing scrapped. Plus, by the next UK elections (2020), it will be all over, the triggering and the two years. The issue is to avert the triggering and that can happen if the current government gets a no confidence vote.
Friday, September 16, 2016
Britain's EU friends
Herman Van Rompay bluntly claimed that the UK did not have that many friends in the EU even before the referendum.
That may be partly true.
First, let's point out that HVR claimed the EU would never become US of Europe a few years ago.
It is true that many in the EU were tired of British antics re the EU way before the ref. It was not just Farage and the UKIP in the EP. It was Tories' (let us not forget that the Tories left the pro EU European People's Party years ago) antics too.
It was Thatcher, it was Major (and his veto on the Maastricht Treaty at first and then on the Euro and the Social Protocol) and Cameron too.
Blair's UK was rather pro EU.
The UK has been nagging for ages about:
The structural funds
The UK contribution to the EU budget
The agricultural policy of the EU
It was the UK that was one of the champions of EU enlargement from 15 to 28 as a strategy for preventing deepening of the EU.
But as Germans have pointed out, Germany and the UK see things eye to eye regarding markets philosophy.
Plus the UK is the most international member of the EU in terms of migration, both intraEU and from outside the EU.
NVR was exaggerating. But the UK has become a problem for the EU and the EU will deal with it.
That may be partly true.
First, let's point out that HVR claimed the EU would never become US of Europe a few years ago.
It is true that many in the EU were tired of British antics re the EU way before the ref. It was not just Farage and the UKIP in the EP. It was Tories' (let us not forget that the Tories left the pro EU European People's Party years ago) antics too.
It was Thatcher, it was Major (and his veto on the Maastricht Treaty at first and then on the Euro and the Social Protocol) and Cameron too.
Blair's UK was rather pro EU.
The UK has been nagging for ages about:
The structural funds
The UK contribution to the EU budget
The agricultural policy of the EU
It was the UK that was one of the champions of EU enlargement from 15 to 28 as a strategy for preventing deepening of the EU.
But as Germans have pointed out, Germany and the UK see things eye to eye regarding markets philosophy.
Plus the UK is the most international member of the EU in terms of migration, both intraEU and from outside the EU.
NVR was exaggerating. But the UK has become a problem for the EU and the EU will deal with it.
Brexit means exit? Update
T. May's experience is the G20 must have been trying.
She then cam back to Brttain to insist that an exit from the EU Single Market is not the objective of the future negotiations.
Contacts have been made but it has been pointed out that trade negotiations with eg Australia will take years and EU-Australia negotiations have priority.
For some reason Mrs May publicly insists that a deal for access to the EU Single Market (capital, goods, services) can be reached without free movement in it. That is against all evidence so far.
The UK needs this access because:
a) Many of its exports are ecological premium products that are adverse to customs and other red tape.
b) Export of services is not part of WTO trade deals
c) The City needs freedom of capital with tthe EU.
Why is then Britain leaving the EU, one might ask.
It shall be long and it shall be hard
She then cam back to Brttain to insist that an exit from the EU Single Market is not the objective of the future negotiations.
Contacts have been made but it has been pointed out that trade negotiations with eg Australia will take years and EU-Australia negotiations have priority.
For some reason Mrs May publicly insists that a deal for access to the EU Single Market (capital, goods, services) can be reached without free movement in it. That is against all evidence so far.
The UK needs this access because:
a) Many of its exports are ecological premium products that are adverse to customs and other red tape.
b) Export of services is not part of WTO trade deals
c) The City needs freedom of capital with tthe EU.
Why is then Britain leaving the EU, one might ask.
It shall be long and it shall be hard
Saturday, September 10, 2016
Where were you in 2000?
In 2000 people who thought Gore was not good enough to be president
voted for Nader and get of all us Dubya. Hope this time it's the other
way round, people vote for Johnson instead of Tramp.
Hillary
was 45 when Bill became president, 53 when he left office and 69 now
(born 1947). It's been 15 years since Bill left office, oh my how
quickly time passes.
CNN is getting heat about the accuracy of its poll showing Trump leading. That's OK, people have to grasp what a Trump win would mean in order to vote for Hillary.
CNN is getting heat about the accuracy of its poll showing Trump leading. That's OK, people have to grasp what a Trump win would mean in order to vote for Hillary.
If Remain had
Now that the ref is done and over with, it is worth doing an evaluation of the Pro EU - Remain campaign.
I remember debating hordes of Eurosceptics - Kippers about the EU all the way back in 2005 in the European Commission's Online Forums.
Where were pro EU Britons then?
It is evident the ref was going to take place as many as four years ago. Who started campaigning then, especially online?
Much like the Swedish Euro ref, the pro EU - Euro side started way too late to win.
In the UK, the pro EU camp relied on the offices of the European Commission and the European Parliament to do "PR" for the pro EU side.
The other reason, was complexity of the messages. The Leave side spoke to the hearts, the Remain side to the brains.
I remember debating hordes of Eurosceptics - Kippers about the EU all the way back in 2005 in the European Commission's Online Forums.
Where were pro EU Britons then?
It is evident the ref was going to take place as many as four years ago. Who started campaigning then, especially online?
Much like the Swedish Euro ref, the pro EU - Euro side started way too late to win.
In the UK, the pro EU camp relied on the offices of the European Commission and the European Parliament to do "PR" for the pro EU side.
The other reason, was complexity of the messages. The Leave side spoke to the hearts, the Remain side to the brains.
Scotland in the EU: How?
What the ALDE leader actually said is that it would be (relatively) easy
for Scotland to apply and join the EU. He did not say it would e
automatic.
Imho, the only way Scotland could automatically remain in the EU is if the UK officially divided into two or more parts before Article 50 is triggered, something which is not going to happen or May allow it, Scotland would have to gain independence from the UK which is not the same thing, it would not inherit any of the UK's rights.
Imho, the only way Scotland could automatically remain in the EU is if the UK officially divided into two or more parts before Article 50 is triggered, something which is not going to happen or May allow it, Scotland would have to gain independence from the UK which is not the same thing, it would not inherit any of the UK's rights.
Monday, April 18, 2016
Once upon a time in Europe
Once upon a time, the European Union was poised to become a federal union. Leaders gathered in a Dutch city and tried to agree. The UK,which never wanted a federal union, disagreed.
Delors, Kohl, Schmidt and others wanted an ambitious union. They did not get it.
They got a single currency for some (which began 10 years later) but under pressure from the UK and others they did not get their federal way. Plus the UK and Denmark got official opt outs from the single currency. The UK also got an opt out from the so called Social Protocol.
They thought they would improve things in later Treaties of the EU. That did not happen. In 2005 for example the EU Constitutional Treaty was rejected by France and the Netherlands. The federal idea had been shaken.
The euro started in 2001 but high interest rates by the ECB created unbalances.
The subprime crisis later hit Europe too.
Enlargement of the EU was partly the cause of slower deepening.
In the meantime, public opinions in the member states changed too.
The EU never got a single tax system or a real budget (comparable to the US). In many member states, fiscally conservative governments wanted an EU that cost less, no matter the cost.
As a result, in 2016, the EU has lost its way.
World growth is slow and the EU has growth troubles. Unemployment is still high in many member states.
24 years have elapsed since the Maastricht Treaty of 2001/2002 and one can wonder what is the reason for having an EU with 20+ different languages, no single tax system, no federal budget, only laws decided at EU level, an EU el cheapo that is.
If the British voters decide to leave the EU in June 23, this may cause similar appetites in other member states.
One solution is for a new EU. A leap forward towards a United States of Europe with those countries that want and can. An EEA type of EU for the rest. Can the EU make such a bold move? Unlikely.
Europe's problem, which led to two world wars, is that it comprises of too many nation states. Europe has too much history. Can it have a (united) future?
The Greece problem serves as a stark reminder that the EU cannot make decisions. For example its insistence of having the IMF in the Greece troika.
The economic logic of the EU is still a hard case to make. EU economies are still too different, too national, too complicated for a central economic policy. Again, without a single tax system, single laws, a single social security system and of course a real federal budget, the EU does not make economic sense. Especially given the liberalisation and growth of TWO trade in recent decades.
Let's see what the Britons decide in June.
I still think the EU needs an IGC very badly.
Delors, Kohl, Schmidt and others wanted an ambitious union. They did not get it.
They got a single currency for some (which began 10 years later) but under pressure from the UK and others they did not get their federal way. Plus the UK and Denmark got official opt outs from the single currency. The UK also got an opt out from the so called Social Protocol.
They thought they would improve things in later Treaties of the EU. That did not happen. In 2005 for example the EU Constitutional Treaty was rejected by France and the Netherlands. The federal idea had been shaken.
The euro started in 2001 but high interest rates by the ECB created unbalances.
The subprime crisis later hit Europe too.
Enlargement of the EU was partly the cause of slower deepening.
In the meantime, public opinions in the member states changed too.
The EU never got a single tax system or a real budget (comparable to the US). In many member states, fiscally conservative governments wanted an EU that cost less, no matter the cost.
As a result, in 2016, the EU has lost its way.
World growth is slow and the EU has growth troubles. Unemployment is still high in many member states.
24 years have elapsed since the Maastricht Treaty of 2001/2002 and one can wonder what is the reason for having an EU with 20+ different languages, no single tax system, no federal budget, only laws decided at EU level, an EU el cheapo that is.
If the British voters decide to leave the EU in June 23, this may cause similar appetites in other member states.
One solution is for a new EU. A leap forward towards a United States of Europe with those countries that want and can. An EEA type of EU for the rest. Can the EU make such a bold move? Unlikely.
Europe's problem, which led to two world wars, is that it comprises of too many nation states. Europe has too much history. Can it have a (united) future?
The Greece problem serves as a stark reminder that the EU cannot make decisions. For example its insistence of having the IMF in the Greece troika.
The economic logic of the EU is still a hard case to make. EU economies are still too different, too national, too complicated for a central economic policy. Again, without a single tax system, single laws, a single social security system and of course a real federal budget, the EU does not make economic sense. Especially given the liberalisation and growth of TWO trade in recent decades.
Let's see what the Britons decide in June.
I still think the EU needs an IGC very badly.
Thursday, April 7, 2016
More troubles for an unbalanced EU
The rejection of the EU-Ukraine partnership agreement by the Dutch populous, albeit non binding for the Dutch government, serves as a stark reminder of the troubles the EU is in.
The recent decision of the ECB to cut the Eurozone's central interest rate to 0% marks the worry of the EU policy makers regarding lack of growth inside the Eurozone.
In 1959 the EU started as a mere Common Market because the French Parliament rejected a fuller union.
The UK is to make a decision on EU continued EU membership in a few weeks.
Ireland has rejected a new EU Treaty twice.
In 2005, the French and Dutch voters rejected the Treaty of Lisbon.
Swiss voters have rejected EU and EEA membership years ago.
Swedish voters rejected EMU/Euro membership.
Danish voters rejected the Maastricht Treaty and EMU/Euro membership.
19 of the 28 current EU members have joined the Euro, 9 have not. That creates an unstable system.
ECB interest rates with the insistence of the inflation phobia driven Bundesbank have traditionally been high, to avoid inflationary pressures. That has kept the Euro high and has hurt Eurozone industry not only in foreign markets but also (from imports) at home.
There are no single taxation system, no strong federal EU budget, no single social security system in sight. No wonder intra EU migration is very low compared to the US one then. Plus there are some 23 national languages among the EU 28.
No wonder an unbalanced union as the current one faces unemployment and growth problems. And when such problems arise, then many voters vote for nationalist parties and policies.
True, the EU has helped Europe avoid feuds such as another world war. But this peace has come at a price. The EU decision making machine is seen as foreign by many citizens of the EU member states. Member states with a strong social model such as the Netherlands and Germany have revised these models downwards in recent years. For example Dutch unemployment benefits used to be high, now they are significantly lower. Who are the voters expected to blame?
Countries with strong social models such as Sweden, Norway, the Netherlands have attracted intra and non EU migration in recent years and that has promoted xenophobia among the population.
To this day, the EU has 28 distinct countries as members, there is no real union to speak of. Plus the existing EU has produced too many laws, in addition to the national ones. As a result, too many small companies do not like the Single Market, they see it as a threat, not an opportunity.
Problems have brought fiscally conservative parties into government in many EU member states. Their policy agenda has been conservative, austerity driven and as a result anti-EU and de facto xenophobic. The Eurozone's austere economic policies by its members and the ECB have hurt the Eurozone. The 0% rate by the ECB is maybe too late. The Eurozone is damaged goods. The EU is damaged goods.
A No by the UK voters in the coming weeks may be a blessing for the EU. It may force it to take a good look at itself. On the other hand, it may not. Some EU policy makers have a tradition of dismissing reactions in the member states. They will be mistaken to dismiss the Dutch No to the EU-Ukraine agreement.
Ukraine has a right to feel betrayed at a result. But it should realise that the EU is in trouble, not the Ukraine. I spoke to many youths in Georgia a year and a half ago and they are not gang ho about joining the EU. Maybe they realize it is not paradise for countries in trouble. The ex USSR and ex Eastern bloc states that joined the EU went through very dire straits because of the need to follow the EU standards.
What is the solution? It is hard to say. A United States of Europe would be a solution but so far the EU is stuck with a Eurozone of 19 without a common tax or social models. At the same time, not only Greece but other EU and Eurozone member states as well are facing significant growth and employment troubles.
The EU could ask for things at an international level to help deal with its own problems. For example use its size and its internal market as leverage for even more free trade. Free migration should exist to counter balance freedom for capital and goods. People migrate because there is war (refugees) and to seek a better life (economic migrants). Two and a half decades after the fall of communism in the USSR, the world has structural problems. The West has become de-industrialised to a large extent. Migrants want to flow into the de-industrialised US and EU whereas new jobs are being created elsewhere.
These things need to be discussed and debated in the WTO and the UN. Probably they won't. In absence of a global summit on growth and jobs, countries will continue to pursue their own remedies. And the EU will make even less sense.
The EU needs an IGC to decide on its future, with or without the UK. It needs, above all, to start making sense to the European common man. It probably won't, though.
The recent decision of the ECB to cut the Eurozone's central interest rate to 0% marks the worry of the EU policy makers regarding lack of growth inside the Eurozone.
In 1959 the EU started as a mere Common Market because the French Parliament rejected a fuller union.
The UK is to make a decision on EU continued EU membership in a few weeks.
Ireland has rejected a new EU Treaty twice.
In 2005, the French and Dutch voters rejected the Treaty of Lisbon.
Swiss voters have rejected EU and EEA membership years ago.
Swedish voters rejected EMU/Euro membership.
Danish voters rejected the Maastricht Treaty and EMU/Euro membership.
19 of the 28 current EU members have joined the Euro, 9 have not. That creates an unstable system.
ECB interest rates with the insistence of the inflation phobia driven Bundesbank have traditionally been high, to avoid inflationary pressures. That has kept the Euro high and has hurt Eurozone industry not only in foreign markets but also (from imports) at home.
There are no single taxation system, no strong federal EU budget, no single social security system in sight. No wonder intra EU migration is very low compared to the US one then. Plus there are some 23 national languages among the EU 28.
No wonder an unbalanced union as the current one faces unemployment and growth problems. And when such problems arise, then many voters vote for nationalist parties and policies.
True, the EU has helped Europe avoid feuds such as another world war. But this peace has come at a price. The EU decision making machine is seen as foreign by many citizens of the EU member states. Member states with a strong social model such as the Netherlands and Germany have revised these models downwards in recent years. For example Dutch unemployment benefits used to be high, now they are significantly lower. Who are the voters expected to blame?
Countries with strong social models such as Sweden, Norway, the Netherlands have attracted intra and non EU migration in recent years and that has promoted xenophobia among the population.
To this day, the EU has 28 distinct countries as members, there is no real union to speak of. Plus the existing EU has produced too many laws, in addition to the national ones. As a result, too many small companies do not like the Single Market, they see it as a threat, not an opportunity.
Problems have brought fiscally conservative parties into government in many EU member states. Their policy agenda has been conservative, austerity driven and as a result anti-EU and de facto xenophobic. The Eurozone's austere economic policies by its members and the ECB have hurt the Eurozone. The 0% rate by the ECB is maybe too late. The Eurozone is damaged goods. The EU is damaged goods.
A No by the UK voters in the coming weeks may be a blessing for the EU. It may force it to take a good look at itself. On the other hand, it may not. Some EU policy makers have a tradition of dismissing reactions in the member states. They will be mistaken to dismiss the Dutch No to the EU-Ukraine agreement.
Ukraine has a right to feel betrayed at a result. But it should realise that the EU is in trouble, not the Ukraine. I spoke to many youths in Georgia a year and a half ago and they are not gang ho about joining the EU. Maybe they realize it is not paradise for countries in trouble. The ex USSR and ex Eastern bloc states that joined the EU went through very dire straits because of the need to follow the EU standards.
What is the solution? It is hard to say. A United States of Europe would be a solution but so far the EU is stuck with a Eurozone of 19 without a common tax or social models. At the same time, not only Greece but other EU and Eurozone member states as well are facing significant growth and employment troubles.
The EU could ask for things at an international level to help deal with its own problems. For example use its size and its internal market as leverage for even more free trade. Free migration should exist to counter balance freedom for capital and goods. People migrate because there is war (refugees) and to seek a better life (economic migrants). Two and a half decades after the fall of communism in the USSR, the world has structural problems. The West has become de-industrialised to a large extent. Migrants want to flow into the de-industrialised US and EU whereas new jobs are being created elsewhere.
These things need to be discussed and debated in the WTO and the UN. Probably they won't. In absence of a global summit on growth and jobs, countries will continue to pursue their own remedies. And the EU will make even less sense.
The EU needs an IGC to decide on its future, with or without the UK. It needs, above all, to start making sense to the European common man. It probably won't, though.
Thursday, March 31, 2016
Should the UK leave or stay in the EU? Some crucial questions.
Well, it is up to British voters/citizens to decide.
My analysis.
Many Britons feel that Britain has lost sovereignty to Brussels. Policies and laws in many areas are decided by the EU institutions and this takes power away from Westminster. This includes standardisation issues for products and services produced and sold inside the EU.
Many argue that Britain needs to be part of the EU Single Market so that it can sell more easily to its most significant trade partner, the rest of the EU. That is true, but more and more minor as the cause of WTO world trade advances. Plus a non-EU UK can be a member of the European Economic Area as Norway and others do.
Has non EU and non EEA membership hurt Swiss exports? That is a crucial question proponents of the Yes and No to the EU must answer.
My 2 cents is that a globally strong and competitive UK does not need to be a member of the EU and its single market.
How will an exit from the EU affect the revenues of The City? That is a question for the City to answer. Will there be another financial hub in the EU that will compete with a non EU City if the UK leaves? To what extent?
The EU, via its policy on EU enlargement, has managed to hinder the process to a United States of Europe by the EU. Why does then the UK have to leave? Are EU laws enough reason for the UK to leave the EU?
Now, let's be reminded that the UK is neither a member of the Euro area nor the Schenger area. Will thus EU exit allow the UK to better determine its immigration policy?
The EU does not have an industrial policy. Will a non EU UK be able to have an industrial policy and help develop more manufacturing? Maybe yes. But is any political party arguing this factor? Cameron should have been arguing for an EU industrial policy for years now. He has not. Why? Has Labour?
A non EU UK will be able to depart from the EU working time legislation and have the type of social, industrial affairs and employment policy it wants to. Be reminded that Blair incorporated the EU social protocol other UK governments had vetoed (most notably, the Maastricht Treaty opt-out).
A non EU UK will be able to also develop its own environment, transport, VAT and other policies and laws. Will they be much different than the existing EU ones though? That is a question UK policy makers must answer.
There is no question that some non EU companies with manufacturing activities in the UK may be tempted to leave the UK and settle inside the EU if the UK leaves the EU. It will depend on what they perceive the problems of selling in the EU if the UK leaves to be. Who has asked them, in the debate so far?
A non EU UK will not have to contribute to the EU budget. But is the UK contribution to the EU budget (much inferior to the US one) so important (see UK Rebate) after all?
Now, what will happen to UK citizens living and working "freely" in other member states and citizens of other EU member states living and working in the UK? That is a matter that may be settled via UK-EU negotiations as part of an exit agreement, should the UK decide to leave the EU.
Of course, it is most likely these questions will remain unanswered and the decision in the referendum will depend on more top of the mind issues.
In any case, there will be no Doomsday though. Why? Because the UK has the policy makers and think tanks to address policy issues, whether the decision is Yes or No.
My analysis.
Many Britons feel that Britain has lost sovereignty to Brussels. Policies and laws in many areas are decided by the EU institutions and this takes power away from Westminster. This includes standardisation issues for products and services produced and sold inside the EU.
Many argue that Britain needs to be part of the EU Single Market so that it can sell more easily to its most significant trade partner, the rest of the EU. That is true, but more and more minor as the cause of WTO world trade advances. Plus a non-EU UK can be a member of the European Economic Area as Norway and others do.
Has non EU and non EEA membership hurt Swiss exports? That is a crucial question proponents of the Yes and No to the EU must answer.
My 2 cents is that a globally strong and competitive UK does not need to be a member of the EU and its single market.
How will an exit from the EU affect the revenues of The City? That is a question for the City to answer. Will there be another financial hub in the EU that will compete with a non EU City if the UK leaves? To what extent?
The EU, via its policy on EU enlargement, has managed to hinder the process to a United States of Europe by the EU. Why does then the UK have to leave? Are EU laws enough reason for the UK to leave the EU?
Now, let's be reminded that the UK is neither a member of the Euro area nor the Schenger area. Will thus EU exit allow the UK to better determine its immigration policy?
The EU does not have an industrial policy. Will a non EU UK be able to have an industrial policy and help develop more manufacturing? Maybe yes. But is any political party arguing this factor? Cameron should have been arguing for an EU industrial policy for years now. He has not. Why? Has Labour?
A non EU UK will be able to depart from the EU working time legislation and have the type of social, industrial affairs and employment policy it wants to. Be reminded that Blair incorporated the EU social protocol other UK governments had vetoed (most notably, the Maastricht Treaty opt-out).
A non EU UK will be able to also develop its own environment, transport, VAT and other policies and laws. Will they be much different than the existing EU ones though? That is a question UK policy makers must answer.
There is no question that some non EU companies with manufacturing activities in the UK may be tempted to leave the UK and settle inside the EU if the UK leaves the EU. It will depend on what they perceive the problems of selling in the EU if the UK leaves to be. Who has asked them, in the debate so far?
A non EU UK will not have to contribute to the EU budget. But is the UK contribution to the EU budget (much inferior to the US one) so important (see UK Rebate) after all?
Now, what will happen to UK citizens living and working "freely" in other member states and citizens of other EU member states living and working in the UK? That is a matter that may be settled via UK-EU negotiations as part of an exit agreement, should the UK decide to leave the EU.
Of course, it is most likely these questions will remain unanswered and the decision in the referendum will depend on more top of the mind issues.
In any case, there will be no Doomsday though. Why? Because the UK has the policy makers and think tanks to address policy issues, whether the decision is Yes or No.
Enlargement vs Deepening. What future for the EU? The EU needs an IGC. Badly. To decide on its future.
Enlargement vs Deepening. That was the big strategic dilemma in the EU years ago. The main proponents of enlargement were the UK and Germany. The UK hoped enlargement would hinder the deepening of the EU. It has worked. 19 members may be in the Eurozone but Eurozone and the EU as a whole are facing considerable problems.
How can a single market work properly without a single language, a single tax system, a single bureaucracy? With a single currency for merely 19 out of it 28 members?
The current migration crisis shows the lack on union within the European Union.
The decision of the ECB to lower interest rates to 0% shows its despair in trying to make the Eurozone more competitive. Triche interest rate policies some ten years ago hurt the cohesion of the Eurozone significantly and it has not recovered.
A de-industrialising EU cannot create enough jobs to curb the joblessness issues.
If the UK decides to leave the EU in a few weeks, an earthquake will shake the EU. It better. The EU needs a wake up call.
Is the EU a failure, so far? Yes. It has taken 60 years and failed to become a United States of Europe.
Can the EU change its course and succeed?
Yes, it can.
How likely is that? Not very likely.
Will the EU dissolve? Not likely.
What should member states do?
Well, they are focusing on national affairs increasingly, taking care of their national needs.
What is the future for European business? Well, 2.5 decades after 1992, there is no European business, merely, companies doing business across the EU. 28 tax regimes, 23 languages, what kind of a single market is that?
The existence of world trade and the EU puts pressure on the cohesion of the EU. Why should members stay members when world trade is now more free than ever and one (eg the UK) can sell to Europe without needing to be part of the EU.
The EU needs an IGC. Badly. To decide on its future. I argued that 2 years ago. The need is more urgent today. Even after the UK referendum.
An IGC should decide whether to move the EU into a United States of Europe (as some want and it makes economic sense) or take back the EU to the Common Market it was decades ago (that would please the UK). More or less union make sense, both, as strategic option. The current status of the union does not.
How can a single market work properly without a single language, a single tax system, a single bureaucracy? With a single currency for merely 19 out of it 28 members?
The current migration crisis shows the lack on union within the European Union.
The decision of the ECB to lower interest rates to 0% shows its despair in trying to make the Eurozone more competitive. Triche interest rate policies some ten years ago hurt the cohesion of the Eurozone significantly and it has not recovered.
A de-industrialising EU cannot create enough jobs to curb the joblessness issues.
If the UK decides to leave the EU in a few weeks, an earthquake will shake the EU. It better. The EU needs a wake up call.
Is the EU a failure, so far? Yes. It has taken 60 years and failed to become a United States of Europe.
Can the EU change its course and succeed?
Yes, it can.
How likely is that? Not very likely.
Will the EU dissolve? Not likely.
What should member states do?
Well, they are focusing on national affairs increasingly, taking care of their national needs.
What is the future for European business? Well, 2.5 decades after 1992, there is no European business, merely, companies doing business across the EU. 28 tax regimes, 23 languages, what kind of a single market is that?
The existence of world trade and the EU puts pressure on the cohesion of the EU. Why should members stay members when world trade is now more free than ever and one (eg the UK) can sell to Europe without needing to be part of the EU.
The EU needs an IGC. Badly. To decide on its future. I argued that 2 years ago. The need is more urgent today. Even after the UK referendum.
An IGC should decide whether to move the EU into a United States of Europe (as some want and it makes economic sense) or take back the EU to the Common Market it was decades ago (that would please the UK). More or less union make sense, both, as strategic option. The current status of the union does not.
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