Wednesday 1 October 2014

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In early 2010, fears of a sovereign debt crisis, the 2010 Euro Crisis developed concerning some European states. What should be the response? How should economic and financial policies be coordinated at the EU level?

 

Re-branding Greece: 7 Tips for Sustainable Nation Branding

Posted by on 29/09/14
By Stavros Papagianneas Between 2009 and 2011, Greece went from being seen as a full member of the eurozone to “Ground Zero” in the Nation Brand Index. Today, it is time for a rebranding of the country. Here's seven ways Greece can put itself on the map again...

Greece is the poorest country in the EU

Posted by on 29/09/14

Since 2008 the Greek state has experienced one of the deepest and persistent financial and economic crisis in its short history. A crisis that has dismantled its social nets, increased unemployment to unprecedented levels, broken out extreme right parties, lowered trust to the entire political and banking system. In contrary to other countries in the EU that implement programs against social inequality, Greece is way long behind reaching the minimum levels of a so-called “welfare state”. People vie for social care more than ever, but state’s reaction to increasing demands is considered inconsistent and burdened with bureaucratic dysfunctions. Meanwhile, there are no prospects for recapturing income losses in the near future.

Greece is the only member-states in the EU that has not implemented the guaranteed minimum income (GMI) system. There are no criteria for establishing the lowest level of living conditions, and there is no political consensus with reference to the minimum wage requirement that is necessary for someone in order to avoid being considered as poor or socially excluded. In many cases, those eligible for receiving state aid, cannot successfully advance for job opportunities, and remain desperately dependent to the slow bureaucratic procedures.

In the meantime, according to a recent study of the Research Committee of the Greek Parliament, 2,5 million people are found below the minimum income line, i.e. referred to the income that is not sustainable to acquire a minimum living standard, whereas 3,8 million people are at risk of poverty due to lack of income, shelter or food. In other words, and in real-economy terms, over 5,5 million people in Greece are either unable to pay their daily living or close to become so. In a population of around 11 million, more than 1/2 Greeks or citizens of Greece are considered poor.

As we have many times wrote over the past couple of years, the problem in Greece is so complex and unique that no study can effectively address it. Nor any politician can tackle it in absence of the necessary consensus by the entire political system. To a certain degree, the problem is found in the slow process of bureaucracy, the lack of cross-reference when dealing with annual income by the relevant authorities, the deep distrust over the tax system. On the other hand, the incompetence of the civil society to influence and affect decision and policy-making is also considered as a major drawback.

Under the current economic conditions, and in areas that the state cannot reach, there are some minimum efforts that can be assumed by private sector’s corporate social responsibility (CSR) through the civil society and the support of volunteer centers. The first recommendation is to guarantee food and shelter for everyone; the second one is to connect income policy with volunteer or social work and lifelong learning; the third one is the issuance of coupons for the purchase of basic goods and services that are not covered by the current social policy; the fourth one is the broadening of social clinics in highly-affected areas for the treatment of unemployed, people without social insurance, and immigrants.

However simple and rational such policies might sound, they demand a high mobilization and effective campaigning – and here is where CSR and well-known foundations can bring about developments, along with civil society organizations that do have the know-how and the will to proceed accordingly.

Greece’s fiscal crisis and its impact on the public sector

Posted by on 28/09/14

Elina Zagou, Judicial, County Court Katerini, Greece
Fotis Zygoulis, Head of the Independent Planning and Design Department of the Municipality of Heraklion Attica, doctoral candidate at the University of Athens +302132000118, Greece
Email:  fotiszygoulis at gmail.com,  elinazagou at gmail.com

Greece in the year 2014 is now in the seventh year of recessionary economic cycle, which causes adverse effects on the social, economic and political spectrum. The crisis served as a catalyst for structural reforms, especially for countries like Greece, which signed agreements on international and European aid that posed as a prerequisite a number of radical changes concerning the organisation and functioning of public administration.
The current financial crisis exposed the weaknesses of the Greek political system regarding patron-client system. The dominance of the patronage system characterized during the previous years both the recruitment of public servants and the public administration’s attitude towards society and economy.
Greece’s economy in the last 40 years was based on excessive consumption, external and internal public borrowing. While European funding had been channeled primarily to consumption, without taking into account the needed investments, the country’s economic development and infrastructure, the improvement of good governance, the state was overloaded with an army of public servants. An unequal distribution of public administration’s structures emerged which resulted in a wastage of public expenditure, loans increasement, a huge debt and a gradually reduced efficiency of the public sector.
The peculiarity of the Greek public sector is the large size and exorbitant public expenditure on wages, but also the low efficiency along with extremely low quality services to citizens. However, the efforts of Greece since the end of 1990 to introduce the Economic Monetary Union reflected in quantitative restrictions on employment policy in public administration. Recruitment had been diminished, and in many cases the replacement of the outgoing staff was limited to one to three or one to five (although these measures were not applied across the whole public sector, applied unevenly and in some cases gradually abandoned).
Since 2009, due to the Fiscal Memorandum with Troika, there was applied a strict replacement staff rule in the public, (one to five). The Medium Term Financial Strategy Government Program extended this rule for the years 2012-2015 and “strengthened” in one to ten in 2011.
In the recent years an attempt was made to adapt to the Troika. So there has been a beginning of a series of serious reforms leaded by the Ministry of Administrative Reform, in order to evaluate both the structure and staff of the Public Service in order to remove structures that have nothing to offer to society or coexisting with other sharing the same powers and lastly to evaluate the public administration’s personnel . Also in the framework of the Memorandum with Troika, traditional public structures have been abolished under the ‘mobility’ project in order to fill positions of government, which were in an emergency state.
The economic and administrative restructuring project in Greece involves the following steps:
Reduction of the operating costs of central government by 200 million
Reduction of public investment program by 400 million euros.
Introduction of the rule 1:10 concerning the recruitment in public interest’s enterprises
Reduction of staff salaries in the public sector by 22 per cent
Reduction of 150,000 civil servants
But the crisis has worsened the economic situation of civil servants with the upcoming reduction of the average wage and the number of salaried personnel by the state budget. The simultaneous reduction of the amount of earnings made unattractive the public sector to the existing personnel. The moreover wider obsolescence of human resources, inevitably led to a drop in morale and a reduction of the employee productivity, while it is often associated with increased incidences of corruption.
The unemployment rate in Greece and in the EU (2000–2012)

European Union (27 countries) Greece

 

Source: [Eurostat, „Unemployment statistics‟,
 http://epp.eurostat.ec.europa.eu/statist...]

The proposals which have been implemented during the last six years concern: Management by objectives – Suspension and recruitment limitation – Meritocracy in the selection and promotion – Motivation Productivity – Enhancing mobility – Simplified pay system – single payroll – Redesign education systems for public officials.
Greek financial crisis is a window of opportunity to promote reforms. The decrease of the average wage and the number of salaried by the state budget is the main priority in the period of last three years. Cutting salaries (average more than 35percent), while the number of salaried by the state budget has been reduced by 9.9% (76,408 persons) in relation to 2010 has leaded to a massive exodus of Greek public servants to retirement.
The reduction of the number of civil servants in Greece was not accompanied by radical changes related to the modernization of HR management. The lack of goal setting, performance measurement indicators and the continued patronage of the State with regard to the appointment of heads of organisational units in Greek government has canceled the practice of this kind of numerical and quantitative limitations operations and has not contributed to an improvement of the quality of services offered by Greek civil servants.
The effects of reduction of the salaries of civil servants in the Greek economy Greek economy has been described in the OECD report entitled: Fairly Sharing the Social Impact of the Crisis in Greece 2014 which clearly shows that the salaries of civil servants by 2010 were incomparably higher than those of their colleagues in the private sector contributing thereby to great inequality among workers. However the salaries of civil servants channeled mostly to private consumption. For this reason, the reduction of the salaries of civil servants affected both the corresponding reduction in private sector wages and general economic cycle.
The ongoing crisis has dramatically affected all structural deficits that characterize the Greek public administration. The decision-making system, structures for implementation and monitoring of public policies which, because of their systemic nature, may be considered as “standing weaknesses” of the entire framework for the organization and the functioning of public administration. Problems such as poor utilization and misallocation of human resources, the absence of modern methods, techniques and tools administration and lack of the public sector coordination led to the current disease situation of the state.
The problem of the Greek Public Sector neither is determined nor is based only on the size which can be solved only through a reduction in staff or salaries of public employees. The hot task today is to upgrade the quality of services provided to citizens and businesses through a rationalization of structures. The administrative burden of the operation of the Greek public bureaucracy is seriously affecting the economic growth more than the reduction of salaries of Greek civil servants.
Bibliography
Fournier, J.-M. and I. Koske (2012), “Less Income Inequality and More Growth – Are they Compatible? Part 7. The Drivers of Labour Earnings Inequality – An Analysis Based on Conditional and Unconditional Quantile Regressions”, OECD Economics Department Working Papers, No. 930, Figure 11.

OECD (2012), Economic Policy Reforms 2012 – Going for growth, Greece-country note, February 2012.
OECD (2011), Greece: Review of the Central Administration, OECD Public Governance Reviews, OECD Publishing,
OECD, (2012a) Public Sector Compensation in times of austerity, OECD Publishing, Paris
OECD (2012c), Greece: Review of the Central Administration (Greek version): OECD Public Governance Reviews, OECD Publishing, http://dx.doi.org/10.1787/9789264179158-…
OECD, 2012d, Developing Human Resource Management Strategies to Support Strategic Agility in the Public Sector
Ministry of Administrative Reform and E-Governance: National Strategy for Public Administration Reform 2014-2016
Unofficial Translation of the OECD report on the Greek Central Administration (2011) from the National Alumni Association of Schools of Public Administration and Local Government
Effects of restrictive policies on public services Athens 2013 Social Multicenter ADEDI
“Local Government: Economic Status of Municipalities, The Impact on human resources of the Municipalities’ Social Multicenter ADEDI 2014
“A new strategy for the management of human resources in public administration” P. KATSIMARDOU Buas INERP 2012
“Crisis and Reforms in public administration” Anthi Karagiannis, 2012 European Centre of Excellence, Jean Monnet Program
Karkatsoulis P. (2012) Administrative reform is necessary and feasible!, Paper presented at a panel discussion organized by ELIAMEP, Kantor and the Citizens’ Movement and Transparency International, Athens, April 3rd, 2012

On Evgeny Vitishko, multilateral development banks and criminalisation of criticism

Posted by on 28/09/14

The recent rejection to release Evgeny Vitishko’s, an imprisoned environmental activist in Russia, illustrates the backlash against fundamental rights and freedoms in some countries. Multilateral development banks need to take notice of this trend and be more wary of the risk that their lending may strengthen authoritarian regimes.

by Klara Sikorova, cross-posted from the Bankwatch blog

On September 24, the Krasnodar Regional Court rejected the cassation appeal filed by the Prosecutor’s Office against the sentence of Evgeny Vitishko a Russian civil society activist known for his criticism of the environmental damage caused by the Sochi Winter Olympic Games. Vitishko was charged with a fabricated crime and sentenced to a three-year prison term in a penal colony in February this year.

Support Evgeny Vitishko: The Free Vitishko campaign offers ways to help Evgeny. Find out more >>>

While the court’s ruling is condemnable, it is sadly predictable. Russia is infamous for using and amending existing legal and judiciary instruments to scale up restrictions on civil rights groups and individuals critical of the regime.

What is alarming is that this approach is becoming a modus operandi in more countries and not only among authoritarian regimes but also where transition to the Western type of democracy is at stake. Under the disguise of protecting national security and stability governments have curbed fundamental rights and freedoms and thus eroded the possibility for an open political debate.

Geographically, this mostly involves Former Soviet Union countries and the Middle East and North Africa (MENA) – regions where international financial institutions (IFIs) such as the European Bank for Reconstruction and Development (EBRD), the European Investment Bank (EIB) and the World Bank have committed to enable a successful political and economic transformation. A very short overview of cases of legal interventions enabling the reprisal against rights and freedoms shows that these are introduced with increased frequency despite the IFIs’ presence and EU attempts to support democracy.

Politically motivated online censorship and surveillance

Due to its potential to be the freest space for communication and access to information, the Internet has become a target for restrictive measures. In its annual report assessing the rate of disruption to freedom of information through online censorship and surveillance, Reporters without Borders ranked Belarus, Turkmenistan, Russia and Uzbekistan as the “Internet enemies” states because of systematic repression of Internet users. Egypt, Kazakhstan, Tunisia and Turkey are listed as “countries under surveillance” for using draconian measures to control freedom of expression online.

The news broke last week that Turkey has amended a law to allow the state telecommunication agency to block websites without a court order as a means of protecting public order or preventing a crime.

Around the same time, the Egypt government has contracted a domestic sister of a US Blue Coat cyber company to procure the surveillance technology that enables the tracking of online communication. While the Ministry of Interior rejected the rumours, it has admitted it has been monitoring online communication to be on the top of political issues and electronic crimes.

Restricting foreign funding

In less developed countries, civil society groups depend on foreign funding to exercise their independent role. The governments of Russia, Egypt and most recently Hungary have waged war against civil society criticism by obstructing access to financial aid from abroad. In 2012, Russia approved a “foreign agents” law which tightens controls over civil society groups that receive foreign funding. Egypt has been pondering a law which would oblige NGOs to receive official consent for financing from abroad. This September, the Hungarian government raided the offices of NGOs distributing Norwegian funds under the pretext of fighting political influence.

Cutting down on freedom of assembly

Russia curtailed on protest rallies in 2012, when it amended a law to introduce large fines for violating rules on public events. Azerbaijan followed the suit and passed legislation approving a nearly tenfold increase in fines for participation in an unapproved public protest. In its 2013 law on public assembly, Egypt granted security officials discretion to ban and forcibly disperse a public protest or a meeting on vague grounds.

Development banks off target

As the human rights situation is deteriorating and transition countries are reversing after two decades of reforms, the impacts of the development financiers’ lending must be called into question.

Azerbaijan currently appears as a model case for IFI lending that is likely to strengthen the elites in authoritarian regimes while turning a blind eye on human rights abuses. In the pursuit of independence from Russian gas the EU and IFIs are eyeing the Trans-Adriatic Pipeline (TAP), that is part of a plan to transport natural gas from Azerbaijan to Europe.

In February this year, the EBRD released an economic assessment of the impacts of the Sochi Winter Olympics. Two days before that date Vitishko had been arrested before being able to deliver the draft report on detrimental environmental impacts of the Games (pdf) for a discussion in Sochi.

Although these two cases stand separately, the legacy of Vitishko and his colleagues at the Environmental Watch on North Caucasus demonstrate the urgent need for the IFIs to bridge the political and economic transformation with the observance of fundamental rights. Without achieving this more cases like Vitishko’s will regrettably keep appearing.

Greece’s economic comeback is marred by uncertainties

Posted by on 22/09/14

Petros Christodoulou, a Greek investment banker, once quipped “most of the bad news about America’s subprime-mortgage market will be out by the end of August.” It was the beginning of August 2007, just a few weeks before the financial whirlwind that almost sucked in the global economic system unleashed. At the time, Greece was still a successful and prosperous European country, buoyed by the lowest borrowing costs in history. But its comeuppance was soon to follow, as a series of rapid revelations over faulty accounting methods wiped out more than 25% of its GDP and pushed 30% of Greeks below the poverty threshold.

In addition to “accounting errors” a number of financial deals allowed Greece to cut its deficit, in return for repayments over time. Using cross-currency swaps, Goldman Sachs channelled $1 billion of funding to Athens in 2002. On the receiving end of the deal, working at the time in the National Bank of Greece, was the aforementioned Christodoulou, himself a former Goldman alumnus. Such shady dealings were made possible by the integrated capital markets that came with the EU, superimposed over a climate of seething corruption.

Indeed, corruption and tax evasion are at the heart of the Greek tragedy. Otherwise how can one explain the audacity of multiple governments to hide a rapidly rising budget deficit? When the truth came out in December 2009, it became evident to everyone that Greece was not only cash-strapped but outright bankrupt. With Europe’s economy hanging over the edge, and the future of the Euro in doubt, the country was forced to contract two successive IMF-backed loans worth €240 billion, raising its debt from 115% in 2009 to an eye-watering 174% of GDP in 2014. Seven consecutive years of economic decline ensued.

Painful structural reforms were passed, as the government scrambled to overhaul as much as it could, from the pension system to private universities, in hopes of bringing to light Greece’s shadow economy, estimated at 25% of GDP. After street protests, intense rioting and political hand wringing, it seems that good news has finally come to the Greek peninsula.

According to the IMF and the European Commission, the country is set to see its first year “in the green” since 2008, with an expected 0.6% expansion. Moreover, Standard & Poor acknowledged this prediction by upgrading its debt rating, from B-minus to B. Although still five notches into junk territory, the embattled country has finally managed to make a successful return to financial markets. On September 12th, the Greek Finance Ministry hailed its sale of some 1 billion euros worth of three-month and six-month treasury bills, noting that strong demand exceeded initial targets of the bond sale.

With the economy showing timid signs of improvement, can one assume that corruption has been stifled? Unfortunately, not so much, as recent evidence shows that the government’s efforts simply “gave Greeks more official protocol to manoeuvre around”. Transparency International still rates Greece as Europe’s most corrupt country, tied with China for the 80th place in the world.

 

Source: Zerohedge.comsource: Zerohedge.com

Although petty corruption is still common, it pales in comparison to what happens at the governmental level. From fraudulent privatizations to businessmen in cahoots with politicians, a foray into Greek corruption reads more like a “How-to” manual. When Prime Minister Andreas Papandreou was told that a leading Greek bureaucrat accepted a big bribe from an Italian company, which wanted to build a hydroelectric dam, he jokingly said that there’s no problem if an official “makes a little gift to himself”. This phrase “became the official green light for generalized corruption at all levels in the 1980s”.

Perhaps one of the most interesting, yet underreport cases in recent memory, involves the Greek shipping magnate and football fanatic Evangelos Marinakis, owner of Olympiacos FC and head of the Greek Super League. Despite being associated with a criminal organization officially charged with match fixing, bribery of officials, politicians and judges, the “untouchable” Marinakis has recently been elected as local councillor in Greece’s third largest city of Piraeus. He will be serving at the pleasure of the city’s mayor, Ioannis Moralis, a former Olympiacos Vice President, whose campaign was largely reliant on the financial support of Marinakis.

Drawing comparisons with Italy’s Berlusconi, Reuters dryly stated that “rarely has big business mingled so openly with politics in a country where contacts between the two are usually conducted behind the scenes“. This is no doubt a worrying development. With the election of the Marinakis/Moralis ticket, Greeks have shown that the same double-dealing spirit that had almost bankrupted the country is still alive and well. Not even an almost total collapse of the country managed to shake up the public consciousness into realizing that it is neither Brussels nor Germany at fault here; it is their own inertia.

As for Petros Christodoulou, after having served for two years as the general manager of Greece’s Public Debt Management Agency, the main government body tasked with restructuring the country’s burdensome debt levels, he was appointed earlier this September as CEO for Marinakis’ shipping company. Indeed, as long as the powerful grow more powerful and inequalities rise with the populace’s consent, the Greek taxpayer will always get the short end of the stick.

 

France and the EU: there is no “exception française”

Posted by on 18/09/14
By Ernst Stetter In a speech earlier this week, French Prime Minister Manuel Valls said, “it is France and France alone that decides what the country has to do”, stipulating that there should be a serious talk with Germany, which has to assume its responsibilities for Europe. Helpful? Not so much...

Up or out. Business models and innovation

Posted by on 15/09/14
In the EU world we hear about “innovation” all the time, but what does that actually mean? I am currently re-reading “More Money Than God” by Sebastian Mallaby. It tells the stories of the pioneers in the hedge fund sector, explaining their methods and the workings of this secretive arena. It has made me realise [...]

Phenomenon of Crimean election

Posted by on 15/09/14

Russian President has signed a federal law about election to the Crimean State Council and to Sevastopol Legislative Assembly, which would take place on September 14. Ukraine has already called these election as illegal and warned coordinatiors to be under criminal prosecution. Due to high represive activity of russian law enforcement agencies agains those who didn’t recognize occupation especially Crimean tatars, this election is nothing other than a farce.

According to numerous testimonies of international observers, local activists and Crimean Tatars leaders , in the Crimea peninsula there is a systematic violation of human rights, particularly against Crimean Tatar population. Today we can observe the open opposition to the Mejlis legislative activity as a deprivation educate their children in their native language, muslims persecution, illegal searches in mosques, madrassas and houses, kidnapping of the Crimean Tatar, the ban on the holding of peaceful demonstrations and meetings, giving the status «non grata» for the Crimean tatars leader Mustafa Dzhemilev, Chairman of the Mejlis Refat Chubarov and his adviser Ismet Yuksel.

Local Police intentionally hushed up the investigation of killings and disappearances of the Crimean Tatars. Untill now we haven’t received any official explanations of the Akhmedov’s incident, who was detained with a large number of witnesses and taken to an unknown destination. We have no information about three civil activists: Leonid Korsch, Timur Shaimardanova and Seyran Znetdinove, disappeared in May 2014. Today the indigenous population of the Crimea is under policy of intimidation, particulary, activists are called for questioning to the Russia Federal Security Service and the Mejlis’ members homes are seached without cause.

Mejlis Chairman Refat Chubarov compared this policy of self-proclaimed authorities against activists and people with great prestige in society with the moral terror. How else could we consider their actions against the Crimean Tatar leader Mustafa Dzhemilev? Recently Mr. Dzhemilev has received the summons for questioning, despite acting ban on entry into the territory of Crimea. So, such a move could be called as the occupation authorities warning that during the election period it is better not to appear in the Crimea, otherwise he will be arrested.

Mustafa Dzhemilev has openly expressed his opinion that systematic violation of human rights and prosecution of crimean tatars won’t ean till Crimea is free of Russian occupation. The crimean tatars called not anly to crimean tatars but also to all conscious population of Crimea to ignore the election of September, 14.

The head of Majlis R.Chubarov supported him and mentioned that nowadays in Crimea ”every journalist or editor has been warned about extremist activity”. To his opinion Russian federal security service does its best to provoke mass leaving of the active representatives of crimean-tatar society for the continent ”to crush the crimean tatars’ Majlis as an organized power”. It is a well-known fact that Crimean self-declared authorities blackmail Crimean people end threaten them to deprive of their social benefits if they don’t take part in the election.

Taking into account the current situation we can say for sure that the serious pressure of the occupation authorities will make many people to vote against their will. Mr. Chubarov proposed to organize the international monitoring under the aegis of UNO or OSCE in orderto estimate the situation of human rights’ observance in occupated by Russia Crimea. According to the Majlis head, the September, 14 Crimean election is an immitation of the election process on the territory of Crimea. He is sure that the turn out and the results of the voting will be falsificated. Chubarov said – «There is no election in Crimea. There is an immitation and the results are already known».

Lord Hill is the EU’s new financial services Commissioner – but what is his remit and who does he report to?

Posted by on 10/09/14
With the future of the UK seemingly hanging by a thread it is understandable that events north of the border are dominating attention, but today's announcement of the new European Commission also has far-reaching consequences for the future of the UK's EU membership and the EU itself.

As we set out in our flash analysis, the appointment of Lord Hill to the key financial services portfolio (pending approval by MEPs) is a win for the UK, and the general reformist outlook of the Commission, with other crucial posts (Internal Market and Competition) held by liberal, pro-free trade, non-eurozone countries, provides grounds for cautious optimism.

What will Lord Hill's portfolio include?
  • Overseeing the creation of the banking union – a crucial policy for the eurozone but also one which threatens to split the EU into euro-ins and outs. In his new role, Lord Hill can ensure this does not happen. That being said, this is a very tricky role to manage (with numerous competing interests), especially for a non-eurozone country.
  • Power to review the role of the European supervisory authorities, institutions which have been controversial in the UK since their creation.
  • Responsibility for a 'Capital Markets Union'. While this remains vague it could be a good initiative for the UK since London is already the centre of European capital markets. Lord Hill can base the union around the single market rather than the eurozone.
As the charts below show, the Commission has also been re-organised with a series of policy clusters, with the UK being at the heart of all the major decisions relating to the single market, jobs and growth and the Eurozone. Each 'cluster' will be headed by a Vice-President, previously a largely meaningless role but now with additional agenda setting powers and the ability to stop legislative proposals from other Commissioners.



Lord Hill will 'report' to two Vice Presidents who will "steer and co-ordinate" depending on the issue at hand - the new "Jobs, Growth, Investment and Competitiveness" VP Jyrki Katainen and the "Euro and Social Dialogue" VP Valdis Dombrovskis (both of whom are former PMs). In terms of the two VPs, Dombrovskis is likely to supervise the banking union aspects of Lord Hill's post while Katainen will oversee the more single market aspects, although even here, there is plenty of scope for overlap.

Lord Hill's portfolio also has some overlap (and therefore potential conflict) with France's new Economic and Monetary Affairs Commissioner Pierre Moscovici .The potential for Anglo-French clashes within the Commission is relatively limited since Moscovici will be primarily tasked with macroeconomic eurozone policies rather than financial markets, but one potentially fraught area could the be Financial Transaction Tax or a Common Consolidated Corporate Tax Base. Juncker has asked Moscovici to finalise negotiations over both.

It remains to be seen how the relationship between VPs and different clusters will work in practice, especially as Juncker himself has insisted that "In the new Commission, there are no first or second-class Commissioners", and since decisions in the College of Commissioners have traditionally been taken by a majority of all Commissioners in a secret vote. However, Juncker also made clear that the Vice-Presidents “can stop any initiative, including legislative initiatives” of other commissioners – effectively acting as “a filter”.

Time will tell how potential disputes play out or are resolved and to what extent the VPs can truly veto proposals. What is clear is that the relationship between these four men could be crucially important.

With Tusk, Poland has reached a tipping point

Posted by on 09/09/14
By Adam Czyzewski As of this May, Poland has been a member of the European Union for 10 years. Our membership in the EU has already brought us tangible economic, social and political benefits. A clear testament to the latter is PM Donald Tusk’s appointment as the President of the European Council, which is not only a great personal success of the Prime Minister and of Poland’s economic policy, but also a tremendous diplomatic accomplishment.

Super Mario al rescate de una Europa estancada o buscando el milagro del “Draghinomics”

Posted by on 08/09/14

En esta especie de absurdo juego del laberinto en el que se encuentra la economía europea, el presidente del Banco Central Europeo, Mario Draghi, se ha enfrentado al Minotauro con todas las armas a su alcance. Nadie le puede negar a este italiano, amante de la ópera y de la tragedia griega, su arrojo al enfrentarse incluso al criterio inflexible del Bundesbank y de los designios del Ministro alemán de Finanzas, Wolfgang Schäuble y la mismísima canciller Ángela Merkel. Ha puesto encima de la mesa prácticamente todo el repertorio de medidas monetarias que desde un banco emisor se pueden poner hoy en día en marcha para tratar de reactivar la actividad económica. Pero a la vez que sorprendía al mundo con la bajada de tipos de interés hasta el 0.05%, él mismo reconocía melancólicamente que todo el esfuerzo del BCE no serviría de nada si no iban acompañadas de medidas incentivadoras y de reformas estructurales llevadas a cabo por los Estados miembros del euro.

Esperemos que Draghi no sea nuestro contemporáneo Ícaro en esta leyenda viva del laberinto de Creta, la de aquel hijo de Dédalo, arquitecto ateniense desterrado a la isla, constructor del laberinto donde el rey Minos hizo encerrar al monstruo Minotauro. Como esperamos que sus medidas no sean hoy como aquellas alas de cera que Dédalo construyó para huir su hijo y él, que les hicieron remontar los muros de su prisión y volar sobre el Mediterráneo, hasta que Ícaro desobedeciendo los consejos de su padre se acercó tanto al sol que derritió las alas y cayó al mar ahogándose. Más nos valdría acabar con la tiranía de la crisis con la habilidad con que Teseo mató al Minotauro, sirviéndose del amor de Ariadna, la hija de Minos que se enamoró de él y le enseñó el sencillo ardid de ir desenrollando un hilo a medida que avanzara por el laberinto para poder salir más tarde.

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Será que los griegos clásicos nos lo dejaron todo escrito porque nuestro trágico devenir actual se asemeja peligrosamente a las interminables luchas de los dioses del Olimpo. La cruda realidad se ha acabado imponiendo a la cerrazón de los dogmáticos del ajuste y los recortes presupuestarios. Se empeñaron en que las economías periféricas, culpabilizadas por sus excesivos déficits, debían pagar el pato del endeudamiento privado causado por los bancos, en gran medida, alemanes y el resultado no podía ser otro que la recesión y el desempleo en cifras millonarias. La consecuencia inmediata no podía ser otra que el estancamiento del crecimiento en la zona euro y la caída drástica de las exportaciones germanas a los países empobrecidos de la UE. Ahora pudiera decirse que tenemos un problema minimizado de déficits, pero seguimos pagando por generaciones la deuda adquirida, no crece nuestra economía y no somos capaces de crear empleo. Todo un éxito digno de pasar a los anales de la estulticia de los manuales de economía.

¿Qué podemos esperar ahora de un espacio regado de dinero muy barato y de la compra de deuda privada a los bancos? Desde el rigor económico es evidente que ambas medidas producen una inyección de liquidez al sistema, jamás vivida en nuestro espacio común. Pero la clave está en saber si la medicina es la adecuada para el enfermo o lo que estamos haciendo es darle una aspirina a un enfermo de cáncer terminal. Nos empeñamos los europeos desde que la crisis nos invadió importada desde Estados Unidos, en arreglar los problemas a base de talonario para sanear el sistema financiero y, sin embargo, castigando duramente el tejido productivo sin obligar a que fluya el crédito a las empresas y con la práctica desaparición de la inversión pública. Hemos permitido que se fabrique la tormenta perfecta. Ahora ya nadie duda de que el problema es de estancamiento y de riesgo severo de estanflación. Pero seguimos incurriendo en el error de poner el énfasis en el dinero, en el vil metal, en la máquina de hacer billetes. Le estamos dando al pirómano la manguera, cuando lo único que sabe hacer es incendiarnos el bosque.

Nuestro problema se evidencia mes a mes, año a año. Se llama competitividad, no tiene otro apellido, simple y llanamente la globalización nos obliga a cambiar el modelo productivo y los procesos del mismo. Y la única receta que existe útil para mejorar la competencia de nuestras empresas y de nuestros productos y servicios, es la innovación, hermana pequeña de la investigación. Ser más eficientes, es ser más rentables y ello hace posible el ciclo de la riqueza y de su redistribución. Si no invertimos mucho más en I+D+i y lo que es más importante si no cambiamos la mentalidad de los europeos, uno a uno, de nada servirán cataplasmas monetarias. Debemos innovar y eso solo se hace en sociedades educadas y formadas bajo la calidad y la excelencia de un sistema educativo universal e igualitario. Y esto no son palabras bonitas, son realidades palpables avaladas por datos palmarios. Si no invertimos un 3% de nuestro PIB en I+D+i y no alcanzamos cuotas del 7% de ese PIB en Educación, es imposible que en las próximas décadas podamos mantener nuestro modélico sistema de protección y bienestar social.

Las cuentas son claras, se trata de marcar las prioridades. Queremos tener un sistema público de salud para todos y de alta calidad: su coste siempre estará en el 10%. Queremos mantener un sistema de pensiones y protección al desempleo digno y que no deje en el desamparo y la marginalidad a nadie: un 15%. Sumémosle Educación e I+D+i: estamos ya en el 40%. Y supongamos que nos tenemos que pagar una deuda abusiva que hoy nos cuesta cerca del 20% del PIB. Todo lo demás o debe ser mucho más eficiente o nos sobra. Si fuéramos capaces de hacer estos presupuestos con visión europea, sin que lo que cuente sea el egoísmo o el abuso de cada Estado miembro, la Unión Europea no solo sería viable, sino que se convertiría en el ejemplo a seguir por el mundo. “Super Mario” no es el culpable de nuestros males, aunque en el pecado lleva la penitencia, pues, ha vivido y muy bien de los excesos del mundo financiero especulativo. La responsabilidad del cambio está en cada uno de nosotros y en no caer en la demagogia fácil e infantil de aceptar el discurso maniqueo de banqueros malos y pueblo bueno. No es la sociedad la que se debe “empoderar”, es el individuo el que debe aprender a ser mayor y defender desde su propia actitud la nueva mentalidad de cambio que requiere Europa. Esa conciencia en el trabajo y en las empresas es la única que nos puede llevar a salir del laberinto y encontrar a nuestro propio Teseo capaz de matar por fin al Minotauro.

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New book: Next Europe

Posted by on 01/09/14

Next Europe – How the EU can survive in a world of tectonic shifts

After many months of interviewing, research and writing, I am happy to announce the launch of my fourth book: Next Europe.

It is already downloadable from Amazon, the Apple StoreGoogle BooksKobo BooksBruna and Smashwords. Other ebook stores will follow soon. 

Next Europe cover

Summary

The EU is in deep trouble. As the eurozone crisis keeps raging on, the European dream lies shattered on the ground. Euroscepticism and nationalism are on the rise, tens of millions are unemployed, Great Britain is heading for the exit door, while Russia flexes its muscles and the Middle East burns.

Is there any hopeful future for the European Union? Are we going to lose the race with the BRICS? Will Europeans ever truly engage with the EU institutes in Brussels?

Next Europe gives some compelling answers to the big questions of our time. EU Watcher Joop Hazenberg, a young Dutch writer who has been based in Brussels since early 2013, takes the reader on a venture across the globe to gain insight into the position of Europe in the 21st century.

His findings are surprising. The old continent is stronger and richer than we are inclined to think. Though the EU is in a mess, so is the rest of the world. Many of the rising giants will stumble and may even fall before they can do Europe harm. But it is also true that we are no longer the coolest dudes on the planet and that new (and old) dangers threaten our security and well-being.

Based on extensive research and interviews with leading experts, Next Europe soothes the unease that looms over our future. Joop Hazenberg also formulates a bold and strong agenda for reform of the EU. If we want to survive the coming age of uncertainty and tectonic shifts, then the European Union needs a restart. Not only in Brussels, but also in the capillaries of our society.

By acting now, Europe could become, once again, a leading continent. Next Europe is the starting point for a better understanding of our world, whether you are a student, Commission bureaucrat, a voter for UKIP or a Chinese businessman.

Praise for Next Europe

‘A spirited and courageous work’ – Jonathan Holslag, Professor of International Politics at the Free University in Brussels

‘Joop Hazenberg is a young thinker with the wisdom to realise that Europe has taken a wrong turn and the courage to want to change things’ – Philippe Legrain, author of European Spring: Why Our Economies and Politics are in a Mess and How to Put Them Right

Launch details

The official launch is in Brussels on Monday 22 September. I will hand over the ‘first copy’ to Constantijn van Oranje-Nassau, Head of Cabinet of Commissioner Kroes.

If you want to know more about the programme of the presentation or attending, please contact me.

I am also available for (media) interviews, lectures and panels.

 

European Council defies Ombudsman over rigging of EU Fiscal Pact

Posted by on 28/08/14

The European Ombudsman has strongly condemned the European Council for unscrupulously rigging the Irish referendum and parliamentary votes around the EU on the Fiscal Compact that controls the European economy. By withholding crucial documents, the European Council has deceived both the public and parliaments in Member States who passed the Pact as law. The Fiscal Compact is in reality an undemocratic Con-Trick. It violates basic principles of national and European democracy and law.

  • How can parliaments judge whether the Pact is fair, if the European Council hides the facts?
  • How can a referendum decide, if the European Council rigs the evidence?
  • How can the public interrogate their parliamentary representatives if the flawed legal basis for taxation and expenditure is locked away in the Council’s safe?
  • Can European institutions such as the Community’s civil service be exploited as a skivvy for the politicians’ own non-Community Pact?
  • The euro violates rules for a Community monetary system. Dishonest book-keeping and fraud reduced the Euro’s real value by 75 percent. Politicians refused to follow the Founding Fathers’ supranational economic and monetary principles.

The Pact makes Council the supervisor of fraud! After the Ombudsman condemned the European Council’s maladministration, the same document was requested AGAIN. The European Council again defied the Ombudsman. It refused to provide the document. A further appeal was made to the Ombudsman, Emily O’Reilly, that the European Council should respect her judgements and basic democratic principles.  The Ombudsman metaphorically threw up her hands. She confessed that the Ombudsman could do nothing to make the European Council follow the rules except the European Court of Justice.

She replied to me on 26 August 2014 that

‘I believe that a new inquiry into the Council’s recent refusal of disclosure would be repetitive, since there is no new element that would distinguish the new case of the one which I already inquired into. Moreover, the follow-up mentioned above (where the European Council again reiterated its own position) shows that the Council has no intention to change its position in this regard. It follows that a new inquiry into the same matters would, in all likelihood, lead to a new critical remark, which would neither be helpful to you, nor would trigger any positive follow-up from the Council.’

What is this crucial document? The European Council produced an analysis on the Pact’s flaws in terms of EU law. For European citizens it covered whether within the Pact they could take the Council and Commission to Court for abuse and criminality associated with it. That is a fundamental democratic right of all citizens. This key analysis is vital for understanding the basis on which the European Council is attempting to control the lives of 500 million citizens and multiple trillions of euros.

The document analyzing the insecure legal basis of the Fiscal Pact was circulated secretively to some EU delegations. It was never rendered public, in spite of national parliamentary debates and a referendum. Yet it is crucial for Europeans to protect the nascent European democracy that has been so abused by the European Council fraud in the past.

In this Pact the European Council gave itself unprecedented powers over national budgets and imposed controls and reviews on government spending. The measures were forced through national Parliaments. Some national leaders refused to sign up to the Fiscal Pact. Thus the Pact cannot be regarded as EU or Community law. At best it is an international agreement masquerading as European law. Obfuscation.

The Fiscal Pact measures are so radical and further distort the Community method for European democracy that referendums in all Member States should have been mandatory. Only one country, however, was able to force a referendum about this measure. That was Ireland. Its constitution requires such matters with major democratic consequences be subject to a vote. Other Member States railroaded the measure through their parliamentary system. A bare majority sufficed. There was minimal or no public debate about it. In Cyprus, which was hit by a euro banking disaster that shook the rickety foundations of the euro, it was passed simply by governmental Decree thus bypassing parliament.

The European Council’s imposition of the Fiscal Compact bypassed all the usual democratic control of the European system such as the European Parliament, the Economic and Social Committee and proper public debate, The European Council has consistently blocked the legally required elections for these bodies. In this case they just ignored them.

Are the Pact’s measures legal? Have Europeans lost their democratic rights? The Court has yet to pronounce.

Robert Schuman, the initiator of the European Community, defined democracy by the goals the European peoples define for themselves, not politicians. He said that all measures must be ‘in the service of Europeans and acting in agreement with the European peoples.‘ In this Pact, the people were left out of the loop in one of the most important measures in recent European history.

A key issue of this Pact is whether Europeans will be able to take legal action against politicians’ abuse or criminality spawned by these ‘closed door’ measures. Were the people consulted? No. Did they call for it? No. Did they agree? Hardly.

The European Council is acting to prevent democratic control of its new powers. Specifically it has thumbed its nose at the Ombudsman in refusing to release documents of primary interest. It did the same to the citizen who pay their salaries and the cost of the legal document in question.

Who are these people who are refusing democratic control over taxpayers money?

The Fiscal Compact was brought in because of corruption of politicians who not only overspent their countries’ budget, but used national budgets in voter bribes to sections of the public while giving ‘tax breaks’ to party supporters. Then they cooked the books. The national statistics were bent, twisted and contorted to cover the fraudulent activity.

If this had happened in a commercial company the perpetrators would now be in prison.

But they are politicians. Now they have a Pact that puts them in the judge’s seat.

 

Will the economic sanctions of US and the EU against Russia fail?

Posted by on 26/08/14
By Tyszecki The harsh economic sanctions against Russia demonstrated the unity of the European Union and the United States on the issue of stopping the bloody war, unleashed and supported by Russia, as well as their full support for Ukraine. The stakes are high...

New payment system SEPA – Germans do not like it

Posted by on 28/07/14

It’s only two weeks until SEPA is starting officially. The start has been postponed from beginning of this year. At that time, many companies hadn’t been prepared for the new system. Now, the vast majority (89 percent) have taken it „into account“. By SEPA europewide transfer of money is much easier due to standardization. German companies do not like the system as it in first instant means conversion costs but in the long run it will most probably work out – in May, already 90 percent of remittances have been done by using the new system.

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