Fernando Fuster-Fabra's Blog

EUROPE’S UNION IN THE CROSSROADS: DO OR DIE

November 15, 2011
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Problems cannot be solved by the same level of thinking that created them.

–       Albert Einstein

 

 

 

 

Spanish version:  http://wp.me/pRlnf-4D

 

The G-20 Summit of world leaders was held in Cannes a few days ago. As expected, no decisions were taken to resolve the economic crisis that affects the stability of a great number of countries. Not a word was said about establishing restrictions to speculative abuses that crop up based on ratings of agencies prone to cause alarm with their presumptions. Assisting the summit were the principal European leaders representing the EU as well as Germany, France, Italy and United Kingdom as full-pledged members, with Spain and The Netherlands as guests.

Just a few miles away, in Brussels, the Greek crisis with a call for referendum warning and the forthcoming Italian tempest had been left unsolved. Today, the Greek crisis remains unsolved although Greece’s elected Prime Minister (Papandreou) has had to step down and a new one (Papademos) appointed in his place without any elections.  Something similar went on in Italy just a few hours ago, with the forced resignation of Berlusconi after the approval of the demanded reforms and the appointment of Monti to replace him.

Two new figures, not elected by their respective citizens, assume their respective tasks; technocrats, as they are called, but without analysing their close links to the financial structures that, in my opinion, have been the root of this entire regrettable situation. Lukas Papademos was Vice-President of the ECB from 2002 till 2008 when Jean Claude Trichet was President whilst Mario Monti not only was a European Commissioner but also a consultant of the notorious American bank, Goldman Sachs.

Furthermore, in November, the turnover at the ECB has also taken place, with an Italian, Mario Draghi, taking over the chair occupied by Trichet from 2003 till late October. He is another figure related to the bank (Goldman Sachs) that caused more than a single financial quake, amongst which it is worth mentioning its advisory role to the Greek Government in the times of the conservative, Kostas Karamanlis, precisely when the state accounts were falsified in the reports to Brussels.

The irony of this entire circus is that a legitimately elected Papandreou was forced out of office for calling a referendum to approve his proposals but no one has said a word about prosecuting neither Karamanlis nor Goldman Sachs por having intentionally lied, causing the domino effect on the weaker Eurozone economies.

Thus, not only has a chance been lost in Cannes to set up global regulating and supervisory measure of the larger banking entities as well as the rating agencies but also it has allowed a slow transfer of previous bank executives and personalities linked to these entities to occupy relevant posts in the hierarchical big-shots of the EU and in the government of its member states.

Likewise, the American stance has taken a 360 degree change from Pittsburgh to Cannes. With elections in 2012, Obama does not wish to risk any confrontation with potential donors for his campaign funds, amongst which we may mention the larger U.S. banks and the powerful Jewish lobby. He abandons Europe to its fate, above all because he does not share the curt German stance in some questions of procedure and timing. Not even the goodwill efforts of the French President and proud father of a baby girl served to ease the tense atmosphere. Furthermore, Obama is aware that in spite of the Euro crisis, the currency has a strong quotation, benefitting the U.S. Dollar and facilitating its exports to the Old Continent while decreasing European countries competitiveness in world trade.

What seems to have gone unnoticed in all this week of European tension after the Cannes summit is that Munich  prosecutors ordered a search in the Deutsche Bank offices in relation to the famous ‘Kirch affaire’. In spite of the death of communications magnate, Leo Kirch, the lawsuit against Deutsche Bank continues its course, with outgoing CEO, Josef Ackerman, in the midst of the storm. The matter must have been of such importance that Ackerman announced his decision not to seek the appointment to the bank’s presidency, a rather difficult manoeuvre after the German banking law reforms in 2009. Said reforms establish a two-year grace period before a former CEO can aspire to the presidential post of a bank, with the only exception that 25% of the stockholders so demanded.

Angela Merkel has covered many inside details of the decisions taken in relation with the German banking system between 2005 and 2011, as well as her personal pact with Gerhard Schröder, with regards such a vital issue as energy, disguised under the so-called ‘grand coalition’. Few are conscious of the of Merkel’s stubborn tenacity that has brought her from that membership in the communist youth movement in her younger years in the extinguished GDR to become ‘my girl’ for conservative, Helmut Kohl. Her rise to power came by pure chance after a scandal caused the downfall of Kohl’s chosen successor, Wolfgang Schäuble, actually the Economic Minister in Merkel’s cabinet.

Perhaps that is the reason that one has given due importance to the very recent announcement of the inauguration of start-up of Operation Nord Stream, the gas pipeline agreed upon between Russia and German, with the blessing of France, The Netherlands and United Kingdom. Said pipeline will go from Vyborg in Russia to Greifswald in Germany in a submarine line across the Baltic Sea. In Russia’s behalf the participations is headed by state-owned Gazprom as natural gas supplier and Nord Stream AG, a German enterprise has been set up to handle constructions and operations. It is interesting to observe that former Prime Minister Schröeder has been involved in the Nord Stream project and with Gazprom since December, 2005, roughly a month after stepping down in favour of Angela Merkel.   

What makes this affair even uglier is the fact that the powerful EU members will share the spoils of Russian gas without sharing a bit with other Baltic member states, namely – Poland, Estonia, Lithuania and Latvia – nor seem to have offered a gas link to the Scandinavian states for the moment. Nevertheless, said gas will indeed go across the English Channel to the United Kingdom.

This project is contrary to the interest of the pan-European Nabucco project which had set the goal of constructing a gas pipeline from Erzurum in Turkey to Baumgarten in Austria, precisely with the intention of breaking EU dependence on Russian gas supply. The problems generated with Gazprom gas supply through Ukraine have left Central Europe and Italy without a reliable supply in more than one occasion whilst Turkey had offered its facilities in a sign of goodwill in its bid to join the EU. Germany has again vetoed a state that has been accumulating more merits to join the EU than some who already are in.

With partners who demand from the south sacrifices but will not share the favourable agreements with other non-EU states, it is no wonder that the Union of 27, each day, is turning into a more difficult endeavour.  In addition, those who impose the terms & conditions interpret the Stability & Growth Pact in such a manner as to oblige members to apply solutions thought out in conventional terms, in precisely the same line as those that created the problem.

Whilst our present-century ‘Medea’ is bossing around in Europe, the route travelled will be the wrong one and the estrangement amongst members each day larger.  How much must we wait before Merkel is sent into exile?     

Fernando Fuster-Fabra

Barcelona, Spain     

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G-20, SEOUL: MEETING OF QUESTIONED LEADERS

November 12, 2010
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Versión en español:  http://wp.me/pRlnf-1I


A series of meetings commenced in Seoul on Thursday evening amongst the countries that are considered to command the developed and emerging economies of the world. In this their fifth meet after the burst of the financial crisis, the countries belonging to the so-called G-20 Group plus some invited nations (Spain amongst them), shall try to reach an agreement.

 

What agreement must they reach?

 

In previous sessions, measures were adopted but almost none have been carried forward to full extent. Amongst such agreements were: the ‘re-foundation of capitalism’ or ‘strict regulations to curtail banking abuses’, to mention but a few of the numerous good-will statements that have ended in nowhere.

 

Con June 23rd., I wrote that the G-20 meet of Toronto   http://wp.me/pv6EY-4T was the last chance the leaders had to see the crisis from another angle. I reaffirm my previous statement. In the almost six months that have elapsed, world leaders have suffered a loss which makes them less credible than when they commenced to be a group of twenty bent to convert themselves into the new impulsive force of the world economy.

 

U.S. President Barack Obama has long shed his buoyant Nobel Peace Award to suffer his first relevant electoral defeat in the last mid-term elections.

France’s President Nicholas Sarkozy is undergoing is lowest ebb in popularity after a flood of strikes against his retirement age reforms, just as he is about to take over the G-20 rotating presidency. Precisely, he is the leader that so arrogantly announced during the Washington, D.C. summit in December 2008 the ‘re-foundation of capitalism’.

 

The German Chancellor, Angela Merkel, virtual winner in the UE arenas with her imposition of part of her criteria on budget deficit cutbacks and regulation measures on EU members’ non-compliance, is not more credible after several electoral defeats and the doubts arisen from her change of views in political affairs such as tax cuts and nuclear power plants closures.

 

Novell British Prime Minister, David Cameron, after some protocol misstep in his visit to China on the way to Seoul, has suffered his first student revolt in absentia whereby the younger Britons acted in a manner not seen since the times of his venerated mentor, Margaret Thatcher.

 

Needless to say that the Italian Prime Minister, Silvio Berlusconi, is not only subjected to an ethical scrutiny of his sexual misdoings but likewise has been practically abandoned to his fate by his parliamentarian supporter to date, the ultra-conservative leader, Gianfranco Fini.

Russian President Dmitri Medvédev still has the shadow cast by his mentor and actual prime minister, Vladimir Putin; a shadow that chases him every step he takes, without knowing who will finally be Russia´s new czar of this millennium.

 

Naoto Kan, Japan’s Prime Minister, had hardly landed when the last G-20 meet was held and no relevant role can be accounted him thus far in the search of a solution of the international crisis. He has enough with trying to keep himself in office longer than his predecessor who resigned after 8 months.

 

The last G-20 host, Canadian Prime Minister Stephen Harper did not obtain a definite final communiqué in the June G-20 summit; hence the widening breach in various fronts that have led to the so-called ‘currency war’ at present. The threat of a G-2 mentioned in June is now a currency war between two adversaries, the USA & china, which brings the world back to the brink of another profound crisis.

 

The aforementioned leaders make up the original G-7 which with Russia added was converted to the G-8. Furthermore, the European Union was given a seat in the G-8 and likewise representation in the expanded G-20. These are the directors, up till the recognition of the G-20 as possible substitute forum, of the destiny of the world economy.

 

The G-20 has given more importance to the emerging powers, of which China, India & Brazil are worth emphasising. In fact, some of their objections to G-7 veteran member stances obliged these to reorient their postures in the last meets of this new economic forum. Furthermore, the emerging members have made their presence known in other forums, some of quite a bit of importance, such as the Doha Round con international trade & commerce and the summits on climate change & environment, the latest held in Copenhagen with a forthcoming event in the next few days at Cancun.

 

The world problem cannot be limited to economic issues and the policies in budget cutbacks but rather should be visualized from another angle based on globalised commercial interaction towards a more balanced distribution of wealth in the framework of sustainable development that doesn’t exterminate or planet nor put an end to its inhabitants’ liberties and social well-being.

 

And such lack of will to descend from their power-seats to see the problem from another angle is putting these questioned leaders at a stalemate, without any capacity to react much less to act correctly.

 

 

Fernando Fuster-Fabra Fdz.

Observer of Human Behaviour

 

 

 

 

 

 

 

 


OBAMA AFTER G-8 / G-20 CANADIAN RENDEZVOUS

July 5, 2010
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Seventeen months after taking oath of office and three G-20 summits held since then, President Obama must review his track record on international achievements thus far.

Whilst Obama’s first year was loaded with international engagements that culminated in a Peace Nobel Award, 2010 has been mainly centred on a domestic agenda laden with Republican rebuffs and unsavoury surprises on the home front. This may have been initially essential to curtail far too rapid popularity erosion and possible Democratic defeats in the forthcoming congressional elections in November but became even more demanding after the BP oil spill in the Gulf of Mexico with incalculable impact on the US coastline.

A week after the latest international G-8 & G-20 summits in Canada and coinciding with the traditional 4th of July celebrations, Gulf Coast beaches were solitary scenes on an otherwise jam-packed day. The fireworks on such a relevant day for the United States were not limited to the evening sky glitters nationwide but to a series of worrying issues both on the home front as well as abroad.

In the local scene, unemployment hit a 10% record figure which if properly considered would stand for as much as 16.5% seeking a job in the 50-star nation. Temporary jobs created by the Administration over the last months to undertake the census were not enough as private entrepreneurs languished with a lack of steady job offers. Consumption isn’t at its best, not even with the 4th of July festivities on the going. America is immersed in a serious economic crisis that may not go away so easily and end, as Krugman predicts, in another Great Depression.

What really is worrying is that Obama has stood alone in the last G-20 meet and one of its staunch allies in the G-8 & G-20, Great Britain, is now in the limelight due to the British Petroleum fiasco in the Gulf of Mexico and Cameron’s insistence in totally withdrawing U.K. troops from Afghanistan by 2015. Tension was added by Britons’ demand for stronger actions by the U.K. cabinet in defence of BP, to avoid its shares plummeting further due to the Gulf of Mexico rig spill. Will Obama finally kick someone’s ass or is he going to take a beating himself?

G-20 silence on Israel’s undaunted policy of striking first as a defence measure, mainly backed by U.S. permissiveness while condemning Iran and North Korea leaves an unsavoury taste for freedom-lovers around the world. No matter what are a nation’s alliances, any world leader must have the stamina to demand its ally to fulfil international agreements towards peaceful coexistence. The United States has thus far consented Israel too many whims to honestly stand out as a firm defender of human rights and democracy. This situation is further aggravated if one considers that Barack Obama accepted the Nobel Peace Award in 2009.

Has the concern for domestic issues blurred Obama’s vision of the international front loaded with unresolved conflicts or is he being forced by American issues and K-Street lobbies to give leeway in such matters as the closure of Guantanamo, the unstable Iraq regime, the war in Afghanistan or the Israeli-Palestinian endless confrontation?

On the other hand, Obama may have decided to make a strategic halt to assess where he stands today after his solitary stand at the G-20 summit. If he decides for a G-2 push, his best bet as a partner would be the European Union with a carefully planned diplomatic action amongst the less conceited and more reliable members instead of the usual partners. It’s Obama’s turn to move a piece on the international chessboard. The world is watching.

Fernando Fuster-Fabra

Barcelona


WORLD TRADE & ECONOMY JIGSAW PUZZLE: THE EXPLOSIVE G-2 FORMULA

February 28, 2010
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President Obama’s visit to China last November hastily coined a new economic axis, G-2, in U.S. and international economic circles. The results of the Copenhagen Climate Change Conference (https://fernandofusterfabra.wordpress.com/2009/12/20/obama-after-copenhagen/) a few weeks later seemed to confirm closer ties between two world powers with different goals. I for one was totally convinced that the Chinese theatre show would be short lived.

World trade events involving the U.S.A. & China in the last quarter have tensed relations. However, bilateral commercial relations have not been the only point of confrontation that has lit the red-light alert in the growing risk of rupture. U.S. arms sale to Taiwan and the Dalai Lama’s private visit to the White House have served to ignite the already heated atmosphere.

There are two main points that oblige the Obama Administration to watch their step in their relations with China :-

  1. The Iran nuclear dilemma
  2. China’s hold on U.S. public bonds

Let me analyse each item and the impressions said issues cause in other scenarios such as the European Union.

The Iran Nuclear Dilemma

The international scenario on nuclear development is supposedly supervised by the United Nations through its IAEA; such situation implies that the five U.N. members (China, France, Russia, United Kingdom & U.S.A.) with veto power in the Security Council have final say on sanctions and nuclear power control. Having convinced Russia to back U.S. demands on Iran, China is the only veto bloc power that could frustrate U.N. Security Council resolutions against Iran’s uncontrolled uranium enrichment scheme.

Being aware of its strategic vote, China has the Obama Administration in a rather awkward position. No words are required whilst China picks the flower dilly dallying on the issue.

China’s hold on U.S. public bonds

China may have as much as 20% of U.S. long-term bonds. A recent move to sell part of its holdings just as commercial hassle on Chinese products imported into the U.S.A., was but a warning of what China could do to effectively harm the still shaky U.S. economy. Furthermore, China has refused to revalue its Yuan, in order to rebalance U.S.-China import-export trade flow.

In this rather inflamed setting, American economic policies seem predestined to toe a soft-line where China is concerned. Nevertheless, President Obama’s bet on a G-2 axis to trigger a global world economic recovery is destined to fail. Moreover, if the U.S. Administration has still any hopes of soothing their Chinese counterparts with light concessions, it then becomes evident that the Obama team knows very little about Chinese Machiavelli-style use of time to wear off their adversaries.

Instead of a G-2 with this unreliable undemocratic commercial partner, the Obama Administration has to bend back to envision a more solid panorama where the other partner lies across the Atlantic Ocean, a natural partner for free-trade, economic sustainable growth, democracy and peace.

Fernando Fuster-Fabra, Madrid


EUROPEAN UNION: FIRST SIX MONTHS OF LISBON TREATY & SPANISH PRESIDENCY

January 20, 2010
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Today, Spain’s Prime Minister, José Luis Rodríguez Zapatero, presented the objectives of the EU’s first semester within the scope of the recently ratified Lisbon Treaty. His extemporaneous speech before the European Parliament was centred on the economic crisis but his explanations went on to indicate his inclination towards social policymaking.

Just a few weeks back, Rodríguez Zapatero went under fire in U.K. newspapers (The Financial Times & The Economist), seconded by Murdoch’s Wall Street Journal. Whilst the WSJ editorials are tinted by the ultra-conservative influence of no less than Murdoch’s Spanish Sancho Panza, in the person of Spain’s former Prime Minister José Mª Aznar, those written by British economic experts went beyond the limits of journalistic competence in questioning Zapatero’s capabilities in a sarcastic comparison to popular British TV character, Mr. Bean.

In its fourth rotating mandate, Spain has so far lived up to expectations, with important European milestones set in each one of its presidential semesters. With a clear all-out support of the EEC, later the EU, Spain has earned its entry into the European club and has there onward led some initiatives which other members, like the United Kingdom for one, have yet to set into their agendas.

This semester is too important for the 27-Member Union to waste words in sarcasm and destructive criticism, more so when the United Kingdom has undermined EU unifying efforts in too many occasions.

As an expert in EU relations, the underlying motive of such mocking comments is certain resentment towards Spain far beyond the political scene and more focused on Spanish corporations taking over numerous British enterprises in the last few years, to name a few – Banco Santander and Iberdrola.

In spite of Spain’s high unemployment rate at the present time, never has the U.K. generated as much jobs as Spain has in the years before the outbreak of the worldwide financial crisis nor has it contained its public deficit to have Spain’s five-year surplus. In fact, Tony Blair’s apparent economic miracle was partly a well-designed accounting reengineering by no less than Gordon Brown, as narrated in detail in the book – Fantasy Island.

Furthermore, Brown’s government has again manipulated figures in order to hide from EU scrutiny state subsidies to British banks in violation of European Commission regulations. Whereas Spain has not nationalised a single bank, the U.K. has both subsidized illegally and nationalised bankrupt entities. Whilst Spain has an exemplary supervision of financial entities the U.K.’s banking system is a free-for-all that allows quite a few irregularities.

The British economy has a full decade ahead before it can say it is out of the rut even if stats show that recession may have come to an end in 2009’s last quarter. What these financial newspapers seem to forget is that whilst Spain now lingers in unemployment, its growth potential in new technologies (solar & wind energy) and innovative activities (electric cars) with renewed immigrant labour forces will launch Spain into a new cycle of competitive businesses. What has been known as the financial crisis is greatly accountable to the uncontrolled business in Wall Street and The City. All risky financial gimmicks launched by the American & British banks have brought us to where we are.

Likewise, the British press seems to resent Obama’s chummy attitude towards Spain’s Prime Minister in detriment of Gordon’s declining role. Should the Tories take over next May, 10 Downing Street may still drift further away from The White House.

Spain has a challenge to reemploy its workers but the United Kingdom has a greater challenge – to start admitting they are no longer an empire.

It’s best these newspapers think twice their words before going to press. I’ll be watching in 2020 where the United Kingdom is to be compared to an environmental conscious businesslike Spain in this coming decade.

Fernando Fuster-Fabra, Madrid


GENERAL MOTOR’S CHAPTER 11 – THE FADED AMERICAN DREAM

June 2, 2009
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 President Obama’s June 1st. deadline failed to force GMC’s creditors into a negotiated solution to avoid bankruptcy. The world champions of free-trade once more had to step down from traditionally a liberal stance on private enterprise to solemnly announce government intervention in yet another private stock-exchange quoted corporation.

Obama GM 

Previous negotiations to ease off the financial strain by getting rid of GMC’s European operations reached a tentative agreement to sell out to MAGNA STEYR, the Canadian-Austrian car parts manufacturer.  Concentrated in the GM Europe group with factories in Germany, France, Belgium, Spain, United Kingdom, Poland, Sweden & Russia producing European brands such as OPEL, SAAB & VAUXHALL and distributing American models and Korean-produced DAEWOO (sold as CHEVROLET), the European GM operations involved roughly 1/5 of its total 250.000 worldwide workforce.

 Assuming the EU’s intervention headed by Germany and its four affected Länders, the GMC crisis is far from a realistic solution. The Obama Administration failure to convince creditors, a large number of which are bond-holders, has forced the 60% takeover solution with an enormous disbursement from the U.S. public budget. It must be remembered that such funding was not only applied to the CHRYSLER crisis which may finally have a less tragic ending should Italy’s FIAT merger plan succeed, but also in the still quaky banking insolvency mess.

 GM stop

GMC has finally bowed down to what I pointed out as the fatal error of not applying Deming’s TQM which ended in TOYOTA’s factories instead. Ever since then, the U.S. automotive industry has slowed down to finally lag behind their Japanese competitors. Even efforts to participate in Asian operations such as was the case of GMC’s DAEWOO takeover in 2002 was insufficient to change the American giant’s TQM and strategic management philosophy.

 Chapter 11 for one of the American Dream’s hallmarks must prove shocking for most U.S. citizens to have been taught that such brands as CADILLAC or COCA-COLA are truly American contributions to the rest of the world.

 President Obama has indeed arrived as times required enormous changes not only to face up to economic crisis but also for the average American citizen to understand that the United States of America is a great nation that needs to examine its most elemental beliefs. Only then will the majority understand that the New Millennium has brought about something more than the tragic 9-11 that shook American society into crude reality. ¿Will “The Establishment” anchored in Washington D.C.’s powerful halls and lobbies let Obama play his cards? I wonder.

us_capitol star 

Madrid, June 2, 2009 


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