Follow by Email

Sunday, October 1, 2017

Emmanuel Macron, the EU and --- Greece

French President Emmanuel Macron is the political star of the day. Many of those who, not long ago, predicted that the EU would eventually share the experience of the former USSR are now elated that there will soon be a strong EU on par as a power with the USA. Macron's wish list is remarkable:

I can see how countries like Greece will become enthusiastic when they read goals like "a bigger EU budget to fund investment and cushion economic shocks", "a guaranteed minimum wage adopted to each country", etc. My recommendation to Greece is: Beware of French bearing gifts!

In 2013, the provocative German author Henryk M. Border published a book titled "Die letzten Tage Europas: Wie wir eine gute Idee vernichten" ("The last days of the EU: How we are destroying a good idea"). Most of the causes behind anti-EU populism of today are explained in detail in this book, such as: a central bureaucratic authority, mostly self-appointed and with questionable democratic legitimacy; a central arrogance over concerns of nation states; a super-efficient central authority when it comes to minor issues and incompetent with larger issues; etc.

Anti-EU populists will not be carried away by new visions if these are not based on an honest and fair assessment of where the EU has been and where it is now; what has gone wrong along the way; which major mistakes need to be corrected and why. Anti-EU populists would remind Macron that it was a French president, the legendary Charles de Gaulle who had materially shaped European integration in his time, who was completely opposed to any European federalism and who created, in 1961, the vision of a "Europe of Nations". A vision of cooperation between governments with absolutely no loss of sovereignty and no supranational institutions. The standard answer that "today's challenges are too big for any one nation to solve on its own", however correct, will not be satisfactory to anti-EU populists. Anti-EU populists will question Macron what happened to one of the EU's major principles, the "subsidiarity principle".

Macron is the prototype product of French elitism, a truly outstanding product, for that matter. Ever since de Gaulle, French elitism has put French interests before any kind of European idealism. De Gaulle's conception of Europe was as a tool to improve France, i. e. an integrated Europe must be beneficial to France. Macron has yet to make the case that even though he is a product of French elitism, he has discarded the major elements which have shaped that elitism over decades. At this point, one cannot but share the suspicion that Macron is the most capable French elitist the country has ever produced and that he beautifully disguises French national interests behind a passionate pro-EU facade.

Macron's first major industrial policy decision was to nationalize France's biggest shipyard at St.-Nazaire rather than allow it to pass into Italian ownership. This was a classic de Gaulle move and not the move of a European visionary who wants to take the first opportunity to prove that he is willing to walk his talk. All the justifications about this only being a temporary move to allow time for a better deal and agreement to emerge notwithstanding.

Macron seems to have realized that de Gaulle's vision of France's being the supreme power in any European integration is no longer workable. He seems willing and intent to share that role with Germany. But what about the other 25 post-Brexit EU countries? Will those countries be happy to see a French-German cooperation treaty or will they feel threatened by it?

First calculations have suggested that the full implementation of Macron's wish list will require additional funding by member states in the order of 3-4% of national GDPs. Those are simply guestimates and should not be taken seriously, but still: 3-4% of GDP would translate into 5-6 BEUR for Greece at present, roughly the same amount which Greece currently receives from the EU as subsidies. Will Greece be prepared to re-allocate its EU subsidies to finance a vision of the EU?

In 2016, the controversial EU agricultural policy (CAP) amounted to slightly over 50 BEUR or 42% of the EU's budget (or more than the complete implementation of Macron's wish list according to first guestimates). The true test of an institution or policy is whether one would one would rationally decide to re-instal it if, for some reason, it disappeared overnight. Whether the CAP would pass that test is rather questionable. A true revolutionary proposal would have been for Macron to propose the elimination of CAP and to use the proceeds to finance his vision of the EU.

One of the great strengths of German federalism is that the federal state distributes its federal offices and institutions throughout its 16 states. A true revolutionary proposal would have been for Macron to propose something similar for the EU. Virtually every EU member could house an EU institution and the EU would no longer be equated with "Brussels".

The charity "My Europe 2100" presents a concise summary about Charles de Gaulle. Some excepts:

"De Gaulle played a major role in its implementation (Treaty of Rome) because he saw the European common market as a positive measure for the French economy. Similarly, he strongly defended the Common Agricultural Policy (CAP), implemented in 1962. He saw it as a very effective tool to modernize French agriculture. These subsidies to promote agriculture in member States, financed by all members of the EEC, benefited France particularly because of its enormous agricultural sector. Moreover, it was in this period that the modernization of the French agriculture began: mechanization and intensive farming were starting to materialize, but subsidies were necessary. All in all, the CAP served the interests of France, and that is why de Gaulle greatly favored it. This goes to show how he put French interests before any kind of European idealism. De Gaulle’s conception of Europe as a tool to improve France widely influenced the country’s position. For example, the massive rejection of European institutions and their decisions in France nowadays can be linked to the idea that being part of an integrated Europe must be beneficial to the country: if its benefits are not immediately apparent, then European integration must be given up or completely rethought ... De Gaulle was opposed to any kind of loss of sovereignty for France. He wanted it to be one of the great powers, and for that, independence was essential. This is why he advertised his conception of a “Europe of nations”, in which national governments would closely negotiate, but would never be forced to anything ...

Overall, Charles de Gaulle’s influence on Europe has been tremendous thanks to his popularity. His conviction that France was a great nation was, and still is, very popular in the country. As a result, his ideas about foreign policy remain highly respected and widely shared within France’s public and political elite."

Macron has yet to prove that while he may be the product of French elitism, he no longer shares the traditional parameters of that elitism. That while he is a child of that elitism, he has discarded its spirit. That his vision for Europe is not a disguise for pursuing French national interests.

A first step would be to revoke the nationalization of the shipyard at St.-Naziere.

Wednesday, September 27, 2017

WEF Competitiveness Report: Greece Ranked #87 out of #137

The World Economic Forum has come out with its Global Competitiveness Report 2017-2018. Greece ranks #87 out of #137 (#86 in the previous report). Ahead of Greece are peer countries like Portugal (#42), Slovenia (#48), Bulgaria (#49), Slovakia (#59), Romania (#68), Albania (#75), Montenegro (#77) and Serbia (#78). Also ahead of Greece are non-peer countries like Marocco, Ukraine, Guatemala or Botswana.

The 5 most problematic factors for doing business in Greece were listed as:

Tax rates
Inefficient government bureaucracy
Tax regulations
Policy instability
Government instability

Inflation was listed as the least problematic factor.

Thursday, September 7, 2017

Greek Land Registration Picking Up Steam Or Falling Behind?

I had first looked into the matter of Greek land registration in May of 2013 with the following article:

One reason why foreigners shy away from investing in Greece! - May 27, 2013

Then, 2 years ago, things seemed to get moving with Greek land registration and I wrote the following articles:

Cadastral registration under way in Greece! - October 14, 2015
Delayed Land Register (Cadastre) A "National Shame"? - October 19, 2015
The Mysteries Of Greek Land Registration - November 1, 2015

Since then, I had assumed that the project was progressing satisfactorily. Until I read this article in the German Handelsblatt. To summarize its key points:

* cadastral registration is complete for only 10.000 square Km, or 7,6% of Greece's land surface.
* only 26,4% of all ownership titles have so far been properly recorded.
* in the last 4 years, when allegedly land registration was a top priority, properly recorded ownership titles have only increased vom 20,1% to 26,4% of the total, i. e. not very substantial progress.

The source of this information is a letter which EU Commissioner Pierre Moscovici sent to a member of the European Parliament. Moscovici concludes the letter on a positive note: he expresses confidence that cadastral registry will be completed by the end of 2020, the original target date. Moscovici assures us that the date is manageable and that all efforts are being undertaken to meet the target.

As I concluded one of my earlier articles: I believe it when I see it.

Tuesday, September 5, 2017

Manufacturing Sector Starts Growing!

The latest report by IHS Markit about the Greek manufacturing sector has got to be the best news in ages! It says that:

* the Greek manufacturing sector growth, i. e. the Purchasing Managers Index (PMI), climbed to the highest level since August of 2008!
* it was bolstered by BOTH domestic and foreign demand!
* and the rate of jobs growth was the sharpest in over 17-1/2 years!

I am reminded of an article which a wrote 4 months ago, titled "The Gut Says: 'Greece Is On The Rebound!'"

Friday, August 25, 2017

Macron's Agenda For Visit To Greece

French President Emmanuel Macron will travel to Athens next month to send a message to fellow euro zone leaders about the need to strengthen the currency union, at a time when Greece is emerging from years of economic crisis, French officials said. “The idea is for France to be on Greece’s side to help this recovery,” an adviser to Macron said.

France has been on Greece's side for quite some time now. To be exact: since October 23, 2015, when the French Finance Minister Michel Sapin and his Greek counterpart Euclid Tsakalotos, in the presence of French President Francois Hollande and Greek Prime Minister Alexis Tsipras, signed a "Protocol between the Hellenic Republic and the French Republic For a Partnership for reforms in the Hellenic Republic." My reaction to this protocol at the time was that "France will modernize Greece."

Athens will certainly be a fitting place to announce the need for reforms of the Eurozone and of the EU altogether. Athens is an even more fitting place to make an interim check of all the reforms which Greece agreed with France to make only two years ago. The focus of the protocol was on the following areas:

Central administration reform
Tax reform
Privatization and public asset management

The protocol promised that "actions and relevant support, as well as clear a timetable of initiatives, will be defined and agreed between the Greek Authorities and the Reform Partner." The first step would be to check whether this was done. The second step would be to check compliance with the timetable of initiatives. Actually, the protocol promised that "the achievements of this Protocol will be reported twice a year to the two governments, by two senior civil servants, designated respectively by Greece and France."

If the above promises were kept in the last two years, they certainly received little or no attention in the media. Macron would provide an excellent public service if he brought the public up to date.

Sunday, August 20, 2017

SYRIZA's Definition Of Communism

Thanks to an article in KeepTalkingGreece, I now have an entirely new definition of what Communism was:

It seems to me that the Greek Justice Minister Stavros Kontonis, when making the above remark, overlooked the fact that it was Communism which destroyed the ideological trend coming out of Prague.

Wednesday, August 16, 2017

Voluntary Austerity?

The Ministry of Finance reported that for the period January-July 2017, the State's primary surplus (not to be confused with the General Government's primary surplus which includes the social security and local administrations and which is the basis for memoranda compliance) amounted to 3.053 MEUR. That was 12% higher than in the same period of 2016 AND 46% higher (!!!) than the 2.098 MEUR which had been the target. Hurrah?

Not really. State revenues were 2% below 2016 so that one would generally have expected a lower primary surplus. The opposite being the case, the answer is obvious: a significant limitation in expenses, i. e. austerity.

In 2016, State expenditures had been 29.755 MEUR. The target for 2017 had provided for an increase to 30.232 MEUR. In actual fact, State expenditures in 2017 were 'only' 28.663 MEUR, i. e. significantly below target and even lower than in the previous year.

Where did the State keep its expenditures below target? Grants to hospitals -199 MEUR, social solidarity income -99 MEUR, family allowances -60 MEUR, earmarked revenues -302 MEUR and public investments -522 MEUR.

By all considerations, the Greek State must be flush with cash: the year 2016 had closed with a budget surplus of 1,3 BEUR; there have been disbursements under the program; fresh funds were raised from markets; the State is not reducing arrears; etc.

In view of the above, it is difficult to understand why the State would voluntarily limit expenditures in such critical areas as hospitals, social solidarity and public investments below the levels provided for in the agreements with creditors. Voluntary austerity at times when creditors are being accused of imposing austerity?

Here are the figures published by the Ministry of Finance and here is the Ministry's commentary.