ISSUE 1-2019 / YEAR 22nd - PRICE 5,00 € / $6,00
www.europeanbusinessreview.eu
THE WORLD
OPINION
CHINA’S INTERESTING FUTURE, IN 2019 BREXIT, ASIA AND THE INCREASED LURE OF EUROPE
SPECIAL REPORT
BUSINESS IS CHANGING. WHAT BRINGS THE FUTURE?
THE WORLD
US DEMOCRATS ARE GOING ‘SOCIALIST’. A REVIEW | 1 BOONEUROPEAN FOR BUSINESS TRUMP?
2 | EUROPEAN BUSINESS REVIEW
INDEX Founder
Konstantinos C. Trikoukis Chairman
Athanase Papandropoulos
8 EDITORIAL
14 OPINION
Publisher
A pall has descended over the global economy…
Turkey and the West: What to Expect in 2019?
20 EU AFFAIRS
24 THE WORLD
Why the Berlaymont will want to cosy up to the Kremlin
10 predictions for the global economy in 2019
30 THE WORLD
32 SPECIAL REPORT
US Democrats are going ‘socialist’. A boon for Trump?
Business is changing. What brings the future?
56 EU AFFAIRS
62 EXTRAIT DE CULTURE
Christos K. Trikoukis Editor in Chief
N. Peter Kramer Editorial Consultant
Anthi Louka Trikouki Issue Contributors
Shada Islam, Janos Amman, Marc Pierini, Judy Dempsey, Giles Merritt, Tom Clifford, Nariman Behravesh, Alexandra Papaisidorou, Stephane Kasriel, Dimitris Panopoulos, Radu Magdin, Nikos Kostopoulos, Rich Lesser, Martin Reeves, Kevin Whitaker, Hans Izaak Kriek, Jurgen Habermas Correspondents
Brussels, London, New York, Paris, Berlin, Istanbul, Athens, Helsinki, Rome, Prague Communications Director Alexandra Papaisidorou Advertising
Marianna Panoutsopoulou Business Development John G. Tragkas Published by:
EMG STRATEGIC CONSULTING LTD. 19 Leyden Street, E1 7LE London, United Kingdom www.emgcommunications.co.uk
ISSUE 1-2019 / JAN. - MAR. 2019, YEAR 21st Published bimonthly under the license of Christos K. Trikoukis. European Business Review trademark is a property of Christos K. Trikoukis. European Business Review is strictly copyrighted and all rights are reserved. Reproduction without official permission of the publisher is strictly forbidden. Every case is taken in compiling the contents of that magazine, but we assume no responsibility for the affects arising therefrom. The views expressed are not necessarily those of the publisher nor of the European Business Review magazine.
“New” Perspectives For Europe
‘Art makes you humble and patient. It brings me fulfillment’
For previous editions archive and up-to-date information on major topics and events you may visit our website http://www.europeanbusinessreview.eu EUROPEAN BUSINESS REVIEW | 3
4 | EUROPEAN BUSINESS REVIEW
EUROPEAN BUSINESS REVIEW | 5
6 | EUROPEAN BUSINESS REVIEW
EUROPEAN BUSINESS REVIEW | 7
EDITORIAL
By N. Peter Kramer, Editor-in-chief EBR
Sombre perspectives for the European establishment The elections for the European Parliament are no longer far away: May 23 till 29. In the media, you can read that these elections will be crucial for the future of the European Union. But, the point is, do the EU citizens think so? Are they interested enough in the EU, and in the European Parliament particularly, to vote? The turnout at the last EP elections in 2014, showed that in 15 of the 28 member states the figures were below the EU average of 42,61%. The lowest scores were to be found in Slovakia (13,05%) and the Czech Republic (18,20%). But also France, The Netherlands, Finland and the UK (!) stayed below this average, which was in turn lower than for the previous 2009 elections. The picture becomes even worse knowing that the figures are distorted upwards by the legal obligation to vote in some member states. But there seems to be hope for the Europhiles, albeit an uneasy one. In ‘Brussels’ the expectation is for an upward trend for euro-critical and anti-european parties in many of the member states. For example, it is possible that Marie Le Pen wins more votes in France than Eurostar Macron. On the other hand, this trend could influence the turnout of voters in a positive way. Probably not quite what the unconditional pro-european establishment is dreaming of. The perspectives for the mainstream parties look sombre. At the end of February the EP published opinion polls showing a significant increase of EP seats for the euro-critical and anti-european parties, with the Christian-Democratic EPP as the big loser - the reason EPP leader Manfred Weber is going through hoops to try to keep, against the will of many of his party members, the ‘dissident’ Orban on board. The Hungarian accounts for at least 13 EP seats. Anyhow, if the turnout in May this year proves to be lower again, maybe it is time to table the question of the legitimacy of the European Parliament. And why not start by declaring that EU politicians in Brussels must stop continually touting that they are working for the good of EU citizens. More than 55% of whom did not give any Member of the EP the right to represent them!
8 | EUROPEAN BUSINESS REVIEW
EDITORIAL
EUROPEAN BUSINESS REVIEW | 9
Brexit, Asia and the increased lure of Europe The world is watching Brexit – and concern over Britain’s uncertain future is sharp in Asia. Asian leaders and businesses are uneasy over Brexit chaos and as they wait and worry many are moving fast to reinforce ties with an increasingly attractive Europe by Shada Islam*
T
he world is watching Brexit – and concern over Britain’s uncertain future is sharp in Asia.Asian leaders and businesses are uneasy over Brexit chaos and as they wait and worry many are moving fast to reinforce ties with an increasingly attractive Europe.Asian consternation over Brexit is not surprising. Governments and companies in the region have long leveraged their historical ties with Britain to get ahead in the European Union. Asian diasporas wield strong influence in British politics, business and society. Asian students traditionally head to British schools and universities. London is every Asian millionaire’s preferred destination. The strong ties prompted initial claims by Leavers that Asian nations would be lining up to do quick trade deals with post-Brexit Britain. It hasn’t turned out quite that way. Instead, Brexit appears to have spurred Asia and
10 | EUROPEAN BUSINESS REVIEW
Europe to take a fresh look at each other. Since they appear to like what they see, Europe-Asia relations have a strong wind in their sails. The year ahead holds promise for bilateral ties between the EU and Asian countries and joint efforts to tackle global challenges. That, at least, is the plan. Take Japan. The EU and Japan opened talks on a free trade agreement about five years ago but discussions only really picked up when US President Donald Trump started upending the global trading system. Brexit also shocked Japanese businesses which had invested heavily in Britain, partially as a gateway to Europe. Suddenly, last year at record speed, the EU and Japan signed up for a trade deal which will come into effect in a few days, creating an open trading zone of almost 600 million people. This will go hand in hand with implementa-
OPINION
tion of parts of the EU’s broader Strategic Partnership Agreement with Japan, a deal which includes plans for enhanced security cooperation. There’s also China. Unwilling to be drawn into the US-China trade and tech war, the EU is charting its own course for working with Beijing. This involves being tough on demanding improved access to Chinese markets, screening Chinese investments in Europe, but also expanding ties in areas of mutual interest, including climate change, urbanisation and Iran. ASEAN is upping its game in Europe, as EU and ASEAN foreign ministers met in Brussels in January to signal they are ready for a strategic partnership and negotiation of an EU-ASEAN free trade agreement. The latter isn’t going to be easy given the array of irritants in EU-ASEAN trade.
the basis of new EU proposals on governance, sustainability and transparency. The need for more and better connectivity, especially for infrastructure, is universally recognised. And while it gets the most attention because of the amount of money involved, China’s Belt and Road Initiative isn’t the only connectivity show in town. Others, including ASEAN, have been in the game for many more years. Japan, India and Europe have a similar interest in increasing connectivity. But all these projects operate under different rules and standards, leaving many countries confused and unsure.
Moreover, Asia and the EU should join forces to implement Agenda 2030, with a special focus on eliminating inequality through an intensified focus on women’s empowerment especially through the education of girls.Finally, Europe and Asian countries should pay more attention to ASEM, the platform for Asia-Europe Meetings, set Brexit appears to have spurred up in 1996 to enhance bilatAsia and Europe to take a fresh eral relations. The successful ASEM summit held in Brussels look at each other. Since they in October 2018 is testimony appear to like what they see, to the fact that the forum is Europe-Asia relations have a increasingly relevant given strong wind in their sails. The year current geopolitical transforahead holds promise for bilateral mations. Interestingly, while “Eurasia” is not mentioned, ties between the EU and Asian ASEM contact is proof of incountries and joint efforts to tackle creased integration and conglobal challenges. nections between the two regions.
There’s more: South Korea was first on the block to get a free trade deal with the EU several years ago and talks on similar agreements are ongoing with Australia and New Zealand. Which brings us to India, arguably the most challenging of all of Europe’s Asian partners. A new EU strategy on India released last year spotlights the EU’s increased interest in India and aspirations for stronger cooperation. Although the EU blueprint does not say so, EU-India relations have stagnated for more than a decade over provisions of a Bilateral Trade and Investment Agreement which both sides say they want, but can’t agree on. In order to get EU-India cooperation off the ground, Brussels and Delhi must take the difficult decision to ditch the trade deal and focus on at least securing an investment agreement.
So where does that leave us in terms of Europe-Asia relations? There are multiple avenues for walking the talk on cooperation.First, Asia and Europe must start serious discussions on reforming global governance. Trump’s retreat from America’s international commitments has dealt a strong blow to the multilateral rulesbased order.But Europe can work with Asian countries – like and unlike-minded – to salvage and reform parts of the multilateral system which have served everyone so well for the last 70 years, including the World Trade Organisation and, specifically, its Appellate Body and the Dispute Settlement Mechanism. Constructive proposals proposed by the EU could form the basis of a revamped and more inclusive global trade system. Efforts should also be made to multilateralise ongoing national and regional discussions on connectivity on
The suggestions above are by no means exhaustive. Enhanced EU-Asian cooperation will require a change in mindsets in both regions. Old-fashioned and outdated concepts and stereotyping will have to change on both sides, replaced by a new, more inclusive approach.There will have to be uncomfortable compromises, more give and take, more listening to each other, less talking past each other. Coalitions will be built more around shared interests despite disagreements over values. Brexit and Trump are not the only reason for the re-ordering of Asia-Europe relations although in most cases, they have certainly accelerated the process. Headwinds lie ahead as both regions brace for upcoming elections and possible leadership changes. For economic and geopolitical reasons, however, it would be wise to stay the course.
*Shada Islam is Director of Europe & Geopolitics at Friends of Europe
EUROPEAN BUSINESS REVIEW | 11
The fight for liberal democracy can only be won on the offensive It has become common to take the growing power of populists in European countries as a sign of the European Union’s declining political viability. by Janos Amman*
I
would argue to the contrary and say that it is a sign of how European politics in Europe have become. Encounters of European politicians that used to be rather technocratic and diplomatic in nature are being politicised. When the Austrian Chancellor Sebastian Kurz visited the German Minister of the Interior Horst Seehofer, this was not diplomacy between Austria and Germany but two European politicians building a political alliance. When Austrian Vice-Chancellor Heinz-Christian Strache met Italian Deputy Prime Minister Matteo Salvini, we witnessed not a diplomatic exchange of interests between two states but a declaration of solidarity from the European populist coalition. When Marine Le Pen, Nigel Farage, Geert Wilders and others congratulate Hungarian Prime Minister Viktor Orban on his election victory, we hear the same full-throated proclamation from the populist coalition.
12 | EUROPEAN BUSINESS REVIEW
It is a confederation of like-minded and well-connected politicians who support each other in their respective campaigns, share strategies and use the same narratives. The danger is not that populists might make politics less European but that populists have become better than any other political force at communicating a potential political agenda for a European future. We do not have to fear that Europe might come to matter less, but that liberal democracy and the rule of law might become less appealing. If we are committed to saving democracy and the rule of law in Europe, we should look to two important populist strategies for inspiration. First, we need a vision of Europe that acknowledges public dissatisfaction with the status quo and demonstrates a clear departure from our current course. Populists sell voters a prom-
OPINION
ise of a return to the “Europe of fatherlands” that they believe existed before the EU. They envision a European political arena defined by self-sufficient, independent nations dominated by a purely Christian culture and unrestrained by international laws and norms in their pursuits of national glory. Too often, established political forces simply unpassionately dismiss this vision as unrealistic or state that Europeans profit from bureaucratic flagships projects, like the single market, that epitomise the status quo. Although this response is closer to the truth than the populists’ proposition, it is nowhere near as powerful due to its lack of emotion and vision. Moreover, it is intellectually lazy to argue that the status quo is good just because it is better than an unrealistic, nationalist version of Europe. The status quo is not good enough. If it was sufficient, we would not have to write articles like this one, worrying about the decline of liberal democracy. We have to put forward our own vision of a democratic Europe, rooted in the rule of law, committed to providing opportunities to its citizenry, ambitious in its approach to the big issues of today and striving to be an example of human progress. As long as the status quo does not provide this, it is on us to criticise and propose changes to the status quo. The fight for Europe can only be won on the offensive.Second, we need to identify and unite against those that stand in opposition of these objectives and values. I do not mean just the populists by this. Dictatorships are increasingly challenging liberal democracy across the globe. The Chinese regime is building a dystopian digital dictatorship that is amassing power at great speed. The Russian regime violates the foundations of the international rules-based border through its military interventions in Ukraine and Syria, as well as by conducting misinformation cam-
paigns against democracies that aim to undermine the informed political discourse central to the success of democracy. Uniting against these adversaries is essential for the survival of liberal democracy. These actions would also provide a counter-narrative to the populists who have been propelled into positions of influence by mobilising constituencies against allegedly illiberal migrants. Additionally, while the politics of us versus them is dangerous, they are actual threats to liberal democracy. If we hesitate to talk about and confront them, we stay vulnerable to these threats and leave one of the most important areas of public discussion, namely “who is our adversary?”, open for the populists to define at their discretion.Both strategies are probably counterintuitive to established politicians that have grown up, politically, in the belief that there were no real adversaries to liberal democracy anymore and that the essential questions of our times were technocratic, rather than political, in nature. Liberal democracy will have to be strengthened by a new generation. Considering myself a part of this new generation, I propose we fight for a truly democratic and federal Europe with a real European government. Let’s advance towards a federal Europe that has all the military capabilities to defend itself against its adversaries, but sources its power from its ability to outshine its adversaries due to the opportunities it provides to people irrespective of their origin, gender, belief or wealth. One might say that this is a distant vision and this might be true. However, it is a lot likelier to work out well for Europeans than a divided Europe of populist nation-states. *Janos Amman is a member of the Board at the political movement Operation Libero
EUROPEAN BUSINESS REVIEW | 13
Turkey and the West: What to Expect in 2019? by Marc Pierini*
A
dispassionate look at the relationship between Turkey and its traditional Western allies reveals that economic, defense, and counterterrorism issues will dominate their mutual agenda in 2019.Four big issues will dominate this agenda. The net result is growing uncertainty about the country’s reliability among its Western allies.In the end, much will depend on what will be left of liberties and democracy in Turkey and whether Ankara’s leadership will feel comfortable permanently balancing its newly acquired illiberal friendships with its traditional Western affiliations. The first thing to watch is the economy. After years of robust economic growth under AKP rule, Turkey is sailing in turbulent waters. First, it remains a structural deficit country with low savings, limited natural resources, and high dependence on Russia and Iran for gas supplies.Second, its trade performance and foreign direct investment inflows (74 percent of which are provided by the European Union) are largely dependent on the EU. The country is therefore also heavily reliant on the EU’s economic health and the mutual political relationship.Third, the concentration of economic powers in the hands of the president makes Turkey even more fragile. Already during the summer of 2018, the country narrowly avoided a major currency crisis largely due to presidential interference with the Central Bank’s independence. Now, the trend is being reinforced: on January 15, parliament granted the president extensive emergency powers in case of a new financial crisis. It
14 | EUROPEAN BUSINESS REVIEW
also created a “Financial Stability and Development Committee,” again headed by the head of state.Financial markets and foreign investors can only be worried by such developments. Turkey’s economy has now fallen under autocratic rule. It will therefore continue to be dependent on unconventional interest rate policies—with the president insisting on zero or low rates as a matter of Islamic practice—and will be even more under the influence of the leadership’s unchallenged views. The penchant for mega-infrastructure projects as a matter of prestige will remain.The bottom line, however, is a simple one: the European Union is Turkey’s irreplaceable partner for exports, service provision, and foreign direct investment, with the United States potentially playing a substantial role in the defense industry. Conversely, apart from the energy sector, Russia doesn’t have anything to offer and is unwilling to share military technology. Therefore, endlessly dismantling Turkey’s rule-of-law architecture runs against boosting trade and investment with EU countries or revamping the mutually beneficial customs union. Secondly is to watch defense. In the defense field, Turkey’s missile procurement is the issue of the year. U.S. Congress and the Trump administration will inevitably have to take a firm stand on the total incompatibility between Turkey’s procurement of Russian-made S-400 missile defense systems and the deployment of American-made F-35 stealth fighters in its air force (and lat-
OPINION
er in its navy, with the light aircraft carrier currently under construction).Experts have documented the dead end at which Turkish authorities have arrived and have proposed alternative solutions, such as switching procurement of Russian equipment from missile defense to anti-aircraft defense. Politically, the consequences of juggling military procurement from two antagonistic sources are huge. They will potentially affect the country’s operation of its U.S.made existing and future aircraft inventory, the performance of its future maritime projection capabilities, and the development of its own defense industry. Counterterrorism is the third issue. Turkey’s counterterrorism narrative places heavy emphasis on fighting the Gulen movement and the Kurdish combatants in Turkey (PKK) and Syria (YPG) over fighting ISIL. This political choice is reflected in the jail population: according to Human Rights Watch, out of 48,924 jailed citizens who have either been charged or convicted with terrorism offenses, 70 percent are held for alleged Gulenist links, 21 percent for alleged PKK links, and less than 3% for alleged ISIL links.Despite Ankara’s extensive diplomatic efforts, the fight against the Gulen movement is not seen by Turkey’s Western partners as counterterrorism, but rather as a self-engineered political fiasco. Internally, the leadership blames many of the country’s woes on the Gulen movement, its former political ally from 2002 to 2013 which had been acting to infiltrate the Kemalist state from within. This failed strategy has triggered an endless witch hunt at home and abroad. It constitutes the main source of political insecurity for the leadership, with the president going as far as deploring once “showing tolerance” to Gulen (“May God and my nation forgive us,” he said). Looking at terrorism proper, Turkey’s actions are linked to domestic considerations: fighting the PKK at home and the YPG in Syria, while jailing as many HDP politicians as possible. All are vital components of the president’s strategy to keep control of the political scene in partnership with the nationalist party MHP. Whether a
separation between YPG and PKK forces—a long-standing request from Turkey— can be achieved through the creation of a “safe zone” along the Turkish-Syrian border between the Euphrates and Tigris Rivers will be the subject of complex international discussions in 2019. Fourth is what happens to liberties and democracy.The rule-of-law architecture in Turkey is being steadily dismantled. Jailing opponents, muzzling the media, smothering civil society (including with absurd cases such as Osman Kavala’s), and vote rigging have all become Ankara’s preferred strategy for shielding the president from political opposition or mere criticism. This choice isolates the leadership from its Western allies and propels Turkey into the league of authoritarian countries. It goes together with the elimination of any real political relationship with the European Union, which in turn frees the leadership from foreign criticism on the rule-of-law. The country’s political course doesn’t seem to be reversible in the short to medium term. In Washington, many voices are questioning the solidity of Turkey’s Western affiliation. The massive financial scheme to help Iran circumvent U.S. sanctions against Iran, known as the Zarrab case, and the above-mentioned deal with Russia on S-400 missiles have resulted in a serious breach of confidence. Ankara’s participation in the Astana process—by which Russia, Iran, and Turkey are teaming up to arrive at a political solution in Syria—is also viewed with deep suspicion. Whether Ankara has a carefully laid-out strategy or not, it is clear that Turkey’s Western anchor in the post-1945 era has shown increasing signs of inconsistency since 2002, when the AKP assumed power. Whether such developments amount to a “pivot away from the West” or to a “power-in-the-middle strategy,” the net result is a growing uncertainty about Turkey’s reliability. And 2019 won’t change that. *Marc Pierini is a visiting scholar at Carnegie Europe, where his research focuses on developments in the Middle East and Turkey from a European perspective.
EUROPEAN BUSINESS REVIEW | 15
16 | EUROPEAN BUSINESS REVIEW
EUROPEAN BUSINESS REVIEW | 17
EU AFFAIRS
What Franco-German Engine? Berlin and Paris are no longer providing the leadership Europe urgently needs to adapt to global, geostrategic shifts. They tried to be upbeat. by Judy Dempsey*
F
or all the smiles and hugs, the reality is that the Treaty of Aachen that French President Emmanuel Macron and German Chancellor Angela Merkel sign on January 22 lacks strategic depth. It’s a shadow of the 1963 Elysee Treaty. Back then, the Elysee Treaty was about these two countries embarking on a long, historic road toward reconciliation in what turned out to be remarkably successful venture. That reconciliation was anchored on the European Union. The vows expressed in 1963 and repeated this week in Aachen—the burial place of Charlemagne, who united swathes of Europe during the Middle Ages—were about promoting and projecting peace. They were aimed at ending centuries of war that engulfed the continent. Since the early 1960s, the EU has promoted itself as a bloc built on peace. This philosophy has been the guiding principle of the union’s foreign policy. That foreign policy, influenced by France and especially by Germany, today lacks
18 | EUROPEAN BUSINESS REVIEW
strategic ambition as the new Aachen treaty shows. The engine’s drivers, who had ambitions for a more integrated Europe in the past, have chosen to downplay or even ignore the geostrategic shifts taking place across the globe. The vows are timid and inward-looking, traits out of place for the challenges facing Europe in the twenty-first century. Just two examples will suffice to show not only the lack of ambition but a provincialism out of sync with Europe’s needs. The Aachen treaty refers to “forward-looking solutions for integration in Europe.” In practice, this is what it amounts to: “To improve the life of citizens in border regions… local actors will be given the opportunity to establish cross-border projects such as nurseries, education facilities, emergency and health services, and industrial estates.” As for the thorny issue of security and defense, German
EU AFFAIRS
pacifists and those who believe only in soft power and development aid need not worry. “Military cooperation is also to be stepped up,” the treaty states. In practice, this will “include the development of joint strategic approaches, including the design of the European Defense Union, a close partnership with Africa… and even close consultation and coordination within the United Nations and other multilaterals.” And by the way, forget about the EU ever winning support from Berlin or Paris for a permanent seat on the United Nations Security Council. Instead, “France supports Germany’s wish” to have such a seat. Forget also about further integration of the eurozone. In short, forget about Macron’s Sorbonne speechof September 2017, in which he unveiled what he hoped would be a blueprint for pushing the EU toward more integration on many levels. So what’s gone wrong with the Franco-German engine? One explanation is that Merkel doesn’t like big designs and didn’t buy into Macron’s vision for the EU. The other is that perhaps she believes that Macron’s model would institutionalise a two-speed Europe— something that leading German politicians embraced back in the early 1990s. Yet today’s EU is already a patchwork of opt-outs or optins, whether they be related to defense, justice and home affairs, different policies towards migration, the Schengen system, or the euro. On reflection, it’s remarkable the
EU functions as it does. Without support from Merkel, who has had to contend with enough domestic problems since she was sworn in as chancellor for a fourth term last March, there was little chance of Macron winning broad acceptance from other member states. The northern Europeans opposed his ideas, letting them do the running for Merkel. Not only that. European leaders didn’t offer their own views about Europe’s future. It’s as if they were afraid of challenging eurosceptics and populists, who were quick to capitalise on their silence. The Franco-German engine lacked the steam to move forward. Maybe the expectations for France and Germany continuing to shape Europe have become too high. Maybe new groupings of countries, big and small, are needed to galvanise support for setting a strategic course for Europe. Given the distractions over Brexit, the European Parliament elections, and Central Europe, the EU is woefully unprepared to deal with any bust-up between China and the United States. If Macron and Merkel don’t recognize that tension, no amount of renewing vows will compensate. *Judy Dempsey is a nonresident senior fellow at Carnegie Europe and editor in chief of Strategic Europe
EUROPEAN BUSINESS REVIEW | 19
EU AFFAIRS
Why the Berlaymont will want to cosy up to the Kremlin by Giles Merritt*
R
ussia and the European Union are at loggerheads or to put it more diplomatically, “their efforts over more than 20 years to build a strategic partnership have clearly failed.�That's the conclusion reached not long ago in a note by a senior EU diplomat, and it was more or less the message at the recent high-level Moscow Gaidar Forum conference attended by Russian Prime Minister Dmitry Medvedev. The seeds of dissension are well-known: Syria, tensions over Ukraine and Crimea, festering resentment in the Kremlin over NATO's and the EU's enlargement, and mutual suspicions over cyber-security, electoral interference and unashamedly clumsy espionage.
20 | EUROPEAN BUSINESS REVIEW
Yet both sides should have their heads knocked together. Collaboration and perhaps friendship will be forced on them by irresistible economic and geopolitical pressures. Their leaders and policymakers might as well start waking to a shared future in which their economic complementarity will be crucial. The 21st century has proved unkind to both Russia and Europe, and it's going to get worse. The Gaidar Forum heard from Wolfgang Ischinger, Chairman of the Munich Security Conference, that at the beginning of this century, Russia's economy had been twice as big as China's, but now it's only a tenth of its size. Europe's economy, too, has shrunk, though not quite so spectacularly.
EU AFFAIRS
European citizens are getting steadily poorer, with little likelihood of a turnaround. Measured by average per capita GDP, incomes in the EU are down to about twothirds of those in America and by 2025 that's forecast to slide to three-fifths. By 2050, the four richest European countries will no longer be ranked among the world's top ten economies. Demographics are at the heart of both Russia's and Europe's problems. As Igor Yurgens, a former spokesman for Medvedev, pointed out during the Gaidar Forum, the slaughter of tens of millions of young Russians who fought in the Red Army during World War II has had disastrous long-term consequences. Irreversible population decline is accelerating, with today's population of 143m Russians forecasted by the US Census Bureau to slump to 111m by mid-century. On the economic front, Western sanctions in answer to Russian actions in Crimea and eastern Ukraine are aggravating the country's difficulties. Already over-reliant on its oil and gas exports, the neglected and outdated manufacturing sector is suffering from a marked absence of foreign investment. Each of the last five years has seen people's real disposable incomes fall, leaving the average Russian 10% poorer than in 2014. Underlying trends such as these have so far been hidden from sight. The dynamic effects of moving to a market economy in Russia, and indeed throughout most of the formerly communist countries that made up the Soviet bloc, have created outward signs of prosperity that mask structural handicaps. As to much of the EU, the
decade of low growth and austerity since the economic crisis of 2008 has seen the rise of populist parties that promise voters a rosier future without specifying how that will be achieved. Europe and Russia are therefore in much the same boat when compared to Asia's rising giants and technological tigers. But they will not be joined by the United States, thanks to its high-tech corporations and a buoyant demographic outlook that will take its population to 400m by 2050. The Russian marketplace could become far more attractive to European companies if Moscow brings in long-promised reforms to improve the conditions in which foreign businesses must operate. European companies have the technology and know-how needed to energise Russia's industrial rust-belts. A new spirit of economic cooperation would be win-win for both. It's hard to predict how policymakers in Moscow and Brussels will adapt to these realities, but adapt they must. An important further factor in their geopolitical realignment will be the opening up of the northern route for shipping between western European ports and east Asian ports. If climate change melts the Arctic ice caps at the rate now predicted, then this game-changing development will be of crucial importance to the EU as well as Russia. Food for thought in both the Berlaymont and the Kremlin. *Giles Merritt is Founder and Chairman of Friends of Europe
EUROPEAN BUSINESS REVIEW | 21
EU AFFAIRS
“New” Perspectives For Europe Certainly, the risks associated with a significantly changed state of the world have penetrated public awareness and have altered perspectives on Europe. by Jurgen Habermas*
I
am invited to talk about New Perspectives on Europe, but new ones fail me, and the Trumpian decay afflicting even the core of Europe makes me seriously question my old perspectives. Certainly, the risks associated with a significantly changed state of the world have penetrated public awareness and have altered perspectives on Europe. They have also directed the broader public’s attention to the global context in which the countries of Europe have more or less unquestioningly felt at home so far. The perception has grown within public opinion throughout the nations of Europe that new challenges affect each and every country in the same way and therefore could best be overcome together. That strengthens, indeed, a diffuse wish for a politically effective Europe. So, today, the liberal political elites proclaim, louder than before, progress should be made in European
22 | EUROPEAN BUSINESS REVIEW
co-operation in three key areas: Under the heading European foreign and defence policy, they demand a boost to the military self-assertiveness that would allow Europe “to step out of the shadows of the USA”; under the motto of a common European asylum policy, they further demand robust protection of Europe’s external borders and the establishment of dubious reception centres in North Africa; and, under the slogan “free trade”, they wish to pursue a common European trade policy in the Brexit negotiations as well as in the negotiations with Trump. It remains to be seen whether the European Commission, which is conducting these negotiations, has any success – and whether, should it fail, the common ground of EU governments simply crumbles away. That’s one, encouraging side of the equation. The other is that nation-state selfishness remains unbroken if not bolstered by misguided considerations of the new International of surging right-wing populism.
LEADERSHIP
EUROPEAN BUSINESS REVIEW | 23
EU AFFAIRS
NATIONALIST SHORT-TERMISM The hesitant progress of the talks on a common defence policy and on an asylum policy that, again and again, falls apart over the distribution question shows that governments give priority to their short-term national interests – and this all the more so, the more strongly they are exposed at home to the undertow of right-wing populism. In some countries there’s not even any tension left between empty pro-European declarations on the one hand and short-sighted, un-cooperative behaviour on the other. In Hungary, Poland and the Czech Republic, and now in Italy and pretty soon probably in Austria, this tension has evaporated in favour of an openly europhobic nationalism. That throws up two questions: How is it that, in the course of the last decade, the contradiction between residual pro-European lip-service and the actual blockade of the required cooperation has come to such a head? And why is the eurozone nevertheless still holding together when, in all countries, right-wing populist op-
24 | EUROPEAN BUSINESS REVIEW
position to ”Brussels” is growing – and at the heart of Europe, i.e. in one of the six founding nations of the EEC, has even led to an alliance of right- and left-populists based on a shared anti-European programme? In Germany the twin issues of immigration and asylum policy have since September 2015 dominated the media and pre-occupied public opinion to the detriment of anything else. This fact suggests a swift answer to the question about the decisive cause of the increasing wave of euroscepticism, and that suggestion may be supported by some evidence in a country which still suffers from the psycho-political divisions of an unequally reunited nation. But, if you look at Europe as a whole and especially the eurozone in its entirety, growing immigration cannot be the primary explanation for the surge in right-wing populism. In other countries, the swing in public opinion developed far earlier and indeed in the wake of the controversial policy for overcoming a sovereign debt crisis brought on by the crisis in the banking sector. As we know, in Germany the AfD was initiated by a group of economists and business people around eco-
EU AFFAIRS
nomics professor Bernd Lucke, that is by people who feared the snaring of a prosperous major exporter in the chains of a “debt union” and who set in train the broad-based and effective polemical campaign against the threat of mutualising debt. Last week the tenth anniversary of the insolvency of Lehmann Brothers recalled the arguments about the causes of the crisis – was it market failure or government failings? – and the policy of enforced internal devaluation. This debate was conducted in other eurozone member states with substantial impact on public opinion whereas here in Germany it was always played down by both the government and the press. GERMANY ALONE The predominantly critical voices in the international debate among economists, which were the voices of the Anglo-Saxon mainstream against the Schauble- and Merkel-driven austerity policies, have been barely noted and appreciated by the business pages of the leading media in Germany, just as on their political pages the social and human costs that these policies have dished out – and by no means only in countries like Greece and Portugal – were more or less ignored. In some European regions the unemployment rate is still just below 20 percent while the youth jobless rate is almost twice as high. If we today are worried about democratic stability at home, we ought also to remember the fate of the so-called “bail-out countries”: It is a scandal that in the unfinished house of the European Union such a draconian policy which impinged so deeply upon the social safety net of other nations was lacking even in basic legitimacy – at least according to our usual democratic standards. And this still sticks in the craw of Europe’s peoples. Given that within the EU public opinions on politics are formed exclusively within national borders and that these different public spheres are not yet readily available one for one another, contradictory crisis narratives have taken root in different eurozone countries during the past decade. These narratives have deeply poisoned the political climate since each one draws exclusive attention to one’s own national fate and prevents that kind of mutual perspective-taking without which no understanding of and for another can be formed – let alone any feeling for the shared threats that afflict all of us equally and, above all, for the prospects of pro-active politics that can deal with common issues and only do so in a cooperative mode and mentality. In Germany this type of self-absorption is mirrored in
the selective awareness of the reasons for the lack of co-operative spirit in Europe. I am astonished about the chutzpah of the German government that believes it can win over partners when it comes to the policies that matter to us – refugees, defence, foreign and external trade – yet simultaneously stonewalls on the central question of completing EMU politically. Join almost 30.000 Social Europe subscribers. It's free! “Social Europe publishes thought-provoking articles on the big political and economic issues of our time analysed from a European viewpoint. Indispensable reading”. POLLY TOYNBEE, COLUMNIST FOR THE GUARDIAN Within the EU, the inner circle of the member states of the EMU are so tightly dependent on each other that a core has crystallised, even if only for economic reasons. Therefore, the eurozone countries would, if I may say so, naturally offer themselves for acting as pace-makers in the process of further integration. On the other hand, however, this same group of countries suffers from a problem that threatens to damage the entire European Project: We, especially those of us in an economically booming Germany, are suppressing the simple fact that the euro was introduced with the expectation and political promise that living standards in all member states would converge – whereas, in fact, the complete opposite has come to pass. We suppress the real reason for the lack of a co-operative spirit that is more urgent today than ever before – namely, the fact that no monetary union can in the long run survive in view of an ever-wider divergence in the performances of different national economies and thereby in the living standards of the population in different member states. Apart from the fact that, today, in the wake of an accelerated capitalistic modernisation, we have also to cope with unrest about profound social changes, I consider the anti-European feelings spread by both left- and rightwing populist movements not as a phenomenon which only mirrors the present kind of xenophobic nationalism. These eurosceptic affects and attitudes have different roots that lie in the failure of the European process of integration itself; they emerged independent of the more recent populist inflammation of xenophobic reactions in the wake of immigration. In Italy, for example, euroscepticism provides the sole axis between a left and a right populism, i.e. between ideological camps that are deeply split when it comes to issues of “national identity”. Quite independently of the migration issue, euroscep-
EUROPEAN BUSINESS REVIEW | 25
EU AFFAIRS
ticism can appeal to the realistic perception that the currency union no longer represents a ‘win-win’ for all members. The south against the north of Europe and vice versa: Whilst the “losers” feel badly and unjustly treated, the “winners” ward off the feared demands of the opposing side. MACRON PLAN
operating under sub-optimal conditions should just be made “weatherproof” against the risk of further speculation, or whether we should hold fast to the broken promise about developing economic convergence in the euro area and therefore develop the monetary union into a pro-active and effective European political union. This promise was once politically linked to the introduction of the EMU.
As it transpires, the rigid rules-based system imposed upon the eurozone member states, without creating compensatory competences and room for flexible joint conduct of affairs, is an arrangement to the advantage of the economically stronger members. Therefore, the real question to my mind does not arise from an undetermined either “for” or “against” Europe”.
In the proposed reforms from Emmanuel Macron both goals have equal value: On the one hand, progress towards safeguarding the euro with the aid of the wellknown proposals for a banking union, a corresponding insolvency regime, a common deposit guarantee for savings and a European Monetary Fund democratically controlled at the EU level.
Underneath this crude polarisation of a “pro” or “con” which goes without any further differentiation, there remains among Europe’s supposed friends a tacit question which so far remains untouched even though it is the key fault-line – namely, whether a currency union
Despite diffuse announcements it is well known that the German government has been blocking any further steps from being taken in this direction – and is resisting all this up to now. But Macron is on the other hand also proposing the establishment of a eurozone budget
26 | EUROPEAN BUSINESS REVIEW
EU AFFAIRS
and – under the heading “European minister of finance” – the creation of democratically-controlled competences for political action at the same level. For the European Union could gain political prowess and renewed popular support only by creating competences and a budget for implementing democratically legitimised programmes against further economic and social drifting apart among the member states. Interestingly, this decisive alternative between the goal of stabilising the currency on the one hand and the further-reaching objective of policies aimed at containing and shrinking economic imbalances on the other hand has not yet been put on the table for a wide-ranging political discussion. There is no pro-European Left that comes out for the construction of a Euro Union which is able to play a role at the global level and, thereby, has in sight the far-reaching goals such as an effective clamping down on tax evasion and a far stricter regulation of financial markets. That way, European social democrats would first of all emancipate themselves from the convoluted liberal and neoliberal goals of a vague “centre”. The reason for the decline of social democratic parties is their lack of profile. Nobody knows any longer what they’re needed for. For social democrats no longer dare to take in hand the systematic taming of capitalism at the very level at which deregulated markets get out of hand. In making this connection I’m not in particular concerned with the fate of a distinct family of parties – although we should always remember when talking about this that the fate of democracy in Germany is historically more tied up with that of the SPD than with any other political party. My general concern is with the unexplained phenomenon that the established political parties in Europe are unwilling to or fail to forge platforms upon which positions and options vital for the future of Europe are sufficiently differentiated. The upcoming European elections serve as an experimental design in this regard. On one side, Emmanuel Macron, whose movement so far is not represented in the European Parliament, is trying to break up the current party groups so as to build a clearly recognisable pro-European faction. By contrast, all those groups currently represented in the Parliament, with the obvious exception of the anti-EU far right factions, are internally divided even below the actually required degree of differentiation. Not all the groups allow themselves such a widely-spread balancing act as the EPP which so far is clinging on to Orban’s membership. The mindset
and conduct of the CSU-member Manfred Weber who is seeking to become president is typical of the wishi-washiness that goes with a totally ambiguous stance. But there are similar splits running through the liberal, socialist and (not least) leftist groups. With regard to at least a lukewarm commitment to Europe, the Greens might share a more or less clear position. Thus, even inside the Parliament, which is supposed to create majorities for societal interests generalized across national borders, the European Project has obviously lost any sharper contours. CAUGHT IN A TRAP If you in the end ask me, not as a citizen but as an academic observer, what my overall assessment is today, I’ll have to admit to failing to see any encouraging trends right now. Certainly, economic interests are so unambiguous and, despite Brexit, as powerful as ever that the collapse of the eurozone is unlikely. That implies the answer to my second question: why the eurozone still clings together: Even for the protagonists of a northern euro the risks of separation from the south remain incalculable. And for the corresponding case of a southern state’s exit we have seen the test case of the current Italian government that, despite loud and clear declarations during the election campaign, has immediately relented; for one of the obvious consequences of leaving would be unsustainable debts. On the other hand, this assessment is not very comforting either. Let’s face it: if the suspected link between the economic drifting apart of the eurozone member economies on the one hand and the strengthening of right-wing populism on the other hand in fact holds, then we’re sitting in a trap in which the necessary social and cultural preconditions for a vital and safe democracy face further damage. This negative scenario naturally cannot count for more than just that. But already common-sense experience tells us that the European integration process is on a dangerous downward curve. You only recognise the point of no return when it’s too late. We can only hope that the rejection of Macron’s proposed reforms by the German government has not been the last lost opportunity.
This text is an abridged version of a speech given at a conference on “New Perspectives for Europe” at Humanities College, Goethe University (Frankfurt), in Bad Homburg (21 September 2018). Translated by David Gow.
EUROPEAN BUSINESS REVIEW | 27
28 | EUROPEAN BUSINESS REVIEW
EU AFFAIRS
Chamber network kicks off European elections campaign by N. Peter Kramer*
M
arch 6, in the prestigious PressClub Brussels-Europe (PCBE), EUROCHAMBRES* set out its ‘#Chambers4EU’ campaign to encourage EU citizens to vote in May’s European Parliament elections and to vote for candidates who are engaged and committed to an ambitious, forward looking EU agenda. DECIPHERING THE JARGON! Only 42% of those eligible to vote actually did so in 2014 and only 52% of people in managerial positions. The campaign will deliver on the memorandum of understanding signed by EUROCHAMBRES with the European Parliament in January in order to help raise these figures. EUROCHAMBRES President Christoph Leitl underlined that Chambers are ideally placed to promote the importance of the European elections to citizens. “Our network can decipher the jargon from Brussels into topics that touch the millions of people who work in our member businesses and the millions more with whom they are in daily contact. That is the challenge over the next three months.” The Chamber network across the EU will engage with candidates and voters through events, the media and social media to discuss and highlight issues like skills, migration, free movement, the environment and climate change. “Chambers won’t try to tell Europeans who to vote for, but we want them to vote in an informed manner, based
on an understanding of the importance and value of the EU. We need constructive candidates who are willing and able to contribute to the EU’s progress over the next 5 years. How to ensure jobs and prosperity? How to respond to the challenges we are facing? European citizens and the business society are waiting for answers. This is the philosophy behind our ‘Chambers4EU’ campaign,” explained President Leitl. EU: MORE STRENGTHS THAN WEAKNESSES President Leitl concluded on a positive note: “We have spent too much time over the last two or three years reflecting on the EU’s weaknesses, mainly because of Brexit. But Brexit has also had a galvanizing effect in the remaining member states, with EU popularity rising. We must build on this enthusiasm and the EU’s many strengths to move forward together. The European elections are a crucial phase in building a strong future for the EU.” The question now is, will EUROCHAMBERS succeed where the EU institutions and Euro-parliamentarians, despite their multimillion communication budget, failed. The EU citizens have the last word the end of May. *EUROCHAMBRES represents over 20 million businesses in Europe through 46 members (42 national associations of chambers of commerce and industry and two transnational chamber organisations) and a European network of 1700 regional and local chambers. More than 93% of these businesses are small and medium sized enterprises (SMEs). Chambers’ member businesses employ over 120 million.
EUROPEAN BUSINESS REVIEW | 29
INTERVIEW
AmCham President: “We are now better prepared to deal with a new financial crisis” On the occasion of the “29th The Greek Economy Conference” held in Athens, the President of the American Hellenic Chamber of Commerce, Mr. Simos Anastasopoulos, gave an exclusive interview at the European Business Review. The President referred among other things to the sectors of the Greek economy with the greatest investment interest, the role of the Chamber and the global challenges ahead. Simos Anastasopoulos has been at the helm of the American-Hellenic Chamber of Commerce since 2013 and has led many pro-business and investment initiatives in his time as President. The cherry on top was this year’s TIF with honored country the US and the prestigious American Pavilion under the auspices of the American - Hellenic Chamber. by Alexandra Papaisidorou*
E
UROPEAN BUSINESS REVIEW (EBR): THIS YEAR TIF SHOWED EFFECTIVELY THE INTEREST OF AMERICA IN GREEK ECONOMY. WHICH FACTORS HAVE BEEN CONTRIBUTED TΟ THIS ATTITUDE, DO YOU CONSIDER? WHICH SECTORS WERE OF THE GREATEST INVESTMENT INTEREST? Simos Anastasopoulos (SA): The American Pavilion in TIF 2018, featuring the US as the honored country, was a landmark event. Not only because of the presence of more than 60 technology and innovation heavyweights but mainly because of the 75 events that took place within the Pavilion and brought together the Greek SMEs and startups with the American conglomerates. The American interest was manifested also by the presence of a government delegation led by US Secretary of Commerce Wilbur Ross and senior members of the administration. With the end of the bailout period, Greece’s profile has been upgraded and duly appreciated by the US admin-
30 | EUROPEAN BUSINESS REVIEW
istration as well as the business community. TIF was a great opportunity for the US to announce its presence and interest for collaboration in Southeastern Europe where Greece is emerging as a center of economic, business and technological interest. During numerous discussions and negotiations, the American interest for the Energy, Tourism, Defense and Security sectors was made quite evident. Following the privatisation of the Thessaloniki Port and the upgrade of transportation routes to Central and Northern Europe logistics appeared also very high in the list of potential investors. EBR: THE AMERICAN-HELLENIC CHAMBER CERTAINLY PLAYED THE MOST IMPORTANT ROLE TO THE SUCCESSFUL OUTCOME OF TIF WITH THE COLLABORATION OF GREECE AND US. WHICH ARE THE CHAMBER’S PLANS FROM NOW ON IN ORDER TO GIVE VALUE OF THE OCCURRING MOMENTUM WITH THE BEST POSSIBLE WAY?
INTERVIEW
SA: We take pride in organising the American Pavilion in the most successful TIF to date and we intend to follow up on the positive momentum in order to increase our presence in US, promote the economic developments and the significant opportunities that can attract further investment interest and assist reinforcing Greece’s role as the commercial center in SE Europe and a pillar of stability in the region. EBR: THE END OF THIS YEAR SIGNIFIES THE TEN-YEAR PERIOD SINCE THE BEGINNING OF THE FINANCIAL CRISIS BURST OUT WITH THE BREAKDOWN OF LEHMAN BROTHERS. DO YOU BELIEVE THAT THE GLOBAL ECONOMY IS READY TO DEAL WITH A NEW EQUIVALENT CRISIS, IF AND WHENEVER IT ARISES? WHAT HAS & HASN'T CHANGED SINCE THEN? SA: The world is facing many challenges including global debt, trade wars, banking and financial systems and
Eurozone problems not to mention major upcoming disruptions like the 4th industrial revolution and the digital world. Although debt levels have risen again to new highs and global growth is slowing, the banks are now better capitalised and regulated to face new challenges. The European and federal authorities have proven to react effectively, even if with some delay in Europe’s case, to respond to critical situations, sustain growth and contain any difficult financial situation. Greece is such a case where, even unprepared, the Eurosystem managed to contain a crisis that threatened not only the Euro but Eurozone and the Common Market. With the experience obtained and the political will as has repeatedly been expressed, we are definitely better prepared to deal with a new equivalent crisis (black swans included?).
*Alexandra Papaisidorou is Editor-at-large & PhD candidate of European & International Relations
EUROPEAN BUSINESS REVIEW | 31
Special Report: Business is changing. What brings the future? by N. Peter Kramer* BUSINESS IS IN A TRANSITION PERIOD TO A NEW ERA. KEYS TO SUCCESS WILL BE DIFFERENT IN 10 YEARS. THE DIGITAL TRANSFORMATION IS THE DRIVING FORCE, NOT ONLY FOR THE BUSINESS ECOSYSTEM, BUT ALSO FOR THE LABOUR MARKETS. WE ARE LIVING ALREADY IN AN AGE OF A GROW-
32 | EUROPEAN BUSINESS REVIEW
ING NUMBER OF ROBOTS. WHAT DOES THIS HIGH TECH MEAN FOR THE EMPLOYMENT? FOR THIS SPECIAL REPORT, EBR SELECTED FIVE ARTICLES FOR YOU, SHOWING A SOMETIMES GROUND-BREAKING VIEW ON HOW BUSINESS WILL WORK IN THE 2020S. WE HOPE YOU ENJOY READING.
SPECIAL REPORT
What the next 20 years will mean for jobs – and how to prepare by Stephane Kasriel*
T
he next two decades promise a full-scale revolution in our working lives. Before we look intothese next 20 years, let’s take a quick look at the present – and something once considered paradoxical. We’re already living in an age of a lot of robots – and a lot of jobs.As the number of robots at work has reachedrecord levels, it’s worth noting that in 2018 the global unemployment level fell to 5.2%, according to a report last month – the lowest level in 38 years.In other words, high tech and high employment don’t have to be mutually exclusive. We’re living the proof of that today. Given this synchronicity between employment and tech, I believe there are reasons to be hopeful that jobs will become more accessible, more flexible and more liberating over the next two decades.Here are five significant changes I foresee, as I previously highlighted for the World Economic Forum: • AI and robotics will ultimately create more work, not less. Much like today.
• There won’t be a shortage of jobs but – if we don’t take the right steps – a shortage of skilled talent to fill those jobs. • As remote work becomes the norm, cities will enter the talent wars of the future. Untethering work from place is going to give people new geographic freedom to live where they want, and cities and metropolitan regions will compete to attract this new mobile labour force. • The majority of the workforce will freelance by 2027, based on workforce growth rates found in Freelancing in America 2017. • Technological change will keep increasing, so learning new skills will be an ongoing necessity throughout life. The most constructive discussion is not whether there will or won’t be changes, but what we should do to ensure the best, most inclusive outcomes. Here are some recommendations that could help guide us towards a positive future of work:
EUROPEAN BUSINESS REVIEW | 33
SOLUTION #1: RETHINK EDUCATION Fast technological change means that the people operating constantly evolving machines need to learn new skills – quickly. Our current education system adapts to change too slowly and operates too ineffectively for this new world.We need to build an education system for lifelong learning – and a culture that promotes it. Rewiring the system should begin with pre-kindergarten, which should be free and compulsory, while education should remain similarly accessible throughout someone’s working life. Skills, not college pedigree, will be what matters for the future workforce – so while we should make sure college is affordable, we should also make sure higher education is still worth the cost, or revisit it entirely and leverage more progressive approaches to skills training. Skills-focused vocational programmes, as well as other ways to climb the skill ladder (such as apprenticeships), should be widely accessible and affordable. Furthermore, our education system needs to equip people with skills that machines aren’t good at (yet). This means meta-skills such as entrepreneurship, teamwork, curiosity and adaptability. As government adapts at all levels to a changing workforce, businesses, too, must shoulder some of the load. And, like government, businesses need to invest both in the workforces they have today and the one they will need tomorrow. That means they need to spend more resources training new workers for job openings, and to invest more in up-skilling their current employees. Tax policies can encourage companies to take these steps. For example, governments can tax companies whose
34 | EUROPEAN BUSINESS REVIEW
former workers end up being unemployed or take lower-paying jobs – both of which are signs they’ve under-invested in their workforces. These types of policy should lead to positive-sum outcomes across the workforce: the labour pool adapts to the available jobs, businesses have the talent they need to achieve their goals, and government sees a bump in the tax base from steadier growth in the workforce. SOLUTION #2: CHANGE WORKER PROTECTIONS FROM A SAFETY NET TO A TRAMPOLINE Our tax, healthcare, unemployment insurance and pension systems were all created for the industrial era, and they won’t serve anyone in the future if we can’t make significant reforms.For decades, that system was aligned with how the majority of workers were employed. But as that has changed, and indeed, is quickly passing us by, all parties should “explore ‘decoupling’ benefits and protections from the status of full-time employment and distributing them more evenly across the productive workforce”, according to a new Forum white paper.Innovation and technological advances in the delivery of such benefits can help with this shift too. For a safety net of the future to be effective, it should embrace technology to deliver benefits. Edtech, for example, offers low-cost ways to provide skills-training. It must also be designed by its stakeholders – not merely the citizens being trained, but also the businesses, trade unions and other groups who depend on that reskilling and upskilling to ensure they can meet their goals with workers in the pipeline.
SPECIAL REPORT
EUROPEAN BUSINESS REVIEW | 35
Myriad policy ideas are already being tested in changing delivery of benefits – such as “flexicurity”, Denmark’s model, which offers government benefits like unemployment security and heavily subsidized skills-training. Others, such as “portable benefits” and a Universal Basic Income, or UBI, are similarly worth continuing to examine for their utility too. And we should challenge ourselves to continue driving innovation in this area – and work with governments to create sandboxes for these ideas to be tested, while respecting the needs of today’s workforce as well as tomorrow’s. SOLUTION #3: PROVIDE PEOPLE WITH MORE FREEDOM AND FLEXIBILITY Acting together, government and business can make people’s lives easier by creating more inclusivity. They can begin doing that by embracing remote work, flexible scheduling and the power of the platform.Working in an office is often neither possible, nor practical, for new parents, single parents, some of those living with a disability or many others in our society – but given the option to work from home or set their own schedules, many would be able to earn an income. And many already are.“Today, approximately 20–30% of the working age population in the United States and the EU-15 engage in independent work, and the numbers
36 | EUROPEAN BUSINESS REVIEW
are even higher in most emerging markets,” according to the World Economic Forum. Platforms, such as my company, Upwork, are helping to fuel this trend, by creating faster and better ways for buyers and sellers to connect. And for millions of people around the world, through our site and a host of others, this is already providing new opportunities to earn the income and flexibility to live the life they want. So today’s message to government is: “First, do no harm.” But more importantly, looking ahead, encouraging government policies that don’t discourage independent work, including freelancing, can allow more people to work who otherwise might not be able to. In fact, McKinsey, the global consultancy, estimates that “by 2025 they could add $2.7 trillion to global GDP, and begin to ameliorate many of the persistent problems in the world’s labour markets”. Promoting remote work and flexible scheduling could advance women’s participation in the workforce and, according to some economists, reduce gender inequality.One major company provides an important proof of concept. In the mid-1990s, Ernst and Young (EY) began aggressively promoting their “flexibility efforts” after the consultancy realized EY female employees were leaving the company at a rate 10–15 percentage points
SPECIAL REPORT
higher than their male counterparts.Twenty-seven years later, according to one report, “with formal flexible work, reduced and part-time schedules and informal day-to-day flexibility, along with other efforts … EY retains men and women at the same rate. And they’ve reached their original goal of promoting women partners, with women making up about 30% of each new partner class every year.” Local communities can also facilitate independent work by creating more virtual workspaces and tools to get work done. This would help expand opportunities into new communities, opening rivers of new capital into towns as decentralised workplaces take root, even on a micro level.The past three industrial revolutions have enabled increasing levels of globalisation. And while they have generally been positive for the global economy, the transitions have often been very scary, and have
even left some people behind in the long term. Western economies have seen shrinking middle classes since the recent waves of deindustrialization. Now, the Fourth Industrial Revolution, or 4IR, is enabling globalization 4.0, and while its positive effects are likely to be as strong, if not stronger, than the prior versions, we need to make sure this revolution creates the most inclusive growth possible for all. It’s on each of us, as global citizens and individual stakeholders, to help create that path – one that provides the the future of work people need, as well as the training and support for them to thrive.
*Stephane Kasriel is CEO at Upwork
EUROPEAN BUSINESS REVIEW | 37
The role of digital transformation in labour markets and business ecosystem by Dimitris Panopoulos*
I
nformation and communications technologies (ICT) play an increasingly important role in our professional and private lives, and digital competence is of growing importance for every individual.In the future, nearly all jobs will require digital skills. However, European Commission figures show that two fifths of the EU workforce have little or no digital skills. In addition, despite continued high levels of unemployment, there could be 756 000 unfilled jobs in the European ICT sector by 2020. This situation is even more challenging in certain geographical areas (such as south-eastern Europe), among socially vulnerable groups (in particular, the unemployed and the disabled) and the elderly. Despite favourable developments in the digital literacy of citizens, the digital gap needs to be narrowed further. Digitalisation has several impacts on the labour market.
38 | EUROPEAN BUSINESS REVIEW
On the one hand, new business models, products and machines create new jobs, while on the other hand, automation contributes to the elimination of jobs or their relocation to countries with lower labour costs.To remedy this situation, developing the digital skills of the EU workforce is essential. Reducing the mismatch between the skills available and those demanded for the digital transformation of the economy has been a key EU-level priority over the past decade. For instance, a 2008 communication entitled 'New skills for new jobs' emphasised the increasing need for digital skills in the shift to a low-carbon economy. Furthermore, the 2010 Digital Agenda recognised the need for indicators to measure the extent of digital
SPECIAL REPORT
competence in the EU. This was implemented through the development of the Digital Competence Framework ('Dig Comp'), enabling citizens to evaluate their digital skills, and the Digital Economy and Society Index ('DESI'), summarising relevant indicators on Europe's digital performance and tracking the evolution of EU Member States in the area of digital competitiveness. The Grand Coalition for Digital Jobs, a multi-stakeholder partnership created in 2013, aims to facilitate collaboration between business and education providers, and between public and private actors, and has already created 60 functional pledges in 13 countries. The 2016 New Skills Agenda aimed to improve the quality of skills on (the supply side _labour force) training and to make the skills acquired more visible and comparable from one country to another. Data on ICT skills should also be improved in order to better anticipate developments and help people make better career choices. Skills acquired in non-formal ways should also be assessed and validated. Possible solutions developed in the EU Member States include encouraging and enabling people to acquire the skills needed, enhancing the labour mobility of digitally skilled people and promoting cross-border skills policies so as to diminish labour market matching obstacles. Improving skills supply can be done by encouraging people to offer their skills on the labour market and by retaining skilled people in the labour market. Putting skills to effective use by creating better matches between skills offered and demanded, and by increasing the demand for high-level skills can also contribute to improving the situation. Some up-to date survey’s data regarding the demand side of skills of labour market(enterprises) bring to forth the following general conclusion: Few companies are immune to the forces of creative destruction. Our corporate longevity forecast
of S&P 500 companies anticipates average tenure on the list growing shorter and shorter over the next decade. Some key insights: i)The 33-year average tenure of companies on the S&P 500 in 1964 narrowed to 24 years by 2016 and is forecast to shrink to just 12 years by 2027 ii) Record private equity activity, a robust M&A market, and the growth of startups with billion-dollar valuations are leading indicators of future turbulence. iii) A gale force warning to leaders: at the current churn rate, about half of S&P 500 companies will be replaced over the next ten years. iv)Retailers were especially hit hard by creative destruction, and there are strong signs of restructuring in financial services, healthcare, energy, travel, and real estate. v) The turbulence points to the need for companies to embrace a dual transformation, to focus on changing customer needs, and other strategic interventions. Overall conclusions of the relevant surveys and researches on the impact of digital transformation in labour markets and business ecosystem for 2018: - The digital disruption in retail heightens the imperative of dual transformation - The rising dominance of digital technology platforms continues to shift massive market value - Disruptive change across industries highlights the importance of continual business model innovation - Cleantech and the downward pressure on energy price has created new winners and losers in one of the world’s biggest industries - The explosion of private “decacorn” companies signals accelerating turbulence in the years ahead. *Dimitris Panopoulos is Executive of Labour Market Needs’ Diagnosis Mechanism, Ministry of Labour, Social Security and Social Solidarity in Greece.
EUROPEAN BUSINESS REVIEW | 39
INTERVIEW
Superclans: Global Entrepreneurial Families and Investor Resilience by Radu Magdin*
W
e live in an age of disruption and, with every passing day, we receive confirmation that only those who smartly embrace change will be able to survive in an increasingly competitive business environment. In the Western world, many of the most successful companies were in their infancy or non-existent 20 years ago; moreover, even for fine observers, the needs they currently serve were hard to predict not so many years ago. The days of the internal combustion engine, the core of the industrial revolution, are numbered, as many countries bet on electric cars and say that all new cars must be zero-emission by 2050. On the Internet, one popular (and frightening at the same time) quiz is whether your job will be automated in the next 10 years. In this context, looking at global entrepreneurial families could be a great starting point for those interested in mastering adaptation and resilience. A backbone of the economy in almost all countries, family-owned companies have outperformed non-family-owned companies since 2006; the explanation, the Credit Suisse’s Family 1000 report argues, hinges on the focus on long-term,
40 | EUROPEAN BUSINESS REVIEW
R&D, and on fierce independence. The long-term perspective is not incompatible with change, as a Deloitte study of nearly 100 future leaders of family-owned companies across the EMEA region has revealed: 80% of the next generation of family business leaders say that their leadership style will be different compared to the previous generation, while 51% intend to take more risks than their predecessors, but in a more controlled way. In the booming Asia, according to Forbes, the total worth of the continent’s 50 Richest Families was $519 billion in 2016; for the assessment, the publication considered only the wealth rooted in Asia and the situation in which the participation in building that fortune has to extend at least three generations. Simply put, the Asian family-owned conglomerates are thriving, even in this age of disruption. But even these champions of resilience are vulnerable to the changing global tides. In the end, not everyone is a French Rothschild to totally reinvent oneself two times in fifty years. It suffices to only look across the Alps at the recent struggles of the Sandoz Founda-
SPECIAL REPORT
tion to understand the magnitude of the threat. As the Deloitte study shows, a three-pronged challenge lies ahead for this type of business: keeping the family values alive, growing the company in a rapidly-changing economic and business environment, and retaining independence in ownership. Without proper preparation, planning, and wise advisors, these challenges risk becoming an impossible trinity. A E&Y 2014 report expands on the secrets to lasting success: clear succession strategy, women empowerment, boards of directors expertly managed by families, healthy communication and conflict, leveraging the family business as an essential tool for branding, and purposeful engagement in philanthropic activities. These are parts of the broader framework, that have to be tailored to each situation. Here, I will only highlight two points essential for the resilience, adaption, and transformation of these “superclans”. It is all about the correct vision and the right approach. As always, aligning goals, means, and resources is key. Mastering adaptation to change and seizing new opportunities is part of the toolkit that will allow these businesses to safely navigate a world whose brand is now crisis. One aspect to take into consideration is the structural landscape. The challenge is how to avoid becoming the victim of politics and geopolitics, all by building the resilience capacity that is needed in today's reality. Instead of only looking at the strength of the ship, it is worth paying attention to how agitated the ocean is. This requires enhanced ability to assess and mitigate political risks and a proper understanding of the best manner of approaching the relationship with decision-makers and politicians. In an era dominated by high expectations and equally high disillusionment, it is no surprise that the blame-shifting has made many politicians to transform successful businesses into scapegoats. A skilled analyst would say that superficial stakeholder engagement and CSR programs are not enough to break the wall separating the two worlds; direct communication with the general public, one which goes beyond marketing and produces a narrative for the role the business plays in the community, will in the future tackle heads-on the apparent incommensurability. The economic development and an aspirational lower middle class will continue to ask for more openness, transparency, and accountability. These are more general evolutions, on top of what has become the new normal in international politics: an assertive China which assumes not only a robust regional agenda, but which gives political contours to its status of global economic powerhouse; a fractured transatlantic relation; a European Union struggling to find its post-Brexit sense of purpose; a Russia that works against the status quo; and the spectre of disruptive great power competition, trade
wars, and of a new arms race (even in the nuclear domain). The world as we have known it for the past 50 years is falling apart. A new nationalism is on the rise, free trade is threatened and identified as the cause of the global predicament, while the resurgence of hard power cannot be discarded. Consequently, taming the forces of the market is secondary in relation to putting the market in service of power. These are all macro-trends whose meaning and effects should be familiar to every family-owned conglomerate, to every CEO or family member groomed to be the next leader. In the race for survival, they are the map towards new markets, new industries, and new investments. Correctly analysing the state, the society, and politics will show not only how to weather the storm, but also how to diversify and where to invest. The other fundamental aspect is about managing succession and major changes in leadership. For state- or privately-owned enterprises, the pressure is not as strong as the one for family conglomerates. Although, obviously, over the recent decades, mechanisms were put in place to ensure stability, today they are sensitive to risks and disruption and the limited number of pillars which support the healthy business might easily disappear. It is my belief that family-owned big businesses are a natural target for attacks and their solidity depends on how clearly the mandate is understood and implemented at the top. Here comes the role of what I call “the resilience coach” - to help CEOs understand the stakes and the risks, to offer tailor-made assessment and judgement. The role of this advisor is to challenge deeply-held business and cultural assumptions, to be the pinnacle of a “red team” approach, to advance the mission by complementing. Those who wear the scars of crises and transitions, those whose experience has been forged beyond well-established societies and institutions could bring to the table the positive energy of disruption. This is how the necessary antibodies to stay on top of things when the crises hit will be developed. The venom of crisis becomes the antidote to messy change. Some family-owned companies are better prepared than others to confront the future, as some have had their fair share of storms and successions. However, even if you are a Wallenberg, a Rothschild, a Sabanci, a Chan, a Koch or a Dangote, embracing unorthodox change and approaches will, in the end, make the difference between the future and a future (still) at the top. *Radu Magdin is a strategic communications analyst and consultant. He has advised the Prime Ministers of Romania and Moldova **This is the fifth article in the series: "Management - Power, Strategy and Communications Essentials". You can find all articles on www.europeanbusinessreview.com
EUROPEAN BUSINESS REVIEW | 41
COVER ISSUE
Building the diplomacy of Innovative Entrepreneurship by Nikos Kostopoulos*
42 | EUROPEAN BUSINESS REVIEW
SPECIAL REPORT
2
019 is a landmark year for Greece and a transition period to a new era where the digital economy and the ecosystem of innovation in the country will be a driving force and a lever of growth. It is clear after a decade of deep recession in the country that the path towards a complete transformation of society goes through digital routes of extroversion and interconnection with the corresponding international ecosystems so that Greece becomes one of the centers of innovative business. In a roadmap where the great effort that has been made by healthy Greek entrepreneurship must be capitalized, both qualitatively and quantitatively, the axes and actions must be substantial and targeted with the Greek state as a helper but also a regulator.
In this context, as well as in a digital single market, both institutionally and substantively, where there is no boundaries in terms of ideas and innovative thinking, it is important to explore the indicator of our digital readiness through communication and knowledge of international ecosystems of innovation. So how do we perceive all of these dynamics that develop in Europe as well as in specific innovation hubs on the American continent but also in Asia or even in Africa? At a first level, the transition from research to the implementation of an innovative idea has been greatly reduced in time by subordinating market and competition rules. What is internationally observed is an informal interconnection of scientific institutions, incubators or accelerators, the enclaves, that is to say, the reception and expulsion of ideas, but also the business itself in converting an idea into a business plan and then an application, service or product. Thus, in this fast-pace transformation of the academic, business and professional environment, the international environment gives us the directions and best practices that we must follow in order to join in a competitive environment, enhancing the dynamics of our digital economy. Initially, the first direction is the culture of creativity, which stems from the correct reading of the data of both the market and the needs of local societies as well as the wider perception of global trends. This is from the new start upper ... entrepreneur's side. On the part of the state, the right reading is the redevelopment of the academic environment from early years of learning to the final stage, the emphasis on the so-called "out of the box" thinking and approach to the delusion of business, error, repetition of effort and persistence. The unification of these two sides in
the aforementioned details essentially "locks" a creative framework for achieving a culture of creativity. Obviously, after this basis, in the next steps, -which are now required by three poles, as well as the state and the innovative businessman-, can be added the market channel - a coexistence that favors the healthy absorption but sometimes the rejection of applications, services and products. This specific equation is now subordinated to central policies carefully interventive, providing incentives, ensuring a stable and competitive tax regime, and protecting the intellectual property. It is part of a strategy of financial institutions with sufficient know-how and channeling of funds as well as in prospective entrepreneurs, where going beyond the start upper stage, it will have the maturity of multiplying the capital value of the investment both in the quality and also offering to economic indicators such as employment. Essentially, this report revolves around specific ecosystems where they have learned from their mistakes, redesigned their strategy and constantly adapted it to the data and dynamics they develop. Countries such as Germany, France, England or the Scandinavian Peninsula, as well as ecosystems such as those in the US and Israel, or even seemingly smaller countries such as Portugal and Switzerland are actually leveraging the acceleration of the innovation cycle, developing aggressive policy on obtaining patents and copyrights, while constantly refining their needs. In addition, they have an essential and holistic narrative of innovation. The next and most crucial question is how do we perceive the country's presence in this global decentralized innovation framework, how do we build our narrative and what policies we are developing by combining the innovative idea's pole with market rules and state laws. The answers are simple and usually of one-word ... Openness, extroversion, strategy! At the same time, we need a steady national narrative of all participants. We owe it to this narrative to take advantage of our innovation ecosystem as an important chapter in our foreign policy and a winning mechanism in the field, which is called ÂŤdiplomacy of entrepreneurshipÂť!
*Nikos Kostopoulos as a candidate Deputy Governor of the Attica Region, was elected Regional Councilor in 2014 and is Secretary for Scientific Organisations at New Democracy. His main business activity is business development consulting
EUROPEAN BUSINESS REVIEW | 43
5 ways for business leaders to win in the 2020s The winners in business have shifted markedly in the last decade by Rich Lesser, Martin Reeves and Kevin Whitaker*
T
he winners in business have shifted markedly in the last decade. When the 2010s began, the world’s top 10 public companies by market capitalization were based in five countries; only two of them were in the tech sector, and none was worth more than $400 billion. Today, all of the top 10 are in the US and China, the majority are tech companies, and some have at least temporarily exceeded $1 trillion in value. We expect the keys to success will be just as different in 10 years’ time. Several developing trends are likely to fundamentally reshape the future competitive environment, including the rapid advancement of artificial intelligence, the changing global economic order, and increasing scrutiny of the broader contribution of business to society, to name just a few. To stay ahead of these forces, leaders need to question current assumptions and retool their organizations. This goes for both tech companies and traditional ones, who
44 | EUROPEAN BUSINESS REVIEW
will face equally critical challenges in the next decade: digital giants will need to “come of age” and navigate issues like maintaining users’ trust, while older businesses will need to evolve their approaches and organisations to harness new technologies. So, how should you prepare your company to emerge as a winner in the 2020s? We see five emerging imperatives that will apply across industries and regions: MASTER THE NEW LOGIC OF COMPETITION The emerging wave of technology – including sensors, the internet of things and artificial intelligence – will turn every business into an information business. With exponentially more data available, better tools to decode that data and a rapidly changing business environment, companies will increasingly need to compete on the rate of learning by leveraging technology to identify and fulfill each individual customer’s changing needs.
SPECIAL REPORT
The arenas of competition will also look different in the 2020s. Traditional industry boundaries will be blurred; instead, competition and collaboration will occur within and between ecosystems – clusters of companies that form temporary, mutually evolving partnerships. Ecosystems are dynamic and not perfectly controllable, so companies will need to be more externally oriented, to deploy indirect influence through platforms and marketplaces, and to co-evolve with their partners. A few digital giants have already achieved outsized returns by harnessing the power of ecosystems. For example, Alibaba became one of the world’s most valuable companies by building platforms that connect providers of all e-commerce functions (such as manufacturing, logistics, and marketing) with each other and with end users – in other words, orchestrating an evolving ecosystem. However, there is not yet a definitive playbook for this era: practice is racing ahead of theory, and pioneers who can crack the code will be greatly advantaged. Finally, companies will increasingly compete on resilience. Accelerating technological change, shifting geopolitical power, increased scrutiny of business and the polarisation of society all point to an era of protracted uncertainty, in which corporate life cycles are likely to continue shrinking. Companies will therefore need to worry not only about their immediate competitiveness, but also about their ability to weather unanticipated shocks. DESIGN THE ORGANISATION OF THE FUTURE Big data and artificial intelligence are already transforming our ability to learn. History has shown, however, that organizational innovation is needed to unlock the full potential of new technologies. Applying AI to existing process steps is not enough: companies must embed the technology in “integrated learning loops" that continuously gather information from data ecosys-
tems, derive insights using machine learning, and act on those insights autonomously, all at algorithmic speed. Faster timescales are not the only ones that matter, however – companies must also better position themselves for slow-moving forces, such as social and political changes, that are increasingly transforming business. Leaders will therefore need to design organizations that learn and adapt on all timescales by combining the best of humans and machines. Algorithms should be trusted to recognize patterns in data and act on them autonomously, while humans should focus on higher-order tasks like validating algorithms, imagining new possibilities and designing the hybrid “human+machine” organization itself. Some pioneers are already beginning to adopt these principles: for example, Amazon’s pricing and recommendation engines, among other functions, are run by autonomous data science systems; humans take a “hands off the wheel” approach and instead focus on more creative tasks, such as redesigning those systems to account for new strategic priorities. The new learning organisation must be designed with flexible backbone systems and evolvable business models, so it can constantly adapt to the environment. It also requires new interfaces that enable humans to understand and trust the actions of machines. And it requires a new model of management – one based on biological principles like experimentation and co-evolution. In other words, leaders need to shift their emphasis from designing hardwired structures to orchestrating flexible and dynamic systems. APPLY THE SCIENCE OF ORGANISATIONAL CHANGE Reinventing organisations to compete in the 2020s will not be a trivial task. Whether because of risk aversion
EUROPEAN BUSINESS REVIEW | 45
SPECIAL REPORT
or complacency, today’s leading companies may be understandably reluctant to unleash fundamental change. But our research shows that the single biggest factor affecting the success of major transformation programs is how early they are initiated. It is therefore critical to create a sense of urgency within the organization to ensure that everyone truly understands the need for change. Even for companies that are committed to transformation, it can be a risky endeavor: most large-scale change efforts fail. Therefore, leaders need to employ evidence-based transformation — based on understanding empirically what works and why, rather than relying on plausible assertions and rules of thumb. Leaders also need to diversify their approaches to implementing change. Large-scale transformation programs comprise many types of challenges; leaders will need to tailor their approaches accordingly, moving beyond one-sizefits-all programs focused only on standardized processes and premeditated timelines. ACHIEVE INNOVATION AND RESILIENCE THROUGH DIVERSITY Diversity is not only a moral imperative – it can also make businesses more effective in the long run. Our study of more than 1,700 companies around the world shows that diversity increases the capacity for innovation by expanding the range of a company’s ideas and options. Diversity also increases resilience: like biological communities, companies that encompass more heterogeneity are better positioned to withstand unanticipated changes. The most obvious sources of diversity, such as gender, ethnicity and sexual orientation, are indeed important in driving innovation. But variety of work experience and educational background are also
46 | EUROPEAN BUSINESS REVIEW
meaningful – and companies that are diverse on multiple dimensions are even more innovative. To unlock the full potential of diversity, organisations also need a culture conducive to embracing new ideas; they must install enabling measures like open communication practices and a commitment to building diversity in top management. PURSUE BOTH SOCIAL AND BUSINESS VALUE Negative external effects like the climate crisis are increasingly visible, automation is sparking fear about the future of work, trust in technology is falling, and the most successful companies are becoming more powerful. As a result, the role of business in society is coming under question, risking the sustainability of the current model of corporate capitalism. To keep the game of business going, business needs to be part of the solution. Leaders will need to master the art of corporate statesmanship, proactively shaping critical societal issues that will increasingly affect business. And they will need to focus on their companies’ Total Societal Impact, ensuring that the business creates social as well as economic value. Not only can this increase a company’s financial performance in the long run, but it can strengthen the social contract between business and society, ensuring that the relationship is able to endure. *Rich Lesser is Global Chief Executive Officer and President, Boston Consulting Group
Martin Reeves is Senior Partner & Managing Director, BCG Henderson Institute
Kevin Whitaker is Economist, BCG Henderson Institute
EUROPEAN BUSINESS REVIEW | 47
Will the April elections in Israel bring a surprise? Elections for the 21st Knesset, Israel's national parliament, are on April 9, 2019. At the moment there are thirteen political parties in the parliament divided over 120 seats. The big question is, will prime minister Benjamin Netanyahu be reelected? by Hans Izaak Kriek*
H
is party, Likud, has now 30 seats and is the largest party in Israel and the polls for him are good. In addition, the current coalition is the most right-wing in Israel's history and Netanyahu wants to continue this coalition after the elections. Snap elections are normal in Israel; no government has served its full term since 1988. There was already a long-time speculation, that snap polls were again on the horizon. Since defense minister Avigdor Lieberman resigned in November. Lieberman opposed a controversial ceasefire deal for the
48 | EUROPEAN BUSINESS REVIEW
Hamas-held Gaza Strip, and his party's withdrawal from government deprived the coalition of five seats. Since then Netanyahu's coalition has been struggling with a one-seat majority. The immediate reason to call elections Was that coalition party leaders failed to agree on a key bill drafting ultra-Orthodox Jews into the army. In a joint statement in December, these leaders said their decision was "in the name of budgetary and national responsibility."Â Some political analysts, however, say that Netanyahu wanted the elections before Attorney General Avichai
THE WORLD
Mandelblit announces whether he will indict the premier in three different corruption cases. While no official timeframe has been given, reports say that announcement could come in mid-April. The thinking is that a fresh electoral mandate would leave Netanyahu better placed to combat potential charges. It would allow him to ramp up his argument that the investigations against him stem from a plot by political enemies to force him from office against the will of the electorate. He is not required to step down if indicted. WHO IS EXPECTED TO WIN? Despite Netanyahu's recent legal and political troubles, polls conducted after recently announcement indicate he would retain power after new elections, putting him in line to become Israel's longest-serving prime minister. The opposition to Netanyahu is fractured. The center-left Zionist Union of Avi Gabbay, and Yair Lapid's centrist Yesh Atid are the largest groupings. Wildcard figures could emerge, including former military chief of staff Benny Gantz, as polls show he could perform well in elections if he decides to create a new party or join an existing one. Gantz said recently, that Netanyahu is divisive and can’t stay Prime Minister if indicted. He claims himself as the next prime minister, “My government will have zero tolerance for corruption.” Former prime minister Ehud Omert react: “Prime Minister Netanyahu does not deserve to remain prime minister.” The parties battling against Likud, including Israel Resilience, Yesh Atid, Labor, Meretz, Hatnua and the Arab parties, may not have a majority to form together a coalition or a political bloc prior to the election but, “I believe we will have enough seats to block another government led by Netanyahu,” Olmert said. FOREIGN POLICY STRONGER THAN EVER Prime Minister Netanyahu meet lately a lot of international leaders in Israel or he’s going abroad. Recently he would go to Moscow for talks focused on Iran’s efforts to establish military presence in Syria. The personal meeting between Netanyahu and President Putin is postponed being rescheduled ‘in near future’, an Israeli official said. The official gave no reason for the postponement, but Israeli media believed it was related to Netanyahu’s strategising with allied right-wing parties for April 9 elections ahead of a Thursday deadline for electoral lists to be submitted. The postponed meeting will be their first extensive faceto-face talks since a friendly fire incident in September that led to a Russian plane being downed by Syrian
air defences during an Israeli raid, which angered the Kremlin. Israel has carried out hundreds of air strikes in Syria against what it says are Iranian and Hezbollah targets, and the Jewish state and Russia have set up a ‘de-confliction’ hotline to avoid accidental clashes. Netanyahu has pledged to stop Israel's main enemy Iran from entrenching itself militarily in the neighboring country. Both Russia and Iran are allies of Syrian President Bashar al-Assad and have helped his forces inflict numerous defeats on rebels and jihadists. Prime minister Netanyahu said: “It’s very important that we continue to prevent Iran from entrenching in Syria. In many ways we’ve blocked that advance and we’re committed to continue blocking it, preventing Iran from creating another war-front against us, right here opposite the Golan Heights. WHAT ABOUT TRUMP'S PEACE PLAN? US President Trump's "ultimate deal" for Israeli-Palestinian peace, the details of which are unknown to the public, was supposed to be unveiled by the end of last year but will probably be delayed due to the elections. Netanyahu, who has been backed strongly by Trump and his administration, said he was "looking forward" to working with the peace plan. Palestinian leaders, who severed ties with Trump's administration after the decision to move the US embassy in Israel to Jerusalem and declared the city Israel's capital, already said they have nothing to do with the peace plan. According to a senior White House official the United States, “The upcoming elections in Israel are one of many factors we are considering evaluating the timing of the release of the plan. The elections may affect peace-plan rollout.” Netanyahu brought Donald Trump in the Likud campaign. In a video appearance, he said: “And frankly, a strong prime minister is a strong Israel, and you truly have a great prime minister in Benjamin Netanyahu, there is nobody like him. He’s a winner, he’s highly respected, he’s highly thought of by all and people really do have great, great respect for what’s happening in Israel. So, vote for Benjamin, terrific guy, terrific leader, great for Israel.” In a few weeks, we will know the outcome of the elections. *Hans Izaak Kriek is International political commentator for European Business Review and editor-in-chief of Kriek Media
EUROPEAN BUSINESS REVIEW | 49
THE WORLD
US Democrats are going ‘socialist’. A boon for Trump? by N. Peter Kramer* ‘America will never be socialist’, President Trump said in his State of the Union. He criticised ‘new calls to adopt socialism in this country’. Democrats -and their supporting media such as the Washington Post, the New York Times and CNN- protested, that the socialist label doesn’t apply to them. But what are they afraid of, the label of their own ideas? The big political story is, that Democrats are embracing policies that include government control of ever-larger chunks of the private economy. And isn’t socialism ‘any of various economic and political theories advocating collective or governmental ownership and administration of the means of production and distribution of goods’ (Merriam Webster’s New World Dictionary)?
ernment would decide what care to deliver, which drugs to pay for, and how much to pay doctors and hospitals. Private insurance would be banned. Senator Kamala Harris said: “the idea is that everyone gets access to medical care and you don’t have to go through the process of an insurance company. Let’s eliminate all of that.’ Well, replacing private insurance with government control sounds quite socialist, doesn’t it?
Recently the Wall Street Journal mentioned some recent proposals of the Democrats.
The Green New Deal. This idea, endorsed by 40 House Democrats and several Democratic presidential candidates, would require that he US be carbon neutral within 10 years. Non-carbon sources provide only 11% of US energy today, so this would mean a complete remake of American electric power, transportation and manufacturing.
Medicare for all. Senator Bernie Sanders’ plan, endorsed by 16 other Democratic Senators, would replace all private health insurance in the US with a federally administered single-payer health care programme. Gov-
And, as imagined by the fast rising Democratic star Rep. Alexandria Ocasio-Cortez, all of this would be planned by a Select Committee For a Green New Deal. As the WSJ wrote: Soviet five-year plans were more modest.
50 | EUROPEAN BUSINESS REVIEW
THE WORLD
A guaranteed government job for all. To assist in this 10-year transformation of society, the plan is to ‘provide all members of society, across all regions and all communities, the opportunity, training and education to be a full and equal participant in the transition, including through a job guarantee program to assure a living wage to job to every person who wants one’.
tax rate on high incomes. Senator Warren wants a new 2% ‘wealth tax’ on assets above $50 million. Democrats in the House Ways and Means Committee are working on a bill to raise the payroll tax to 14.8% from 12.4% on incomes above $400.000. Isn’t this government confiscation merely because someone has earned or saved more money than someone else?
Presidential candidate senator Kirsten Gillibrand support the plan as an alternative to tax reform. It is not a fringe idea! The Center for American Progress, Obama’s think tank, supports a government job for everyone.
And there are many more ‘socialist’ proposals, such as Senator Warren’s plan to set up a government-owned generic drug maker that would inevitably put private companies out of business.
A new system for corporate control. Senator Elisabeth Warren wants a new federal charter for businesses with more than $1 billion in annual revenue that would make companies answer to more than shareholders.
It becomes clear, that the Democratic party takes a left turn. An opportunity for President Trump? In his State of the Union he said ‘We are born free and will stay free. America will never be a socialist country’. To continue with broadside against the crumbling Chavez regime in Venezuela,’ where socialist policies have turned (it) from the richest country in South America to the poorest on earth’.
Employees would elect 40% of directors, who would be obliged to consider ‘benefits’ beyond returns to the owners. A radical redesign of corporate governance that would give politicians (and their interest groups) influence over private business. • Vastly higher taxes. Senator Sanders wants to raise the top death tax rate to 77%. Rep. Ocasio-Cortez a new 70%
In his recent column in the Sunday Times, Prof. Niall Ferguson (Stanford University) gives the US Democrats a well-meant warning: ‘In American politics, unlike in Europe, those who live by the s-word die by the s-word’.
EUROPEAN BUSINESS REVIEW | 51
INTERVIEW
10 predictions for the global economy in 2019 The global economy started 2018 with strong, synchronised growth. But as the year progressed, momentum faded and growth trends diverged by Nariman Behravesh*
T
he global economy started 2018 with strong, synchronised growth. But as the year progressed, momentum faded and growth trends diverged. The US economy accelerated, thanks to fiscal stimulus enacted early in the year, while the economies of the Eurozone, the UK, Japan and China began to weaken.
ity mean that financial conditions worldwide are tightening. These risks point to the increasing vulnerability of the global economy to further shocks, and the rising probability of a recession in the next couple of years.
These divergent trends will persist in 2019. IHS Markit predicts global growth will edge down from 3.2% in 2018 to 3.1% in 2019, and keep decelerating over the next few years.
1. THE US ECONOMY WILL REMAIN ABOVE TREND
One major risk in the coming year is the sharp drop-off in world trade growth, which fell from over 5% at the beginning of 2018 to nearly zero at the end. With anticipated escalation in trade conflicts, a contraction in world trade could drag down the global economy even more. At the same time, the combined effects of rising interest rates and surging equity and commodity market volatil-
52 | EUROPEAN BUSINESS REVIEW
OUR TOP 10 ECONOMIC FORECASTS FOR 2019
Based on estimates about sustainable growth in the labour force and productivity, we assess the trend, or potential, growth in the US economy to be around 2.0%. In 2018, US growth was well above trend at 2.9%, though the acceleration was almost entirely due to a large dose of fiscal stimulus in the form of tax cuts and spending increases. The impact of this stimulus will still be felt in 2019, but will diminish as the year progresses. As a result, we expect growth of 2.6% in
TRENDS
2019 - less than in 2018, but still above trend. 2. EUROPE’S EXPANSION WILL SLOW EVEN MORE Eurozone growth peaked in the second half of 2017, and has declined steadily since then. IHS Markit predicts a further decline to 1.5% in 2019. Political uncertainty, including Brexit, challenges to Emmanuel Macron's government, and the winding down of Angela Merkel’s chancellorship, are contributing to a decline in business sentiment. Economic factors such as the tightening of credit conditions and heightened trade tensions are also driving the deceleration in growth. 3. JAPAN’S RECOVERY WILL REMAIN WEAK, AND ITS ECONOMY WILL GROW LESS THAN 1% IN 2019 Japan’s economy is expected to expand by 0.8% in 2018, with this rate increasing only slightly in 2019 to 0.9%. The slowdown in China’s economy and the fallout from trade tensions between the US and China are drags on growth. Monetary policy will continue to be ultra-ac-
commodative next year. The cyclical decline in Japan’s growth is occurring in an environment of very weak long-term growth. Adverse demographics - specifically a declining labour force - are not being offset by strong enough productivity growth. The “third arrow” of Abenomics, which was supposed to implement significant structural reforms and boost productivity, has been slow to materialize. 4. CHINA’S ECONOMY WILL KEEP DECELERATING The quarterly rate of Chinese growth has been steadily edging down since the beginning of 2017, hitting its lowest level in 10 years in the third quarter of 2018. On an annual basis, the pace of expansion has slowed from 6.9% in 2017 to 6.6% in 2018, and will fall further to 6.3% in 2019. In response to recent economic shocks including the impact of US tariffs, which has so far been limited - policy-makers have unleashed a series of monetary and fiscal measures to help support growth and stabilize financial markets. However, these measures are likely to remain modest. Credit growth will con-
EUROPEAN BUSINESS REVIEW | 53
TRENDS
tinue to be constrained by the massive debt overhang and the government’s commitment to deleveraging, at least in the medium to long term. On the other hand, the government’s stimulus efforts may well become more aggressive if trade tensions with the US (re)escalate and growth is seriously damaged. 5. EMERGING MARKET GROWTH WILL DECELERATE TO 4.6% IN 2019 Some economies, including Brazil, India and Russia, experienced a mild pickup in growth in 2018, while others, such as Argentina, South Africa and Turkey, came under intense financial pressure and suffered recessions or near-recessions. Going forward, emerging markets face a number of headwinds, including slowing growth in advanced economies and in the pace of world trade; the strong US dollar; tightening financial conditions; and rising political uncertainty in countries such as Brazil and Mexico. A few countries will be able to buck these trends, especially dynamic economies with low levels of debt, notably in Asia. 6. COMMODITIES MARKETS COULD BE IN FOR ANOTHER ROLLERCOASTER RIDE IN 2019
54 | EUROPEAN BUSINESS REVIEW
Demand growth next year still looks strong enough to provide commodity markets with support, making the kind of price collapse seen during 2015 unlikely. However, volatility in commodity markets will continue in 2019, particularly in oil markets. We predict oil prices will rise a bit in the near term and average around $70.0 per barrel over the coming year, compared with an average $71.0 in 2018. That said, the risks to prices of oil and other commodities are predominantly on the downside, given slowing demand growth and rising supply. Despite volatility, we predict that by the end of 2019, prices will be little different from their current readings. 7. GLOBAL INFLATION RATES WILL REMAIN CLOSE TO 3.0% Most of the rise in consumer price inflation between 2015 and 2018 - from 2.0% to 3.0% - was due to a transition in the developed world from deflationary, or near deflationary, conditions to inflation rates that are close to central banks’ targets of 2.0%. Over the near term, we expect global inflation and developed economy inflation to remain close to 3.0% and 2.0%, respectively. While there will be upward pressures in many economies as output gaps close and unemployment rates
TRENDS
fall - in some cases to multi-decade lows - there are downward pressures as well. Outside the US, growth is weakening. Moreover, relative to 2018, commodity prices will be relatively flat on average in 2019. Finally, with the trade war in a “temporary truce”, the upward push from tariff increases will be on hold. 8. THE FED WILL RAISE RATES, AND A FEW OTHER CENTRAL BANKS MAY FOLLOW With the world’s key economies at different points in the business cycle, it is not surprising that central banks are moving at different speeds and in different directions. However, given weaker growth and muted inflationary pressures, the pace of removing accommodation is likely to be even more modest than previously expected. The US Federal Reserve is likely to raise rates three times in 2019. Other central banks, including the Bank of England (depending on the Brexit process), the Bank of Canada, and a few emerging market central banks - such as those in Brazil, India and Russia - may also raise rates. The European Central Bank will not hike rates until early 2020. Similarly, we do not believe the Bank of Japan will end its negative interest rate policy until 2021. The People’s Bank of China is the one major central bank moving in the opposite direction; worried about growth, it is providing modest stimulus. 9. THE US DOLLAR WILL HOLD AT CURRENT ELEVATED LEVELS FOR MUCH OF 2019 Continued above-trend US growth and more rate hikes by the Fed are the primary reasons for this anticipated strength. Given the recent relative calm in forex mar-
kets, especially relative to emerging market currencies, another big appreciation of the US dollar seems unlikely. Nevertheless, the potential for volatility remains very high. Political uncertainty in Europe could be very negative for the euro and sterling; we expect that the euro/ dollar rate will end 2019 at around $1.10, compared with $1.14 at the end of 2018. At the same time, we predict that the renminbi/dollar rate will hold fairly steady just below the psychological level of 7.0 - the result of the Chinese government’s desire for financial stability. 10. THE RISKS OF POLICY SHOCKS HAVE RISEN, BUT PROBABLY NOT ENOUGH TO TRIGGER A RECESSION IN 2019 Policy mistakes remain the biggest threats to global growth in 2019 and beyond. The simmering trade conflicts are dangerous, not because they have done damage so far - they haven’t - but because they could easily escalate and get out of control. In addition, rising budget deficits in the US, high debt levels in the US, Europe and Japan, and potential missteps by key central banks all pose threats to the global economy. The good news is that the probability of such policy mistakes seriously hurting global growth in 2019 is still relatively low. However, IHS Markit believes that the risks of damage from policy mistakes will rise in 2020 and beyond, as growth slows further.
*Nariman Behravesh is Chief Economist, IHS Markit
EUROPEAN BUSINESS REVIEW | 55
China’s Interesting Future, in 2019 If China has a problem, so does the global economy by Tom Clifford*
M
aking predictions, as common as they are at this time of year, are notoriously unreliable. Add China into the mix and fate will be tempted to a dangerous degree.But there is one thing we can say about China in 2019 that is definite: The CCP will celebrate its 70th anniversary of coming to power in October 2019.In the real world, that could mean that much-needed reforms of the Chinese economy are delayed. After all, initiating them risks social unrest in the run up to a key anniversary.This is all the riskier as everywhere you go in Beijing, there are signs of a slowing economy. Shops are closing, factories are letting people go, family holidays are cancelled and there is a marked drop in property prices.
56 | EUROPEAN BUSINESS REVIEW
I live in north Beijing, in an area beyond the 5th ring road. There are no shops selling designer brands. You are considered successful in Beijing if you live inside the 4th ring road.The nearest subway is a 20-minute walk, as are the nearest shops. This in no way could fall into the “des-res” (=desired residential) category.There are six residential blocs in my compound, each with 100 flats. These flats were originally built to house elderly inhabitants from inner city areas. But many of their children, now adults with their own families, thought it might be a good idea to bring their parents in with them and rent out the new flat. Judging by the lights that are on at night, 70% of the apartments there are
TRENDS
empty and have been for more than a year. Plans for two nearby shopping centers have been put on hold because there are so few potential customers.Even in northern Beijing, the most affordable part of the Chinese capital, signs of a downturn are obvious.
events, remember this: If China has a problem, so does the global economy.It’s like that old joke: You owe the bank a million, you’re in trouble. If you owe the bank a 100 million, they are in trouble. And if you owe the bank a 100 billion, we are all in trouble.
Talk to economists and financial specialists and you are told the fundamentals show signs of an improvement that is “just around the corner.” But then, these people are often paid to be inveterate optimists.A better indicator for the economy’s well-being may be to talk to the local real estate agent. In my area, they have left 11 of their 23 members of staff go in the last year. Just as telling, my landlord has not increased the rent, the first time this has happened in my eight years in the Chinese capital.
That is why, if China sneezes, the rest of the global economy feels the symptoms of flu. Chinese journalists have been told to refrain from what the party called “bad reporting” on the economy and measures have been introduced to shore it up.Consumers have been given tax cuts to encourage spending, jobless young people receive subsidies and companies that do not lay off people get insurance refunds.
Officially, China’s economy is growing at 6.5%. But car sales, a key indicator of growth, have stalled. China has become the world’s largest car market, but sales have gone into reverse for the first time since 1990.That’s the year Saddam invaded Kuwait, so over a generation ago. The Chinese stock market, meanwhile, has seen $2 trillion wiped off share-price values in a year.
Not a prediction, but in 2019 China will have to tackle not just a slowing economy, but also a protracted trade war with the United States.As if that weren’t enough yet, demands among the population for the benefits of progress, better environmental, labor and health protections are growing louder.The choice for China’s leadership in the run-up to the anniversary is clear. Infrastructure spending funded by debt to maintain the headline grabbing 6.5% bottom line of growth — or reforms that will increase unemployment.“We’ll see,’’ my landlord said to me as I signed the contract, “if your rent will go up next year.’’ He didn’t want to predict, and I didn’t want to tempt fate.
THE CHINA DREAM IN PERIL The most important challenge is that China’s unwritten social contract is under strain. After all, the lack of political freedoms can be accepted if you are the first in your family to own a flat, a car and washing machine and send your child to university.But when your child can’t get a job upon graduation and nor can their friends, then the Communist Party has a problem.Before anyone in the West gratuitously rejoices about this turn of
CONCLUSION
*Tom Clifford is Irish journalist, currently based in Beijing
EUROPEAN BUSINESS REVIEW | 57
EXTRAIT DE CULTURE
Cosmopolitan and Festive Art in the tiny island of Hydra – IAMY the Riviera of Culture A 10-minute walk from the sea, marking a circular distance around the port, with no street names on the island, but only with the great Roloi to guide you, you can find the The Hydra Museum Historical Archives (ΙΑΜΥ). It was founded in 1918. The building was donated to the state by Gikas N. Koulouris. The mayor of the island in that time, Anthony Lignos, discovered much material of this archive in the monastery of the Virgin Mary, which he then categoriyed. Then, up several flights of steps and with your eyes stuck on winding alleys, EBR met the Director of IAMY, Mrs. Ntina Adamopoulou - Historian & Archivist - awarded by Unesco for her valuable offer to culture. Her second award came by the The Faculty of Philosophy of the National and Kapodistrian University of Athens for Ntina’s Adamopoulou documenting research on Andrea’s Miaoulis scientific monograph.
58 | EUROPEAN BUSINESS REVIEW
EXTRAIT DE CULTURE
In an exclusive interview she was introduced by: The "architect" of the EU Jean Monnet had once confessed that "if he could re-start Europe, he would start from culture ...!!" , and analyses why IAMY (with its Archival Section full of records and individual folders of great personalities like Kolokotronis, J. Makriyannis, I. Kapodistrias, Miaoulis, its Museum Section under the theme of Greek Revolution with the embalmed heart of Andreas Miaoulis and its Library with more than 4,000 books many of which date back to 19th century)... consists a real treasure for the history of the island! by Alexandra Papaisidorou*
E
BR: THE HISTORIC ARCHIVE AND MUSEUM OF HYDRA (IAMY) HAS MANY TEMPORARY EXHIBITIONS OF A GREAT SUCCESS. THIS SUMMER PAINTING EXHIBITION OF ALEKOS FASSIANOS "HIS FRENCH CREATIONS" WAS MY FIRST THOUGHT OVER THAT, COULD YOU PLEASE SPECIFY A FEW POINTS ABOUT THE CRITERIA OF CHOOSING COLLECTIONS AND EXHIBITS AND WHAT FACTORS MAKE SOME OF THEM TO BE SOME REMARKABLE?
NA: Our future objectives, except for any other major scientific avocations with the archival and permanent historical collections and our care for the spotlight, viewing and their safe keeping, is also our continuous offer to the contemporary art by organizing and presenting exhibitions, but also in the field of music, dance and theater with the Organization and presentation of relevant always high quality cultural events.
NA: The purpose of organizing a temporary exhibition is in one recreational, however I think is undoubtedly and educative. Temporary exhibitions are in my opinion a literal communicative medium of our Archives- Museum and we have to integrate to the objectives and basic principles of our operation. The experience of a visit to our exhibition premises with the transmission of messages relating to the featured exhibitions to the public of our visitors are certainly unique!.
NA: Each year, around 18,000 to 20,000 guests, Greeks and foreigners, visit our premises. Also the visit of organized groups is, as well as students from all primary and secondary schools. I would say that the kind and style of our Museum (historical) attracts a larger number of Greeks than foreign visitors while noticing that we have frequent visits from Northern Greece and Cyprus.
Thus the exhibition collections that we choose and their constituent projects we ensure that all of the above are met. We ensure that the presentation of works or objects of an exhibition being made in ways that allow several alternative interpretations. Concerning the factors that make our exhibitions significant, I believe, foremost among all, is the way highlighting the works of the collection through the General presentation, the selected and proper lighting but also the accompanying instruments that we use: the graphics, multimedia (image, sound, computers, maps, blueprints, etc) yet – even the right color on the walls that almost every time we change in order to welcome a new exhibition and create the color atmosphere needed. EBR: WHAT ARE THE FUTURE GOALS FOR IAMY?
EBR: WHAT ARE THE VISITING FIGURES OF IAMY EACH YEAR?
EBR: HOW CAN VISITORS BE MORE UPDATED ON IAMY NEWS? NA: Before answering your question, I would like to tell you that the Historical Archives-Museum of Hydra is a purely Public Service, regional service of the General State Archives that belongs to the competence of the Ministry of Education, Research and Religious Affairs. Taking care for the continuous public information of visitors we distribute immediately upon entering our special brochures in Greek and in English with full tour on our premises. Also any visitor can refer on our website (www.iamy.gr) where there is a daily update on the operation and events as well as on our page on Facebook titled Historical Archives – Museum of Hydra/General State Archives. EBR: UNDER WHICH EFFORTS AND FUNDS CAN LARGE EXHIBITIONS BE DEVELOPED?
EUROPEAN BUSINESS REVIEW | 59
EXTRAIT DE CULTURE
NA: Efforts towards organizing large exhibitions are continuous and never ending! Ongoing discussions with prospective exhibitors, research, negotiations, ensuring conditions and funds anguish. So far the costs of major events that have taken place in our premises and even those events involve international partnerships (Switzerland, Spain, Canada, Argentina etc.) are covered by their own exponents. Also important is the financial support in our Museum of some Greek artists even in exhibitions that do not relate to their work. EBR: WHAT CAN SOMEONE ATTEND DURING A FIRST VISIT IN IAMY? NA: First of all, the permanent collection of historic relics kept and displayed in our premises. Among these on the exhibition premises on the first floor is exposed the great Map of Greece of Rigas Feraios, the seal of Napoleon III Bonaparte, the embalmed heart of Andreas Miaoulis, ship figureheads of the ships of the Revolution, weapons and costumes of the fighters of the Revolution, personal documents, photographs, personal objects and costumes of the Admiral Pavlos Kountouriotis, art of the 18th19th century, historic paintings of great painters etc., a large collection of archival documents, photos etc. On the second floor a collection of ancient objects derived from surface is exposed, mainly researches in many points of
60 | EUROPEAN BUSINESS REVIEW
Hydra and amphorae from maritime excavations. And of course in the actual exhibition rooms the visitor can enjoy contemporary art through the eyes of our artists. EBR: HOW HAS YOUR LOVE FOR ART BEEN ORIGINATED? NA: My love for Art I think it started from the... beginning of my existence! Always I was attracted by the nice and aesthetically impeccable in all aspects of my life and I was trying to tone in, of course, as much as possible about it!. From schoolgirl already, on the latest classes of high school and later even as a student at the University of Athens, I was watching exhibitions on various Galleries of Athens. The science of Archaeology which I chose and with which I dealt through excavations for several years is I think a factor, a sine qua non for the cultivation of love for the beautiful and artistic!! Crucial however stood the 25-year, closely acquainted friendship with the great colorist of our era, which sadly is no longer with us, the late Panagiotis Tetsis. Close to him, and close to the circle of his students and his exhibitions I became even more... fanatical! My acquaintance and friendship also with the late Nikos Papadakis and his wife great ceramist Eleni Vernadaki but also with many other great painters, older and younger, Caras,
EXTRAIT DE CULTURE
Veroucas, Fassianos, Mavroides, Katsoulidis, and many others, inevitably led me down the path of love for art and its people. EBR: HOW CAN THE SEPARATE UNITS OF THEMATIC AREAS INTO THE MUSEUM INFLUENCE THE VISITORS’ PREFERENCES? FOR EXAMPLE, THERE ARE SOME EXHIBITIONS OR COLLECTIONS MORE POPULAR THAN OTHERS, HOW DO YOU HANDLE IT? ND: If you ask me for the coexistence of old and new, I assure you that this pairing, this "marriage" of the past with the present through historical exhibits on one side and modern works of art on the other side, almost always excites the visitor since he has the possibility of regurgitation and alternative approaches to the content of our Museum. EBR: WHAT IS WORTH VISITING THE HISTORIC ARCHIVE AND MUSEUM OF HYDRA FOR THE FOLLOWING PERIOD? WHAT ARE YOUR NEXT PLANS? ND: The exhibitions that we are discussing, planning and organizing are in total 3 or 4 but very important. Allow me, however, because we are still in the process of research and discussions mainly to secure resources for their implementation, to not refer by name to each of them. Also the next summer season we will be accompanied by several others, not only exhibitions but also events, workshops, conferences, book presentations, musical and theatrical performances, etc. EBR: FRENCH WEEK ON HYDRA WAS OF A GREAT SUCCESS AND APPRECIATION. IT CONSISTED A GREAT INITIATIVE ON YOUR PART & AN EXCHANGE OF CULTURE HOSTED BY IAMY - WOULD YOU BELIEVE THAT BY THIS WAY MUSEUMS CAN PLAY A ROLE OF COLLABORATION BETWEEN NATIONS AND TAKE ACTIVE ACTION TO THE OPPOSITIONS OF CURRENT REALITY? NA: I think museums can literally remove the borders, eliminate hostility and racial differences through this "Exchange" of cultures in which you refer… This approach of people, lifestyle, methods, attitudes through art blunts the existing and brings closer man one to another. French Week indeed left excellent and very nostalgic impressions to us and especially to our visitors. Of course, in order to accept and welcome in our premises this “exchange” of culture we took great initiative not only by us, but also by the great painter Alexis Veroucas, whom I warmly thank from this position and whom we honoured in the recent
us event. This is because our desire and our belief is to honor and award of the offering, from wherever it comes!! EBR: FINANCIAL CRISIS HAS ALSO A GREAT INFLUENCE ON THE IAMY AFFAIRS? NA: I would say not... Clearly as to all museums, moreover, had declined in recent years, the incoming public but this year things were very encouraging, visits increased, ongoing events have brought us many visitors and on the island and Museum and our Museum Shop objects found ardent shoppers with whatever this means economically. EBR: WHICH ARE THE REASONS FOR SOMEONE TO VISIT THE IAMY? NA: The significance and value of the historical relics of the permanent collection, many high-level events that are always being presented each summer, the warm, friendly atmosphere and the fact that each visitor within our premises can seek and ultimately discover its historic identity. EBR: DO YOU BELIEVE THAT EU HAS CONTRIBUTED TO A CULTURAL INTEGRATION? NA: The "architect" of the EU Jean Monnet had once confessed that "if he could re-start Europe, he would start from culture ...!!" It is indisputable fact that we are the Union of 27 Member States with common borders, with common policies and institutions, common currency, common in general course. Culture is a domain with a humane dimension, a common "language" for all Europeans and clearly culture supported temporal life of Europe. The need for the EU and its common course is well grounded in culture, and the EU looks forward to its catalytic benefits. Therefore the care and effort to stimulate and promote culture should be continuous. EBR: IS THERE A EUROPEAN CULTURE, IN YOUR OPINION? NA: Indisputable fact is the existence and the effort of diffusion of a European culture in my opinion. Culture however that should become broader and deeper. And to do this, the EU Member-States should not only accept and adopt neither to stand on things that separate people between them, after all the actions and ideological residue of centuries of Colonialism, but all European people through culture always as a central pillar, should try to consolidate the cultural values and join the different evaluative opinions on the European North-South and West-East. *Alexandra Papaisidorou is Editor-at-large & PhD candidate of European & International Relations
EUROPEAN BUSINESS REVIEW | 61
COVER ISSUE
62 | EUROPEAN BUSINESS REVIEW
EXTRAIT DE CULTURE
‘Art makes you humble and patient. It brings me fulfillment’ It makes life more interesting, claims the artist Anne-Marie Fiquet in an exclusive EBR interview. by Alexandra Papaisidorou*
V
incent Van Gogh mentioned: “It is good to love many things, for therein lies the true strength, and whosoever loves much performs much, and can accomplish much, and what is done in love is well done"... and the artist Anne-Marie Fiquet applied it. The Ambliaise who knows well how to make the "two rivers" of her homeplace to flow inside her and turned into rivers of love and inspiration, action and passion, creation and devotion reveals her secrets and share this love. EBR exclusively interviewed Anne-Marie Fiquet and make her assemblage of motives, motivos, motivations, motions both of her life and artistic inspiration. A great number of exhibitions do complete a ten-year period of her multifaced works of art. To name a few: paintings, monotypes, engravings, collages, torn papers, drawings, ink, engravings along with different styles elegantly combined with her fine techniques. Sophisticated art houses host Anne-Marie’s works of art and it is now the time to discover her beauty! WHO OR WHAT INSPIRED YOU TO TAKE UP PAINTING AND PURSUE A FUTURE DEVOTED IN ART? Art has always taken a special place in my life as I always enjoyed attending exhibitions and looking in art books. But, my practice as an artist is only 10 years old. Born in Amblie, a small village in Normandy, I moved to Paris for my studies. My professional career started
there in the field of marketing and tourism and then in 1989 I came to Brussels to work for the European Commission, where I stayed for almost 20 years. Breast cancer made me quit my career and change my life. Art came to me as a healing process and became almost an obsession, an art mania. I started painting some monochromes with a friend and then I attended painting classes nearby before eventually attending Fine Art Academies in Brussels (Académie des Beaux Arts de Bruxelles, Rhok Flemish Art Academy). Brussels offers an ideal environment conducive to artistic practice with its many art academies, art galleries and art collectors. It is famous for its art market, art fairs such as Brafa or Art Brussels. WHO OR WHAT HAVE BEEN THE MOST IMPORTANT INFLUENCES ON YOUR ARTISTIC LIFE? Picasso has had a strong influence on me. Not only because he is the greatest artist of the XX° century but also because of his eclecticism, he tried everything: all subjects, all techniques and worked constantly. He is an example for me of someone who pursued his fate in a passionate and comprehensive manner. German expressionism, Fauvism, early XX° century painters were also quite influential, but my taste ranges also from Italian
EUROPEAN BUSINESS REVIEW | 63
EXTRAIT DE CULTURE
and Flemish primitives to Renaissance, Baroque and modern art. I love artists like Egon Schiele and Marlene Dumas whose expression in their art is very powerful. WHICH WORKS OF ART ARE YOU MOST PROUD OF? I am never fully happy with my work, so I cannot say I am proud of my work. It would be arrogant. Still, I am quite happy with the variety of art work that I created both in style (figurative and abstract) and techniques (drawing drawing 2017 ink drawing, paintings, collages, prints, ink). Engraving has recently been a real challenge for me as the potential is unlimited (aquatint, etchings, woodcut, etc.). Art practice makes you humble, modest and patient. HOW DO YOU MAKE YOUR PAINTING CHOICES FROM SEASON TO SEASON? ENGRAVINGS, MONOTYPES, COLLAGES, TORN PAPERS CONSIST A VARIETY OF YOUR ARTISTIC AGENDA... COULD YOU GIVE US MORE DETAILS? My early work was based on monochromes. I also copied artists like Kees Van Dongen, Ernst Ludwig Kirchner, Matisse, which is a good way to learn how to paint. My very painting portrait was that of my younger sister Estelle, the younger one in a family of 12, after lunch in the home
64 | EUROPEAN BUSINESS REVIEW
garden in Normandy and then I painted my father newspaper. After a series of portraits I explored abstraction and material in a series of paintings inspired by Al Alhambra in Grenada. The series of collages on the image of woman called « body and soul » was based on female magazines. My themes also come from my journeys (blue mountains from my trip to Iran), the daily news (my rhino in the financial jungle or simply be based on the observation of nature and of the human body (live model). They can also be given themes or directions in the Art Academy like the work we did echoing the exhibition on Japanese prints in the Brussels Cinquantenaire Museum. I always learn from exchanging with others and I find it stimulating. I like to renew my work constantly, I enjoy exploring new techniques, new medium etcetera. It makes life more interesting. Finally, I visit many art exhibitions and art fairs, where I also get inspiration for my work. WHAT DO YOU CONSIDER TO BE THE MOST IMPORTANT IDEAS AND CONCEPTS TO IMPART TO ASPIRING ARTISTS? I would say: be yourself, be sincere, dare, don’t be afraid of yourself and others. Do, do, do, work, work, work and try again. It is through work that you can make progress and find what you are looking for. Listen to your heart and find pleasure in your art. Also,don’t expect the result immediately, the process is very important.
EXTRAIT DE CULTURE
EUROPEAN BUSINESS REVIEW | 65
EXTRAIT DE CULTURE
WHAT IS YOUR IDEA OF PERFECT HAPPINESS? For me, happiness is rather theoretical but I believe in small pleasures in life such as admiring a beautiful picture, the sea, the sun, nice objects, nice friends, nice food, nice wine. Shakespeare said « beauty is in the eye of the beholder ». Beauty brings happiness. I believe in « Art Total » (‘Gesamtkunstwerk’ in German), art as a lifestyle. WHAT ARE YOUR COMMENTS ON EU’S ‘LOST PERFUME OF BEAUTY’, ARTISTIC IDENTITY AND LOSS OF CULTURAL PURSUITS? The EU is facing times of uncertainty, lack of confidence in EU leaders, migration crisis, youth unemployment, economic recession, identity crisis, rising nationalism, risk of splitting such as for Brexit. Against this background, culture is not the EU’s top priority. But we should recall that one of the founders of Europe, Jean Monnet, said if I had to start again the common market, which started with Coal and Steel European Community and Euratom, I would start with culture. He understood culture is crucial for building common values, understanding each other, integration, tolerance and democracy. The EU is torn apart on the issue of immigration. Fear of others, foreigners, leads to nationalism. But look what happened in the early XX° century in Paris for example, the avant-garde artists came from other countries often escaping dictatorship or revolution: Picasso, Juan Gris, Modigliani, Chagall, Giacometti, De Stael… There was such a cultural effervescence in Montmartre and Montparnasse. Europe was built also by and with migrants. DO YOU BELIEVE THAT EUROPE CAN BE RE-ORIENTED TO PROSPERITY, WELL-BRING, HARMONY, BALANCE THROUGH “BRUSHSTROKES” OF SOPHISTICATION AND FINESSE? We need to stand for our common values in Europe, based on democracy, tolerance, freedom and solidarity.
66 | EUROPEAN BUSINESS REVIEW
The EU is the first commercial power in the world. Beyond its economic power, Europe is also a cultural hub with the greatest cultural heritage in the world and we should be very proud of it. Europe is very attractive and I believe we should promote it more. Many countries envy our cultural heritage and history and want to import our art to their countries (just look at the new museums in the Middle East:Louvre Abu Dhabi, the Desert Rose Qatar’s National Museum and those new museums being built all over China). I believe also that the role of women in politics and art should be enhanced. There are still very few women artists at international level and present in museums. I am not sure things have changed much in the last 40 years since the Guerrilla girls’** feminist movement in New York in the 80’s. But, never give up! Be optimistic! *Born in Amblie in Normandie, Anne-Marie Fiquet, started as a painter in 2008. She is living in Paris and Brussels, where she has her own atelier, Art Kitchen 200. Her passion and eclecticism are reflected in her art. Anne-Marie’s work can be seen at an exhibition in Brussels: Galerie Le Laboratoire, 96-100 rue Brogniez, 1070 Anderlecht (March 15-17). Visit her website www.annemariefiquet. eu or look at Instagram @fiquetannemarie or Facebook 'Anne-Marie Fiquet' to find more. **Anne-Marie Fiquet exhibited recently in Brussels, in Galerie Le Laboratoire. The vernissage was on March 8, World Women’s Day. For that reason, she referred with her paintings, all male nudes, to the ‘Guerrilla Girls’. These feminists complained, that in the Metropolitan Museum in NYC, almost all paintings of nudes showed women, and that almost all of these were painted by men. She also exhibited on this occasion, with a nod to Gustave Courbet, her painting ‘A male origin of the world’.
*Alexandra Papaisidorou is Editor-at-large & PhD candidate of European & International Relations
EUROPEAN BUSINESS REVIEW | 67
EU AFFAIRS
68 | EUROPEAN BUSINESS REVIEW