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ISSUE 2-2016 / YEAR 20th - PRICE 10,00 € / $12,00

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Special Report:

The Empowerment of Society through Freedom of Education Views and opinions from the recent ECNAIS and HAIS conference Tibor Navracsics

Opinion

FREEDOM OF EDUCATION IN A TRANSFORMED WORLD

EU Affairs

Trends

ISLANDS AND THE EU

TECHNOLOGY HAS CHANGED MIGRATION FOREVER

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INDEX Founder

Konstantinos C. Trikoukis Chairman

Athanase Papandropoulos Publisher

Christos K. Trikoukis

08 EDITORIAL

12 OPINION

Turkish Prime-Minister Davutoglu’s exit…

Freedom of education in a transformed world

18 EU AFFAIRS

22 THE WORLD

The fundamental flaws of brexit backers

Is Trump out of step with Americans on foreign policy?

26 SPECIAL REPORT

48 TRENDS

Editor in Chief

N. Peter Kramer Editorial Consultant

Anthi Louka Trikouki Issue Contributors

Athanase Papandropoulos, Radu Magdin, Steven Hill, Antonis Zairis, George Zairis, William A. Galston, Vasilis Margaras, Jan Techau, Tibor Navracsics, Simon Steen, Charalampos Kyrailidis, Leonidas Phoebus Koskos, Evy Christophilopoulou, George Mavrotas, Kostas Gouliamos, George Pagoulatos, Erasmia Papadopoulou, Kilian Kleinschmidt, Navi Radjou, Laurence Capron, Correspondents

Brussels, London, New York, Paris, Berlin, Istanbul, Athens, Helsinki, Rome, Prague Public Relations

Margarita Mertiri Financial Consultant

Theodoros Vlassopoulos Published by:

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The Empowerment of Society through Freedom of Education

Technology has changed migration for ever

52 LEADERSHIP

54 LAST PAGE

The cost of Geopolitics to M&As

Can India surpass China’s economy by 2050?

ISSUE 2 / MAY-AUGUST 2016, YEAR 20th 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.

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EDITORIAL EUROPEAN BUSINESS REVIEW

TURKISH PRIME-MINISTER DAVUTOGLU’S EXIT...

By N. Peter Kramer

T

he package of the EU-Turkey agreement to solve the refugee crisis was tied to visa liberalisation, to ease the deal for Turkey. This was what Turkey’s Prime-Minister Davutoglu’s achieved during the negotiations. Although throughout the EU-Turkey talks President Erdogan has continuously repeated that he was not willing to change laws in order to meet the agreement, it has not prevented the EU from setting dates. European Commission President Jean-Claude Juncker warned Erdogan that the agreement aiming to allow Turkish citizens visa-free travel within Europe will collapse if Turkey doesn’t fulfil its commitments.

However, President Erdogan refused to change the Turkish laws on terrorism, a main part of the deal, and let Juncker know ‘since when are you running this country? Who has given you the authority?’. After that the Turkish President took the decision to change the Prime-Minister.

Meanwhile it seems that Erdogan is proposing his own son as a candidate.

Davutoglu’s departure coincided with the postponement of the visa liberalisation deal. European Parliament President Martin Schulz announced that he didn’t send the draft for the visa liberalisation tot the relevant parliamentary committee review. The reason he gave, was that Turkey has not fulfilled all the requirements.

Apart from the anti-terror law, there are other obstacles, about anti-corruption laws, data protection rules, and Europol and judicial cooperation. On this last one, Turkey must cooperate closely with all 28 EU member states, including Cyprus…

Now, the Commission tries to save the agreement quietly. If the negotiations are not successful, there will be more delay and it could ultimately end in a catastrophic failure: with again a major influx of migrants arriving to the Greek islands, as it happened in 2015.

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OPINION EUROPEAN BUSINESS REVIEW

FREEDOM OF EDUCATION IN A TRANSFORMED WORLD

By Athanase Papandropoulos* We stand at the brink of a technological revolution that will alter fundamentally the way we live,work and relate to one another I am an economic journalist for many years –a newspaperman, not a specialist on education or a historian of economic thought. My mathematics is rudimentary, my English imperfect, my skepticism fluent and my background knowledge of Economics fairly extensive from having followed the field for many years. During the same period, also working as correspondent in Brussels between 1966 and 1977, I learned first-hand the advantages of the European integration and, as former vice-president of the Students Association of the University Centre of Mons, in Belgium, I participated to the biggest educational reform in this country.

During this turbulent period I had the opportunity to read the monumental book of Ludwig von Mises “Human Action” and I remember a quote of the author: Give a man a fish and you feed him for one day. Teach a man how to fish and you feed him for a lifetime. To this quote we can now add: Invent a better method of fishing or of farmer-fishing and you feed a great many people, because these methods can be copied virtually without cost and spread around the world. Of course, depending on the circumstances, your intention can make you rich as well. New ideas and education, more than savings or investment, are the keys to prosperity, both to large and small private fortunes and the wealth of nations. In other words, knowledge as producer of wealth is an important raw material.

According to Peter Drucker, the great philosopher of management and doing business, knowledge is the business fully as much as the customer is the business.

Physical goods or services are only the vehicle for the exchange of customer purchasing power against business knowledge.

Business is a human organization, made or broken by the quality of its people. Labor might one day be done

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by machines to the point where it is fully automated.

But knowledge is a specifically human resource. It is not found in books. Books contain information, whereas knowledge is the ability to apply information to specific work and performance. And that only comes with a human being, his brain or the skill of his hands. For business success, knowledge must first be meaningful to the customer in terms of satisfaction and value. Knowledge per se is useless in business – and not only in business. It is only effective through the contribution it makes outside of the business (to customers, markets, and end-uses).

To be able to do something as well as others is not enough, either. It does not give the leadership position without which a business is doomed. Only excellence earns a profit; the only genuine profit is that of the innovator. Economic results are the results of the differentiation. The source of this specific differentiation, and with it of business survival and growth, is a specific, distinct knowledge possessed by a group of people in the business.

But while there is always at least one such knowledge area in every successful business, no two businesses are alike in their distinct knowledge. “Knowledge itself is power”, said Bakon, more than 250 years ago. And this is the main reason why every country in our world is trying to improve what I call “educational quality”.

In sum, educational quality has powerful effects on individual earnings at the distribution of income and on economic growth.

Economists have long believed that investments in education, or “human capital”, are an important source of economic growth. Over the last 40 years of output in the EU has risen about 1,8% a year. Growth in labor productivity, the major driver of increases in wages and standards of living, has measured about 2,4% per year.

The contribution of education to labor productivity growth is estimated in different studies to be between 13% and 30% of the total increase. Whatever the contribution of education to growth in the past, investments in human capital may rise in importance

EUROPEAN BUSINESS REVIEW OPINION

relative to investments in other forms of capital as we transition to a post-industrial, knowledge-based economy.

Why might a more highly-educated work force increase economic growth? A more educated labor force is more mobile and adaptable, can learn new tasks and new skills more easily, can use a wider range of technologies and sophisticated equipment (including newly emerging ones), and is more creative in thinking about how to improve the management of work. All of these attributes not only make a more highly skilled worker more productive than a less skilled one, but also enable employers to organize their work places differently and adjust better to changes necessitated by competition, by technical advances or by changes in consumer demand.

Just as a firm with better educated workers can perform better in these dimensions, so too can an economy with a better educated workforce. Skills beget more skills and new ways of doing business, workers learn from one another, and firms adapt their technology and their use of capital to the skills of the available work force. The benefits of having a more educated work force accrue to everyone, not just to the organization where these individuals happen to work. Further, these kinds of indirect (or spillover) effects for the firm or the economy as a whole may be especially important in an increasingly competitive global marketplace. Imagine an economy lacking in people able to read directions, use a sophisticated copier or a computer, or understand prevailing norms of behavior –especially now, in the era of complexity and the Fourth Industrial Revolution.

As professor Klauss Schwab pointed out during the annual Davos Conference, organized by the World Economic Forum, we stand at the brink of a technological revolution that will alter fundamentally the way we live, work and relate to one another. In its scale, scope and complexity, the transformation will be unlike anything humankind has experienced before.

We do not yet know just how it will unfold, but one thing is clear: the response to it must be integrated and comprehensive, involving all stakeholders of the global polity, from the public and private sectors to academia and civil society.

The First Industrial Revolution used water and steam power to mechanize production. The Second used electric power to create mass production. The Third used electronics and information technology to automate production. Now a Fourth Industrial Revolution is building on the Third, the digital revolution that has been occurring since the middle of the last century.

It is characterized by a fusion of technologies that is blurring the lines between the physical, digital and biological spheres.

There are three reasons why today’s transformations represent not merely a prolongation of the Third Industrial Revolution but rather the arrival of a Fourth and distinct one: velocity, scope and systems impact.

The speed of current breakthroughs has no historical precedent. When compared with previous industrial revolutions, the Fourth is evolving at an exponential rather than a linear pace. Moreover, it is disrupting almost every industry in every country. And the breadth and depth of these changes herald the transformation of entire systems of production, management and governance.

The possibilities of millions of people connected by mobile devices, with unprecedented processing power, storage capacity, and access to knowledge, are unlimited. And these possibilities will be multiplied by emerging technology breakthroughs in fields such as artificial intelligence, robotics, the Internet of Things, autonomous vehicles, 3D printing, nanotechnology, biotechnology, material science, energy storage, and quantum computing.

Already, artificial intelligence (AI) is all around us, from self-driving cars and drones to virtual assistants and software that translate or invest. Impressive progress has been made in AI in recent years, driven by exponential increases in computing power and by the availability of vast amounts of data, from software used to discover new drugs to algorithms used to predict our cultural interests. Digital fabrication technologies, meanwhile, are interacting with the biological world on a daily basis. Engineers, designers, and architects are combining computational design, additive manufacturing, materials engineering, and synthetic biology to pioneer a symbiosis between microorganisms, our bodies, the products we consume, and even the buildings we inhabit.

Like the revolutions that preceded it, the Fourth Industrial Revolution has the potential to raise global income levels and improve the quality of life for populations around the world. To date, those who have gained the most from it have been consumers able to afford and access the digital world. Technology has made possible new products and services that increase the efficiency and pleasure of our personal lives. Ordering a cab, booking a flight, buying a product, making a payment, listening to music, watching a film, or playing a game –any of these can now be done remotely.

In the future, technological innovation will also lead to a supply-side miracle, with long-term gains in efficiency and productivity. Transportation and communication costs will drop, logistics and global supply chains will become more effective, and the cost of trade will diminish, all of which will open new markets and drive economic growth.

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OPINION EUROPEAN BUSINESS REVIEW

At the same time, as the economists Erik Brynjolfsson and Andrew McAfee have pointed out, the revolution could yield greater inequality, particularly in its potential to disrupt labor markets. As automation substitutes for labor across the entire economy, the net displacement of workers by machines might exacerbate the gap between returns to capital and returns to labor. On the other hand, it is also possible that the displacement of workers by technology will, in aggregate, result in a net increase in safe and rewarding jobs.

We cannot foresee at this point which scenario is likely to emerge, and history suggests that the outcome is likely to be some combination of the two. However, I am convinced of one thing: that in the future, talent, more than capital, will represent the critical factor of production. This will give rise to a job market increasingly segregated into “low-skill/low-pay” and “high-skill/high-pay” segments, which in turn will lead to an increase in social tensions.

In addition to being a key economic concern, inequality represents the greatest societal concern associated with the Fourth Industrial Revolution. The largest beneficiaries of innovation tend to be the providers of intellectual and physical capital –the innovators, shareholders and investors– which explains the rising gap in wealth between those dependent on capital versus labor. Technology is therefore one of the main reasons why incomes have stagnated, or even decreased, for a majority of the population in high-income countries: the demand for highly skilled workers has increased while the demand for workers with less education and lower skills has decreased. The result is a job market with a strong demand at the high and low ends, but a hollowing out of the middle.

This helps explain why so many workers are disillusioned and fearful that their own real incomes and those of their children will continue to stagnate.

It also helps explain why middle classes around the world are increasingly experiencing a pervasive sense of dissatisfaction and unfairness. A winner-takes-all economy that offers only limited access to the middle class is a recipe for democratic malaise and dereliction.

Discontent can also be fueled by the pervasiveness of digital technologies and the dynamics of information sharing typified by social media. More than 30% of the global population now uses social media platforms to connect, learn, and share information. In an ideal world, these interactions would provide an opportunity for cross-cultural understanding and cohesion.

However, they can also create and propagate unrealistic expectations as to what constitutes success for an

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individual or a group, as well as offer opportunities for extreme ideas and ideologies to spread.

Under these circumstances, the role of education systems has changed and this process will continue, toward more freedom of the educational landscape.

To thrive in a rapidly evolving technology-mediated world, students must not only possess strong skills in areas such as language arts, mathematics and science, but also to be adept at skills such as critical thinking, problem solving, persistence, collaboration, and curiosity. However, all too often students in many countries are not attaining such skills.

In this context, the WEF has taken on a multi-year initiative, “New Vision for Education”, to examine the pressing issue of skill-gaps and explore ways to address these gaps through technology.

Consequently, it is time to identify fundamental problems in education that are overled or neglected, and should be taught in the future. To improve the future we should examine the sort of education systems that have consistently produced the best results across countries and continents. From ancient times until the present, in nations both wealthy and developing, the most market-like education systems have been the most efficient, produced the highest academic achievement, created the least social conflict, and been the most responsive to the evolving needs of parents and students.

What Greece needs is more educational freedom.

Parents must be free to choose the education that’s best for their children, no matter where they live or how much they earn. Educators must be free to determine their own curricula and methods and free to set their own prices and compensation. Schools must be free to innovate and compete to attract and retain students. And they must be both free to profit from their successes and compelled to suffer losses for their failures, because the profit-and-loss system spurs innovation, efficiency, and the dissemination of best practices. Likewise, educators must be free to compete in the labor market for positions that give them the greatest professional freedom and compensation.

Historically, the only way parents have retained control over their children’s education in the long run has been for them to assume, as much as possible, the direct financial responsibility for it. *Athanase Papandropoulos Honorary President of the Association of European Journalists {AEJ}

EU AFFAIRS EUROPEAN BUSINESS REVIEW

ISLANDS AND THE EU

By Vasilis Margaras* In its January 2016 Plenary Session, the European Parliament adopted a unanimous Resolution on the special situation of islands (2015/3014(RSP)). The resolution has touched upon a number of demands that have been advocated by insular regional territories and their lobbies in Brussels. But what are the particular conditions that the islands are facing? Why has this resolution received such a big level of support from all political groups and MEPs at the European Parliament?

Many EU Member States have islands and insular territories (e.g. archipelagos). Among these islands are several world famous tourist destinations, which possess considerable natural and cultural wealth.

Certain islands also produce renowned agricultural products and handcrafts. In our minds, islands constitute idyllic spaces for holidays and relaxation.

However, islands also face considerable challenges.

They may lack adequate transport links with the nearest mainland. Their ecosystems are vulnerable and natural resources are often scarce. Some are small and/or mountainous with small agricultural sectors.

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Many of them may be located on the periphery of a Member State, or constitute border regions. This special geographic location is placing considerable limitations on their potential for economic growth. Islands are usually too small to allow big economies of scale. They may lack human capital and usually possess limited public resources in health, education, research and innovation. More recently, the EU’s southern islands, and in particularly the Greek islands, have seen a large influx of migrants, whilst lacking the resources needed for their accommodation or integration.

In most cases, islands are not self-sufficient in agricultura and industrial products or tertiary-sector services. They are usually reliant on imported fossil fuels and dependent on mainland energy networks.

As the majority of products and services have to be transported to islands, prices are considerably higher, adding to the cost of living in insular territories.

Many islands also suffer from an economy of seasonality where much of the economic activity takes place during the tourist summer months. In the winter months, the economy tends to stagnate.

EUROPEAN BUSINESS REVIEW EU

In addition, certain insular economies specialise in one or just a few economic fields (e.g. tourism, fisheries, agriculture), or have limited economic activity due to their small size. This is especially the case with the very small islands. Therefore, diversification of the economy is desperately needed. However, although the state of insularity creates a large number of problems, various studies suggest that islands can become ‘lands of opportunities’ by investing in their relative strengths.

In order for this to happen, measures to promote insular policies should be established both at national and European level. Policy ideas put forward by insular territories themselves, such as the adoption of ‘insular mainstreaming’ in national and European policies; adopting a measuring of the cost of insularity and the collection of data to assess the real needs of insular territories should be further explored and developed.

Island territories claim that a number of small aid incentives to their territories will boost local economies considerably, without posing a danger to the EU budget. These incentives could include the granting of additional aid to islands in the fields of environment, energy, transport and infrastructures. Insular territories also call for state aid exemptions to be extended to islands with populations above the established limit of 5 000 inhabitants as mentioned in the Treaty on the Functioning of the EU, and the use of additional indicators for the allocation of regional funding.

Islands face considerable challenges. However, through a revision of existing policies, they may have the potential to transform their geographical handicaps into opportunities. The European Spatial Planning Observation Network (ESPON) study on the development of islands (EUROISLANDS 2013) provides ideas for economic conversion, whereby islands can be transformed into ‘green’ islands of equal opportunities and producers of high-quality local products. With the use of green technologies and smart specialisation, islands can protect their natural resources and become positive examples of self-sustainability. Many islands have already taken the first steps in this direction by participating in the Covenant of Mayors for the environment.

In addition, new ICT opportunities may contribute to diminishing the ‘research; life-learning education and innovation gap’ that many island territories face. Furthermore, the potential for growth and jobs

AFFAIRS

can be further developed through the production of high-quality agricultural products and handcrafts. A number ofisland-produced products have already been protected by EU geographical indication schemes and constitute successful examples of commercialisation.

Rural development aid programmes may also provide additional revenue to rural areas. In addition, blue growth techniques as promoted by the European Commission may be developed in the islands in order to address the depletion of fishing stocks and to provide a new range of economic activities in coastal areas. The development of sustainable tourism in addition to seasonal tourism may provide additional growth and employment as well as a focus on the promotion of cultural heritage and specific artisanal economic activities. The huge potential of ocean, wind and solar energy and the potential of islands to become important sources of alternative energy, to be as energy-autonomous as possible and, above all, to guarantee cheaper energy supplies for their inhabitants can provide a new source of sustainable economic growth for insular territories.

Finally, islands offer a unique way of life to inhabitants and visitors. The widely acknowledged high quality of life, relatively stress-free environment, and cultural and natural resources constitute valuable assets which could be further promoted.

More on the issues affecting the islands and the possible solutions to their problems can be found in the briefing on the EPRS briefing on: ‘Islands of the EU: Taking account of their specific needs in EU policy’ at the following webpage: http://epthinktank.eu/

This article is written in a personal capacity and does not represent the views of the institution for which the author works.

*Vasilis Maglaras holds a PhD from Loughborough University. He has been a Regional Councillor for the South Aegean Region and is currently working at the European Parliament as Policy Advisor in EU Regional Policy for the European Parliament Research Service. ** first published in “The Press Club Brussels Europe Magazine’’, April 2016.

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EU AFFAIRS EUROPEAN BUSINESS REVIEW

THE REFUGEE WAVE AND THE ISSUE OF STRATEGIC COMMUNICATIONS

By Radu Magdin*

In 2015, Europe experienced its highest number of refugees since the Second World War, with Syria the number one “supplier”, due to the conflict there

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EUROPEAN BUSINESS REVIEW EU

A high number of Syrians gave up on the idea of going back to their normal life before the war so they decided to seek asylum in Europe, furthermore as tragedies continued on the ground. Even if the EU has pumped a lot of money in border security technology, it still fell short when it comes to being prepared to receive such an influx of refugees. A refugee normally has to stay in the first country that he or she arrives into, a phenomenon that puts a lot of pressure on the countries that are already in economic trouble such as Greece; refugee routes targeted directly the Schengen space, and the idea of mandatory quotas was brought up. But the EU has both the economical means of managing this crisis, the problem is more one related to social integration of a large wave of refugees. This is where perceptions and strategic communications come in, and so does foreign propaganda: a fear game on refugees, their integration and their possible motives to commit crimes came in the public arena the past few months.

For example, in an interconnected global media space, the main idea stressed out by the media, particularly in countries such as Russia, but also in other EU countries, is the focus on crime and religion, as well as the collapse of the social systems. However, statistics say that even if the EU were to bring in 4 million refugees, the percentage of Muslims would only rise from 4% to 5% in the European population: so no “Islamisation of Europe” is happening. One of the main concerns that the Europeans have is the propagandistic idea that the immigrants will increase the birth rates and that new comers might end up overtaking the natives in a matter of decades. Contrary to popular belief, statistics show that even if the Muslim population is prone to have more children than non-Muslims, this trend decreases as the standard of living and education rises. So, integration is always key, and so are living conditions, not to mention that young people need less social security help: the workforce the refugees will provide will not only boost the economy but will also fill in the gaps and sustain Europe’s ageing population. Not all immigrants joining the wave are actual refugees, so Europe will not be and cannot be everyone’s refuge: where there is no case for a refugee status, a person will have to go back.

The portrait of the “dangerous and violent” refugee enjoyed some of the headlines, with a particularly

AFFAIRS

media frenzy as regards the fake case of the Russian girl in Germany. Indeed, one of the main sources of propaganda is Russia and Putin is said to be seeking to “sow the seeds of discord in Europe by weakening Germany and Angela Merkel”, according to German intelligence sources quoted by SueddeutscheZeitung as well as the NDR and WDR television networks. Judy Dempsey, an analyst with the Carnegie Foundation Europe, has, in our view, a good case saying that “Putin is using the refugee crisis to weaken Merkel” and that there is a “direct correlation”between the support of the Kremlin chief to its Syrian ally Bashar al-Assad and the declining popularity German Chancellor home.

Moreover, the hostile approach towards the refugees is really popular with, and is making popular the rightwing parties in a number of EU member states (surprise: parties partly funded by Russia) and their agenda is definitely saying a big “NO!” to opening up the borders.

They in fact deny most of Europe’s achievements, and the refugee crisis is a good excuse.

What can be done against negative media spinning?

A lot of things, from consistent and careful journalist reporting - to avoid propaganda or misleading information, to myth-busting as regards refugees.

Helping people that are fleeing a war they did not start nor seek is not only our moral duty but it is also the right and humanitarian thing to do. Of course, if some of these people commit crimes in our States, they should be punished according to our laws, but that does not mean that the refugee wave should be viewed as threat, but as an opportunity. History will make its case for the humane solution and a diverse Europe.

*Radu Magdin is an analyst and consultant, Vicepresident of Strategikon, a Romanian English speaking think tank.

This article is also part of a collection of articles dedicated to “What our fear of refugees says about Europe and the way forward in European policy approach: Balkan Young Leaders’ Perspectives” by European Expression and EU Policy Hub.

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EU AFFAIRS EUROPEAN BUSINESS REVIEW

THE FUNDAMENTAL FLAWS OF BREXIT BACKERS

By Jan Techau*

By now, it has become clear that the heated confrontation in Britain over the issue of Brexit has very little to do with the actual arguments, especially among those who want the UK to leave the European Union when the country votes on the question in a referendum in June. Much of the debate is driven by emotions and by fuzzy but very potent concepts of sovereignty and identity. And yet, it is also interesting to look at the more intellectual, policy-based arguments for Brexit, for they reveal another underlying truth: the Out camp fundamentally misunderstands the central mechanics of globalization.

The analytical case for Brexit boils down to two core arguments: First, it is possible to have greatly beneficial economic integration without political integration.

Second, Britain could regain major influence over its own affairs by getting out of the EU. In both cases, the exact opposite is true.

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The first argument is based on the old conservative dream of keeping the dirty world of politics out of the honorable, gentlemanly world of business. This is perhaps feasible if economic integration does not go farther than a simple free-trade arrangement. It is not an option once you enter into a highly integrated single market that is not only more complex but also produces a lot more wealth for those in it.

Britain’s excellent commercial instincts have made the country a strong proponent of the EU’s single market. But now, the great champion of capitalism is shocked to learn that the forces unleashed by deep economic interaction among member states make the integrationist logic spill over into the political realm.

You can’t have a single market without, in the end, also talking about a more unified approach to taxes, social policies, banking regulation, and labor laws, to name just a few fields under pressure from the sheer forcefulness of integrated capitalism.

EUROPEAN BUSINESS REVIEW EU

The second argument wants people to believe that the EU has taken away Britain’s ability to get the best possible deal in the world. This is Mayor of London Boris Johnson’s big point when he gives speeches in front of banners reading “Let’s take back control: Vote Leave.”

Britain, so the underlying message has it, is controlled by external forces that prevent the country from taking matters into its own hands and, consequently, from flourishing.

It’s not easy to say whether there ever was a time when staying away from the table at which decisions were made was a winning proposition. Would it have been smart for Britain to eschew the Congress of Vienna in 1814–1815 just because binding agreements with the continentals were meant to be made there? This may seem too odd a comparison—but only to those who don’t understand that the EU is in many ways a permanent Congress of Vienna among countries that are interested in keeping Europe from slipping into chaos again.

In any case, the EU is the dominant political, economic, and regulatory power in Europe today, whether you like it or not. Being in it is the only way to have a say in how it is run and what it produces. Getting out would cost Britain an enormous amount of influence. The UK would lose control if it jumped out, not take control back. No one has phrased this more smartly than former British foreign secretary David Miliband, who wrote in the Guardian: “No nation in human peacetime history has voluntarily given up as much political power as we are being invited to throw away on 23 June.”

When you look at both pro-Brexit arguments carefully, and also at their refutation, then you realize that at the core of the Leave campaign’s reasoning lies an antiglobalization sentiment. The same arguments that Euroskeptics are making against the EU are made by antiglobalization activists against the capitalist, openmarket, competition-driven system we call the liberal world order: a loss of sovereignty, nondemocratic rule by faceless powers accountable to no one, and a big unifying force that wipes out national and local traditions in favor of a shallow, globally harmonized mass culture. In both cases, criticism is not entirely unjustified, but flawed at the core and gravely exaggerated.

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Anti-EU activists do not realize that the political integration the EU has brought is not the illness but the remedy. This integration is meant to give back to nations and people a say in affairs that are otherwise driven by the anonymous forces of the market—and by other powers that no individual European country has the weight to pit itself against successfully. In other words, the EU is designed to hand nation-states control they would otherwise lose. The EU is not about destroying sovereignty, it is about saving it by way of sharing it.

Just as a globally integrated economy leads directly to questions of global governance—climate change, the fight against terrorism, international trade agreements, the control of weapons of mass destruction, global financial regulation, and so on—so European economic integration leads directly to questions of European governance. But while at the global level, governance is for the most part absent, in the EU a system of governance has been invented that allows even small member states that would otherwise be plowed under to enjoy the blessings of a globalized economy. From a European perspective, therefore, it is intellectually impossible to be in favor of globalization (as many Eurosceptics are) while at the same time being against European integration (as they also are).

If Britain wants to reap all the benefits of globalization while having a say in the way it unfolds and being protected from some of its negative side effects, the country needs to stay in the EU. The price for that will be to accept the sometimes irritating, sometimes tedious company of other Europeans to whom Britain would be bound in a fateful way. And yet, that would still be better than being fatefully unbound. With a sober head and emotions firmly under control (which is what Brits like, presumably), the gains of being in the EU far outweigh the costs. May good old British common sense prevail.

*Jan Techau Director of Carnegie Europe

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THE WORLD EUROPEAN BUSINESS REVIEW

IS TRUMP OUT OF STEP WITH AMERICANS ON FOREIGN POLICY?

By William A. Galston*

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Donald Trump’s emergence as the Republican Party’s presidential nominee represents a frontal challenge to every building-block of Ronald Reagan’s conservative coalition—limited government, social conservatism, and democratic internationalism.

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Trump’s departure from longstanding conservative tenets is especially pronounced in foreign policy, where he advocates an assertive unilateralism with an isolationist tinge. Deaf to its historical resonance, he recently adopted the slogan “America First,” the motto of the isolationist movement that opposed America’s entrance into World War Two until the attack on Pearl Harbor. He may now be tempted to believe that the American people as a whole want to move in this direction. The facts suggest otherwise.

But while Trump may be out of step with many Americans, in pushing an America First position, he is speaking for a substantial portion of his own party.

Sixty-two percent of Republicans say that we should let other countries deal with their own problems, while only 42 percent think that we should compromise to take our allies’ interests into account. Republicans regard with disfavor every dimension of our efforts to assist developing nations, from direct aid to trade and investment. Only 37 percent of Republicans think our global economic involvement is a good thing because it expands markets and boosts growth, compared to 55 percent who think it’s a bad thing because it eliminates jobs and squeezes wages. By contrast, 49 percent of Democrats favor our current global economic engagement, compared to 44 percent who question it.

This morning, for example, the Pew Research Center released its latest survey on Americans’ attitudes concerning foreign policy and the country’s role in the world. The survey revealed important areas of continuity, some dramatic changes, and deep divisions between and even within the political parties.

In short, we now have a Trump-led nationalist party facing off against an internationalist party that will be led into battle by a former secretary of state.

Internationalism represents the path of continuity, while isolationist-tinged unilateralism is a radical change.

Let me begin with the continuities. Americans believe, as they have for decades, that it is more important to focus on our domestic problems than on foreign policy.

Still, the poll’s findings show that the people are no more likely now than in the past to embrace unilateralism or isolationism. By a margin of almost 2-to-1, they reject the proposition that we should go our own way in international matters without worrying what others think. While they believe that the United States should remain the sole superpower, they do not want us to be the single world leader, preferring instead to share leadership with other countries. And they continue to favor close relations with Europe and involvement with NATO and the United Nations. In a similar vein, they are more likely than they were just a few years ago to regard the United States as the world’s leading economic and military power—putting them more in the Hillary camp than in the Trump camp. The concern sparked by China’s dramatic rise has noticeably eased.

No doubt Americans want us to focus on our problems here at home. As Pew’s findings show, they almost always do. But Americans have longed believed that we can meet our domestic challenges without turning our back on our allies and alliances. There is no evidence that they have suddenly changed their minds and are willing to take a chance on going it alone.

Sober internationalism is good policy, and it is likely to prove good politics as well.

*William A. Galston A former policy advisor to President Clinton and presidential candidates, William Galston is an expert on domestic policy, political campaigns, and elections.

His current research focuses on designing a new social contract and the implications of political polarization.

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ENTREPRENEURSHIP EUROPEAN BUSINESS REVIEW

A LONG TERM POLICY NEEDED FOR GREEK SME’s

By Antonios G. Zairis and George A. Zairis*

Although their mere existence does not automatically lead to growth, their development becomes even more important and almost imperative as a key instrument in poverty reduction efforts.

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Greece has a very high share of SMEs, with large enterprises representing only 0,1 % of the total number of businesses. In respect to employment, Greek SMEs account for a higher proportion of total employment in relation to the rest of European countries, with the exception of Italy, Spain and Portugal. More specifically, 85,6% of employees was working in the sector (in 2010), which was well above the EU average (67%) for the same year. The difference was maintained for the subsequent three years at about the same level (18 %).

In terms of value added, the contribution of SMEs to the Greek economy also exceeded the EU average (71,7 versus 58,4% in 2010). Nonetheless, the vastly fewer large companies managed to create 28,3 % of value added (in 2010) compared to the 35,3% of the micro enterprises, suggesting that the productivity of the later was quite low.

Regarding the economic sub-sectors, SMEs in Greece were more concentrated in the trade area (38%) in comparison to their EU peers (30%). In contrast, the proportion of companies active in the services sector was smaller in Greece than the EU average (40% versus 45%). The areas of construction and industry, on the other hand, were close to the EU average (13 and 10 %, compared to 15 and 10% respectively). It is obvious that the SME sector in Greece varies considerably compared to the structure of the European and it is far more important for the country’s economy.

In the 2012 report, there was also evidence about the impact of the financial crisis on the Greek SMEs: they had suffered a dramatic decrease. It appears that the total number of SMEs had fallen drastically since 2003, as there were nearly 90.000 fewer companies in 2011 than in 2008 (the last year of the pre-crisis period). In terms of employment that was reflected in the loss of more than 200.000 jobs. This negative development also applied for the value added data (SBA Fact Sheet, 2012). Numbers continued to decline in the next year’s report as well. Approximately 196.824 of SMEs ceased operating, a total of 571.613 jobs were lost and the value added was reduced by 13 billion Euros. This was attributed to the austerity measures that were implemented (increased taxes, reduction in salaries and pensions) that reduced the purchasing power of consumers, and increased the financial and tax obligations for the Greek companies. The biggest

decline occurred in the construction sector, which is substantiated with the steady reduction in the number of building permits that were granted. The same applied for the manufacturing sector that suffered a 20% loss in the number of employees, and a reduction of 10 % in the value added. The only sector with positive numbers and growing signs was energy production.

That was mainly attributed to the government support of projects that belonged to the ‘green economy’ and the operational programme for Competitiveness and Entrepreneurship (2007-13) which encouraged energy efficiency in housing and public buildings projects (SBA Fact Sheet, 2013).

In light of the current economic climate, Greek SMEs struggle to recover from the crisis so that they can continue to be the backbone of the economy. But there is no doubt that the severe recession has affected their ability to survive. And after years of declining numbers, even the slightest recovery seems fragile.

Although their mere existence does not automatically lead to growth, their development becomes even more important and almost imperative as a key instrument in poverty reduction efforts. Their role is indisputable.

The creation of new and innovative firms in times of crises and rising unemployment could help face many challenges.

Despite the fact that their recovery depends mainly on the country’s macroeconomic environment a n d financial stability, their development could emerge through policy measures. These actions are not to be fragmented, or serve different goals. Their context should be specific. There should be a long term policy, serving a specific purpose, with strict monitoring of its implementation. Policy makers should influence entrepreneurs and provide incentives for the creation of new firms, on innovating projects and for existing companies to become more productive and competitive.

Each country faces different challenges but also has many opportunities.

*Zairis G. Antonios is the Vice President of the Hellenic Retail Business Association and Zairis A. George is an Economist

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ENTREPRENEURSHIP EUROPEAN BUSINESS REVIEW

GOOD JOBS THREATENED

BY THE INTERNET

By Steven Hill*

For decades, workers in Germany, Europe and the United States have been the wealthiest in the world.

That is about to change for the worse as America heads towards a “freelance society”, writes Steven Hill.

What is the future of work, and the future of jobs? For the last several decades, the workers of Germany, the US and Europe have been the most productive and wealthiest in the world. But now that prosperity is in danger.

Where is this danger coming from? Is it from hordes of immigrants arriving from distant lands? Or foreign competitors stealing jobs? No, ironically the threat is self-inflicted.

The situation is most advanced in the United States, but it’s heading to Germany and Europe. The US workforce is undergoing an alarming transformation. Millions of workers are finding themselves on shaky ground, turned into freelancers, contractors and temps, with inadequate wages and a weaker safety net. Even many full-time and professional jobs are experiencing this shift. America is heading toward a “freelance society.”

During the weak economic recovery, nearly half of new jobs created pay only a bit more than minimum wage.

Even as corporate profits are at an all-time high – with much profit parked in overseas tax havens – threefourths of Americans now live paycheck to paycheck, with little emergency savings.

Now a mash-up of Silicon Valley technology and Wall Street greed is driving the latest economic trend: the socalled “sharing economy.” Companies like Uber, Upwork and TaskRabbit are allegedly “liberating workers” to become “independent entrepreneurs” and “their own CEOs.” In reality, workers are hiring themselves out for ever-smaller part-time jobs (called “gigs”), with no safety net or assurances of future work, while the companies profit handsomely.

What is equally alarming is that US corporations themselves are being redesigned. The vertical, industrial powerhouses of the post-cold war era, in which all operations were performed under a single company roof, yielded in the 1980s to companies like Nike and Apple, in which production was outsourced to low wage countries, while design and marketing remained in-house.

But now that business model is yielding yet again to companies like Uber and Upwork, and their precursor Amazon. These companies are little more than websites and an app, with a small core of executives and 24

employees who oversee an army of freelancers, temps and contractors. In the vision of the libertarian CEOs of Silicon Valley, they want a “fractured” labor force they can turn off and on like a water spigot.

Upwork, for example, is a website where 10 million freelancers and contractors scrounge for work. Upwork draws globally, putting U.S. and German workers in direct competition with counterparts in India, Thailand and elsewhere. The result is predictable: cheap, Third World labor undercuts developed-world wages.

As “independent contractors” these workers also do not receive safety net benefits, and have no guarantees of future employment. They must constantly search for their next gig – the search itself is unpaid — in this “share the crumbs” economy. The “good jobs” of old are an endangered species. Welcome to the Freelance Society.

While these economic trends are most advanced in the US, Germany and Europe display similar tendencies. I am a visiting scholar in Germany at the American Academy in Berlins, here to research a few things. First, is it possible that this sharing economy could work better in a place where the welfare state, labor unions and the “visible hand” of government are more developed? Or might the current differences prove to be temporary, as the pressures of global competition tend to homogenize nations over time? Can we preserve transatlantic prosperity if our economies are based on fractured, unilateral employer-employee relationships? Or does prosperity require more co-determination between all the players?

These are the great questions before us. Fortunately there are solutions, but it will take a reimagining of the social contract, and careful regulation of these new ways of doing business. *Steven Hill is a journalist and the Holtzbrinck Fellow at the American Academy in Berlin . His most recent book is Raw Deal: How the ‘Uber Economy’ and Runaway Capitalism Are Screwing American Workers. **First published at Euractiv.com

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Special Report:

The Empowerment of Society through Freedom of Education Views and opinions from the recent ECNAIS conference

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We all know that we live in an era of radical transformations, deeper today than in the past. The reason why this happens is not widely understood, though. Anyone who thinks about the speedup of change must sense that it has a lot to do with modern technology.

You can see the link when you notice how short the new light-tech-product life cycles are becoming and how whole new industry sectors appear almost overnight. An example: Watch-making changed relatively little for more than a century, and timepieces were sold in watch and jewelry shops. But new technology created this rapid sequence of events: *Timex turned the watch into a tiny electric motor and shifted watch sales to drugstores. *Casio made the watch into an information-generating piece of electronic equipment and moved the watch business into electronics stores and departments. *Swatch reinvented the watch as a piece of designer clothing, to be sold (where else?) in clothing stores.

We also read that scientific discoveries are coming along so fast now, that most of what we now know was discovered only in the past decade. And the big new discoveries have the power to change whole sectors of the economy. Who knows, for example, what the pharmaceutical business will look like when the potentials of genetic engineering have been realized? Who knows what the digital world will do to our communication, or what smartphones will do to our need for travel? When such possibilities are widely capitalized upon, what will that do to the airline business, or to airplane manufacturers? What will it do to the hotel and restaurant business, and to the construction industry and equipment makers that serve it?

But such effects notwithstanding, if new products were the only way that technology affected the world of work, the job would be relatively safe: jobs lost in one sector of the economy would be added in another. Technology affects jobs more directly in the way it changes how work is actually done. In this case, the role of modern education is highly important, because more and more, knowledge is becoming the main row-material of creating wealth.

This was the aim of the last conference organized in Athens by the Hellenic Association of Independence School and the European Council. Why? Because Greece is considered to be a place a place of birth of democracy and the democratic institutions require respect of freedom. The pedagogical perspective from the point of view of educators the most important tell us something significant about the freedom of education. In this magazine we believe that this freedom in the long run empowers society.

Christos K. Trikoukis Publisher

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EDUCATION, THE BEST ROUTE TO EMPLOYMENT

by Tibor Navracsics*

Jobs remain the best route to inclusion, but only high-quality education and a broad mix of relevant skills lead to employment, writes Tibor Navracsics.

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At the start of this Commission’s mandate, President Jean-Claude Juncker clearly set out its political priorities, summarised in his “Agenda for Jobs, Growth, Fairness and Democratic Change”. One year down the line, those priorities have lost none of their relevance. lf anything, they have acquired even greater urgency.

In a post-crisis scenario, the priority is to build a European Union of convergence, jobs and growth, with a stronger focus on employment and social performance This is about long-term and sustainable growth, improving employabilíty, reaching convergence among mernber states and building resilience. lmproving education is central to all of those objectives.

The reason is símple: education is and remaíns the best guarantee against unemployment, and having a job is the best guarantee against becomíngmarginalised and excluded. ln today’s world, a person’s ability to find a job – their employability – is more than anything linked to their education. University graduates and highly skilled young people are more likely to be in work – and at a higher salary – than their less educated or less skilled peers.

This is particularly striking when we think that there are currently 23.5 million unemployed people across Europe, 4.7 million of them young people, and yet, 2 million vacancies remain unfilled and four out of ten European employers report difficulties in finding employees with the right skills. This means that our education systems are not delivering – or at any rate, not as much as they should.

My main mission is helping member states modernise their education systems and make them fit for the 21st century. This means not only the technical skills relevant to specific activities or sectors, but also the full range of transversal skills that are vital to an ever-changing knowledge economy, an entrepreneurial mindset, creativity, problem-solving, teamwork, languages and communication, for example.

They also include creativity, flexibility and the ability to take risks – the great components of entrepreneurship.

These are the types of transferrable skills that need to be nurtured through good, innovative approaches to education. This approach thrives when the worlds of education and of work come together, when there are solid partnerships between the academic world and the world of business – the types of partnerships that we are developing at EU level, for instance through the European lnstitute of Technology. The key to success is providing the right blend of skills, rather than exclusively focusing on a few.

This process begins long before people enter the labour market, and it must become a political priority at all stages of education: schools, vocational training and higher education. But for all this to happen, education must be inclusive in the broad sense and from the start. With more than 5 million early school leavers across Europe, and some vulnerable groups much more affected than others, it is imperative that our education systems do more to address the needs of disadvantaged learners, thus achieving convergence within our societies and not only among member states This means making sure that schools offer an inclusive learning environment for all, where pupils and students from diverse backgrounds feel accepted and supported, where they are given the same opportunities for personal fulfilment and social mobility.

Jobs remain the best route to inclusion, but only high-quality education and a broad mix of relevant skills lead to employment. Education from pre-school onwards remains the best safety net against social exclusion. lf we are serious about being social, then the EU needs to put people at the heart of our work, and show that we are investing in their future. Today’s education is tomorrow’s society. *Tibor Navracsics Commissioner Tibor Navracsics is in charge of Education, Culture, Youth and Sport

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ECNAIS AND THE INDEPENDENT EDUCATION

by Simon Steen*

How the free parental choice can be ensured by civil society?

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ECNAIS is a non-political, non-confessional, international association for collaboration between national associations of independent schools in European countries. We use the term “independent” in our statues, but more common all over Europe is the term ‘private’ schools, meaning not governed or owned by the state.

ECNAIS concerns schools which are strongly connected to the civil society. ECNAIS acts as a network for sharing experience, information and knowledge between national associations.

We gather 20 National Associations not only from Western and Northern Europe, including Iceland, but also a growing number from Central and Eastern European countries. Furthermore The Independent Schools Council of Australia and The Steiner Waldorf Schools Fellowship are associate members.

Independent education is not a right that once acquired, will last forever.

In the beginning there were existing associations of independent schools which were well organized in their own countries. They were interested in sharing knowledge about European educational developments and how these developments could influence the situation of their schools.

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also that we succeeded in making connections with Swiss association that lobbies for a stronger influence of parents in education.

Independent education is not a right that once acquired, will last forever. In a way it has to be ‘earned’ and embedded into society continuously. For these reasons, independent schools should continue to publish and promote the broader results of independent education and show how it contributes to solving the questions society faces today.

The economic crises is putting our welfare states under pressure and the constant message in the public debate is that the next generation will have less prosperity than their parents. But children need to be encouraged and should feel themselves challenged by an optimistic perspective for the future. We hope –as said in the Common Declaration about the role of Independent Schools in the European Society- that the European society, governments and citizens will understand and value the vital role of independent schools in our societies and, on behalf of generations to come, will help us to improve and strengthen their contribution to a plural and democratic Europe.

Nowadays we have a growing number of association who are representing new social initiatives strengthening parental participation in education or establishing a wider diversity in the national educational system. This is inspiring for the ‘old’ members of ECNAIS and it gives pleasure and satisfaction that we cn help to new members.

We support, for example, the national educational platform of the Ukraine and the Ukrainian Association of private schools in their efforts to convince their politicians that it is to the benefit of the whole society that they make room, in the national legislation, for independent schools, based on religious, philosophical or pedagogical ideas. Another example is social initiative in Austria where active parents strive for more room for pedagogical diversity in education. We are pleased

*Simon Steen Chairman of ECNAIS

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THE EMPOWERMENT OF SOCIETY THROUGH FREEDOM OF EDUCATION

By Charalampos Kyrailidis*

History proves that more freedom strengthens our societies and such a statement is nowhere more applicable than in the area of Education We live in strange and difficult times, which often burden our societies with new fears, stress our resources and reflectively lead many countries to policies of tighter controls and limitations of our freedoms.

It is our ardent conviction that the present and future challenges, we face in Europe, can be much more successfully addressed with more freedom in our societies, not less. The strongest advantage of our common European heritage is comprised by our democratic liberties and our civic rights. History proves that more freedom strengthens our societies and such a statement is nowhere more applicable than in the area of Education.

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Perhaps the greatest social achievement of the 19th and 20th century, was the establishment of the free for all public education system. Through this for the first time in human history universal school access was granted to all children irrespective of the social class they belonged.

A century and more later, the public school education system, in most European countries, appears to becoming less and less satisfactory. Teachers in public schools appear less motivated. Students in public schools appear more estranged from their educational environment and with less interest for their school program.

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We feel the reasons of these inadequacies lie in the way public education is organized, in most countries.

It is this type of organization that gave birth to a monopolistic, bureaucratic, non-competitive public school, incapable to evolve and incorporate the fast occurring changes in society and the new needs which emanate there off.

sult, public opinion demands change, demands educational reforms, demands more freedom in education, demands to be granted the parental right of choice of the right school and the institutional instruments to exercise this right, which may I remind us all, is a fundamental right of the EU citizens as inscribed in article 14 of the EU Charter.

At the same time contemporary research shows that in most European countries, despite the fact that independent schools have less available resources than public schools, despite also the fact that their class sizes are usually larger than public schools, their students appear to gain more in competences and knowledge than their public schools counterparts.

Thus, the questions which must be addressed by our democracies are:

The parents who opt for independent schools appear also more satisfied from the academic program, the social, cultural and athletic activities and the safety and security level of the school environment. Independent school students also tend to be involved in more interesting and productive projects, enjoy better communication with their teachers and appear more socially integrated, more tolerant, more eager and prone to learn.

Evidently research does not lead to the conclusion that all independent schools are better. There are unsatisfactory independent schools, but these sooner or later close down and thus make room for better schools.

The conditions I just described, stand valid in many European countries, certainly in Greece, and as a re-

Firstly, up to which point should the State prevent the exercise of freedom of choice in education and secondly, who should choose the education of our children, the politicians, the educators or the parents?

We remain convinced that an education system, that would place parents and their rights between the State and the Schools, would offer such a freedom of choice to the parents, that no government thereafter would dare remove. Such a system would indeed empower our societies in more ways than we think possible.

It is indeed a shame that at present the Greek government is plotting a course in the opposite direction, diminishing instead of increasing the range of parental choice in education. *Charalampos Kyrailidis Chairman of the Hellenic Association of Independent Schools (HAIS)

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THE LIBERATED SCHOOL AND SOCIAL CHANGE

By Leonidas Phoebus Koskos* For the last six years the political elite, the state apparatus and Greek society have been strikingly unable to come up with ideas and programs to lead the country out of its economic crisis. If there is anything that has marked our society during this period, it is this sense of impasse, inertia, and inaction – the total lack of individual and collective initiative. In short, economic and social gridlock.

If this gridlock is discussed at all, it’s only in bar-room debates. We keep hearing how a “new national model” of economic reconstruction is needed. Implementing a new and different “model of production”, we’re told, could lead us out of the state of bankruptcy in which we seem to be mired.

Latent in this call for a “new model of production” is an awareness of what did and did not cause the crisis. The Greek crisis exists independently of the banks, Lehman Brothers and the global financial crisis. The Greek crisis is NOT an economic crisis. It is a crisis triggered by the role of the state in the society and economy of Greece, one I believe has been largely responsible for the lack of action in the last six years.

The role the state played is the same it has played since its very infancy. To put it simply, the Greek state is domineering and highly centralized.

The Greek state was established as a protectorate within the European system of security at the time. It did not naturally emerge from a society of free citizens.

Nor did it organically reflect the will of a social class that owned the means of production. On the contrary, in this country of farmers and serfs it was the state

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that owned all the means of production and the vast majority of land.

In fact, state ownership of the means of production had been imprinted in the collective memory of Greeks as an essential part of the country’s time-honored “model of production”. It remains so to our time and day.

The institutional organization of the Greek state borrowed heavily from European models. It did not fit

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with either the pre-revolutionary organization of Greek society or the ethnic, linguistic and cultural diversity of its people. Even the awareness of the continuity of Greek culture and the forging of a sense of national identity only became possible in the mid-19th century.

In effect, a modernist, Western model of the state was grafted onto a pre-modern society that was clearly not a society of citizens.

Pre-revolutionary Greek society was not only pre-modern. It was also highly fragmented, and the centrifugal forces within this society led Kapodistrias and the Bavarian Regency to create a central(ized) state as a counterweight.

The Greek state and society have been in competition ever since. Six state bankruptcies and the international financial oversight that followed reinforced the state’s concentration of power and undermined individual initiative.

The effectiveness of the state was always tempered by the need to meet its obligations to its lenders. The latter’s oversight of income and expenses entailed control over investments. Control over development programs as well. The result was centralized economic planning.

In the first years of the Greek state, during the civil strife of 1824-1827. The revolutionary governments had already claimed the role of the sole administrator of the first foreign loans, which they used to pay—and control—its armed supporters. After each of its succession of defaults, the Greek state transformed its operations and modified its goals according to the needs of international financial oversight and to be able to collect the money it needed to repay its loans. Each time

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the state went bankrupt or disaster ravaged the economy, the country’s infrastructure and the remnants of state and society were used to rebuild the same model.

Throughout its history—and not, as many believe, only since the restoration of democracy after the fall of the junta—the Greek state has been the sole administrator of foreign money, be it foreign loans, European funds distributed by the state, or, in the case of the Marshall Plan, development aid.

The actions of American officers who arrived in the country in the late ‘40s to manage and monitor American aid was yet another step in this process of centralization. They found themselves faced with the unaccountability of the Greek private sector. At the same time, they were ideologically predisposed to give greater priority to state rather than individual initiative.

These New Dealers were thus convinced that a stronger state would be more effective in economic reconstruction, even though they could see that the Greek state fell far short of Western standards.

For long periods of time in its history, the Greek state determined what would be produced in the country, how would be made, who would make it and whom net revenues would be distributed to. It set private-sector wages but also labor conditions, education policy and qualifications standards. Consequently employability.

It determined who would have access to business capital and subsidies. For much of its history the Greek state was the country’s largest employer, its biggest consumer, and at times its most powerful businessman. It is now a massive, highly centralized entity with a monopoly of initiative, while the citizen is in a disproportionately weaker position.

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A vicious circle is created. The greater the involvement of the state in social and economic affairs, the more citizens are deprived of the ability to choose, assume risk, and take initiative. This democratic deficit in turn hinders the emergence of enterprising citizens, to borrow a phrase from my dear friend, Thanasis Papandropoulos, who will be speaking next. This process of obstruction is particularly evident in the Greek educational system.

The state’s intervention has broad and dire consequences. The ongoing war against the private school and the continued undermining of the model experimental public schools impede the free exchange of ideas and innovation, as it does the formation of a culture of civil society.

It is thus here, in the schools, that the model of decentralization must first be implemented.

The state’s presence in education is ubiquitous. It intervenes in the relations between the school director and the teacher, and between the teacher and the curriculum. It intervenes even in decisions regarding what will be taught, by whom and in what way.

The central government says what books must be taught and how much of the material must be taught at what time. It regulates which visitors may come to the school to speak to students or the school can take its students for extra-curricular activities. It imposes specific instructors while refusing to assess their performances. It micromanages everything. In this way the state does away with the school’s right of choice but particularly the right of choice within the school itself. It turns the school into a reformatory.

As a general principle, the transition to a new model of production assumes that initiative and resources be decentralized. That is, devolved from the central government to municipal government, to regulatory agencies and other publicly funded organizations and to the citizens—stakeholders—themselves.

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In the case of the school, initiative and resources must be transferred to the schools’ stakeholders. The decisions affecting the day to day operations of the school should be made by those who comprise the school community: the school director, the teachers, parents and to some extent the students themselves. For example, even if there is a nationally planned curriculum, stakeholders must have a part in making decisions on

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how the curriculum is to be delivered in a particular classroom in a particular school. Relations among faculty members and between the faculty and the school administration are more effectively managed at the level of the school itself, rather than in an office in the Ministry of Education.

Decentralizing the state, however, means more than administrative decentralization. It must involve genuine political decentralization. This means a shift in development goals and a fundamental change in the way society and politics are organized. It means the devolution of power and initiatives to a society of free, engaged citizens. It means the creation of an open and outward-looking civil society, anchored in Europe and the West and released from the protective custody of the state. A society in an open, globally oriented country with an open market. A society of “enterprising citizens”.

The “enterprising citizen” is not to be confused with the entrepreneur. It is rather a citizen endowed with critical reasoning and emboldened to decide among various choices, daring to innovate despite the risk of failure and accepting the consequences of his actions.

The enterprising citizen is every engaged, responsible citizen. And it is precisely these responsible citizens that article 16 of the Constitution expects the school to cultivate.

By school I do not mean today’s inward-looking, centrally planned and state-controlled school. I am instead referring to autonomous, self-administered school units, both public (as the model experimental schools were intended to be) and private. Through these units, a meaningful dialog can emerge on educational reform, and with it, a model of social liberation. Such a dialog would stand as a creative alternative to the useless, prefabricated, so-called public dialog that once again has been launched in the aim of never being concluded.

There are many in this country who want to see the school change. Some because of a genuine desire to see society itself change, others out of guilt for what has happened in the last decades.

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Countless Greeks throughout the country, from Eidomeni to Gavdos, have realized that society must become greater than the state, not smaller. The need to reverse the ever widening democratic deficit in the country justifies the creation of a grand alliance to create the liberated school of tomorrow. Anyone who wishes to see Greece remain member of the European Union has a place in this alliance. Anyone who believes in the transformative potential of education. Teachers who want to teach. Administrators who want to see true progress in their schools. Citizens who believe that the liberated school can lay the path toward a freer society.

As owners of private schools you have a particularly important role in this alliance. You have an obligation to foster educational excellence and autonomy within your institution, as you are called to support the liberation of the public experimental school. You must defend the right of Greeks to choose a quality public school education so that you can ensure the right of your own students to choose your school.

The school is imprinted in Greek collective memory as the “seedbed” of national self-awareness, a nucleus of society as important as the family. But it has also been seen as a tool of the ruling class to create a society of subservient subjects or party cadres. If I may make a politically incorrect remark, this is nothing less than intellectual genocide. Its victims include even prominent public figures.

The time has come to make the school the nucleus of a national reawakening.

The liberated school can begin to reverse the imbalance between the monopolistic, hyper-centralized, autocratic state and an increasingly disempowered citizenry.

The school—the liberated school—can be at the heart of the great change for growth and sustainable development that our country needs.

It is up to you to set this change in motion.

Leonidas Phoebus Koskos * President of Hellenic American University

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THE IMPORTANCE OF PRIVATE SCHOOLS IN GREECE

By Theodore Fortsakis*

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It is essential to develop synergies between public and private education. Private schools tend to adopt innovative new programs which could inspire the legislator as well as the staff of public schools for related improvements.

As you know, in Greece, during the last year we have gone through a very unpleasant experience in the field of education. As of January 2015 we have a new gov-

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ernment that has adopted a number of hostile positions against private education.

I would like to focus on the particular problems which private schools face due to this situation.

First, let me bring to your attention a flamboyant statement of our former Minister of Education, who is also a professor at the National and Technical University of Athens. He has expressed the belief that excellence in schools and universities constitutes a kind of disease, a “retsinia�. According to his opinion, this negative characteristic of excellence leads to the unavoidable rejection of its components, such as the principle of meritocracy, as well as to the means of achieving it, such as the continuing evaluation in all levels of our educational system.

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The same attitude has been adopted by our government since January 2015, despite the legislative framework which protects private education in Greece.

As is provided by the Greek Constitution, in particular by article 16, education constitutes a public good and is constitutionally protected. The Greek Constitution guarantees in particular free access to all levels of education as well as the right of parents to choose any type of school they desire for the studies of their children. Parents have, among others, the right to choose public schools or private schools. So, in this context, it is my opinion that we should conceive the constitutional protection of the education as a whole, without any subdivisions or differentiations such as public or private education. Consequently, the state undertakes the obligation to support all types of education, including private schools, which have a significant role in our educational system.

The importance of private schools in Greece can be easily demonstrated by some statistics, which I would like to present you. Concerning preschool education, more than 8% of the nursery schools are private, to which 7% of the related children population has been enrolled. Concerning primary education, almost 7,5% of the schools are private, to which the same percentage of the related student population has been enrolled.

Concerning lower secondary education, what in Greece we call “gymnasio” or what French call “college”, 5,5% of the schools are private, to which the same percentage of the related student population has been enrolled.

Finally, concerning high schools, more than 7% of the schools are private, to which almost 6% of the related student population has been enrolled. These brief statistics show the importance of private schools to the Greek educational system. They also strongly support the opinion that the state should actively assist private schools on their development, taking into consideration that they have also been hit hard by the financial crisis.

Unfortunately, this government shows hostility not only to private schools but in general to the principle of meritocracy.

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I would like to give you an example regarding the former. A few months ago, the government had the idea to impose VAT of 23% on all private education. Fortunately, this plan failed mainly due to the reaction of the European Commission, which rejected it. If the new tax had been imposed, it would have created many difficult problems for private education. It has to be underlined that the majority of students of private schools are members of an average Greek family. Against this fact, the government widely supported the idea that only rich people have the possibility to access private schools, in an effort to justify the new tax. However, it is well known from the statistics that this conviction does not correspond to reality.

Moreover, during the last fifteen months, the government has taken numerous legislative and administrative measures which limit in a very drastic way the autonomy of private schools. The Ministry of Education constantly tries to impose a very strict framework on all types of programs and activities which are provided by private schools. In the same direction, the new Minister of Education recently decided to forbid the self-evaluation of private schools. He also dictated that all forms of private schools’ evaluation should conform to the national system of evaluation, provided for public schools and conducted by public servants. This actually leads to the non-evaluation of private schools since the national system of evaluation still remains on paper.

Today, you can read in the front pages of the newspapers the latest related announcement of the Minister of Education. In accordance with it, he intends to impose a state control by public servants to all private schools, concerning the internal exams of their students. It is easily understood that this measure will create substantial problems for the functioning of private schools.

All these measures are in the wrong direction. Our beliefs are completely different to those of our government.

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We strongly support the idea of private schools’ autonomy on all levels. This autonomy includes, among others, the management of the teaching staff, e.g. hiring, evaluating etc., but in accordance with a number of pre-defined criteria, deriving from the principle of meritocracy.

We also are in favor of all types of evaluation, both external and internal, based on objective criteria.

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lished, this bill will substantially hinder the functioning of private schools in such a high degree that will lead to their de facto abolition. This is unacceptable.

It is our duty to fight this bill with all our might and this is exactly what we intend to do. Private schools in Greece are an indispensable component of our educational system and have to be protected from those who wish for their extinction.

Concerning the obligation of private schools not to adapt the state’s curriculum, which is intended to be imposed, we believe that this measure will severely damage their autonomy. Therefore, we strongly demand the freedom of private schools to adapt the curriculum to their particular needs, in accordance with best practices, not to be hampered.

We also feel that it would be a good idea to support private schools in a financial manner. It is well known that parents who choose private schools for their children to be enrolled are also tax payers. The tax burden which has been imposed on them corresponds, among others, to the provision of public education services.

Since they do not make use of these services for their children, it seems reasonable that voucher be provided to them by the state which would ease the burden of the tuition fees payed by them for private education.

This voucher would also facilitate significantly the choice of private education.

We also believe that it is essential to develop synergies between public and private education, which could benefit particularly public schools. Private schools tend to adopt innovative new programs which could inspire the legislator as well as the staff of public schools for related improvements.

I would like to finish with a few remarks regarding the latest bill about private education, which our government appears ready to present to the Greek Parliament in the following weeks. As it has been already pub-

*Theodore Fortsakis MP with New Democracy, Professor of Public law at the Law School of the University of Athens

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CHANGING THE WORLD THROUGH EDUCATION

By Evy Christophilopoulou*

«Education is the most powerful weapon which you can use to change the world».

Nelson Mandela was right. In order to change the world one needs to change people. And education is the catalyst.

It is unanimously accepted that education contributes to the development of human personality and hence it is a requirement of human dignity. In accordance with this belief education has been accorded the status of a human right, both in national, constitutional and international legal orders.

The right to education is at the same time a social right and a freedom right. The social right to education consists of the right of everyone to be granted equal access to the existing education institutions. In this respect the state must take active steps aimed at realising the right. On the other hand, as a freedom right, the right to education requires the state to respect free choice of education and the freedom to set up and

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run private schools .The right to education operates as a multiplier, in the sense that it enhances all other human rights when guaranteed, and forecloses the enjoyment of most, if not all, when denied .

Legal guarantees offer,however, very little results if there is insufficient political will. We also need an effective enforcement mechanism in place for implementation. Moreover, the various national and international legal texts have not prevented the illiteracy of 775 million of the world’s citizens. Nor have they prevented 67.4 million children remaining out of school (mostly in developing countries), 60% of them being girls .

There is a strong correlation between literacy and education on the one hand, and economic and social progress on the other. Graca Machel summarised in one word why education makes a difference; and that word is “empowerment” .

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As the economist Amartya Senpointed out in his book Development as Freedom , education is crucial to give people not only knowledge and skills, but also capabilities such as confidence and self-esteem, which they need to participate in society. For example providing education to marginalised children and young people means they are more likely to participate in political and representative bodies, and therefore participate in directly or indirectly shaping their own future. Similarly, evidence from sub-Saharan Africa shows that increasing access to primary school promotes citizen endorsement of democracy and rejection ofnon-democratic alternatives . The same is true for environmental protection. Only people who sufficiently understand science to recognise the problem of climate change, can push governments to act according to environmental principles. The 2006 PISA (Programme for International Student Assessment) assessment of scientific literacy of 15 year olds proves that students that do better in science tests have higher environmental awareness and stronger sense of responsibility for sustainable development .

The link between education and economic growth and poverty reduction, human development and well being, the availability of human rights and democracy, social cohesion and peace-building, resilience and environmental sustainability is clear .

It cannot be stressed enough that the educational problems do not only concern the developing world, as one could possibly assume from the available international organisations’ literature and studies.

To name but one example, Greece has taken many steps backwards “de-moting” educational freedom during the last year.

Public schools of excellence, to which access was guaranteed through exams, have been abolished.

Meritocracy gradually becomes an unknown word in the Greek educational system. Instead of guaranteeing the same educational opportunities for all children, regardless of their socio-economic background, a lower standard of education is forced upon everyonein the name of uniformity. Excellence is under attack in the present Government.

When it comes to private schools – which are constitutionally guaranteed in Greece- the government strives to undermine the freedom of choice private education allows. Any effort to differentiate the

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school programme, or undertake any sort of quality assessment in private schools, is hindered.

This is alarmingnot only because private schools allow for economic growth and help reduce unemployment among teachers, who are heavily affected by the financial crisis. It is also significantmostly because differentiation, innovative practices, and excellence in education, are the necessary environment to foster new talent and allow for the full potential of the new generation. Freedom of choice, as a constitutive part of freedom of education, is a necessary precondition for the optimum allocation of resources and the best possible outcomes of an educational system .

Instead of acting like a deeply conservative society, that it is afraid of anything new or different, we ought to open up our educational system, decentralize it, allow new ideas to flourish. The State must of course guarantee certain qualitative features of the system.

But it cannot -and should not- fully control the system.

In our Digital era of multiple sources of information and instantaneous multiple communication channels worldwide, trying to create a centrally controlled monolithic educational system is an anachronistic and dystopian effort. We need to allow for innovation, both in public and private schools, through openness, competition and exchanges of best practices.

Allow me to close with some final remarks on university education in Greece, which illustrate the above. Our Constitution is one of the very few European Constitutions-if not the only one-which provides for a state monopolyin university education. This closed system is unsustainable in practice. European legislation andcase law, as well as the Council of State case law, have resulted in accepting all sorts of European degrees as a professional qualification, fully recognized in Greece.

I want to end by citing Paulo Freire: it is a call to all of us, politicians, educators and academics alike: “let us strive, in unity, to make education the practice of freedom, the means by which men and women deal critically and creatively with reality and discover how to participate in the transformation of the world” . *Evy Christophilopoulou MP with the Democratic Coalition

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A SCHOOL THAT BUILDS INTEGRATED PERSONALITIES

By George Mavrotas*

I didn’t go to a private school (and my kids also) so I don’t have any close relationship with private schools.

So, allow me to say that I believe in a liberal society where the right to choose about the education of your children is primary.

And for this reason I don’t understand the obsession against anything private especially in education. An obsession that has no place in a European environment.

Let me open a parenthesis…

Potami, our party, is also in favor from the very beginning for a constitutional amendment in order not to be prohibited to establish non-state universities in Greece.

The good state universities in Greece have nothing to fear and I say it as a professor of a public university, the National technical University of Athens (Metsovio Polytechnio) Besides, with the relevant regulations the whole fuzzy picture of today’s tertiary education in Greece with colleges, departments, institutes etc will be clarified.

What we need is common rules that hold for everyone in academia either public or private.

We don’t have to reinvent the wheel, just look to all the other countries of the world…

Closing of this parenthesis.

I will briefly talk about the role of a modern school in today’s society.

About the activities that are needed in a school in order to enrich the knowledge, the skills and capabilities of young pupils.

About the reform that our educational system needs.

In Greece the role of school, especially for high schools,the last 30 years has unfortunately suffered from disorientation.

Its major task has become how to prepare the students for the exams in order to pass to the University, although this task is mainly outsourced to external private tutorials the famous “frontistiria”.

However, school should have a different role in today’s societies.

Its major role is shaping the children’s personality, character and at a secondary level to provide basic knowledge about various subjects.

We need schools that gradually allow the pupils to see what they like more, to offer a tray with dishes that the student can taste in order to select his/her favorite.

We need schools that teach pupils and students how to learn and not to learn many things that will be forgotten after the exams.

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We need schools that combine the knowledge from different courses. Interdisciplinarity is the key for new knowledge, for new discoveries.

We need less load per course, but more interconnection between courses.

We need schools with more degrees of freedom that let the teacher’s creativity blossom.

On the other hand, the state must have a general overview of the system allowing more flexibility. For this task we need capable people in the administration of education and not just clientism practices We need good and novel education practices to be disseminated effectively to schools with more or less the same characteristics We must always keepin mind that the final output of the school is a student with integrated personality and not a learning machine. We have the computers for this job.

Especially in today’s world where information is abundant and easily accessible the great challenge is how to use it, how to analyze and how to combine it.

How to pass from information to knowledge and then to wisdom. How to pass from data to decisions.

And if we talk about integrated personalities we must not forget to promote humanitarial principles like solidarity, social responsibility, volunteerism etc.

Allow me to close with a few words about sport in education extracted from my experience (I was member of the national water polo team for 17 years and captain for 6 years participating in 5 Olympic Games).

Sport is a school by itself. There is no better place that you can learn the “no pain, no gain” principle.

No better place that you can learn meritocracy.

No better place to learn goal setting, persistence, selfdiscipline, to fall and rise again.

No better place to learn to respect the rules and the opponent.

And especially in team sports no better place to learn teamwork, to put “I” under “WE” in order to achieve a specific goal.

To learn how each one individually should make a little step back in order all together (the team) to make a big jump ahead. *George Mavrotas MP with “To Potami”

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RESPONDING TO 21st CENTURY CHALLENGES FOR DECENTRALIZATION

INVESTING IN EDUCATION, A STRATEGY FOR SOCIAL AND ECONOMIC DEVELOPMENT

From Educational Freedom to Pedagogical Excellence and from School Autonomy to the Parental Right of Choice

How education can transform societies on our digital world?

By Kostas Gouliamos*

By George Pagoulatos*

Decentralization of educational system today plays a fundamental role in facilitating development and improving educational standards of the 21st century.

The imminent importance of decentralization is based on exactly chief pillars which must be well positioned to improve how resources are used and citizen (students and parents) needs are satisfied.

Education can transform society, and investment in education is a key strategy for economic and social development. Greece lags in a number of comparative indicators when it comes to its education system. In particular, the Greek education system is unfit for the challenges of a modern, globalized economy in the era of information. Despite the extensive state centralization and control, the Greek education system scores low also in terms of fairness. Extensive influence of teacher associations, a corporatistic structure, excessive state regulation and bureaucracy, procrastination in implementing an integrated and effective evaluation system, have all contributed to low education performance. What needs to be done.

Within this framework, experts, professionals and authorities of education have more and more responsibilities in responding to chief pillars such as Educational Freedom, Parental Right of Choice Pedagogical Excellence, and School Autonomy.

However, if the responsibilities are growing, the pale of decentralization available to ensure these responsibilities is often inadequate due to the low level - in most European countries - of school autonomy as well as to the eclipse of the parental right of choice.

Moreover, without the parental right of choice, autonomy, educational freedom and pedagogical excellence, decentralization is crippled. Its advances remain precarious and can generate a profound disillusionment which threatens decentralization’s own democratic or/ and pedagogical foundation.

In view of this, close collaboration and innovative institutional arrangements are needed to provide policies or reforms contained by the content and context of decentralization as the transfer of decisionmaking authority closer to the education user or beneficiary.

*George Pagoulatos Professor of European Policy and Economy at the Economic University of Athens

*Kostas Gouliamos Rector of the European University of Cyprus

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TEACHERS CAN INSPIRE STUDENTS AND TRIGGER NEW IDEAS

By Erasmia Papadopoulou*

Parents must be free to choose the education they believe must be the best for their children “Teaching is something more than to distribute knowledge, it is about inspiring change. Learning is something more than to memorize data. Learning is to arrive at understanding�, as William Arthur Ward (1921-1994, American writer of self-help ) stated!

The development of the human spirit, the standards of living and the progress in societies through the ages has been achieved through people that challenged, what was considered known and right for the general good of the society.

Those who challenged the laws of nature allowed

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humanity to reach the stars.

Those who challenged the Ends of the Known World discovered America.

Those who challenged authoritarian regimes gave us the opportunity to live in Democracy.

The common ground of all those inquisitive minds and the condition of the achievement of knowledge is based on the value of freedom.

The freedom to think differently, to explore new grounds and new ideas, to choose how best to achieve goals in the quest for knowledge.

The societies that are open minded and understand the value of freedom, fully appreciate the fact that the

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freedom in education is the cornerstone of success and prosperity in the economy of the society constituting real added value to the economy.

Indeed, it is a fact that any investment in construction and technology is depreciated within a few years whilst any Investment in education and innovation increases the value of the GDP of a country.

Democratic and open minded societies are willing to challenge their education system and give to their schools and teachers the opportunity to open up students minds!

We know that great teachers can inspire students and trigger their minds to generate new ideas and open up in new challenges!

But it is not only that!

We know that teachers practice a social service since they create the “nation” of the future.

We also know that we have great teachers who can inspire the desire for knowledge to their students, who however are blocked and discouraged from passing on to the next generation what they have got, by the system of education which demands from them to teach only what is written in the official text book.

That’s where the freedom of choice comes in, when we as parents make a choice on the matter of education of our children.

In the exercise of our choice to send our children to private schools, we take this option because private schools tend to have a systematic way to offer incentives to our children, to explore new thinking approaches and to compete and excel each and every one of them in their field of natural talent and preferred activity.

It can be a special talent in music, sports, literature, singing, gardening, chess, dancing, debating…..you name what you wish.

Our children have the opportunity to study languages that will be necessary when they become adults since private schools go beyond what is good for today BUT also see what will be necessary for tomorrow.

We all understand that these extra activities which require a lot more school hours cannot be offered within the strict official program of the public schools operating on the limited resources provided by the Ministry of Education of our country.

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At this point I must say that we all understand the passion of the Minister of Education to upgrade the Public Greek School and we fully support his intentions!

But we cannot agree with his publicized plan to undermine the standards of private education in Greece and the benefits that private schools have achieved till today!

We expect the government to exercise controls that protect and safeguard the professional rights of teachers and professors in our country’s schools, private or public.

We expect the government to upgrade the level of education by finding the best possible methods of evaluation that will enhance teaching services and secure that the pupils, both in public and private schools, will have the best possible teachers, devoted to and only focused on educating our children and cultivating their spirit.

But we also expect our Government to respect the freedom of choice in education, assuming that our democratic Government believes in the freedom of spirit and expression!

In the words of a major Soviet leader: “Education is a weapon, whose consequences depend on who is holding it and against whom it is turned”. - Joseph Stalin (1879-1953).

If this is true, we, the Greeks, living in a free democratic society ask our Government not only to decide and dictate who shall hold the weapon of education, but also, against whom this weapon shall be turned.

Great politicians can create a better future for their countries if they will realize and admit that the only truly productive long term investment is in education flourishing and developing in freedom. *Erasmia Papadopoulou President of Parents Associations at “Ekpedeftiki Anagennisi” private school, member of the Steering Committee for Greek Private Schools

“For more information, speeches, presentations and the outcomes of the conference organised in Athens, Greece on April 14-16, 2016 by the European Council of National Associations of Independent Schools (ECNAIS) you may visit www.ecnais.org”

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TECHNOLOGY HAS CHANGED MIGRATION FOREVER

By Kilian Kleinschmidt*

T

he one million people who came to Europe over the past twelve months certainly achieved the goal of raising attention. With their courage and the enormous risks they took to come to Europe, they changed the way the world is thinking about refugees and discussing the broader issue of people on the move.

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The refugee crisis has highlighted that in today’s world of connectivity and information sharing, the rich and wealthy can no longer hide from the poor and dispossessed. The success of mobile phone companies and internet service providers in spreading their products to almost all parts of the world, including the refugee camps and the poorest favelas, has contributed massively to a better spread of knowledge across the globe about the opportunities and conditions available elsewhere. And that includes the values and ethics of an open society. Elites and some privileged nationalities have long enjoyed a global freedom of movement and mobility that furthers their capacity to acquire more wealth and skills. The poor have been watching and always attempted to join that other world, but were made to understand that migration is only accessible to them when a new workforce is needed.

Whatsapp, Google maps, 3G in many parts of the world and connectivity at many Starbucks and other Wi-Fi hotspots have changed the paradigm. Refugees and the desperate poor have been empowered to make their own decisions, and no longer accept such an unbearable injustice; they began to move. Mobile communication and information throughout their journeys enabled fast adjustments to travel routes. Traffickers were also able to arrange and command trucks, boats and accommodation with fast and direct exchanges of information with people on the move. Technology also saves lives with alert systems and boat movement monitoring. Information about the help and assistance available helped such services to be coordinated, and accessed by migrants throughout the journey and upon arrival in Europe.

Civil society across Europe has mobilised through social media, and we have seen that decentralised services are possible and effective. Individuals in Europe connected directly with people on the move. Helpers and goods were dispatched when and where needed, although at times exceeding requirements. The people wanting to help understood that responsibility for the provision of aid doesn‘t belong solely to big organisations and to governments, but has always been a collective responsibility. Communication helped to re-engage society and people to take charge.

The arrival of one million people is of course raising questions about where they can settle. They will obviously take the initiative to move where there are prospects for housing, education and jobs. Assuming that people will come this far on their own only then to

be at our charge is not fitting with the reality. Keeping people in camps in Europe makes no sense; there is a great need for young and active people in our ageing society. If we are determined to store people away with only basic assistance, without allowing them to be in charge of their own lives, it would be cheaper and more effective to build such facilities in refugees’ regions of origin. But that still means a more robust financing of such support, which Europe have ever failed to do.

The arrival of more people must trigger a discussion on social inclusion and access to services and opportunities in urban as well as rural areas. Some mayors of smaller municipalities and villages have taken up the challenge and have begun inviting new residents, using the arrival of new people to reopen schools, improve transportation, commerce and communication. That’s a win for everyone! There are a number of excellent examples ranging from Italy to Spain, Austria and Germany.

Larger urban agglomerations will continue to grow.

Here, again, there are examples throughout Europe of new populations stimulating innovative rethinking in urban planning, access to affordable housing and how to deal with language and skills development as preconditions to successful integration.

What’s missing is the ability to scale successful models through better exchanges of such experiences.

Exchanges between mayors, communities and civil society on their positive and negative experiences should become more regular. Instead of debating fences and defensive measures, positive models will help to tackle the fear, leading to a healthy debate on how to shape society of a future allowing for diversity beyond the European dimension. It should trigger a rethink in what the European project is all about, and how a real and true vision of a democratic and open society can be realised. We need to return Europe to being what we claim: the role model of cooperation, democracy and freedom.

*Chairman and founder of the Innovation & Planning Agency, special advisor to the German ministry for development and economic cooperation. Previously UN deputy special envoy to Pakistan and deputy humanitarian coordinator in Somalia.

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TACKLING BIG GLOBAL CHALLENGES WITH LOW-COST INNOVATION

By Navi Radjou* Digital platforms like Uber and Airbnb harness the power of the internet to offer a frictionless marketplace that powerfully matches supply and demand so as to make whole new sets of assets available to customers.

Airbnb lets spare room owners make money out of their idle asset and makes the asset easily accessible for more travelers.

Healthcare. Escalating healthcare costs — due in part to the explosion of chronic diseases among Americans — are expected to account for 20% of U.S. GDP by 2020.

To rein in these costs and deliver better care at lower cost, the U.S. urgently needs to adopt frugal medical practices from resource-constrained regions like China, India, and Africa.

The idea of offering your spare room on the web is not new, but with Airbnb you don’t have to create your own website and hope that Google-searching travelers find you. Thanks to Airbnb, more people will travel, bringing more tourism dollars to more people in the countries they travel to, creating more profits and distributing them more fairly.

Take China, which sits on a ticking demographic time bomb: it will be home to 500 million people over 60 by 2050. China can’t build enough new hospitals and train sufficient doctors to take care of its rapidly aging population. To solve this issue, Neusoft, China’s largest IT service provider, deployed a low-cost telemedicine solution that enables doctors in cities to remotely treat older patients with chronic diseases who live in rural areas. This frugal solution is built around affordable and easy-to-use medical devices that can be operated by nurses in rural clinics.

This kind of innovation is almost a textbook example of frugal innovation. It removes a major source of cost/effort to both supplier and customer and relies on simply being smart with what you already have.

There is no major capital investment involved and yet it revolutionizes the industry and unlocks the valuecreating potential of hitherto idle assets.

What enables revolutions like this is the existence of broadband networking and mobile infrastructure, cloudbased data storage, and clever digital programming — stuff we already have. The result is a growing realization that there are many more available assets and capabilities to meet consumer needs than we have traditionally imagined.

The digital revolution, therefore, is helping to create a more frugal economy, one that generates greater value in a highly efficient, socially inclusive, and ecosustainable manner — using fewer resources. What’s more, many of the innovations originate in relatively poor, underdeveloped regions or are designed to serve low-income customers, which means that the innovators have no choice but to be frugal. Here are some striking examples of how these digital innovators are shaping the frugal economy worldwide:

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Education. Khan Academy has upended the education sector by offering free tutorials on multiple subjects as short videos via YouTube. Yet, over 5 billion people worldwide don’t have internet access. So Khan Academy launched KA Lite, an open-source software that delivers its educational content without internet connectivity.

In India, Khan Academy partnered with Foundation for Learning Equality and Central Square Foundation to preload KA Lite on the ultra-cheap Raspberry Pi microprocessor, which can be deployed as a local server in a school. Today, underprivileged students at Akanksha Schools in Mumbai learn math with KA Lite by accessing its content locally using low-cost tablets like the $35 Aakash.

Energy. Climate change is a clear and present danger to all of humanity. To keep the rise of global temperatures below 1.5 degrees Celsius, all countries — rich and poor — need to rapidly transition to a low-carbon economy powered by renewable energy. Africa, a continent where up to 90% of people lack electricity but where mobile

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phone penetration reaches 90%, is showing us the way.

In Kenya, half of the population uses M-PESA, a mobile payments solution that doesn’t require a bank account.

M-PESA is now enabling other disruptive business models in sectors like energy.

Take M-KOPA, a home solar system that comes in a kit containing a small solar panel, two LED lamps, an LED flashlight, and a mobile phone charger. Although the entire kit costs $200, Kenyans can purchase it with an initial deposit of $35 and pay off the rest by making a daily micro-payment of 45 cents using M-PESA. After paying for a full year, the system is unlocked and the customer owns the product outright. Adding 600 new customers a day, M-KOPA intends to cross the millionunit mark by the end of 2017. Thanks for these frugal off-the-grid energy solutions, African households are leapfrogging from candlelight to solar light.

Housing. In its latest report, Harvard’s Joint Center for Housing Studies points to an “affordability crisis” in the U.S. housing sector. With rents growing more rapidly than average Americans’ income, nearly half of renter households today spend more than 30% of income on housing. Meanwhile, even middle-class Americans are being priced out of the housing market in states like California, where average low-tier property prices went up by 10% in 2015.

Here is an aberration: The average American house size has more than doubled since the 1950s, while the average family size shrunk by half during that same period! In lieu of building more McMansions — which only the wealthiest can afford — the U.S. could harness technologies like 3D printing to build affordable houses faster and cleaner and make them accessible to most Americans.

In 2014, the Chinese company WinSun used a giant 3D printer to construct 10 houses in 24 hours. WinSun claims its proprietary process can save up to 60% of construction waste, cut production time by up to 70%, and shave off 80% of labor costs. Italy-based World’s Advanced Saving Project recently upped the ante by unveiling the world’s largest 3D mud printer, which combines advanced technology with ancient construction techniques and abundantly available cheap materials (mud and clay) to build ultra-low-cost houses that are durable and sustainable.

Finance. According to one recent estimate, Europe is home to 50 million low-income people who altogether represent a €220 billion ($245 billion) untapped market,

especially for financial services. Traditional banks — with their monolithic business models and hefty fees — have been unable to crack this lucrative market.

Enter Compte Nickel, a French startup that enables people without a bank account to walk into a local mom-and-pop store, subscribe to their service in just five minutes, and get an international debit card and an international bank account number. The service enables users to send/receive money with their mobile phone and pay anywhere in the world using their debit card—all at no extra cost. Compte Nickel charges a flat annual maintenance fee of just 20 Euros (compared to 180 Euros charged by retail banks). Adding 20,000 new customers a month and with a 97% customer satisfaction rate, Compte Nickel expects to close 2016 with half a million clients.

Armed with 3D printers, mobile technology, and opensource hardware, a new generation of innovators is emerging to address our basic needs faster, better, and cheaper than traditional providers. These digital pioneers are using frugal innovation, rather than distributive economics, to tackle the global wealth inequality crisis. I hope more entrepreneurs will join them to co-build an inclusive frugal society where everyone can live better with less. *Navi Radjou is a Silicon Valley-based innovation and leadership advisor. A TED speaker and winner of the 2013 Thinkers50 Innovation Award he is the coauthor (with JaideepPrabhu and Simone Ahuja) of Jugaad Innovation (Wiley 2012). His latest book (with JaideepPrabhu) is Frugal Innovation (The Economist in association with Profile Books and Public Affairs, 2015).

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LEADERSHIP EUROPEAN BUSINESS REVIEW

THE COST OF GEOPOLITICS TO M&As

By Laurence Capron*

When geopolitical relations between nations are strained, states are more inclined to intervene to block mergers and acquisitions on national security grounds. But this makes mergers more difficult and more expensive, putting them at odds with the national interest.

M&A-induced protectionism is rising and not only in countries where state intervention is fairly common (such as France, Russia, Germany and Japan), but also in Anglo-Saxon countries such as the United States.

Cross-border deals involving US companies, which represented 40% of cross-border acquisitions in 2015, has raised protectionist concerns, most notably in deals involving Chinese acquirers. Geopolitical tension between the United States and China is not restricted to the South China Sea but has reached Wall Street’s corridors.

With the forthcoming presidential election, Chinese acquirers, notably those targeting high-tech targets, are being closely watched by the Obama administration

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and Congress. Many in Washington consider these companies to be wings of the Chinese government as they are either owned or are connected (or suspected to be connected) to the latter. In some cases they are considered a threat to the country’s national security and their overtures to corporate America are routinely blocked.

In February 2015 the Dutch company Philips learnt this lesson the hard way. In a move to focus more on the group’s medical activities its management decided to sell its lighting subsidiary, Lumileds. A consortium of Asian companies was interested in acquiring Lumileds and made an offer that totalled more than US$3 billion. However, it was not to be. The Committee on Foreign Investment in the United States (CFIUS) a

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body made up of representatives from the US Treasury, the Departments of Justice and Defence blocked the takeover claiming it was a risk to US national security.

Chinese investors were part of the consortium and it was feared that they would gain access to sensitive technology through the transaction.

Another recent case is the US company Fairchild Semiconductor International, that recently rejected a purchase proposal from the Chinese company, China Resources Microelectronics, despite a lucrative offer of approximately US$2.5 billion. The risk of being flunked

by CFIUS was considered just too great by Fairchild Semiconductor International’s team. The company operates in the semiconductor sector with its products used in some military equipment (such as drones).

National good vs. entrenched interests The existence of geopolitical friction is not limited to Chinese-US transactions. It is common that target countries resort to different economic levers such as national champion-promoting policies to oppose a cross-border acquisitions or to obtain more favourable deal conditions for the target country.

Such M&A protectionism prevents the risk of nationally beneficial high-tech assets being acquired by foreign countries. Countries such as the US can maintain their edge in foreign affairs by maintaining technological superiority and preventing military-industrial arms races. Public intervention can also protect jobs and keep innovation at home. For corporations, this can ensure the continuity of good corporate governance that could be changed by a less developed foreign acquirer. It can also be beneficial to the target’s shareholders. When international relations are strained, target companies are also better equipped to defend themselves against an acquisition that is deemed unfavourable, through the intervention (or the threat of intervention) from public authorities. This also leads to increased bargaining power during any negotiations that may follow.

A recently published article in the Strategic Management Journal by Olivier Bertrand and Marie-Ann Betschinger, management researcher at the University of Fribourg, Switzerland, found an inverse relationship between acquisition prices and the quality of international relations between countries. Their study looked at the

operations of 700 large-scale international M&As from 1990-2008. It shows the purchase premium offered to a target company’s shareholders may increase by 25% when bilateral relations between the countries of the purchaser and the target firm are strained.

The extent of state intervention This raises the question of how much a state should intervene in M&A. It boils down to the fundamental question of the role of the state in a market economy.

The state may intervene arbitrarily because of lobbying pressures and entrenched domestic interests, which is not viable in the long run. What is key for the state is to ensure a well-functioning market for corporate control that can attract both domestic and foreign investors. If the rules lack clear scope, it will make it difficult to predict whether a cross-border deal is likely to be blocked or require modification. We know that what foreign investors value most is institutional predictability. Lack of clarity will eventually dampen their enthusiasm. Investors need to know early on whether the proposed deal involves strategic assets likely to be subject to more stringent controls and whether these may have an impact on the deal’s value or execution.

During the international mergers and acquisitions process therefore, the acquiring companies should consider the geopolitical dimension well in advance to avoid such pitfalls.

The stakes will be much higher if there is political friction between the countries of the purchasing company and the target company. Not only will the purchase premium rise but so will the risk of the transaction failing or being altered with, for instance, required subsequent divestitures or job protection guarantees. *Laurence Capron is a Professor of Strategy at INSEAD and The Paul Desmarais Chaired Professor of Partnership and Active Ownership. She is also the programme director of M&As and Corporate Strategy, one of INSEAD’s Executive Development Programmes and the author of Build, Borrow or Buy: Solving the Growth Dilemma. Capron is also a LinkedIn Influencer.

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LAST PAGE EUROPEAN BUSINESS REVIEW

CAN INDIA SURPASS CHINA’S ECONOMY BY 2050?

9 facts on the economic rise of India after a delayed start 1. For several decades to come, China will almost certainly hold its new spot at the top of the global economic table.

2. However, by 2050, it is possible India’s economy will have edged out not only the United States but also China, to take the top spot.

3. A little more than a decade after China launched its market-based reforms, India jumped into the growth game as well.

4. India’s economic liberalization policies of 1991 led to an increasing role for the private sector and opened the economy to foreign investment.

5. As of 2014, India’s $7.3 trillion economy was the world’s third-largest, measured in terms of purchasing power parity.

6. However, it is at present only a little over 40% as large as the U.S. and Chinese economies.

7. While India’s growth has not been as strong as China’s over the past two decades, its growth rate is expected to outpace China’s in the coming decades.

8. To realize its potential, India will need to sustain its reform policies and increase investment in infrastructure, education (especially women) and better governance.

9. The Indian economy is expected to be about 2% larger than the U.S. economy by mid-century — but about 30% smaller than China’s.

Sources: Price water house Coopers with additional analysis by The Globalist Research Center.

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