European Business Review (EBR)

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ISSUE 4-2019 / YEAR 22nd - PRICE 5,00 € / $6,00







INDEX Founder

Konstantinos C. Trikoukis Chairman

Athanase Papandropoulos Publisher

Christos K. Trikoukis Editor in Chief



‘The Times They Are a-changin’

Why Macron’s ’Master Plan’ for EU reform risks being stillborn



NATO Needs a German Voice Now

Tycoon Michael Bloomberg for US President?



N. Peter Kramer Editorial Consultant

Anthi Louka Trikouki Issue Contributors

Giles Merritt, François Lafond, Shada Islam, Judy Dempsey, Raluca Csernatoni, Radu Magdin, Giannis Pagkalias, Jasjit Singh, Sebastian Buckup, Helen Regan, Marian-Jean Marinescu, Katharine Rooney, M Niaz Asadullah, Alexandra Papaisidorou, Boris Liedtke Correspondents

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Marianna Panoutsopoulou Business Development John G. Tragkas Published by:

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Private wealth and the route of business earnings towards the end of the decade 2010

Crowdfunding for Impact?

ISSUE 4-2019 / OCTOBER-DECEMBER 2019, YEAR 21st Published bimonthly under the license of Christos K. Trikoukis. European Business Review trademark is a property of Christos K. Trikoukis. European Business Review is strictly copyrighted and all rights are reserved. Reproduction without official permission of the publisher is strictly forbidden. Every case is taken in compiling the contents of that magazine, but we assume no responsibility for the affects arising therefrom. The views expressed are not necessarily those of the publisher nor of the European Business Review magazine.



Space traffic management – the next challenge for Europe’s leadership in space

Big Food Is Ripe for a Revolution

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by N. Peter Kramer, Editor-in-chief EBR

‘The Times They Are a-changin’


ith apologies to Bob Dylan for using his already so often (mis)used words: ‘The Times They Are achangin’. The song went through my head, realising that I am writing my last column as Editor-inChief of European Business Review. I would like to thank my readers for their patience during all these years. Dylan’s words become even more political and powerful knowing that, at the beginning of December, Russia began supplying gas to China via a brand-new pipeline: ‘the Power of Siberia’. It is the largest gas project in history and symbolic of Moscow’s diplomatic pivot towards Beijing at a time of worsening relations with the EU for both countries. Work on the pipeline began shortly after the EU and the US introduced the first Crimea-linked sanctions against Russia. A few thousand more km of Siberian pipeline will be finished next year and the year after. Dubbed ‘the contract of the century’ by Russian gas group Gazprom, the $55bn deal with China’s oil and gas group CNPC will allow for 38bn cubic metres of annual gas supplies to China via the 3000 km pipeline that crosses Siberia to the Chinese border in the south-east. The pipeline will allow Gazprom to increase gas exports amid declining demand and gas prices in its traditional export markets of Europe and Turkey, which buy on average about 200n cubic metres of gas a year. For China, Asia’s largest economy, the project will help ensure its energy security amid declining domestic gas production and rising demand. It should also help combat air pollution in the coal-dependent north-eastern regions of China. The two leaders launched the project via video, Vladimir Putin from Sochi and Xi Jinping from Beijing. ‘This is truly a historic event, not only for the global energy market, but first of all for us, for China and for Russia’, Mr. Putin said in Sochi. Mr. Xi said ‘This gas pipeline launch is an important transitional result and the start of a new stage of our co-operation’. Whilst the EU is divided on how to cope with Russia, Vladimir Putin is strengthening his relationship with China. Mr. Xi Jinping called this development ‘a priority in our foreign policies’. As Bob Dylan sang…




Why Macron’s ’Master Plan’ for EU reform risks being stillborn General de Gaulle famously believed his “certaine idee de la France” in the aftermath of World War 2 was key to re-building his country’s economic and political muscle by Giles Merritt* 10 | EUROPEAN BUSINESS REVIEW



eneral de Gaulle famously believed his “certaine idee de la France” in the aftermath of World War 2 was key to re-building his country’s economic and political muscle. He and his successors in the presidential Elysee Palace can claim they also did much to shape the European Union of today.

tral Europe, along with the three Baltic republics, have ineradicable memories of their treatment at the hands of the Kremlin during the Cold War, and still see Russia as a threat to their security. Public opinion in those countries looks to be viscerally opposed to any rapprochement with Moscow.

But now the EU is rudderless and in the grip of a paralysing identity crisis. ‘Une certaine idee de l’Europe’ is clearly needed to confront a host of daunting challenges. France’s president Emmanuel Macron thinks he knows what that idea should be, but few if any of the EU’s other national leaders seem disposed to go along with him . He is far from being the sole political leader to recognise the EU badly needs a 21st-century update, but he is very much in the forefront. A few months after taking office in May 2017, Macron unveiled ambitious proposals for reforming and streamlining the EU. He chose Paris’ venerable Sorbonne university to outline to a student audience a plan he intended should echo around the world.

As well as his reform proposals, Macron has been championing a much stronger European ‘defence union’. Many EU member governments are, however, wary of anything that might weaken NATO. Add to that Berlin’s concerns that eurozone reform might increase the financial burden on German taxpayers that will be created by Brexit’s impact on the EU budget. President Macron has tough opposition to contend with.

MACRON HAS NOW UNDERPINNED HIS CASE FOR EU REFORM WITH A CALL FOR A RADICAL NEW GEOPOLITICAL STANCE President Macron’s thinking ranged from controversial EU-level taxes on carbon-heavy imports and on largely American giants of the Internet, and included a new ‘disruptive innovations’ agency and the ‘mutualisation’ of debt within the eurozone that would target taxpayers in richer countries like Germany. In short, good ideas but ones chiefly involving political costs for all. Undeterred by those nations’ lack of enthusiasm, Macron has now underpinned his case for EU reform with a call for a radical new geopolitical stance. Europe, he has said, “is on the edge of a precipice” in an increasingly unstable world, and must re-think its security and economic relations with the United States while improving them with Russia and China. US President Donald Trump’s disdain for Europe has provoked widespread alarm and hostility in EU capitals. But Macron’s urging of closer ties with Moscow, and his comment to The Economist that NATO is “brain dead”, is deepening divisions within the EU. MACRON HAS BEEN CHAMPIONING A MUCH STRONGER EUROPEAN ‘DEFENCE UNION’

Yet he appears determined to press ahead, buoyed no doubt by the fact that the EU evidently cannot opt for business-as-usual. Its dwindling popularity and the electoral inroads of eurosceptic populists are ringing ever-louder alarm bells. REACTIONS TO MACRON’S REFORM AGENDA HAVE BEEN LUKEWARM AT BEST Macron can claim authorship for the idea of the twoyear ‘Future of Europe’ conference currently being launched by the EU and its member governments. This device for consulting European civil society and asking people what EU they want may greatly strengthen the case for reform; it’s expected to contribute inputs on climate change and social inequalities as well as on Europe’s industrial shortcomings and stagnant productivity. Reactions to Macron’s reform agenda have been lukewarm at best, and this has often been ascribed to the French president’s ‘arrogant’ manner as much as to the desirability of his suggestions. The truth, however, is that political inertia and fears of provoking public hostility are the real reasons. As 2020 dawns, the ball will be firmly in the EU’s court, and especially that of the incoming European Commission. It will be up to its new president, Ursula von der Leyen, to decide whether to take the political risk of giving unequivocal support to Macron’s reform drive.

*Giles Merritt Founder and Chairman, Friends of Europe **first published in:

Poland and the three other ‘Visegrad’ countries of cen-



An obvious Balkan strategy for Greece The geographical position of Greece is still an amazing comparative advantage as South East extremity of the European continent. This is from this geography that Greece has been in capacity to develop two of its main economic drivers: tourism and shipping. And Greece is a natural gate from one of the most important and strategic maritime road, in direct line with the Suez canal. by Franรงois Lafond**


ven its Turkish Neighbor cannot play the same role as a gateway with two major ports, Piraeus and Thessaloniki, towards the biggest trade partner in the world, the European Union. This geographical location has of course a specific importance for you as a country, but also beyond your national interests, Greece has become recently more strategic to world powers. One obvious reason for such interest is the evolution of the role Turkey in the whole region. As natural and predictable ally in the Western defence alliance created in 1949, NATO, (which will welcome in the coming weeks, the Republic of North Macedonia, as 30th member), Turkey is nowadays facing a certain number of hard challenges: - a coup 3 years ago and its following repression;


- a massive refugee situation with more than 3 million and 800000 people on its territory; - a stop in the EU accession process which started 14 years ago; - and some very personal erratic relations with the current US President. By contrast and by consequence, Greece is seen as a stable, predictable and key Western ally, and member of the European Union. PIRAEUS AND THESSALONIKI PORTS Furthermore, Greek ports, in particular Piraeus and Thessaloniki, have always been important assets because being gates. The European Union and most of the Member States have not perceived enough this


geostrategic dimension when during the financial and economic crisis, they have been pushing the Greek government to privatize most of the public infrastructures in order to get fresh money, liquidity and start cleaning the public budget deficit and the public debt. This is how the Chinese company Cosco was the only one to understand how Piraeus could become a major Mediterranean maritime hub. This is work in progress and if I am not wrong, the Chinese involvement has been about 20% increase activities of the port and new forthcoming development with millions of investments. Thessaloniki port (South Europe Gateway Thessaloniki) have seen a French major shipping operator (CMA-CGM) with German (Deutsche Invest Equity partners) and Ivan Savvidis group becoming main owners (67%) of this port. Without entering in the details, both ports are stressing the importance of trade, exchange by the maritime way, where the Greek shipowners of course are playing a leading role. But the development of these two ports have obviously an International meaning and with some very concrete consequences. In Piraeus port, Cosco is a clear and important element of the China’s Belt and Road Initiative, adding the Greek port to a long list of 36 other ports on the 5 continents. Most of you are aware about this long-term strategy. Piraeus like Thessaloniki are not an end in themselves. They are gates, connection points, where goods arriving will then continue their journey somewhere else. In order to be transported to Poland, Germany and France and all European markets, you will need to develop efficient infrastructures. Railway of course if you want to take into account the environ-

mental paradigm shift in direction to the Balkans. And the roads, often missing or not in a good shape. The exchanges of China with Western Balkans countries are not so important in term of volume (5,7% if you compare with the trade with EU, 73%) but China massively invested in most of the more than 7 billion euros in Serbia. More important, because of the different loans conceded for the infrastructures in construction, 20% of the national debt of North Macedonia owns to China, 12% of Serbia, 40% in Montenegro and 14% in Bosnia Herzegovina. Elsewhere in the world, this unhealthy dependence is worst and may have some concrete consequences on Greek political decision or to respect our democratic European values. This is also the editorial of the Financial Times of today, untitled “Europe needs its own Belt and Road Initiative” as some are questioning about the role of China, as the European Union considering China “a systemic rival promoting alternative models of governance”. GREECE AND THE WESTERN BALKANS As you may know, Montenegro and Serbia have already started the negotiations to become member of the European Union. Last October, the 28 member States have discussed about starting also the negotiations with Albania and the Republic of North Macedonia. The decision has been postponed, as the French President, Emmanuel Macron, was not convinced about the timing and the process and has asked to change the methodology of the accession in order to make it more efficient, reversible, less technocratic and with more concrete impact on the citizens during the whole negotiations.



What is important, is that everybody agrees at the EU level, that the 6 countries of Western Balkans will become members of the EU. This is why the Greek ports have their importance because they will become assets for the development of the region, not only on a short term but on the long run. Remember that Greece had the opportunity to become member of the EU in 1981, 38 years ago (even if you were a small kid, Danae). And how it has changed the situation of Greece. So, Greece has consequently a new strategic important International role to play, which goes well beyond your national interest. Of course, national interests are important and political leaders are elected to take care of them, Prime Minister Mitsotakis like his European council partners. But because of its geographical position, because of the situation of the ports, because of the new global powers evolution (and not only the trade tensions between the US, China and the European Union), Greece will have to contribute positively to what the new President of the European Commission, Mrs van der Leynen has declared in the first speech and again at the European Parliament: a geopolitical Commission in order to be a shaper of a better global order. Greece has a specific responsibility: the country has made sacrifices to stay in the Eurozone, European partners will continue to help Greece to manage the migration crisis (since 2015 more than 2 billion euros have been given to Greece to manage this situation) but Greece’s European’s role is obvious: European gate and Balkans economic booster. The objectives are to create the opportunities to increase exchanges, trade, and economic cooperation beyond the borders. This is


the best way to strengthen the role and the activities of Greek ports and to insure shipping sector a growth in their business. Let me conclude with a recent event that confirms how a Greek strategy for the Western Balkans will be important also for the shipping sector and the development of your ports, with a certain number of concrete initiatives to support the European perspective of these countries in the region, enhance stability and develop prosperity of the Wider region. Few weeks ago, Greek Foreign minister, Nikos Dendias was in Skopje for his first visit to the Republic of North Macedonia. During the press conference, he has fortunately confirmed what has been done by the Greek previous government and I quote him: "Greece strongly supports North Macedonia’s EU accession, full implementation of the Prespa Agreement, and strengthening our bilateral cooperation". This is how Greece will demonstrate to the International community and to its European partners to have and to develop a leading role in the Western Balkans region.

*François Lafond Special adviser to Deputy Prime minister for European Affairs, Republic of North Macedonia / Expertise France. But he is writing in its personal capacity. ** This is an article from a speech given at the occasion of the 19th Navigator Conference, The shipping decision makers Forum, held November 19, at Stavros Niarchos Cultural Center in Athens.





Europe needs new stories and an end to mind-numbing ‘group think’ Incoming European Commission President Ursula von der Leyen has jazzed up her team’s job titles, promising also to give a ‘geopolitical’ tinge to future policies by Shada Islam*


ncoming European Commission President Ursula von der Leyen has jazzed up her team’s job titles, promising also to give a ‘geopolitical’ tinge to future policies. This is good news. But the rebranding of tasks must be backed up by a rethink of the European narrative. Most importantly, it’s time to take a break from mind-numbing European group think. Stories matter. The stories we tell ourselves – about


ourselves – are as important as the ones we tell others. They determine how Europeans view themselves and how others perceive Europe. In a changing world, Europe needs new stories and fresh thinking to flourish and thrive. The threat to Europe doesn’t come from diversity of thought. It comes from complacency and clinging to out-dated single narratives that keep us within our old comfort zones


– but disconnected from the realities of today’s complicated world. So, let’s start reframing at least four important conversations. LET’S WELCOME THAT RARE MODERN ANIMAL: A POLITICIAN WHO CAN THINK First, let’s admit that French President Emmanuel Macron is no European superhero – but he isn’t a villain either. The French leader’s recent tough-talking interview on transatlantic relations and “brain dead” NATO has been almost-universally denounced as unacceptable, disruptive and another deadly blow to faltering US-EU relations. It isn’t. The French leader’s choice of words is deliberate and his comments are thoughtful. As the US looks inwards and elsewhere, Europe needs to get its act together on security and defence. Yes, Macron is speaking more like a think-tanker than a politician but in a world where politicians prefer to interact through Twitter diatribes, what’s wrong with that? Let’s welcome that rare modern animal: a politician who can think. As they get ready to meet in London for the NATO summit in two weeks, European leaders

should pay attention to Macron’s concerns instead of huffing and puffing about the sanctity of transatlantic relations. REINFORCING EUROPE-AFRICA TIES, HOWEVER, REQUIRES A RECOGNITION THAT AFRICA IS IN THE MIDST OF EXCITING TRANSFORMATIONS Second, no more time should be lost in reframing EU-Africa relations. Summits with African leaders are now the norm in Japan, China and India. Russia is upping its game in Africa, having just hosted representatives of all 54 African nations, including 43 heads of state or government, in Sochi. Turkey-Africa relations have reached “a level that could not have been even imagined 15 years ago”, according to Turkish President Recep Tayyip Erdogan who recently met with Africa’s Muslim leaders. The number of Turkish embassies in Africa has increased from 12 to 42 in recent years. Europe still matters in many African countries. France is expected to convene a meeting with African leaders in June and several German-Africa gatherings will be held during the German Presidency in the second half of 2020, including one summit in Brussels.



Reinforcing Europe-Africa ties, however, requires a recognition that Africa is in the midst of exciting transformations. It needs two key changes: a firm rejection of the still-too-often ‘white saviour’ approach based on colonial (mis)perceptions and a vision of Africa as a land of potential migrants, all poised to arrive en masse in Europe. BUT CHINA AND EUROPE WILL NEED TO COOPERATE ESPECIALLY ON TACKLING GLOBAL CHALLENGES Third, it’s time to recognise the complexity of China and the multi-faceted reality of Europe-China relations. Responsible leadership demands that when engaging with Global China, EU leaders put Europe First. Competition and cooperation, divergence and convergence will continue to be the hallmark of EU-China relations. Differences over human rights, Xinjiang, Hong Kong, the rule of law in the South China Sea, the power of state-owned enterprises, Internet freedoms and rules governing cyberspace will continue to sow discord. But China and Europe will need to cooperate especially on tackling global challenges including climate change, Iran, North Korea and Agenda 2030. Both are serious about preserving the much-frayed multilateral rules-based order. The recent EU-China agreement to


protect 100 European Geographical Indications is an important breakthrough. THE QUESTION IS SIMPLE: CAN THE NEW EU LEADERS WIPE AWAY THE COBWEBS AND START A NEW, MORE SENSITIVE AND INCLUSIVE EUROPEAN CONVERSATION? Finally, the switch from “protecting” to “promoting” the “European Way of Life” is a welcome sign that the new Commission chief is willing to listen to critics who said the original job title echoed Far Right tropes. The truth of the pudding, however, is in the eating. The annual “Black Pete” controversy raging in the Netherlands is a sad illustration that the “European Way of Life” includes elements which are hurtful to many Europeans and certainly should not be promoted The question is simple: can the new EU leaders wipe away the cobwebs and start a new, more sensitive and inclusive European conversation? Or are we doomed to hear out-dated myths which mislead and confuse European citizens – and amuse and amaze the rest of the world?

*Shada Islam Director of Europe and Geopolitics at Friends of Europe



NATO Needs a German Voice Now Hold your breath! The American and French presidents’ provocative views on NATO are good for the alliance—provided Germany starts acting strategically by Judy Dempsey*


arely has NATO not been under verbal siege over these past few months. U.S. President Donald Trump continues to snipe at the alliance at any given opportunity. And on the other side of the Atlantic, French President Emmanuel Macron has gone so far as to call it “brain-dead.” Leading officials, predictably, have rushed to defend the organization. Ahead of a meeting of alliance leaders near London on December 3–4, there will be even more praise and support showered on NATO. Yet the fact that that this meeting will not be called a summit shows how NATO’s seventieth birthday is not being celebrated with great fanfare but instead with


a degree of self-doubt, if not anxiety. In their different ways, Trump and Macron are good for NATO—provided alliance leaders can turn such criticism into an advantage. Trump’s tirades against NATO are about money. He wants the allies to pay more into the pot and stop taking the United States’ security umbrella for granted. The member states are now paying more for their defense. And even if several governments have yet to meet the target of spending 2 percent of GDP on defense, the contributions have jumped. Yet it is debatable if the 2 percent goal makes sense if not coupled with an overhaul of what countries spend the money on.


Trump’s comments aside, the immense dangers the West is facing from Russia, China, and terrorism, not to mention the increasing vulnerability of democracies worldwide, cannot be played down. Macron wants NATO to talk about these issues. The fact that the alliance has shied away from such discussions—even of the collapse of the Iran nuclear deal—or avoided preparing for scenarios such as a conflict breaking out in the South China Sea reveals a mindset and culture in fear of opening a Pandora’s Box. But it has to be opened. And Germany should do it. The German defense minister, Annegret Kramp-Karrenbauer, says she wants the European allies to take on more responsibility. Not to be outdone, the minister of foreign affairs, Heiko Maas, who swings back and forth with regard to his views on NATO, wants an independent commission set up to undertake a forensic examination of the alliance. That committee should be chaired by NATO Secretary General Jens Stoltenberg. But it will go nowhere unless Germany gets off the fence and decides once and for all to play a strategic role in Europe and in NATO. And it’s an open question if Trump even believes that sum is enough anyway. For him, NATO is just another transactional instrument. The idea that it was founded to underpin the West carries little weight. That’s such a dangerous development for the transatlantic relationship. It represents another assault by Trump on one of the post-1945 multilateral organizations that were established to ensure a measure of predictability and stability for the West. Macron has weighed in from a very different angle. It’s the intellectual and political aspects that he wants addressed. It’s not about getting rid of NATO or ganging up on the United States—which some countries such as Poland infer from Macron’s comments. Nor is it about Macron wanting France to become the leader of a European defense force that would eclipse NATO. Even if he wanted the latter, he would garner little support. What Macron wants is for NATO to think and act politically and for Europe to consider the future of its security in case Trump wakes up one day and pulls America out of NATO. Many alliance leaders prefer to keep their heads in the sand rather than contemplate such a possibility.

This is not about Trump forever berating German Chancellor Angela Merkel for failing to spend enough on defense. As if money alone was a panacea to NATO’s ills. It is about Germany replying to Macron by setting the agenda for Europe’s security and defense. This means asking hard questions about America’s security guarantee, about the role of Europe’s two nuclear powers, Britain and France, and about further enlargement of NATO. Germany’s procrastination over security and defense should worry all NATO allies and all EU members. As Merkel sees out her last term as chancellor, she has the chance to take advantage of the criticism coming from the White House and the Elysee Palace. Unless she grabs that chance, the advantage will pass to Russian President Vladimir Putin. *Judy Dempsey nonresident senior fellow at Carnegie Europe and editor in chief of Strategic Europe **first published in:



The Democratic Challenge of EU Defense Policy The EU must improve democratic accountability and transparency on defense policy—otherwise its new-found ambitions to forge a defense and strategic culture will backfire by Raluca Csernatoni*


he new European Commission has big plans for defense. So big and ambitious that, in trying to shape a coherent EU defense and security policy, they challenge the role that member states have traditionally played. They also raise questions about how accountability and transparency, both of which are necessary for public legitimacy and support, can be reconciled with national defense policies and military spending—areas


that are traditionally closely tied to lobbies and weapons’ manufacturers. These are some of the big issues that incoming European Commission President Ursula von der Leyen and her team will have to tackle if the EU is serious about making defense more integrated. The EU has always punched below its weight when it comes to defense; a former Belgian foreign minister


once (in)famously said that “Europe is an economic giant, a political dwarf, and a military worm.”

14. So far, such catchy slogans lack substance and realism

Certainly, there has been a plethora of recent initiatives such as the revived Permanent Structured Cooperation (PESCO), the European Defense Fund (EDF), and the establishment of a new Directorate General for Defense Industry and Space. The latter marks a political signal that the EU and the commission should have increased competences in this domain. Both the EDF and the new directorate general introduce innovative changes to a fragmented and complex policy area such as defense, where intergovernmentalism is still dominant and supranational governance has traditionally been limited.

But if the EDF is successfully implemented—and it’s a big if—it is expected to boost the commission’s agenda-setting power in the field of defense, for example by supporting lucrative joint investment schemes in cutting-edge military technologies and their research and innovation.

All these initiatives are expected to upscale the European level of ambition in defense at a time when the EU institutions and member states are talking about increasing Europe’s strategic autonomy and sovereignty across different domains. “We have to work on our technological sovereignty,” said Thierry Breton, the French commissioner-designate for the new directorate general, when he was questioned by the European Parliament on November

The EDF is not a defense policy per se, but a research and technological-industrial policy. Still, with its expected budget of €13 billion for 2021-2027 it symbolizes an unprecedented development of EU governance on the supranational level: it makes defense industrial cooperation under the EU budget a reality. Spending EU money (meaning tax payers’ money) on defense capabilities and their development is no longer taboo. The expected main beneficiaries of the defense fund are member states with strong national defense industries and the financial means to co-finance costly military capability projects. Because France is such a major defense player, and



commission’s increased power in defense-related issues raises questions about the transparency and scrutiny of how decisions are reached. If the EU proceeds with further political integration in such a sensitive field as defense, the big democracy question is inevitable. Indeed, civil society and activists have already criticized the way decisions on EU defense policy are made behind closed doors. True, decisions on defense have to be expert-driven—but there is a need for transparency, legitimacy, and public debate about these kinds of integration processes.

because the new directorate general will be led by a Frenchman for the next five years, Paris seems to be the biggest winner from this new-found EU interest in defense. This raises concerns from several member states about France’s potential influence over EU defense policy. As if to reassure those who fear the EU may be undermining national prerogatives in defense or becoming a competitor to NATO, the outgoing commissioner for the internal market, Elzbieta Bienkowska, insisted the commission “is not making a power grab for defense policy or creating an EU army.” Yet there is a more fundamental point to be made: the

Proposed EU investments on defense also require new forms of checks and balances, oversight mechanisms, and the meaningful participation of EU citizens in decisionmaking. So far, however, the EU’s goals and interests in defense are progressively converging and being shaped by those inside the European defense industry. Powerful industry-driven lobbying has always played a signi?cant role in setting priorities in defense research and development. But currently, there is a growing sense of a corporate capture, compounded by unaccountable and often invisible forces that directly or indirectly influence the EU’s policymaking on defense. Transparency and legitimacy are dimensions of the accelerating EU defense integration that enjoy limited public debate, namely of whether defense initiatives are democratically accountable and subjected to meaningful parliamentary scrutiny and oversight—either on the European or on the national level. The reality is that embarking on deeper integration in such a highly sensitive area as defense, without putting in place new mechanisms for democratic participation, is highly problematic and could backfire. It could lead to an EU legitimacy crisis-in-the-making. Unless von der Leyen matches geopolitical ambition with accountability and transparency. *Raluca Csernatoni Visiting researcher at Carnegie Europe, where she works on European security and defense with a specific focus on disruptive technologies






Tycoon Michael Bloomberg for US President? by N. Peter Kramer


ichael Bloomberg joined the race for the 2020 Democratic presidential nomination. But at a time when progressive ideas are on the ascendant, some derided the announcement as a misguided vanity project for a 77-yearold media tycoon. He ran as mayor of New York City as a moderate Republican. He is wielding his $54bn fortune like a bludgeon, I read somewhere. And indeed, money and his success as New York City’s mayor make him a serious candidate for US President, despite a late start. The billionaire is one of 15 Democrats vying for the nomination after Montana governor Steve Bullock, Californian senator Kamala Harris and Joe Sestak, a former lawmaker, dropped out the beginning of December. An average of recent national polls, compiled by RealClearPolitics, showed Mr. Bloomberg with 2,8% support, placing him seventh in the field, significantly after the other septuagenarians Joe Bidden, Bernie Sanders and Elisabeth Warren. Senator Warren, who has put mega-taxing billionaires at the centre of her candidacy, welcomed Mr. Bloomberg to the race this way: ‘He doesn’t need people. He only needs bags and bags of money’. His late entry has forced Mr. Bloomberg into an unorthodox election strategy to become the Democratic candidate for the Presidency. Skipping the traditional early voting states of Iowa and New Hampshire, where traditionally successful candidates build momentum, he is putting plans to bet hard on the 14 ‘Super Tuesday’ states that vote on March 3. So, while the rest of the field was fighting in Iowa, Mr. Bloomberg took his plane to Virginia and Arkansas. He will also wage what he is calling a ‘parallel campaign’ with a $100m digital media assault that includes attacks on President Donald Trump in the so-called battleground states. ‘Part of showing that Mike is the one who can beat Trump is taking the fight to Trump’, said a Bloomberg campaign spokesperson. But Mr. Bloomberg’s mayoral record poses problems for his efforts to attract black voters, a crucial Democratic constituency. He recently apologised for his longstanding support of a ‘stop-and-frisk’ policing strategy that disproportionately affected minority New Yorkers. Pundits warn that if Mr. Bloomberg’s campaign fails, he could split moderate Democrats and smooth the path for a candidate on the far-left.

There are also resurfaced allegations about a testosterone-fuelled and sexist office culture at Bloomberg LP. Mr. Bloomberg is alleged to have uttered ‘kill it’ when an employee informed him she was pregnant – something he has denied. His assistants say the claims are not new, but they play probably differently after the #MeToo drive against sexual harassment. Trump bans Bloomberg News journalists from campaign events. After Mr. Bloomberg formally announced his campaign, Bloomberg News editors told the 2700 Bloomberg journalists that it would not conduct investigations into Mr. Bloomberg or his opponents in the Democratic race, in a bid to avoid favouring him. However, the company did not extend the same ban on investigations into President Trump. ‘This is uncharted terrain’, the editorial board explained in a note to readers. Brad Parscale, Mr. Trump’s campaign manager, said yesterday that the Bloomberg decision was ‘wrong and troubling’. ‘We are accustomed to unfair reporting practices, but most news organisations don’t announce these biases so publicly’. The Trump campaign will no longer allow Bloomberg News reporters into Trump rallies and other campaign events until Bloomberg News ‘publicly rescinds it decision’, Mr. Parscale added. ‘We will determine whether to engage with individual reporters or answer inquiries from Bloomberg News on a case-by-case basis’, he added. ‘No current Democratic contender can beat Trump’, ‘No current Democratic contender can beat Trump’, according to BET (Black Entertainment Television) founder Robert Johnson, a lifelong Democrat and America’s first black billionaire. He assessed the Democratic contenders in next year’s presidential election and doesn’t like what he sees. ‘If you take a snapshot today, I don’t think that group is capable of beating Donald Trump, despite what the polls say.’ ‘I think the President has always been in a position where it’s his to lose!’, he added. Johnson has sided with many conservatives in saying Democratic politicians have moved too far left. ‘I don’t see anybody in the Democratic primary race today who is enough in the centre where I believe most of the voters are, and particularly most African Americans are’, Johnson told CNBC.



The case for an enhanced EU-India cooperation The European Union is at a strategic crossroads. After the confirmation in the European Parliament, the next European Commission will have to change gears and refuse to be consumed by small stakes. by Radu Magdin *


t is not enough to embrace “strategic autonomy” or to talk about a “geopolitical” Commission, the time has come for the EU to deliver by showcasing relevance, decisiveness and even creativity. Given that the negotiation of the next European budget will be more of a headache, the strategic minds of the Union have started to put more emphasis on how the EU can turn the increasingly prominent great power competition to its advantage. As it looks for a “big win” in the coming year, the EU could make of its


strategic partnership and relation with India a key piece of its global game. Yes, there will be in 2020 another big stake, with the China-EU summit, to be organized under the German EU Presidency, but this does not preclude Brussels and Delhi to walk the talk from sharing a similar worldview to building up a more concrete partnership. With the exception of France (who, by the way, views India as a strategic partner), the EU has been slow to


react to the trade war between United States and China and to the weakening of the rules-based international order. Caught off guard, the EU is seeking to regain the lost ground and to be influential beyond its immediate neighborhood. Although some have argued that the Union should first deal with the economic and political reverberations of Brexit, that an internal consolidation is mandatory before enlargement to the Western Balkans or that a “global strategy” is too much of a task, others have rightly pointed out that the international realignments, especially the unilateralism of a Trumpian United States and the rise of a perhaps overconfident China, risk to transform the very context in which the Union operates. There is no clear solution to the EU’s Trump problem. For example, France’s plans for more defense and security cooperation – a step to compensate for the unpredictability of Washington – have been received with caution in Berlin and with sheer mistrust in Central and Eastern Europe. Calling NATO brain dead does not help either. In all honesty, the hope in Brussels is that the US will come back to its old strategy after the disruptive president is defeated in the elections next year in November. But Trump may actually win again, and Europe hasn't got a plan B for 4 more years except for an ambitious "strategic autonomy" which is hard to predict in terms of actual progress. Europe also pays more attention to the moves of China, first within its own borders and then in different parts of the world. After the U.S. has used its leverage with some Central and Eastern countries, Germany seems to reconsider its initial open stance on 5G. More generally, Chinese investments will be analyzed not only through an economic lens, but also by factoring in technological transfer, access to innovation and patents, and the buzzword "reciprocity". Investment screening is now available at EU level and will be used when needed. However, all these steps are rather reactionary, risking being perceived as the desperate moves of waning (soft) power. This is where the relation with India could play an important part. The EU is one of the strongest believers in the current rules-based international order, in globalization and free trade. Nonetheless, internal divisions, demography and the international logic prevent the Union to act alone and it has to look for valuable partnerships. Building an alliance of major players, emerging powers and small states is not an easy task, but actions have been taken: the recently entered into force FTA with Japan, the enhanced cooperation with Canada or the attempt to give real substance to the partnership with India. Showcasing that there is an alternative to great power competition and that a differ-

ent world dynamic is possible, takes off if, for example, EU can coordinate with a major country like India on matters of deep significance. This is entirely consistent with the Indian ethos based on throwing off the notion that the world is a battle between two things/powers – something that could be thought by observing the US – China cold war. By making such a bet, Europe could indeed demonstrate that it can escape strategic defensive: the EU has the potential to contribute to a soft rebalancing in Asia, but of a type that is different from a US "China containment" strategy. If this is the strategic dimension, then the challenge will be to move towards real progress at the sectoral level. Fortunately, there is a long list of topics of common interest that can really receive greenlight once the existential, key aspects of the cooperation have been sorted out. Connectivity, nuclear nonproliferation, investment in new (environmental) technologies and maritime security (for instance, the Indian Ocean could become a bridge, with impact on joint naval patrolling or something even bolder such as space operations) are on everyone’s mind. Europe has already the financial tools to invest in India’s infrastructure and to show to the other countries of the region that the Belt and Road Initiative (BRI) is not the only game in town; for example, there is potential for coastal cities twinning between Europe and India, with investments and mutual benefits. Climate change mitigation is another area of convergent interest – let’s only think about the opportunities for the recycle economy. What is essential here, as others have suggested, is that trade is only a small part of the bigger picture. The long-term goal is to bring together like-minded powers such as the EU, India, Japan, Australia and ASEAN and to set the way forward for reimagining a world order under big pressure today. The time to go strategic has arrived. *Radu Magdin International Analyst, Consultant & Trainer / CEO @ Smartlink, VP @ Strategikon, Chief Strategist @ GRA / Opportunity Spotter & Problem Solver passionate for Power, Strategy & Comms



Taiwan blocked from UNFCCC Despite the reality of the climate crisis and the obvious need for nations around the world to come together, Taiwan continues to be excluded from the United Nations Framework Convention on Climate Change (UNFCCC) by N. Peter Kramer


espite the reality of the climate crisis and the obvious need for nations around the world to come together, Taiwan continues to be excluded from the United Nations Framework Convention on Climate Change (UNFCCC). This contravenes both the spirit of the climate change convention, with its emphasis on cooperation, and the UN Charter. Taiwan should be allowed to participate in the UNFCCC, too, in order to share its expertise in combating climate disaster. Taiwan has passed a series of acts aimed at protecting the environment, setting serious long-term goals for the reduction of greenhouse gases. It has made significant progress in the renewable energy sector, with solar power projected to produce 20GW of electricity per year, and wind power 6.9GW by 2025. It has also created the National Climate Change Adaptation Action Plan, which brings central government agencies together across different aspects of climate change: disasters, basic infrastructure, water resourc-


es, homeland security, coastlines, energy and industry, agriculture and health. Taiwan has much climate expertise to offer the world. Thanks to FormoSat-3, Taiwan has also amassed over 10 million items of meteorological data which it provides free of charge to scientists and academics around the world. This year’s launch of the FormoSat-7 satellite will further improve accuracy in predicting severe weather events. The counter-productive exclusion of Taiwan from the UNFCCC is politically motivated and contradicts the spirit of climate conventions, which emphasise all nations working together. By allowing Taiwan to participate, the world would benefit from the country’s expertise and experience and we would all stand a greater chance of combatting climate change and natural disasters. It seems hard for world leaders to distinguish coarse political problems from the greater good.



Private wealth and the route of business earnings towards the end of the decade 2010 In a few days, the decade of 2010 comes to an end, leaving its place for this of 2020. by Giannis Pagkalias*


his decade, which had the difficult task of bringing back the regularity in the markets after the great financial crisis of 2008, and in no doubt it has not disappointed, as economies around the world have been able to recover greatly and global business has blossomed over the years. In an economic ecosystem where very low or negative borrowing rates by central banks and the huge asset purchases by them, have played a major role to their mission in recovering the struggling economies, the personal wealth has increased and companies have gained in market capitalization. During this decade 2 companies managed to break the $ 1


trillion barrier in market capitalization in the 3rd quarter of 2018 (Apple first and Microsoft second), levels that have managed to retain to this day. But in the final steps to the finish line of the 2010 decade, came the outbreak of the trade war in the second half of 2018 between the US and China, to tarnish this good image. The trade dispute between the world's two largest economies has caused seismic shakes in the markets and major upheaval. But in this 18-month-long trade dispute, have there been winners and losers?


THE PERSONAL WEALTH According to the UBS/Price Waterhouse Coopers Billionaire Effect report released in November, billionaires' private wealth in 2018 (a year in which the trade war had reached 6 months) shrank for the first time since 2013.

alth at $ 3.1 trillion followed by China with $ 982 billion, Germany with $ 501 billion and Russia with $ 421 billion. But China had the most new entrants in the list in 2018, with 56 in total, roughly one for each week of the year.

On a year-over-year basis, the decline was 4.3%, or $ 388 billion, at $ 8.5 trillion of the total private wealth of 2,101 billionaires, when in the period 2013 -2017 personal wealth jumped 38.8%.

But the most interesting thing from this analysis is the fact that China has overcome Russia to billionaires over the last 5 years with total wealth in this period projected to rise by 202.6%, despite private wealth decline in 2018 by 12.3%.

In the last five years, 589 new billionaires entered the list, registering an increase of 38.9%.

At the end of last year, the world's second-largest economy had 325 billionaires.

In 2018, the largest pool of billionaires was the Asia-Pacific region with 754, although the number of wealthy fell 7.4%, overtaking America (North and South) with 749 billionaires, and the region of Europe - Middle East (EMEA) with 598 billionaires.

The listed companies controlled by the billionaires over the last 10 years to 2018 returned a total of 16.6% of their equity stake in those companies while the stocks traded on the MSCI All Country Global Index returned 11.3%.

The American continent, however, is first in terms of personal wealth at $ 3.6 trillion and was the only region in which private wealth increased even marginally by 0.1% and billionaires grew by 4.8% at the end of last year, followed by the Asia-Pacific region with $ 2.5 trillion and the EMEA region with $ 2.4 trillion. The US is by far the country with the largest private we-

Another point the report highlights is that over the last five years women have grown by 46% to 233 from 160 in 2013, while 57% of Asian female billionaires are self-made. THE COMPARISON AND THE WEALTHIEST PEOPLE The 8.5 trillion of billionaires' private wealth is about $



470 billion less than Japan’s and Germany's combined GDP for 2018, the 3rd and 4th largest economy in the world ($ 4.97 trillion and $ 3.99 trillion, respectively according to data from World Bank).

Corporate stocks in 2018 and 2019 went against the flow and withstood the intense pressure from the Sino-American trade war and the prospects for a global economic recession that emerged from it.

This figure is also higher than the total GDP of Russia, South Korea, Australia, Spain, Mexico, and Indonesia, which occupy the 11th to 16th position in the World Bank list of 2018 GDP (the GDP for everyone of these 6 countries is more than $ 1 trillion).

With the exception of the American economy, the world's largest economies have gone downwards, hurt by the effects of the trade war.

In 2018 the total wealth of the 10 richest people in the world totalled to $ 744.6 billion according to the Forbes annual list, an amount that is $ 50 billion less than the combined GDPs of Puerto Rico, Angola, Slovakia, Ecuador, Morocco and Ukraine. These 6 countries had a GDP of over $ 100 billion in 2018. Amazon's founder Jeff Bezos topped the list with $ 112 billion in 2018, placing Microsoft's Bill Gates in second place after four years with private wealth at $ 90 billion. Warren Baffett of Berkshire Hathaway came in 3rd position with $ 84 billion, followed by Bernard Arnault of LVMH with $ 72 billion and Facebook's Mark Zuckerberg with $ 71 billion. In the top 10 of the list, 7 are Americans, 1 is from France, 1 from Spain and 1 from Mexico. And where do they prefer to stay and enjoy their luxury lives the super rich? According to a recent study from real estate agency Savills, New York has 85 billionaires in its territory, the city of Hong Kong 79, Moscow 71, Beijing 61 and London 55 billionaires. THE COMPANIES Looking at the big picture of businesses after the great crisis of 2008, we can clearly see that they are the winners and have been a constant source for the private wealth of the billionaires. It is noteworthy that the Wall Street Index S&P 500, a barometer for global business, is in the second largest bull market in its history (an asset that has not lost more than 20% of its value of its highest level in the past 12 months from the date that is measured). The bull market of the S&P 500 has surpassed 3,900 days and is poised to break the 4,000 day barrier.


Particularly Germany the largest economy in Europe managed to escape from a technical recession marginally in the third quarter of 2019 when its growth advanced 0.1%, while in the second quarter of 2019 it contracted to -0.1%. A technical recession for an economy is considered of two consecutive quarters during which it records a negative performance. China's growth rate has also shrank to its lowest 30-years level during the 3rd quarter of 2019, while at the same time the US economy is growing at a steady pace, its inflation also maintaining steady levels and the unemployment dipped to a near-60 year low. The oxymoron with US is that despite the encouraging picture of macroeconomic indicators, US President Donald Trump since last year has unleashed a sustained attack on the US Federal Reserve and its governor Jerome Powell, demanding lower interest rates as he claims that their high levels, hurt the US dollar, making American products less competitive. The truth is that the Fed eventually overrode the Republican President's constant protests and cut interest rates three times in 2019 bringing them to the zone of 1.50% -1.75%. WHAT THE NUMBERS INDICATE FOR 2018 The largest companies in the world in 2018 undoubtedly presented a healthy picture, as shows the Fortune’s list with the 500 highest-earning companies in the world. Amounts came to unbearable heights and net profits in many cases were also more than satisfactory. The world's 500 largest companies generated revenue of $ 32.7 trillion and net profits of $ 2.15 trillion in 2018. In total, the companies on the Fortune’s Global 500 list employed 67.7 million people worldwide by the end of 2018 with presence in 33 countries. Walmart tops Fortune's list with total revenue of $ 500.3


billion, surpassing more than $ 150 billion Chinese State Grid in the 2nd place with revenue in 2018 of $ 348.9 billion, followed by also 2 Chinese firms the Sinopec Group in the 3rd place with $ 326.9 billion in revenue, and China National Petroleum with $ 326 billion.

the balance sheets within the top 10 US companies stands at $ 721.5 billion as of September 30.

The top 5 consists with the presence of Dutch Royal Dutch Shell with $ 311,8 billion in revenue.

FactSet in a company's liquidity calculates its cash and short-term investments such as bonds. At the top of the list is Microsoft with $ 136.6 billion, followed by Warren Buffett's Berkshire Hathaway Investment Group with $ 128.2 billion, breaking technology companies' dominion in the list, followed by Google’s parent Alphabet with $ 121.2 billion and Apple with $ 100.6 billion, marginally surpassing the $ 100 billion barrier.

It is noteworthy that in the top 10 of the list American companies occupy 3 positions, as well as 3 Chinese firms do the same. In terms of sectors, the energy sector dominates the top 10 having 5 oil companies and 1 energy company, followed by the sector of car industry having presence with Volkswagen, and Toyota while Walmart and Berkshire Hathaway taking the remaining position but for Walmart is the 1st position by far. DID THE ADVANCE CONTINUE IN 2019? An interesting element of the companies’ performance in 2019 is derived by how much cash have in their balance sheets as the economic results for all of the current year aren’t still available. According to data provided by FactSet, total liquidity in

That number is above the GDP for the 2018 of Switzerland which stands at $ 705.5 billion.

Far behind are Facebook and Amazon ($ 52.3 billion and $ 43.7 billion respectively), to find the second non-tech company in the top 10 of the list Ford with a liquidity of $ 37.3 billion. The others are Oracle ($ 35.7 billion), Cisco ($ 33.4 billion) and Bristol-Mayers Squibb ($ 32.5 billion). This enormous liquidity of the big American companies has inevitably begun a debate about what they intend to do with the cash they have aside. From their part, shareholders and investors appear dissa-



tisfied with the boards of companies, as they believe that corporate leaders rather than investing in company development prefer to keep the money.

Acquisitions and mergers (M&A) reached a very high level in 2018 with the total amount to almost $ 3.9 trillion remaining close to the median of the last 5 years.

Another point of friction is the funds available for equity buyback plans, which while still return a profit for investors, in fact the cash returns to the companies.

For the first 9 months of 2019 (there are nott available data for the last 3 months of the current year) M&A fell 5.6% to $ 3.05 trillion, compared to $ 3.3 trillion in the corresponding period of 2018.

The position of a listed company becomes stronger when the percentage of its free-floating shares is smaller, as the smaller is the percentage of shares that is available to investors, the more protected the firm becomes.

But it is worth notice that only Bristol-Myers Squibb of the 10 companies with the most cash involved in a major acquisitions or merger.

On the other hand, companies trying to keep things in balance, each quarter they seek to reward existing investors, by paying dividends to shareholders, but almost always they return less in dividends, than the amounts they spend for their buyback programs of their own shares.

The biggest merger for 2019 was the merger between aerospace company United Technologies and defense equipment company Raytheon in June for $ 87 billion, which together created a colossal of $ 121 billion in terms of market cap.

For example, Apple, which in the 2nd quarter of 2019, proceeded with a $ 18 billion equity repurchase program, returned just $ 2.5 billion in dividend yields, while Microsoft returned $ 8 billion to shareholders in buyback programs and returns of dividends, an increase of 28% year-on-year.

The second largest acquisition which is also the first for the year 2019 is Bristol-Myers Squibb Pharmaceuticals’ acquisition of Pharmaceuticals for $ 74 billion.

ACQUISITIONS AND MERGERS IS A ONE WAY CHOICE? It is clear that companies have to growth year by year if they want to survive in a long term basis.


In March, Saudi state-owned oil giant Saudi Aramco acquired 70% of Saudi Basic Industries Corporation's stake in the Saudi Aramco Public Investment Fund for $ 69 billion. Saudi Aramco made this move during a year in which has programmed its stock debut, expected to raise $ 25.6 billion for the 1.5% disposal in free float of its stocks.


Another megadeal from the pharmaceutical industry ended in June, when AbbVie acquired Allergan for $ 63 billion. In fifth place is a deal from the oil market as Occidental Petroleum Co completed the acquisition of Anadarko for $ 57 billion, in a deal that needed Berkshire Hathaway's support of Warren Baffet to overcome Chevron, which also claimed Anadarko. The 9 companies of the Big 10 with the most cash flow in their balance sheets, maybe they stayed quiet in 2019 (only Google acquired Fitbit for 2.1 billion). But with the stock markets at very high levels, it is a strategic choice for them to “wait and see�, before they make any move, as nowadays the companies are very expensive in terms of market capitalization. Wall Street has rallied in the 4th quarter of 2019 surpasses new record highs one after the other. So as the analysts say this is not a time for investing in M&A, because the stocks are at unbearable levels. The tightness of a sector or a market is always the big issue for the big players as it makes less intense the competition. So perhaps the investors and the shareholders have to wait for the next decade of 2020 to see the companies invest in M&A. *Giannis Pagkalias is a journalist at Naftemporiki economic and business newspaper and a radio producer.



The 27th edition of the EUROCHAMBRES Economic Survey The 27th edition of the EUROCHAMBRES Economic Survey (EES2020), based on feedback from 53.000 businesses, reveals that ongoing concerns about domestic sales and exports, as well as labour related challenges are constraining private sector investment and growth by N. Peter Kramer


he 27th edition of the EUROCHAMBRES Economic Survey (EES2020), based on feedback from 53.000 businesses, reveals that ongoing concerns about domestic sales and exports, as well as labour related challenges are constraining private sector investment and growth. EUROCHAMBRES: exports, domestic demand and lack of skilled workers main challenges for 2020.


According to the results gathered by national Chambers in 28 countries, European businesses overall are less optimistic for the year ahead regarding domestic and foreign sales, employment and investments compared to 12 months ago. Commenting on these findings, the President of EURO-


CHAMBRES, Christoph Leitl, said: “The results provide several clear messages for senior policy-makers at the start of the new EU term: European businesses need a stronger single market, a favourable trade environment and measures to tackle the persistent skills gap if the European economy is going to prosper”.

• National sales, the size of workforce and investments are expected to slow down slightly.


• The general level of business confidence for the year ahead is at its lowest since 2014.

• Low domestic demand, lack of skilled workers and rising labour costs are the main challenges businesses identify for 2020. Brexit is lower down the ranking of challenges, but a major concern for Irish and German respondents. • An increasing number of businesses are worrying about the constantly growing prices of energy and raw materials, notably in France, Germany and some eastern European countries.

• Exports are expected to slow down, lowering revenues from sales outside the national market to the lowest value since 2010.

President Leitl made a strong call to policy-makers, particularly the new Commission to factor this compelling feedback into their priorities and actions: “Ursula von der Leyen is a strong proponent of evidence based policy making; so here is the evidence, now we need the right policies!” The EES2020 findings will shape EUROCHAMBRES’ recommendations for the new European Commission.



Crowdfunding for Impact? Individuals seem increasingly keen to invest in ventures that create social impact, and crowdfunding platforms are making this easier than ever by Jasjit Singh*


ndividuals seem increasingly keen to invest in ventures that create social impact, and crowdfunding platforms are making this easier than ever.

But there is a catch. Unlike professional investors or major foundations which rely on hard data and cost-benefit analyses, retail investors often base deci-


sions on the emotional connection they feel in an investment opportunity. Entrepreneurs who seek funds from them are therefore tempted to craft their message around feel-good stories rather than a rigorous impact strategy. Unfortunately, the stories that retail investors are drawn to and the activities that produce real impact are not always aligned.


ENGAGING RETAIL INVESTORS Take the case of Uncharted Play, the social enterprise that invented the Soccket – a football with a mechanism to convert kinetic energy into electric power. The idea was 30 minutes of kicking it around would generate enough energy to run an LED lamp for three hours, bringing hope that poor children worldwide with limited access to energy could study even at night. In 2013, Uncharted Play raised over US$92,000 through the popular crowdfunding website Kickstarter. More than 1,000 eager supporters participated. Uncharted Play had hoped to scale to more than 50,000 Socckets a year, but this did not come to pass. There were complaints about shoddy workmanship and poor customer support, as the Soccket often stopped working within a few days of use. More fundamentally, critics raised a concern about lack

of unique value creation: the cost of a single Soccket was many times the combined cost of a solar lamp and a football. Also, there was an uproar over the top-down imposition of solutions which are not effective in terms of real development. Therein lies the tension. While retail investors, in principle, care about creating change for good, too often they are drawn in with a cool story rather than considering the nuances of a venture’s business model or the real impact it creates. People who participate in crowdfunding rarely have the patience or the skills for digging into details of the needs analysis, evidence base, due diligence, measurement strategy or impact evaluation, all important to professional investors. THE POWER OF STORIES My recent article in Stanford Social Innovation Review illustrates a similar dilemma for Kiva, a social enter-



prise launched in 2005 as a crowdfunding platform that allows ordinary Americans to fund microfinance loans for entrepreneurs living in poverty in the developing world. Through a contribution of as little as US$25, a Kiva “lender” could directly help someone far away – such as a beekeeper in Ghana, a spinach farmer in Cambodia or a carpenter in Gaza. What made the story even more enticing was that the money – provided as a loan rather than a donation – came back after supposedly having changed somebody’s life halfway across the world. The organisation’s success was celebrated on prominent blogs and television programmes, including an episode of the Oprah Winfrey Show which described Kiva as the “ultimate shopping experience”. By the time Kiva celebrated its 10th anniversary in 2015, it had achieved a loan volume of US$750 million, connecting 1.3 million lenders to 1.75 million borrowers through crowdfunding. WHAT ABOUT IMPACT? Despite Kiva’s widespread recognition, its critics argued that success should not be measured in the extent of funds raised or even the scale but in terms of real impact. They pointed to the compromises that Kiva had to make whilst implementing its vision. Realising that a pure peer-to-peer (P2P) model was not practical in reality, Kiva’s model channelled funds through large microfinance institutions which served as field partners. Working with these partners minimised risk and helped pursue scale. But this put Kiva’s implicit portrayal of itself as an interest-free P2P lending platform under scrutiny.


In the meantime, findings from randomised control trials (RCTs) led by world-renowned economists indicated that mainstream microfinance did not have the transformative social impact that everybody had assumed. Only a small fraction of the borrowers used their loans for business, never mind succeeding as entrepreneurs. In fact, rather than lifting people out of poverty, the microfinance loans were often leaving them saddled with layers of debt. THE DILEMMA AND ITS RESOLUTION Oblivious to the complexities of Kiva’s operating model and the nuances of its impact, loyal users continued their support. If any effort from Kiva to now integrate impact deeper into the user experience didn’t align with what lenders believed, it risked disengagement. But it would be irresponsible to only offer lending opportunities that drew attention for their engrossing stories. The trick was to strike the right balance between what inspired users/lenders and what really led to deep impact documented by hard evidence. In trying to shift its portfolio towards greater impact, Kiva decided to shield lenders from excessive complexity. Relying on research that identifies lending practices and loan attributes with the greatest impact potential, Kiva has been nudging its users gently towards projects with deep impact. This is not based on an aggressive data-driven rational pitch. Instead, Kiva uses evidence drawn from research as a subtle input in determining what the users see and the order they see it on the platform. So Kiva users continue to think they are selecting the


loans purely based on the stories, but Kiva’s algorithm already makes sure that the potential success of opportunities they see is backed by hard data from research. This notion of “managing users” via algorithms might look manipulative to some, but Kiva sees it as the most practical way of ensuring its depth of impact without compromising on attracting crowdfunding.

and the depth of impact. The two dimensions are like the two sides of a rectangle, whose area we are trying to maximise. If you do not achieve much breadth, your impact will be limited. And if you do not achieve much depth, this is also a negative factor for your impact. So a balance is important. But finding the sweet spot where impact is maximised differs from one context to another.

Goldie Chow, Director of Impact at Kiva, said, “That is the thing about pursuit of impact: there is so much you do because of the mission, even if nobody gives you credit for it.”

So, what happened to the Soccket and Uncharted Play? The Soccket was discontinued and its grand vision of using play to bring access to energy to the developing world was abandoned. Its team is now focused on developing other motion-based renewable energy technology. In 2016, they raised US$7 million in Series A funding, and changed their name to Uncharted Power in 2017. Where they will end up still remains to be seen, but that is the unpredictable journey of entrepreneurship.

Kiva’s CEO Neville Crawley added, “Maybe we will find that the users really do want to understand impact, and it’s just the way we present the information that leads to overload or something. We’re still learning how much information to present and how. So the model will surely evolve.” MAXIMISING THE DIFFERENCE THAT YOU MAKE

*Jasjit Singh

Kiva’s experience reminds us that, in the end, maximising impact involves keeping an eye on both the breadth

Social Entrepreneurship Programme (ISEP)

Professor of Strategy and the Paul Dubrule Chaired Professor of Sustainable Development at INSEAD. He also co-directs the INSEAD



Why corporate citizens must become global catalysts Since the advent of the modern firm, businesses have had to contend with a fundamental paradox: society needs large organizations to solve complex collective problems, but also fears centralized authority and decision-making by Sebastian Buckup*


ore than 180 CEOs have committed to taking the interests of all stakeholders into account.

The Davos Manifesto heralded a shift from “corporate philanthropy” to “corporate citizenship”

- The public trust small businesses more than big ones - which has shaped shifts in corporate governance

- The latest transition in corporate stakeholdership is focused on scaling more wisely - and becoming wiser about what to scale



Since the advent of the modern firm, businesses have had to contend with a fundamental paradox: society needs large organizations to solve complex collective problems, but also fears centralized authority and decision-making. It is the latest incarnation of this paradox that is now driving large firms to move beyond the "shareholder first" mantra. By last month, 183 corporate CEOs signed on to a statement affirming their commitment to move beyond the “shareholder first” mantra to account for the interests of all stakeholders, including employees, customers, suppliers, and communities – many responded with skepticism. But dismissing the statement by the US Business Roundtable as a mere public-relations stunt fails to recognize the fierce headwinds businesses are facing – and their proven capacity for adaptation. Since the advent of the modern firm, businesses have had to contend with a fundamental paradox: society needs large organizations to solve complex collective problems, but also fears centralized authority and decision-making. As Robert D. Atkinson and Michael Lind explain in their latest book, Big is Beautiful: Debunking the Myth of Small Business, in the United States, large companies outperform small ones on almost every indicator, from wages and productivity to exports and innovation. Yet public opinion surveys rank large companies among the least trusted institutions (above only television news and the US Congress), with small businesses among the most trusted (below only the military). This trust paradox has shaped several dramatic shifts in corporate governance over the years.

titrust Act was born. According to a study published in 1935 by the economist Shaw Livermore, more than half of the trusts formed in the US between 1888 and 1905 disappeared or fell behind by the 1930s. Though rapid technological progress may have been more damaging than “trust-busting” policies, business learned its lesson: if you squander your social license to operate, size is a liability. This realization underpinned a new governance shift: the institutionalization of corporate philanthropy. While individual business leaders had been among

The first transition occurred in the nineteenth century, when the Industrial Revolution shifted production away from small, owner-led enterprises to modern multiunit firms, and gave rise to a professional managerial class. The great merger movement of the late 1800s, when thousands of small firms were replaced by a few dozen large trusts, accelerated this reshuffling of the corporate landscape. The new corporate giants propelled societies forward, but also created new imbalances – and almost immediately ran into resistance. “If we will not endure a king as a political power,” US Senator John Sherman declared in 1890, “we should not endure a king over the production, transportation, and sale of any of the necessaries of life.” With those words, the Sherman An-



America’s top donors since the seventeenth century, in the twentieth century, philanthropy became an essential part of doing business in the US. This helped to sustain an implicit ceasefire, with government more inclined to allow business to operate with minimal interference. If the beginning of the twentieth century was shaped by the modern multiunit enterprise, the century’s latter half was all about the multinational. The shift began after World War I and picked up steam after the end of the Cold War, when the integration of markets and the vast expansion of corporate bureaucracies enabled companies to take advantage of global economies of scale. The trust paradox reared its head again. Though the software giant Microsoft avoided the fate of America’s largest telecom provider, AT&T, which was broken up in the 1980s, it was forced to lift barriers on third-party software – a move that would later help companies like Google to grow. Though the anti-trust campaigns of the 1990s did not match the scale and scope of those in the early twentieth century, businesses felt pressured to reconsider


their role in society. In 1973, at the World Economic Forum’s annual meeting in Davos, WEF founder Klaus Schwab asserted that “the purpose of professional management” is to serve all stakeholders, and to harmonize their different interests. The so-called Davos Manifesto heralded yet another shift, from “corporate philanthropy” to “corporate citizenship” – the idea that a corporation, like any citizen, had to align its self-interest with the shared interests of society. But, though participants at that year’s WEF meeting unanimously endorsed the manifesto, corporate citizenship has remained a radical idea – one that is only now, nearly a half-century later, becoming mainstream. The catalyst is the Fourth Industrial Revolution, characterized by business expansion into the domain of data and algorithms. In a sense, smaller firms may lead this new phase of business activity. As Jack Ma, the founder of the Chinese tech giant Alibaba, told Davos attendees this year, “In the last 20 years, globalization was controlled by 60,000 companies worldwide. Imagine if we could expand that to 60 million businesses.” But this would not be a return to the past, with indi-


vidual small and medium-size enterprises driving the economy. In fact, Ma was touting a platform he has built to allow SMEs to build globalized businesses.

including climate change and high levels of inequality – this must include using the unprecedented power of platform leadership to catalyze global-scale solutions.

Therein lies the fundamental difference between modern markets and those Adam Smith envisioned back in 1776: to compete today, SMEs need to be able to store, process, and analyze massive amounts of data – capabilities that are provided by giants like Alibaba, Amazon, Facebook, and Google.

Earlier this year, the artificial-meat producer Beyond Meat celebrated a rapturous stock-market debut. Rather than focus on meeting rising demand for meat by scaling up factory-farming operations, as companies did in the past, it – and similar companies, such as Impossible Foods – is working to help reduce overall meat consumption, a major driver of climate change.

Similarly, while the rise of the “gig economy” means that more people are operating as one-person firms, these workers rely on multinational platforms to get “gigs.” It is this tension between unprecedented bigness – Apple and Amazon recently became the first privately owned trillion-dollar companies – and pre-industrial smallness that lies at the heart of the trust paradox today. As a result, large corporations are more than stakeholders; they often govern the platforms upon which all stakeholders intersect. To avoid another public backlash, they must make these platforms serve us not only as consumers, but also as entrepreneurs, workers, and citizens. At a time of unprecedented global challenges –

This is propelling the latest transition in corporate stakeholdership, focused not just on scaling more wisely, but also on becoming wiser about what to scale. Business leaders know what happens when the tide of public opinion turns against them. While critics are right to demand that they translate their recent pledges into action, there is plenty of reason to believe that they will. *Sebastian Buckup *Head of Programming, Global Programming Group; Member of the Executive Committee, World Economic Forum **first published in:



Climate crisis pushing Earth to a ’global tipping point,’ researchers say The Earth is heading toward a "global tipping point" if the climate crisis continues on its current path, scientists have warned, as they called for urgent action to avoid "an existential threat to civilization." by Helen Regan*


he group of researchers, who published a commentary in the journal Nature, say there is growing evidence to suggest that irreversible changes to the Earth’s environmental systems are already taking place, and that we are now in a "state of planetary emergency." A global tipping point is a threshold when the planet’s systems go beyond the point of no return -- such as the loss of the Amazon rainforest, accelerated melting of ice sheets, and thawing of permafrost -- the authors of the commentary say. Such a collapse could lead to "hothouse" conditions that would make some areas on Earth uninhabitable.


"We argue that the intervention time left to prevent tipping could already have shrunk towards zero, whereas the reaction time to achieve net zero emissions is 30 years at best," the authors said. ACTIVE PROBLEM AREAS Led by Timothy Lenton, professor of climate change and Earth system science at the University of Exeter, in southwest England, the team identified nine areas where they say tipping points are already underway. Those include widespread destruction of the Amazon, reduction of Arctic sea ice, large-scale coral reef die-offs,


melting of the Greenland and West Antarctic ice sheets, thawing of permafrost, destabilizing of boreal forests -which contain vast numbers of trees that grow in freezing northern climes -- and a slowdown of ocean circulation.

actions between a variety of climate change factors, such as the loss or weakening of carbon sinks, forest dieback, ice retreat and increased bacteria respiration, could combine to form a feedback loop which accelerates climate change.

The team claims that these events are interconnected and change in one will impact another, causing a worsening "cascade" of crises.

The authors acknowledge that there are limits to their understanding of climate tipping, and further investigation is needed. But they say the possible impact could be so huge and "irreversible" that "to err on the side of danger is not a responsible option."

For example, the Arctic is warming at least twice as quickly as the global average. Melting Arctic sea ice is driving warming further because less heat is reflected off the planet. That regional warming is leading to an increased thawing of Arctic permafrost, soil that stays frozen throughout the year, which is releasing carbon dioxide and methane into the atmosphere. The warming has triggered large-scale insect disturbances and fires in North American boreal forests "potentially turning some regions from a carbon sink to a carbon source," the team said. The researchers said early results from preliminary models suggest the climate is much more sensitive than first thought and that a global tipping point is possible. "Research last year analyzed 30 types of regime shift spanning physical climate and ecological systems, from collapse of the West Antarctic ice sheet to a switch from rainforest to savanna," they added. "This indicated that exceeding tipping points in one system can increase the risk of crossing them in others." EMISSIONS, GLOBAL WARMING The idea of a climate tipping point is not new. The UN Intergovernmental Panel on Climate Change (IPCC) introduced the concept 20 years ago. Back then, the UN suggested such "large-scale discontinuities" would only come about when global warming exceeded 5 degrees Celsius above pre-industrial levels. But the authors say data from the two most recent IPCC reports in 2018 and September 2019, suggest tipping points can happen between 1 C and 2 C of warming. Global average temperatures are today around 1 C higher than in the pre-industrial age and continue to rise. One report from 2018 -- of which Lenton was part of -suggested that a domino effect will kick in if global temperatures rise more than 2 degrees Celsius above pre-industrial levels.

In other words, not acting is "too risky to bet against" in their view. AND TIME IS OF THE ESSENCE. While the 2015 Paris Agreement set a goal to limit the Earth’s warming to 1.5 degrees Celsius, a UN report this month said that pledges countries made to limit the climate crisis are nowhere near enough to stave off record-high temperatures. The UN Environment Program (UNEP) 2019 Emissions Gap report said at the current rate, temperatures are expected to rise 3.2 C by 2100. Greenhouse gases reached a record high in 2018 with no sign of peaking, according to a recent World Meteorological Organization report. Carbon dioxide levels reached 407.8 parts per million, a unit used to measure the level of a contaminant in the air. Hope is not lost, however. Researchers say that mitigating greenhouse gas emissions could still slow down the accumulation of these climate impacts. What is needed, they say, is urgent international action to cut emissions, slow sea level rise, and to keep warming to 1.5 C. "A saving grace is that the rate at which damage accumulates from tipping -- and hence the risk posed -- could still be under our control to some extent," they said. "The stability and resilience of our planet is in peril. International action -- not just words -- must reflect this."

*Helen Regan Writer for the Asia-Pacific region with a particular focus on human rights

The model highlighted the consequences of how the inter-



Space traffic management – the next challenge for Europe’s leadership in space The EU needs to show leadership on space traffic management to ensure that it protects its increasingly important space infrastructure, writes MEP Marian Jean Marinescu by Marian-Jean Marinescu*


n our increasingly digitalised societies, European citizens, economies and public decision-makers have become heavily reliant on data provided by satellites in orbit.

change monitoring, civil protection or even military purposes, space-based applications are part of our daily lives, without even realising it.

Between air control management, car connected navigation, bank transfer operations, border monitoring, smart farming, weather forecast, natural resources and climate

Today, 10% of our GDP is estimated to depend on the proper functioning of space infrastructures and the data they generate back to earth.



Therefore, it is of major importance to make sure that the space infrastructures – in particular those owned and financed by the EU budget, with the Galileo and the Copernicus programmes- and their operations are protected from natural and accidental hazards. Space traffic management (STM) is definitely not a rhetorical topic: a few weeks ago, the European Space Agency had to perform a last-minute avoidance manoeuvre to protect one of its spacecraft from colliding with a Space X satellite in the Starlink constellation. And considering the many projects or initiatives of mega-constellations that are ongoing, space traffic is expected to surge rapidly in the near future, from 1700 satellites in orbit at the moment up to, potentially, over 10 000… All this posing a real threat of orbit congestion. Well-aware that the absence of regulations in the area of space traffic management could negatively affect US space activities on the short run, the Trump Administration took the lead to produce a Space Policy Directive, in June 2018, aimed at establishing a future STM system and framework. This approach is of course neither innocent nor naive: this directive states that “to maintain U.S. leadership in space, we must develop a new approach to space traffic management (STM) that addresses current and future operational risks”. In this perspective, the directive clearly expresses as objectives for the US to “continue to lead the world in creating the conditions for a safe, stable, and operationally sustainable space environment” and to “seek to lead the world in the development of improved SSA [space situational awareness] data standards and information sharing”. On the other hand, the directive wants to “encourage and facilitate U.S. commercial leadership in SSA, and STM. Fostering continued growth and innovation in the U.S. commercial space sector, which includes SSA, and STM activities, is in the national interest of the United States”.

and norms, impacting European industries in the medium term and, additionally, creating a new market for STM service for US companies. This is then the responsibility of the EU institutions and of the Member States to support the European space sector to get ready. Following closely these developments on the other side of the Atlantic, I incited the European Commission to move forward and proposed, already last year, a pilot project on Space traffic management – expected to start in the next few weeks. This pilot project will have to identify and assess the legal and regulatory challenges, needs and best practices, and provide recommendations for the European Union and Member States policymakers on STM. The results should compare as well pro and cons of international, European and national approaches. Meanwhile, the European industries (launchers, satellites ground segment, operators) also have to get involved and speak with one voice about the concerns, challenges and technology needs they face in the area of space traffic management. Commission President-elect Ursula von der Leyen has ensured that promoting Europe’s technological sovereignty and strategic autonomy will be key priorities of the upcoming European Commission. From this standpoint, the way EU institutions handle space traffic management will be an immediate test-bed. The European Parliament, which has always demonstrated strong support to EU space policy developments, will have a pivotal role to play to keep this issue at the top of the political agenda in the next few months

In addition, some provisions of the US text lay out that the proposed rules should apply also to non-US actors – which means that US-driven extraterritorial principles could become a norm for the European space sector, as it is already the case in several other economic sectors, such as in banking or energy. In this context, we Europeans should not wait for the US to apply their traditional “space dominance” doctrine: the development of a structured STM at the US level will undeniably result in the adoption of US standards, guidelines

*Marian-Jean Marinescu *Co-ordinator for the European People’s Party on the European Parliament’s Transport committee **first published in:



How the inventor of the internet plans to make it safe and accessible for everyone When Tim Berners-Lee invented the world wide web in 1989, he envisioned it as an information management system for CERN, the European Organization for Nuclear Research, where he was working at the time by Katharine Rooney*


alf the world is connected to the internet today. Concerns about civility, bullying and hate speech on the internet are growing. Contract for the Web includes nine principles to fix the internet and make it safe and accessible for everyone. When Tim Berners-Lee invented the world wide web in 1989, he envisioned it as an information management system for CERN, the European Organization for Nuclear Research, where he was working at the time. Today, half the world is online. And while that access brings tremendous benefits, it also fosters some of society’s worst behaviour. South Africa tops the list of countries where the most


abrasive digital encounters take place – but there are no geographic boundaries when it comes to incivility and deception. “While the web has created opportunity, given marginalized groups a voice, and made our daily lives easier, it has also created opportunity for scammers, given a voice to those who spread hatred and made all kinds of crimes easier to commit,” says Berners-Lee. HIS SOLUTION? A Contract for the Web, a plan to make online activity safe and accessible for everyone. Berners-Lee compares the contract to the United Nations’ Universal Declaration of Human Rights, which enshrines dignity and freedom for all people.


“As the web reshapes our world, we have a responsibility to make sure it is recognized as a human right and built for the public good,” he says in a statement on behalf of the Web Foundation, the non-governmental organization he founded to promote digital equality.

about other people,’” he said. “If all you are doing is casting stones, you’re probably not going to get that far.”

The contract outlines nine principles for governments, companies and the public, including commitments to ensure everyone can access the internet, that trust is secured through the protection of personal privacy and data and that civility and dignity are front of mind. It’s backed by 150 tech organizations, including Google, Microsoft and Facebook.

Alongside concerns about anti-social behaviour, Berners-Lee’s contract emphasizes the need to bring the rest of the world online through ambitious policies and investment connectivity – especially in unserved and underserved areas.

AFFRONTED BY ANGER There are many prominent critics of inappropriate use of the internet. At a recent speech to the Anti-Defamation League, British comedian Sacha Baron Cohen described social media platforms as “the greatest propaganda machine in history,” citing the rapid spread of conspiracy theories, hate crimes and bullying online. He suggested social media companies be held responsible for the propagation of hateful material and socalled “fake news” on their sites. Former US president Barack Obama, meanwhile, has taken young activists to task for being overly critical online: “There is this sense sometimes of, ‘The way of me making change is to be as judgmental as possible


The World Economic Forum is supporting a similar objective through its Internet for All initiative, working to get millions of new users online through both country-level programmes and global collaboration. There are 3.9 billion internet users worldwide – but in the world’s poorest countries, less than 5% of the population is online. Berners-Lee’s hope is that, 30 years after the introduction of his revolutionary idea, it will bring ever-more positive change to the world.

*Katharine Rooney *Senior Writer, Formative Content **first published in:



How to achieve a quality, universal education In setting global targets for closing the gender gap and achieving universal education by 2030, governments and development advocates tend to focus on the need to build more schools and increase enrollment rates for women and girls by M Niaz Asadullah*


n setting global targets for closing the gender gap and achieving universal education by 2030, governments and development advocates tend to focus on the need to build more schools and increase enrollment rates for women and girls. But while these objectives cannot be ig-


nored, Afghanistan’s experience shows why they are not enough. Despite frequent calls for action to provide universal primary education and eliminate gender disparities,


few developing countries have made much progress toward these goals. For example, although South Asia made substantial progress toward achieving gender parity during the era of the Millennium Development Goals (2000-2015), the region still has the second-highest number of out-of-school children in the world, and lags behind international standards on several key indicators. Girls account for the majority of the region’s ten million children who are not receiving formal education, owing to a lack of schools, poverty, the threat of violence, and social customs. Progress has been especially slow in countries like Pakistan and Afghanistan, where patriarchal values and traditional cultural norms militate against girls’ education. In Afghanistan, women’s status declined sharply under Taliban rule between 1996 and 2001. Public education for girls was banned, and many government-run girls’ schools were converted into male-only institutions. Gross female enrollment fell from 32% to just 6.4% by

2001, by which time as many as 1.5 million children had been barred from school. The literacy rate for Afghan women fell to as low as 3% in rural districts. With little opportunity to acquire skills, thousands of young girls were forced into early marriage. Given these historical conditions, Afghanistan has long represented an important test case for global efforts to provide universal education. After the Taliban regime was toppled, the Afghan constitution was amended, in 2003, to guarantee women and girls the right to an education. And women have been allowed since 2005 to participate in politics. But the influence of patriarchy remains strong. Socialization and mobility outside the household remain limited for girls, particularly after puberty. Worse, after almost two decades of US intervention, the Taliban insurgency is stronger than ever. Attacks on girls’ schools are once again on the rise. And with the United States calling off recent peace talks, Afghanistan’s political future looks precarious.



To understand what is at stake, we should consider the important achievements that have been made since 2001. In a recent study that I co-authored with Md. Abdul Alim and M. Anowar Hossain of BRAC International, we found that there has been a sharp increase in Afghanistan’s gross primary- and secondary-education enrollment ratio since the Taliban fell. Between 2001 and 2013, the total number of schools operating in the country increased from around 3,500 to 14,600, and the average primary-school completion rate for girls increased from 47% to 52%. By 2015, the female-to-male ratio in primary- and secondary-school enrollment had risen to 69% and 56%, respectively. Even so, participation and retention rates remain low by international standards. The share of girls enrolled in school falls from 39% in first grade to 35% by ninth grade (the end of the lower secondary cycle), with a sharp decline coming at the end of the primary cycle (sixth grade). In explaining these rates, the Afghan government points to a continued shortage of all-girls’ schools, qualified female teachers, and resources for existing schools.


Yet we also found that the poor quality of education may also be a reason for low enrollment and retention. Even Afghan girls who are in school are not learning much. Among girls enrolled in grades four through nine, advancing from primary to secondary grades yields almost no gains in basic numeracy; and similar results follow from an analysis of student performance in oral reading fluency and comprehension. These findings are in line with those from an earlier nationwide study, which concluded that only 43% of a sample of third-grade children could read with comprehension. These findings could have implications for the broader education challenge in Afghanistan. There are currently around 3.7 million children, mostly girls, who are not in school. But reforms to enroll them may not succeed if the poor quality of education is one of the main reasons why parents are keeping their daughters at home (if not marrying them off). To be sure, the learning crisis is not confined to Afghan public schools. Similar gaps can be found in Bangladesh and India. But these countries, at least, have made much more progress in enrolling girls. In post-Taliban

Afghanistan, girls’ education still is not a society-wide priority, not least because conservative religious groups remain staunchly opposed to it in principle. Generally speaking, aid agencies and their development partners have been right to focus on helping the governments of fragile states like Afghanistan build more schools and invest in girls’ education. As Gordon Brown, a United Nations Special Envoy for Global Education, writes, “putting girls in school is the most effective way to keep them free from exploitation, forced labor, trafficking, and child marriage.” But efforts to achieve universal education will fail if schooling does not translate into basic numeracy and literacy skills. To account for the learning crisis in many developing countries, governments and development agencies should look for more opportunities to form strategic partnerships with non-state providers. In Bangladesh, for example, schools run by BRAC employ female teachers (which is key to increasing girls’ enrollment), and outperform government-run schools in terms of learning outcomes.

Fortunately, the Afghan government has begun to open its doors to innovative NGO models like BRAC’s community-based education program. But a shortage of qualified female teachers makes scaling up such efforts difficult to impossible. Women account for just onethird of all teachers in Afghan primary and secondary schools, partly owing to extremely low female literacy. And, as we have seen, the poor quality of education in existing schools threatens to derail the next generation of would-be female teachers. Needless to say, international support for education in Afghanistan must be sustained. But given the evidence of extremely shallow learning (little learning per grade) in government-run girls’ schools, we must also focus on strengthening state capacity in the education sector. Only by making the investments necessary to improve the quality of education can we end the vicious, cross-generational cycle of illiteracy in Afghanistan, let alone achieve the Sustainable Development Goals by the 2030 target date. *M Niaz Asadullah Professor of Development Economics, University of Malaya



Photo by Andreas Simopoulos



The Allégro of Greek National Opera Few directors in the opera world are quite as iconic as Giorgos Koumendakis. While his style, with its numerous distinctions and of always high status collaborations along with slow movements of prestigious accomplishments that look like a kaleidoscope of his successes and, may not be for everyone, but there is no denying that he has a clear vision for how he sees the opera. He’s worked in many major artistic programmes and he’s still going strong. Into the Stavros Niarchos Foundation Cultural Center (SNFCC), that has welcomed some 3.4 million visitors by exceeding initial forecasts of 700,000 up until now, the successful relocation and operation of the new National Opera plays the first fiddle at the moment. It is a prime destination for entertainment, learning and exercise and a top cultural destination in Athens for both tourists and locals. EBR was there in an exclusive interview of the Greek National Opera’s Artistic Director. by Alexandra Papaisidorou*


NO is the only lyric theater in Greece. This year marks its 80th anniversary and this is one of the most productive moments in its history. In 2017 GNO moved to its new home, the impressive Stavros Niarchos Foundation Cultural Center, which was created thanks to a significant donation from the Stavros Niarchos Foundation. At SNFCC, Lyric co-exists with the National Library of Greece and the unique Stavros Niarchos Park. GNO presents productions of opera, opereta, and ballet in the Stavros Niarchos Hall with a seating capacity of 1400, and musical theater productions in the Alternate Stage with a seating capacity of 350. In addition to that, every summer GNO organizes two major opera productions at the Herodes Atticus Theater, in the shadow of the Acropolis. MR. KOUMENDAKIS, PLEASE, WOULD YOU INTRODUCE THE GREEK NATIONAL OPERA (GNO) IN A FEW SENTENCES TO OUR READERS? GNO is the only lyric theater in Greece. This year marks its 80th anniversary and this is one of the most productive moments in its history. In 2017 GNO moved to its new home, the impressive Stavros Niarchos Foun-

dation Cultural Center, which was created thanks to a significant donation from the Stavros Niarchos Foundation. At SNFCC, Lyric co-exists with the National Library of Greece and the unique Stavros Niarchos Park. GNO presents productions of opera, opereta, and ballet in the Stavros Niarchos Hall with a seating capacity of 1400, and musical theater productions in the Alternate Stage with a seating capacity of 350. In addition to that, every summer GNO organizes two major opera productions at the Herodes Atticus Theater, in the shadow of the Acropolis. WHAT IS IT LIKE RUNNING AN OPERA IN GREECE DURING THE YEARS OF POLITICAL CHANGES AND FINANCIAL DIFFICULTIES WHILE YOU HAVE BEEN CHAMPIONING NEW AUDIENCES, HOW DO YOU THINK YOU ACHIEVED THIS GOAL? HOW CAN OPERA BE MADE PALATABLE FOR NEWER AND YOUNGER AUDIENCES? Crisis is now a part of our lives and the only way to handle it is with inventiveness and creativity. As we consider that today we are in need of art, more than



Photo by Yiorgis Yerolymbos

ever, we provide the public with top-notch performances, we collaborate -and co-produce- with major artists and major foreign authorities, we create performances that bring close the lyric art with the artistic affairs and the cinema, and we develop dozens of educational and social programs for children, adolescents, adults, people over 65, prisoners, refugees, immigrants etc. Moreover, we offer free seats to the unemployed and keep our ticket prices low so that we can be accessible to as many as possible spectators. WE SPEAK ABOUT AN OPERA WITH 150 YEARS OF HISTORY, IS IT A THOUGHT OF YOURS THE NEED TO MAKE THESE OPERAS TO REMAIN STILL ALIVE TODAY? AND HOW IS IT IMPORTANT ON THAT TO STAY IN AN INTERACTIVE CONTACT WITH THE AUDIENCE - BOTH THE MOST FAMILIAR & INEXPERIENCED ONE TOO? Opera can convey messages to today's audiences and young people through sharp performances that spark discussions and bring the lyric art to today. At the same time, however, lyric art has a unique timelessness that speaks to the soul and heart of people of all ages. Of course, our Alternative Stage, has also an educational character, as its mission is to talk to young people


through experimentation and modern forms and make them partakers of the musical theater and the opera. REGARDLESS OF THE PERIOD OF TIME THEY WERE ACTIVE, WHICH OPERA COMPOSER OF THE PAST IS THE MOST “CONTEMPORARY” TO YOU, IN TERMS OF THEME AND SCORE? I consider Richard Strauss- Electra to be an extremely contemporary play, with which we inaugurated our SNFCC beginning in October 2017, as well as Wozzeck Berg's which we will present in January 2020 at the Stavros Niarchos Hall. WHAT DO YOU REGARD AS THE EARLY INFLUENCES ON YOUR INTEREST ABOUT HOW TO CHOOSE EACH PRODUCTION OF THE GREEK NATIONAL OPERA? The selection of the plays is a combination of my desires, the needs arisen by the theater and the opportunities we have at both an artistic and economic level. My biggest concern is to expand our repertoire and my greatest desire is to provide GNO –till the end of my appointment- a pool of high productions with major plays. IN THE PAST, YOU COMPOSED AND PRE-


Photo by Andreas Simopoulos



Opera is a universal language capable of bringing together diverse and distant cultures. We notice that from the Baroque era till today. Music always helps break down the communication barriers and has the magic of speaking directly to each person regardless of their level of education and their cultural characteristics. I am delighted that through my music at Fonissa I was able to bring elements of Greek music into a dialogue with contemporary European music.

I would venture to say that opera is an art flooded with emotions – most of the time wild and merciless-, but at the same time it is perhaps the ultimate work of art dealing with major philosophical issues, those of existence, of knowledge, etc.

I am dreaming a lot about GNO and I consider that some of my big dreams have been accomplished. At the moment, GNO has opened its wings to the worldwide operatic event with valuable support from the Stavros Niarchos Foundation, which with a new € 20 million donation enhances our artistic extroversion. At the same time, supported by SNF, we are preparing an extremely ambitious anniversary program for 2021, a landmark year after completing 200 years from the Greek Revolution. IS OPERA FOR YOU A SYNONYM OF EMOTION OR PHILOSOPHY?

*Alexandra Papaisidorou Editor-at-large / PhD cand. University of Piraeus, Cultural Diplomacy & International Relations



Big Food Is Ripe for a Revolution The wine industry shows how eco-friendly production can benefit both companies and consumers by Boris Liedtke*


n May 2019, a Californian jury found Monsanto’s weed killer, Roundup, to be a “substantial factor” in the cancer suffered by a couple and ordered the American agrochemical company to pay them US$2 billion in damages. This was the third and largest verdict against Monsanto, now owned by German pharmaceutical giant Bayer, over its decades-old product. A judge slashed the award to US$86.7 million in July after Bayer appealed, but it is cold comfort for the company. An estimated 13,400 similar Roundup cancer cases are pending in state and federal courts across the United States. European investors and Bayer’s management are in shock at the size of the settlements. Financial damage to Bayer aside, it is hard to overstate the potential long-term significance of the Roundup


lawsuits on the food industry. In 2017, Monsanto and DowDuPont were estimated to account for 60 percent of the global agricultural seed market. In the US, up to 80 percent of the corn and soybean market was controlled by Bayer/Monsanto and DowDuPont in 2018. Not surprisingly, the majority of US corn and soybeans have been genetically modified to withstand Roundup, whose active ingredient glyphosate is blamed for the cancer flaring up in gardeners and farmers. The Roundup court cases will make the public become increasingly aware of the health risks they have been exposed to by the low-quality, high-volume food industry, inevitably leading to a shift of consumer behaviour. Already, media reports of Roundup seeping into the food chain is causing widespread unease even as the backlash against genetically modified foods continues to grow.


The food industry is ripe for a revolution. The model of the future will not be found in the mass production sector of the industry, which has pursued lower prices by squeezing more yield from crops and livestock on constantly shrinking space. Smart money should seek technology or operations breakthroughs that will replace present practices. The answer might just be found in an unexpected product: wine.

these vineyards are extremely cautious about sharing too much of their production and storage expertise. But there is possibly a second, more interesting reason for their discretion: The top-end wine producers fear that by opening up, they could actually hurt their image.

As an industry, wine couldn’t be more different than the low-quality, high-volume food industry. Wine’s dual function as a high-end food product and investment instrument means wine producers have had a long, ongoing interest in sustainable value based on quality. Precisely because of this, the wine industry’s workings may guide the future of food.

The wine industry in California offers insights. Increasingly, Californian wine producers are combining modern wine-growing practices with environmentally friendly methodologies, which qualifies them for socalled eco-certification. In a study published in 2016, Magali Delmas, Olivier Gergaud and Jinghui Lim noted that the number of eco-certified Californian winemakers in their database had increased from 10 in 1998 to 57 in 2009. However, vineyards rarely use this certification as a selling point out of concern that consumers might consider eco-labelled products as inferior.

Consider, for one thing, that while there may be as many as tens of thousands of wine producers across the globe, only some 250 are worth investing in. As one would expect, wary of competitors and fraudsters,

In other words, the wine industry is shifting towards eco-friendly products while trying to keep this information away from the consumer. This is in stark contrast to Big Food, which follows the exact opposite strategy:




plastering product packaging with often-questionable health claims that may lead to consumers becoming more leery than loyal. The irony is that, contrary to popular perception, eco-certified wines are rated more highly than non-certified ones. In their study, Delmas et al crunched the ratings of more than 74,000 wines produced in California between 1998 and 2009. They found that “being eco-certified increases the scaled score of the wine by 4.1 points on average [typically out of 100].” Adoption of wine eco-certification production methodologies has a statistically significant and positive effect on wine ratings. LESS IS MORE The upshot of eco-friendly production practices’ benign effect on wine quality is, quite simply, better returns for the producer. In a study published in 2014, Australia-based researchers Edward Oczkowski and Hristos Doucouliagos found a positive and significant correlation between wine scores and price. It is safe to conclude that wine producers in California are increasingly shifting towards environment-friendly production because it enhances the quality and hence the value of their product. Many consumers, meanwhile, have been drinking eco-friendly wine for years without realising it. The correlation between eco-friendly production, quality and prices extends to the rest of the food industry, possibly even more strongly since foods labelled “nonGMO”, for instance, don’t suffer from an image problem. As consumers become increasingly vigilant about what, rather than how much, they eat, food producers will have ever more incentives to adopt less environment-damaging practices while producing better-quality food. In the industrialised world, which is struggling with obesity, such a trend would have additional health benefits. If regulators and the media continue to nudge the population in the right direction, consumers will shift from over-consumption of low-quality food towards a more appropriate consumption level of higher quality products, while keeping steady their overall expenditure on food. That is something we can all say “cheers” to. *Boris Liedtke Distinguished Executive Fellow in the INSEAD Emerging Markets Institute




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