Germany’s AfD and the Lander elections…

Guten Tag sunny reader, I hope all is well in your world.

Today, I am going to talk about Germany’s four upcoming state elections and the AfD, a particularly noxious and xenophobic new face on the German political scene. For them these elections are a chance to prove their viability as political actors.

In just under a month’s time several states (Landers) will be voting in crucial elections. I don’t usually talk about state elections and I go mainly for the national picture (call me an old fashioned centralised Brit!) but these elections have been given special significance by Germany watchers and the media. For they allegedly could signal the death knell of Frau Merkel’s time at the ultra modern Chancellery building in Berlin.

In order, the states of Hesse, Baden-Wurttemburg (B-W), Rhineland-Palatinate (R-P) and Saxony-Anhalt (S-A), will all vote by the end of March. How will this play out?

Well according to the latest polls by Forschungsgruppe Wahlen and also polls in the Der Spiegel newspaper, conducted in late January the CDU is forecast to come out on top with percentages of votes of around the mid-high 30s, such as in B-W, where it is on 35%.

In these affluent states, which includes big commercial and cosmopolitan cities, such as Frankfurt and Stuttgart, the main challengers are the Greens (who reach a high of 28% in B-W right down to 5% in R-P) or the Social Democrats (who are at about 15%-17% in most states and then hit 31% in R-P). So the CDU is sitting rather comfortably, and given that the CDU and Social Democrats often mirror the ‘grand coalitions’ at the national level, it is very much conceivable that they will form these in the states to. That is not the issue so much but the rise of the Alternative fur Deutschland (AfD), right wing and Eurosceptic upstart party, is the story of these elections (sorry dear reader I took a rather lengthy detour to bring you that news flash!) and the polls for that party are on the rise I’m sad to say.

However, this Party is not going to win but could drain votes from the CDU and Social Democrats alike. Hence the CDU leader in R-P, the up and coming Julia Klockner, has defied the Chancellor and called for an upper limit to be placed on the numbers of refugees entering Germany. For the Social Democrats they risk losing the blue collar, working class males who, like we have seen in the UK, USA and other western nations, are too easily falling under the spell of right wing demagogues (you can guess I have the odious figure of Donald Trump in mind!) and who are a ripe and juicy demographic for these types of politicians. Much like UKIP in the UK, they initially attracted disillusioned intellectuals and the middle class, such as professors and doctors, with more than two-thirds of their original membership holding doctorates. It was at the time dubbed the ‘professors’ party’ for this reason. Not anymore as I explain in more detail down below.

There is also disgruntlement within the AfD ranks which has bubbled to the surface on occasions and this gives a glimmer of hope that the Party orgnisation is much more fragile than it first appears.The AfD was formed in 2013 and was originally set up as a Eurosceptic populist party. Its founder, Bernd Lucke, who was elected an MEP in the 2014 European elections tried to keep the Party away from any overtly racist statements and elements and stick to a staunchly anti-Euro line. Although, following the refugee crisis last summer and the election of hardline and populist, Frauke Petry, the AfD has happily and very publicly embraced the anti-Muslim, anti-immigrant rhetoric of the Pegida movement and I doubt she would reject the classification of the AfD as the ‘Pegida party’ given the number of AfD flags that are waved at Pegida marches.

What is interesting about Frau Petry is that she had a very similar upbringing to Angela Merkel, although there (mercifully for Mrs Merkel) the similarity ends. Both are East German scientists who broke through the ranks of their largely male dominated parties to clinch the top spots. The AfD is according to the Spiegel Magazine, 86% male in terms of its membership numbers.

However, the original founders of the AfD (whose views on the Euro I strongly disagree with but they were at least presented in a civilised fashion) such as Mr Lucke and several other academics and economists, have now left the party highlighting its rightward and pro-Russian lurch as the main reasons. This action deprived the AfD of 5 of its 7 MEPs and a core segment of their more respectable and middle class supporters. These defectors have now established a new party called the Alliance for Progress and Renewal (ALFA).

Whilst the AfD and the threat they pose to modern, prosperous and tolerant Germany should not be taken lightly we must also reflect on their polling numbers. Yes, they have made a name for themselves and got into state legislatures the real test will come in 2017 at the federal election level where they remain I am pleased to say, small fry.

As I keep reminding people whilst Frau Merkel may be down she is not out, and I have yet to see any obvious alternatives to her on the horizon. Her Party remains very strong at the federal and local levels but what the analysts have forecast is that if the CDU slumps in support in these Lander elections in March she may, like her Social Democrat predecessor Gerhard Schroder, be forced to call a confidence vote in her leadership and potentially lose her post. This is a possibility but I still think it unlikely. This is a Chancellor who is still popular,  at about 50% approval ratings, when compared with other democratic leaders,this is astonishing after 11 years inf office, and she could still resoundingly win a head to head vote against her rivals in a federal election.

At the opening of her campaign rally in Magdeburg, the capital of Saxony-Anhalt, she acknowledged difficulties but displayed her main talent in my opinion (the ability to look clearly at the future and analyse what is best for the long term welfare of her country) and she said “I know that people are impatient and want fast answers but fast answers are often the wrong answers.” How I for one will miss her when she chooses to retire.

Advertisements

Let’s talk Brexit….

Hello and welcome dear reader,

I truly appreciate your continued loyalty to the cause!

Today is not going to be the mother of all rants (I hope anyway!), and I will today talk about my position on this whole ‘Brexit’ debate as it has been labelled. Now for those in the dark, the United Kingdom has decided to hold a referendum on its relationship with the European Union (EU). I have major objections to the holding of referendums as a way of resolving policy matters as a rule (I view it as an abdication of responsibility by our Parliamentarians) but to hold them on what is essentially a foreign policy issue is even stranger in my humble view. Why don’t we have a referendum on our so called ‘special relationship’ with the USA? Or on our relationship with that other Brussels based organisation, NATO?

Many international statesmen and women such as, Barack Obama, Angela Merkel, Matteo Renzi, Narendra Modi as well as others from the world of business, such as Richard Branson, Michael O’Leary, Stellios Haji-Ioannou, Sir Michael Rose, Karen Brady have all urged the UK not to leave the EU. Only today the US Trade Negotiator said that the US would never negotiate a separate Free Trade Deal with the UK, as it is currently talking to the EU about.

It may have skipped the notice of many but this is already the third referendum which is being held during the rule of David Cameron and these votes don’t come cheap! The Alternative Referendum vote in 2011 cost £75 million according to figures released by the UK’s Electoral Commission and there is no indication that this is exercise is going to be any cheaper. Don’t forget how much the flyers, TV ads, and posters will come too!

The tricky thing about referendums is will people even be properly informed by the time it comes to vote on our future with the EU. For almost 50 years the venomously Eurosceptic press has kept up a relentless stream of Eurosceptic bile (sometimes bordering on the xenophobic side) often based on manipulation of the facts or downright lies. If you want some choice examples (there are too many for me to tell here) then Google ‘Euromyths’ and just short of blaming the EU for Roswell or the killing of President Kennedy you’ll see the kind of lunacy that has been spouted out virtually unchecked over the years. If you don’t trust Google then ask the next Brit you meet if there is a European Parliament or test if they recognise the EU flag when shown it.

Now, I concede dear reader that was a mild rant so on to a more positive case for the EU. You might rightly ask, so if the EU hasn’t banned bendy bananas or vacuum cleaners then what do all those ‘Eurocrats’ do with their time?

Well, if you are not a UKIP Member of the European Parliament (MEP), who incidentally are well known for pocketing their allowances and salaries  (and don’t bother to turn up to crucial votes or debates in the EU’s Parliament or question the European Commissioners) then a fair bit. Just don’t expect it to be covered appropriately by the BBC or many other British media outlets. So here I am!

I am not going to attempt to cover the whole gamut of votes and policy issues but to make some personal choices on where I think the EU has delivered.

  1. The environment: The EU’s Bathing Water Directive has since the 1970s required Member States (MS) to monitor and assess the quality of bathing water and the levels of bacteria. MS are also obliged to provide detailed profiles about beach management systems and any pollution risks which might impact on the safety of bathers. Think about that next time you take a dip in the sea in Greece or Spain, or the UK for that matter!
  2. Consumer choice: Realising they are on a stark vote loser with this, UKIP and the Out campaign have peddled the fantasy that if we left the EU we could seamlessly remain in the world’s largest single market of 500 million people. Now that MSs’ have abolished tariffs and red tape on the trading and sale of goods and services we have now, for example, seen the price charged by former monopolies on national and international calls fall by more than 40% on average between 2000-2006. This extends into our average daily supermarket shop where we can now buy reasonably priced Spanish oranges, Greek olives, German sausages, French yoghurt or Belgian chocolate. By leaving the EU we run the real risk of seeing prices rise and jeopardising the access we have to this successful EU market which represents 50% of our exports and 60% of our imports.
  3. Travel: According to latest figures almost 80% of the UK population holidays every year in an EU country. Think about your weekend break to Paris, or beach break on the Spanish Costas, concert or football match trip to Berlin, or a skiing trip in Bulgaria. We might at least end up paying more for them or even have to apply for visas all over again!
  4. Consumer rights: The EU’s Air Passenger Rights Regulation provides a basic minimal standard for travellers on departing from the EU and those aboard an EU registered carrier. These rights include a certain level of compensation if your flight is delayed or cancelled. This can include free telephone calls to loved ones or the reimbursement of hotel costs depending on the length of delay.
  5. Tackling crime and terrorism: Led by a Brit, the Europol agency is finally being granted the resources it needs to do its job properly. Having successfully busted nefarious organisations from match fixing syndicates to credit card fraudsters, Europol has, following the tragic Paris attacks and the refugee crisis last summer, set up EU wide computer databases to help MS’s track and prosecute terrorist financiers and people smuggling rings.
  6. Erasmus: This student exchange programme provided grants to 13,662 UK students or graduates in 1 year alone to help them undertake some of their studies, or undertake an internship, in a fellow EU country. This not only enhanced their CVs but helped them to brush up on their much needed language skills and learn about other cultures.

This is by no means, as I mentioned before, a comprehensive analysis, but I hope it at least gives you a flavour of what we currently enjoy and how we could easily throw it all away.

As for the thorny topics of sovereignty and immigration let me just say that, as I alluded to earlier, just how sovereign are we as a nation in such a globalised world? We are members of the UN, IMF, NATO and countless other supra-national institutions which fly in the face of the outmoded Westphalian state. For those of you with prejudiced angst about the Polish plumber or Spanish barristas let me say categorically they will not automatically go home because we leave the EU, the demand businesses have for them to fill the jobs will still be there!

Not forgetting the lack of control we have our global economy, as the 2008 banking crisis highlighted. Whatever happened to the bankers involved in that calamity? We cannot recreate some idealised or sanitised version free of migration flows, climate change, threats from terrorism, fraud or organised crime but we can join together with those who share our values of democracy and tolerance and learn something from each other.

In terms of democratic accountability it is a behemoth of a lie to claim that European Commission or other bodies are out of our democratic control. First, the European Parliament whose members are directly elected by us (last time in the UK was 2014) and they vet and interview members of the European Commission as well as summon them to Parliament for questioning. Similarly, all decisions must be signed off by the European Council, which is made up of Member States heads of government, like David Cameron. The Commission proposes and the Council can reject, ask them to think again, or accept.

Now, dear reader I have endeavoured to answer as many questions as I can, and no I don’t believe the EU is a perfect organisation, but I do believe it is the right one for us and this question is about more than subscribing to the European Union. It asks very fundamental and at times, awkward questions about how we are perceived by the rest of the world and ourselves.  Outward and welcoming or inward and reactionary? Choice is ours on June 23rd.

 

 

Black Gold: The world’s lifeblood?

Hello and welcome dear reader! I hope you are well and continuing to enjoy health and success in your endeavours.

I want to start by looking at oil, or rather romantically as it is called, black gold. This commodity has been at the heart of our economies for many decades now, powering our transport, businesses and homes as a near monopoly. Historically it has even been used as a weapon of war (as seen by the OPEC oil boycott of 1973 against western states) and also contributed and exacerbated existing conflicts where the goal was to gain control of oil fields (see wars in Iraq and Nigeria).

However, in the last few years the oil market has faced the most profound of challenges and its continued relevance to our economic wellbeing is under a cloud.  The rise of renewable energy sources and development of shale gas has seen a fundamental shift in the reliance (many would say over-reliance) on oil for our energy production. According to the OECD consumption of oil in member countries (which includes Europe and America) has been in decline since the 2000’s.

In Europe, the European Commission has made it a strategic goal to reduce overall energy consumption by 20% by 2020. Figures from Eurostat, show Europe is on the way to achieving that, with a combined share of our energy mix on petroleum products and solid fuels falling from 65.1% of total consumption in 1990 to 50.6% by 2013.

A World Economic Forum report highlights that the USA, where owning and driving an oil guzzling automobile is seen as an integral part of the ‘American Dream’, saw a peak consumption rate of 20 million barrels per annum in 2006 but by 2015 this was down to 18 million and it is still falling. This is the lowest rate since the turmoil of the Iranian Revolution in 1979, when the oil market was adversely affected by chronic political instability.

In 2014, under the twin threats of renewable energies and the opening up of shale energy markets, Saudi Arabia (the world’s largest oil producer) and leader of the Oil Producing and Exporting Countries (OPEC) cartel, decided to saturate the world economy with cheap oil to essentially keep itself relevant. As such prices at €115 a barrel in June 2014 have now tumbled down to an unprecedented €41 a barrel in 2015. Saudi Arabia, with large foreign exchange reserves of roughly €900 billion, can afford this gamble but since last year, other OPEC member nations, such as Venezuela and Nigeria, have been feeling the loss heavily in their economies. Only today, oil rich Venezuela was forced to increase the taxes on oil for the first time in over 20 years.

OPEC only represents 30% of global oil producers but in a sign of how deep the crisis is other significant producers, such as Russia, have joined hands with OPEC to adopt the same risky strategy. Russia pumped a record high of 10.88 million barrels a day in January surpassing the Saudi high at 10.2 million barrels a day during the same period says the Economist Intelligence Unit.

In the summer of 2015 the return of oil rich Iran to the world economy, includes the turning on of moth balled oil refineries, and this has provided an additional challenge to other oil producers.

On the plus side though, for Europeans (as net oil importers) we are seeing the benefits of low oil prices. Not only has it left consumers with more disposable income to spend on non-transport related goods and services but it has allowed for much needed breathing space following the 2008/2009 Eurozone crisis.  In Germany, Europe’s largest and most productive economy, the low oil bill has saved the German government an estimated €12 billion in 2015. This in turn has kept consumers confident, with similar levels to the era of the dot com boom in the early 2000s says GfK, the German data research group.

The serious question many policymakers around the world are asking is whether this is a long term trend? The oil market is extremely difficult to predict and if you look at the history of oil prices since WWII it is full of dramatic highs and lows. Certainly Saudi Arabia has up until now remained stubbornly fixed to its current policy of pricing out rivals.

There is an indication that this may be changing though. Last week an unprecedented agreement signed in Doha, Qatar, resulted in a freeze in output at January 2016 levels between Russia and Saudi Arabia. This is particularly curious given the tensions between these two over Syria. It brought much needed relief to the battered economy of Venezuela which brokered the deal alongside Qatar. This is part of a series of steps that these countries will now take to stabilise the oil price the Saudi Oil Minister, Ali Al Naimi, stated.

This evidence indicates that 2016 might be the year in which we see a concerted effort to return prices to more normal levels, especially as oil companies, such as Royal Dutch Shell, see continued and deep cutbacks in refinery investment and maintenance. The International Energy Agency recently stated that continued low oil prices will only lead to reduced energy security as investment in older and new plants dries up. Dr Fatih Birol, the Director of the Paris based agency and he interestingly forecast that the glut in oil supplies during a period of weak demand is only going to damage us all in the long term. For employees in the sector and its extensive network of suppliers the picture is even bleaker. In 2015 Shell was forced to cut 2,500 jobs and it wasn’t alone in doing this, BP and Weatherford also cut jobs, and the Financial Times estimated 250,000 jobs were cut in the sector in 2015 alone.

My assumption is, subject to caveats, that we will see a steady climb this year in oil prices, driven largely by the still insatiable appetite of an oil hungry Indian economy and gradual curtailment in production. Chinese demand had powered the oil market for most of this century but now with sharp falls in economic growth in China the oil giants are relying on what could be an overheating and debt laden Indian economy.  Further instability in the Middle East, where the conflicts in Syria and Iraq, continue to grow more dangerous each day could lead to sharp and unsustainable spikes in oil prices, with negative repercussions for USA and Europe.

Let us keep an eagle eye out dear reader is my advice!

 

 

 

 

Countdown to Ireland’s election: And they’re off…..

Hello dear reader and welcome back! A pleasure to have you here today!

Today we are going to visit the Emerald Isle, Ireland, where the starting pistol has been fired on what will be the shortest and possibly the closest election in Irish electoral history.

Last week, the Irish Taoiseach (Prime Minister), Enda Kenny, merrily waved goodbye to the leader of his Labour Party coalition partner and erstwhile deputy, Joan Burton, as he left Government House in Dublin and went off to see the President to ask for a formal dissolution of the Parliament.

TV3 recently held a four way TV debate between the leaders’ of most competitive parties, including centre left Fianna Fail and the governing centre right Fine Gael, and the jovial Mr Kenny and slightly awkward Ms Burton both made the passionate case for re-electing their parties back into government. The opposition Fianna Fail leader, the erudite Michael Martin, meanwhile slammed the insurgent Sinn Fein party over alleged criminal links and vowed he would never work with them to form government, a suspicion which had been popular in some circles and which the government was for obvious reasons keen to keep alive.

After the debate the latest polls by the Irish Times, the popular Dublin daily newspaper, are showing that while there is an appetite among the Irish people for change,  at 63% wanting a change. Change is especially keenly felt by the middle and poorest classes and those living in rural areas. This is all somewhat contradicted however, by the way the support for the parties is predicted to pan out in the same poll though! Bear with me dear reader!  Just over a third of voters (35%) are forecast to give their vote to the incumbent Fine Gael/Labour coalition and 21% to the main opposition Fianna Fail, and a record 19% to Sinn Fein. The really crucial factor is the 25% that a huge swathe of Independent candidates are likely to take and their support will be highly sought after for anybody seeking to form a majority government.

This overall picture indicates that the pattern of other recent European elections, in particular in Spain and Portugal, might be borne out where centre right incumbents come out on top but shorn of their majorities. In the end, in Portugal at least, the left seized the opportunity and took office after cobbling together a coalition. That is a possibility but an unlikely one here in my humble opinion.

As I outlined in my very first blog article, back in September, Mr Kenny seems to be appreciated for his economic management. I got this information first hand from a chatty taxi driver in Dublin, so you can’t get much more authoritative than that! The European Commission winter forecast highlighted the fact that Ireland has been the top performer in the Eurozone in terms of GDP economic growth with 4.5% forecast this year and the report also noted continued falls in government debt. Unemployment is on track for a steady decline too, down to 8.5%, as well and PM Kenny has been gleefully opening new business and multinational headquarters.

The other big issue of last year in Europe, the refugee crisis, which I have spoken about many times in my articles, is continuing to dominate politics right across the continent. The Irish people continue to be welcoming in their approach and like the economy, Mr Kenny  has handled this crisis shrewdly in terms of the politics. 64% back the numbers he has agreed to. However, like his British counterpart, David Cameron, the Irish PM has agreed to accept an inadequate amount, only 4,000 Syrian refugees will be coming to Ireland according to current figures, the first batch of which started arrive over Christmas.

The Irish Mirror has underlined in a poll, the fact that 1 in 5 Irish people say more refugees need to be resettled and 65% want enhanced security vetting of the newcomers showing there is room for improvement. Just last week, the anti-immigrant Pegida group launched its Irish branch where the numbers who turned out were not just outnumbered, but grossly outnumbered, by the anti-fascist counter demonstrators and police, and the handful of Pegida members ended up being chased quite literally out of Dublin town!

Apart from this delightful scene, it is quite likely that in a special migration summit in Brussels in March the PM, whoever that may be, will be asked to step up to the plate and accept more. Ireland has shown a far more positive and constructive approach to these matters than the recalcitrant and often xenophobic Eastern Europeans have and I hope this continues.

Crime shot up the election agenda after a pretty horrific spate of shootings related to suspected gang warfare, with a shooting at a boxing match weigh in on the outskirts of Dublin, and reprisal killings followed in and around the inner city areas. All parties promptly rolled out tough messages with Fine Gael promising a strong Armed  Response Unit for the Dublin Gardaí police force and an extra €5 million of funding. Sinn Fein quipped that it would reopen the 150 police stations the current government had shut down, and Fianna Fail challenged Mr Kenny to a robust  debate on crime and policing.

Ireland also continues to watch slightly nervously, as the UK continues its existential crisis with another referendum, this time on whether to stay in the European Union. For Ireland any ‘Brexit’ as it is dubbed, could hamper its strong trading partnership with the UK. The OECD estimates that the UK is Ireland’s second biggest export market (worth €18.8 billion)  and its largest import market (worth €23.6 billion) based on 2013 statistics. However, for Ireland it could present an opportunity because many multinationals, such as Google and Goldman Sachs, who currently use the UK as a base to enter the wider European market might switch bases to Ireland ,which is English speaking, well educated and has a favourable corporate tax rate. This is particularly attractive for the Americans.

However, like the economy and refugee crisis the successful handling of these issues will rest on the guile and a fair dose of luck of the next Taoiseach.  Still, only another couple of weeks to go till election day, and whilst my view continues to err on Mr Kenny remaining in office don’t expect it to be easily attainable or be decided clearly on election night. We may be in for some horse trading into March!

France’s flailing Hollande…

Bonjour mes chers amis! Hello my dear friends! From Berlin to Paris now. Today, I’m going to talk about France, a country I admit I should have talked about in greater detail much earlier. What follows is a little bit of analysis on my part and then some number crunching!

To be frank, France in terms of European politics and economics has seen its star wane in recent years. For a long time the Franco-German motor drove the European Union but an extended period of economic malaise has set in and France, under successive conservative and socialist governments has failed to get back on top. Whereas Germany has, single handed, kept its own economy strong and held the often fragile Eurozone together. Germany has also led the way on European crises on refugees and climate change. Berlin has become the new go to capital in Europe, alongside Brussels, not (as was once expected) Paris.

It is partly this sentiment of French underachievement which has fuelled the rise of the neo-fascist National Front, led by the cunning and utterly ruthless Marine Le Pen. Her speeches are laced with distractions from the real challenges facing France and she instead chooses to bash the European Union, immigrants, the wealthy, globalisation and anything else that will help her shore up support amongst the working class.

Since 2012, France turfed out the quite un-French and brash Nicolas Sarkozy for an old school socialist (at least that is what he promised) called Francois Hollande who promised to return Gallic dignity to the august position of President of the Republic. However, his private life and his very public and bitter break up with his girlfriend seriously undermined him and with his economy stagnating and his too often feeble attempts at reform he has failed to revive France.

By the mid point of his Presidency he was living up to his nickname of ‘Flamby’ a type of wobbly custard, and there were even rumors he would resign before the 2017 elections. He did reshuffle his cabinet in a concession to his critics and then came the January 2015 terrorist attacks on the satirical magazine, Charlie Hebdo, in Paris and then the much larger and more savage November outrage which saw 130 killed in concerts and restaurants across the French capital. Hollande came in to his own and used the full might of the state apparatus to mobilise troops, sent them on to the streets, and declared a state of emergency. He promised to go after terrorist havens in Syria and Iraq with a co-ordinated series of airstrikes and received widespread European and international support. Mr Hollande certainly managed to rally his countryfolk successfully around the flag but the economy remains his Achilles Heel.

President Hollande famously promised to resign if he did not make a significant dent in unemployment figures. Current indicators point to a tentative Eurozone wide economic recovery, helped by low oil prices and the practical support of quantitative easing by the European Central Bank, but the French President’s belated reforms have been perceived as merely tinkering at the edges.

It’s now stats time again I’m afraid dear reader!

Last year the French economy exited three years of economic stagnation by posting 1.1% GDP growth rate according to Insee, the French statistics office. This may seem small but 2014’s rate was only 0.2%! The economy remains vulnerable to shocks and the Paris attacks certainly hit consumer spending during the busy Christmas period when travel and retail sectors expected robust trade.

By the President’s own measure on unemployment he has also failed to live up to expectations. IHS Economics, the economic analysis company, states that unemployment remains stubbornly high at 10.6% and the number of jobless actually rose last year by 90,000. In a last ditch attempt to revive the employment prospects of the French nation, Francois Hollande has declared ‘an economic emergency’ with measures including training for 500,000 jobless workers, increased support for apprenticeships and a €2,000 bonus for companies who hire young people. The latter measure is specifically aimed at ethnic minority youngsters in the troubled suburbs who are often left to crime and terrorism as career choices.

The economy will be Mr Hollande’s make or break issue come next year’s Presidential election. Already Ms Le Pen is waiting for him to fail as is the scandal hit Mr Sarkozy who is hoping to stage what could be a remarkable comeback to the French President’s residence, the Elysee Palace.

My main criticism of the Socialist President is over his response to the refugee crisis. His lacklustre attitude to the plight of refugees might have been understandable in a sense after the Paris attacks but even before this incident his hardline and ambitious Prime Minister, Manuel Valls, voiced opposition to European Union sponsored migrant quotas, refused to support the humanitarian open door policy of Germany and set an upper limit of 24,000 over two years. This is a miniscule number given the size of political importance of France and its still substantial economic and diplomatic weight. It sent a very negative message to Europe and the world. To be fair, anything more generous may have been unpopular in France (surveys in Le Monde and France 24 news outlets indicated a roughly 50/50 split on allowing refugees in)  but it is this lack of solidarity which seriously undermines Paris in the global leadership stakes. Germany meanwhile has received well earned kudos in the Muslim world and beyond for its generous stance.

Mr Hollande’s chances for re-election next year hang in the balance. Only today it was announced he is to carry out another reshuffle of his cabinet. His Justice Minister resigned after openly opposing one of his key anti-terrorism initiatives, the stripping of French citizenship from dual nationals who are suspected of terrorism offences. Whilst this controversial step is broadly popular among the French populace support is far from universal with critics in his own Party, human rights NGOs, and some journalists slamming him for trampling on the French constitution and France’s much cherished right to liberty.

I don’t give much hope to Mr Hollande and his supporters next year, and I have not pulled my punches in this article, but what I will say is like Mr Sarkozy he does not need to mimic the noxious and divisive politics of the National Front (which many claim he is at risk of doing with some of his policies and language). Leave that to the dilettantes and demagogues Mr Hollande, you can do better than that I am sure. Then, and only then, may your left leaning and moderate critics consider overlooking your thin record on the economy and refugees, when they hit the voting booths next spring.

Germany’s economy: the year ahead…

Guten Tag meine lieben Freunde (hello my dear friends). Thank you for stopping by! Always an honour and a pleasure for me.

So today, I want to write something a little different, and concentrate on the German economy and the prospects for the future. Whilst I will of course talk about politics I am going to see if I can avoid making it the main topic of discussion here (at least I’ll try but you know what I’m like dear reader!) Prepare for lots of statistics, if you don’t like stats I suggest looking away now!

In terms of economic growth in the Eurozone and more widely abroad, the German economy has weathered a very turbulent global economy rather well. Here’s to it continuing!  According to Destatis, the German Federal Statistics Office, the economy’s GDP growth rate expanded by 1.7% in 2015 following on from growth of 1.3% in 2014. In terms of hard currency this means GDP amounted to an impressive €3.027 trillion in 2015 on the back of the highest employment rate since reunification, in 1990, of 43 million people.

The driver behind this growth is primarily domestic demand, overseas investment and exports, with exports continuing to grow by an extra 5.4% this year. In terms of domestic demand, consumer confidence and retail spending is really keeping the German economy resilient in the face of terrorism and refugee anxieties, with December showing sales rose by 2.7% on 2014. Good job Germany!

The economy is expanding at a better rate than the Bundesfinanzministerium (German Finance Ministry) expected so the extra money available is being spent on the over 1 million refugees who entered Germany last year and the projected 800,000 this year. Under current plans the Ministry has allocated roughly €8 billion for this extraordinary situation, which includes funds for unemployment benefits and municipalities.

The redoubtable Finance Minister, Wolfgang Schauble, has also made attaining the ‘Schwarze Null’ (black zero) budget a sacrosanct priority for his term in office. However, critics outside his party, the Christian Democratic Union (CDU), complain that this is blinding him to the other policy needs of the day which includes extra infrastructure expenditure on schools, police and housing for example. This point is often raised in the German Bundestag (Parliament) by the Green Party and Die Linke (the Left Party).

The recent lifting of economic sanctions against Iran is also a great boost to Germany as the German Chambers of Commerce estimates that in a few years trade will be back to the pre-2005 levels of roughly €5 billion. Germany was the main trading partner of Iran before sanctions and with other western countries exchanging business and government ties, the German government has not  been slow of the mark either, with the German Vice Chancellor, Sigmar Gabriel, visiting in July and another visit in the pipeline later this year. This could also aid German manufacturers and provide much needed investment opportunities as Iran opens up to the world again.

This last point is especially critical because of fears of an imminent Chinese economic slowdown. China is Germany’s fourth largest trading partner and has been a major source of demand for German factories, such as BMW and Siemens, but the fears of a dramatic slowdown have been exaggerated in my opinion because Chinese consumers are still spending and the rapid declines in the Shanghai stock market make up only a small percentage of the wider Chinese economy. For the German economy it is more important that demand continues in the more prosperous parts of the Eurozone (such as the Netherlands) and USA, who are more prominent amongst Germany’s trading partners. Any slack from China could also be picked up by other more robust emerging markets such as India, with which Germany has a good and productive trading relationship with as well. The German Embassy in New Delhi says that bilateral trade is worth €16 billion with key exports of electronic technology, metals, automobiles and chemicals. Pakistan also represents another emerging market with which Germany has strong relations and many German companies such as Bayer, Linde, BASF, Merck and others have strong investment ties in the country.

In terms of the refugee crisis, which there is in no avoiding when discussing Germany today, the Bundesagentur fur Arbeit (German Federal Employment Agency), has stated that owing to German unemployment being at historic lows coupled with a low fertility rate, Germany has the ability to absorb 350,000 refugees who wish to enter the labour market per year, with the German economy creating roughly 700,000 new jobs each year. The BfR qualified this by highlighting the fact that refugees would not be able to contribute immediately to the economy because they would need to re-train to plug skills gaps in the domestic labour market and learn the German language. There is also the matter of how much counselling and psychological trauma many people will have gone through after five years of civil war and the horrors this would entail. However, what is critical here is how the transition from refugees into constructive participants is managed. I am optimistic that Germany can do this and the recent initiative launched by the German government to provide 10,000 young refugees with dual vocational training qualifications by 2018 is a good first step.

Before the Syrian civil war, the European Commission underlined the main exports out of Syria were oil and gas, mining, machinery and agricultural products. As a former socialist economy the Syrian regime emphasised the development of heavy industry, which by the end of the 1990s accounted for 22% of Syrian exports, specialising mainly in the chemicals, oil production, mining and agro-food markets. This gives Syrian refugees the rudimentary skills to work in the manufacturing powerhouses in Germany. In terms of basic literacy rates, Syrian refugees were almost universally educated and the most highly qualified in the Arab world before the civil war erupted. According to UNICEF (the United Nations Agency) 84.1% of Syria’s population were literate, a high number of these were degree educated people too, and 5-10 year olds were almost all enrolled in a primary school. Again, this highlights how much of an asset the newcomers to Germany could be.

Whilst I am in no way complacent about the challenges which Germany faces, especially in terms of refugee numbers and the terrible threat from terrorists, my familiarity and knowledge of the German people helps shape my view that they are profoundly resilient and tolerant, and this is virtually unparalleled in my humble opinion. My forecast is not fullproof and is subject to changes in the world economy and society at large but I remain steadfast in my optimistism for the future of this country which I so admire.

 

Lebanon: A tiny country with a big heart

Salaam and Bonjour dear readers!

Off we go to what is, in my humble opinion anyway, one of the most enchanting of Middle Eastern countries = Lebanon. By the way, if any of you ever feel generous dear reader Lebanese food is one of my all time favourites!

For a long time Lebanon had been at the centre of a vicious civil war that had torn this country along sectarian and religious lines. Since a peace settlement was reached, called the Taif Agreement which was signed in 1975, this naturally beautiful country has built itself back up into a multi ethnic, middle income state. It had already played host to some 450,000 Palestinian refugees the UN Reliefs and Works Agency (UNRWA) estimates but this now pales in comparison to the over 1 million Syrian refugees who have been spilling out of that deeply troubled land of Syria. Refugees now represent almost half the Lebanese population and they live in abject poverty in refugee camps with virtually no access to the local jobs market or mainstream education system.

At a recent donors’ conference in London for Syrian refugees the UN Co-ordinator for Lebanon, Sigrid Kaag, urged participating governments “not to take Lebanon’s stability for granted.” This is not a melodramatic statement to make as various political actors, representing Christian sects and Muslim sects, have taken competing sides in the Syrian conflict and the risk is ever present that this fragile nation could see a spillover effect of the tragic and bitter Syrian war. Already the crisis has exacerbated the election of a new President. For two years lawmakers have struggled to elect one since Michel Sulieman stepped down and their has not been a general election for a Parliament since 2009, so the Middle Eastern Eye online newspaper reports.

In 2015, the paralysis reached a crescendo, which almost tipped the country over the brink. It all started when the government closed down the main garbage processing centre on the outskirts of Beirut, in July as part of a cost cutting exercise. What quickly followed was the formation of a civil society led protest movement called ‘You Stink’ (I’m sure the name will resonate with many a jaded voter around the world!) and the protesters demanded that the government act to stop the rubbish piling up in the streets, as alternate sites rapidly began to overflow.  The Prime Minister, Tammam Salam, desperate to build consensus and unable to get his actions signed off by a President (as there is no-one occupying the hilltop Ba’abda Presidential Palace!) bore the brunt of the protesters’ ire and like a rabbit caught in headlights was unable to satisfy the demands of his citizens. Members of the Lebanese diaspora in Berlin and Paris also staged sit-ins outside their embassies over the issue.

The impasse eventually eroded away as the protesters were met with arrests and water cannon and the government moved the mounds of garbage off the city streets and piled them up in landfills on the outskirts of the city, some of these piles are apparently six stories high Al Jazeera reports, so hardly a satisfying outcome but one which has given the embattled government some breathing space for now. There are still cases of dysentery and gastroenteritis being submitted on a daily basis to already strained health authorities, the France 24 news channel states.

The World Bank is nevertheless, forecasting positive GDP growth rate of 2.5% for 2016 rising to 3% by 2017. Beneath this positive news however, the Bank warned that 16% of GDP is reliant on remittances from Lebanese living overseas and the low commodity and oil prices are giving an added boost to the economic growth rates. A continued failure to elect a President, tackling of the budget deficit and no will to carry out the necessary structural reforms to the labour market could precipitate a new crisis. Tourism, a main stay of the economy, has already taken a sharp knock following the tumult in the Middle East.

As outsiders we have a role to play by ensuring that the warm words and pledge of $6 billion of aid made by our leaders in London this week is translated into reality and we actually follow through on this promise. There is no room for mistakes. Otherwise we risk further calamities in the region and another influx of desperate migrants and refugees in Europe this summer. Lebanon should serve as an example of how even the smallest of countries has with generosity, and in spite of the obvious challenges, welcomed those in urgent need of assistance.

More specifically for Lebanon, the call to action is I am afraid to say to get more politicians, by which I mean elect a President! That as a first step is absolutely vital to navigate the tricky political waters which are dashing the Lebanese nation and already their appears to be some movement by Lebanon’s often impassive lawmakers. However, much like the rubbish situation will the moves be merely cosmetic and merely throw a plaster over what is a deep wound!?

France & Italy: Of wine and nudes…

Bonjour and Ciao! I know what you are thinking but Ciao is apparently hello in Italian too, which I never realised. Still onwards and upwards dear readers and welcome!

As you may be able to tell I am going to talk about the ‘Grand Tour’ of Iran’s reformist President, Hassan Rouhani, to Paris and Rome last week.

It is no coincidence that President Rouhani chose these two capital cities as his first European port of calls given the high esteem, as fellow ancient civilisations, that most Iranians hold France and Italy in. They have been favoured nations since the days of the Shah with many Iranians of a certain age having studied there during their university days’. It’s funny to note then that much to the frustration of both sides the media and government critics have focussed on the more controversial aspects of the visit. Namely, that wine which was due to be served by the French over dinner (at the Elysee Palace) and the covering up of nude statues on display at a noted Rome museum (the Capitoline) during a joint press conference. Both were handled diplomatically but not before hardliners decided to make a meal out of it! The far right Lega Nord & Forza Italia Parties in Italy both called it an ‘act of submission’ and ‘crazy.’ In France the furore over the wine at dinner was also condemned by proud Gallic gastronomes in the media and politics.

However, now that these sideshows to the actual visits are out of the way (after arousing much mirth I hope dear reader!) I want to look at what was actually achieved and how successful the trips were. This was the first visit to France and Italy by an Iranian leader in 16 years and following the landmark P5+1 Agreement reached in July last year and the subsequent lifting of trade sanctions a whole new market of almost 80 million middle income consumers has opened up to recession hit French and Italian industries.

In France

As Tahar Boumedra wrote in French newspaper, Le Monde, the visit of Mr Rouhani comes at a time when Iran is widely perceived to be flouting its universal human right obligations. It was with this in mind that Femen protesters hung themselves symbolically from bridges over the River Seine to highlight the large number of prisoners on death row in Iranian jails.

It also poses a challenge to the historically strong relations that France has with Iran’s regional rival, Saudi Arabia, who watched this visit closely. Nevertheless, the French Foreign Minister was the first top flight European official to visit last summer when sanctions were lifted, hoping to secure deals for big brand French companies such as Airbus, Total and Peugeot, but it was reported in the Tehran Times that hardline student protesters had to be dragged away by police as they chanted ‘lackey’ at his passing motorcade.

Mr Rouhani, who used to live in France, seemed happy to be in familiar surroundings but his foreign policy team will have highlighted their opinion (during the P5+1 negotiations last year) that France was the main obstacle to reaching an agreement. The French routinely raised last minute objections to any final deal, and this is not something Mr Rouhani’s enemies back home will let him forget in a hurry.

In spite of these tensions there were big deals signed as France 24 reports. Currently, trade between Europe and Iran is worth a paltry €7.6 billion compared to €28 billion pre sanctions in 2012. The hope is to get this equilibrium in trade restored. Already a potential deal with Peugeot could see a €500 million with local Iranian car maker Khodra signed and give European automobile manufacturers lucrative access to the largest car market in the Middle East.

Even intelligence sharing against Daesh (ISIS) was on the cards and the symbolism of the trip would not have been lost on many with a stake in these relations. The French PM Manuel Valls concluded with the words “France has been seduced by Iranian history and culture” in front of a beaming Hassan Rouhani, who no doubt will utilise such lines to silence his critics in the run up to crucial parliamentary elections in Iran.

In Italy

While the sometimes intimate but rocky relationship between France and Iran has characterised bilateral ties, the mood music was even more convivial in Rome.

The Middle East Eye, a Gulf regional newspaper, and ANSA, the Italian news agency, both reported that in Rome alone €18.4 billion worth of deals were concluded in steel and oil production, with Italian steelmaker Danieli, and Saipem, the Italian oil services group, landing €4-€6 billion worth of contracts. The Iranian leader rapturously declared to joint Italian-Iranian business forum that Iran was now ‘welcome to investment’ says the Corriere della Serra and this was also in the presence of Fiat’s CEO!

For Italians this was a much more pleasant visit than the last Iranian leader they were obliged to play host to. For it was none other than the controversial Iranian leader, Mahmoud Ahmedinejad, who arrived at a UN food conference in Rome, back in 2008, and was swiftly taken to the conference venue and swiftly back out again before the cameras could really capture the moment. However, you can relive the moment on YouTube if you so wish dear reader!

Matteo Renzi, the Italian Premier, tweeted before Mr Rouhani’s plane had even left Italian airspace that he was looking forward to visiting Tehran in the not so distant future.

No doubt the Iranians will reciprocate the red carpet welcome they received in Rome but whereas the French leg of the tour had the air of a business meeting the Italian trip felt much more like a meeting of ideas and minds.

Conclusion

Mr Rouhani came to Europe with a 100+ delegation of Iranian business leaders, so he obviously meant business quite literally! What I forgot to mention was the sealing of a deal with European aircraft maker, Airbus, with Iranians looking to seriously revamp their rather down at heel national airline which has felt the full effect of sanctions. An initial order of 114 planes is in the pipeline with more set to follow. In other words, watch this space because this doesn’t look like a relationship either side wants to drop the ball on, given the potential benefits to both parties.