Thank you, Mr. President

AP-donald-trump-g7-jt-170528_12x5_1600-2Here we go again: The U.S president is attacked on a global scale for his thinking on trade and investments. Mrs. Merkel, chancellor of Germany even announced a “new chapter in U.S. European relations” and stated that “Europe must take our fate into our own hands’’. Similar accusations had been raised in 1980 after the election of President Reagan. He was labelled a B class actor, a cowboy and an inexperienced but lucky vote gainer. The accusers were wrong then and they are wrong now!

President Trump lived up to his convictions during the tense G-7 political summit just as he had already done during and after the U.S. presidential campaign. No surprises there when he reflected on the need for more balanced trade relations and the requirement for all nations to pay a fair contribution for the benefits they obtained from the United States.

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Hungary’s Unacknowledged Leadership

Hungary has a strategic position in the heart of Europe. The country offers a highly developed logistics system. Its traditional role as a trading post makes it important as a regional production and distribution center.  Porsche, General Motors, and Audi are now producing many of their cars in Hungary – with other suppliers working for and close by. A recent investment by Mercedes Benz re-affirms the auto cluster formation in Hungary. The significant development of industries like information technology, electronics and automotive has attracted Foreign Direct Investment (FDI) at a rising rate.  Hungary’s acceptance as a member of the European Union and the Schengen Zone further boosted its own and its European partners economic, social and political development and stimulated more R&D activities.

All this is now jeopardized because of major EU internal strife over immigration policies. I observed the early stage of human flow between Serbia and Hungary which was then a 200-kilometer long green zone. Groups of 30 to 50 men, women and children slowly walked across the border. The local chief of police shrugged since he neither had the manpower nor the physical resources to round up or process the waves of humanity. In 2015, more than 400,000 people entered Hungary from Serbia, aiming to settle in Germany, France or Britain. The march through Hungary used to encounter an ostrich policy of “carry on and ignore”. But the people who immigrate were worn out and not any less hungry because they were in Hungary. To rest, or feed themselves, they trespassed on property and took fruits and other food. Locals were weary and talked about organized protection for their harvest. Pressures and complaints are like sparks in a tinder box.

The government of less than 10 million Hungarians has only limited resources to respond to the clashes. A wall has been built to stop the immigration flow across the most accessible border areas. The public response in Europe to Hungary’s defensive measures have been complaints, accusations of government over reaction, and lack of sympathy towards restriction of mobility. Prime Minister Orban, a democratically elected head of government was accused of a lack of sentimentality and guilty of behaving like a political winner (DUH)!

Today, Hungary is again encountering its traditional environmental ambiguity. In history, the country has been too far East to be part of the West, and too far West to be integrated into the East. There have been long-term occupations by the Tatars, Ottomans and Austrians. The treaty of Trianon, removed large portions of Hungary’s population and resources. During the Cold War Hungary kept conditions at least lukewarm with its Gulyas communism, and was often at the forefront of clamoring for change, for example, with its 1956 revolution against the Soviet Union, and the 1989 opening of its borders to help escaping East Germans.

Again Hungary has been an early proponent of the need to monitor refugee access to a country for purposes of justice, information, planning and control. Given its small size and population, repercussions of new factors are simply felt more quickly and demand more rapid actions than for nations which have lots of reserve resources to deal with new conditions. Even those players eventually recognize the need for new policies.

Accusing the Hungarians of inhumanity for their regulation of migration is unwise. To protect nations many walls have been built: just think of the Roman Hadrian or the Chinese Qin Shi Huang 2000 years ago. Walls are still being built today, by Austria, Serbia and now also by Turkey. Doing so is not a disregard for human lives, but rather an institutional requirement for control of the distribution of resources. Even Herculean effort is to provide food, shelter and security for migrants can fail if there is no timely count and assessment of human needs and the direction of the massive flow of people. It has not been sensible to overburden Hungary with expectations and demands for accommodative actions which, as we can see now, has shaken up major countries as well. In today’s times, leaders are all-to-often confronted with asymptotic conditions, where they encounter major demands for actions by outsiders who are shouldering neither the political burden nor are paying for all their wonderful suggestions. Later on, those who earlier decried and dismissed responsible government action often turn about and imitate the once so deployed steps. Particularly in groups of nations which disagree about idealistic policies, one winds up with the unfortunate constant of politics: foresight and early implementation of corrective action has no international payoff. No gratitude, no memory, no long term, no acknowledgment, just like an unhappy couple.

Oil price slump a mixed bag for world economy

By Wang Jiamei Source:Global Times

A confluence of factors have weighed down oil prices, including a strong US dollar, a global supply-demand imbalance and an increase in domestic crude output in the US, the world’s largest oil consumer and importer; all of which are unlikely to change in the months to come. While falling crude prices may mean shrinking revenues for oil exporting countries and regions, they could also lead to a drop in raw material prices, a trend which could lend new economic momentum to oil importing countries and regions.

The continuous growth in oil production has been a major reason behind the recent drop in crude prices. According to data from the US Energy Information Administration, US crude oil production reached 8.4 million barrels per day during the first nine months of this year, up 14.5 percent compared with the same period last year. Meanwhile, Russia also revved up its oil output to increase fiscal revenue, with September production in the country close to the post-Soviet peak of 11.48 million barrels per day set in 1987. Moreover, the Organization of the Petroleum Exporting Countries (OPEC), which provides one-third of the world’s oil, has surprisingly broken from its tried-and-true pattern of cutting production in the face of falling prices; instead the organization lifted output to 31.06 million barrels per day in September, the highest level since November 2012, according to Reuters reports.

On the other side, oil demand forecasts have been largely subdued thanks to the faltering pace of global economic recovery and the shale gas revolution in the US. Despite uncertainties surrounding shale gas development, US demand for oil has fallen noticeably over recent months. Statistics show that only 30 percent of the country’s oil consumption needs were satisfied by imports, down from 60 percent in 2005.

In the meantime, the world’s other top two oil consumers, Europe and China, have also recorded sluggish demand due to their own slowing economies. Because of this, OPEC and several other organizations have already lowered their expectations for global oil demand several times this year.

In addition, the strengthening US dollar has also contributed to falling oil prices. Theoretically, an appreciating greenback would hurt demand for commodities by making them more expensive for holders of other currencies. The US Federal Reserve announced Wednesday the exit of its monthly bond purchasing program, indicating rising confidence in its economic recovery, which is expected to further boost the dollar in the near future.

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News from the USTR: TTIP Update from Brussels

Today, the United States Trade Representative Michael Froman addressed the Transatlantic Trade and Investment Partnership during his stay in Brussels.

Highlights:

“Today, the U.S. and the European Union are each other’s largest economic partners, with $2.6 billion dollars’ worth of goods and services flowing between us each day. We invest nearly $4 trillion in each other’s economies, creating the world’s largest investment relationship. And more than 13 million people owe their jobs to the transatlantic economic relationship. The U.S.-EU economic partnership is second to none.

“But we know that we can do more. We can do more for economic growth. We can do more to create jobs. We can do more to strengthen rules-based trade that supports the entire global trading system.

“And that is precisely why we launched the Transatlantic Trade and Investment Partnership, or T-TIP. Together with the Trans-Pacific Partnership, or TPP, and the work being done at the WTO to negotiate a multilateral Trade Facilitation agreement, a plurilateral Trade in Services Agreement (TISA) and an expansion of the Information Technology Agreement (ITA), we see T-TIP as an opportunity to raise the standards, to introduce new disciplines and ultimately to strengthen the multilateral trading system.

Read more here.