The times, in Europe, they are a-changin’

From The Hill

afd_germany_1The German elections are over, and for a brief moment, it looks like all is stable. But make no mistake, this is only the eye of the storm. Germany has already shifted away from the current leadership.

German Chancellor Angela Merkel stated that she has done nothing wrong. While that is true, there are many things she hasn’t done right. Society and its problematics around the world have moved on, circumventing traditional politics and politicians.

From a long-term analytical business perspective, politics requires a new direction. The parties in power may elegantly gloss over losing 10 percentage points in voter support. They talk about how the voters have made a mistake; how all it takes are better explanations and how all these inequities will be rectified shortly. How wrong they are!

Perceptions change. Research by Mintel reports that many consumers now judge soap bars to be a haven for bacteria. Similarly, voters now judge political insiders to be parasites to progress. Our work, which systematically tracks business behavior and expectations over the past 30 years, indicates new core values for voters.

Traditional dimensions of politics and individuals have four key dimensions, illustrated by the four legs of a stool. First is competition, which determines the approach to progress — one party achieves “the winner takes all,” others meekly fall in line for the droppings from the table.

Second is the establishment and management of risk, where steely nerves and occasional disasters determine lifestyle. Then comes profit, which accounts for success in tangible form. Finally, the fourth leg of the stool is property rights, which assure innovators of their return on investments. There now is a simultaneous splintering of all four legs, which inhibits successful conduct of direction.

A new stool with new legs has recently emerged, these changes are crucial in understanding society. First is truthfulness. Firms and voters detest fake news, insincere excuses and thoughtless comments. When the shadows of unreality obscure one’s outlook, exposed people extract a penalty.

Second is simplicity. Employees and citizens want to understand how relationships work and interact. Without that, it is hard to provide or accept truthfulness. Then there is participation, permitting insight beyond simple observation and offering an active role in shaping the conditions which confront one’s life.

The fourth leg is responsibility — going far beyond customary short memories and the traditional pleading of ignorance. The new drive says: “We are here and, if not, we are coming.”

Just as in America, European voters are beginning to be energized by the new legs of the stool and their new criteria. They expect new directions that negate tradition. Judging by shifts in Britain and Spain, stability in Germany may not be that assured.

It’s also not just the money or even economic growth that matter most. Known quantity may give way to even more quality and a rise of local criteria. “Merkelism” will be substituted for Mercantilism. German economic power may be repulsed by regions seeking to regain their cultural self-determination.

The U.S. emphasis on re-shoring, and the enhancing and encouraging of local production is likely a portent of the new Europe, which perhaps reduces Germany from the “King of Exports” to a mere prince. More export-supporting banks will permeate Europe, accompanied by increases in protectionism.

There are still many options for tariff and non-tariff barriers. Within, but particularly outside of the EU, one can expect growing restrictions in both capital and labor flows and a rise of sanctions. Vested interests will become more visible, and provide new decision frameworks.

All that requires a new team. Low-profile politicians will inexorably move onto the new pedestal. Andreas Pinkwart (FDP) and Karl-Theodor zu Guttenberg (CSU/CSIS) are two who get it. Bob Dylan may have written the song half a century ago, but now more than eve,r we get key guidance from, “The times, they are a-changing.” The change is with us already — the new stool will give us new rules of success and new directors.

Michael Czinkota (czinkotm@georgetown.edu) teaches international business and trade at Georgetown University’s McDonough School of Business and the University of Kent. His key book is “International Marketing” 10th ed. (with Ilkka Ronkainen), CENGAGE.

The US and Europe demonstrating unity on energy security

Bart Marcois

ukraine_flagCalmly in July, a party leader from the Czech Republic visited Washington to hold discussions with the White House and Republican members in Congress on the basis of shared values, including peace in Europe. At the recommendation of senior national security officials, he has reached out to his neighboring countries, to the east and the west. His aim: to link Europe and the U.S. in a pragmatic formula to secure energy independence in Ukraine and provide economic opportunities for the Czech Republic.

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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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