Time for exceptional leadership to step up

This is a time of great anxiety. It’s a global challenge. It would require global political leadership, men and women in decisive positions of authority that would come together and would address the crisis with a single voice. It is not enough to have the G7 or the G20 finance ministers talking about debt relief and access to tremendous amounts of theoretical money. It is also not enough to get statements from the IMF, the WB or the WHO. Even the UN Security Council, if it could agree on a resolution, that would be good but insufficient. We need the key heads of State and government to agree on a joint declaration that would be some guide of roadmap out of the crisis. It would send an exceptionally important message of togetherness, cooperation and hope.

Unfortunately, we are very far from such a common position. The world is leaderless and more fragmented than ever.

If we can’t have a global message, why don’t we try to agree on a common European position at the leadership level? Is it too difficult to formulate a joint way forward, that would be larger than just talking about the post-crisis recovery, something of a shared vision about the kind of European society we would like to build together, after such a unique test?

The moment calls for leadership that can unite people and envision tomorrow’s world.  

Lots of billions lost to flu

Today, we are challenged again to reflect about resources, availability of wealth and how vast amounts of money can be spent wisely or just evaporate. It is also a call to reflect about priorities, decide on the appropriate ones and how to fund them. More concretely, all this is about uncertainty and its impact on capital markets, on short-term decisions and, in the end, on the minds of people.

Today’s uncertainty is about the coronavirus.

More concretely, almost every stock in the STOXX 600, the largest European share index, are trading since this morning in negative territory, in the red, as the specialists say. This represents around 180 billion euros the investors have lost during the day, just today. This is about 2% of the entire capital invested in those companies. But it is a lot of money that has faded away.

The investors are pessimistic about the impact of the virus and the capacity to control its transmission. A friend from the East Asia region told me that, in the current state of world affairs, “when China sneezes, the rest of the world catches the flu virus!” It is not exactly like that. But for sure the Europeans that negotiate in the capital markets got high fever today.

IMF and the EU's ambivalence

The best people that could compete for the leadership of the IMF, following Christine Lagarde's departure, are not from Europe. They are from Mexico – Agustin Carsten, who is currently the General Manager of the International Bank of Settlements –, from Singapore –Tharman Shanmugaratnam, Chairman of the Singapore Monetary Authority and Senior Minister –, and from India – Raghuram Rajan, former Governor of the Indian Central Bank.  These three are head and shoulders above the names the European are putting forward as their candidates. In a better system of global governance, one of them should be the next Managing Director of the IMF.

But, again, it will be a European. This has been the game for the last seven decades. The US gets the top job at the World Bank and Europe goes for the IMF. The European will be chosen because of EU’s political considerations – the balance between the different regions of the Union – and that will be it. It might end up by being someone competent. But certainly, if we give credence to the short list that is under consideration, an intellectual pygmy compared with the names I mention above, from other parts of the globe.

This would have been an opportunity for the EU to show to the world that it means business when it talks about the reform and the strengthening of the institutions of global governance. But the EU leaders do not want to walk the talk. They prefer a narrower view and respond to their EU internal politics first.

It is a bit of a shame, isn’t it?

Tax havens

Hong Kong is included in the just published EU list of tax havens for corporations. It is one of the 30 countries and territories enumerated.

The Hong Kong authorities have reacted with great surprise to their listing. And they are right as the territory has now in place a number of mechanisms to share information. It is true that the territory´s taxes are low. But that´s a political choice. It is part of the competition at the international level.

Many other countries have low corporate taxes and are not listed by the EU. Do you want an example? Look at the Delaware tax system in the US and you will see what competition means. Not to mention Luxembourg, an EU country with a very advantageous tax system for big companies. Luxembourg is not in the list…