Portugal on the street

Large crowds marched today in the key cities and towns of Portugal against the austerity measures the government is implementing. The key feature of these manifestations was their peaceful nature. People have shown, once more, that they can be on the streets and behave responsibly.

Many of the protesters could be defined as middle class families that are going through a process of impoverishment. For many of them and for many years their living standards were based on a fiction: that the country could afford a level of public expenditures that was well beyond the means of the economy. With the international financial crisis this fiction could no longer be sustained. The state could no longer borrow in the international markets at low rates of interest. To be able to finance the public sector and adjust spending to the real possibilities of the economy over a short period of time, the state had to look for funds coming from the IMF, the ECB and the European Commission. These monies came with strings attached, as expected. And that hurts. It hurts even further because the government has realised – but cannot explain it properly and clearly, for reasons that are beyond my understanding – that the long term sustainability of public expenditures calls for further cuts, particularly if one takes into account the fragility of the economy and the very low rate of productive investment that has been recorded so far.

In a country where the state was the true engine of the economy – unfortunately the private sector had not been able during the last two decades to take off and expand; it remained too dependent of state projects and orders and largely linked to political patronage – if public expenditure goes significantly down most of the economy tends to collapse.

The point is to get as many investments from outside as possible. My hope is that today’s popular civism be perceived by those potentially interested in investing in Portugal as an encouragement to do so. 

Honduras: the homicide country

 I just noticed, after speaking at length over Skype with a former senior colleague who is now retired and decided to live in Honduras, that the United Nations Office on Drugs and Crime ranks that Central America nation as number one in the world in terms of its Homicide Rate.  Indeed, Honduras averaged 91.6 murders per 100,000 people in 2011. To put this number into perspective, the United States has a rate of 4.8 murders per 100,000 and the UK’s rate is 1.2.

All of sudden, I got worried for my friend. 

On Greece: what should we conclude?

On Greece, from today's Eurointelligence daily report:

Confidential troika report reveals significant delays in tax collection

Greece missed key revenue targets by a wide margin last year, triggering concern over whether the government is fully committed to cracking down on tax evasion and graft, the FT quotes a confidential troika report leaked to the Greek press. The collection of overdue tax raised only €1.1bn in 2012, compared with a target of €2bn, while unpaid tax increased by 10% to €55bn, equivalent to almost 30% of national output. Two years after the launch of broad-ranging tax reforms, Athens each year still collects less than 10% of total assessed taxes on personal income and corporate profits. Thousands of Greek company owners and self-employed professionals routinely contest their assessments through the courts waiting for the finance ministry to grant tax amnesty settling for a tax bill cut by at least 30%.  The official Greek translation of the report, dated January 31, was accessible on Thursday on the websites of several Athens newspapers.

To know when it is time to exit

It would be unfair to ignore Pope Benedict XVI on the day that marks the end of his papacy. From a leadership point of view, Benedict XVI will remain as unforgettable example. For me, the ultimate test of good leadership is the exit one: a first-class leader knows when time to exit is. 

Riding on the Italian elections

Some opinion makers here in Brussels and in some other European capitals are taking advantage of the Italian election results to openly express their dislike for the German political elite. It is amazing to see important people coming out of hiding and placing the blame on the Germans for the anti-EU feelings some voters are expressing left and right. 

Today I got a mail from the Executive Director of a leading Think Tank that keeps its doors open because of generous funding received from the European Commission. The man was calling my attention to an interview that a French TV had broadcast early in the morning. In his opinion, the interviewee – a prominent Parisian  economist – had been able to explain that all this popular opposition to the EU had gained strength because the German government had imposed austerity all over the place in Europe.

I watched the interview and was not convinced. Then I read a few media pieces here and there attacking austerity. It is now very fashionable as a theme. I looked for alternative suggestions but found no credible answer to the question. The only avenue that made some sense was about a different policy approach to public financing by the European Central Bank (ECB). The Bank should be more forthcoming with resources. But then one key question remained unanswered: how to get the necessary consensus among the member states about the ECB change of policy?  

Italy's dramatic move towards the future

In view of the election results, many analysts of the Italian political scene think that Beppe Grillo is the true winner and the king maker. I beg to differ. This is an election without winners. To let Grillo play the role of king maker would be a strategic mistake. His support – tacit or explicit – to a centre-left led government would be terribly unstable. Sooner or later such a government would collapse. Then, new elections would have to be called. And these elections would bring Berlusconi back to power. Let’s have no doubt about such a scenario.

I trust Bersani, the leader of the centre-left party PD, understands this.

That’s why I would agree with those who say that the country looks “ungovernable” at this stage. But a political impasse is no solution either. In my opinion, and I say this with trepidation, the centre-left has to reach out to Berlusconi party and try to form a grand coalition. It might not last very long. But it is the only way to compromise both sides in a process that will certainly be painful. Italy’s future – not to mention the chaotic state of the country at this juncture – requires such a dramatic approach.

Clowns and Mafiosi

At this hour, the results of the Italian general elections are not yet clear. But what is obvious is that a large segment of the country’s population leaves in a strange planet. Those who voted for two men that are far from being serious – Berlusconi and Grillo – have not yet realised that Italy needs a deep transformation and modernisation. Populism and cronyism of the Silvio’s fashion are just the continuation of the road towards bankruptcy, more corruption and chaos. Grillo’s anti-establishment platform will, in the end, lead to almost the same results: bankruptcy, chaos, street politics and political instability. 

Italy is an example of what can happen to a major economy when the rule of law is replaced by the rule of political favouritism and the rule of the mafia groups. Let the situation go on for decades without being tackled and see what you get: clowns and Mafiosi being voted into office. 

One single Europe...

In 2012 European car sales in South Korea have increased significantly, as a result of the Free Trade Agreement signed the year before.  Volkswagen’s sales recorded 48% growth. Audi’s figure, plus 46%. BMW’s growth was 21% and Mercedes –Benz, just over 4%.

Curiously all these makes come from one single country within the EU…

What about the French, Italian, Swedish and other car makes? 

South Korea in the EU

Yesterday I could notice how strong the group that represents South Korea’s interests is in Brussels. They are very well connected with the European External Action Service and with the Universities of Brussels and Leuven as well as with other think tanks. It is true that South Korea is considered a strategic partner of the EU. It is also true that Europe is a bit confused sometimes and calls a number of countries “strategic partners”, which makes the concept weak. EU cannot have a strategic partner in every street of the world, it makes no sense. Strategic for what?

Trade is a major area of focus for the partnership between the EU and Korea. A Free Trade Agreement has been under implementation since July 2011. That has seriously boosted the exchanges between the two sides. But, as expected, on the European side it has been Germany the main winner of the new opportunities.

On the political front, South Korea would certainly like to see the EU playing a more vigorous role towards North Korea. The fact of the matter, however, is that Pyongyang is far away from Brussels’ limited outreach in East Asia. EU is no real power player in that part of the world. 

Afghan women and human rights

Afghan woman leaders are very worried about the country’s situation post-2014. They have very little or no information about the on-going secret dialogue that is gradually taking place between the Karzai people and the Taleban leaders and they fear that the priority that is given to peace at any cost will have a very heavy cost as far as women’s rights are concerned. They believe that there is a trade-off on the table that will buy the Taleban in and will place the women out…

The women are also very surprised that the big partners of Afghanistan seem more interested in “sustaining” peace – a way of showing that the many years of military intervention have achieved durable results and that the operational assistance was therefore worth the sacrifice and the money – than on protecting the human rights gains.

These are very legitimate concerns. They are even more justified when one looks at President Karzai’s increasing silence about women's issues.