China, Europe and the others

This is the wrong time to behave like a bully in the international arena. The Chinese Foreign Minister, Wang Yi, seems to know it. He appealed for a better relationship between his country and the US, now that we are at the door of a new Cold War, to paraphrase what he said. The words that call for cooperation instead of competition are the right words. He for sure is aware of that. And I am sure he is also mindful that for the time being the relationship with the US will not improve. Actually, it is possible to forecast deterioration. That is certainly not good. But he and his fellow leaders in Beijing have a chance to show that they mean business. They can establish a better relationship with the European Union. The Europeans are ready for that if it is a more balanced and equal one. Let us see if the Chinese are also willing. That could have an incredibly positive influence on the trade, global affairs, and the image of China in the world. There are negotiations going on between Brussels and Beijing. They should be concluded by September and send the right signal.

My friend gets special treatment

It is a serious mistake to follow double standards when you are leading a country. You cannot be exacting for some and permissive for others, particularly when it is a political friend that is overstepping the red line. That fundamentally undermines the leader’s credibility. Once lost, it is not easy to recuperate.

New disparities in a changing world

People were queuing this afternoon to get into the most expensive shops in a well-to-do area of Brussels. The other shops, normally patronised by the medium-income people had almost no customer. And then, there was this incredibly sad sight of closed restaurants and bars and a big hotel, a huge tower, completely empty. For me, it was a vivid example of how the crisis is seriously affecting some segments of society whilst others are just returning to their old habits, as if the past were back. But it is not.

The realism and the utopia

Today I came back to a statement that I used to make when discussing with overly ambitious but unrealistic people. I would tell them that during my walks in the bush, and I did many in distinct types of bushes, I could see that the baboons would go for the lizards. At a different level, the wild dogs would do the run, with extreme efficiency, to catch the impala. And the lions would focus on the kudus, a much bigger animal than the poor lizard or the gracious impala. No baboon would make any effort to do the impossible and try to catch a kudu.

The ladies are in charge

Harvard professor Carmen Reinhart has just been appointed as the new Chief Economist at the World Bank. The Chief Economist at the IMF, Gita Gopinath, has also come from Harvard University. Both ladies have collaborated with Professor Ken Rogoff, from the same university. They might all think alike which is not the best approach in times of crisis. Diversity and contradictory opinions are much more creative, at a time when we have to imagine a new economic order. But they are all for debt forgiveness when the challenge is too big to be managed, which is not a bad approach. And they have studied financial crashes and deep national crisis extensively.

People say that when two economists discuss there are at least three divergent opinions. In this case, let us see if both ladies can bring fresh ideas to their institutions. The IMF and the WB will be very much in demand in many countries in the post-Covid situation. They must propose an approach that goes beyond austerity and keeps investments flowing across the globe, particularly in the direction of poorer countries.

Combating the xenophobia

The crisis created by the pandemic and the way countries have responded to it, particularly by closing the borders and banning international travel, are fertile soil for the xenophobic sentiments to grow. One of our challenges is to fight that. We cannot allow the narrow-minded and xenophobic ideas to win the day. The world would be a terrible place if we let prejudice and chauvinism to take control.

The European recovery

Today, Chancellor Angela Merkel and President Emmanuel Macron stated they will advocate for the establishment of a €500 billion recovery fund. In their view, the money should be raised in the international capital markets by the European Commission, as a common pot aimed at helping the Member States seriously affected by the Covid-19 pandemic. The disbursements would be approved by the Commission, following the criteria that are yet to be established. It would also be the Commission that would have the responsibility to pay the markets back, meaning, the principal and the interests or dividends.

I am not sure this will work. Austria’s leader, Sebastian Kurz, has already voiced strong objections to such an idea. He does not want to see a recovery mechanism that is dispensing grants to the States. He is for loans. Loans make the leaders a bit wiser than just getting free money, he seems to believe. We can expect that other voices will join his own.

In view of this, my position is that most of the money should be channelled to fund joint multinational projects that would reinforce the European system and would have an impact on the EU’s strategic self-sufficiency in matters of public health, bioresearch and other critical emergency response mechanisms. The pandemic has taught us that the health sector is vital, not only for medical reasons but also because of its impact on the functioning of the economy. We cannot no longer talk about strategy without including the strengthening of our common capacity to deal with epidemics, critical hospital equipment needs and essential medicines. Money should also be spent on common logistics and rapid deployment networks.

It is also clear that the recovery fund must be operational soonest. There is urgency. We are not yet at the end of the crisis. The intensity of the pandemic can have a new surge at any moment. We must be better prepared this time. In addition, the economy of the most affected countries needs resources that would encourage new investments, in greener areas, and in matters that address the issues of income and social security. The priority should go for those projects that are fundamental for a stronger Europe and that are not too much dependent on resources and means of transportation we do not control.

This is a time to think differently. The fund, if it is thoughtfully planned and wisely administered, can become a tool for transformation and progress. The alternative is for it to become a reason for further divisions within the European space. Nobody wants that to happen.

Times of change

We all agree the economic recovery is pressing. Truly, we are confronted with extreme urgency. There are too many people without income, or with a reduced one, too many companies close to insolvency, plenty of sectors working below capacity. The economy is seriously disrupted, in many countries, including in the EU states. Speed is, therefore, the key concern, in the minds of the politicians as well as in the private sector.

Then, a number of intellectuals have come forward and said this post-pandemic time is the big opportunity to change direction and make the economy greener and people-friendly. I agree with their proposals. They are not all of them entirely realistic, but they are well-meaning and the right type of utopia we need to make this world a better place. It would be a mistake not to give attention to them.

There will be some changes, for sure. More people will be working from home, there might be less commuting, and we will witness a lot of pressure from the politicians for the entrepreneurs to bring home some of the investments made far away. There will be a new impetus to move on to a greater share of renewable sources of energy.

But the urgency might upset some of these proposals. Jobs, investments, and revenue generation will be the key criteria for decision-making. And they might not coincide with the new economy we would like to see. But there will be progress in that direction. People are coming out of this crisis with a different approach to life and their own priorities. That is why I think it is important to keep insisting on progressive modifications to the way we produce and trade goods, and a new approach to the worth of some services the pandemic has shown to be of essential importance to our daily lives. 

  

There will be a process of change. Not as much as we would like, but we should not give up. This is an appropriate time to talk about a more balanced world.

The trend is negative and must be stopped

Their power resides on the capacity to build collective fear. In different parts of the world, some governments are taking advantage of the pandemic to create extreme anxiety among their people. Then, they make sure, through all kinds of media platforms, that they are perceived as very decisive, able to take tough decisions to save as many lives as possible. Some of those measures go far beyond the necessary, from a public health perspective. They basically have a political purpose, to strengthen those in power. In addition, such radical measures allow the governments to hide the weakness of their national health systems, their extremely poor capacity to respond to emergencies. The truth is that many governments are just inept and cannot find the balance between an adequate health response and the mitigation of poverty. That incompetence and the political dividends they expect to draw from tough decisions are just ruining their countries. We are going back to a world that will combine despotism, increased inequality, and desperation. Can we accept that trend? The answer must be clear and strong.

Power and dominance

In responding to a friend that lives in China, I said I am also genuinely concerned regarding the growing tension between his country and the US. We do not believe there will be, in the foreseeable future, an armed confrontation between these two powers. We both know that today's wars are fought in diverse ways, but no longer through the classical approach of bullets and boots on the battlefields. Big countries make use of other means to disrupt and weaken the adversaries. The armies are for smaller fights and to show off. We live in a more civilian world, and we fight with a variety of tools that are available in a multidimensional toolbox. Such means can be very destructive as well, with a wide impact on a number of the things, including on the livelihoods of many people.

And this time the conflict is not about ideology, like during the Cold War, but about what each side sees as its vital national interest. In addition, history has taught us that the dominant power perceives the emerging power as a major menace. That is the trigger. And all this makes the confrontation move way up to a more dangerous level, more multifaceted and certainly far more complex to mediate. Moreover, it brings in other countries that have no choice but end up by being forced to take sides. They will also be dramatically affected by the dispute.

In such a dangerous context, my view is that we should keep talking about international norms and cooperation, as well as about clairvoyant leadership. In all truth, the leadership thing is the key issue. It can bring us back to a more reasonable world or take us to the abyss.