The US-China trade confrontation has sharply escalated lately, while this past weekend’s G7 summit did nothing else than provide the opportunity for Trump to confess to “second thoughts” and for the other G7 leaders to tut-tut. But why should they even do that? If there is less US-China trade, shouldn’t there be more trade (i.e. sales) for other countries’ firms?

Well: yes and no. It’s complicated.

One the one hand there’s a recent piece from the main Dutch business newspaper, Het Financiële Dagblad (FD): Dutch firms profit from trade-war.” (Should be behind pay-wall, but when I tried it wasn’t; your mileage may vary.)

Yes, things are going swimmingly these days for Dutch firms in China, as the FD has discovered doing the rounds among the various commercial branches engaged there; there has even been a noticeable loosening-up of the usual bureaucracy. But note the top-performing sector: land- en tuinbouw (“agriculture and gardening”). There it’s likely there’s been a minimum in the way of winning over Chinese customers who were serviced by US companies before; it’s just a more-friendly Chinese attitude. As one expert remarks, “The Chinese would never say it out loud, but at this moment a lot of business [for Dutch firms] is proceeding faster and easier” due to the US-China tension.

A second sector that has benefited is that of suppliers to auto-makers; clearly there has been some snatching of contracts once held by American firms there. At the aggregate level, as shown by figures from the Dutch national statistical office, first-half 2019 has seen substantial growth in Netherlands exports to and imports from China.

The second week of Champions League last-16 action kicks off tonight, with a pair of very juicy matches indeed: Bayern Munich at Juventus and Barcelona at Arsenal. So maybe it’s the appropriate time for a little reminder about one of that competition’s chief sponsors.

Gazprom has paid big to associate its name with Europe’s leading international football club competition for a number of years now, and at every commercial break you’ll see an elaborate paean to it on your TV screen, generally in cartoon form and accompanied by a medley of leading tunes from Tchaikovsky. The thing everyone must remember is that Gazprom is not really a company in the conventional sense of that term. Rather, it is a component of the Russian state, tasked with making money, for sure, but also with carrying out Putin’s strategic objectives. Those have included, multiple times, forgetting about money entirely and cutting off gas supplies to entire countries – generally in mid-winter, of course – to make them knuckle under. Among these victims have been the Ukraine, of course, but also those EU countries, generally to the East (e.g. Bulgaria, Slovakia, Estonia, Finland), which have not had the resources or time to make the considerable infrastructure switch from the heavy dependence on that gas that they had during Soviet times.

So you can watch those playful cartoons of serious-looking employees manning gas pipeline control rooms, etc., flick by on your screen, but you need to remember: this is a “company” that would be glad to simply let you and your family freeze; all that it takes is for Putin to give the word. The sad fact that it has been able to do that reflects the absence of any common EU energy policy. Yes, the Commission has certainly been aware of the problem, and of course there exists a Directorate-General for Energy within the Commission, now headed by the Slovak Maroš Šefčovič. And in one sense it’s reassuring to read (in Dutch, from Het Financiële Dagblad; behind paywall) that the Commission recently concluded from a study that “well coordinated actions by member-states, above all in case of emergency, can considerably increase the security of [natural gas] delivery.” (On the other hand: Why did they find this out only recently? And what are they going to do to make that conclusion a reality?)

Fortunately, other developments have occurred which – often independently from anything the Commission might have done – serve to lessen this dependency on Gazprom and Russia. For one thing, demand for natural gas is declining simply due to increased energy-efficiency and alternate renewable sources of energy that are coming on-line. And there are other developments, too, discussed in a separate article not stuck behind a paywall (although it is in Polish):

“American natural gas arriving on European shores forces Gazprom into a battle for the market and for investors.” Yes, the Americans are coming to the rescue again, specifically the shale-oil companies which, via fracking, have unlocked considerable new supplies of both petroleum and gas there on the North American continent. Mighty kind of them, you have to admit, namely to pollute their own ground-water and a as result have so much gas coming out of local household water-taps that you can light a match and explode it, all just to produce some more fossil fuels to sell. But the business of America is business. (more…)

As I mentioned previously, the main tone I could detect within the European press in reaction to the announcement last week of the specific personnel and assignments of the new Juncker Commission team (to take office – barring any problems with confirmation before the Parliament – on NOV 1) was along these lines:

And with that I thought that the topic was exhausted. Not quite, though: one of the Brussels correspondents of the leading Dutch business daily Het Financiële Dagblad, Ulko Jonker, points out a particular aspect of that “fox guarding henhouses” syndrome that I had not realized, and that is too full of import to be left unmentioned. (Link is behind a paywall with a limited number of articles free per month for non-subscribers.)

Right then, Jonker’s list of EU Commissioner oddities includes:

• The British commissioner in charge of bringing London to heel with Brussels’ financial regulations;
• “[T]he Greek who has to carry out migration policy” (Actually, this was very smart: Greece is one of the main EU member-states charged with holding the line against illegal immigrants – principally along its short border with Turkey – so why not put the Greek Commissioner in charge?);
• “[T]he Hungarian who can explain about citizens’ rights” (Aha, I did note this puzzling paradox in my previous post, it seems at least some elements of the Fourth Estate are taking note of Hungary’s creeping authoritarianism.);
• “[T]he German illiterate who is responsible for the digital economy” (Harsh, but again this is essentially what I remarked on in that previous post.); and
• “[T]he Cypriot who will do ‘crisis management'” (That would be Christos Stylianides, of Humanitarian Aid; I don’t get why he would not be up to the job.)

Jonker’s explanation for all this is up top in his lede: “The biggest difference between him and his predecessor José Manuel Barroso is that Jean-Claude Juncker has a sense of humor.”

Frenchman’s Collision Course with France

It’s not always so funny though, because surely the biggest paradox among the new Commissioners is France’s Pierre Moscovici, put in charge of “Economic and Financial Affairs, Taxation and Customs” – otherwise known as the “budget czar” since Moscovici’s DG is in charge of monitoring member-state budgets to ensure they adhere to the 3%-of-GDP-or-less standard – and to start proceedings for fining the EU government in question when its budget does not. And yes, it is France that looks set to be the greatest offender along these lines, with a projected 4.4% deficit for this year. (more…)

There are some people – or institutions – that can’t help but look at the bright side of things. Over in Eastern Ukraine, seven European military officers working for the OSCE have just been put out for display at a press conference, unconvincingly insisting “We are not prisoners of war, we are guests of [Sloviansk] Mayor Ponomarev”; the Economist writes [subscription required] “Every day, incident by incident, the situation is deteriorating and moving towards major armed conflict of one form or another.”

Not to worry, though, at least if you read the Netherlands’ leading business newspaper Het Financiele Dagblad: The Ukraine crisis also has its winners. The lede:

The drift since the crisis in the Ukraine has been: Europe has to become less dependent on Russian gas. Who can profit from that?

Oh, a number of organizations can profit, and journalists Gijs den Brinker and Mathijs Schiffers have the run-down. (more…)

The financial travails of the Greek government go on, and will do so for some time even in the best of scenarios. So at least one thing is fixed: simple arithmetic quite clearly shows a noticeable imbalance in that country’s public financial resources and the amounts it customarily spends. Unfortunately, all other considerations surrounding that predicament and how best to address it seem to be stuck in a kaleidoscope-like flux.

Take for example the blogpost found on this site a couple weeks ago: there, resort to the IMF to assist Greece out of its bind was unthinkable, and the proposed solution – suggested by no lesser figure than the current German Finance Minister Wolfgang Schäuble – was instead to set up some sort of Monetary Fund within the institutions of the European Union. You can scratch that now; according to no less than Bundeskanzlerin Angela Merkel (who of course outranks Schäuble), IMF involvement would be perfectly OK and, if there is to be some sort of within-the-EU Monetary Fund, then it certainly won’t be able to appear in time to have anything to do with solving the Greek case. Oh, and another point I made was that the preferred technique so far of EU heads-of-government for dealing with the Greek situation was simply to issue declarations of support without actually doing anything to back them up, and that is also no longer completely true. Mind you, it’s not that the EU leaders now are trying to back them up; it’s that some, such as Bundeskanzlerin Merkel, don’t even want to talk about it any more, including shutting Greece’s problems off of the agenda for another EU summit meeting scheduled to be held next week.

But it gets even worse, as we see in an article in today’s issue of the Dutch business newspaper Het Financiële Dagblad. Merkel now is willing to countenance IMF involvement, but Nicolas Sarkozy still insists publicly that that is out of the question. Furthermore, the French President (together with Jose Manuel Barroso, Chairman of the European Commission) does want to talk about Greece at next week’s summit, at least to the extent of issuing another ringing declaration that the country will not be let down by its EU brother-states – thereby accomplishing a lowering of its borrowing costs, at least for a while.

Unfortunately, it seems that an IMF team has already been called in to take a look at the Greek situation, according to this HFD piece. Plus, the suspicion remains (although it is mentioned elsewhere, not here) that Sarkozy mainly wants to shut out the IMF in order to deny credit/glory to that organization’s head, Frenchman Dominique Strauss-Kahn, who might well run in 2012 to replace Sarkozy as French president. But this now-open disagreement on fundamental aspects of how to deal with the situation between the heads of the EU’s two leading states can only worsen investor confidence in Greece’s finances, and thereby the situation as a whole.

Here in the Netherlands we also have a prominent financial sector, dominated by a handfull of internationally-operating banks (e.g. ABN Amro, ING, even Rabobank) for which the value of the assets of any single one alone exceeds the national GDP. It follows that developments here over the past six months or so have more-or-less echoed the more-prominent financial travails in, say, the US or Great Britain: overindulgence in promising new asset-classes – often involving American real estate – which then turn out to be “toxic,” concerns over solvency, government injections of capital through one means or another, and in general some rather poor performance on the part of financial executives when it comes to sober risk analysis and maintaining their institutions’ very financial viability.

What is also not missing from the Dutch experience is the phenomenon that has gotten much of the American and British public exercised in recent weeks, namely that of financial executives walking away with huge monetary bonuses in the face of what is commonly understood as the meaning of “bonus” (“paid over and above base salary to reward extraordinary performance”) and the glaring absence of any merit that would justify them. (more…)

It’s coming on Christmas, but it’s also coming on the end of 2008, and so it’s time to look ahead to 2009. Economically, things do not look good. The leading Dutch business newspaper Het Financiële Dagblad has already picked up on remarks from Vice President-elect Joe Biden that will be televised later today on This Week with George Stephanopoulos that the US economy is in danger of “absolutely tanking.” (You can get the run-down in English plus a brief video of their interview here.)

Right, but what about closer to (the €S) home, what about the Netherlands’ economy? Also from Het Financiële Dagblad, we get some good news straight from the Dutch premier Jan Peter Balkenende that he is confident that the strong character of the Dutch will get them through the hard times. (more…)

From the leading Dutch business newspaper Het Financiële Dagblad comes a report about an encouragement pronouncement from current OPEC chairman Chakib Khelil (OPEC Chairman Khelil Sees Oil Price Sharply Falling).

According to Khelil, the price-per-barrel of over $140 that we recently saw for oil was “abnormal.” (more…)

We’re immediately back today to the “Polish guest-worker” theme, and this time in an established EU-land where the gates for such labor have not been thrown wide open with last May’s accession of the ten new member-states (logical, as that’s going to be the case for every “older fifteen” member-state we talk about other than Ireland), namely the Netherlands. Nonetheless, it seems that the spectre of Polish labor is making its presence felt here, too, as Martin Visser reports in one of those rare on-line articles from the leading Dutch business newspaper, Het Financiële Dagblad, that you’re allowed to read in exchange for free registration on the site (Union Fears the Invisible Poles). (more…)

You know that has to be true when the hardest-liner on the side of making France pay a fine for its flouting of the 3%-of-GDP budget deficit limit, Dutch finance minister Gerrit Zalm, finally throws in the towel. That he is now doing so is clear from an interview published in today’s Het Financiële Dagbald (subscription required). The scheduled meeting next Monday evening of EU finance ministers, long thought to be a setting for confrontation, will now merely be a formality as the lenient stance proposed by EU Economic and Monetary Affairs Commissioner Perdo Solbes is approved. Even though for him personally Monday’s meeting is sure to be, as the article puts it, “a long and unpleasant session,” in the end Zalm himself might even vote to approve Solbes’ proposal, if only to head off even more-lenient treatment of the French that some may use that occasion to advance. (more…)

OK, we’ve heard from the sanctimonious but idealistic Danish Left. (That’s the entry from earlier today, below; with the zany way that weblogs work, you get to read that afterwards, unless you switch over there right now.) Now for last week’s Madrid Conference of Iraqi donors from the cynic’s point of view – what you could call the “pay-to-play” outlook. (That “pay-to-play” concept I’ve now run across in connection with the California recall election, and just recently having to do with the upcoming election for Philadelphia’s mayor – which I am definitely not interested in. You should get a good idea of what it means from what follows.)

Let’s start with Die Zeit . . . (more…)

One big piece of current news in the Netherlands is the release of a comprehensive report from the Centraal Planbureau (CPB) on “The Future of Europe.” That “Central Plan Bureau,” despite its name, does not occupy itself with any sort of economic planning – i.e. in the socialist sense (as in the old Soviet Gosplan) of presuming to choreograph the national economy by calculating how that economy should work to achieve given national objectives, and then issuing instructions to economic actors about what they are to do. Rather, it is roughly the equivalent, say, of America’s National Bureau of Economic Research, except that the CPB is not private but rather publicly-funded, organizationally being part of the Dutch Ministry of Economic Affairs. Nonetheless, the CPB claims that it is quite objective and independent in the research it performs and conclusions it draws, even if it is formally part of the government.

Back in 1992 the CPB produced, and released to the public, its “Scanning the Future” report, a long-term study of the future of Europe and of the Netherlands based upon a general-equilibrium economic model it had developed, called “Worldscan.” “Scanning the Future” was built around four different long-term scenarios of how the future might look, depending on what assumptions you adopted. Like that earlier report, the just-released “Four Futures of Europe” – written in English – is also constructed around four long-term scenarios. (more…)

Can I write some more about that last week’s “European Council” (i.e. summit of European heads-of-state/government) in Brussels? There is at least one loose end to tidy up – interesting enough in itself to prompt an essay from Die Zeit.

There were a few other things that happened in Brussels, besides Jacques Chirac representing Germany for a day, and everybody reciting for the umpteenth time their stand on the draft Constitution. For one thing, the assembled leaders also approved the creation of a new European agency to coordinate immigration controls at the EU’s expanded borders. But of greater interest is the “growth initiative” that also constituted part of the summit’s business. That was mainly what the EU leaders talked about Thursday afternoon, after their no-progress talks on the draft Constitution of that morning. (more…)

If the Dutch on-line press is any indication, opinion in the Netherlands over the results of the just-completed European summit in Brussels (which was supposed to make progress towards a final European Constitution) is no higher than in France (covered in the following entry). Indeed, these articles offer some key updates to developments. (more…)