Wednesday, 20 July 2016

Europe is just about the States

Blaming the EU is useless: decisions are up to governments, responsibilities are nationals

(click to enlarge)
by Emanuele Bonini

If things go wrong it is because of the Euro-bureaucrats in Brussels and their decision. How many time do we listen to complains like this? From Italy to Czech Republic, from the United Kingdom to Hungary, there are no leaders who abstain to blame Europe. In spite of what is repeated every day by every government, Europe is not a problem. The is not and cannot be the main root of all evil pure and simply because Europe doesn't exist. Blaming the European Union for difficulties, problems or decisions considered as useless or rummy, is nothing but a way to put domestic problems away. Here's a short guide to dismantles all the myths built up all around the twelve stars flag.

Europe is about member States. By definition the EU is an associations of sovereign coutries. Article 1 of the treaty on the EU, clearly states «the High contracting parties establish among themselves a European Union, on which the Member States confer competences to attain objectives they have in common». As a consequence, there are no central powers. The European is not a federation. Europe is a confederation, a league of States. Under a confederal regime, in contrast with a federal one, the central authority is relatively weak. This is the case of the European Union, where the European Commission - to be considered as the "government" - has no power of imposing laws. By treaties, the Commission has only the legislative initiative («The Commission shall promote the general interest of the Union and take appropriate initiatives to that end», article 17.1), which means legislative proposals can be blocked, modified, rejected at any moment. This is a further example of how EU decision are not imposed.

Tuesday, 19 July 2016

Europe growth on the downside path in light of Brexit

Up to half percentage point expected to be lost the Eurozone next year

by Emanuele Bonini

Brexit poses downside risks for European economic growth, said the European Commission in a report published today. The directorate-general for Economic and financial affairs made available the Economic outlook after the UK Referendum: a First assessment for the Euro area, document containing first consideration on potential effect of the British referendum. There is no doubt that the UK’s vote will affect not only the UK but also the rest of the EU economy «through several transmission channels», mainly uncertainty, investment, trade and migration. In the near term, the main impact will be a large increase in uncertainty, both economic and political. These factors are expected to slow private consumption and investment growth and to impact on foreign trade, mainly in the UK, but also in the other EU Member States. Simulations from the European Commission services suggest a moderate growth in 2016 (to 1.5%-1.6%) and in 2017 (to 1.3%-1.5%), meaning a cumulated loss of GDP in the range of ¼ to ½ a percentage point in the Euro area by next year and 1 to 2¾ percentage points in the UK. Figures changed compared to previous estimation. Before the UK referendum, GDP growth in the Euro area would have been expected to reach 1.7% in both 2016 and 2017. 

This is just a partial preliminary analysis. The situation is so unclear to make a definitive answer impossible, right now. As specified by the report, due to the lack of information about the new equilibrium after the UK’s exit, many elements have not yet entered the assessment but nevertheless constitute substantial risks to the outlook. The point is there are no information about the situation after the UK’s exit, such as trade patterns, mobility of goods, services and labour, policy responses. All these missing elements make impossible to specify what can happen. However it is possible to state the Euro area and the EU are already under pressure, as pointed out in the assessment of the European Commission. The banking sector, particularly in Italy, has come under significant pressure recently as the UK referendum result exacerbated pre-existing vulnerabilities and led markets to question the capacity of these banks to repair their balance sheets. This is especially true considering that «the weaker growth outlook makes it harder for many banks to improve their balance sheets by increasing capital and/or reducing non-performing loans».

Monday, 18 July 2016

FACT SHEET/ German banking system spillovers

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«Deutsche Bank could cause major systemic risks»

Latest in-depth analysis from the IMF showed all the critical point of German national banking system. Perhaps the real critical point for economies

by Emanuele Bonini

Although it is the Italian banking system keeping markets, analysts and politicians with bated breath, the real threat comes from Germany. According to the Financial System Stability Assessment of the International Monetary Fund, network analysis suggests «a higher degree of outward spillovers from the German banking sector than inward spillovers». This because of two reasons: «the highest degree of interconnectedness» of the biggest lenders of the country on one hand, and the fact that Germany’s financial sector plays a key role in the global economy on the other hand. The country is home to two global systemically important financial institutions, Deutsche Bank AG and Allianz SE, and troubles in one of them pose systemic risks. Consequently, Germany’s contribution to ensuring the success of the new European financial stability architecture is crucial for fostering its domestic financial stability and the success of the European reform agenda. Even though the problem is mainly for Europe but not only for Europe.

Premising that national credit institutions in the global list of systemically important banks (G-SIBs) have huge imbalances which pose a serious problem from financial stability, the in-depth analysis pointed out that the highest degree of interconnectedness can be found between Allianz, Munich Re, Hannover Re, Deutsche Bank, Commerzbank and Aareal bank, with Allianz «being the largest contributor to systemic risks among the publicly-traded German financials». Most important, «both Deutsche Bank and Commerzbank are the source of outward spillovers to most other publicly-listed banks and insurers». Furthermore, the IMF warned that «among the G-SIBs, Deutsche Bank appears to be the most important net contributor to systemic risks». Something true especially within the Eurozone, where structural weaknesses are already reason of major concerns. Of course size and importance of German economy put at risk non-Eurozone partners, too.

Friday, 15 July 2016

Eurozone exposed to great shock, risk sharing needed

Latest Quarterly Report called for further integration, in order to safeguard stability and growth

by Emanuele Bonini

Economic recovery in the Euro area is at stake, according to the European Commission. This in not the only problem for the single market, since the incomplete integration makes it weak and more unprepared to major challenges. The Quarterly Report on the EU member States with single currency published yesterday recognised that «the downside risks to the outlook are considerable». Both internal and external uncertainties are behind these risks. On one hand, on the foreign side weaker growth in emerging market economies and stronger geopolitical tensions «could affect Euro area economies more negatively than expected», according to the analysis. On the other hand, on the domestic side «the probably most important policy risk surrounding our forecast has materialised, namely the UK's vote to leave the EU», even if it's to early to say what can really happen. Brexit impact on the economic outlook has to be carefully assessed.

The situation appears to be less optimistic than expected. According to the financial services of the European Commission, in this environment of lasting uncertainty, the Euro area «is not yet fully prepared to cope with large economic shocks». In other words, EU member States using the single currency have not the great resilience they believe, and this is because a true monetary union is not there yet. In fact a major reason of this vulnerability is that «although domestic tax and benefits systems are quite extensive within Euro area Member States, the single currency area lacks an appropriate degree of cross-border risk sharing», wrote the Director-General for Economic and financial affairs at the European Commission, Marco Buti. «Further integration» is therefore needed. In fact, «elements of risk sharing contribute to a process of risk reduction», was stressed in the EU Commission document.

Wednesday, 6 July 2016

Farage to stay in EU for promoting new Brexits

Former UKIP leader will not leave the European Parliament. He will work «with parties and movements across Europe to help them get their independence»

(Nigel Farage)
by Emanuele Bonini

Nigel Farage the destroyer. After having led the United Kingdom out of the European Union, the fresh former leader of UKIP announced today he will continue his activity of dismantling the EU. «Eurosceptic feeling is spreading all over Europe. I will be working with parties and movements across Europe to help them get their independence», told reporters in the press conference held in Strasbourg. Farage made clear he will not leave his seat at the European Parliament. «I will continue my work in Strasbourg once article 50 will be triggered», said referring to the part of the Treaty on the functioning of the EU regulating the withdrawal of a Member State from the European Union. In other word, Farage wants to be in Europe to destroy Europe from the inside as only real saboteurs can do. He said it is sure after Brexit «nothing will ever be the same again», and his personal aim is now promoting new Brexits as it happened in the United Kingdom

«You destroy for the sake of destruction rather than build something for your citizens», replied the vice-president of the European Commission, Frans Timmermans. «Is this all you have to offer?» The answer is yes. Another MEP supported the idea of denying Europe. «I'm in favour of a Czexit» (the Czech version of Brexit), screamed Petr Mach from the eurosceptic Free Citizens Party, allied to UKIP in the EFDD group and close to Nigel Farage. The latter is still president of the EFDD group, and Petr Mach is one the vice-presidents of the same parliamentary group. Here we have Farage's personal mission to export the anti-European sentiment. The English man will carry on his battle against the European Union, and he promised (or threatened?) to «return in five years with no EU». According to him in five years, there will be a Europe based on the 1940 idea of nations which decide to have trade and cooperate». Unfortunately in 1940 Europe was engaged in the second world war and in that specific year London was almost razed to the ground by German air-strikes. Indeed, this is all Farage the destroyer has to offer. A fair deal, isn't it?

Monday, 4 July 2016

Brexit, new considerations

Farage's resignation is the best plot twist (or simply plot?) of the British tragicomic story

by Emanuele Bonini

A lot has been already said and written over Brexit, even on this blog. Latest developments impose new considerations on, and make further reflections compulsory. After having sold the Brexit as the best option for the country, the entire political class of Britain is escaping from responsibilities. David Cameron already announced his resignation as prime minister, Boris Johnson took a last-minute decision of renouncing the take over the leadership, and finally the UKIP leader Nigel Farage stepped down, too. No jokes: the winner of the Brexit campaign is now leaving politics. «I have never been and I never wanted to be a career politician. My aim in politics was to get Britain out of the European Union. Now I fell I have done my beat and I couldn't achieve more. I think is right I should now stand aside as leader of UKIP». This is Farage's statement made to announce his resignation. Now, how many politicians do resign after having achieved their goal? This question alone is enough to see how irresponsible are decision makers are in the UK, and how fool were citizens to believe to any single word of this man. A true leader would use his victory to built his career and fortune, but Farage was not a politician, as he personally admitted.
Cameron, Johnson, Farage: all these men brought mess in the country and they now leave to other people the duty of re-establish order. Well done.

Farage said he achieved what he wanted, and this is to him a right reason to quit the scene. No stories, please! This a real escape! People struggling for a political purpose cannot leave once they were fighting for. If Cameron stepped down after the outcome of the referendum is because he was against the Brexit, and this means he has been totally out of mind in calling for such a referendum. What about Boris Johnson, great conservative in favour of leaving the EU? He got what he wanted but immediately after disappeared from the political arena. Farage has been the last one in chronological order to leave, we can say properly. Why does he leave? Because he is nothing but a selfish, superficial, mistaken man. As everybody (and more than everybody) activated a machine of which he has lost the control. UK leaders wanted to blackmail the European Union by playing the lethal game of the Russian roulette. This bluff didn't work, and now British are left in this situation where have been led by mediocre political class. Mediocre and cowardly political class, it has to be added. No one is facing is assuming his own responsibilities. On the contrary, everybody is leaving to their successor this non-performing legacy.


Related articles:
- Brexit, some preliminary considerations
- Brexit, further considerations

Friday, 1 July 2016

FACT SHEET/ Middle East Quartet recommendations

In its report on Middle East the Quartet has the following specific recommendations:

1. Both sides should work to de-escalate tensions by exercising restraint and refraining from provocative actions and rhetoric.
2. Both sides should take all necessary steps to prevent violence and protect the lives and property of all civilians, including through continuing security coordination and strengthening the capacity, capability and authority of the Palestinian Authority Security Forces.
3. The Palestinian Authority should act decisively and take all steps within its capacity to cease incitement to violence and strengthen ongoing efforts to combat terrorism, including by clearly condemning all acts of terrorism.
 4. Israel should cease the policy of settlement construction and expansion, designating land for exclusive Israeli use, and denying Palestinian development.
 5. Israel should implement positive and significant policy shifts, including transferring powers and responsibilities in Area C, consistent with the transition to greater Palestinian civil authority contemplated by prior agreements. Progress in the areas of housing, water, energy, communications, agriculture, and natural resources, along with significantly easing Palestinian movement restrictions, can be made while respecting Israel's legitimate security needs.
6. The Palestinian leadership should continue their efforts to strengthen institutions, improve governance, and develop a sustainable economy.  Israel should take all necessary steps to enable this process, in line with the Ad Hoc Liaison Committee recommendations.
7. All sides must continue to respect the ceasefire in Gaza, and the illicit arms buildup and militant activities must be terminated.
8. Israel should accelerate the lifting of movement and access restrictions to and from Gaza, with due consideration of its need to protect its citizens from terrorist attacks.
9. Gaza and the West Bank should be reunified under a single, legitimate and democratic Palestinian authority on the basis of the PLO platform and Quartet principles and the rule of law, including control over all armed personnel and weapons in accordance with existing agreements. 
10. Both parties should foster a climate of tolerance, including through increasing interaction and cooperation in a variety of fields – economic, professional, educational, cultural – that strengthen the foundations for peace and countering extremism

Israel urged to «stop denial of Palestine development»

The Middle East Quartet released its first-ever report on the Arab-Israeli peac process, calling both sides to work for a two-State solution

Quartet components flags
by Emanuele Bonini

The Middle East Quartet called Israel to allow the creation of a Palestinian State, in its ever realised report on the Arab-Israeli conflict released today. Three main areas of «concern» have been highlighted by the EU, the United Nations, the Russian federation and the United States. In each of these areas there are not progress. On the contrary the international forum denounced «no movement forward», as admitted by EU sources. According to the report «continuing violence, terrorist attacks against civilians, and incitement to violence are greatly exacerbating mistrust and are fundamentally incompatible with a peaceful resolution». Secondly, «the continuing policy of settlement construction and expansion, designation of land for exclusive Israeli use, and denial of Palestinian development is steadily eroding the viability of the two-state solution». And thirdly, the Middle East Quartet stressed that «the illicit arms build-up and militant activity, continuing absence of Palestinian unity, and dire humanitarian situation in Gaza feed instability and ultimately impede efforts to achieve a negotiated solution». The international community pointed out «the urgent need for affirmative steps to reverse each of these trends in order to prevent entrenching a one-state reality of perpetual occupation and conflict that is incompatible with realizing the national aspirations of both peoples».

«We don’t want to blame anybody in this report», assured officials of the European side. The only purpose of the document was and remain the necessity of saying «what we see every day is something that cannot work». The key issue, was explained by the same sources, «is about empowering the Palestinians, particularly in the West Bank, in Area C, without touching key Israeli security concerns». In fact the recommendation contained in the report call the Israeli government to move in such a direction, asking to «cease the policy of settlement construction and expansion» (recommendation 4), «transfer powers and responsibilities in Area C, consistent with the transition to greater Palestinian civil authority» (recommendation 5), and to «accelerate the lifting of movement and access restrictions to and from Gaza» (recommendation 8). It is basically reaffirmed the working in order to achieve a the two-state solution. Given the fact Israel already exists and is recognised by the whole international community, the same has to be done for the Palestinian side.