Faced with an existential threat to EU cohesion, not to mention the government of Chancellor Angela Merkel in Germany, European leaders fashioned a last-minute compromise in Brussels on 29 June to deal with their immigration crisis.
A coherent reform of asylum-based EU immigration must embody two main components: control over external borders and a new set of internal EU rules. EU leaders have made some progress on the first part, but the outlook concerning the second remains vague. In this post, Olivier Blanchard and Jacob Funk Kirkegaard make some suggestions for the way forward.
— Read here voxeu.org/content/immigration-reform-europe
The US imposed steel (25%) and aluminum (10%) duties on Europe, Canada and Mexico on May 31, reflecting Trump’s obsession to bring business back to the US and contain the country’s external deficit. He had already presented this idea right from his inaugural address (in French) at the White House, with his view of the world economy as a zero-sum game, meaning each country has to fight tooth-and-nail to get its hands on the biggest slice of the pie. This view is admittedly not helpful in understanding economic and growth momentum, but it is the view we are dealing with here.
Based on steel and aluminum exports to the US, the cost for Canada is very high at around 2 billion, as well as for Mexico (600 million) and the European Union at around 1.7 billion, including close to 400 million for Germany and 150 million for France. These are substantial figures, so they can have an impact on trade with the US.
So in the end, who will come out the winner from this tariff jostling? It is probably a no-win situation. A trade war is a bit like going 15 rounds in heavyweight boxing match…the two fighters make it through, but they are both a mess by the end and run the serious risk of some long-lasting after-effects.
We can raise a number of points:
1 – Announcements made at the start of March and on Thursday May 31 pushed steel prices up, as shown very clearly by the chart below. Continue reading
My interview on France 24 on the US sanctions against Iran and their consequences for European companies
Donald Trump’s announced sanctions on Iran are proving to be quite a headache for European companies that had re-expanded their business in the market since the July 2015 agreement.
It is vital here to draw a distinction between a potential political nuclear agreement between Iran and the other signatories of the previous 2015 accord (apart from the US) on the one hand and the issue of economic sanctions on the other, which would severely hamper Iran’s economic growth as foreign companies working with the country would be subject to hefty penalties from the US. Before 2015 we witnessed the extent of such penalties on banks that had tried to evade sanctions, and a number of banks had actually continued to steer clear of Iran, even after the 2015 agreement as they were not convinced it would last. In this respect, the timing of the ZTE affair is perfect. The Chinese company operating in the telecoms sector and specializing in 5G technology is highly dependent on US components to pursue its growth. After pleading guilty of shipping US components to Iran and North Korea in 2016, it is now facing legal action for failing to comply with measures it was supposed to take against managers involved in the affair. Continue reading
European citizens are now optimistic on the future of Europe and they feel European. A survey published in a report this month by the Pew Research Center testifies to this, with favorable views of Europe increasing everywhere in 2017, even in the UK. The only country that saw a deterioration was Greece, but this is understandable given the austerity measures imposed on its citizens by the hefty economic adjustment process from Brussels. We can also read the French presidential election result as a referendum primarily fought and won on Europe.
The old continent is regaining greater political strength at a time when growth is also picking up speed. The planets are finally aligning and the outcome is positive. The region’s political environment is more stable and the risk of populism has dwindled.
In a complex, tough and unpredictable world, Europe is now a safe haven of stability, and this haven looks more assertive, particularly with Germany’s impetus.
We all heard Angela Merkel indicate that Europe should take its fate into its own hands as yesterday’s allies look less reliable and yesterday’s enemies are still there, and talking about the need to reform Europe, even if that means setting up a finance ministry and having a joint budget. Continue reading
The French presidential election primarily comes down to a political choice on the role that French voters want to give to France. The first round of voting showed that French electors were no longer very comfortable with the image they had of France. The traditional governing parties did not make it through to the second round of voting. There is a deep-rooted need for change and a desire to choose the path that French society will take. This malaise can be seen in the choice electors face on Europe – for or against – and this decision overrides all other electoral considerations. We cannot compare electoral programs if the question of European membership is not clarified. This is why the economic aspects of the candidates’ programs are not decisive and voting decisions will not be based on them. Indeed, there has been little talk of economic issues since the start of the campaign, with the candidates focusing more on the over-arching framework for the country.
The predominance of politics over economics was recently witnessed in the US presidential election and in the UK referendum on Brexit. Remainers talked essentially about the economic consequences of Brexit, while Leavers talked about the United Kingdom, its people and this people’s role in the world. The US presidential election followed the same pattern. Donald Trump did not come to power on the back of his economic program, which merely reflected the idea of less State intervention from a strong and reassuring State. It was a political vision of the US, taking on the rest of the world alone, that took Donald Trump to the White House. And these factors should make us stand back and think, not focus just on the economics. Continue reading
The future of the European Union may not officially be on the ballot in the upcoming elections in the Netherlands, France, Germany, and Italy, but the results will go a long way towards determining Europe’s fate.
Anti-EU sentiment is more widespread than ever, as demonstrated by the feverish campaigns of right-wing populist insurgents like Geert Wilders in the Netherlands and Marine Le Pen in France
Read Reichlin’s post here http://bit.ly/LREurope-en