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November 28th, 2007

Très chiraquien

Apart from the fact that he is several coat sizes smaller than Jacques Chirac, what differences are there between Nicolas Sarkozy and his predecessor as French president? When it comes to China policy, not many, it would appear.

Watching Sarkozy’s swing through Xian, Beijing and Shanghai this week, I cannot have been the only European in China wondering if this wasn’t a rather splendid example of Plus ça change, plus c’est la même chose.

The deal to sell 160 Airbus aircraft to the Chinese that was secured during Sarkozy’s visit was remarkably similar to the deal to sell 150 Airbuses that Chirac secured on his last official trip to China in October 2006.

Sarkozy’s decision not to take his human rights minister to China, and his public silence on the lashing that German chancellor Angela Merkel received from China for having met the Dalai Lama, were très chiraquien.

In Shanghai, Sarkozy even took fire at the US and Japan, saying in a speech to the city’s French community that the US should reduce its deficits and the Japanese should pay more attention to the value of the yen.

In fairness, Sarkozy had already asked the Chinese to let the renminbi rise in value. And no one can say Sarkozy wasn’t, in his own way, putting a certain kind of pressure on China. According to the China Daily newspaper, when he accepted President Hu Jintao’s invitation to attend the 2008 Beijing Olympics, Sarkozy joked: “I will attend the opening ceremony, but please reserve a nice seat for me.” 

It would be pointless to make a big deal out of all this, because Sarkozy was doing was what every European national leader does when he or she visits China – they put their own country first.

It must be something in the green tea, but European politicians seem to go light in the head when they arrive in China and come face to face with the country’s daunting size (the Beijing area alone is more than half as big as Belgium) and its breathtaking business opportunities.

The Chinese know this, of course. They can hardly be blamed for thinking the easiest thing to do when hosting a European leader is to speak a few polite but empty words on the exchange rate, praise the leader’s knowledge of China, and throw him a few billion euros’ worth of business deals before ushering him out of the door.

But in Sarkozy’s case, the deals amounted to a hefty €20bn. Chapeau! Enjoy the Olympics!

November 26th, 2007

China, be warned: Mandelson may snap

Criss-crossing Beijing in the Chinese capital’s cheerfully coloured and slightly clunky taxis, it is easy to see what European Union negotiators mean when they say the Chinese give them the run-around.

Since I arrived on Sunday, I have taken, or tried to take, seven taxis. One got me to the correct destination. Two took me somewhere completely different, and four refused even to let me hop in.

My 14 per cent success rate left me feeling smaller than a terra cotta warrior from Xian, but I’ll wager it will be higher than the visiting Europeans achieve this week.

Nicolas Sarkozy, Peter Mandelson, Jean-Claude Trichet, Jean-Claude Juncker, Joaquín Almunia and the rest of them can spout till they’re blue in the face about the supposedly undervalued renminbi, but they might as well be talking to the Great Wall of China.

What is more, the Chinese have a point. When you look at China’s explosive export growth, it is difficult or even absurd to make the argument that it is all down to the renminbi’s exchange rate. Juncker says the currency is 20 to 25 per cent undervalued against the euro, but if it went up by that amount overnight, China’s export machine would still churn out vast volumes of goods at prices Europeans love.

Mandelson, the EU trade commissioner, appears to grasp that. During his visits to China, he therefore tends to dwell more on issues such as restrictions on European access to the Chinese market and poorly protected European intellectual property rights. But when he made a speech on Monday about food product safety and included some criticisms of the Chinese position, the fearsome vice-premier Wu Yi, China’s top trade official, said icily that she was “extremely dissatisfied” with his remarks.

Not all is wrong in the EU-Chinese trade relationship. How can it be when the EU is China’s biggest trading partner and when trade, measured in dollar terms, is up more than 20 per cent so far this year?

Still, when a reporter asked Mandelson how long his patience with China would last, he replied: “My patience is not exhausted, but I can no longer suffer in silence.”

China, be warned. Any more of this funny business on trade and Mandelson may snap his chopsticks in frustration.

November 22nd, 2007

Is the UK cornered on temporary workers’ rights?

An intriguing development here: it looks as if Britain has been cornered in a fight to settle two hugely controversial EU labour rules.

This would be more bad news for Gordon Brown, and infuriate some British employers.

To them, these laws  - one on temps’ rights, the other on the maximum working week - are a pet hate, a sign of Brussels meddling in the UK’s flexible labour market.

But many countries are keen to get agreement on the rules, which are stuck in a legislative deep freeze after years of delays.

If the plan - put forward this week by the Portuguese EU presidency - goes through, the UK would have to compromise on one of the laws.

(more…)

November 21st, 2007

Of fairways and farmers

Mariann Fischer Boel is pretty upset. The farming commissioner, not afraid of using agricultural language, saw Tuesday’s outline of a modernising "health check" overshadowed by a row other why money was going to golf courses and town councils.

The “stupid” observations, made in a report the week before by the Court of Auditors, the financial watchdog, and flamed up by the “sensational press”, were overblown, she told reporters. On Wednesday she had not calmed down much. She told the European parliament’s budgetary control committee: "It is not possible to receive an EU farm subsidy for a golf course. Only areas used for agricultural activity are eligible. Of course, it is possible that golf clubs, railway companies etc may also own adjoining or nearby land which is used for farming. On this land, the subsidies can of course be paid as long as the conditions are met."

The truth is, that now payment for production has been replaced with payment for landholding, farming can mean simply keeping it in a condition to be farmed.

(more…)

November 20th, 2007

An Expensive Train of Thought

It was good to see the European Commission getting tough last week with websites that put out misleading information about airline ticket prices and sales conditions. An attempt to stick up for consumers has been one of the most distinctive features of José Manuel Barroso’s Commission presidency over the past 18 months, and here they went one step farther.

You could say Barroso and his colleagues hit on the idea of expanding consumer rights as a way of distracting attention from the disaster of the French and Dutch constitutional treaty referendums of 2005. Or perhaps the Commission crusaders had always secretly yearned to put some populist sauce on the elitist fish that had generally been served on the EU policy menu since the 1950s.

(more…)

November 13th, 2007

A stability pact for unit labour costs?

European policymakers never admit to the slightest doubt about the prospects for the long-term unity of the eurozone. But they do occasionally make comments that allow a mere blogger to ask the fatal question.

Such a comment came on Monday, at a meeting of eurozone finance ministers, from the lips of Jean-Claude Trichet, the European Central Bank president. He made the observation that, if Europe’s monetary and economic union were to be designed all over again, it might make sense to have a "stability pact for unit labour costs".

Politically feasible or not, this is an intriguing idea. It hints at the long-term problem faced by a single-currency area in which some members keep down their labour costs, others don’t, and the competitiveness gap gets wider and wider. Can such a union stay together?

This may not be just idle speculation. Policymakers clearly feel some unease at the fact that, since the euro’s birth in 1999, Germany has raced ahead of other countries - above all, those in southern Europe - in containing labour costs. Between 1999 and 2006, Germany’s competitive advantage has gone up by 20 to 25 per cent compared with, say, Italy.

All this was disguised in the early years of Europe’s monetary union by Germany’s relative economic weakness, caused by the cost of reunification and the replacement of the D-Mark by the euro at a relatively high exchange rate. But now Germany has more than recaptured its competitiveness. It is beginning to do exactly what some forecasters in the early 1990s said it would. It is starting to dominate the European economy by means of monetary union.

No one should begrudge Germany its new-found success. The real question is what the eurozone laggards, especially Greece, Italy and Portugal, are going to do about their own performances. Corporate restructuring, more labour market flexibility, wage moderation, pensions and healthcare reform and cost-cutting all round are the usual answers. 

But are their societies ready to accept such measures, which would have to last many years to have a real impact? Perhaps the only way to ensure the survival of the eurozone in its present form would be to insist on enforceable cost-cutting rules, precisely as Trichet suggests.

Because one thing is sure. Neither the German government, nor German companies, nor the international shareholders of German companies are going to accept any relaxation in the drive for ever greater German competitiveness, merely to save the day for a few friends in the Mediterranean.

November 12th, 2007

It takes two to make a pact, but only one to break it

It is 2028. The ice caps are dwindling, Chelsea Clinton continues her parents’ presidential legacy in the White House…and Belgium still awaits a new federal government after elections in June 2007.

Yes, I’m joking. Belgium faces a very difficult situation right now, and many people hope it will get out of its impasse in the coming weeks. But how?

A quick recap: The linguistically-divided country has been without a new government since an election more than five months ago.

The francophone parties and the Flemish groups expected to make up a centre-right coalition just can’t agree on state reform, prompting concerns that the country could break up along its linguistic fault lines.

(more…)

November 7th, 2007

Another twist in Turkey’s tale

Those who say Turkey must never be allowed to join the European Union should meet Mehmet Simsek, the Turkish economy minister. His family and career background may surprise some people. But it is a story that serves as a reminder not to lock modern Turkey in a box of tired old stereotypes.

Simsek was in Brussels this week for a meeting of the European Policy Centre think-tank. After bombarding his lunchtime audience with fiscal and trade data, he turned to the attacks being launched on Turkish targets by the PKK, the Kurdish separatist movement.

"The PKK is not representative of Kurds," he said. "I am a Turkish citizen but my ethnic origin is Kurdish."

Quite so. Simsek was born in 1967 in Batman, a poor province of southeastern Turkey. Kurdish, not Turkish, was his first language - and this in a country where Kurdish identity and the Kurdish language have often struggled to win official recognition from the authorities.

Yet here is Simsek, at the age of 40, running Turkey’s economy. On the way he has picked up an economics degree from Ankara University, collected another degree from the UK’s University of Exeter, worked for the US embassy in Ankara, spent time at the equity analysis department of UBS bank in New York, and then moved up at the ranks at Merrill Lynch in London.

In Turkey’s general election last July, Simsek was elected to parliament for the Justice and Development party, the one that scares so many Europeans because of its Islamic roots.

It’s worth pausing a moment to think about this. An ethnic Kurd, born into poverty, rises first to become an international investment banker and then to take office as a government minister for a party which, though wedded to Turkey’s secular system, clearly has conservative Islamic religious tendencies.

It is an extraordinary tale that tests the limits of the European imagination by confounding its sense of what constitutes progress and backwardness, east and west, tolerance and intolerance. Turkey truly is unique. And that is one good reason not to rush to judgement on where its long process of self-transformation may finish up.

November 5th, 2007

Read blog, get politically active

Since you’re reading this, it’s not too much to assume that you’re interested in the blogsphere…

So you might want to know about a report - The online world - a new constituency - which comes out tomorrow. It’ll be posted on the website of a PR firm called Edelman.

Perhaps it is a little self-serving for a blog to write up this study. After all, it details the growing role of the medium. And yes, it can be tricky for a report to get the measure of these sorts of phenomena. Still, for what it’s worth, here are some of the core points: 

(more…)

November 2nd, 2007

Belgium: Five months and still no government

And on it goes…

Belgium waits and waits for a new federal government, almost five months after the election. Next week, it is expected to break its record for the longest-ever talks to form a coalition.

This leaves everyone to muse about the linguistically-divided country’s future, and in particular, the claim that the Flemings of the wealthy (Dutch-speaking) north and the Walloons of the poorer, francophone south, barely know each other.

I suppose when your country has been (briefly) put up for sale on eBay, and the prime minister designate appears unwilling to sing the national anthem, you’re justified in questioning things? But is the doom and gloom making everyone become a bit too tough on themselves?

(more…)


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