Beyond some shocking outcomes, Europe still won yesterday

27-5-19

Dear Partners in thought,

While we liberals (in the European sense) can be shocked at Marine Le Pen’s Rassemblement National and Nigel Farage’s Brexit Party coming out first on their home turfs in the European Parliamentary elections, let’s not forget that there was a great likelihood of that to happen. However, especially for Le Pen, her pole position is truly marginal – so a disappointment for them – as it could have been as was expected by them a wider lead. The key point is that pro-EU parties, whether they are centrist, center left, center right, Lib Dems or Greens have still won a comfortable aggregate majority both locally and at the European Parliament through their respective groups. Populists and extremists still represent a small minority, albeit growing, while they are unsurprisingly fragmented in Strasbourg. 

The real losers of the elections, taking France as an example, are not Macron whose La République en Marche was only 1 point behind Le Pen at a high level. There are the old parties like Les Républicains (stuck between a Macron and a Le Pen not finding political space), the Socialists (who used to run France, as they are the past now) and the radical left with La France Insoumise (showing the parties need to be managed well beyond any fiery rhetoric).

We can still have great hopes for the European project and the EU as we reform them and make sure they are better understood by the people of the EU member states.  

Warmest regards,

Serge          

Don’t go fishing and hold the line on the 26th

20-5-19

Dear Partners in thought,

As we approach a rather key electoral point across Europe, this short Interlude is for my fellow Europeans but should matter to all.  Like with William Barrett Travis and his “line in the sand” at the Alamo in 1836, I wanted to stress a few key things about the upcoming European elections on 26th May.

I am sure you all have read why the EU matters and is crucial to us more than ever (if not see my Interlude of 3rd May). These EU parliamentary elections have always involved a low participation as voters never related much to the EU and why they should vote. However we live in populist times now and while mainstream European voters are by and large happy about living in their EU member state but at times can’t bother to go to the polling booth, the extremist populist parties across the EU are very mobilised and want to score a big victory that may adversely impact on the way we go about our daily lives. Apathy can be dangerous in our times as it was in the 1930s. So please forget about going fishing this Sunday and go voting. 

It is likely that the Brexit Party of shouting Nigel Farage may score the highest result in the UK (even if only 30-35%) at the expense of the two traditional, largely discredited parties and their current leaderships while all the Remain parties from the Lib Dems, to Change UK, to the Greens will score marginally higher than the Brexit Party. I do implore my friends across the Channel to go and vote, especially the young voters, and send a message that leads to a second referendum so we stop this nonsense once and for all. And by the way do not buy David Cameron’s memoirs. Harking back to my French heritage it makes me think of filmmaker Michel Audiard who famously said: “Les cons osent tout, c’est à ca qu’on les reconnait” (loosely and kindly translated: idiots dare everything, it’s how you recognise them). Some people should keep quiet.        

As for France and the never happy, always riotous French, it is possible that Marine Le Pen’s Rassemblement National (formerly Front National) might lead the pack in the evening of the 26th right before the Renaissance group which is the Macron coalition. While it is unlikely that Le Pen’s and similar parties across the EU would hold a majority, they may command enough votes to be disruptive and slow down the efficient works of the EU institutions and thus directly affect the lives of hundreds of millions of Europeans. One reassuring strategic fact, aptly put forward this weekend by my friend Simon Kuper in the FT Weekend, is that “the big decisions are not made by Bruxelles bureaucrats or even the Strasbourg parliament (for which we are voting on Sunday) but by national leaders working together” in what is truly “a Europe of nations”. Having said that it is no reason for not defending our values at all levels and strengthening rather than weakening Europe and its project.    

Populists and authoritarians in democratic Europe are good at slogans as shown with self-appointed European nationalist leader Matteo Salvini and his grand nationalist Milano mass of 18th May with “No bureaucrats, bankers, boats” while screaming at the betrayals of the founding fathers (in his case Gasperi and no less than de Gaulle) and surprisingly holding a white rosary and calling “on the Immaculate Virgin to bring us victory” in what can only be a new marketing plan (which for a divorced father of two is interesting). They are good at getting votes – the main, real target of the populist “game” today – while rarely delivering positive change or even any results expected by their own voters (see my Book Note of 15th March on Yascha Mounk’s “People vs. Democracy”) though very apt at restricting freedoms on the way and creating instability at all levels if not chaos when in power. The last and timely populist episode involving the forced resignation of Austria’s Deputy Chancellor and Far-Right FPÖ leader on Russian-flavoured corruption charges taken on tape (maybe a Cannes Festival contender this week?) shows to star Premier Kurz and all of us how smart it is to work with people with no values. On the 26th in France, Britain and in all EU member states it is high time to wake up and send the message that the values that have made our world matter and that charlatanism and illiberalism are not the answer to the problems of our challenging times. 

For those who like the movies, think of the 26th in terms of Gary Copper’s Sheriff in “High Noon”. “We” are all him on Sunday.

Warmest regards,

Serge             

On Joe’s butterfly effect and why it is finally his time – for him and us

16-5-19

Dear Partners in thought, 

On September 2015, I was sitting at a mini-Davos discussion table led by the then editor-in-chief of Foreign Policy who, answering my question as to whether Joe Biden would finally run, even late, in 2016, said flatly “No, not with Beau’s death”. Beau Biden, Joe’s son and Attorney General of Delaware had died in May of that year of brain cancer at age 46. The shock was too great and the focus on winning not there. Putting aside the human tragedy, this was the little yet realised case of the greatest Butterfly effect (a “small” localised event – if I may say with all respect in this case – with huge consequences globally) in US history. If Joe Biden had joined the primaries, he may have won against Hillary Clinton in an admittedly challenging “sewn up machine” contest and more importantly Donald Trump might not be in the White House. 

A President Biden would have offered America a steady leadership style, the values that made that country what it is and the world would keep going, with its ups and downs, in a largely multilateral way. There would have been no special investigation, no daughter and son in law as close advisers. His team would have been filled with experienced and dedicated public servants and not loyal political zealots. The noises of war, trade and real, would not be there as diplomats could and would do their jobs. The list is long. 

Joe Biden is now back and effortlessly leading the pack of an increasingly long list of Democratic contenders, many of whom threw their hat in the ring to be noticed for the future or with an eye on the ticket. Joe likely would not have run if Trump was not in the White House but felt compelled to do out of public service and to get back things on track for America and the world. 

While it is too soon to extrapolate anything certain, Joe, who is the most known contender, should win the nomination for several reasons as follows:

– He has the most leadership experience of any primary contenders. 

– He is a true and tested public servant at a time when they are rare. 

– He has never taken advantage of his various positions to enrich himself. 

– He is a decent and genuine man at heart whom people from all walks of life can relate to.

– He has blue collar roots and learned politics from the bottom of the ladder.  

– He is very human, prone to gaffes, though never mean-spirited (even if he should work on these and adjust to our times) 

People say that he cannot win simply as being “against Trump” and what he represents. I would agree though Joe’s stance is not so much against Trump (it is for sure) as it is for universal American values of decency, fair game, leadership we all like, win-win, optimism, hard work and betterment. Joe is for a return to what America had been for seventy years, really making America great again (without the silly red cap). Even if other candidates offer more radical thinking and solutions the time now is about reassurance. Joe is the indispensable candidate today. He should win the Democratic primary.    

Winning against Trump will never be easy given the direct and indirect brainwashing process of some of the electorate and the sound state of the economy, the latter which may change as we near 2020 (not that we should rejoice on this point). However it should be noted that Trump is most worried about Joe (he may not want that fight in the barn after all) and would pray to have a true left wing Bernie Sanders or Elizabeth Warren in the final contest. 

I believe (and hope too) that Joe would defeat Trump in the final race though the ticket will be key. It needs to be quality-based with the right “dosage” which we know is a real art. As you know I like bets (you have not forgotten the “Second Referendum” which I predicted six months ago, haven’t you? Keep watching). I will go for a Biden-Harris ticket. Kamala Harris offers the perfect partnership in terms of gender, ethnicity, age, West coast location and former AG profile while by and large matching Joe’s humanity. This is the winning ticket which would also allow Joe to go for one or two terms depending on his own plans and would propel the first woman in the White House. 

Warmest regards,

Serge

Why the European Union works and is crucial for Europeans and the world, now more than ever

3-5-19

Dear Partners in thought,

The May 26 European Union parliamentary elections getting close it seemed like a good idea to stress the benefits of the EU so all voters remember what they may at times take for granted and so they can look beyond the naturally obvious imperfections of the institution.

The aim of the EU, which is not “a marxist dream without the revolution” nor “an evil federation bent on killing who we are” as often heard at populist party meetings, is to promote European harmony through the creation and improvement of a single market for its member states that enables the free movement of services, goods and indeed people (within the EU).

1. Peace and Harmony. The EU and its predecessors like the European Community have allowed for peace to be the norm between European nations ending centuries of bloody rivalries and wars, this process also helped with NATO and good old fashioned US leadership. The EU is about peace and international cooperation.

2. Rule of Law. The EU enshrined legal and human rights with a commitment to and a model for preventing discrimination and enforcing the rule of law. Sheer muscle strength no longer prevails in most of Europe.   

3. Role Model. The EU and its membership process provided a strong set of incentives for countries with a low historical tradition for democracy to change and improve their course in terms of human rights, the rule of law and market economics – even if the rise of populism in some member states shows a return to the old ways as a way to consolidate power.

4. Economic and Trade Might. With its 500 million population and 23% of the world GDP, the EU has become one of the strongest economic blocs and the leading trading area in the world giving it unparalleled clout in relations with its dealings with other countries.  

5. Cost Efficiency. The EU’s free trade and removal of tariff barriers have driven costs and prices down for EU consumers with enhanced job opportunities and higher income for all EU nationals. The removal of customs barriers eliminated the completion of 60 millions customs clearance documents per year in the UK only.  

6. Road to Prosperity. Many once economically-poor EU member states like Ireland, Spain or Portugal not to mention Central & Eastern European states made strong economic progress upon joining the EU through economic assistance.  These structural  programs such as the Social Cohesion Fund that certainly benefitted exports of the older and more developed EU member states also paved the way to self-supported prosperity for new EU joiners – a fact often easily forgotten by populist anti-EU parties particularly across CEE. The EU also greatly boosted inward investment from outside the EU zone like with the UK that once became the 5th inward investment market in the world due to its image as a key EU entry market notably with Japanese firms. 

7. Free Movement Benefits. The EU freedom of capital and labour gave enhanced flexibility to its economy and that of its members like the UK that could fix shortages in its pumping, nursing and cleaning sectors, making a net contribution in tax revenues and increasing productivity. People started being able to work across the EU developing career plans that once were constrained by national borders. EU migrants (about 15 m of them), most of them young, have been net tax contributors while using a relatively small share of social and retirement benefits and improving the dire demographic state of some of the larger EU economies. Tourism and trade became easier and cheaper while a large number of students – 1.5 m – were able to join the cross-EU Erasmus programme that became a greatly popular educational and cultural achievement in also building a more European-minded population at its youth.

8. Useful Regulations Aplenty. The EU brought common safety standards and rules to firms and individuals of all member states. It made it easier for using work qualifications and degrees across member states. Worker have benefited through the EU Social Charter from common protection such as a maximum working week, the right to collective bargaining and all sorts of fair play measures in relation to employment.  

9. Much Better Environment. As of 2006 the EU has vowed to fight global warming well ahead of the COP 20 Paris agreement and has committed to reduce greenhouse gas emissions by at least 80% by 2050. The EU has raised the quality of sea water and beaches with nearly all tourist locations meeting water quality standards. It has set strict restrictions on the use of pollutants such as sulphur while tackling wide environmental problems such as acid rain. 

10. Consumer protection. EU competition policy has harmonised the regulations and abuses of monopoly and cartel power in Europe while leading deregulation of the airline, electricity and gas markets to enhance competition. It has also reduced the price of making mobile phone calls within the EU while recently successfully pushing mobile operators for dropping roaming charges. Consumers can shop in any EU countries without paying any tariffs or excise duties when they return home. The EU Commission today is working on ensuring data privacy and fair taxation in an era of vast technological changes and the ascent of social media.                      
And yet EU nationals should not be happy with the state of play…and many are not judging by the rise of populist parties…

Is the EU perfect? Absolutely not as it is a work in progress. Is the EU staffed always with the best and the brightest? Probably not but they have done a great job so far at managing a multi-cultural group of nations, large and small, with at times centuries or decades of historical and ideological oppositions. 

Do EU member states send their best nationals to hold high office in Bruxelles?Probably not and very often the Commission is a refuge for lost politicians or those their capitals want far away. However and putting aside the pioneers like Jean Monnet the Commission has had great leaders too like Jacques Delors or more lately Donald Tusk, Margaret Vestager or Michel Barnier who “made” the EU institutions even if there are some most of us would prefer to forget or have done so already. 

Does the EU parliament has the best legislators? No and they are often little known back home. However they also give Strasbourg a feeling that ordinary people are indeed poorly represented and by non-professional politicians as judged by the composition of many MEP lists on offer for the next EU parliamentary elections. Strasbourg and its elected MEPs does legislate and Bruxelles mostly execute contrary to popular populist beliefs that the EU is ran by faceless bureaucrats without any mandate from the European people.   

Do we need a language for each or the member states so they feel better represented?Do we not need to improve EU communication? Certainly not and while Esperanto is no longer in the cards, there will come a point when sanity and efficiency will prevail and English may become the official language (in a week to Brexiteers even if the Netherlands may become the new England within the EU), perhaps with two or three others that are mostly spoken in Europe. The simplification of the message through a reduction of languages should go hand in hand with a communication revamp to improve EU clarity and the link between he institution and the nationals it represents.    

Is the EU too bureaucratic? Without a doubt but bureaucracy is an institutional hazard that is multiplied by 28 member states. And large institutions do indeed hire very expensive rootless supranational staff to carry out their missions that can cut them off from the people they represent. In parallel the EU has needed to work on regulations which if they protected nationals and consumers within the EU also had the imposition of forcing myriads of local items like egg calibration which were not always liked locally but were a small price to pay. Working together meant that trade offs were necessary with French and British farmers benefitting greatly from EU assistance (even if the latter massively and strangely voted to leave in June 2016) while some fishermen felt constrained (and indeed English fishing areas also massively voted to leave).   

Was the EU harsh with struggling member states like Greece through austerity programs so they could recover? Undoubtedly and people did suffer, some of them very much for some time, but today Greece is back to showing budget surpluses and Prime Minister Tsipras, once a fierce critic of Bruxelles, is warning all member states about not imitating Brexit. Interestingly and looking at the British example – this potentially being the greatest contribution of the Brexiteers to the EU project whatever its ending at home – no leading populist party across Europe has “leaving the EU” as a magic plan for greatness today.  

Did the EU manage the 2015 refugee crisis and its aftermath in the best of manner?Probably not even if they tried their best. National interests prevailed, starting with Germany wanting to deal with its ageing problems while other member-states refused the quota system at a time when populism and national identity rose. Italy did bear the brunt of the refugee crisis due to its geography leading to the rise of Matteo Salvini’s Northern League, whom today thinking in terms of European partnerships among nationalists, forgets that Hungary’s Viktor Orban was only too happy not to help Italy in time of need.     

Should the EU slow down accession at a time of populist uprising? Yes it should be slowed down for some years simply to take stock, recognise the concerns that, if they are taken cheap advantage of, are also real and focus on reforming the EU while getting its message more clearly across to the populations of its member states. Recent EU gatherings involving some key national leaders communicated this message to accessing countries especially in the Balkans. However the EU dream should not stop so interim partnerships should be developed while an admittedly longer accession process should be maintained.   

When looking at all those fields of anti-EU concerns and sorrows, it is key to remember the real benefits of the institution and that the EU is a job in progress – indeed an imperfect human project – that is improved year after year and reflects who we are and want to be.  

In an era of blocs, at a time of a rising China (with whom the EU will trade productively as there is nothing wrong with China restoring its position of five centuries ago as it does assuming fair game), a more erratic America (with whom the EU will keep working hoping for a better post-2020 era, also for America and the world), a more aggressive as economically declining Russia  (with whom the EU will always engage as it is also about greater Europe) and new powers or blocs profiling themselves such as India, maybe eventually Brazil or even longer term Africa, there is no no doubt that the EU is the only requisite for Europeans for survival and success. Without the EU, small EU member states such as those in Central & Eastern Europe would no longer viably exist or would be the preys of natural imperialism while the great powers of old like the UK or France, while they would keep their identities, would no longer seriously matter. The French historically pushed for the EU project in order to pull above their weight which has become an unavoidable recipe for all nations even if some are tempted by the memories of past glory and putting absolute concepts of sovereignty ahead of economic power, the latter that ultimately ensures concrete sovereignty.

As political thinkers try to grapple with a potentially gradual disintegration of the liberal world order, all the more in case of a Trump II post-2020 (Joe forbid) there are nascent views of a tri-polar world order with one built on arms control and old post-1945 values and two each led by the US and China competing trough their own networks of alliances and economic pacts, eventually  structuring a duopoly of powers driven by intense security competition (Read John Mearsheimer in International Security). If that were the case, the only way for the first world order to be sustained would be with a strong EU that could also attempt to avoid a return to Cold War Redux. It is indeed crucial in that context for the Europeans and the world at large to have a strong EU going forward as a stabilising force so a multipolar world can emerge, avoiding a new Cold War road to senseless destruction.          

Without pushing for federalism in our uncertain times (even if some like me may find it a natural historical path), the EU should continue developing common projects particularly in the economic and environmental areas but also now more than ever in the field of defence. The EU needs more defence cooperation if not a European army so it can work in conjunction with NATO and the US (or the UK post-Brexit if there is one) while assuming the cost of being free as nations and as member states in today’s world. It is also clear that the Trump era has demonstrated that Europe can no longer rely on the self-interest of its key ally and mentor even if sanity restoration may take place in two years.                

If you are a national of a EU member state, go out and vote on May 26. Go out and vote en masse in this usually low participation election as the times are truly challenging and the cheap populists should not prevail let your freedoms be curtailed if not one day gone. It makes for a good family outing preceded or followed by a nice lunch and a walk in your neighbourhood while you will have done your bit to support an institution that has given you and yours peace and prosperity for decades. Do not take things for granted and more importantly do not regret them one day. And if you are “young” do not repeat the carelessness or laziness seen in June 2016 in Britain as of all people it is about your future.

To conclude and borrow from a great American President and a recently aspiring one as the EU is also about “values”, simply let “the better angels of your nature” prevail on May 26.                

Warmest regards,

Serge 

On the fallacy of giving substance to Trump’s “America First” policy

30-4-19

Dear Partners in thought,

Nearly two and half years on we had to expect attempts from the American populist quarters to give some intellectual substance combined with dogmatic nobility to what constitutes Trump’s “America First” policy. This just happened in a Foreign Policy essay by Michael Anton who outlined the so-called “Trump Doctrine” while giving it some quasi-academic aura of credibility beyond the Tweets and erratic behaviour of the American President. I thought that it would be a public service to review, discuss and refute all or part of the four tenets of that “doctrine”. I should give all the credit for this initiative to Fareed Zakaria’s Global Briefing and Global Public Square’s CNN team that reported Anton’s piece factually though without providing any views given the briefing set up, which prompted this Interlude.

As you may know Michael Anton, who “writes” these days focusing on the American left (read radical left) as his chief nemesis, is the former Deputy Assistant to the President for Strategic Communication (quite a mouthful) who resigned as John Bolton became the new National Security Advisor in the Trump Administration in April 2018. Interestingly he once was a speechwriter both to Rudy Giuliani, the once legendary NYC Mayor and current truculent personal lawyer to Donald Trump and to the National Security Council under George W Bush, having worked as director of communication at Citigroup and for asset manager BlackRock. One of the more exotic features of Anton was his role as fierce critic of jus soli (right of the soil) as the basis for birthright citizenship in the US – he clearly enjoys tough positions – and his writing of books under a pseudonym given his government position then, like Nicholas Antongiavanni,  in The Suit that parodied The Prince from Niccolo Machiavelli. Of note, Anton also defended in 2016 under another pseudonym – Pubis Decious Mus (strange choice) – the erstwhile America First Committee of the Charles Lindbergh-type, arguing that it had been unfairly maligned in its times (one really wonders why).            
According to Anton the emerging doctrine would be based on four pillars which are inter-connected and would indeed be a nice foundation set for the Trump foreign policy house (as described in Fareed’s briefing): 1) A recognition that populism is the result of globalisation’s infringements on national identity; 2) a view that the liberal international system was great 50 years ago but offers only “diminishing returns” today; 3) a consistent support for nationalist, self-interested policies by all nations, not just the US; and 4) a belief that supporting nationalism is good for US interests, by making individual countries stronger.    

Anton’s task is indeed challenging and an attempt at after the fact rationalisation and justification of the kind that aims at giving structure to chaos where bold moves and ruptures of directions take the form of policy. If taking each of the four pillars, one could be forgiven to stress the obvious as follows:

1) A recognition that populism is the result of globalisation’s infringements on national identity

No. Putting aside the benefits of globalisation in overall political and economic terms while agreeing it certainly is imperfect and can be fine tuned, populism is not simply the result of the globalisation’s infringements on national identity. Populism is both the “marketing” mean and the result of politicians providing easy answers to complex issues and in doing so dealing with the problems that some voters have with a world that they cannot fully comprehend and they see as hurting their economic and social prospects. Populist politicians then create populist voters adding to their simple messages an element of national identity to the equation ennobling their demand for less globalisation to restore a mix of identity, sovereignty, independence, economic well-being – in other words usurped “dignity” – while blaming foreigners (the migrant, and refugee of the illegal kind but also the variants of the legal “Pole” in the UK) in an age old costless recipe of pointing the finger “abroad” to manage deep domestic resentment. Globalisation is the other and reshaped fingered Jewish financier of our times in being the scapegoat for all of today’s ills of the rural, non cosmopolitan, left out and out of sync populations in the West. Having said this, one should not be deaf and devoid of empathy.  It is clear that globalisation, a major world-changing paradigm of the last 20 years, which benefits are taken for granted and forgotten, still needs to be ceaselessly managed and regulated to avoid excesses and indeed feeding the anger of “helpless” populations that feel trapped and hurting from it even if they have unknowingly appreciated the low cost of many of the basic “Made in China” products they have purchased back home for years.            

2) A view that the liberal international system was great 50 years ago but offers only “diminishing returns” today

50 years ago the world was in the midst of the Cold War which the West eventually won, led by the US and in close cooperation with its allies. Today’s world has other threats though it is difficult to see why the recipe of the Western liberal order as we have known it should offer only “diminishing returns”. While quantifying returns seems awfully challenging it is not clear that the formula, however cute, possesses any validity as a way to make a point, even less a doctrine pillar. That the world has not yet suffered a major transcontinental war since the last global conflict 75 years ago (short of Islamic terrorism and its ripple effects throughout the world and notably Middle East since 2001) and the world economy has kept growing, even with the odd major financial crisis, with poverty receding gradually over decades, could be deemed a happy return which would be hard to see as “diminishing”. Cooperation between nations and dialogue fostering multipolar policy-making is bound to yield more positive developments for the world than national self-centrism whatever the easy beauty of the argument and as the world is no longer going to be unipolar as it goes.        

3) A consistent support for nationalist, self-interested policies by all nations, not just the US

One can understand the drive for the seemingly “rational” approach and its roots. And Secretary of State Mike Pompeo (who admittedly thought his President was doing God’s work in the Middle East) stressed publicly that such a nationalist approach had strong merits for all nations. So the US would not be the only self-centred kid on the block. It should encourage and indeed support all nations to go out alone and define their priorities in the most-self interested manner.   Would that mean that America should encourage Russia and China, to name only two nations, to be more nationalistic than they are? And if logically yes would that approach not create naturally clashes when nationalism run amok were to cross borders such as with the earlier Crimea and eastern Ukraine episodes? Would that not encourage New Delhi at an uncertain leadership time to bet the house on Kashmir something which as we well know “notoriously placid and pliant” Islamabad would find absolutely acceptable and even welcome? Would that not send the wrong message to Beijing in relation to Taiwan, simply looking at its current reaction to foreign naval vessels simply crossing the straits? Would not nationalist interests collide? Would not cooperation be more sensible than confrontation, knowing that nations will still vie for their national interests even in such a productive setting? And would we not send the wrong signals to smaller nations they can sort out their problems by being self-centred at the military and economic levels? I do hope the affable Mike Pompeo could respond to these simple questions that are answers in themselves.             

4) A belief that supporting nationalism is good for US interests, by making individual countries stronger

Not only the US would like nationalism in other nations but there is the delusion that it would be good for America itself. While pillars 3 and 4 are really like close cousins (we feel Anton scratching his head to come up with the fourth pillar of the house so it could stand on its own) it is hard to see a more nationalistic Russia be good for America. The same could be said of the rising China or even today of a rising geopolitically-focused India. To run the risk of repetition (no bad thing these days), resurgent nationalism brings with it a desire for conquest of a military and/or economic nature and again is linked to capturing domestic voters’ attention and make them focus on easy targets for their woes, this in a millenary approach that never stops working. In the end and as already stated nationalism is not patriotism, the latter which is absolutely fine and is based on one’s natural pride for one’s country’s history, culture and achievements.  The aggregation of all the “my country first” will not make for a better world and will ensure a “zero sum game” road to conflict particularly among leading powers, resulting in large scale confrontation at a time when the nuclear threat of old was largely forgotten. And it would drive smaller nations to resort more easily to force to solve differences particularly at a rising time of the elected and non-elected despot at the their helm. The US would not benefit from such a world. No nation would in the end.        

One should be forgiving about Anton’s attempt as the task he set himself to achieve was indeed challenging if not impossible however the intellectual juggling and pirouettes. However what is clear with those pillars is that the Western liberal world order, which as Gérard Araud, the colourful departing French ambassador to Washington, said simply (and if only) ensured a peaceful Europe since 1945, is the target of the new Washington leadership (or lack thereof) that finds collective policy-making very unattractive if not repugnant. The current US leadership forgets that the beauty of the US-led Western world order, that was indeed based on collective thinking and action, is that it was also very much in the interest, short and long-term, of the US.

One feature of the current Trump administration and many of its alumni (knowing they tend not to say very long) is the relatively low quality of the individuals comprising it. And after they leave, they write, this mainly to exist as they find it difficult (a trend that will grow exponentially) to secure gainful employment in the private sector once their leave the administration (as an aside, that Anton had to leave when Bolton came on board says it all in terms of the human comedy – or tragedy – on display at the White House today). This post-fact rationalisation of the so-called new “America first” doctrine is valuable not by its poor contents but by its paucity and the quality of its author. However it should not be forgotten that such a piece can resonate in some quarters that are dying to secure such a rationalisation for what they gradually start perceiving as erratic behaviour of the greatest magnitude. Once the piper will have been paid as the policy consequences are more visible and felt (often by early supporters – see trade wars and Trump’s core base) the emperor will be naked but it will take time to restore things and having been right in the end is not a remedy. The remedy for America and the world as we and our parents built it, if ever found (not a forgone conclusion) will be in the ballot box in 2020 and, by the way, likely not through tactically ill-advised impeachment proceedings even if the multiple counts of obstruction of justice are good grounds and totally demeaning.

The sad feeling reading such non-sensical attempt at creating a doctrine from nothing is that the White House is now run and supported by grown-up “kids”, the few adults like McMasters or Mattis having indeed left the playground. Those who remain, whose main asset is loyalty to “the tribal chief” (to borrow from the FT’s Martin Wolf last week), skipped history classes and address crowds with decreasing historical memory as time goes by. This combination is a bad recipe for why history tends to repeat itself so it is our duty to follow Edmund Burke and at least “say something” lest the evil prevails.

Warmest regards,

Serge                

Why closing down elite schools like ENA is no answer

21-4-19
Dear Partners in thought,
Growing up in the times of the rising Jacques Chirac who was giving a breath of fresh air and “Hussardism” to my Gaullist political family in the 1970s and even voting “No” at the 1992 Maastricht referendum (doubtless then a youthful mistake driven by “l’ancienne gloire” of the Napoleonic era combined with a scary, foresightful wink to the Brexiteers of the future), I never thought I would be impressed by and vote for a man who had been a member of the socialist government under François Hollande (even if we shared a stint as bankers for the Rothschild family). And then I did.
In 2017 I voted Emmanuel Macron having been throughly disappointed by François Fillon’s moral compas and sense of entitlement. Macron changed the French political landscape as some British friends would like to see cross-channel, sending the two main parties to quasi-oblivion for the Socialists and intensive care for the center right Républicains, unwittingly having to thrive without a real and constructive opposition which may have been a poison chalice in disguise. Macron led key reforms in a country that is eminently conservative regardless of whom was in power over the last seventy years and crucially became a leading voice for the renewal of the European project.
The “Gilets Jaunes” (Yellow Vests) erupted in November with conflicting demands to “change life”, many of them suffering from economic and social ostracism in a country that is the most redistributive of the OECD on a par with Sweden (see my Interludes on the Yellow Vests on this matter). Macron both quickly caved in and made concessions amounting to multiple billions of Euros while engineering the start of a Great National Debate so the French could express their views on their future. His reaction was seen by many as quickly surrendering to demonstrators, quite a few of them violent, who in turn were never satisfied by such concessions as they did not change the “horrible” system in which they and I guess we all lived.
Macron went further and wanted to “make a big splash” announcing that he would plan to abolish the Ecole Nationale d’Administration (ENA), the elite postgraduate institution established in 1945 that has formed future top French civil servants that counts presidents, prime ministers and chief executives among its alumni. Every year a class of 100 students graduate and is on its way to run France first as civil servants and then for some as business executives at the leading French corporates.  It was a very divisive step with some applauding “the long overdue reform in an unequal society” while others, like me, seeing it as a damaging act of populism.
This step triggers a debate about the elite in France and generally modern Western society. The French have always had since 1789 a “penchant” in their genes for equality or even equalitarianism as if society did not need an elite or the way that elites appeared was unequivocally inegalitarian thus wrong in essence. It is astounding as this emotional stance is deprived from any historical reality check and the fact that any society indeed “enjoys” elites, something the revolutionary Bolcheviks and then the Nomenklatura could attest to. So there is always an elite though the problem is how it does appear.
Is it better to have strongmen become the elite as they have more muscles or weapons as in many countries still today? Is it better to have an elite that benefits from dramatic changes in their countries and are well politically connected at the crucial time such as the oligarch class in parts of Europe? Or it better to have like at ENA a transparent examination process that everybody can take which will lead to an education that will give more tools to these students to take part in leading the government of their country?
Clearly the upper classes will be privileged in terms of school admissions the world over though mainly as its members spent time “reading” in their early youth (one of my professors always asked in his questionnaire to students if there were books at home). However nobody is prevented to take the ENA exam if she or he can show the right credentials. While I was part of a leading high school in Paris, I was not a good student and played far too much tennis in my teens (stopping my studying after flunking my Bac once to hit the ball) and could never have been admitted into ENA (America saved me but that’s another story). However I always recognised the value of ENA and its graduates who were so easily despised as being the dreaded elite at home while the world kept recognising the high quality of the top French civil service. And if you don’t have a tough knowledge-based selection process for getting into the best school, what do you have that is more fair? And looking abroad is it sensible to consider the closing down of these awful elitist beacons such as Oxford, Cambridge, Harvard, Yale, Princeton or Stanford? Maybe we could set up an admission lottery which no doubt would identify the best student in-take?
Suppressing ENA is caving in to populism. ENA should not be closed but could be reformed also to ensure that its in-take represents France better (in itself a very arduous endeavour) though without sacrificing the principles of selection that have produced the leaders of France since 1945. And whatever desire to assuage the Yellow Vests and the likes (who are a real, but admittedly vocal, minority that is being “heard”) Macron should indeed focus on pursuing his deep reforms in relation to economic development, the role of the state in that development and how to attract the best people in that key effort. At a time when many talented young Frenchmen now want to be entrepreneurs instead of senior civil servants and be part of the elite “without checking the box of a government job” (or indeed like I did go far away to study and build a life outside France), it would be also useful to retain some of these talents to work on building the next government chapters of France. ENA is a national asset for France and should stay.
And I still like Macron.
Warmest regards,
Serge

On the current tech listings, irrationality and avoiding the road to systems failure…

15-4-19

Dear Partners in thought,

We read and hear more and more about well-known tech companies such as Lyft, Uber, Pinterest, Slack, Airbnb and others raising billions of dollars via Initial Public Offerings while most have never been profitable. In other words, as already stated in recent days, making them philanthropic organisations that subsidise their services, like transportation, to millions of users while large institutional investors are strangely happy to fund them as if there was no tomorrow on the basis of “first scaler advantage” that has replaced “first mover advantage”. Uber founded in 2009 never made a profit in a decade and reported a loss of USD 1.8bn last year while now raising USD 10bn and contemplating a stock market valuation of USD 120bn. By doing so “we” are leaving sound financial principles aside and entering the world of Las Vegas or faith-based betting however the brand and its appeal involved. There is something wrong with this even if many stakeholders enjoy the game and indeed win big from it at times.

Having worked with start-ups and Venture Capital and Private Equity funds for years I am fully aware of the benefits of backing start-ups and indeed valuing them through many investments rounds at levels that are not linked to their profitability, when indeed they can show some. This is one thing and arguably the only way to get those young companies to grow. It is another to tap the public markets with its many institutional investors, including pension funds, that back these huge loss-making machines, however impressive and brandnames, at outlandish valuations at IPO times as would seem the flavour of the day. One of the pitfalls of history is that memory vanishes with passing generations allowing the rising one to repeat mistakes of the old ones. Memories of the tech bubble of the turn of the century are distant or non-existent, not to mention the tulip bubble of old.

Even if today listing tech companies are older, showing far more revenues and already winners in their sectors, it does not change the fact that a USD 120bn valuation for a company that never made profit and “may not achieve profitability” is lunacy and against all the sound principles of finance. The fact that there is too much money around should not lead to such valuations, knowing that the dividends of such tech companies will never be forthcoming any time soon if ever while their stock performance is unlikely to be stellar, which should make institutional investors now virtuously priding long-termism vs. short-termism to “justify” their investment decisions ponder them a bit more if only in view of their underlying pension members or clients.    

Arguably such irrational developments may also hurt the growth prospects of much smaller start-ups which, even if they do not show unicorn features, are perfectly viable as potentially great companies but may not attract the same natural interest from some venture capitalists as they are not first scaler material. There is a need to ensure funding is sound at all levels the process from seed stage to IPO stage which should eventually produce an even greater number of attractive listing candidates for the institutional investment community in a win-win for all.

On a more macro-level such recent tech listing developments do not strengthen the viability of the financial system and may lead to systemic risks also at time when capitalism is under attack, often wrongly, from various segments of society. These tech valuation features carry the seeds of anti-capitalism promoted by extremist populism at a time when reforming capitalism should be much needed as recently and rightly suggested by the likes of Ray Dalio and Jamie Dimon so our Western liberal and capitalist model of society can survive and indeed thrive at this challenging juncture.    

Warmest regards,

Serge                     

A half way house Article 50 extension is still better than none (even if…)

11-4-19

Dear Partners in thought,

I would have gone for a one year delay like most EU member states wished but for France and a small minority of others only as I hoped (very naively as there is still no indication for it) that a well-prepared second referendum could eventually be organised more easily. Obviously no UK plan was on offer yesterday against granting any extension as it was requested and France believed six months would give enough time and, based on past experience, also needed focus for the UK to finalise the Brexit process. I am sad that this French stance was driven by the feeling that the UK will indeed leave and that the political will to organise a second referendum is not there, the latter against the mood of the country and facts and reality. May’s request for an extension until 30 June was unrealistic based on what she and Parliament have achieved to date. A six month “flextension” under close watch to avoid any EU disruption should give the UK time to focus and finalise. However as the UK will participate in the EU parliamentary elections (unless there is a deal before 25 May and knowing the EU will not renegotiate the agreed withdrawal agreement), let’s hope that this EU electoral process should give the strong impetus at the people’s level to organise a confirmatory referendum on the eventually chosen exit and staying in the Union even it time will be tight. And when all is said and done, any delay is better than none at all levels. And everything is still possible.

Warmest regards,

Serge         

Letter to a Leaver friend on Brexit

6-4-19

Dear Partners in thought,

I recommend you reading the very good FT pieces last friday from Martin Wolf (“A long extension offers a chance to think again on Brexit”) and Philip Stephens (“Farewell EU and the United Kingdom”).

As we are going through a deluge of statements regarding Brexit, I did not want to add the usual Interlude to the saga we know. Instead I wanted to share with you something I wrote today “from the heart and from the mind” to one of my dearest friends and great thinker and professional who chose to vote Leave nearly three years ago, driven by a need to restore British sovereignty. I think that it captures the whole reasons why I would have chosen to remain (a term by the way that did not help the cause as action is much preferred than inaction especially if people have a grudge or suffer from something…).

Warmest regards,

Serge         

Dear Michael,

Were I British (and as a “European”) I would first look at the costs of Brexit which are real and may last, to an extent which would depend on the type of Brexit. I think it is economic self harm that was not needed (the USD equivalent 800m loss a week, including about half for public services and the 2.5 percentage point decline in GDP since June 2016 are coming from Goldman Sachs and other institutions that would rather state better news). There is a lot of truth in the slogan “we did not vote to be poorer”. It means jobs and investments which the UK got aplenty before as it was also to many a port of entry into the EU market which spoke the Latin of the day. I especially worry today about the services industry which is by far way bigger than the trade in goods for the UK.  

I secondly look at the value of blocs in today’s world. I feel we are stronger “together” especially at a time when China is rising, America is erratic and Russia may be bellicose to sort out its own problems. And I wonder if a UK out of the EU is strategically and commercially viable compared with being part of the EU however the feeling of pride associated with sovereignty and independence (and indeed the Victorian times for some; on that I rather remember “the sick man of Europe” of the 70s). On sovereignty I never felt France was in chains or that Britain was as part of the EU even if the calibration of eggs may have been a thorn to some. I sadly feel like your last Ambassador to the EU in that what Britain will get by being out of the EU, its biggest market by far, is “notional sovereignty” while it will have to deal with all sorts of trade laws and regulations that it will no longer shape as part of the EU in what was always a great British skill (personally I like the UK in the EU as it brings a needed free market influence that often won the day). It is also overwhelming the number of trade treaties the UK would have to renegotiate, not to mention developing a relation at all levels with the EU where we saw the reality of asymmetric power.

Finally I think the most terrible thing about this whole debate is that people tend to forget what they take for granted, that is the good things that the EU brought not only in terms of a peaceful Europe and the Erasmus programme but simply in terms of real economic benefits to member states and indeed particularly the large ones like the UK. I agree that the bureaucrats in Brussels are not always great and that everything can be reformed at so many levels but that is the beauty of the EU experiment – It is a work in progress that keeps adjusting to the vagaries of the world. I also think that the EU brought us many nice things at the personal level we forget at times, something only possible thanks to the EU set up. We of all people live happily in Prague through these benefits.

As an aside, one should recognise the impressively cohesive behaviour of the EU as a bloc in the negotiations (something that was never a given) and its genuine drive to find ways that would work for both parties (exemplified by Barnier) even if there were times when the bloc needed to be firm, for existential reasons (one can’t pick and choose club rules) but also especially as Britain was not fully understanding (its MPs but also May and the Cabinet) that the subject at hand was not only a British one.      

I have felt like going through a divorce of sorts and really would like that a second referendum takes place, hoping that the UK finally stays but more so that it gives some solace to all as the people would have finally and conclusively decided.

Warmest regards,

Serge

April Fool’s Day thoughts

1-4-19

Dear Partners in thought,

Given April Fool’s Day I wanted to share with you some of the highly sensible predictions I thought we could have today (and could never be fake news of course):

  • Britain finally stays in the EU on better terms than before after a three year extension of Article 50 granted by Brussels against an immediate repudiation of the British parliamentary system 
  • Lib-Dems sweep to power in Britain in coalition with the Scottish National Party following a General election with the British Marxist party as sole opposition, the Conservative and Labour Parties numbering 17 seats and having to work together
  • Unknown Nevada politician Lucie Flores dumps Bernie Sanders, recants on her allegations against Joe Biden, who was always such a warm guy, and wholeheartedly joins his presidential ticket for 2020
  • MAGA-cap wearing and DC-visiting high school student loses his dual USD 250m lawsuit against the Washington Post and CNN and is forced to eat his beautiful hat in a Native-American reservation
  • Emmanuel Macron officially makes Saturday “Yellow Vest Day” and makes the yellow vest the mandatory dress code for all the weekly ministers’ councils as a way to convince demonstrators that policy should not be made in the street (dammit!)
  • Donald Trump finally decides not to represent himself in 2020 though strikes a deal with Mike Pence so Ivanka is on the ticket and Jared is finally White House Chief of staff 
  • China finally decides not to take Italy as part of its Belt and Road Initiative after spending too much time with Salvini and di Matteo who they nevertheless find “interesting people” as they regretfully conclude they really cannot digest all that pasta 

Warmest regards,

Serge