Open borders and bottleneck jobs

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I have learned via the unlinkable newsfeed site NOS Teletekst that The Netherlands will be opening its borders to East European workers coming from the new EU member states, starting January 1st 2007. Dutch Parliament pushed back the original entry date, May 1st 2006, that was proposed by employers. The big fear is abuse of social security.

In Great Britain, Ireland and Sweden the borders are already open. Portugal, Spain and Finland will follow suit on May 1st while Germany and Austria keep their borders closed for the time being.

In Belgium there was some debate about allowing workers for so-called bottleneck jobs, jobs for which there are hardly any qualified candidates in Belgium.
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Wolfgang Munchau is a mensch

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While everyone in France is waiting for tomorrow’s decision (and not “démission” i.e. “resignation”, as Villepin said today in a dreadful slipe of the tongue) of the Constitutional Court on the CPE, I urge everyone to go read Wolfang Munchau’s refreshingly contrarian take on the current crisis.

The column is now safely protected by the FT’s subscriber’s firewall but, thanks to the wonders of globalization, freely available on the website of the Business Standard, an Indian financial newspaper:

At first sight, the travails of Mr de Villepin fit a depressing pattern of Europe’s chronic inability to reform. The prime minister is portrayed in the media as an idealistic political leader who tried to do the right thing, but failed. In the same vein, the young protesters on the streets of Paris look as though they stand in the way of France’s transition to the 21st century.

This narrative is as widespread as it is false. As far as I know there exists no reputable academic foundation for Mr de Villepin’s specific proposal – a work contract that removes employment protection for the young, while leaving it fully in place for the old.

Read the whole thing, as they say. It’s a lot better than the lazy drivel the international press has been offering on the subject of late.
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Fun With Maps

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For those of you who aren’t in the habit of reading the fine print in the left-hand column — especially the one-third who can’t tell us apart in the current poll results — this is an invitation to add your location to the frappr map of afoe readers. Join your peers from Wellington, New Zealand to Kailua, Hawaii, more than a dozen European countries and even exotic places like Kansas and Texas (you know who you are). David set the map up last October, and it’s neat to see where folks are.

Es Lebe Das Exportventil!

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Chris “Stumbling and Mumbling” Dillow has a very interesting post on signs of German economic recovery. Interestingly, the bellwether Ifo confidence index has shown a dramatic uptick, reaching its highest level since 1991. Dillow proceeds to examine its correlation with the DAX stock market index.

Now, as Chris points out, DAX-constituents are likely to be the most globalised German businesses. The DAX tracks the Ifo with about a three month lag. This all suggests that a) the most globalised German businesses are feeling chirpy, as you’d expect in an economy struggling to raise domestic demand that trades with several raging boomers, and b) that some things never change.

Back before the Second World War, before the Nazi seizure of power, there was something known as the Exportventil in German. This means something like “export safety valve” in translation. What it meant in practice was that German industrialists believed that exporting was a hedge against the economic and political instability at home, and duly specialised in exporting as much stuff as possible. That is pretty much exactly opposite to what you’d expect – after all, you normally assume that German businesses know more about Germany than Country X and therefore face lower risks at home, not to mention the foreign exchange risk involved.

There were good reasons for this, though – economic conditions inside Germany were dire, the devaluation of the mark was helpful – and alternatively you could price your products in hard currency and thus protect yourself against the hyperinflation. It also helped that you had a stream of foreign-denominated revenue, which meant you could borrow in the US. The downside of the Exportventil, though, was that German businesses were highly operationally geared with respect to world trade, and German banks tended to have long-term German assets and short-term US and sterling liabilities.

The onset of the great depression, of course, slashed demand for German exports – and the beggar-your-neighbour policies drained world trade of liquidity, which hit the Germans twice as hard because of export dependence. So the safety valve turned out to be more of a seacock that let more water into the ship. Germany, however, still seems to love exporting – which perhaps explains the strong “home bias” that Chris claims to have identified.

In a tangential theme regarding historical legacies and the way things don’t change, check out this post at Veronica Khokhlova’s. Seems the Ukrainian electoral map divides along the ancient border of Kievan Rus..

Gauging European temperatures

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Discuss, if you like, to what extent the following quote is still applicable today. To what extent is success policy-driven, if there is any success at all, and not the accidental consequence of the actions of a few exceptionalist individuals? Where does Europe stand right now? Should we still count our blessings? Please keep the discussion civil 🙂

Mankind surely does not represent an evolution toward a better or stronger or higher level, as progress is now understood. This “progress” is merely a modern idea, which is to say, a false idea. The European of today, in his essential worth, falls far below the European of the Renaissance; the process of evolution does not necessarily mean elevation, enhancement, strengthening.

True enough, it succeeds in isolated and individual cases in various parts of the earth and under the most widely different cultures, and in these cases a higher type certainly manifests itself; something which, compared to mankind in the mass, appears as a sort of superman. Such happy strokes of high success have always been possible, and will remain possible, perhaps, for all time to come. Even whole races, tribes and nations may occasionally represent such lucky accidents.

From The Antichrist by Friedrich Nietzsche, 1895

The Czech Car Growth-Engine?

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News today which is of more than passing interest from the Czech Republic. The South Korean industrial group Hyundai has announced that it is going to build its first European car plant at Nosovice. The factory – which is scheduled to cost around one billion euros – should begin production in October 2008 with full capacity of 300,000 vehicles a year being reached in 2009. This new output, when added to added to the 600,000 cars or so produced annually by Volkswagen’s Skoda Auto and the Franco-Japanese joint venture, TPCA, will bring the Czech Republic into the front line – along with Germany, France and Italy – of the European automotive industry.

As elsewhere this will have its good and its bad side.
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State of Democratic Emergency!

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Or should that be a undemocratic state of emergency?

In past AFOE threads, we’ve been discussing the Italian elections, as you no doubt saw. One thing that came up is the possibility that Silvio Berlusconi might not behave himself in the event that he looks like losing. This is after all a man who has no compunction about changing the law to avoid being prosecuted, associating with barely concealed mafiosi, and generally flouting the principles of the Italian constitution. It’s by no means impossible that, losing power and immunity, he might end up in jail. Can he really be trusted, then, not to try to rig the ballot and to go away if he loses?

This week’s events have lent much point to this discussion. Berlusconi’s behaviour has become a little odd, to say the least. After walking out of a TV discussion, he proceeded to harangue the members of Confindustria for making up all Italy’s economic problems as part of (you guessed it) a communist plot, and finished up by announcing that a “state of democratic emergency” existed after a minor fracas broke out near one of his speeches.

Worryingly, he seems to be assembling the ideological foundations of anti-democracy; he argues that there is a plot by secret communists who incorporate the judiciary, the procuracy, the media and even the top executives of Italian industry, and that the state is in danger from a violent opposition movement aligned with them. They are also part of the communist conspiracy. Perhaps he will soon discover that they are also terrorists.

Is this not something like the arguments of Carl Schmitt’s Ausnahmezustand? To deal with these violent communists who are endangering democracy and the rule of law, presumably, democracy and law must be suspended. If the election is close, I think there is a small but non-trivial chance that he will try to announce that, “to restore order”, the elections will be “suspended” or some such. Fortunately, any such action would have seismic economic and political consequences, national bankruptcy being the most immediate, which ought to deter the people he would need to carry with him from supporting such a move.

Yes, there is a “state of democratic emergency” in Italy. I don’t think it’s too wild to say that Silvio Berlusconi is it.

French protests : it’s the politics, stupid!

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There are some offers you can’t refuse. An invitation to join the permanent roster of Afoe is one of them. Let me first say, then, that I was initially happy and thrilled and grateful to be part of this wonderful blog. All the more so since it means that I’ll be ineligible for the Afoe Awards next year, and thus spared the humiliation of a third crushing defeat in a row. (For those of you who are scratching their head and wondering “who the hell is this guy?”, check this post)

If is say “initially”, it’s because, as the French guy of the team, I now have the daunting task of trying to explain clearly our current social row over the Contrat première embauche (First job contract) to a mainly non-native readership. As it happens, the BBC has already done a quite decent Q&A on the topic. So go read it to get the basics. And then come back here if you want my long and -I hope- not too muddled thoughts on what it all means.
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Steinmeier on Belarus

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Well, following up the last post on Belarus, it seems that German foreign minister Frank-Walter Steinmeier has mirrored what went on in that Patterson School command post exercise to an eerie degree. In the simulation, apparently, Gerhard Schröder made a fool of himself by lining up with the Russians…and, strange to tell, Steinmeier has done so too, at least in the eyes of Transitions Online’s Belarusoblogger.

Seems he’s arguing for a “measured” approach and more “dialogue” with the Belarus government – or to put it another way, doing nothing. Is it “the natural gas, stupid”? Perhaps. One of the delivery pipelines from Russia to Germany (the Yuma pipeline) passes through Belarus, but German policy seems to be more about bypassing the Central Europeans, and surely (as I blogged regarding the Ukrainian gas crisis) it would be in the EU’s interest to limit the degree to which Russia can disaggregate the customer states.

Deeper than that, I think it’s fair to say that Germany – or to be more accurate, the German foreign policy establishment – has an enduring preference for Moscow. As far back as Willy Brandt, in fact. The Treaty of Moscow in 1970 preceded the Treaty of Warsaw and the Grundlagenvertrag with East Germany, and extensive partnership agreements were signed with Gorbachev as a preliminary (indeed a quid pro quo) to the reunification. Timothy Garton Ash, I think, remarked that “this Germany and all previous Germanies have a special interest in good relations with Moscow”.

This was obviously true regarding Deutschlandpolitik and reunification–the Ostpolitik was a prerequisite of the Deutschlandpolitik. But is it still true now? Clearly the degree of hostility between Germany and Russia is much less, which is all good, but the degree of interdependence is much greater. And the conflicts of interest are hardly less.

One thing the German policy establishment did well in the 1970s, 1980s and 1990s was to synchronise their own policy with that of the EU. It would seem that a tension is emerging.