European Business Review (EBR)

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INDEX Founder

Konstantinos C. Trikoukis Chairman

Athanase Papandropoulos Publisher

Christos K. Trikoukis Editor in Chief

8 EDITORIAL

12 OPINION

The peculiar world of Christian-Democrats

Time to ask the Eurosceptics what they would suggest

24 EU AFFAIRS

26 SPECIAL REPORT

Macron, the end of a myth?

A decade after the global financial crisis: What has (and hasn’t) changed?

40 MEDIA

48 TRENDS

A landmark year for Media Industry

Social entrepreneurs can change the world

60 LEADERSHIP

64 ENVIRONMENT

How to coach a CEO

Can we tax our way out of the plastic pollution crisis?

N. Peter Kramer Editorial Consultant

Anthi Louka Trikouki Issue Contributors

Ilana Bet-El, Giles Merritt, Alexandra Papaisidorou, Wout van Wijk, Uri Dromi, Hans Izaak Kriek, Jaushieh Joseph Wu, Susan Lund, Asheet Mehta, James Manyika, Diana Goldshtein, Dr. Nikitas Kastis, Dr. Antonis Zairis, Giannis Pagkalias, Christian Chuboda, Kyle Zimmer, Kristine Pearson, Katarzyna Anna Nawrot, Rein van Gisteren, Manfred Kets de Vries, Rick Stafford, Ariadna Rodrigo, David Powell Correspondents

Brussels, London, New York, Paris, Berlin, Istanbul, Athens, Helsinki, Rome, Prague Communications Specialist Alexandra Papaisidorou Advertising

Marianna Panoutsopoulou Business Development John G. Tragkas Published by:

EMG STRATEGIC CONSULTING LTD. 19 Leyden Street, E1 7LE London, United Kingdom www.emgcommunications.co.uk

ISSUE 3-2018 / JUL. - SEP. 2018, YEAR 21st Published bimonthly under the license of Christos K. Trikoukis. European Business Review trademark is a property of Christos K. Trikoukis. European Business Review is strictly copyrighted and all rights are reserved.

Reproduction without official permission of the publisher is strictly forbidden. Every case is taken in compiling the contents of that magazine, but we assume no responsibility for the affects arising therefrom.

The views expressed are not necessarily those of the publisher nor of the European Business Review magazine.

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EDITORIAL

By N. Peter Kramer, Editor-in-chief EBR

A

The peculiar world of Christian-Democrats

prominent Dutch politician once said: ‘Count your fingers after shaking hands with a Christian-Democrat.’ Reading how the European Peoples Party (EPP) is handling the ‘Viktor Orban-trial’ brought this remark about the trustworthiness of Christian-Democrats back to mind.

The majority of EPP members in the European Parliament, including their President Manfred Weber and all German CDU MEPs, not only vote to trigger the Article 7 procedure to deprive Hungary of its voting rights in the European Council, they also strongly demanded Hungarian Prime Minister Orban and his political party Fidesz were expelled from the EPP. A minority of the EPP group voted against.

Among them all the MEPs of the CSU, the Bavarian partner of Merkel’s CDU. All that is with one exception: the Bavarian Weber. Merkel promised him a few days before the vote that he had a chance to be the next President of the European Commission. Weber left his Bavarian CSU colleagues behind him and followed the example of the protestant Henri of Navarra. He declared: ‘Paris faut bien une messe’ (‘Paris is worth a Holy Mass’) and converted to Catholicism to become King Henri IV of France.

But EPP Uber-chieftain Joseph Daul let the world know that Fidesz will stay in the EPP. His argument is ‘the press can’t force me to throw out Viktor Orban’. Absolutely right! But wasn’t it the majority of MEPs from his own EPP group that wanted the expulsion? Also, leading EPP member Jean-Claude Juncker, President of the European Commission, is against Viktor Orban even though he doesn’t like to miss any chance to kiss Orban heartily on both cheeks (What was the name of that disciple of Jesus again?).

The point is, Joseph Daul can count! In May next year there are elections for the European Parliament.

In many Member States EPP parties are losing their voters. And as Orban rightly said: ‘Fidesz is the EPP’s most successful party’. Daul knows that’s true.

But see. As the famous rabbit out of the magician’s hat, there is Alexander Stubb, former MEP and Finnish Prime Minister and at the moment the second man of the European Investment Bank. Stubb wants to be the first man of the EPP and he doesn’t want to belong to a group which accommodate Viktor Orban’s party. “…values are the most important element. However, with values it’s binary, either you are with us, or you are somewhere else”, he said. It’s clear Stubb is leaning on the rule of law, whereas Weber is more conciliatory.

A split of the EPP? Mid-November the Christian-Democrats have to make their choice.

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EDITORIAL

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OPINION

The EU has lost the liberal plot The ‘liberal international order’ has become one of those terms that is used reflexively. Whether in support, derision or simply as a way of referring to the architecture of governance that came into being after the Second World War, the term is waning and losing its significance.

by Ilana Bet-El*

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et the truth is that most people, including politicians and those charged with leading the system, have little idea as to what it means: they are out of touch with the core understanding of what being a ‘liberal’ truly entails.

If there was a real and common understanding of the term ‘liberal’, it would not have been so easy for Viktor Orban to use it in a manipulative way, to claim repeatedly that “a democracy is not necessarily liberal” and so coining his term ‘illiberalism’ – without any significant outcry from other European leaders. Neither would it have been possible for Jaroslaw Kaczynski, leader of the governing PiS party in Poland, to justify his assault on the judicial system as a pushback against European liberal values.

The reality is that the European Union is at the heart of the matter. It has avowedly defined itself as a value-based community, enumerated as human dignity, freedom, democracy, equality, rule of law and human rights. And yet,

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rather than abide by them or debate them, these values have become the core of a most serious conceptual rupture within the EU. For those who consider themselves supporters of its values, the EU is now deemed to be suffering a recoil from liberalism. Whether due to the longstanding dispute over rule of law in Poland; the fact that the European People’s Party (EPP) allow Fidesz, the party of Hungarian ‘illiberal’ ruler Viktor Orban to remain part of it; or the openly xenophobic attitudes of a number of member states towards migrants, Muslims and Roma people, these examples demonstrate the EU’s lack in ability to keep to its consistently preached founding liberal values.Meanwhile, opposition forces in various member states deem the EU to be too liberal, with its very principles threatening nation sovereignty and identity. The emphasis on minority rights is seen as a disinterest in majority issues, exemplified by

OPINION

the repeated attempts to find a common policy on migration.

Notions of equality are read as enforced secularity, undermining Christian history and the role of the church.

For those who consider themselves supporters of its values, the EU is now deemed to be suffering a recoil from liberalism.

The face-off over values is of a strategic nature since it poses a threat to the very meaning of the EU. Yet it is being played out as a series of tactical political battles for short term gain in member states and political groupings run by a professional class of politicians.

For example, a government may fall, and then a coalition partner might tactically play the victim or claim the least responsibility in the hope of maintaining a majority of its voters.

Issues like these dominate the debate in the EU and its member states, with remarkably little vision or interest in substance, essentially damaging credibility of the European project. This means “the space for liberal debate has shrunk to the bare minimum”, as a senior EU official put it, leading to a permanent fixation with consensus. This is deemed to be true to EU Council conclusions as well as its national policies: they are consensus positions reached from a position of insecurity.

The end result is that the EU, rather than being the global torch-bearer of promoting values, is increasingly being seen as weak and unprincipled. Politicians and techno-

crats confound democracy in the eyes of both those who support its principles and those who seek to undermine them.

The very cause of the EU as a value-based community is at stake, but weak liberals fail to support it and the opposition is taking advantage of this through illiberal imposition.

The EU was not founded on common, shared and liberal values due to intellectual exercise, but rather due to the preceding absence of collective principles in Europe that allowed non-liberal and nationalist political systems to evolve, leading to devastating wars. Allowing European values to be eroded and disputed openly and repeatedly is therefore not only a violation of the very meaning of the EU, it may mean the end of the European project, and peace.

This article is drawn from a research project on “Liberalism in Europe Today”, commissioned by the Open Society Foundations in Europe, and based upon a selection of high level in-depth interviews conducted in Italy, Germany and Poland in the closing months of 2017.

* Ilana Bet-El *Historian, writer and political analyst **First published in friendsofeurope.org

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OPINION

Time to ask the Eurosceptics what they would suggest Never mind Brexit or Trump's re-election chances, 2019 is shaping to be the year Europe's populists shake the EU to its foundations.

by Giles Merritt*

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ritain is perilously close to the cliff edge of a no-deal Brexit, but so too is the European Union on the brink of serious trouble.

Sweeping advances by populists in many EU member states could wreak havoc after next year's elections to the European Parliament. Strange to say, the ways to defuse both Brexit and spreading Euroscepticism are broadly similar.

Voters need to be asked precisely what they don't like about the European project and how it is managed. The EU has for many decades been the butt of barbs and hostility, notably in the UK, but not exclusively. None

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of the major political parties there has ever come forward with cogent ideas for re-fashioning it.

Nobody, whether in Brussels or in Westminster, has said "If you don't like this model of European cooperation, what arrangements and responsibilities would you prefer?" And that's equally true of other countries where the EU's popularity is waning.

A modest stab at this question was made fifteen years ago with the European Constitutional Convention. Its discussions were often highly technical, and when too politically sensitive they tended to move behind closed doors. The starting point was an assumption that all

OPINION

was broadly well with the EU, but that it needed a little fine-tuning. In the event, its key ideas were torpedoed when French and Dutch voters took fright at the idea of a single European constitution.

The premise among the hundred or so delegates to the convention was that 'Europe' enjoyed widespread popular support.

And indeed, the project of ever-closer union was then at its apogee, following the successful launch of the single currency and the EU's imminent 'Big Bang' enlargement. But that was then; ours is now a very different world, and the EU's structure and mechanisms are failing to keep up.

If the European project is to survive the populists' onslaught, it must be seen to respond to their criticisms, whether they are over migration or are longstanding gripes about Brussels' unresponsiveness. But Brussels has been sending a very different message. Along with Europe's mainstream parties, it criticises the populists for being unrealistic but stops short of challenging them to put forward their own policy prescriptions.

Most people with more than a merely passing interest in the EU's affairs know what's wrong. Hardened political arteries have led to the EU's institutions being overdue for reform. The commission often has the right instincts, but not the courage to communicate well with public opinion. Its leaders – the commissioners – are mainly chosen on a "Buggins' turn" basis and lack profile and therefore authority.

The parliament, although technically very competent, is widely perceived as irrelevant to people's lives, hence plummeting voter turnouts. And ministerial councils, including the summit meetings of national leaders, are derided both for their deadlocks and for their failure to inspire confidence.

Until Europe's citizens are reassured that something will be done about the lacklustre aspects of the EU, they're likely to continue listening to the siren songs of the populists. Brussels needs to wake up and announce a major re-think if it is to rekindle citizens' enthusiasm.

Overhauling the EU should involve a Europe-wide debate, preferably based on independent evaluations of what works, and what doesn't. Not only in a practical sense, where the EU usually scores well, but also in political terms, meaning voter recognition and support.

This initiative could at least be announced in the runup to the European elections.

It's time the sexagenarian EU was revived and its ramshackle structures rebuilt. It's also time to go headto-head against the populists. They are no more than opportunists exploiting the deficiencies of a European Union that has been so loath to reform itself.

* Giles Merritt *Founder and Chairman of Friends of Europe. **First published in friendsofeurope.org

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OPINION

A fair European Copyright system fit for the digital age

By Wout van Wijk*

O

n 12 September 2018, European news media closely followed the European Parliament in Strasbourg. They weren’t looking for another story as they normally would. This time, they were looking at a vote in the Plenary session of the Parliament, that could change the course of journalism in Europe.

Members of the European Parliament were voting on a piece of legislation that would update the EU’s copyright legislation. The proposal, published in 2016 by the European Commission, included a provision that would help press publishers with the monetisation of their online content. The legislation that was in place at that moment, was from before the time that the internet, and online platforms such as Facebook or Google, were as widespread as they are now.

There’s a delicate relationship between press publishers on the one hand, and online platforms on the other.

Platforms need press content as part of its offering to consumers, while press publishers need the platforms to reach its audience. Meanwhile, both the platform and the publishers have business models that largely rely on advertising income, and so they are competitors in this space. Although… one could argue that due the sheer size of companies like Facebook and Google, there’s never been any real competition with press publishers. The online platforms could pretty much dictate the terms of engagement.

European press publishers currently do not have an exclusive right to protect the content they produce. This leads to severe issues when it comes to licensing their digital content. As a result press content has been massively reused by the platforms without permission or remuneration and without press publishers being able to do much about it. And while the consumption of news content was never as high as it is now, the revenues are lagging way behind. Particularly smaller publishers

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were forced to close shop and journalists were fired.

Back to Strasbourg, where the European Parliament voted on new copyright legislation that would actually recognise press publishers as rightsholders, through a so called “publishers’ right”. Such a right would give press publishers a much stronger stance vis-à-vis the platforms in demanding some sort of payment for the commercial exploitation of their content.

Members of the European Parliament had been discussing the file at length of over two years. While it only seems fair that publishers get paid for the use of content they produce, it was clear from the outset that the online platforms were not going to let this one go without a fight. What ensued, was, according to one European Parliamentarian, a fierce lobby on one of the most contested files in 20 years.

Despite the pressure from the online platforms, MEPs decided to vote in favor of a publishers right, thereby granting press publishers the recognition as rightsholders. Due to the imbalance in the online ecosystem between online platforms and press publishers, the sustainability of the press sector has come under threat.

And where the press sector fails, democracy suffers. The press as a cornerstone of democratic societies keep those in power to account, and enable citizens to engage in informed debates.

The European Parliament has not only voted to update the copyright regime in the EU, it also voted to increase the sustainability of journalism in Europe. And that is good news for everyone. * Wout van Wijk is Executive Director, News Media Europe

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THE WORLD

Twenty-five years ago today, Arafat and Rabin shook hands at the White House. Did anything change?

Twenty-five years ago, on the South Lawn of the White House, I witnessed history

by Uri Dromi *

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n front of a large crowd, and watched through television by many millions around the world, two former arch-enemies — Israeli Prime Minister Yitzhak Rabin and Palestinian leader Yaser Arafat — shook hands. A new, unprecedented and promising chapter has opened in the Arab-Israeli relations.

It is difficult today, after so many frustrations, setbacks and bloodshed, to describe the surge of optimism we felt that day. On the stalls behind the crowd, Israeli and Palestinian journalists hugged each other emotionally. We were confident that nothing would be the same.

Indeed, we felt the change right away, and it exceeded the immediate Israeli-Palestinian conflict. For years we have been told by the Arabs that the Palestinian question was the main reason for their enmity towards Israel, and once this issue is settled, Arab countries would make peace

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with Israel. Now, with the Oslo Accords signed, it was time for the Arabs to stand by their word. They certainly did.

The following day, we took off from Andrews Air Force Base but instead of heading back home, we made a surprise landing in Morocco, considered up to that moment an enemy state, where King Hassan II gave us the warmest and most lavish royal welcome. And this is the same Morocco which in the Yom Kippur War sent an armored contingent to fight against Israel on the Golan Heights.

Greater things, however, awaited us on the Arab front in the wake of that historic handshake. Secret talks with Jordan started right away, and on Oct. 26, 1994, I ushered the journalists again, this time to the Araba Crossing between Israel and Jordan, close to the southern city of Eilat.

In front of a huge, jubilant crowd, President Bill Clinton praised King Hussein who had fulfilled the dream of his

THE WORLD

grandfather, King Abdullah, to make peace with the Israelis.

And to Yitzhak Rabin he said: “As a general, you have won many battles through strength and courage. But now, through strength and courage, you command the army of peace, and you have won the greatest victory of all. We salute you.”

It turned out that the peace accord signed that day was a win-win deal. It was so strong, that an Intifada in 2000, a war in Lebanon in 2006 and three military operations in Gaza between 2008 and 2014 couldn’t shake it. Of course, the Jordanians expressed their anger over the bloodshed between Israel and the other Arabs, but had strong reasons why to stick to the peace treaty: Israel is the most loyal military ally of the Jordanians in the troublesome Middle East, and like the Egyptians, who had spearheaded the peace with Israel, they received generous trade dividends from the United States in return.

Furthermore, the Sunni states of the Middle East joined in the rapprochement with Israel, although not publicly.

That they did so more because of their fear of the common enemy, Iran, doesn’t really matter. Seventy years after the concerted Arab attack in 1948 on the nascent State of Israel, with the Secretary General of the Arab League boasting that “the fish of the Mediterranean will eat the bones of the Jews,” the majority of the Arab world accepts Israel as an accomplished fact.

But what about the Palestinians? Wasn’t the ceremony at the White House 25 years ago meant to bring peace between them and the Israelis? It was, but alas, it didn’t work out. Recently, on the 25th anniversary of the Rabin-Arafat handshake, people on both sides indulged in speculations about why the Oslo process had failed. To me it is obvious who the villains are: The extremists on both sides, those who managed to scuttle the peace, the Palestinians with their terrorists and the Israelis with their fanatics, including Yigal Amir, who had assassinated Rabin, the one person who could have pushed the process through.

Having said all that, I still remain an optimist about the prospect of peace between Israelis and Palestinians.

Thanks to that handshake, 25 years ago, barriers between Israelis and Arabs fell, resulting either in formal peace or in informal relations and alliances. In this new framework of Arab-Israeli relations, the Palestinians will eventually join the process as well.

* Uri Dromi *Uri Dromi, former spokesperson of the Yitzhak Rabin and Shimon Peres governments, is the director general of the Jerusalem Press Club. **Originally published in Miami Herald

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THE WORLD

Trump supporters: ‘the President keeps his promises’ I spoke recently with a lot of people about Trump and his politics. Police-officers, bankers, salesmen, blue-collar workers, doctors, professors…. Read what they told me.

By Hans Izaak Kriek*

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rom the moment Donald Trump was sworn in, about 40 percent of the Americans have stood steadfastly by his side. Trump can count on these Americans.

And the number of his supporters is still growing. When many others denounced Trump’s inhuman policy of separating refugee children from their parents, ‘his 40 percent’ praised his determination to do whatever is necessary to protect the US borders.

I spoke recently with a lot of people about Trump and his politics. Police-officers, bankers, salesmen, blue-collar workers, doctors, professors…. Read what they told me.

TRUMP IS DELIVERING “I voted for the man because of his stance on immigration,” Harold, a policeman told me. “From giving our military the flexibility and tools to wipe off the map the Islamic State of Iraq and Syria, to reshaping the judiciary for a generation. President Trump has delivered on my expectations. I voted for him to accelerate economic

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growth, boost wages, and restore American strength’.

David, a doctor, told me that most of his colleagues are left leaning (Democrats) but that is changing, he said. He voted for Trump and tells me why: “While I am a strong supporter of President Trump, I would not describe myself as fanatic or a zealot, I call myself more a realist. He has proven to be a strong leader and has earned my trust and respect. He has been, in my opinion, the only President that has treated this country like the business that it is, and has turned around the economy unlike any president before him’.

Brendan, a car salesman: “I will stand by President Trump.

He is this country’s last hope,” explaining that Trump stands up for American-born citizens over others. “He is really the only one to take on the problem of illegal immigration, the unfair trade policies, the unfair way we have to fund NATO.”. He follows Trump’s foreign policy. “Trump

THE WORLD

has handled the Middle East and North Korea masterfully.

As I knew he would, he opened the throttle on the U.S. economy. He has also handled Russia correctly, economically and otherwise. He has been a goddamned prodigy so far. People who are serious about history understand how unprecedented this president is. The first man in the Oval Office without owing anyone anything can and will do great things. We will probably never see another like him’.

WHAT ABOUT THE EUROPEAN LEADERS? European leaders aren’t happy with Donald Trump. In the opinion of my banker: “European leaders, as well as others throughout the world, were lulled into 8 years of Obama diplomatic apologetic complacency, and feel threatened

by President Trump’s business acumen and his “art of the deal”. He negotiates from strength, not the weaknesses of previous administrations, and is earning respect throughout the world.”

rose to the highest recorded levels in 2017 and the national poverty rate declined as the benefits of the strong economy lifted the fortunes of more Americans, the US Census reported recently. The average middle-class US household earned $ 61,372 last year, meaning half of families in the country brought in more income than this. The Census Bureau said: “We’re continuing to see a shift from parttime to full-time work, so some of that could explain an increase in income. Further the Census Bureau reported that the US poverty rate declined modestly to 12.3 percent, the lowest level in more than a decade.

TRUMP RE-ELECTED IN 2020?

This question isn’t a problem for the people I interviewed.

Will a Democrat come back in the White House? Doctor David: “The only platform the Democrats now have is that of hatred and vitriol. Trump has no competition. As a former Democrat, I am truly disappointed in that party's lack of strength and character, stability, leadership, and a plan Bob, a professor, said: “The leaders in Europe are fearful of of action. President Trump ran a strong campaign based Donald Trump because he is not an Obama type globalon improving the economy, securing the borders, strengthist. He wants NATO memberstates to pay their fair share. ening the military, making better trade deals, and putting He wants fair trade instead of America back to work, to name unfair trade practices and puna few goals. He hasn’t just met ishing tariffs taking advantage these goals, but accomplished Middle-class incomes rose to the of US exports to EU nations. even more than what was exHe wants legal immigration highest recorded levels in 2017 pected, despite the media. He is in the US, not open borders as and the national poverty rate the spokesman for a majority of exist in and flooding these nadeclined as the benefits of the strong Americans, and what we want tions with illegal immigrants. is another progressive and imeconomy lifted the fortunes of more He wants the southern US pressive term.”

Americans, the US Census reported border with Mexico protected

by a wall. He is not in favor of recently.

Professor Bob: “The US econthe Obama Paris Climate Acomy in the US was failing uncord which was clearly a plan der President Obama. Donald to punish the US with unfair Trump, in less than two years, climate accord regulations and benefit violating nations has grown the economy and the Gross National Product with an exchange of wealth to their economies from the to a huge 4.2 % in the last quarter.

The economy is boomUS.’ ing. Our military is and will be the strongest ever. Consumer confidence is at a high record level. Unemployment HOW HEALTHY IS THE US ECONOMY NOW? is at an all-time low for all people and minorities. North Let’s have a look at the latest numbers, from the US BuKorea, Iran and ISIS have been put on notice. The US is reau of Labor Statistics, updated on the first Friday of each now the largest producer of energy and exporting energy month. US wages are growing at fastest rate in 9 years more than ever. The US stock market is booming and at as unemployment rate holds at 3.9 percent, one of the an all-time high in just a few months since Donald Trump lowest levels in half a century. America’s record-breaking became president. It has grown the wealth of the US by streak of job growth continued last month with adding 7 trillion dollars, a remarkable achievement. For all these 201,000 jobs. The US has now added jobs every month for reasons, he will continue to let grow our nation's strength, 9 months in a row. Trump has been touting the low units wealth and its standing in the world. Trump will be employment rate and strong job gains since he took office reelected in 2020. Mind my words”. as proof he is delivering results and his critics are wrong about him. Trump criticised the US central bank’s policy of raising rates. “I don’t like at all this work we’re putting into the economy and then I see rates going up,” the president * Hans Izaak Kriek said in a reaction to CNBC. Hans Izaak Kriek is international political commentator for European But there is more interesting news. Middle-class incomes

Business Review and editor-in-chief of Kriek Media

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THE WORLD

The UN should open its doors for Taiwan The 2030 Agenαda for Sustainable Development, adopted at the 70th session of the United Nations General Assembly in 2015, set bold goals to shift the world onto a sustainable, resilient path.

By Jaushieh Joseph Wu*

H

ere was also pledged the formation of a revitalised Global Partnership for Sustainable Development including all countries, all stakeholders and all people, such that no one would be left behind.

Despite such a pledge, Taiwan’s 23 million people have been left out of this global effort. This violates the principle of universality upon which the UN was founded

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and deprives Taiwan as well as the international community of opportunities to work together for the common good.

Taiwan, though not being allowed to participate in the UN’s meetings, activities and mechanisms, has never shirked its duties as a responsible stakeholder. In line with the Agenda’s recommendation, Taiwan has

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released its first Voluntary National Review last year, detailing our whole-of-government approach to implementing the UN Sustainable Development Goals (SDGs).

The concrete results we have achieved include alleviating poverty, zero hunger, reducing the percentage of low-income households to under 2 percent, cutting the maternal mortality rate to just 11.6 per 100,000 people and under-five child mortality rate to just 2.4 per 1,000, and improving our literacy rate to 98.7 percent.

All of these are well above UN SDG standards.

Taiwan also provides development assistance to other countries. Through the International Cooperation and Development Fund (TaiwanICDF), Taiwan’s official development assistance organisation, we have launched various programs in the Pacific, Asia, Africa, Latin America, and the Caribbean. These programs aim to help countries in these regions to achieve clean energy, food security, food safety, sustainable agriculture, better education, health and well-being for all age groups, and disaster reduction and adaptation. Taiwan ICDF also works with the European Bank for Reconstruction and Development to assist countries in Central Asia and Central and Eastern Europe to develop market economies and a green economy.

While Taiwan’s valuable contributions have been widely acclaimed around the globe, the UN continues to ignore what Taiwan can offer. Taiwan’s tourists, experts and professionals are denied entry into UN premises simply because the UN does not accept the Republic of China (Taiwan)’s passport, which is recognized by almost every country in the world. The UN has refused to accredit Taiwan’s journalists covering its meetings and activities, yet the work of such people is in the interests of the people of Taiwan and the world.

We are extremely disappointed that the UN continues to misuse 1971’s General Assembly Resolution 2758 (XXVI) to justify Taiwan’s exclusion and isolation. As we have pointed out before, this resolution neither addresses the issue of representation of Taiwan and its people in the UN system, nor defines the relationship between Taiwan and China. The so-called one-China principle has been challenged by many UN Member States. It is wrong for the UN, an organisation created to serve all of humankind, to unilaterally define Taiwan’s status.

Article 1 of the UN Charter proclaims that the purposes of the organisation are to “achieve international co-operation in solving international problems of an economic, social, cultural, and humanitarian character,

and in promoting and encouraging respect for human rights." At this critical juncture when humankind is facing multiple challenges, global cooperation that includes all countries, all stakeholders, and all people is ever more important. By excluding a willing and able partner like Taiwan, the UN not only violates the fundamental human rights of Taiwan’s 23 million people but also greatly harms human welfare. To ensure the UN remains relevant to all people, the organisation should stand up to external pressures and open its doors for Taiwan!

* Jaushieh Joseph Wu Minister of Foreign Affairs Republic of China (Taiwan)

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EU AFFAIRS

Macron, the end of a myth?

Sunday September 30, the front-page headline of Le Monde, the French quality newspaper says: ‘Facing the difficulties, Macron changes his way of working’

by N. Peter Kramer

R

apidly losing his popularity, the French President decided to work on a less provocative attitude and to be less ‘imperial’.

‘In the eyes of the French people, the President became too arrogant and lost his popularity’, the newspaper writes.

the Republican Sarkozy and after him the Socialist Francois Hollande, at the same moment in their legacy.

And Hollande had already hit the lowest point ever.

It is clear, the French are disappointed in their young President.

In the spring of 2017, Emmanuel Macron promised the French the return of the entrepreneurs, the proliferation of innovation centres buzzing with young programers and the arrival of European headquarters of big multinationals.

His popularity is lower than that of his predecessors,

Ambitious reforms would create the most liberal and

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EU AFFAIRS

dynamic market of all developed countries. With President Macron, France would become the ‘start-up’ country and a big friend of enterprise.

In May 2017, the French elected Macron as their President for the next five years. A few months later they provided him with a majority for his party, La Republique en marche (The Republic en marche), in the Assemblee nationale, the French House of Commons. But seventeen months after Macron’s bombastic arrival in the presidential palace L’Elysee, it is becoming clear that ‘Project Macron’ is failing…

Recent statistics on the French economy are disastrous.

Growth is only 0,2%, a figure much lower, than for instance, that of the UK embroiled in Brexit problems.

Industrial production is declining and on a lower level than in 1998.

Retail business is decreasing; the French victory at the World Championship Football has not had any stimulating effect.

In 2017 the unemployment rate was decreasing, but in the 2nd quarter of 2018 83.000 new jobseekers were registered. Investment in France is declining sharply.

highschool teacher, a kind of vice-president. He used the Palace of Versailles for meetings with foreign heads of state. He dined with his close friends in the posh restaurant La Rotonde in Paris and spoke in very denigrating terms about the average French.

Many ministers quit or had to quit the government, led

by Macron’s squire Edouard Philippe. The most tragic loss for Macron was the stepping down of Nicolas Hulot, one of France’s most popular television personalities.

As a convinced and convincing ecologist, Hulot told the public that he could not reconcile with his conscience to stay in a government with no interest at all in the environment.

And there is so much more. The scandal around Macron’s personal bodyguard, who whilst in a police uniform, beat up innocent demonstrators. Or announcing like a bolt out of the blue that the pensions of millions of elderly French people were no Macron likes to play the EU card; longer index linked. he would like to change EU rules to

receive more money for his country.

But his buddy Angela Merkel’s position is eroding and many EU government leaders dislike his arrogant attitude towards them.

No doubt, Macron has turned the French political landscape upside down. His election campaign instigated a wave of optimism and sympathy in France. With Brexit, Paris would become the financial centre of the EU. ‘La France est de retour’ (France is on the way back up), he told his country. Together with German Chancellor Angela Merkel, Macron would change the rules of the EU and put France in the lead. It was an overwhelming, modern, optimistic campaign, that seduced a majority of French women and men to vote for him.

Luck was on Macron’s side as well. His political opponents were trapped in scandals or dogmatism; and the most important one, Marine Le Pen of the Front National, strangled herself by the way she performed in the most important television debate. The rule is, you are as strong as your opponents are weak.

French mayors are quitting in droves, double the number as during the previous legislature, because of new restrictive rules and unprecedented financial containment for municipalities.

Macron likes to play the EU card; he would like to change EU rules to receive more money for his country. But his buddy Angela Merkel’s position is eroding and many EU government leaders dislike his arrogant attitude towards them.

In the meantime, the French people are not interested at all in the EU. Their priority is how much money they have to spend and the quality of education and health care.

A note from the editor.

On the day, this magazine had to go to the printer, in the news appeared that Macron’s Minister of the Interior, Gérard Collomb, resigned. Collomb was called ‘the most faithful of the faithful’. He was the first French politician with fame who joined ‘The Republic en marche’ movement of Macron. Last week Collomb said that the French President had completely lost contact with the French people and doesn’t listen to

But after his victory, Macron behaved like an absolute monarch. He planned to make his wife, his former

anybody anymore. It seems that the Republic doesn’t ‘marche’ at all…

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A decade after the global financial crisis: What has (and hasn’t) changed?

by Susan Lund, Asheet Mehta, James Manyika, and Diana Goldshtein*

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he world economy has recently returned to robust growth. But some familiar risks are creeping back, and new ones have emerged.

IT ALL STARTED WITH DEBT. In the early 2000s, US real estate seemed irresistible, and a heady run-up in prices led consumers, banks, and investors alike to load up on debt. Exotic financial instruments designed to diffuse the risks instead magnified and obscured them as they attracted investors from around the globe. Cracks appeared in 2007 when US home prices began to decline, eventually causing the collapse of two large hedge funds loaded up with subprime mortgage securities. Yet as the summer of 2008 waned, few imagined that Lehman Brothers was about to go under—let alone that it would set off a global liquidity crisis. The damage ultimately set off the first global recession since World War II and planted the seeds of a sovereign debt crisis in the eurozone. Millions of households lost their jobs, their homes, and their savings.

The road to recovery has been a long one since those white-knuckle days of September 2008. Historically, it has taken an average of eight years to recover from debt crises, a pattern that held true in this case. The world economy has recently returned to robust growth, although the past decade of anemic and uneven growth speaks to the magnitude of the fallout.

Central banks, regulators, and policy makers were forced to take extraordinary measures after the 2008 crisis. As a result, banks are more highly capitalized today, and less money is sloshing around the global financial system. But some familiar risks are creeping back, and new ones have emerged. In this article, we build on a decade of research on financial markets to look at how the landscape has changed.

1.

GLOBAL DEBT CONTINUES TO GROW, FUELED BY NEW BORROWERS As the Great Recession receded, many expected to see a wave of deleveraging. But it never came. Confounding expectations, the combined global debt of governments, nonfinancial corporations, and households has grown by $72 trillion since the end of 2007. The increase is smaller but still pronounced when measured relative to GDP. Underneath that headline number are important differences in who has borrowed and the sources and types of debt outstanding. Governments in advanced economies have borrowed heavily, as have nonfinancial companies around the world. China alone accounts for more than one-third of global debt growth since the crisis. Its total debt has increased by more than five times over the past decade to reach $29.6 trillion by mid-2017. Its debt has gone from 145 percent of GDP in 2007, in line with other developing countries, to 256 percent in 2017. This puts China’s debt on par with that of advanced economies.

GROWING GOVERNMENT DEBT Public debt was mounting in many advanced economies even before 2008, and it swelled even further as the Great Recession caused a drop in tax revenues and a rise in social-welfare payments. Some countries, including China and the United States, enacted fiscal-stimulus packages, and some recapitalized their banks and critical industries.

Consistent with history, a debt crisis that began in the private sector shifted to governments in the aftermath. From 2008 to mid-2017, global government debt more than doubled, reaching $60 trillion.

Among Organisation for Economic Cooperation and Development countries, government debt now exceeds annual GDP in Japan, Greece, Italy, Portugal, Belgium, France, Spain, and the United Kingdom. Rumblings of potential

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sovereign defaults and anti-EU political movements have periodically strained the eurozone. High levels of government debt set the stage for pitched battles over spending priorities well into the future.

debt. Global nonfinancial corporate debt, including bonds and loans, has more than doubled over the past decade to hit $66 trillion in mid-2017. This nearly matches the increase in government debt over the same period.

In emerging economies, growing sovereign debt reflects the sheer scale of the investment needed to industrialize and urbanize, although some countries are also funding large public administrations and inefficient state-owned enterprises. Even so, public debt across all emerging economies is more modest, at 46 percent of GDP on average compared with 105 percent in advanced economies. Yet there are pockets of concern. Countries including Argentina, Ghana, Indonesia, Pakistan, Ukraine, and Turkey have recently come under pressure as the combination of large debts in foreign currencies and weakening local currencies becomes harder to sustain. The International Monetary Fund assesses that about 40 percent of low-income countries in sub-Saharan Africa are already in debt distress or at high risk of slipping into it. Sri Lanka recently ceded control of the port of Hambantota to China Harbour Engineering, a large state-owned enterprise, after falling into arrears on the loan used to build the port.

In a departure from the past, two-thirds of the growth in corporate debt has come from developing countries. This poses a potential risk, particularly when that debt is in foreign currencies. Turkey’s corporate debt has doubled in the past ten years, with many loans denominated in US dollars. Chile and Vietnam have also seen large increases in corporate borrowing.

CORPORATE BORROWING IN THE ERA OF ULTRA-LOW INTEREST RATES An extended period of historically low interest rates has enabled companies around the world to take on cheap

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China has been the biggest driver of this growth. From 2007 to 2017, Chinese companies added $15 trillion in debt. At 163 percent of GDP, China now has one of the highest corporate-debt ratios in the world. We have estimated that roughly a third of China’s corporate debt is related to the booming construction and real-estate sectors.

Companies in advanced economies have borrowed more as well. Although these economies are rebalancing away from manufacturing and capital-intensive industries toward more asset-light sectors, such as health, education, technology, and media, their economic systems appear to run on ever-larger amounts of debt.

In another shift, corporate lending from banks has been nearly flat since the crisis, while corporate bond issuance has soared. The diversification of corporate funding should

INTERVIEW

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Unsustainable household debt in advanced economies was at the core of the 2008 financial crisis. It also made the subsequent recession deeper, since households were forced to reduce consumption to pay down debt.

lending. In the United Kingdom, household debt has drifted downward by just nine percentage points of GDP over the same period.

In countries such as Australia, Canada, Switzerland, and South Korea, household debt is now substantially higher than it was prior to the crisis. Canada, which weathered the 2008 turmoil relatively well, has had a real-estate bubble of its own in recent years. Home prices have risen sharply in its major cities, and adjustable mortgages expose home buyers to rising interest rates. Today, household debt as a share of GDP is higher in Canada than it was in the United States in 2007.

MORTGAGE DEBT

OTHER TYPES OF HOUSEHOLD DEBT

Before the crisis, rapidly rising home prices, low interest rates, and lax underwriting standards encouraged millions of Americans to take out bigger mortgages they could safely afford. From 2000 to 2007, US household debt relative to GDP rose by 28 percentage points.

Housing bubbles were not confined to the United States.

Several European countries experienced similar run-ups— and similar growth in household debt. In the United Kingdom, for instance, household debt rose by 30 percentage points from 2000 to reach 93 percent of GDP. Irish household debt climbed even higher.

Looking beyond mortgage debt, broader measures of household financial wellness remain worrying. In the United States, 40 percent of adults surveyed by the Federal Reserve System said they would struggle to cover an unexpected expense of $400. One-quarter of nonretired adults have no pension or retirement savings. Outstanding student loans now top $1.4 trillion, exceeding credit-card debt—and unlike nearly all other forms of debt, they cannot be discharged in bankruptcy. This cycle seems likely to continue, as workers increasingly need to upgrade their skills to remain relevant. Auto loans (including subprime auto loans) have also grown rapidly in the United States.

Although overall household indebtedness is lower since the crisis, many households will be vulnerable in future downturns.

improve financial stability, and it reflects deepening capital markets around the world. Nonbank lenders, including private-equity funds and hedge funds, have also become major sources of credit as banks have repaired their balance sheets.

2. HOUSEHOLDS HAVE REDUCED DEBT, BUT MANY ARE FAR FROM FINANCIALLY WELL

US home prices eventually plunged back to earth starting in 2007, leaving many homeowners with mortgages that exceeded the reduced value of their homes and could not be refinanced. Defaults rose to a peak of more than 11 percent of all mortgages in 2010. The US housing collapse was soon mirrored in the most overheated European markets.

Having slogged through a painful period of repayment, foreclosures, and tighter standards for new lending, US households have reduced their debt by 19 percentage points of GDP over the past decade. But the homeownership rate has dropped from its 2007 high of 68 percent to 64 percent in 2018—and while mortgage debt has remained relatively flat, student debt and auto loans are up sharply.

Household debt is similarly down in the European countries at the core of the crisis. Irish households saw the most dramatic growth in debt but also the most dramatic decline as a share of GDP. The share of mortgages in arrears rose dramatically when home prices fell, but Ireland instituted a large-scale mortgage-restructuring program for households that were unable to meet their payments, and net new lending to households was negative for many years after the crisis. Spain’s household debt has been lowered by 21 percentage points of GDP from its peak in 2009—a drop achieved through repayments and sharp cuts in new

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3 BANKS ARE SAFER BUT LESS PROFITABLE After the crisis, policy makers and regulators worldwide took steps to strengthen banks against future shocks. The Tier 1 capital ratio has risen from less than 4 percent on average for US and European banks in 2007 to more than 15 percent in 2017. The largest systemically important financial institutions must hold an additional capital buffer, and all banks now hold a minimum amount of liquid assets.

SCALED BACK RISK AND RETURNS In the past decade, most of the largest global banks have reduced the scale and scope of their trading activities (including proprietary trading for their own accounts), thereby lessening exposure to risk. But many banks based in advanced economies have not found profitable new business models in an era of ultra-low interest rates and new regulatory regimes.

Return on equity (ROE) for banks in advanced economies has fallen by more than half since the crisis. The pressure has been greatest for European banks. Their average ROE

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over the past five years stood at 4.4 percent, compared with 7.9 percent for US banks.

Investors have a dim view of growth prospects, valuing banks at only slightly above the book value of their assets. Prior to the crisis, the price-to-book ratio of banks in advanced economies was at or just under 2.0, reflecting expectations of strong growth. But in every year since 2008, most advanced economy banks have had average price-to-book ratios of less than one (including 75 percent of EU banks, 62 percent of Japanese banks, and 86 percent of UK banks).

In some emerging economies, nonperforming loans are a drag on the banking system. In India, more than 9 percent of all loans are nonperforming. Turkey’s recent currency depreciation could cause defaults to climb.

The best-performing banks in the post-crisis era are those that have dramatically cut operational costs even while building up risk-management and compliance staff. In general, US banks have made sharper cuts than those in Europe. But banking could become a commoditized, low-margin business unless the industry revitalizes revenue growth. From 2012 to 2017, the industry’s annual global revenue growth averaged only 2.4 percent, considerably down from 12.3 percent in the heady pre-crisis days.

DIGITAL DISRUPTIONS Traditional banks, like incumbents in every other sector, are being challenged by new digital players. Platform companies such as Alibaba, Amazon, Facebook, and Tencent threaten to take some business lines, a story that is already playing out in mobile and digital payments. McKinsey’s Banking Practice projects that as interest rates recover and other tailwinds come into play, the banking industry’s ROE could reach 9.3 percent in 2025. But if retail and corporate customers switch their banking to digital companies at the same rate that people have adopted new technologies in the past, the industry’s ROE could fall even further.

Yet technology is not just a threat to banks. It could also provide the productivity boost they need. Many institutions are already digitizing their back-office and consumer-facing operations for efficiency. But they can also hone their use of big data, analytics, and artificial intelligence in risk modeling and underwriting—potentially avoiding the kind of bets that turned sour during the 2008 crisis and raising profitability.

4.

THE GLOBAL FINANCIAL SYSTEM IS LESS INTERCONNECTED—AND LESS VULNERABLE TO CONTAGION One of the biggest changes in the financial landscape is

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sharply curtailed international activity. Simply put, with less money flowing across borders, the risk of a 2008-style crisis ricocheting around the world has been reduced.

Since 2007, gross cross-border capital flows have fallen by half in absolute terms.

GLOBAL BANKS RETRENCH Eurozone banks have led this retreat from international activity, becoming more local and less global. Their total foreign loans and other claims have dropped by $6.1 trillion, or 38 percent, since 2007. Nearly half of the decline reflects reduced intra-eurozone borrowing (and especially interbank lending). Two-thirds of the assets of German banks, for instance, were outside of Germany in 2007, but that is now down to one-third.

Swiss, UK, and some US banks have reduced their international business. Globally, banks have sold more than $2 trillion of assets since the crisis. The retrenchment of global banks reflects several factors: a reappraisal of country risk, the recognition that foreign business was often less profitable than domestic business, national policies promoting domestic lending, and new regulations on capital and liquidity.

The world’s largest global banks have also curtailed corre-

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spondent relationships with local banks in other countries, particularly developing countries. These relationships enable banks to make cross-border payments and other transactions in countries where they do not have their own branch operations. These services have been essential for trade-financing flows and remittances and for giving developing countries access to key currencies. But global banks have been applying a stricter cost-benefit analysis to these relationships, largely due to a new assessment of risks and regulatory complexity.

Some banks—notably those from Canada, China, and Japan—are expanding abroad but in different ways. Canadian banks have moved into the United States and other markets in the Americas, as their home market is saturated. Japanese banks have stepped up syndicated lending to US companies, although as minority investors, and are growing their presence in Southeast Asia. China’s banks have ramping up lending abroad. They now have more than $1 trillion in foreign assets, up from virtually nil a decade ago. Most of China’s lending is in support of outward foreign direct investment (FDI) by Chinese companies.

5N EW RISKS BEAR WATCHING Many of the changes in the global financial system have been positive. Better-capitalized banks are more resilient

SPECIAL REPORT

and less exposed to global financial contagion. Volatile short-term lending across borders has been cut sharply.

The complex and opaque securitization products that led to the crisis have fallen out of favor. Yet some new risks have emerged.

CORPORATE-DEBT DANGERS The growth of corporate debt in developing countries poses a risk, particularly as interest rates rise and when that debt is denominated in foreign currencies. If the local currency depreciates, companies might be caught in a vicious cycle that makes repaying or refinancing their debt difficult. At the time of this writing, a large decline in the Turkish lira is sending tremors through markets, leaving EU and other foreign banks exposed.

As the corporate-bond market has grown, credit quality has declined. There has been notable growth in noninvestment-grade “junk” bonds. Even investment-grade quality has deteriorated. Of corporate bonds outstanding in the United States, 40 percent have BBB ratings, one notch above junk status. We calculate that one-quarter of corporate issuers in emerging markets are at risk of default today—and that share could rise to 40 percent if interest rates rise by 200 basis points.

Over the next five years, a record amount of corporate bonds worldwide will come due, and annual refinancing needs will hit $1.6 trillion to $2.1 trillion. Given that interest rates are rising and some borrowers already have shaky finances, it is reasonable to expect more defaults in the years ahead.

Another development worth watching carefully is the strong growth of collateralized loan obligations. A cousin of the collateralized debt obligations that were common prior to the crisis, these vehicles use loans to companies with low credit ratings as collateral.

REAL-ESTATE BUBBLES AND MORTGAGE RISK One of the lessons of 2008 is just how difficult it is to recognize a bubble while it is inflating. Since the crisis, real-estate prices have soared to new heights in sought-after property markets, from San Francisco to Shanghai to Sydney. Unlike in 2007, however, these run-ups tend to be localized, and crashes are less likely to cause global collateral damage. But sky-high urban housing prices are contributing to other issues, including shortages of affordable housing options, strains on household budgets, reduced mobility, and growing inequality of wealth.

In the United States, another new form of risk comes from

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nonbank lenders. New research shows that these lenders accounted for more than half of new US mortgage originations in 2016. While banks have tightened their underwriting standards, these lenders disproportionately serve lower-income borrowers with weaker credit scores—and their loans account for more than half of the mortgages securitized by Ginnie Mae and one-third of those securitized by Fannie Mae and Freddie Mac. CHINA’S RAPID GROWTH IN DEBT While China is currently managing its debt burden, there are three areas to watch.

First, roughly half of the debt of households, nonfinancial corporations, and government is associated, either directly or indirectly, with real estate. Second, local government financing vehicles have borrowed heavily to fund low-return infrastructure and social-housing projects. In 2016, 42 percent of bonds issued by local governments were to pay old debts.

This year, one of these local vehicles missed a loan payment, signaling that the central government might not bail out profligate local governments. Third, around a quarter of outstanding debt in China is provided by an opaque shadow banking system.

The combination of an overextended property sector and the unsustainable finances of local governments could eventually combust. A wave of loan defaults could damage the regular banking system and create losses for investors and companies that have put money into shadow banking vehicles. Yet China’s government has the capacity to bail out the financial sector if default rates reach crisis levels—if it chooses to do so. Because China’s capital account has not been fully liberalized, spillovers to the global economy would likely be felt through a slowdown in Chi-

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na’s GDP growth rather than financial contagion.

ADDITIONAL RISKS The world is full of other unknowns. High-speed trading by algorithms can cause “flash crashes.” Over the past decade, investors have poured almost $3 trillion into passive exchange-traded products. But their outsized popularity might create volatility and make capital markets less efficient, as there are fewer investors examining the fundamentals of companies and industries. Cryptocurrencies are growing in popularity, reaching bubble-like conditions in the case of Bitcoin, and their implications for monetary policy and financial stability is unclear. And looming over everything are heightened geopolitical tensions, with potential flash points now spanning the globe and nationalist movements questioning institutions, long-standing relationships, and the concept of free trade.

The good news is that most of the world’s pockets of debt are unlikely to pose systemic risk. If any one of these potential bubbles burst, it would cause pain for a set of investors and lenders, but none seems poised to produce a 2008-style meltdown. The likelihood of contagion has been greatly reduced by the fact that the market for complex securitizations, credit-default swaps, and the like has largely evaporated (although the growth of the collateralized-loan-obligation market is an exception to this trend).

But one thing we know from history is that the next crisis will not look like the last one. If 2008 taught us anything, it’s the importance of being vigilant when times are still good. * Susan Lund is a partner at the McKinsey Global Institute, Manyika is a chairman of and director, and Diana Goldshtein is a knowledge specialist. Asheet Mehta is a senior

where James

partner in McKinsey’s New York office.

EBS 2018

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Ten years after the fall of Lehman, corporate debt may be next bubble Ten years after the financial crisis, the seeds are being sown for the next potential meltdown

by Hans Izaak Kriek*

T

en years after the financial crisis, the seeds are being sown for the next potential meltdown. This time, the tinder isn’t subprime mortgages but a mountain of risky corporate debt that looks eerily similar.

mer New York Fed President and Treasury Secretary Tim Geithner, and former Treasury Secretary Hank Paulson reflect on the responses they led to the 2007-09 global financial crisis and ensuing Great Recession.

UBS estimates there’s a record $ 4.3 trillion in 2010 – that could that could begin to see rising defaults if the healthy U.S. economy starts to wobble.

Here are highlights of their Wide-ranging remarks to the New York Times and CNBC.

Mark Zandi, chief economist of Moody’s Analytics said: “I view this as the most severe threat to the economy and financial system.

The other day marks the 10th anniversary of Lehman Brothers’ bankruptcy filing, a seismic widely viewed as the trigger of the financial crisis as it rapidly caused investors to lose confidence in banks and the financial system.

Former Federal Reserve Chairman Ben Bernanke, for-

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REFLECTIONS OF THE FINANCIAL CRISIS Tim Geithner on the hardest moment of the financial crisis, asked to recall the worst moment of the crisis, he recalled sitting at breakfast with his wife as she read about what had been done the day before and seeing a mix of despair and doubt on her face.

Ben Bernanke gives his bottom line on the government response to the financial crisis, he says in hindsight, the government’s response was late, but proved to be successful

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even though it remains unpopular.

WHY DIDN’T THEY DO THINGS DIFFERENTLY? Hank Paulson says that the government couldn’t force banks to take taxpayer-funded capital in October 2008, so it had to make the terms attractive, which is why he didn’t put limits on bankers’ bonuses.

Tim Geithner on whether there’s an opportunity to do any of the crisis response differently he says that if the U.S. government had waited until there was no option but to nationalize some big banks, it could have attached more strings. Acting earlier so the banks could remain in private hands was economically sound, but politically treacherous.

Geithner on what the Fed can do observes that people think the Fed has more power than it actually does. He says there is “a lot of magical thinking about what central banks can do.”

WHY DIDN’T THEY SAVE LEHMAN BANK? Ben Bernanke on the Lehman Brothers failure: “Lending to Lehman was not only beyond the Fed’s legal authority, but also wasn’t feasible. Tim Geithner recalls that some people were initially relieved when the authorities didn’t save Lehman, but he saw it as evidence that the crisis had outstripped the Fed’s power to contain it.

“There was a run, a panic analogous to the 1930s, but in an electronic form rather than people lining up in the street,” he said in his reaction. “The availability of credit plummeted.”

Echoing comments made last week by former Treasury Secretary Timothy Geithner, Bernanke voiced concern that post-crisis reforms had left the Fed and other policy makers with fewer tools to combat the next crisis.

In an effort to prevent future government bailouts, Congress curbed the ability of the Fed, the Federal Deposit Insurance Corp. and the Treasury Department to provide emergency support to the financial system.

While the reforms overall had significantly improved the system’s resilience to shocks by boosting bank capital and other measures, “policy makers need to have the appropriate tools to fight the next crisis,” Bernanke said in a reaction.

“Banks and governments have learned little. Due to a relaxation of the rules for banks, the regulator has fewer opportunities to intervene if things go wrong,” he says.

They were unable to prevent Lehman from failing. Hank Paulson explains on communication during a crisis why he wasn’t more forthcoming the day Lehman failed. Had he acknowledged the limits of the government’s ability to intervene, Morgan Stanley would have collapsed immediately.

BERNANKE ADMITS FED MADE MISTAKES COMBATING CRISIS 10 YEARS AGO Ben Bernanke acknowledged that policy makers made two critical errors fighting the financial crisis a decade ago: They failed to see it coming with such force then underestimated how much economic damage it would cause later.

“Nobody saw how widespread and devastating the crisis itself would be,” he said in a short reaction. Bernanke took issue with economists who contend that the housing-price bust -- and its impact on household wealth and consumer spending -- was the main driver of the deep downturn a decade ago.

While that undoubtedly played a major role, particularly in sparking the crisis, Bernanke said the recession wouldn’t have been as bad as it was if investors hadn’t yanked money out of banks and other financial institutions.

*Hans Izaak Kriek *International political commentator and journalist for European Business Review and editor-in-chief of Kriek Media.

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SHIPPING

18th NAVIGATOR – The Shipping decision makers weekend The 18th NAVIGATOR FORUM was held this year in Chios Island, September 2123, 2018 with the warm hospitality of Chians

by Alexandra Papaisidorou

T

his is the first time that NAVIGATOR SHIPPING CONSULTANTS, organized such a week-end for shipping decision makers, with a range of activities facilitating a friendship atmosphere and obvious moments of networking.

More than 300 high-ranking and shipping community executives, from maritime Organizations, journalists, Embassies’ representatives, academics and students from Educational Institutions and from AEN of Oinousses and Chios gathered in such mythical maritime Greek island.

As one of the greatest achievement of this year's NAVIGATOR FORUM has been an open dialogue held in a full amphitheater by representatives of the entire spectrum of the shipping industry, including Irene Argyri, Chief Of Coast Guard of Chios, Plotarch Panteleimon Vatoussis Commander of AEN of Oinousses, Maria Makka, Director of Studies of AEN of Chios, as well as Greek seafarers, where the problems of the sector were discussed, but also with proposals for their possible resolution.

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Danae Bezantakou, CEO of NAVIGATOR welcomed the participants underlining that in order to maintain the leading position of Greek Shipping worldwide, we should combine ORGANIZATION-METHODOLOGY-WORK-FINANCING-KNOWLEDGE ... but also the awakening of the next generation!

The President of NAVIGATOR, Capt. Dimitris Bezantakos, during his opening remarks stressed that value of SYNERGY and “HANDS ON” (meaning personal contact and care) are keys to success and to achieve the goals.

The Minister of Shipping, Mr. Fotis Kouvelis, indicated in the message he has transmitted to the organizers that his priorities are the development of maritime education and the protection of labor rights, having begun, in cooperation with the shipowners, an effort to upgrade Naval Education, with the modernization of the facilities of the AEN, their curriculum and their connection with higher education institutions both in Greece and abroad.

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MEDIA

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MEDIA

A landmark year for Media Industry So far, 2018 has evolved into a quite episodic year, as economic, geopolitical and commercial tensions have reached to a point where they constitute a daily phenomenon. On the other hand, in the business field there is a great and intense corporate growth, which is reflected in the stock of the companies and the exchanges they trade in, with the record highs breaking down.

by Giannis Pagkalias*

I

n 2018, two companies surpassed the psychological barrier of 1 trillion (Apple, Amazon), with the Dow Jones, S&P 500 and Nasdaq on the Wall Street stock market experiencing ‘’high flights’’ and surpassing their historical highs several times within the year.

Mobility is intense in the corporate environment, particularly with regard to US companies, as well as their quarterly financial results are getting improved, while engaging in acquisitions and mergers.

Acquisitions and mergers involving US companies, amounted to 1.03 trillion dollars in the first half of 2018 or, out of a total of 3.54 trillion dollars of global agreements.

THE MEDIA LANDSCAPE One of the sectors that has shown intense mobility during the year is the media, as three major agreements were reached, which –as soon as they are going to be implemented- will set 2018 as a landmark year for the media industry. The total amount of the three agreements is $196.7 billion, namely about 25% of the total amount of US mergers and acquisitions related to the media.

The beginning was in late June when the US Department of Justice gave the “green light’’ to the world's largest telecom operator, AT&T to buy Time Warner for $85.4 billion and acquiring, among other TV channels, HBO, Cartoon Network, CNN, movie studio, DC Comics, and 10% of Hulu's company shares for monthly subscription.

In less than 10 days, the deal was announced for Disney's acquisition of Twenty First Century Fox's film and television assets for $71.3 billion, dominating the US Comcast media giant, which intended to offer $65 billion.

The two giants of the media industry were involved in a battle to acquire Fox's film production company as well as

National Geographic and FX networks, Star TV, shares in the British group Sky, the Endemol Shine Group, the Hulu network and regional sports networks.

In Hulu the shares are: 30% on behalf of Disney, Twenty First Century Fox and Comcast (via NBC Universal), and 10% on behalf of AT&T through Time Warner's acquisition. Comcast and Disney crossed their swords again to acquire 61% of the British Sky TV group.

Comcast, with Sky acquisition, has a huge opportunity to gain access to the European market and become the world's largest pay-TV group, reaching about 52 million customers worldwide, along with 23 million Sky subscribers in five European countries.

Additionally, whichever company acquires the British group automatically acquires the television rights of the most expensive football product in the world, namely the Premier League which has the world's largest audience.

It is a fairly complex transaction. The rest 39% of Sky has been acquired by Australian tycoon Rupert Murdoch through Twenty First Century, which is also owned by him.

The deal for the sale of Fox includes 39% of Sky assets.

Not only Disney through Fox is interested in acquiring the remaining 61% for sale, but also Comcast has expressed its interest for this acquisition. As a result, the two giants are adversaries for a second time in an effort to acquire the media company.

In Britain, it is true that the regulatory authorities have not seen in a positive manner the prospect of buying 100% of Sky shares by Rupert Murdoch, because of his intense business presence in the British media. From the beginning they expressed raising concerns about his excessive influence in the UK media sector.

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MEDIA

Finally, in September, while Fox is authorized to acquire the remaining stake in Sky, the regulatory authorities took an unprecedented decision; the acquisition will be completed through a three-round auction.

At the end of the auction, Comcast was one that acquired 61% of the Sky group, since the final bid was $40 billion, $3.6 billion up compared to Fox's offer.

The final result? Comcast - Disney 1-1.

FROM RIVALS, PARTNERS Consequently, the two companies were transformed from rivals to co-owners on both the UK television network Sky and Hulu. It sounds quite strange and unusual the fact that rival companies participate in third-party companies by holding their shares.

In its announcement of its first bid in October 2016, AT&T argued that the acquisition of Time Warner would help the company compete with technology companies such as Amazon and Netflix. After the deal was completed, AT&T said that the acquisition would help it attract new customers, combining entertainment with telecommunication services.

"We are extremely proud of what we have created in 21st Century Fox and we firmly believe that merging with Disney will bring even more value to the company and its shareholders as the new Disney sets the pace in a dynamic era for our industry, said Rupert Murdoch, adding that "we are confident that the combination of Fox brand assets and franchises with Disney will create one of the largest and most innovative companies in the world".

For his part, Disney’s Managing Director, Robert A. Iger,

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said that the combination with Fox's television and film products would allow Disney to create more appealing content, expand its offerings to consumers, its international presence and offer more personalized and fascinating entertainment experiences to meet the growing consumer demands all over the world.

TELECOMMUNICATION COMPANIES ‘’WINK’’ ON TELEVISION The trend has begun several years ago, but rather in the past, it has been more testing, preparing the ground for telecoms and media industry to move forward together.

It is true that telecommunication companies have opened up to the television market since the last decade, offering on-demand television content to their subscribers, especially in the early years via the Internet.

The project was not very successful because the television content offered was not at the level of the television networks, so subscribers turned their back on television services of telecommunication companies. However, things have greatly changed since then, with the evolution and development of technology.

The first one who setting the course was music industry, which within a few years became so accessible that anyone who wanted to avoid it was impossible. During the years, the music has been digitized, diminished in volume and could now be transported more easily into small devices. As a result, the people devote more time to mobile devices and above all 80% of the tasks they perform require the use of the internet.

Observing that the public spend more time on mobile devices, television networks realized that part of this time will be distracted from the television.

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MEDIA

They react relatively quickly and start to offer their content over the Internet, and somehow the first partnerships of TV networks with telecommunication and internet service providers start. These collaborations now offer a real-time TV program for large subscriptions or satellite channels. The first step was made, but there was an evolution that was meant to change the whole TV landscape.

NETFLIX & HOUSE OF CARDS In April 1998, a company from Scotts Valley, California, was founded. This company has been activated in the sale and rental of films on a DVD format and it is called Netflix.

But there was a noticeable difference. The company provided its services by requiring a monthly subscription, without charging extra for the films rented by users.

The company has begun to consider the prospect of being able to offer cinematic content online, but by 2005 the internet was not that fast and such a service was still impossible. That specific year the subscriptions have reached 4.2 million.

Within two years, the titles of the movies and television series have reached 12.000 and its popularity is also being expanded outside the US over the years. As a result, its services are now available in 140 countries worldwide and subscriptions have exceeded 130 million at the end of the first half of 2018. The revolution has been taken place.

Streaming on demand means that the viewer watches a movie or a series whenever he/she wants it and does not depend on the program of any TV channel or network. The most important is the fact that the consumers no longer need television to watch a movie or series. And what’s even better? There are no ads.

In 2013, Netflix made another major change. The company presented its first full-length production, the House Of Cards TV series, which is an adaptation of the British

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mini-series of six episodes based on the novel by Michael Dobbs.

In the new version, British parliamentary political action is being transferred to the White House and the audience follows Frank Underwood's story (Kevin Spacey), who creates a complicated plan with the help of his wife, Claire Underwood (Robin Wright), to take over the presidency.

The series goes on its sixth and final season, having achieved something unique: The audience will never face the political system in the same way.

THE AUDIENCE HAS EMBRACED THE TELEVISION SERIES As far as House of Cards series is concerned, Netflix did nothing more than follow the general trend that had prevailed since the beginning of the 21st century; Investing in the production of series.

The TV series has greatly encouraged television networks to keep the current subscribers or add new ones. This is not by accident. The scriptwriters borrowed data from the films of the major film studios.

Having the opportunity to tell a story in a larger television time, scenarios can unfold better, reversals in the narrative are more and the production is really expensive (just like Hollywood). The characters are presented more extensively due to the long television time (in the cinema this is impossible) and generally speaking they are everyday people with features that we also distinguish in our character or those around us. As a result, the TV audience can feel identified with the protagonists.

Furthermore, watching TV or videos from the mobile device in the comfort of one’s own home subconsciously creates a sense of intimacy that de facto cinemas cannot

MEDIA

offer. The TV series are here to stay and are now part of our everyday life.

strive to become giants in order to face the competition from new players just like Netflix.

This was clearly understood by Netflix, which formed a surprising partnership with a screenwriter whose series had millions of viewers around the world. In 2017, the company signed a fifteen-year contract with Shonda Rhimes, Gray's Anatomy screenwriter, Scandal, How to Get Away with Murder, for the production of nine television series.

DOES TRADITIONAL TELEVISION AND CINEMA BEGIN TO DECLINE?

The amount in order to secure the exclusivity of the creator of huge successes, is said to be up to $135 million!

Certainly such an amount is not accidentally invested by a company that has revolutionized the media.

5G TECHNOLOGY IS UNDERWAY One element that will bring about a great change in our life is the coming of 5G technology.

According to scientific studies, ages 18-24 are watching content on the internet at 90%, with the percentage aged 25-34 being slightly less than 86%. The same audience is ranked first having 41% and 37% of Web TV channels tracking, as well as illegal streaming (48% and 43%) and torrents (45% and 36%). Conventional channels are the main way of monitoring older age groups.

Ages 35-44 watch TV content through traditional channels (80%), while the percentage of 45-54 is just 2 points less (78%). Content monitoring by device is through: 70% Smartphone, 61% Laptop, 41% Desktop, 44% Conventional TV, 33% Smart TV, 6% Games Console, and 25% Pay TV. The average number of content devices per person is 3.4 while the most popular content categories are: 85% movies, 67% series, 50% comedy videos, 49% news, 43% reality and talent shows, 43% sports, 43% documentaries.

Comcast and Disney fought for the acquisition of Fox TV and Film Studios, while AT&T acquired Time Warner at a time when big media companies and telecoms companies

Someone might reasonably wonder: What if someone won’t watch television programs in a few years, since we will be able to watch whatever we want any time?

The answer to this crucial question is the following: There are still two TV products for which people watch TV; that is news and sports. The news will always rank higher as far as the preferences of the audience are concerned.

Furthermore, in traditional ways of communication, the anonymity of the internet is largely absent. Live streaming during the speeches of various leaders, the election results and major events are covered predominantly by television networks.

And of course there are sports events. One has the possibility to watch a football game after it has been completed. Nevertheless, is the entertainment still the same when we already know the final result?

The answer is pretty clear. Things have definitely changed and probably in some years market analysts will be referring to the pre-and post-Netflix era, because of its innovation in television. Still, the TV keeps its position in the audience’s preferences and the same goes for the cinema.

There is a massive differentiation of watching a movie at the cinema than at home.

The trend, which seems to prevail, will be like this: By subscribing to a company, consumers will be able to enjoy Internet, mobile & TV connection and possibly music services. * Giannis Pagkalias Journalist at “Naftemporiki” economic and business newspaper and radio producer

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ENERGY

How to lower electricity prices in Europe One important key to lowering electricity prices in the short-term are the grid utility fees. And digital solutions offer the most significant leverage to bring them down.

By Christian Chuboda*

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iscussions on how to design the energy transition often boil down to the cost aspects. The management consultancy McKinsey released a study estimating the costs for a system change in Europe to a green and decarbonized power sector at €6,600 billion. Europe’s cumulative GDP between 2020 and 2050 is calculated to be €510,000 billion – the system change would therefore amount to 1.3% of the overall GDP.

prehend, given that implications for the individual level remain unclear. That is why the price for electricity has become such a conspicuous indicator. Everybody knows more or less what he or she is paying for electricity, and any increase is felt in the individual budget. Electricity prices are now closely connected to the overall energy transition – increasing prices symbolise the failure of the energy transition.

Still, these are abstract numbers for most citizens.

They reach too far into the future and are hard to com-

What few consumers are aware of: electricity prices for household consumers in Europe differ a lot. Based on

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ENERGY

the average of the EU-28 states, the price for one kWh was slightly more than 20 Cents in 2016. However, Danish, German, and Belgian customers payed up to 10 Ct more for each kWh. The reasons behind the price spread are numerous. First of all, local differences in purchasing power and exchange rates contribute to the fact that Denmark and Germany are leading the ranking compared to Bulgaria having the cheapest prices.

Another explanation frequently offered by politicians, energy-intensive companies or consumers are the varying costs of energy generation in the respective countries. Advocates of this narrative postulate that countries with a higher share of renewables in their energy mix have established a higher price level due to the long-standing subsidies for renewables.

However, the statistics do not support this theory. Sweden, a country that produces half its electricity from nuclear resources and half with hydro power, has a similar basic price, i.e. the price for the production of electricity before VAT as well as other taxes and levies.

Moreover, the Netherlands still produce 80% of their electricity using fossil fuels, mostly natural gas. Their basic price is comparable to that in Germany.

Thus, the big leverage to lower electricity prices is not the production side of the equation, but the taxes and levies. Generally, the electricity price for consumers is made up of three major components: costs for production, grid-use and other levies and taxes. The latter two are more or less politically determined.

In Germany, more than half of the power price for household consumers consists of those politically determined components. German citizens find a number of different factors on their electricity bill: 25% of the overall price goes to the power grid providers, the tax for financing investments into renewable energy makes up almost another quarter.

The profit margin and supplier’s cost of purchasing wholesale power on the market amount to one fifth of the overall price, other levies total up to 30% of the price. Germany’s grid fees are amongst the highest in Europe. Other countries may have higher network fees, but profit from lower costs for the production or lower taxes and levies. Europe’s largest country is the testing ground for a complex energy infrastructure trying to optimise the transition from fossil fuels to renewable energy sources while keeping the energy prices at a stable level.

Germany’s electricity generation is largely decentralised. Around 40% stem from renewable sources,

mostly wind and solar. During the first half of 2018, renewable energy sources satisfied more of Germany’s power demands than coal. Renewables will soon be or sometimes already are producing energy at grid parity – meaning they have the same production cost as conventional sources. Again, the production side of the equation will be negligible.

One important key to lowering electricity prices in the short-term are the grid utility fees. In a complex energy system with many traditional structures, digital solutions are the most important leverage to bring down prices. By connecting and intelligently controlling power plants, grid-use can be optimised leading to lower grid fees paid by both consumers and industry.

The approach for the grid fees is twofold: With a temporal flexibility, electricity can be intelligently used and stored when renewables produce energy in abundance. A spatial flexibility underlines the importance of sharing energy within a community. The closer to the actual production site the energy is consumed, the better for the whole system. Thus, grid fees can be cut and hence electricity costs reduced. Suddenly, the perception of the energy transition changes from being a failure to being successful.

The recent deal between European Parliament and Council on the Renewable Energy Directive II (RED II) supports the development of renewables and shows the importance of local generation. RED II strongly backs energy communities and prosumers by including a strong definition of self-consumption. Furthermore, the deal includes a promise to remove all charges on electricity produced by households that is consumed on premise.

By strengthening local structures and excluding the direct use of electricity from taxes and levies, the EU supports the decentralised energy transition and lowers the prices for customers all around Europe. At the same time, digital solutions help to increase the possible use cases for renewables. As digital solutions make our day-to-day lives easier, why not also make the energy transition successful and affordable? Using digital solutions to bring down grid fees would be a first step.

*By Christian Chuboda * Christian Chudoba is CEO of Lumenaza, a German company providing software for decentralised and digitised energy

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TRENDS

Social entrepreneurs can change the world - but 6 things are holding it back

by Kyle Zimmer* and Kristine Pearson**

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ocial entrepreneurs around the world have been unparalleled catalysts for social change. They use market-driven strategies to tackle critical social issues in brand new ways. Through non-profit, for-profit and hybrid enterprises, social entrepreneurs have promoted a broad range of solutions focused on sustainable development, decades before they were called ‘SDGs’.

The real power of social entrepreneurs is their talent for identifying market failures that are holding humanity back, and their skill in tailoring and implementing solutions. These include providing clean water, access to renewable energy, financial inclusion, high-quality educational resources and critical information that allows life-giving agriculture to flourish.

As the field has matured, so too has the complexity and depth of the social issues at stake. We are confronted by a rising tide of crises - teetering democracies, racial injustice, gender and LGTBQ discrimination, environmental catastrophe, population growth, food instability, nationalism and technological advances that require new skills and workforce training. Not to mention the alarming rise of displaced populations caused by natural disasters or conflict.

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Now entering its fourth decade, the field of social entrepreneurship is at a crossroads. Enterprises are not growing at a sufficient pace to meet the escalating problems. Our sector has excelled at launching initiatives. But it has neglected the underlying systems for scaling successful, mature models. We are in danger of backsliding on the groundbreaking social accomplishments we have achieved. We also risk losing the expertise of experienced, yet often discouraged social entrepreneurs, at the very time when the social sector is needed most.

CANDID, PEER-TO-PEER ANALYSIS Clearly, there are market failures in the social sector. Our task is urgent. As social entrepreneurs, we need to do what we do best: examine our field and identify the challenges holding us back, then develop and implement solutions to propel our collective work forward.

While universities, think tanks and other groups study and support social enterprise, the missing link has been candid and authentic engagement from those of us in the field. It is one thing to study social entrepreneurs; it is quite another to worry about meeting payroll, ensure your organi-

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zation is continuously innovating its models and aligning staff expertise to increase impact, while often putting your health, family, relationships and even lives on the line in your quest to deliver systemic change.

WHAT’S STOPPING IT? Here are six of the many obstacles hindering progress in the social sector.

1. THE STRUCTURE OF THE SECTOR DOES NOT PROMOTE INNOVATION Social entrepreneurship, like every other sector, needs to encourage experimentation and risk. The value of this and its impact on innovation is visible in nearly every field from health to education to the agricultural and industrial sectors.

However, because funding almost exclusively favours positive results and conservative impact metrics, experimentation in the social sector is not incentivized. While deliverable metrics are one goal, the greatest gains in any field are usually delivered by strategies that are experimental. The results of these speculative strategies are, by definition, speculative. The social sector’s dependence on metrics-based funding reduces its ability to experiment, develop learnings and re-innovate.

In the corporate world, experimentation is called fail fast and fail often. In the social sector, it’s simply called failure.

2. THE SECTOR DOES NOT HAVE CONSISTENT ACCESS TO CAPITAL While capital is limited for early-stage social enterprises, it is greatly diminished for proven social enterprises working to scale. There are advances in impact investment, and the field is trying to gain traction. But there are also significant

doubts about the viability of a capital market that presumes that investors will be satisfied with below market financial returns. In addition, there are persistent doubts about whether an enterprise that must deliver significant returns can be free to pursue and prioritize social change.

In addition, cultural barriers can significantly limit access to capital for women, minority and indigenous social entrepreneurs around the world.

3. COMPLEX AGENDAS In the private sector, if you design a better product, venture capitalists come to you with cash, and expectations for returns on that capital.

In the social sector, investors come to a social entrepreneur and say: "we love what you have built, but here are our priorities that must be included in your business execution". Social entrepreneurs are then tasked with bending their models to serve the needs of the funding community over the needs of those it is their mission to serve. This misalignment is distracting to the scaling efforts of social enterprise and does not allow the entrepreneur to direct growth in the most efficient and effective manner to meet social needs.

4. NON-TRANSPARENT REPORTING Because the social sector is starved for funding, there is often a push to report the best findings possible in order to maximize the likelihood of the next round of funding. It is not that anyone misrepresents their results (ok, some do) but the link between positive findings and future survival funding is perilous. Again, this dynamic undercuts experimentation and innovation.

Similarly, funders generally reward positive results. They are less likely to fund social entrepreneurs who report set-

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TRENDS

backs, let alone failures - even when those experiments can lead to better strategies for the field.

5. THE MEDIA LOVES NEW NON-PROFITS The media is fascinated with large businesses, but not with large social enterprises. Media stories tend to focus on small or new enterprises that feature a narrative of human compassion, a new technology or a new use of a technology. The social sector is an elephant graveyard for such short-term stories.

The field’s voice and storytelling ability must be expanded to reflect the full spectrum of social institutions, if we are to drive unprecedented large-scale change. As a sector, we also need to promote examples of systemic change organizations so that the field can learn from itself.

6. SOCIAL SECTOR LEADERS STRUGGLE WITH BURNOUT There is growing concern that social entrepreneurs, who deal with the chronic stress of maintaining and growing their organizations, are suffering from depression and burnout. Nearly 50% of the social entrepreneurs attending the World Economic Forum’s Annual Meeting 2018 reported struggling with burnout and depression – a figure that is both alarming, especially considering these are the “most successful” and scaled social entrepreneurs, and not surprising at all. This may be a different experience from that of a typical entrepreneur, who might not have the same emotional investment in those they exist to serve.

Donors, boards and investors need to acknowledge better the realities of long-term exhaustion, and provide resources to support social sector leaders. Foundations and investors need to come to grips with how their practices contribute to burnout and long-term exhaustion of the very leaders they seek to support. We are encouraged by the fact that a group of funders associated with Big Bang

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Philanthropy started to do exactly that at their most recent convening, and we strongly encourage philanthropists and programme officers to initiate honest, two-way conversations with their grantees and investees on this topic.

In addition to burnout, the egos of passionate social sector leaders may at times impede their business judgment. For example, one option for scaling may be merging two social enterprises, but the concepts of mergers and acquisitions as a business strategy are rarely discussed.

The social sector also suffers from the same issues of inequality that have been reported in other sectors. While social enterprises led by women, people of colour, indigenous people or youth may be contributing significantly to social change, issues such as sexual harassment and assault, racism, sexism, ageism and related issues can negatively impact funding and growth opportunities for their organizations, further contributing to burnout.

We know these six obstacles are only the start. There is certainly a longer and more complex list of issues that need to be acknowledged and addressed.

In a series of blog posts, confidential interviews, surveys and other forms of engagement, we will be joined by social entrepreneurs from around the globe. Collectively, we will identify and tackle the challenges both hindering progress in the social sector and also creating change for those we serve. Forthright and unvarnished dialogue and evaluation is critical to addressing what is wrong with the field, learning how social entrepreneurs fail the sector and providing what is needed to support significant scaling, continued innovation and impact around the world. *Kyle Zimmer *President and Chief Executive Officer, First Book **Founder and CEO, Lifeline Energy

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ECONOMIC OUTLOOK

The Greek Support and Restructuring Program: Between Intent and Efficiency To Jean-Claude Juncker, the President of the European Commission, one of the most well-seasoned and dedicated European politicians, we have to acknowledge at least his continued and practical support for Greece throughout this longstanding crisis.

Dr. Nikitas Kastis and Dr. Antonis Zairis *

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ven when Greek society, with high rates of 62%, was supposedly rejected his plan, with the referendum as a lever of political support for the government, targeting the President of the Commission as the main representative of the European partners, Mr. Juncker showed understanding. And he insisted, in the end, persuading the leaders of the major Member States not to adopt the €50 billion Greece’s "exit plan" from the Eurozone - but the -about €35 billion more expensive- Fiscal Adjustment and Structural Reform Program. This was the 3rd Memoran-

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dum of Understanding, which included the continuation of almost all of the incomplete reforms from the 2nd Program.

The current Greek government, with the luck of the political time at its disposal, has gone even further and almost exclusively into the direction of fiscal adjustment, which of course, was needed again after the abandonment of the 2nd Program and the fiscal derailment of the first half of 2015. And in this direction, the Greek government

ECONOMIC OUTLOOK

moved easily because of the de facto affinity of an intensive taxation policy with the "ideological suspension" that the ruling party has. But also by accelerating and, in the end effectively, with "overproduction", at least at the significant increase in public revenues, taking advantage of the institutional "tools" that had been consolidated with the previous Programs despite the fierce disagreement of the opposition then and currently the government.

While the present government has always tried systematically in all policy areas for the availability of social goods, i.e. in health, safety and education, to minimize - or even to pay without prior delay - the so-called costs to third parties. Although they represent a (very) small part of the annual budget for ministries and the public sector in general - because of the prohibitively large percentage of wage costs - on the other hand, they concern work and tasks critical to the present elementary, already very low, operational capacity of these entities. Hence the phenomena of the decline in the effectiveness of structures and mechanisms to ensure public safety and social peace, health and education - less directly visible to the latter due to the nature of the long-term impact on the field.

It is quite obvious that the distance between political intentions, as they were partly reflected by indicators and prerequisites in the "Adaptation and Reform Programs" and their ultimate effectiveness, declined between 2010 and 2014, while took off again during the 3rd and final Program. With the sole exception of the scope of fiscal adjustment, which was otherwise achieved in excess, with a fragile balance of government revenues and expenditures and with the overwhelming burden on the economy. After that, this balance did not come as a result of the gradual address of the root causes of the crisis. That is, as a result of similar progress in the area of reforms, with achievements in the field of non-budgetary objectives and prerequisites of the Program (we almost all learned about "prior actions"!).

Just because the results are far from the intentions and the programmatic objectives, having left aside the difficulties for the two-year period 2019-2020, one would expect if not from the Greek political staff, at least from the European institutions, greater sensitivity. This would be depicted in statements with "clear messages" to the Greek society.

That is, while we actually reached the end of the Program and this is a "conquest" of the Greek people, because of the unjust and absurdly increased sacrifices to which it was subjected, at the same time this people must realize that we will still need significant changes, so as to ensure the well-being for the future generations.

In a nutshell, what it is really worrying is the alleged flattering declaration of the philhellene President of the Commission that "... after August 20th, Greece will come out of an eight-year financial support program, being able to rely on its own forces (without help of other European states), securing its place in the heart of the Eurozone and the Union". While he knows that this could happen for a maximum of 12-18 months, since the reforms in the goods markets and in the public sector, health, education and - again - insurance do not progress quickly. What would it cost him if he added a phrase, and specifically, that this would be "sustainable" only if the delayed ("cursed") reforms are about to be made?

And so, unfortunately, for the image of these institutions towards the promising parts of Greek society, but also at the expense of the need to raise awareness in this society, the President of the EU has been tragically disproved, almost " before the rooster crows three times’’. The tragic destruction with the recent fires in Attica region, which prepare us for recurring similar natural disasters, make fully apparent the unbearable inadequacy of public services to perform. With obvious effects, not diffused and long-term, as in other fields.

A basic "lesson" for any "re-launch": finally, the European institutions should review their attitude and the consistency of their policies at all levels, from quasi-elected Commissioners to the bureaucracy. Helping at the same time the Greek political personnel and finally the Greek people. * Dr. Nikitas Kastis and Dr. Antonis Zairis Dr. Nikitas Kastis is an European Policy specialist and Dr. Antonis Zairis a Member of the American Economic Association (AEA

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EXTRAIT DE CULTURE

“The C C Land Exhibition: Pierre Bonnard – The Colour of Memory” grasp light by the energetic brushstrokes of Pierre Bonnard & the reverberating chroma of Tate Modern An exhibition with rarely shown paintings from 23 January to 6 May 2019 at Tate Modern

by Alexandra Papaisidorou

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uropean Business Review presents an exclusive interview on the occassion of Pierre Bonnard's unique new exhibition at Tate Modern. The Assistant Curator of "The C C Land Exhibition: Pierre Bonnard – The Colour of Memory" Helen O' Malley gives us special insight over the inspiration of the great artist and how the full breadth of the artist's practice was shaped.

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Tate Modern hosts a series of 100 works of his art which reveal Bonnard's intense colours and modern compositions that transformed painting in the first half of 20th century. World events, images, society effects, impressions and emotions dance hand in hand in Bonnard's paintings and leave his mark for future artistic generations. He is characterized as the 20th century artist and an influential figure for most of his admirers putting

EXTRAIT DE CULTURE

abstact painting in the first plan, as Helen O' Malley outlines.

Spanning four decades from the emergence of Bonnard’s unique style in 1912 to his death in 1947, Tate Modern’s exhibition will show how the artist constructed his vibrant landscapes and intimate domestic scenes from memory. It will reveal how Bonnard’s intense colours and modern compositions transformed painting in the first half of the 20th century, and will celebrate his unparalleled ability to capture fleeting moments, memories and emotions on canvas. EBR proudly stand by the French artist’s works of art which compose The C C Land Exhibition: Pierre Bonnard – The Colour of Memory, which upon further inspection reveals something more interesting and unsettling.

Pierre Bonnard's exhibitions are usually divided into sections (Japanism, intimacy, the unexpected, photography, portraits, wild garden, colour, and great decorative works) – how would you characterise the “The C C Land Exhibition: Pierre Bonnard – The Colour of Memory”?

We’ve made the decision to adopt a chronological hang for the Pierre Bonnard: “The C C Land Exhibition: Pierre Bonnard – The Colour of Memory”. Bonnard was often characterised as a reclusive artist, withdrawn from contemporary events. He’s best known for his depictions of domestic life; however his subject matter is enormously diverse. One of the aspirations of the exhibition is to insert him back into history. Bonnard will be repositioned as a man who engaged with the world around him. The chronological hang will allow us to reveal the overlooked areas of his activities-from the city scenes and panoramic landscapes he painted during his frequent travels across France, to his practice of working simultaneously on different paintings side by side, and his response to the crises of both the First and Second World War. Presenting the works in the order in which they were made opens up new questions, allowing for a reassessment of Bonnard’s career.

career. Although Bonnard and de Méligny remained together for over 50 years, their relationship was by no means simple. They went through various ups and downs. Bonnard captures the intimacy and melancholy of their relationship in paintings such as Nude in the bath, 1936. He creates a dappled surface, in which the figure appears to begin to break down, merging with her surroundings. His experimental use of colour suggests a break with reality. He somehow manages to create a space between what he is looking at and thinking about.

It is a memory space, which offers a fascinating, if somewhat ambiguous insight, into the joy and strain at the heart of their complex relationship.

With numerous Bonnard exhibitions held all over the world over, why should people visit this show at Tate Modern?

The show marks the UK’s first major exhibition of Pierre Bonnard in 20 years. The unique difference between Pierre Bonnard: “The C C Land Exhibition: Pierre Bonnard – The Colour of Memory” and many of the exhibitions that have come before, is that our show will focus specifically on the period between 1912 and 1947. 1912 marked a radical shift in Bonnard’s practice. This shift was stimulated by his awareness of the change in contemporary art in Paris and his dissatisfaction with certain threads in his earlier work. Bonnard began to reassess his use of colour, placing an increased emphasis on saturation. Our exhibition will explore the experiments and achievements of this innovative painter, following the emergence of his unique new style. It aims to offer a fresh insight into the life and practice of Pierre Bonnard, reasserting his position as one of the greatest colourists of the early 20th century.

How many paintings will be brought together at Tate by the French artist? Will they be arranged chronologically or according to subject matter?

Bonnard’s relationship with his wife, Marthe de Méligny is at the core of his work. She was his primary muse, featuring in 100s of his paintings. One of the most fascinating aspects of these works is that they were created primarily from memory. Bonnard would catch glimpses of his wife as she moved through their home; cooking, reading, bathing. He would create quick sketches in his notebooks, using them are source material for his paintings, which he completed later in the studio.

The exhibition will include around 100 paintings. These paintings will be drawn from a combination of private and public collections from around the world, including the Musée D’Orsay, Paris and the Metropolitan Museum of Art, New York. Visitors will experience the full breadth of Bonnard’s practice, with key works such as The Studio with Mimosas, 1939-46 (Centre Pompidou), Nude in an Interior, c. 1935 (National Gallery of Art, Washington) and Summer, 1917 (Fondation Maeght) being shown at Tate for the first time in this exhibition. Important paintings and drawings from Tate’s collection will also feature in the show, including The Window, 1915 and The Bath, 1925, as well as a range of preparatory drawings for Coffee, c.1913 and The Bowl of Milk, c.1919.

The paintings of his wife are some of the most glorious, vivid and on occasion, unbearably sad works of his

While Matisse, a personal friend, praised Bonnard after his death in 1947 as “a great painter, for to-

How does Bonnard’s personal life influence his artistic inspiration?

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EXTRAIT DE CULTURE

Nude in the bath, 1936. Musée d'Art moderne de la Ville de Paris

day and for the future,” Picasso, no admirer, called his painting style “a potpourri of indecision.”

What are your comments on that?

In 1947, soon after Bonnard’s death Christian Zervos published an article titled “Is Pierre Bonnard a great painter?” in Cahiers d’Art, which was one of the most influential art magazines at that time. The article was a damning dismissal of Bonnard’s practice, in which Zervos stated that admiration for Bonnard’s work is shared only by those who “know nothing about the great difficulties of art and cling above all to what is facile and agreeable.” Henri Matisse, a close friend and supporter of Bonnard’s work, was outraged by the article, so much so that he scrawled the statement “Yes! I certify that Pierre Bonnard is a great painter, for today and for the future” across the cover of the article, before posting it to Zervos.

Pierre Bonnard holds an ambivalent position within the history of twentieth-century art, lying somewhat outside what came to be regarded as the canonical path of modernism. He achieved early success between 1890 and 1900, as part of the French avant-garde group, Les Nabis. However, his disengagement from the development of cubism and later surrealism, limited the consideration of his work. Picasso took great issue with the relationship of Bonnard’s work to nature, implying that it was purely representational. Similarly, he suggested that Bonnard’s layered application of colour was due to a lack of clarity in his own vision.

While Bonnard supported the development of abstraction, he found the strict spatial formula dictated by the cubist movement deeply limiting. He did undoubtedly draw upon his surroundings for inspiration, however he

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never allowed himself to be restricted by his environment. Bonnard shifted and adapted his compositions to enrich the emotional and psychological content of his work. Each colour and brush stroke, had a place in the overall composition. They were not frivolous gestures on Bonnard’s part but measured decisions. Although Bonnard worked towards abstraction in a slower and more organic way than the cubists, to discount him for choosing to follow his own path seems misguided. He carved out an autonomous style, which is something to be celebrated.

Can you pick two favourite paintings and describe to our readers how they highlight Bonnard uniqueness?

Two of my favourite paintings are The Garden, 1936 (Musée d'Art moderne de la Ville de Paris) and Bathers at the end of the day, 1945 (Le Musée Bonnard au Cannet). Bonnard’s unique handling of colour and innovative sense of composition are captured in these works.

The Garden, 1936 depicts the artist’s home in Le Bosquet.

The painting bears testament to Bonnard’s exquisite ability to use juxtapositions of colour to transcend reality. When a person stands in the garden, they don’t fix their eyes straight ahead, but let them wander, taking in their surroundings.

Bonnard draws the garden in, creating an immersive explosion of coloured foliage and vegetation. He builds up the painting, capturing the feeling and experience of being in the garden. Bonnard’s process of constructing through memory, is key to the success of this work for it allows him the flexibility to experiment with both perspective and colour, lifting the garden scene to new heights.

EXTRAIT DE CULTURE

L'atelier au mimosa 1939-46 Musée National d'Art Moderne, Paris

Photograph of Pierre Bonnard by Andre Ostier, 1941

A similar approach is employed in Bathers at the end of the day, 1945. Although experience is taken as a starting point, as evidenced by the title of the work, the swimming figures emerge through colourful hues of reds and yellows. The artist departs from reality by favouring abstract layers of blues, greens, reds and whites. Bathers at the end of the day, 1945 gives a sense of Bonnard’s continuing innovations in the final stage of his career.

A diverse range of artists have been influenced by Pierre Bonnard since his death in 1947, from Mark Rothko to Patrick Heron. The connection to these artists can be seen clearly in works such as The Garden, 1936 and Bathers at the end of the day, 1945.

Is Tate's exhibition “The C C Land Exhibition: Pierre Bonnard – The Colour of Memory” a new "view" of Bonnard?

Most definitely. The exhibition aims to show the work of this innovative and much-loved French painter in a completely new light. The exhibition will emphasise Bonnard as a 20th century artist, who like his friend and contemporary Henri Matisse-had a profound impact on modern painting. It will allow a new generation to discover Bonnard’s unparalleled ability to capture fleeting moments, memories and emotions through colour, while surprising those who think they already know the artist.

* Answers by Helen O Malley, Assistant Curator, Tate Modern. **The C C Land Exhibition: Pierre Bonnard - The Colour of Memory is at Tate Modern from 23 January to 6 May 2019

The Garden, 1936. Musée d'Art moderne de la Ville de Paris

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FINANCE

The WIR “schaft es”, already more than 80 years!

by Rein van Gisteren *

T

he Swiss alternative currency called WIR is a ‘Wirtschaftswunder’ before its time. It exists already more than 80 years. One in six Swiss companies accept it as an alternative currency to the Swiss Franc.

How this circulair money system works? For instance, a painter pays for his new laptop in WIR. His supplier buys from the sale a bunch of flowers for his partner.

And the florist has his shop door painted from the daily yield so that after payment of his invoice the painter can purchase an accounting program on his new laptop. And the payment circle is closed.

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The trade name 'WIR' comes from Wirtschaftsring economic circle - and WIR also means ‘we’ in German.

In addition to being a banking institution, the cooperative bank is also a network of entrepreneurs. It is an economic community for payments and loans but also a forum for contact between its co-operants.

The Swiss WIR, exploited by the WIR Bank, is a cashless payment method; especially popular among small and medium-sized enterprises (SMEs). On the door of a Swiss shop, restaurant, hotel or other business, is often announced with a sticker that you are dealing with a ‘WIR partner’.

FINANCE

One WIR has the value of one Swiss Franc. The 'cashless payment method' is not very well known outside the Alpine country. This is mainly because the virtual currency can only be used domestically if both the buyer and the seller have an account with the cooperative bank. The WIR is a giro settlement system: WIR Bank administrates every step in the payment cycle and, just like a credit card company does. The WIR card also includes a function to be able to pay abroad via V-Pay. Actually it is a debit card, because you can only spend money if there is a value from the real economy on your account.

Solidarity and trust are the most important assets. The WIR calls itself 'the largest alternative currency in the world'. In the past 80 years, the virtual currency WIR has been functioning as a supplement to the regular Swiss franc.

The WIR works as a mutual calculation unit for about 60,000 customers, most of them are SME’s. The system has also been working for individuals since the beginning of this century, providing them also membership of the cooperation.

Because of its size, the WIR is seen as one of the statements of the steadiness of the Swiss economy. The WIR was created during the peak of the economic crisis in 1934 when there was too little money in circulation. The payment system continues to flourish after 80 years.

The use of the WIR is reportedly resulting in higher turnover, cash flow and profit for the customers of this bank.

The WIR Bank and its alternative money circuit have proved to be resistant to economic recessions over the years. Due to its way of working, there would even be a stabilising effect of the WIR system on the local Swiss economy. With economic prosperity, the WIR system shrinks and people use the ordinary Swiss Frank more often.

WIR currency becomes more available. Therefore the existence of the WIR network protects SME businesses from some of the worst effects of economic downturn.

The WIR Bank funds its currency by imposing fees on every transaction it facilitates, as well as by collecting interest on loans and overdrafts.”

Companies will not execute all their transactions in WIR because, for example, salaries for employees and taxes cannot be paid in WIR or because not all suppliers accept the currency. WIR is therefore a complementary currency. Your bank credit can not be exchanged for cash; whoever does so is excluded.

Oliver Willimann, President of de WIR board of directors, says in a press release of the bank after a bank meeting in May 2018: "As a co-operation, we are not committed to maximising profits, we offer fair conditions for our banking products and we are committed to equal opportunities." And further: "The WIR system to strengthen the Swiss SME economy will be further developed. With our WIR system, we have a unique product that many countries are envying.”

The WIR head quarters, with approximately 280 employees, are located in Basel; branches in Bern, Chur, Lausanne, Lugano, Luzern, St. Gallen and Zurich. The balance sheet of WIR Bank shows roughly CHF/CHW 4 billion (€ 3,5 billion). According to the rules of the bank, the purpose is to encourage members to make their purchasing power available and to promote traffic within their own ranks, thereby benefiting members from additional sales.

The transactions are administrated at the head quarters in Basel. Besides a large accounting system, it is also a transaction guarantee. It promotes buying and selling among participants within an economic cycle of SMEs and stimulates you as an entrepreneur to first use your self-earned WIR for paying an account and only then your cash or other assets.

Through its existence, the WIR makes a valuable contribution to a healthy and stable national economy. In times of economic downturn, SMEs offer the certainty that they are paid and that they can pay. The seller can dispose of the balance immediately after each transaction.

Website Investopedia writes: “Research by James Stodder has found that WIR stabilises the economy by creating a countercyclical tendency. During financial crises, when conventional means of currency become less available,

*Rein van Gisteren Rein van Gisteren is a Dutch communication consultant, living since 10 years near Brussels. He is one of the first members of NewB, a cooperative organisation trying to start a new ethical bank in Belgium

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LEADERSHIP

How to coach a CEO The term “horse whisperer” was first associated with Daniel Sullivan, an Irish horse trainer who became famous for his ability to rehabilitate intractable horses more than 200 years ago..

by Manfred Kets de Vries*

T

oday, it refers to those gifted with a deep understanding of equine psychology, enabling those who can “whisper” to elicit the horses’ cooperation.

Some coaches (and consultants) very much resemble horse whisperers. Instead of dealing with difficult horses, however, they whisper to CEOs. Their effectiveness is due to an intuitive understanding of what drives these executives. They know how to interpret their verbal and non-verbal language.

Also, they recognise that many of these executives – despite their success or perhaps because of it – may have acquired dysfunctional behavioural patterns along the way.

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STARTING A WORKING ALLIANCE To be successful, CEO whisperers must first establish a working alliance with their clients and remember that the relationship unfolds in a specific context, never in a vacuum. Given both parties’ characteristics and peculiarities, some amount of fumbling can be expected along the way.

Listening skills are critical to the success of this working alliance. Deep, active listening will allow the CEO whisperer to decipher the client’s verbal and non-verbal cues throughout the relationship.

The first meeting is always the trickiest, as both parties try to determine if they can work together. If the potential

LEADERSHIP

client doesn’t feel engaged, there is very little chance that a working alliance will be established.

Furthermore, creating a working alliance is more difficult with clients who are overly defensive; who are extremely guarded or quiet; or who do not have any idea of what they want to get out of the intervention. The CEO also needs to be willing to engage in the change effort.

DEFINING A DESIRED FUTURE During the initial interview, I often ask questions to draw out the executive’s thoughts and wants, such as: What brought you to see me? What do you feel is wrong in your work and personal life? What are the issues you’d like to work on? What would you like to be different?

I tell them to imagine that they are looking into a crystal ball: What would they like to see in the future, especially as an outcome of our work together? Imagining a desired future creates a mindset focused on progress.

To better understand their inner drivers, I ask them to tell me something about their personal history, e.g. education, relationships or career trajectory. However, I refrain from prying into topics that may be sensitive, such as the person’s childhood. Clients should be able to decide if and when certain themes become part of the coaching relationship.

DON’T POKE THE BEAR (TOO SOON) To nudge clients along, it’s important to show a modicum of understanding about their predicament. Clients need to feel safe, accepted and respected. Coaching requires an open attitude, as well as warmth and empathy.

TOUCHING ON VULNERABILITIES Serious CEO whispering also requires delving into uncomfortable and difficult aspects of the executive’s life. After a working alliance has been firmly established, I try to pique my clients’ curiosity by carefully starting to challenge them. When the situation warrants it, humour can be used to facilitate the dialogue.

At this stage, the coach must remain attuned to clients, generate curiosity and create the framework for the future relationship. One way to do so by encouraging clients to share details about their stressors, frustrations and dissatisfaction. This helps in formulating the goal component of the relationship.

While keeping these various concerns in mind, it is useful to enquire how the client feels about the working relationship. Do they feel safe, heard, taken seriously and cared for? Do they still hope for – and even expect – success?

AN OPPORTUNITY FOR SELF-REFLECTION To sum up, the role of a CEO whisperer is to help executives act out less and be more reflective. A CEO whisperer coaxes them to examine their lives and maximise their potential.

Socrates said that the unexamined life is not worth living: Too many people cruise through life without reflecting on their destination or purpose. These people are just moving in the dark. This is where CEO whisperers rise to the fore, helping their clients dispel the shadows and see things as they are, not how they wish they would be.

Clients may hold very different values and beliefs, but a coach’s job is to help them achieve their objectives, whatever these may be. The last thing clients want is to be lectured to and feel controlled.

It is wise to play it safe in the beginning and to avoid any form of argument. Think of the working alliance as a form of judo. A judoka moves with resistance rather than fights it.

It is of utmost importance that the coach be aware of what does and doesn’t work – and adjust accordingly. Based on my experience, progress can stall if clients are pressed to deal with issues that they are not yet ready to face. In coaching, it is best to strike when the iron is cold.

In addition, coaches should refrain from giving false assurances. As I’ve written before, there are no miraculous cures in the helping professions. Clients can indeed hope to improve their lives with coaching, but it is important not to create highly unrealistic expectations.

*Manfred Kets de Vries *Distinguished Clinical Professor of Leadership Development & Organisational Change at INSEAD. **First published in knowledge.insead.edu

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EVENTS

128 little “heroes” Given the chance, you dare. When not, you create the chance. When there is will, there is a way. That’s what “Pavilion 12” would say, if it could speak...

By George Christoforidis*

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mart ideas, great appetite for work and an incredible enthusiasm to reach as high as possible. These are the common traits of 128 Greek startup businesses that took part this year in Thessaloniki International Fair (TIF), featured at the prominently set up Pavilion 12. Its remarkable spot in the 83rd TIF venue certainly attracted visitors’ attention. Most of all, though, it managed to excite Greeks who suffered greatly during the austerity programmes and yet endured, struggled and resisted. Today, their realistic hope is to see their country succeeding again. Precisely what the same startuppers dream for their business.

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Pavilion 12 visitors met with new faces, fresh ideas, nimble minds and amazing projects. They left impressed by the inventiveness and determination of the young entrepreneurs; businessmen already accustomed to adversity and intimidated by nothing. Even though they faced the greatest crisis ever in their homeland; no matter the lack of funding and support, despite the obstacles, amidst the worst economic circumstances of the last decades… they keep moving forward.

The 128 little "heroes” present at Pavilion 12 proved that such vicissitudes are too small to stop them. As if they

EVENTS

brought the startuppers from Athens to Thessaloniki the day before.

The symbolism could not be more apparent. All together, on the same train, towards the same direction, bearing the same objective. If they work together, they can all succeed. Cooperation, common perception and networking create value added and provide motion in the modern world. New technologies, innovation, realization of one’s capabilities serve as the locomotive of contemporary entrepreneurship and life in general.

This is how we, Greeks, can make our country sprint.

Like a train; like the startup train. Make the country stand out internationally, even without the… initial investment capital. It’s the brains that matter. Besides, even those who actually have capital resources, they are usually looking for smart people to invest in! Such as those Greek startuppers.

It was no coincidence that Pavilion 12, right across the US Pavilion, was chosen to host the 128 startuppers. As if Greece (a small country of 10 million people) wished to proclaim it can stand next to the strongest.

Even though it just came out of the toughest times in its modern history.

saw them as a challenge, to prove themselves. They had no money. So what? They have the brains. They have Internet. Invaluable assets in the modern world; that much they knew well.

They all had a story to tell. Each one of those young people had to cope with hard times, with times when troubles seemed to overwhelm them. However, they felt no fear. They demonstrated resolve, sought alternatives and finally succeeded. Against adversity, not only did they not let go, but tried even harder, to be better prepared for the future. In a manner similar to how, today, all Greek people are finally leaving the storm of austerity behind...

It is no exaggeration to say that, this year in Thessaloniki, we experienced a historical Fair. Officially, the bailout programmes and the tight fiscal adjustment they brought along expired on 21 August; but this was properly announced a few days later in the 83rd TIF. It was when the Prime Minister, Alexis Tsipras, addressing the Greek people, presented his Government’s vision for the future. Greece is back on track. Like the train, which

Greece is here, again. Vibrant. Ready to shine internationally, holding the eternal Greek spirit as its shield and an invaluable human capital as its weapon; from resourceful Odysseus of antiquity, to the present-day “hero”, the Greek citizen going through daily hardship.

We must all believe in ourselves. A Greek but also an international message.

The 128 Greek startuppers came forward with just one cry: “If you want it, you can make it”. For anyone who did not listen, we will make sure to shout it again next year, during the 84th TIF. So that it sounds from Europe as far as India, the Fair’s honored country in September 2019; and even farther, to be heard everywhere.

This year’s leading initiative of TIF is turning into an institution. Greece grows again. Our world can become better. Trust me, if you were there, in Thessaloniki, not a single of these words would sound an overstatement.

If you were there, in Thessaloniki you would definitely understand how all these are connected; as they share a common root: the passion to fulfill our vision.

*George Christoforidis *Advisor of TIF - Helexpo, responsible for the project “Digital Greece” (Pavilion 12), a project of the Ministry of Digital Policy, Digital Policy, Telecommunications and Media

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ENVIRONMENT

Can we tax our way out of the plastic pollution crisis?

By Ariadna Rodrigo and David Powell*

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o environmental tax has ever been approved at EU level, given the need for unanimity in the Council. But if a plastic tax were successfully passed, would such a measure really help to set the EU on the path to curbing plastic pollution?.

This year it appeared that the European Commission had finally woken up to the urgency of the plastic pollution problem, with three different proposals published since January.

The most surprising of these is a new contribution to the EU budget (unveiled in the Multiannual Financial Framework) – a tax on the quantity of plastic packaging waste generated in each Member State and not recycled.

Current media attention to the issue of plastic pollution is not unjustified. Every single minute, the equivalent of a truckload of plastic enters our oceans, with large numbers of sea animals dying after ingesting plastic.

Microplastics have reached the Arctic, and are commonly found in both tap and bottled water, as well as in seafood and table salt. Every single piece of plastic ever made since the 1950s is still on the planet, wheth-

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er in use, as litter, piling up in landfill or polluting our air after incineration.

To date, only 9% of these plastics have been recycled.

All across Europe, citizens are becoming ever more concerned about our over-use of plastics, particularly the consequences for the natural world and for human health.

There is a strong economic case for far tougher and more comprehensive action to cut our plastic use, as acknowledged by the EU’s Plastics Strategy.

However, Europe’s aim to build a more resource-efficient economy is unlikely to be met unless there are appropriate economic incentives for both consumers and the plastic industry, targeting how much and what types of plastic we make, how much we use, and how much we throw away.

Regulation has a major role to play, as shown by the new Single-Use Plastic (SUP) Legislation, which proposes to ban some of the most visible single-use plastic products (e.g. straws), and the overarching Plastics Strategy.

ENVIRONMENT

However, none of the proposals or legislation tabled comes close to addressing the depth of our reliance on plastic. As argued in our new report , we urgently need to look at the potential for new taxes to change behaviour and shift economic incentives for industry and consumers alike.

There are many different types of plastic tax that could be introduced. The process by which monomers such as ethylene (which is chiefly produced from oil) are processed into finished plastics and sold to consumers involves many actors, and different taxes could have important effects along the value chain.

For example, increasing the production cost of oil-based monomers or polymers could help to changes industry’s incentives, with little public impact. By contrast, taxes on the purchase of plastic by business or consumers would be instrumental in raising public awareness of the extent of the plastic problem.

Economists are fond of proposing a single, sweeping tax to solve pollution problems, such as in the case of carbon emissions. In reality, however, a suite of taxes, regulations and other measures is likely to be needed.

It would be tempting for policy makers to see the depth of our plastic addiction as a “cash cow” to raise easy money. This would only entrench our plastic use, creating perverse incentives not to lose that lucrative new revenue flow.

The real challenge is to rapidly reduce our overall use of plastic while greatly increasing reuse and recycling of the remainder. Taxes thus need to be designed to trigger real change in how we think about and use plastic, right across our economy, not simply as a tap to feed government budgets.

Although industry will inevitably complain, the reality is that we have ignored the depth of the plastic pollution crisis for far too long. The consequences for human health, the natural world, and our inefficient and wasteful economy cannot be addressed by small measures or tinkering around the edges of solutions.

Given the scale and urgency of the problem, economic incentives that prevent the use of plastic are now more necessary than ever.

*Ariadna Rodrigo and David Powell * David Powell is head of Environment & Green Transition at the New Economics Foundation in the UK. Ariadna Rodrigo is Sustainable Products Campaigner at Zero Waste Europe

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The Chinese are changing the smartphone world

By N. Peter Kramer*

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he Chinese telecom giant Huawei is now the second largest vendor of smartphones worldwide. In the second trimester of 2018 it has overtaken US based Apple. In this period Huawei’s share of the global market was 15,8%, compared to Apple’s 12,1%. Yet with 20,9% , South Korea’s Samsung remains market leader.

Pathak, an independent expert at Counterpoint, said: ‘These last years an enormous improvement of the image and the recognition of the Huawei brand has taken place. In a very smart way they differentiated and positioned their products across the whole spectrum of models and prices’.

Comparing these results with the same period in 2017 the unstoppable growth of Huawei in the global smartphone market becomes clear. It sales were up from 11% to 15.8% (nearly 5%!), Apple from 11,8% to 12,1% whilst Samsung lost 2% market share, from 22,9% to 20,9%.

However, the growth of Huawei has a greater importance. It signifies a new generation of mobile phone producers. The year 2010 marked a first change when Apple, Samsung and LG took over from Sony, Ericsson, … the past glories of Motorola, BlackBerry and Nokia being long gone. But this time, in 2018, the new wave comes from China. And not only Huawei who sold 158 million mobile phones in 2017; two more new Chinese brands are impressing the market, Oppo (110 million mobiles sold in 2017) and Xiaomi (105 million). For the moment, these two are active in the Asian market only, but they are expected to enter the western part of the world soon.

In 1987 the former engineer of the Chinese army, Ren Zhengfei, founded Huawei. He started with only a few thousands of dollars, concentrating on telecom technologies. Nowadays the company is a world leader and a recognised pioneer of 5G. In 2003 Huawei launched a new division for mobile phones with considerable success, first in China and later elsewhere in Asia.

Three years ago, Huawei decided to take the mobile phones global. A considerable challenge as the name was still unknown to the general public outside Asia.

But by mid-2018, Huawei is outdoing Apple and seriously challenging Samsung. It is not for nothing that Mr Zhengfei once called his company ‘a tenacious wolf’ that never let go its prey.

According to the French quality daily Le Figaro, Tarun

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In the spring of this year, Huawei chose Antoine Griezmann to be the celebrity promotor of its new smartphone flagship le P20Pro. It was a successful bet.

Griezmann became world champion with his French team and was chosen as one of the best players of the tournament. With the Huawei P20Pro being heralded as one of the best smartphones on the market at the moment, it seems an unbeatable combination.

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