The ESADEgeo Daily Digest, 08/09/2017

The New York Times—N. Kitsantonis / Emmanuel Macron, in Greece, calls for ‘rebuilding’ E.U.

  • In his first state visit to Greece, President Macron outlined his vision for a stronger and more united Europe, repeating his calls for a common budget and a eurozone Parliament.
  • The Greek crisis was “a failure of Europe,” Macron said. The French President has repeatedly called for Greece to be relieved of some of its huge debt load.
  • Europe’s challenges, Macron said, include “how to become a power that can face the U.S. and China.”
  • Macron vowed to lead the reformist push, partly by jump-starting the French economy. But French unions and civil servants have been riled by spending cuts and by new labor regulations.
  • Macron has been leading an effort to toughen screening of major Chinese investments in Europe. He was rebuffed recently in Brussels by a group of countries dependent on China’s investments, including Greece.

Project Syndicate—D. Rodrik / Macron’s labor gambit

  • At the end of August, Emmanuel Macron unveiled the labor-market overhaul—aimed at increasing flexibility—that will make or break his presidency. Even though the country’s second-largest union has called a general strike, indications are that Macron will have the political support he needs.
  • There is considerable evidence that strong employment protection laws do reduce job turnover – the number of hires and fires. But when it comes to overall employment and unemployment levels, the jury is still out.
  • By some measures, among EU countries France was second only to Germany in terms of labor-market deregulation before the global financial crisis. Yet unemployment levels in Germany are a fraction of those prevailing in France.
  • Psychology—in particular, the “animal spirits” of French industrialists—may eventually play a greater role than the details of the reforms themselves.

Financial Times—J. Shotter & J. Brunsden / Poland threatens to block part of EU-Canada trade deal

  • Poland is threatening to block a part of the EU’s trade deal with Canada (CETA) because of its concerns over a planned mechanism for resolving disputes between governments and multinational companies.
  • A panel of judges would be appointed to hear cases, consisting of five EU judges, five Canadian judges, and five judges from third countries.
  • Worried that this could lead to cases involving Poland being heard without a Polish judge, Warsaw is pushing for the panel to include a judge from each of the EU’s current 28 nations. Failing that, it wants clarity on how the EU judges on the panel will be assigned to cases.
  • The bulk of the CETA agreement is set to provisionally apply from September 21. Still, should Warsaw really take the step of refusing to ratify CETA, it would hold up the full legal entry into force of the deal and, notably, the establishment of the investor court system itself.

Foreign Affairs—J. Mujanovic / Russia’s Bosnia gambit

  • Moscow actively sought to prevent the pro-Western transitions in Macedonia and Montenegro. But the target of Russia’s next Balkan gambit—possibly the most forceful one yet—is in the region’s strategic center: Bosnia and Herzegovina.
  • Russia’s objective is simple: keep Bosnia out of NATO and the EU. Moscow wants to ensure that the country remains an ethnically fragmented basket case in the heart of the Balkans, and counts both the Bosnian Serb and the Bosnian Croat leaders as allies.
  • Croatia is far from a beacon of regional stability. The country is on the precipice of its worst political and economic crisis since independence, and Moscow is poised to capture a huge portion of the Croatian economy through the state-backed Sberbank.
  • The Kremlin is looking ahead to Bosnia’s 2018 general elections. In particular, Moscow is concerned that it is seeing a genuine reformist alliance taking shape. If 2018 sees an opposition victory, Bosnia will quickly renew its bid to join NATO.

The selected pieces do not necessarily reflect the views of Javier Solana and ESADEgeo.

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