ESADEgeo Daily Digest, 08/10/2019

POLITICO – Andrew Gray / Borrell to visit Kosovo first as EU foreign policy chief

  • Josep Borrell’s first visit as the European Union foreign policy chief will be to Kosovo, although his own country does not recognize the Balkan territory as an independent state. Borrell has faced questions about how he could oversee an EU-backed dialogue aimed at ending the “frozen conflict” between the governments of Kosovo and Serbia, and several reports have suggested Borrell will name a special envoy for the dialogue.
  • Moreover, he was asked if he would push Spain to recognize Kosovo, and his response was that the “recognition of Kosovo is a competence of member states.” He defended, however, that “One thing is clear: Kosovo and Serbia have to reach an agreement. This is the important thing. And I will do utmost in order to fulfil this priority.”
  • Concerning the European position in the world, Josep Borrell said that if the European Union was not able to solve a problem in its immediate vicinity, “it’s very hard to believe that we are going to be a geopolitical power.”
  • Financial Times – Michael Peel / EU top diplomat nominee urges bloc to look east

The Washington Post – Associated Press / Lam says Chinese military could step in if uprising gets bad

  • Hong Kong’s leader Carrie Lam has warned on Tuesday that the Chinese military could step in Hong Kong if an uprising for democratic reforms that has rocked the city for months “becomes so bad” . Nonetheless, she reiterated the government still hopes to resolve the crisis itself.
  • Carrie Lam also urged foreign critics to accept that the protests marked by escalating violence were no longer “a peaceful movement for democracy.” Moreover, she defended that seeking Chinese intervention was provided under Hong Kong’s constitution but that she cannot reveal under what circumstances she will do so.
  • By invoking a colonial-era emergency law to criminalize the wearing of masks at rallies, she has hardened her government’s stance on the protests, which has fueled more anger, with continuous daily violence over the long holiday weekend. Enforcement of the mask ban began Saturday, and Lam said it was too early to call it a failure. Two people have been charged with violating the mask ban so far, which is punishable by up to a year in jail.
  • South China Morning Post – Chan Ho-him, Brian Wong, Kelly Ho  & Joanne Ma  / Hong Kong school week kicks off with citywide student protests against anti-mask law arrests

Financial Times – Andres Schipani / After 14 years, is Bolivia falling out of love with Evo Morales?

  • In comparison with other leftwing leaders who came to power in the first decade of the century, Evo Morales has succeeded in bringing prosperity to Bolivia. In Brazil, former president Luiz Inácio Lula da Silva is in jail after being convicted of corruption and the economy has suffered a traumatic fall. In Venezuela, Hugo Chávez’s revolution has led to one of the biggest peacetime economic collapses.
  • However, as Evo Morales prepares to run on October 20 for an unprecedented fourth term as president — after what critics believe was a bungled attempt to get around constitutional term limits — he faces a series of profound questions over his mandate. There are warning signs that the strong economic run could be running out of steam. For example, last year’s 4.2 % rise in GDP, according to government statistics, was partly the result of an unsustainably high budget deficit. Moreover, in a country where many young people only remember him as president, the 59-year-old leader is facing growing criticism that he is becoming autocratic.
  • The enactment of redistributionist policies was an appropriate decision; they have raised the living standards in one of the region’s poorest nations and have helped to dissolve enmity between opposing political camps. Secessionist calls in pockets of the eastern lowlands have melted away and businessmen have joined his socialist chorus.
  • Amid uncharismatic opposition leaders and an absence of other strong figures on the government side, the driving force in the election remains the towering personality of President Morales. A campaign slogan reads: “the best president in the history of Bolivia”.

Project Syndicate – Joseph E. Stiglitz / No more half measures on corporate taxes

  • Globalization has gotten a bad rap in recent years, and often for good reason. However, some critics, not least US President Donald Trump, place the blame in the wrong place, conjuring up a false image in which Europe, China, and developing countries have snookered America’s trade negotiators into bad deals. One particularly toxic aspect of globalization has not received the attention it deserves: corporate tax avoidance.
  • The aggregate costs of such practices are enormous. According to the International Monetary Fund, governments lose at least $500 billion per year as a result of corporate tax shifting. And Gabriel Zucman of the University of California, Berkeley, and his colleagues estimate that some 40% of overseas profits made by US multinationals are transferred to tax havens. Since the aftermath of the 2008 financial crisis, when many countries found themselves in dire financial straits, there has been growing demand to rethink the global regime for taxing multinationals.
  • The fundamental problem are the patchwork fixes to a fundamentally flawed and incorrigible status quo. Under the prevailing “transfer price system,” two subsidiaries of the same multinational can exchange goods and services across borders, and then value that trade “at arm’s length” when reporting income and profits for tax purposes.
  • Given the scale of the problem, it is clear that we need a global minimum tax to end the current race to the bottom. A global minimum tax rate should be set at a rate comparable to the current average effective corporate tax, which is around 25%. Otherwise, global corporate tax rates will converge on the minimum

The selected pieces do not necessarily reflect the views of Javier Solana and ESADEgeo. The summaries above may include word-for-word excerpts from their respective pieces.

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