The widely advertised hazards of the EU not that ominous; the sting is financial woes

Jean-Claude Juncker, President of the European Commission, presents the White Paper on the Future of Europe at the European Parliament. This paper became known as the Bible for a multi-speed European Union. Date: 01/03/2017. Location: Brussels, Belgium. © European Union, 2017/Source: EC – Audiovisual Service/Photo: Etienne Ansotte.

Last Monday, Deutsche Bank’s management surprised everybody quite negatively by asking its shareholders for an €8 billion capital injection. Only hours before that, the London Stock Exchange had almost terminated the long negotiated merger procedure with the Deutsche Börse, the German bourse in Frankfurt. The LSE directors rejected the terms set by the European Commission as preconditions for this mega-fusion.

As if all that was not enough, last Monday, the US automotive giant General Motors said it decided to abandon its European operations, having agreed to sell its affiliates producing the Opels in Germany and the much smaller Vauxhall business in Britain. All those developments constitute negative signs for Europe, in an uncertain global environment. By the way, the much advertised prospect of the European Union of multiple speeds is not a real risk at all. The 27+1 EU countries were never aligned at one speed and the Brexit confirms that.

Is division a real threat?

Concerning the EU of 27 members, their long time division is between the four Visegrad central European member states (Poland, Hungary, the Czech Republic and Slovakia) and the other 23. The basic dividing question is immigration policy. But, yet again, this doesn’t present any impediment for the 23 to promote more integration. The latest Jean-Claude Juncker proposal for an EU of multiple speeds, endorsed by most member states, aims exactly at more consolidation of the willing.

The four southern countries Italy, Spain, Greece and Portugal have always been firmly placed in EU’s first speed, as members of Eurozone. Grexit is not an option any more, especially now after Donald Trump celebrated the Brexit. It turned out that Brexit and Trump have obliged the EU to answer with consolidation, and this will be evident in the pending agreement about Greece’s financial support program. But let’s return to the real problems.

Again, it’s Deutsche Bank

Deutsche Bank’s shareholders have a lot to blame the lender’s top management for, but reportedly they will comply with the demand for a new large capital injection. Their decision is an infallible signal of the precarious position of this 147 years old financial institution, Germany’s pride. Apart from the very costly problems in New York, Deutsche is to surely pay a dear price for the Brexit also, due to its out of proportion presence in the London financial markets.

During the last five years or so, the icon German lender has raised around €20bn in various capital forms. It seems this was not enough to pay for a long series of blunders. So, the bank now needs another €8bn in order to survive. What makes the shareholders more furious, though, is the fact that there is no certainty that this will the last time they are asked to put their hands deep into their pockets.

LSE and Deutsche Börse not to merge?

Deutsche’s problems will very probably be inflated, with the now possible breakup of the merger between the LSE and Deutsche Börse. It turns out that, after the Brexit, the €30bn deal of the British and the German stock exchanges fusion, is not seen positively by the authorities on both sides, and more so in Berlin.

For one thing, Carsten Kengeter, the CEO of the German exchange is under investigation for inside trading, while the country’s political elite strongly opposes the positioning of the merged company’s central seat in London. There is rumor that Kengeter accepted this, in exchange for securing for himself the top job of the combined firm. It is very possible then that the merger process breaks up, despite tireless efforts of the management of both exchanges to save the deal.

Automotive troubles

Now, let’s pass to the Peugeot-Citroen (PSA) announcement, about the purchase of the Opel/ Vauxhall business from General Motors for €2.2bn. Many industry experts agree that, PSA CEO Carlos Tavares’ over optimistic statement doesn’t tell the whole truth. In announcing the purchase, he appeared certain he can “accelerate” the loss making Opel-Vauxhall automakers. Unfortunately, and despite the initial hike of PSAs stocks, the truth is that GM is abandoning Europe for more than one reason. GM says its US business is booming and very probably the company wants to offer more jobs to Americans, rather than losing money by supporting the employment of 42,000 Europeans.

So, the deal is not what Tavares says it is. It’s more a kind of first act in the Atlantic auto war. Actually Peugeot/Citroen in some peculiar way was forced to buy and rescue a business the Americans wanted to get rid of. Soon PSA’s shareholders will realize that they acquired a business, which has to be partially but extensively shut down. Industry sources and workers unions expect PSA to close a number of units and of course unify R&D and other special activities with own operations. And all that undoubtedly means fewer jobs. The combined Opel/Vauxhall Group has a work force of more than 42,000 people. However, only 3,360 are in the UK, a fact that could make the German work force pay the dearest price. There are strong indications then, that PSA’s decision to acquire the loss making automakers was more of a politico/strategic decision, rather than a strictly business affair. In this respect, the Brexit must have also played an important role.

Brexiteers exposed

Last but not least, the exit of Britain from the European Union is to haunt Europe in the foreseeable future, but more so for Britain itself. Brexit is developing into a bellicose and costly confrontation between Britain and the EU, away from the hope for a peaceful or zero sum game procedure. The war has already started. PM Theresa May is not concealing her intention to hold the EU citizens living in Britain as a kind of hostages and as such, use them as ‘tradable asset’ in the negotiations for the Brexit.

On top of that, she insists that the government must negotiate the terms of the Brexit, without the consent of the Parliament. This undemocratic or even autocratic attitude may lead to absurdities. The Brexiteers in the government may choose that the divorce be effectuated with no agreement at all. May stressed that “no agreement at all, is better than a bad agreement”.

The Lords constrain May

The House of Lords though, the upper chamber of the Parliament, where May’s Conservatives are the minority, voted to block all that, and demanded that the Parliament has to approve the final terms of the withdrawal. In principle, this can be reversed in the Commons, the lower chamber of the Parliament. Nevertheless, May could face difficulties even at the lower house of the Parliament, the Commons, where her party has a small majority.

Already, a number of conservative MPs are threatening to uphold the Lords decisions. If they do, May’s premiership is seriously questioned and Britain enters into uncharted political waters. Undoubtedly, these problems are the measure of the Brexiteers’ total political deadlock. They are now progressively facing the exposure of their lies, which impelled the Brits to vote ‘leave’.

In conclusion, there are hardships ahead for Europe, but not for the reasons the English language commentators advertise. This year, the Dutch, the French and the German voters will not make the mistake of the Brits and the Americans and the EU will come out of her divisions probably stronger. Still, Europe faces turbulences emanating from her own financial shortcomings and also from the Atlantic enmity.

 

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

the European Sting Milestones

Featured Stings

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

Libya: EU efforts should focus on protecting migrants, MEPs say

This new way of understanding disease is changing medicine

Action needed to end deadly clashes between African herders and farmers: UN chief

The four top Americans who flew to Europe perplexed things about Trump’s intentions

“A Junior Enterprise is run only by students.. there are no professors or managers that can help you solve your problems”

EU-India summit: Will the EU manage to sign a free trade agreement with India before Britain?

Africa-Europe Alliance: first projects kicked off just three months after launch

The German automotive industry under the Trump spell

Fight against climate change and poverty will fail without overhaul of global financial system, says major UN report

Eurozone closer to a deflation – stagnation trap

Why Commissioner Rehn wants us all to work more for less

Syrian Refugees in Germany face distinctly different challenges than those in Lebanon

Consumers suffer three defeats

Is a full course lunch, a new Commissioner and 2 million anti-TTIP citizens what you would call a “Fresh Start”?

What we take for granted: The EU is not perfect

Who the US and China have trade disputes with

EU makes key TTIP document public as protests get louder

ILO’s Bureau for Employers´Activities to publish new study on women in business and management

3 autonomous vehicle trends to follow in 2019

Second Facebook-Cambridge Analytica hearing: impact on privacy, voting and trust

This is what a planet-wide network of ocean sanctuaries could look like

EU budget: the Common Agricultural Policy beyond 2020

‘Global care crisis’ set to affect 2.3 billion people warns UN labour agency

Guatemala: UN anti-corruption body will continue working, as Constitutional Court blocks Government expulsion

COP21 Breaking News_03 December: Unprecedented Global Alliance for Buildings and Construction to Combat Climate Change

Why the ECB prepares to flood the markets with more and free of charge euro; everybody needs that now

This is our chance to completely redefine the meaning of work

Greece and Ukraine main items on EU28 menu; the course is set

Eurozone: The crisis hit countries are again subsidizing the German and French banks

The Indian miracle state pointing the way to global sustainability

EU Commission: Germany can make Eurozone grow again just by helping itself

Chinese Premier Li Keqiang’s speech from World Economic Forum’s Annual Meeting of New Champions

Press coverage of migration crisis in Europe: a call for collaborative action

Parliament demands ban on neo-fascist and neo-Nazi groups in the EU

Climate change recognized as ‘threat multiplier’, UN Security Council debates its impact on peace

2 trillion drinks containers are made every year – so where do they go?

Water supply a human right but Greeks to lose their functioning utilities

Darfur: Inter-communal tensions still high despite improved security, Mission head tells Security Council

Brexit: when the hubris of one man can set the UK, the EU and the entire world on fire

Marking Sir Brian Urquhart’s 100th birthday, UN honours life-long servant of ‘we the peoples’

Mandela, ‘true symbol of human greatness’, celebrated on centenary of his birth

ECB’s first flight in Eurozone’s banking universe will be just a reconnaissance

Syria: ‘Violence, displacement’ and cold kill 11 infants ‘in the past two days’

Tuesday’s Daily Brief: Bicycles for the environment, new leader for the UN General Assembly, UN values, Ebola, Syria and Libya

EU-China Light Bridge in Brussels signals the bright coming of the Year of The Dog

‘Never give up’: UN chief urges all who serve, marking UN Day

Venezuela: UN human rights office calls for ‘maximum restraint’ by authorities in face of new demonstrations

The EU Commission does nothing about the food retailing oligopoly

MEPs want to ensure sufficient funding for Connecting Europe’s future

We need to talk about failure in the social sector

Long live Eurozone’s bank supervisor down with the EU budget supremo

Why Obama asks approval from Congress to bomb Syria?

UK voters sent strong message to May and Corbyn for soft Brexit

COP21 Breaking News_05 December: Ban Ki-Moon Closing Address at COP21 Action Day Innovation, Imagination, Faster Climate Action

The 28 EU leaders show contempt for the European Elections results

WEF Davos 2016 LIVE: “No other problem has jeopardised the EU as much as the refugee question” Joachim Gauck, President of the Federal Republic of Germany, cries out from Davos

Love unlimited

Medical students of today, technological doctors of tomorrow

Why Eurozone urgently needs the ECB to print and distribute at least €500 billion

European Youth Forum welcomes the European Commission’s proposed revision of the Union Code on Visas, however it does not go far enough

More Stings?

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s