Peter Kurer: «The Crazy, the Clueless and the Gordian Knot»
Friday, 31 March 2017 15:23
«To the elites, the EU is a means to get rich quickly and export their problems»
« Pour les élites , la Construction Européenne a été un moyen de s’enrichir rapidement et d’exporter leurs problèmes ».
Je n’ai jamais lu meilleur résumé , c’est en deux lignes, ce que j’ai toujours pensé.
Si quelqu’un veut offrir une traduction partielle …
«We’re not crazy, nor totally clueless,» former UBS Chairman Peter Kurer writes in an exclusive essay for finews.first. The EU had opportunities, which it squandered. Maybe it will come to an end in the foreseeable future.
The traveller around Europe steps out of his hotel on Via Veneto, into the bright, warm light. A morning breeze from the north blows gently down from the Borghese gardens and along the street. The light combined with the fresh air gives the day a feeling of ease, such as is rarely encountered, and therefore the traveller, known to the kind reader from previous appearances in columns on this website, is in a cheerful and enterprising mood. He sets out to explore Rome in the springtime.
The city has not yet lost its great soul. True, Via Veneto is no longer what it used to be; the street faithfully accompanied the Cinecittà in its decline. Gone are the legendary stars of the silver screen, like Marcello Mastroianni and Anita Ekberg. The marble and imperial splendour of the Excelsior also looks a little tired. But much remains from the best times. The Spanish Steps are thronged with tourists, buskers and street traders, even in March; the Babuino still reclines, relaxed and satirical in the old square; and the Vatican gardens are still a wonderful centre of power, a unique quiet place of refuge in an area brimming with vitality.
«Bizarre, Disgusting Contents»
The traveller enjoys the splendour of Rome. He continues along Via Veneto now, soon turning right into a side street. Here the splendour shows some cracks. Around a garbage container, front and back, left and right, and scattered a few metres away, lie brightly-coloured garbage bags, or plain plastic bags, carefully tied or hardly closed, often torn and spilling their bizarre and disgusting contents onto the street.
Heading towards Via Crispi, the surefooted traveller seeks out his favourite shirt shop. While being fitted in finely textured cotton, he draws the signora into a deep political discussion. What is going on with the garbage, he asks. Previously, the shop owner explains, they used to collect the garbage from in front of each house but today residents have to take it somewhere. And why do you empty your window display every night, you are not a jewellery store? Otherwise they would break my window and steal the shirts and ties, she answers. And what do you think of the new mayor? She is a crazy young woman, the signora thinks, a grillista, and clueless to boot. From time immemorial, Rome has been a city of factions and cliques: you have to know how to hold that together, and how to muddle through. Raggi is not up to that.
«Rome is like a living allegory for Europe»
In all its glory and misery, Rome is like a living allegory for Europe. The old continent is still full of splendour, diverse, culturally rich, beautiful to travel around and entertaining unlike any other region of the world. But a gloominess has settled over the splendour, the people are insecure, ill-humoured, often angry, they don’t know where the journey is leading. The crazy and the clueless are in charge. And to the left and right, lie the inherited burdens, which are not being cleared away. The EU ploughs through the waves in a swaying ship, as if the helmsman were drunk.
There are many explanations for this development, for the political misery, the rise of the crazy and clueless. Some say the elites have failed; others say the people have been left behind. The traveller around Europe ponders these questions. While musing, his wanderings take him to the Hotel de Russie. He asks a waiter standing in the corner if he may sit at the small table. Without moving a muscle, the waiter says he is not from here, and then the traveller sees the device in the man’s ear. Shortly afterwards the mystery is solved.
«This is an intellectual flying altitude that remains closed to the traveller»
Sitting at the next table is a former minister president and enthusiastic EU politician. He explains to his friends the reasons for the gloom in Europe and elsewhere. When he comes to the finale of his long performance, his expression becomes even more grim, he leans his head forward and points, without realising it, in the direction of the Villa Borghese: La politica mondiale si orienta quasi ovunque verso un aumento e non una diminuzione della concentrazione del potere. The amazed listeners spontaneously cry: Bravo! Brilliante!
This is an intellectual flying altitude that remains closed to the traveller, to his regret. He steers clear of extensive explanatory models. He seizes the subject pragmatically and traces the steps backwards, as he has learnt to do, through an imaginary decision tree, to find out what went wrong. After some back and forth of internal dialogue, he has persuaded himself by the time the ristretto is served: the problem of the continent lies in the condition of the EU.
«They are closely tied and together form the Gordian knot of the continent»
Following an unfortunate combination of wrong decisions at the top and the uncontrolled flourishing of a self-serving bureaucracy, the union has moved in a direction where it has become a prisoner of its own constructed reality. Putting it somewhat simply, the EU, after making good progress in the early years and serving peace, made two fundamental mistakes since the Maastricht Treaty that have become inherited burdens today, and that we would do better to get rid of. They are closely tied and together form the Gordian knot of the continent:
The first problem is the euro. This artificial currency was imposed on an economic area that is too uneven to support a uniform currency. The euro is too weak for some, too strong for others. In Germany’s case, it is significantly undervalued, boosting the export economy, but at the same time driving up the price of many everyday imported items, causing consumers to lose out and not to benefit from being world champion exporters.
It is the opposite in the south where the euro is overvalued. Industries located there cannot keep up and are being forced out of the market. The consumers in these countries benefit from cheap imports but are often low-income or even unemployed. Balancing measures such as a transfer union or a standardized fiscal policy are not available in the economic area.
«To the elites, the EU is a means to get rich quickly and export their problems»
All this is being accompanied by a certain austerity in state payments, which is more of an exacerbating factor rather than the actual cause of the problem, contrary to what people who blame Germany for everything like to think.
The second burden is the failed eastern expansion of the union. Again, for political reasons, the states of the east of the continent, formerly under Soviet influence, were too hurriedly pushed into full EU membership. These countries were not and are not suited to so close an alliance with Western states. They lack a sufficient degree of democratization and rule of law. The development of an economic infrastructure and understanding of good economic and state governance are lacking.
To the elites of these countries, the EU is a means to get rich quickly and export their problems. They have nothing but contempt for the well-meaning but somewhat naïve political programmes of the Brussels bureaucracy. Corruption is more than ever the central governing instrument. The region is increasingly a source of discord within the wider European region and produces an abundance of crazy and clueless leaders, such as Orban, Kaczinski and others.
The third problem is the glorification of the free movement of people. This did not exist in the original European order in its current radical form, but was introduced and implemented in such a way to cushion the negative consequences of the euro and the expansion eastwards. The inclusion of the Eastern European countries into the EU subjected their economies to the harsh demands of the free market and destroyed state enterprise which had provided better job security for workers.
If the strong West could introduce goods and services in the East, the thinking went, then the states of Eastern Europe should have the right to export their citizens to the West, to keep unemployment under control. In the countries where the euro was introduced, this mechanism was strengthened because the most competitive western and northern countries increasingly imported their goods into southern and eastern regions, instead of producing them there, which again increased the migration pressure.
«The traveller enjoyed Europe, despite its allegorical weight»
Over the years, the uncontrolled free movement of people led to a brain drain in the south and east, to the emigration of the brightest and best to the West. The result in the destination countries was an immigration pressure that many could not endure and felt as a threat. The great English philosopher Roger Scruton summed it up drily, when he called free movement a stupid concept: the same could be said about the eastern expansion and the euro.
The traveller enjoyed Europe, despite its allegorical weight. On a beautiful Sunday morning, he drives together with a foreign friend to Fiumicino. Beforehand he attended Mass in the Basilica Santa Maria del Popolo. There the priest let the congregation go with a beautiful vision: the Mass is ended, go in peace. At the airport, the friend asks, as he extends his hand in farewell: And you Swiss, when you will finally join the EU? Or at least sign up to an institutional framework agreement?
«The EU had its chances»
Not in my lifetime, says the traveller, to the question of joining the bloc. A framework agreement is currently being negotiated by the government. But you can already forget it. Politically it has no chance of survival. At the end of the day we are not crazy and also not totally clueless, the European traveller says, somewhat on the offensive.
The EU was a great idea but it has been ridden to death. Back in 1992, almost half of Swiss voted to join the European Economic Area, including the traveller. If there was a vote today on joining the union, the latest polls say just 15 per cent would vote yes.
The EU had its chances. It squandered them, and maybe it will come to an end in the foreseeable future under the weight of its burdens: La messa è finita, andate in pace.
Peter Kurer is a partner with the private equity firm BLR & Partners AG. He studied law and political science at the University of Zurich and the University of Chicago and started his professional career with the international law firm of Baker & McKenzie where he became a partner in 1985. Since 1990, Peter Kurer was a founding partner of the Zurich law firm Homburger where he headed the Corporate Law Practice Group.
In 2001, Peter Kurer joined UBS as General Counsel and member of the Group Executive Board. He served as the chairman of the bank during the crisis of 2008-2009 and then retired. He now is also chairman of Kein & Aber, a Swiss book publisher, and Sunrise, a Swiss telecommunicatons provider. Kurer writes and speaks frequently on M&A topics, corporate governance issues, and legal and compliance risk management.