The epidemic of old fashioned protectionism has engulfed Europe in recent months. Luxembourg and France are not too happy with the takeover bid of an Indian steel company of a French steel company with headquarters in Luxembourg.
Even intra-Europe mergers were nixed, the single European market notwithstanding. Last week, the French stopped an Italian energy company from acquiring Suez, the French public utility company by forcing a merger instead, with a French government-owned gas firm. The governor of Italy’s Central Bank lost his job as he tried to stop a Dutch bank from acquiring an Italian bank. And in Spain, the Spanish government made it clear the bid of a German energy company for a Spanish energy company is also not welcome.
It gets worse. There is tension between Old and New Europe over migration and other economic issues. There is this growing resentment over Polish plumbers and labor in general, moving into old Europe and supposedly displacing native workers or causing a decline in wage standards. The expansion of One Europe to include Eastern Europeans and even Turkey has threatened the equanimity of national leaders, who are also feeding on the sense of insecurity of their people.
One Europe, as a concept, is facing tough scrutiny from an increasingly skeptical and economically insecure public. As national boundaries are erased, Europeans started thinking like nation states again. Italians are blaming the Euro for their loss of competitiveness. And the British are still reluctant to surrender monetary policy and currency to the European Central Bank.
Globalization, it seems, is reawakening nationalism and for many people, One Europe is just a more localized form of that dreaded global trend. Maybe too, it is just that up until now, globalization meant Western economies taking advantage of open markets to sell to emerging markets and cross border mergers and acquisitions mean Western companies taking over other Western companies.
But times have changed. China and India are now slowly but surely becoming the engines of growth for the world economy. In fact, the US National Intelligence Council was reported by the Financial Times predicting that the next phase of globalization will most likely see an Asian face. From this perspective there may even be a tinge of racism in this backlash of nationalist sentiment in Europe.
The French couldn’t imagine how an Indian firm can have the chutzpah to acquire a major French company. French executives reporting to Indian bosses? What are they thinking! It isn’t just Europeans. The Americans are rejecting the notion that a Middle Eastern company is now able to acquire a British company that services their major ports. It was bad enough those Chinese peasants tried to by Unocal. Why can’t the Chinese stay as mass producers of cheap garments instead of venturing into higher value technology industries?
The reality is, they just have to get used to more of this sort of thing happening. The Americans will have to allow China to acquire more than just the personal computer side of IBM’s business. With all those dollars in China’s Treasury these days, some of those would have to end up buying American assets other than just the benign Treasury Bills.
Same thing with Europe. The Europeans will just have to accept the fact that the Chinese and the Indians will be shopping for assets that would enhance their investment portfolios. The Germans shouldn’t feel a sense of national embarrassment if Daimler Chrysler was acquired by, for example, India’s Tata or Reliance Group.
Soon, even the ever haughty French would have to swallow national pride as one "national treasure" with "strategic value" after another are acquired by foreign and heaven forbid, Asian companies with money to burn. Listing 11 industries where the French government can exercise veto powers over foreign acquisition can prove to be an exercise in futility in our globalizing world.
And so it is all tied up. The French and the Spaniards are taking it out on the Italians and the Germans in a bid to reset boundaries now, out of fear of emerging market countries who now have the means to merge and acquire in their backyard. Probably, at the back of their minds, there is this fear of losing old glory and market power. The emergence of countries like China and India may mean the decline of Old Europe, and America too.
And there’s this feeling of helplessness to stop this runaway train called globalization. Europeans, like the Americans on the other side of the pond, will just have to like it even if it means Asians will be calling a lot of the shots in this new world.
Next time those Europeans and Americans start lecturing us on why we should embrace open markets and let competitive market forces reign, let‚s just invite them to have a few bottles of beer instead. San Miguel, of course.
Oh, how the world has turned!
In your article, "Hopeful optimists no more!" you asked, "What is happening to our nation?
When I returned to the Philippines after a 40-year absence, I asked myself the same thing. When I was here in the 1960s, I found hope and excitement for the future. My friends at the time, all believed the future would be bright. English was spoken by almost everyone of my friends and communication was easy. Many of my friends were able to go to the US and become successful while others stayed here and became successful. It was a wonderful time to be in the Philippines.
When I stepped off the plane in 2001, I did not find hope. I found acceptance of despair. It seemed to me there was little hope for the future. College educated young people were working as bus boys, waiters, drivers, house help, etc. Many were working on contracts for six months, then would be dismissed.
Today, I see no changes for the better, only resignation that the people will take any job just to put food on the table. It was sad when I arrived and it is sad today. The colleges continue to produce what might be called graduates however, they seem to lack survival skills in writing, speaking and the spirit and drive to improve themselves. Is it because after the age of 25, there is no future for most of them? What happens to those seeking work after 25? What happens to the educations and the work experiences?
Why would a contract employee want to excel? After maybe six months, they will lose their minimum pay job regardless of their performance. I remember a wonderful waitress in Manila. I commented favorably on her ability to wait on tables. She told me she was a college graduate and would be released from her job the following week. Next week, she was gone.
When I see the number of unemployed people around me, I wonder where the unemployment figures reported in the papers come from. They seem to say unemployment is about 10 percent, or so, when I can count a lot more in the neighborhoods I visit. When it is said a certain number of people have found jobs in the past month or so, I wonder who are they counting. If it is contract workers, it must be they count those getting jobs but not those losing the same jobs.
Boo, keep up the good columns. I used to think it was unfortunate your column appears in the back of the paper but those of us who follow you already know where you are and we can find you wherever your columns appear. Thanks.
You know, doctors can be so frustrating. You wait a month and a half for an appointment and he says, "I wish you had come to me sooner."
Boo Chanco’s e-mail address is bchanco@gmail.com