Rent seeking and business support for the EU

After the rant of my previous note, I thought I should even things out with a more positive post about the interesting people offering their support for the EU.

In this post I’ll focus on the support provided by business world. This makes sense. Any further damage to the Euro could damage the common market, with consumers and producers having the most to loose from this. Contrarily to consumers, business leaders can organise themselves and as such are able to utter a somewhat coherent message, when they discover their voice. In this particular case, I refer to 2 reports. The first, from BusinessWeek/Bloomberg, reports that German business groups have expressed their regret for not supporting Merkel more; that article quotes Joerg Schneider, chief financial officer of Munich Re, the world’s largest reinsurance company as saying that “We’ve forgotten to stress how important the euro is and how good it is for our business” and that “We haven’t pointed out enough that the euro is a massive export-support instrument for Germany.” The second informs us that companies from the energy sector have provided some political cover to the EU’s energy plans, signaling “a shift in favour of giving Brussels more authority over energy policy, warning that conflicting national regulations are creating an “unsustainable” market”. They took their time…

These are interesting issues which should stimulate some reflection. In my hopeful (more than optimistic) view, this suggests some shifting in opinions and possibly even some learning. The first is particularly relevant in light of a recent decision from the European Commission to declare tax break aid to German companies to be in violation of the single market legal provisions. Basically, we have German businesses doing two things. First, they are recognising that the eurozone rescues of Greece, Ireland and probably the upcoming plan for Portugal, are a good thing for them. Secondly, we have a situation where they confronted with a business environment where their nation state can no longer support and protect them. As more and more of these situations will arise, it should become clearer and clearer to businesses where the power to defend their interests is shifting to. They should become more and more aware that intra-EU pressures, such as the single market, and the external forces of globalisation have reduced the power of their countries to protect them. This, in turn, should motivate them to endorse the EU even further, by providing it with more powers to support them. If the countries aren’t able to run a deficit in the medium run and if the member states can’t subsidise their national industries, then eventually calls will arise for the EU to step in and provide the necessary cover.

The second report is also interesting, because integration in the energetic market would be a stepping stone for the EU. It would seem that we are at a critical moment in this policy area and the industry’s support is most welcome, particularly when it has been the biggest obstacle, until now.

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