On March 20th, 2018, IFE Trustees, Count Ambassador Corrado and Countess Cecile Pirzio-Biroli hosted a working dinner at their Brussels home with IFE Founder & CEO Coach Kathy Kemper, her daughter Kelsey, former IFE diplomatic Stewards, H.E. Franciskus van Daele, H.E. Jan Matthysen, and other European ambassadors and experts. All dinner attendees, including two former Chiefs of Staff at the European Commission and a former EU Ambassador to Russia, discussed their support for further European integration amongst a host of other current political and economic subjects.
Attendees articulated grave concern about the status of transatlantic, specifically Euro-American, relations. Guests held a variety of opinions regarding the Sustainable Development Goals of the UN, the COP 21 Paris Agreement on climate change – which was recently rejected by the US; respect for Article 5 of the NATO on allied solidarity in case of serious military threat, continuing to honor the nuclear deal with Iran, to which all but one signatories including Russia are very attached, and multilateral trade and the irreplaceable role of the WTO and its dispute settlement system since the US withheld agreement on the nomination of new judges there.
It was hoped that the new coalition led by the fourth Merkel Government would understand the need to reduce its current account surplus of 8% of GDP, which creates a bigger problem within the EU – three quarters of whose trade is internal to the Union – than internationally, mostly regarding the US and the UK as Britain leaves the EU. While substantial current account imbalances are inevitable, they should be kept within reasonable limits. Surplus countries such as Germany (and China) must understand that rebalancing current accounts requires corrective policy measures by both deficit and surplus countries. There is still a long way to go on this, both in Europe and worldwide. Germany’s beg-thy-neighbour policy of domestic budget balancing with large external surpluses, coupled with the imposition of austerity policies towards EMU countries in deficit, has created a lot of opposition in southern Europe, exacerbating populism. The situation calls for urgent correction, on condition, of course, that the necessary structural reforms are actually conducted in parallel. The divergent socio-economic trends must be reduced with enhanced EU solidarity in the common interest. Greater inclusion of Keynesian concepts in the policies of the northern members of the EU could help reduce the impact of Eurosceptic populism in several southern and eastern member states. Several participants struck out in their pursuit of pressing reforms of the banking union and of the European Monetary Union.
Guests also expressed concern that the tax reduction package just passed by the United States Congress, might well worsen US income distribution, and, unless it led to additional US economic growth, would risk aggravating the US budget deficit and hence the US current account deficit. Protectionist measures such as the recently announced tariffs on several imports, whatever their justification, would be counterproductive in that regard and actually exacerbate the US deficit. It was also feared that such measures could lead to a trade war which would be bad for everybody. Concern was also expressed about the EU and US moving away from financial regulations, since the EU MIFID II directive was designed on lines similar to those of the Dodd-Frank Bill for which some of the provisions, such as the Volcker rule, are being weakened by Congress, as was US banking supervision in general. The more optimistic dinner attendees hoped that this would not facilitate a new financial crisis, because of commercial bank irresponsibility.
Another issue central to the discussion was Brexit. The draft withdrawal agreement reached that very day in Brussels provided a useful standstill in UK-EU relations for 21 months, providing some welcome breathing space to economic operators from both sides. But the most important of the outstanding issues had been once more postponed: although there is a common intention to keep the intra-Irish border open, ensuring regulatory alignment across the whole Irish island, no solution could be agreed upon. The May government still hoped for a technological solution to avoid border checks, as is the case between Sweden and Norway. But the number of road borders (12) and intensity of intra-island trade was such, that any technological solution was likely to prove unworkable, including for the Irish tax authorities. It was felt that keeping that border open would only be possible by internalising it, keeping the UK within the European Customs Union. The UK was now entitled to test the prospects of free-trade agreements with tertiary countries. But the discovery that these agreements would be unable to replace the trade advantages enjoyed through EU membership would presumably help the May government, or convince Westminster, to bow to reality and accept the remainers and Corbin’s view that Britain should continue to stay within the customs union.
The discussion then veered towards the conundrum raised by the breach of privacy caused by Cambridge Analytica, which used an algorithm to obtain personal data on 50 million Facebook users and allegedly helped influence elections in several countries. Several participants at the dinner felt there was a need for digital giants such as Facebook to find a better balance between privacy and profits and for a review of competition policies regarding digital enterprises. These were largely focused on consumer advantage, which the digital giants indeed produced, both in terms of price and convenience, but were outrageous gross margins such as those Facebook earns (87%) acceptable? Did they jeopardize or discourage new entrants?
Several other subjects were raised during and after the dinner, including the situation in Russia and the deterioration of the situation in the Middle-East.
I had the privilege to close out our productive evening by acknowledging our honored guest visiting from IFE headquarters in D.C. — Coach Kathy Kemper. Coach is an essential agent of conviviality who has spent nearly three decades leading the Institute for Education. She is a one-woman state department who has connected leaders and decision makers across nations and political parties, building bridges of tolerance and civility both in the U.S. and worldwide.
The Countess and I were pleased to host this international IFE dinner and hope to do so again in the future!
Contributed by IFE Trustee Count Ambassador Corrado Pirzio-Biroli
SPOTTED: Mrs. van Daele, H.E. Franciskus van Daele, Coach Kathy Kemper, H.E. Jan Matthysen and Mrs. Agnes Matthysen, Diplomatic Stewards to the Institute for Education, Count and Countess Bernard de Hemptinne, Kelsey Kemper Valentine, Charlotte Matthysen, Ambassador Dr. Michael Emerson, Ambassador Juan Prat y Coll.