Category Archives: GIS Statements

GIS Statements

How to destroy the European Union

GIS Statement by Prince Michael of Liechtenstein

Once, the “European idea” helped unite a war-weary continent. Now, overbearing central authorities, suffocating bureaucracies and reams of red tape are limiting the freedom that idea once promised. Europeans are losing trust in their institutions, and worry for their own security. At the heart of the problem is weak leadership.

The EU is far removed from the celebrations that came with its expansion in 2004. Then, former communist countries realized their hopes of joining a free and prosperous Europe. Centralization and bureaucracy are increasingly impinging on those ideals (source: dpa)

After the test phase that was the European Coal and Steel Community, the Treaty of Rome created the European Economic Community, which evolved into the European Community and finally, in 1993, the European Union. These developments helped bring peace and prosperity to Europe after it had been devastated in two world wars.

From 1989 on, the hope of joining a free and prosperous Europe helped drive development in the countries that had freed themselves from the communist yoke and opened the door for German reunification. A real European spirit prevailed and grew. Europe – not necessarily the EU – was increasingly considered, as French President Charles de Gaulle had envisioned, the “fatherland of fatherlands.” Patriotism replaced nationalism, but people still felt strongly bound to their own countries. It is a model that works well in a decentralized environment.

Expanding bureaucracies

However, Parkinson’s law – that work expands to fill the time available for its completion – took hold in European bureaucracy, which overran institutions. Its growth did not stop at the national level, but infiltrated EU administration. More and more centralization and harmonization were imposed through a web of new rules and regulations. Local, national and regional specificities and needs are frequently ignored. This took place even as national bureaucracies grew increasingly excessive. Now, two nannies domineer over European citizens: their national governments and the European Commission.This situation might still be accepted if Brussels, with the support of some governments, did not harmonize and unify various measures, undermining the principles of self-determination, local control and subsidiarity to the point where individual citizens feel it acutely …

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How to destroy the European Union


*GIS is a global intelligence service providing independent, analytical, fact-based reports from a team of experts around the world. We also provide bespoke geopolitical consultancy services to businesses to support their international investment decisions. Our clients have access to expert insights in the fields of geopolitics, economics, defense, security and energy. Our experts provide scenarios on significant geopolitical events and trends. They use their knowledge to analyze the big picture and provide valuable recommendations of what is likely to happen next, in a way which informs long-term decision-making. Our experts play active roles in top universities, think-tanks, intelligence services, business and as government advisors. They have a unique blend of backgrounds and experience to deliver the narrative and understanding of global developments. They will help you develop a complete understanding of international affairs because they identify the key players, their motivations and what really matters in a changing world. Our experts examine the challenges and opportunities in economies old and new, identify emerging politicians and analyze and appraise new threats in a fast-changing world. They offer new ideas, fresh perspectives and rigorous study.

The Euro and the German Constitution

GIS Statement by Prince Michael of Liechtenstein

Two legal challenges to the EU central bank’s most controversial policies have been working their way through Germany’s Federal Court of Justice, the country’s supreme court equivalent. In one of the cases, the justices in Karlsruhe already ruled that the authority of the EU Banking Union ought to be limited. A verdict on the legality of the EU’s “quantitative easing” policy, under German law, is expected soon. This could prove to be the moment of truth not only for Germany.

The Euro and the German Constitution
Karlsruhe, February 16, 2016: The Second Senate of the German Federal Constitutional Court opens an oral hearing on the 2012 case of bond purchases by the European Central Bank (source: dpa)

Two cases have been filed with the Bundesgerichtshof, the highest court in Germany’s judicial system. One of them questioned the constitutionality of the Banking Union, initiated in 2012 as a response to the eurozone crisis, which transfers some of the responsibility for banking policy from the national level to that of the European Union. Europolis, a Berlin-based think tank created by lawyer and public finance Professor Marcus C. Kerber, was behind that suit. The other case, submitted by a former Bavarian politician and lawyer Peter Gauweiler, challenges the legality of the European Central Bank’s quantitative easing (QE) policy.

The Banking Union, institutionally attached to the ECB, is tasked with supervising the largest European banks – those which have been dubbed “system-relevant” (insolvency of a “system-relevant” institution may threaten a financial system’s stability). The union also supervises the liquidation of such banks when they fail.

The main argument for the transfer of the responsibility for these banks to the ECB level has been that the biggest banks typically operate in more than one eurozone country.

Power grab and ‘easy money’

The plaintiffs in the federal court argued that too much power was shifted from the national supervision to the ECB, which violates the Lisbon Treaty (the constitutional framework of the European Union) and, particularly, the German constitution. They also pointed out that the German authorities and parliament had lost control of the use of the “Bankensonderabgabe” bank levy (the German banks’ mandatory contributions to a deposit protection fund) to a supranational, technocratic and democratically unaccountable authority controlled by the ECB …

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The Euro and the German Constitution

 


*GIS is a global intelligence service providing independent, analytical, fact-based reports from a team of experts around the world. We also provide bespoke geopolitical consultancy services to businesses to support their international investment decisions. Our clients have access to expert insights in the fields of geopolitics, economics, defense, security and energy. Our experts provide scenarios on significant geopolitical events and trends. They use their knowledge to analyze the big picture and provide valuable recommendations of what is likely to happen next, in a way which informs long-term decision-making. Our experts play active roles in top universities, think-tanks, intelligence services, business and as government advisors. They have a unique blend of backgrounds and experience to deliver the narrative and understanding of global developments. They will help you develop a complete understanding of international affairs because they identify the key players, their motivations and what really matters in a changing world. Our experts examine the challenges and opportunities in economies old and new, identify emerging politicians and analyze and appraise new threats in a fast-changing world. They offer new ideas, fresh perspectives and rigorous study.

Politics follow the money – the ECB’s fate

GIS Statement by Prince Michael of Liechtenstein

History contains many examples of what happens when politicians gain control over the currency. Few of them end well. In a not very convincing way, the European Union’s heads of state and governments have chosen a new leadership team at the Union level. The most powerful appointment was probably not the new president of the European Commission, but the nominee to lead the European Central Bank– the guardian of the single currency.

Christine Lagarde
Christine Lagarde. (source: dpa)

Ever since money was invented, governments have tried to control it. That means mankind has a long history of monetary devaluations, which happen whenever the ruling authorities see an easy opportunity to finance their political or bureaucratic objectives.

Stabilizing factor

The gold and silver content of specie was ordinarily a stabilizing factor, though we have seen its debasement even in Roman times, through the admixture of copper. This practice had an inflationary effect. The one big exception was during the 16th and 17th centuries, when the Spanish Empire discovered such abundant gold and silver in the Americas that its very oversupply inflated prices. Since then, however, gold production has remained quite stable.

In the case of fiat money, the stabilizing factor is the issuing central bank, which must strike a balance between preserving the value of the currency and supplying enough money to ensure economic liquidity. Fiat money is a currency that is not backed by underlying collateral, such as precious metals, but by the trust people have for the emitting institution. Today, for most of Europe, this institution is the ECB, whose primary duty is to preserve the value of the euro …

U.S. President Donald Trump’s recent visit to the United Kingdom and Normandy, France, for the 75th D-Day anniversary was instructive in this regard. In the UK and the president’s subsequent short visit to Ireland, the American leader made clear once again that the U.S. strategy for dealing with the transatlantic community is not centered on the European Union. That is crucial for Germany, which continues to remain a dominating force in EU policymaking …

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Politics follow the money

 


*GIS is a global intelligence service providing independent, analytical, fact-based reports from a team of experts around the world. We also provide bespoke geopolitical consultancy services to businesses to support their international investment decisions. Our clients have access to expert insights in the fields of geopolitics, economics, defense, security and energy. Our experts provide scenarios on significant geopolitical events and trends. They use their knowledge to analyze the big picture and provide valuable recommendations of what is likely to happen next, in a way which informs long-term decision-making. Our experts play active roles in top universities, think-tanks, intelligence services, business and as government advisors. They have a unique blend of backgrounds and experience to deliver the narrative and understanding of global developments. They will help you develop a complete understanding of international affairs because they identify the key players, their motivations and what really matters in a changing world. Our experts examine the challenges and opportunities in economies old and new, identify emerging politicians and analyze and appraise new threats in a fast-changing world. They offer new ideas, fresh perspectives and rigorous study.

U.S.-German rapport: the transatlantic X-factor

GIS Statement by James Jay Carafano

The U.S. no longer looks at Germany as its primary political partner in Europe and NATO. Washington’s strategy is not centered on the European Union, where Germany is the leading player, but on bilateral ties in Europe. Although the two countries will still cooperate closely in some areas, their policies will diverge in many others.

“Few questions are more pressing in transatlantic affairs than the future of the German-American relationship,” observes Dr. James Jay Carafano.

These days, the United States no longer presumes that Germany will be its leading partner in the transatlantic system. Instead, Washington’s assessment is that internal political struggles will distract and confound German efforts to exercise decisive leadership. Rather than sharing vision and direction, the two countries are more likely to manage their relations over the next few years on a more transactional basis. That said, there are few signs of fissures and gaps that could eventually create unbridgeable rifts in the transatlantic alliance.

merkel trump gis
Angela Merkel meets Donald Trump. Source: GIS

U.S. President Donald Trump’s recent visit to the United Kingdom and Normandy, France, for the 75th D-Day anniversary was instructive in this regard. In the UK and the president’s subsequent short visit to Ireland, the American leader made clear once again that the U.S. strategy for dealing with the transatlantic community is not centered on the European Union. That is crucial for Germany, which continues to remain a dominating force in EU policymaking …

Read the scenarios in the full report (paid content).


*GIS is a global intelligence service providing independent, analytical, fact-based reports from a team of experts around the world. We also provide bespoke geopolitical consultancy services to businesses to support their international investment decisions. Our clients have access to expert insights in the fields of geopolitics, economics, defense, security and energy. Our experts provide scenarios on significant geopolitical events and trends. They use their knowledge to analyze the big picture and provide valuable recommendations of what is likely to happen next, in a way which informs long-term decision-making. Our experts play active roles in top universities, think-tanks, intelligence services, business and as government advisors. They have a unique blend of backgrounds and experience to deliver the narrative and understanding of global developments. They will help you develop a complete understanding of international affairs because they identify the key players, their motivations and what really matters in a changing world. Our experts examine the challenges and opportunities in economies old and new, identify emerging politicians and analyze and appraise new threats in a fast-changing world. They offer new ideas, fresh perspectives and rigorous study.

The financial elephant in the room

GIS Statement by Prince Michael of Liechtenstein

Three compelling messages on the economy have come through over the past few days. First, neither the United States Federal Reserve nor the European Central Bank (ECB) have imminent plans to end their easy-money policies. Second, the Italian government is considering paying off its arrears to suppliers with new small-denomination bonds instead of euros; the receiving parties would be able to pay with these instruments in Italy. And third, Facebook announced the creation of a new cryptocurrency, the libra, that it hopes will be accepted as a form of payment – one of the critical functions of money. The company issuing the currency, Libra Networks, was registered on May 2, 2019, in Geneva.

U.S. Federal Reserve Chairman Jerome Powell hit pause on future interest rate hikes
U.S. Federal Reserve Chairman Jerome Powell hit pause on future interest rate hikes, prompting speculation that the Fed could cut rates as loudly demanded by President Donald Trump to prevent an economic slowdown Source: dpa

One might question the need for cryptocurrencies, as there is an established monetary system in existence – in theory, guaranteed by central banks as institutions of public trust. To resolve this doubt, you may want to take a look at the last 20 years of monetary policy.

Debasing the system

Following the financial crisis of 2007-2008, Mervyn King, the former governor of the Bank of England (2003-2013), wrote a book entitled The End of Alchemy: Money, Banking and the Future of the Global Economy(2016). In it, he accurately described how the neglect of sound monetary and banking practices by governments, central banks and the financial sector – this neglect being a consequence of the wrong incentives created by cheap money – had led the world into the dangerous crisis …

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The financial elephant in the room


*GIS is a global intelligence service providing independent, analytical, fact-based reports from a team of experts around the world. We also provide bespoke geopolitical consultancy services to businesses to support their international investment decisions. Our clients have access to expert insights in the fields of geopolitics, economics, defense, security and energy. Our experts provide scenarios on significant geopolitical events and trends. They use their knowledge to analyze the big picture and provide valuable recommendations of what is likely to happen next, in a way which informs long-term decision-making. Our experts play active roles in top universities, think-tanks, intelligence services, business and as government advisors. They have a unique blend of backgrounds and experience to deliver the narrative and understanding of global developments. They will help you develop a complete understanding of international affairs because they identify the key players, their motivations and what really matters in a changing world. Our experts examine the challenges and opportunities in economies old and new, identify emerging politicians and analyze and appraise new threats in a fast-changing world. They offer new ideas, fresh perspectives and rigorous study.