Posts By Tony Phillips

goodwillTony

13 Billion – Lucky for some?

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Cork is a pretty city on the river Lee in the south of Ireland where I lived for part of my childhood. Cupertino in the Silicon Valley is the HQ of Apple Inc. As an Irishman and former Silicon Valley software engineer (who is ironically typing this article on an Apple Mac) what is my problem? Doesn’t Apple provide 6,000 Irish jobs? Well it turns out Apple’s small investments in staffing and infrastructure in Ireland are dwarfed by the benefits Apple accrued from a special relationship with the Irish legal and taxation system which it has been milking for billions for years.

Calling out this fiscal black hole has caused a full-blown international political battle, the result of just one decision on one corporation which, as it turns out, was not operating in Cork. This Apple incident is just one such ‘discovery’ representing just the tip of the iceberg.  Since 1960 some Apple products are ‘made’ in Cork, or, to be more precise, Apple claim that value was added in Cork, what seems to be more important is that Cork also housed certain non-US Apple sales and distribution channels. The recent European commission decision has revealed that Apple’s profits from Cork operations were not recognized in Cork or anywhere on the planet for that matter. The commission cried foul. Apple products share much with that other Cork marvel of modern technology, the Titanic, which though built in Belfast, made its first (and last) trip from Cork just 100 years ago. Experience is a hard teacher. 

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RobertSchumanTime

Beyond Grexit & Brexit, Advocating an Irish and a British role in solving Europe’s mid-life crisis

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Robert Schuman was a former Vichy bureaucrat who became finance minister in post-war reunified France. He later became French foreign minister, then president of the European Movement, now official historians of European integration call him an “architect of the European Integration Project”. EU Public Relations officials celebrate Schuman’s declaration (made on the 9th of May 1950) as Europe’s birthday with photos of cupcake with a single European candle[sic.]. The European Parliament awarded Schuman the title: “Father of Europe”. Two years later he died, in 1963.

Europe, according to Schuman “will be built through concrete achievements which first create a de facto solidarity […] to secure in the shortest time the supply of coal and steel […] which have long been devoted to the manufacture of munitions of war”.  The 1951 Treaty of Paris formed the European Steel and Coal Community (ECSC) introducing an open market for military raw materials. The ECSC morphed into the Common Market, the Economic Community (EEC/EC) and now the European Union (EU) while adding the regional currency, The Euro; a currency managed in Frankfurt but spent in Dublin and Athens. When the global financial crisis hit Europe, again EU Federalism was mooted as a cure. Where is the debate in Ireland and in the UK on a federal EU? Are we really that insular?

Fast forward to 2016, almost a decade into the EU crisis, and the Anglo-Saxon press in Europe frames its “Europe” debate between two goalposts (‘Brexit’ and ‘Grexit’), as coined in the Financial Times by German journalist, Wolfgang Munchau.

Brexit is one possible result of Britain’s June 23rd referendum on a UK exit from the EU. The Brexit referendum follows mild-mannered arguments by UK Prime Minister on legislative flexibility (mainly financial safeguards for the City of London). David Cameron’s suggestions for sovereignty loopholes for the UK absenting them from EU financial controls rubbed the other European leaders up the wrong way. Perhaps this is not surprising as EU nations, the UK and Ireland included, are desperately trying to navigate the financial and political fallout of the European phase of the Great Recession.

Grexit revisits Summer 2015, when SYRIZA leaders capitulated to further austerity (and more Sovereign debt) while remaining in the Eurozone countermanding their own referendum decision to reject the third EU offer. Even the IMF recognizes this as a third phase of Extend and Pretend in Greece, kicking the stone down the road till 2016 (afterBrexit).

Globally, European integration, an open EU market, and the survival of the Euro, is debated in the Bank For International Settlements (BIS) and the G20 and the Council for Foreign Relations (CFR). Barack Obama conveyed his opinions to European leaders in his recent springtime visit. Neither Brexit nor Grexit are income neutral for hedge funds. Vulture funds would do well should Schaüble have his way forcing Greece out of the Euro and Brexit offers lucrative fluctuations in Sterling Foreign Exchange futures.

In the German Bundestag and in the other seats of EU power mum’s the word. Brussels and Frankfurt feign business as usual.

UK and Irish newspapers debate European Integration using national balance-sheet arguments on EU contributions and the taxation that pays for this. Taxation without representation is certainly an important issue, but this masks a deeper debate on supranationalism and European federalism. In Dublin’s Fleet Street, border controls and national corporate tax rates form part of a cautious debate on sustainable growth under conditions of high debt. Lucky for Ireland the term Irexit doesn’t quite roll off the tongue: “Ireland is not Greece” after all.

Instead of debating Federalism in Ireland a parochial debate focuses predominantly on national interests particularly its low corporate tax rates and the choice by US multinationals to offshore their EU headquarters locally. Ireland is English speaking; its trade and cultural ties are North Atlantic, a reflection of its history and its ongoing emigration; locally rebranded ‘diaspora’. None of this bodes well if Brexit passes. Ireland’s eastward facing Euroports export to Britain; there is significant cross-border trade with Northern Ireland. The governing coalition fears geographical isolation between Washington D.C. and (a possibly non-EU) Westminster. 

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Greece; Deathplace of Democracy

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The word Referendum comes from the Latin referre (to bring back) anddemos is Greek for the people as a political unit; demos is the root of the word Democracy; so a referendum brings a decision back to the people. As representative democracies European States hold elections to choose their governments giving elected representatives a mandate to represent their political choices. The Greek people chose Syriza to represent them in the broken institutions of a European Union in crisis; the Greeks chose to end Austerity. If representatives can’t make a political decision, because it is contrary to their mandate, the decision can be brought back to the demos in a referendum; or at least that is how things used to work.

Welcome to post-crisis EU democracy.

Since 2009 and the financial crisis in the EU, decision-making has been deferred to a financial triumvirate, the Troika, and to the Eurogroup. In latin triuviratus means unofficial coalition of power. Julius Caesar, Pompey and Crassus were the first triumvirate. When the Senate told Julius Caesar to step down as military leader of Rome, he crossed the Rubicon. He proclaimed himself “dictator in perpetuity”. Triumvirates are not known for love of democracy.

The Eurogroup works with the Troika’s mandates (called Memoranda of understanding). The group is democracy light, or rather, it used to be. This flexible ad-hoc ‘group’ has one representative (a finance minister) for each nation in the Euro currency. Neither Denmark nor the UK are members because they don’t use the Euro. As and from Monday the 29th of June, neither is Greece.

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European Elections 2014: 2020 Hindsight

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The results of the European Union’s Parliamentary elections are just in. They are twofold: first, there is a clear disinterest in the European Parliament as expressed by very low voting turnouts and second, of the few Europeans that did bother to vote, many have decided that it is time for a change.

Non-voters in the European Parliamentary elections are the majority in those nations without compulsory voting. The European turnout was 43% with 57% not voting or spoiling their vote. In Germany 48% voted, 46% voted in France, 36% in the UK and 35% in Portugal. There was extreme disinterest in the European elections in much of Eastern Europe: with 24% turnout in Croatia; 23% in Poland, 19% in The Czech Republic; and the Slovakians with a 13% turnout.

Christoph Hasselbach of Deutsche Welle’s Europe desk noted: “As for turnout, the picture is mixed: in some countries more people voted than before, but those votes often went to Euro-skeptic parties.” “All in all”, he added “the general public’s interest in the EU is shockingly low”.

As to the changes in voting patterns, highlights of the wave of political change include the rise of the German anti-EU AfD party (Alternative für Deutschland) which gained their first seats in the European Parliament; France, where Marine Le Pen’s party was the overall winner of 24 seats with more than 25% of the vote; Spain, which now has a new fourth party called “Podemos” with an anti-EU/Troika and an anti-capitalist stance which may have taken many of the PP and PSOE’s 17 lost seats; and the UK where non-finalised counts indicate that the right-of-centre anti-EU party UKiP (United Kingdom Independence Party) has won the election gaining, for the first time ever, more MEPs than either the Tory or Labour parties; finally there is Greece, where the “SYRIZA” far left alliance has come out on top with 27% of the national vote and seven MEPs.

On a national level Europe’s political structure has been reasonably stable since the Second World War and more specifically since the first waves of growth of the Common Market in the 1970’s. This has been broadly reflected in the European Parliamentary party groups since the Parliament began in 1979. Until today the main groups in the European Parliament reflected two broad nation political categories. The centre-left grouping in the European Parliament is the S&D “The Group of the Progressive Alliance of socialists and Democrats” which includes the German SPD, the PSOE in Spain, the French Socialist Party and Labour in the UK, among others. The large centre-right grouping in the European Parliament is called the EPP “The Group of the European People’s Party (Christian Democrats)”, it includes Germany’s CDU party, the Spanish PP and the UK Tory party. Provisional results at 11:00AM/CET on Monday, May 26 show the S&D lost seven seats since the last (2009) elections falling to 189 MEPs but the EPP did even worse, losing 60 seats to 214 seats. There are 63 new ultra-left-wing MEPs and 63 new ultra right-wing MEPs who have not yet aligned themselves to European party groups. This change is a clear demonstration of the radicalization of European politics.

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An Open Letter to Minister Shatter

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This open letter was originally published on Project Allende on the 9th of December 2013.

On Monday this week I received a surprise email from The Minister for Justice, Equality and Defence. Signed “Best Wishes, Alan”, minister Shatter’s email was no Christmas greeting. It acknowledged a November online Contact.ie campaign to “Destroy the Anglo Bonds” in which I had participated along with an estimated 100,000 others.

The timing of Alan’s missal was unorthodox, as the vote had already taken place, the other emails I had received from TDs were in favour of the motion and had been sent before the debate. None of these were from any of the three major parties. In contrast to Alan’s letter they were strongly in favour of removing the Anglo ‘socialised’ debt, first created by Fianna Fáil as promissory notes, then consecrated by Fine Gael & Labour into sovereign bonds.

I can only surmise that Alan felt a need to explain himself.

This ‘debt’, as every Irish person knows, was the result of a disastrous public rescue of Anglo Irish Bank, the bank that The British Independent Commission on Banking called “the worst bank in Europe”. Internationally Anglo is a case study in the corruption of the European banking sector. To Alan it was an unsightly legacy from Fianna Fáil. Had Alan not listened to the Anglo Tapes? Maybe not.

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