Tuesday, June 12, 2018

Thoughts from Galicia, Spain: 12.6.18

Spanish life is not always likeable but it is compellingly loveable. 
- Christopher Howse: A Pilgrim in Spain. 

If you've arrived here because of an interest in Galicia or Pontevedra, see my web pagehere.

  • The total number of Brits living in Spain – at least for (just under) 6 months a year - ranges from 250,000 to 1.3m, depending on whom you talk to. Here's an article on how we've been portrayed in films. I would add the (usually) very funny TV series Benidorm.
Life in Spain
  •  Playing with bulls can be dangerous. Don't do this at home . . . 

Fatally so, even . . .

Details here and here for those interested.
  • Only in countries where there are language academies can there be intense discussion as to whether the name of the potential next leader of the PP party is Feijoo, Feijóo or even Feixo.
  • There's a new web mag here in Spain called Jot Down Kids. Ignoring the issue of WTF this actually means, I'm compelled to conjecture it should be Jot Down, Kids. Or Kids, Jot Down. Or even Jot Down for Kids.
The EU
  • Says Ambrose Evans Pritchard: The US assault on the world’s existing trade system becomes less of a mystery. It is not a discussion about tariffs or Ricardian theories of comparative advantage. It is about geopolitics. This is much more threatening for Germany. See the full article below.
  • The US is no longer a country we can trust, says Alex Massie in the right-of-centre Times, in the article posted below.
  • In the left-of-centre Guardian, the equally estimable Simon Jenkins writes that Trump’s vulgarity could be the one diplomatic style Kim Jong-un understands, but adds that Donald Trump’s diplomacy would be fascinating were it not so dangerous. Click here for the article.
  • Fart is not the only member of his family who deals in bewildering statements. His daughter tweeted this just before the meeting in Singapore: 'Those who say it can not be done, should not interrupt those doing it' - Chinese Proverb. It was then reported that: No one in China had any knowledge of this dictum and in thousands of comments on Weibo, users proffered scores of different suggestions without arriving at a consensus. Some suggested the proverb "the foolish old man removed mountains”. And one person commented that: One proverb from Ivanka has exhausted the brain cells of all Chinese internet users. Her father must be very proud of her.
  • As regular readers will know, I pride myself on my ability to predict which retail outlets here won't last long. My 2 latest 'successes' are, sadly, both spice shops. Still, the closure of these provides the opportunity for yet more money-laundering jewellery shops. It's an ill wind . . .
  • Which reminds me . . . 13 people are currently being tried in the city's court for drug smuggling. One of them is a local cop. Or maybe 'was'.
Finally . . .
  • Good to see that Google have solved whatever the problem was and, this morning, is again emailing me copies of Comments. I was thrilled to get this one just now:-
My Brothers and Sister all over the world, I am Mrs Boo Wheat from Canada ; i was in need of loan some month ago. i needed a loan to open my restaurant and bar, when one of my long time business partner introduce me to this good and trustful loan lender DR PURVA PIUS that help me out with a loan, and is interest rate is very low, thank God today. I am now a successful business woman, and I became useful. In the life of others, I now hold a restaurant and bar. And about 30 workers, thank GOD for my life I am leaving well today a happy father with three kids, thanks to you DR PURVA PIUS Now I can take care of my lovely family, i can now pay my bill. I am now the bread winner of my family. If you are look for a trustful and reliable loan leader. You can Email him via,mail (urgentloan22@gmail.com) Please tell him Mrs Boo Wheat from Canada introduce you to him. THANKS. Dr Purva Pius 

© David Colin Davies, Pontevedra: 12.6.18


1. German car industry fears double shock of Trump tariffs and a Brexit breakdown: Ambrose Evans-Pritchard

President Donald Trump owns a Mercedes SLR McLaren and a Mercedes Maybach. His daughter Ivanka drives a Mercedes Cabrio.

This has not stopped him seizing on German cars as the ultimate symbol of mercantilist villainy and unfair trade practices. Mr Trump reportedly told French leader Emmanuel Macron that he aims to clear every German car from Fifth Avenue in New York in an unyielding quest for national purification.

The German car industry is now seriously alarmed after the bad-tempered collapse of the G7 summit in Canada, followed by a storm of anti-German tweets from Air Force One.

It is calling for the total abolition of EU import tariffs on cars in a frantic bid to avert a trans-Atlantic trade war and preserve its lucrative US market. But the bitter rift between Europe and America already risks spinning out of control.

“I am very worried. Let’s get rid of the tariffs and rely on mutual standards on both sides of the Atlantic,” said Bernhard Mattes, president of the country’s auto federation (VDA), speaking to the Süddeutsche Zeitung.

The plea came as Chancellor Angela Merkel described the G7 summit clash as “sobering” and warned that the EU will retaliate in kind whenever provoked. “We’re not going to let ourselves be rolled over the table a second time. We will also take action,” she said.

German industrialists increasingly suspect that Mr Trump is spoiling for a fight and intends to go ahead with 25% tariffs on European car imports, exploiting a national security loophole under US trade law as he did over duties on steel and aluminium.  The EU currently imposes 10pc duties on cars, mostly aimed at curbing a flood of imports from Asia.

This could turn into a double drama for Germany if Brexit talks break down at the same time, leading to trade barriers with Britain. The German car industry might then face a sudden squeeze in its two biggest global markets.

Prof Gabriel Felbermayr from the IFO Institute in Munich said a double shock from both Trumpian tariffs and a no-deal Brexit would cost the German car industry around €10bn (£8.8bn), but the negative synergy of the two together would be worse than the sum of the parts. “There is less leeway for trade diversion. Industry would be badly hurt, and nobody wants this kind of escalation,” he said.

Brussels has threatened tit-for-tat retaliation against Washington. German carmakers fear this will merely goad Mr Trump to escalate further. He appears to relish the prospect of a full-blown showdown before the mid-term US elections in November.  EU counter-measures  risk a spiral of protectionism, with painful consequences for those countries such as Germany that are highly-geared to trade.

Exports equal 46​% ​of GDP in Germany, but only 12%​ in the US. “Further punitive tariffs on cars from Trump would do massive damage to the German economy,” said Hans Gersbach from the German economy ministry. Roughly 850,000 jobs in Germany depend on the car industry. An eighth of all jobs are linked to the sector in one way or another.

The difficulty is that Brussels cannot wave tariffs on US cars alone even if it wants to. The EU has to extend the same zero rates to China, India, and emerging Asia to be compliant with World Trade Organisation rules.
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“You can't just cut the tariffs for US cars. You are not allowed to discriminate. The EU now has carefully crafted trade agreements with South Korea and Japan, where the lifting of car tariffs has been agreed to be gradual,” said Eurointelligence.

France, Italy, and Spain compete for the mid-level segment of the car market, and are sensitive to price. They would demand exorbitant political concessions from Germany – perhaps on eurozone fiscal union – in exchange for helping Mercedes, Audi, Porsche and Volkswagen.

Audi is the worst hit by the threatened tariffs since it does not manufacture models in America. VW has four plants in Mexico, which might be vulnerable.

Prof Felbermayr said the German government is looking at a possible “TTIP-lite” trade deal with the US to eliminate bilateral tariffs.

Ironically, this resembles the deal that Theresa May wants on Brexit, but which the EU so far refuses to contemplate without stringent conditions.

On one level, the US sanctions are absurd since German car firms employ 36,000 workers in the US, and over half their output from US plants is exported. The tariff issue is essentially a red herring since average US rates and EU rates are identical at 1.6%.
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The dispute is really a cover from something else. The White House complaint against Germany and China is that they have strategically gamed the global trade system, although in different ways.

Peter Navarro, the ultra-hawkish White House trade adviser, argues that Germany has locked in a semi-permanent trade advantage through the deformed  structure of the euro, allowing it to amass and hold a current account surplus of over 8​%​ of GDP.
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The implicit Deutsche Mark is “grossly undervalued”, he argues. The intra-EMU exchange rate is misaligned. To the extent that there is a self-correcting mechanism, it is through "austerity" policies in the South.

This means that the eurozone has become a contractionary black hole, hollowing out world demand. It distorts the global economy. Germany has not shown any willingness to correct this. Berlin deems the eurozone surplus to be a virtue.

The US conflict with China is different since the Chinese trade surplus has largely disappeared. It is a contest for control over the technologies of the 21st Century.

Seen it this light, the US assault on the world’s existing trade system becomes less of a mystery. It is not a discussion about tariffs or Ricardian theories of comparative advantage. It is about geopolitics. This is much more threatening for Germany.  

2. The US is no longer a country we can trust: Alex Massie, The Times

Trumpist politics, with Steve Bannon as cheerleader, is spreading across Europe and fuelling support for far right parties

Pity the poor United States. For decades, according to Donald Trump, America has been “like the piggy bank that everybody’s robbing”. Mr Trump’s sense of victimhood may not be his worst attribute but it might be his most dangerous.

In Ottawa at the weekend the US objected to the inclusion of the words “rules-based international order” in the G7 summit’s official communiqué. Mr Trump’s hands — tiny or not — will not be bound by such conventions. The US is pulling down a temple it built itself. It remains tempting to dismiss Mr Trump as a mere blowhard, a rhetorical bully whose words should not be taken as a true indication of the American interest, but where rhetoric leads actions follow. The idea that responsibility is the price of great power is deeply unfashionable in Washington these days. The American president’s impatience with wishy-washy democracy is as obvious as his admiration for the world’s strongmen.

So, we should expect this to get worse before it gets better. Month by month, the Trump administration becomes Trumpier as old holdovers from the Obama years and career civil servants decide it’s just not worth it any longer and are replaced by people more in tune with the president’s mindset and agenda. Then there is the prospect, terribly real I am afraid, Mr Trump might win a second term. At that point you might wish to cancel any and all bets you have; at that point the toddler-in-chief will be truly unleashed.

Trumpism is not confined to the US either. To the extent that it is a movement and not just a collection of resentments, it is international in scope. That was something made clear by an article written by Steve Bannon and published by The Spectator last week. Mr Bannon may have been thrown out of the White House — chiefly for making rather too much of his self-declared status as Mr Trump’s “brain” — but besides the president himself, he remains the most useful guide to the spirit of Trumpism.

Mr Bannon wrote about his admiration for the new tough guys on the European scene. You know who he means: the far-right Alternative für Deutschland, the rebadged French National Front and so on. The “deplorables” — Mr Bannon is proud of Hillary Clinton’s unfortunate but not altogether inaccurate description of some Trump supporters — are “fighting back” all across the continent and, as Mr Bannon notes with wolfish satisfaction, they are “winning”. This is an international sensibility. No wonder “all the brothers came to Rome” to meet Mr Bannon.

Unwittingly, I assume, Mr Bannon is right about one thing. This is indeed “a contagion” — his word — “that has spread across to the United States and come back around again”. Hark, though, at the sleight of hand deployed. According to Mr Bannon, for instance, Viktor Orban is “redefining democracy” in Hungary, which is true in the sense that he’s defining it out of existence.

Like Vladimir Putin, Mr Orban probably does not need to cheat to win but there is no point in taking unnecessary risks. According to the Organisation for Security and Cooperation in Europe, the most recent Hungarian election was characterised by “intimidating and xenophobic rhetoric, media bias, and opaque fundraising” in addition to “a pervasive overlap between state and ruling party resources”.

Orbanism is Trumpism on the Danube. According to Mr Orban’s spokesman, “When unelected people or organisations lobby or speak out against the government, that is basically against the country.” L’état, c’est nous.

Mr Bannon is not a lone freelancer. He may have left the White House but his spirit continues to animate the presidential parts of the American government. Earlier this week Richard Grenell, the new American ambassador to Germany, told Breitbart News (sic), that “I absolutely want to empower other conservatives throughout Europe, other leaders.”

This did not refer to Angela Merkel or Theresa May. No, in Germany he means supporting “conservatives” such as Alternative für Deutschland, who are opposed to Mrs Merkel, just as in Britain the natural home for Trumpism is whatever remains of Ukip, not the Conservative Party. When Trumpists salute “anti-establishment conservatives”, it’s the anti-establishment bit they value, not the conservative element.

In that respect, and regardless of official state department policy, Trumpism is ineluctably hostile to Europe and the norms of European politics. It believes in smashing things up. Chaos is a friend, not a threat. That has consequences and not the least of these is that the United States is no longer a reliable partner, no longer a country that can be trusted.

None of this requires one to avoid the inadequacies of the European Union or, more generally, European politics. The EU’s resistance to democratic challenge contributes to its stability but also undermines its credibility and its ability to respond to events or changing preferences. It is, often, a triumphant expression of groupthink and its response to being challenged is generally to double-down on the very policies that helped produce the challenge in the first place.

Equally, even Mr Trump can be right sometimes. European countries, including Britain, do need to spend more on defence. This is so even if you also allow that, in the past, the US has been happy to encourage a dependency defence culture in Europe. For that matter, the G7 is anachronistic anyway. A forum built for a world that no longer exists and that is more than due an overhaul. Any gathering that includes Italy and Canada but not China or India is one that’s out of date.

The whole point about contagion, though, is that it spreads. The American president gives the impression of admiring America’s enemies more than he likes America’s friends. His suggestion that Russia is allowed back into the G8 was hardly a surprise even if the justification for it — the annexation of Crimea happened a “long” time ago — was characteristically fatuous.

Mr Trump’s trade policies weaken alliances elsewhere. What value would you now put on defence commitments made to US allies? Less, I wager, than at any moment since the Second World War.

This is a time for dispassionate realism, for noting the way things are no matter how much we might wish them otherwise. It means keeping a clear head in London, Paris and Berlin and acknowledging that, when it comes to dealing with the United States, the default position must now be verify, then trust. Above all, it means confronting the fact that these people are not our friends.

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