AuthorMartin Hladík

Nobody in the financial industry could have missed how notable the attention has been in all recent regulations paid to the conflict of interest and its mitigation. All those MiFIDs, IDDs, MCDs and other Directives, have substantial parts dedicated to so called “inducements”. This is a euphemism for preventing the advisors (distributors) from taking too much money that would skew their advice and recommendation to clients. Because even a little kid knows that those essentially undesirables in the financial world (we love Fintech!) will recommend even the worst product with the highest commission, right? Wrong.

As with many presumptions of current consumer protection dogma, this cliché has very little empirical backing. Considering investments, as the most observed segment, even scholarly literature is deeply divided, as to whether higher commissions lead to worse advice or not. Seeing this and the huge costs incurred by the colossal inducements’ regulation, I decided about two years ago to take a look at the situation in Central-Eastern Europe. That “wild East” of the European Union, which is not empirically mapped at all. So, what was our journey and what have we found?

Our research, which will be published in a few months in one of the prestigious European journals, was based on the examination of a total of 2,066 advised sales realised between 2013 and 2015. Using a quantitative model, we have examined whether, in those sales, the amount of commission paid to the final adviser had anything to do with the costs, yield or volatility of the recommended investment product. Participating companies were divided according to their sales model (MLM, pool or flat structures) and their size, to make results most granular. We certainly had many expectations regarding the outcomes, but what we found surprised us all. Although we have observed a relationship between commission and sold product costs, this was for the biggest part of the market (MLMs) compensated (for the investors) by significantly higher returns from the recommended funds.

How can we interpret such an outcome? Well, simply put: the majority of financial advisers recommend products with higher fees, but also higher returns. Does this suggest the consumer detriment that the Brussels legislators’ are claiming? Hardly. Because, on the negative side of the equation, the consumer must also add the costs of the regulation itself. Which are, unsurprisingly, enormous and are already pushing smaller companies out of business. Sceptics might ask: is this not the true goal of the regulation storm that we are enduring, despite the rhetoric about “smart regulation? Only time will tell.

Notes:
The paper referred to above can be accessed here and the previous author’s work on the topic at both here and here.

By Jiří Šindelář
Broker Consulting, a.s.
former Deputy Chairman of FECIF

After several months of mass protests, which started in December 2018 due to bread and fuel shortages, the Sudanese finally achieved the ouster of their long-term dictator Omar Al-Bashir who has been overthrown by the army. Since 1989 his uninterrupted ruling has been marked by oppression of the black and non-Muslim population.

In July 2008 he was charged by the Hague-based International Criminal Court with genocide, crimes against humanity and war crimes committed during the Darfur war.

Sudan was on the brink of civil war between the protesters on one side and the Rapid Support Forces (RSF) on the other side. The Forces are commanded by another war crimes suspect Mohamed Hamdan Dagalo, a self-proclaimed general who never served as a soldier nor received any military education. He was granted his military rank by President Al-Bashir in return for his services in Darfur that he performed with extreme cruelty. RSF is composed of former members of the Janjaweed militias which have committed most brutal crimes and atrocities in Darfur since 2003 with at least 300,000 killed and three million civilian population displaced.

In their massacre attack in Khartoum on 3 June 2019, shortly before the agreement was achieved between the ruling military council and the opposition, RSF killed 128 peaceful demonstrators. General Dagalo has established good relations with Saudi Arabia where he is in charge of recruiting Sudanese mercenaries to fight on the side of Saudi coalition in Yemen. The Sudanese army has remained neutral in the current crisis and thus proved its professionalism.

Doubts about the capacity of transitional government

After long and many times interrupted talks and following the intervention by Ethiopian Prime Minister Abiy Ahmed Ali, the Constitutional Charter was signed between the opposition coalition and the military council on 17 August 2019. The coalition called Forces of Freedom and Change unites the Sudanese Professionals Association, the National Consensus Forces, Sudan Call and the Unionists (DUP).

The agreement should pave the way to the formation of civilian government after almost have a century of military rule. Despite great optimism among the citizens doubts are still present about the capacity of the transitional government to limit the army’s and especially the RSF’s influence on politics.

After the ousting of long-term President Al-Bashir an agreement was reached between the military council and the opposition on 11 April 2019. This represents a new chapter in Sudan’s modern history that has already seen three civil wars: the conflicts between the northern part of Sudan and the southern Sudan region from 1955 to 1972 and from 1983 to 2005, and the ethnic cleansing in Darfur and south Kordofan from 2011 till present.

So far Sudan has avoided the Egyptian scenario

The process of transition to democracy brings along challenges such as new domestic and foreign policy, economic reforms, protection of rights and freedoms and a balanced foreign policy, all of which would enable Sudan to be removed from the international community’s black list and sanctions.

The transition process necessitates fair elections and a new or modified constitution. The democratic process would trigger political and economic reforms whose consequences would especially hit the army and its interests. The recently agreed period of three years and three months would be enough for a smooth transition. The opposition coalition and the army have thus avoided the radical overnight changes as was the case in Egypt where such quick changes led to the military coup in 2013. Sudan’s experience in limiting the army’s role with cooperation rather than with confrontation is important for the whole Arab world and for the Arab Spring. +

After tough negotiations the opposition made a very difficult decision to appoint General Dagalo, who is charged with war crimes, as the vice president of Transitional Military Council.

Pursuant the Constitutional Charter the opposition coalition and the military council agreed that the Transitional Council would be Sudan’s highest body. The Council comprises 11 members (five from the army, five from the opposition coalition and one independent member). The mandate for forming the government was entrusted to an experienced economist Abdullah Hamduk, who served as Deputy Executive Secretary of the United Nations Economic Commission for Africa (UNEC) from 2011 to 2018.

Of course, not all issues have been completely resolved. Within the opposition there are still strong fractions that have reservations about the agreement, while some have not even joined the opposition coalition.

There are four factors that enabled Sudan to overcome the difficult phase of unrest and civil war with the least possible losses in comparison with the events in Egypt, Libya, Syria, Yemen, and also Algeria where it is still not clear whether the Algerian army will take complete control over the country like it did in Egypt or it will allow a democratic transition of power following Sudan’s model.

Four positive factors

Four key factors contributed to the resolution of the situation in Sudan:

Firstly: The patriotic Sudanese army refused to shoot at the protesters, except for its D-unit. Despite the conflicts and mistrust among the army and the opposition coalition they continued with the negotiations to reach the agreement and to meet at least the minimum expectations of the protesters.

Secondly: Sudanese opposition is comprised of relatively strong political parties with a long tradition, political maturity and wisdom. Their activists from the civil society maintained the initial momentum, so the protests, did not devolve into anarchy and consequently the army and RSF did not quell the uprising. During the protests and negotiations the opposition coalition was patient in resolving the critical issues. They agreed to the acceptable and realistic solutions in order to resolve the severe economic and ethnic problems in the country. They did not demand that the army be excluded from the political process and agreed to share power with the army during the transitional period. Thus they avoided the mistakes made by the opposition protesters in other Arab Spring countries.

Thirdly: Probably the most important factor was that Sudanese opposition prevented the army from abusing the local and social vulnerability of minorities and tribes. Unlike during the previous civil wars in South Sudan, Darfur and elsewhere, they focused on uniting the whole nation with the aim to ensure a better future for them and for their future generations without any discrimination.

Fourthly: Most of the credit for reaching the agreement goes to the Ethiopian Prime Minister Ali and his assiduous mediation activities in the Organisation of African Unity (OAU). Both Prime Minister Ali and the OAU prevented the interference of some Arab countries such as United Arab Emirates and Saudi Arabia and their financing of the military junta to carry out a coup, as was the case in Egypt where they provided over 12 billion dollars to remove the democratically elected President Mohamed Morsi in a coup that took place on 3 July 2013.

Once the 17th fastest growing economy in the world

Sudan, which was the largest African state until the Republic of South Sudan gained independence, is now the third biggest country in Africa (following Algeria and the Democratic Republic of Congo) with a surface of 1,886,000 km2.

According to estimates from 2010 Sudan was the 17th fastest growing economy in the world. Its fast development, which was mostly based on high income from oil (despite international sanctions), was mentioned and described in The New York Times article from 2006. After the separation the Republic of Sudan lost 80% of its oil fields that remained on the territory of the Republic of South Sudan. Being a landlocked country South Sudan has to rely its oil exports on the pipelines running through Sudan’s ports on the Red Sea coast. It also lacks the oil processing facilities that remained in the northern territory. In August 2012 Sudan and South Sudan signed the agreement on the transportation of South Sudan’s oil through Sudan’s pipelines to Port Sudan. Today Sudan produces about 250,000 barrels of oil per day. Until the secession of South Sudan in 2011 Sudan’s economy depended substantially on oil exports.

Agriculture was Sudan’s main source of income in the past, employing over 80% of the population and accounting for one third of the economic sector. The country has 16.9 million hectares of irrigated agricultural land. Sudan is the world’s third biggest sesame producer following India and China, while cotton is its main export crop. Nile is the main source of irrigation. The country has 643 km of coastline along the Red Sea. There are still unexploited possibilities of fishery, coastal tourism and tourism in the three national parks.

The main factors preventing Sudan’s economic growth in agriculture are frequent droughts and instability due to the civil war.

Sudan has rich mineral resources including asbestos, chromite, cobalt, copper, gold, granite, gypsum, iron, kaolin, lead, manganese, natural gas, nickel, oil, silver, tin, uranium and zinc.

The new Sudanese transitional government needs international support for reforms and economic development and for rescheduling of public debt towards IMF and other international lenders.

As far as its internal policy is concerned, the new government needs inter-ethnic and inter-tribal peace and consensus. Besides Arabs which represent 54% of the 36 million population in Sudan there are 597 Arabized ethnic groups with more than 400 different languages and dialects.

Sudan’s legal system is based on Islamic Sharia law. After the 2005 Naivasha peace agreement that ended the civil war between north and South Sudan, Khartoum introduced several measures to protect the non-Muslims. The use of Sharia law in Sudan does not comply with the tradition of Sudanese people and with the modern times. Sudanese Muslims are divided between Salafism and Sufism, therefore the use of Sharia law which favours the Salafis is not appropriate for Sufis and Darfurians who belong to Sufis.

Analysts believe that Sudan’s foreign policy should turn away from supporting terrorism and start to cooperate closely with the international criminal court in order to achieve the lifting of international sanctions. The Sudanese army should urgently withdraw its 10,000 soldiers from Yemen. The Yemen war is illegal and illegitimate pursuant to international law and it undermines the reputation of the Sudanese army.

The International Institute for Middle-East and Balkan Studies (IFIMES) in Ljubljana, Slovenia, regularly analyses events in the Middle East and the Balkans. IFIMES has prepared an analysis of the situation in Sudan and examined the possibilities for resolving the tensions and appointing a civilian-led transitional government. The most relevant and interesting sections from the comprehensive analysis entitled “Sudan 2019: A difficult path to Sudanese democracy” are published above.

Financial literacy and education are key elements of the path to economic growth and social inclusion in the European Union. At the same time, it is important to remember the 2030 Agenda for Sustainable Development, adopted on 25 September 2015 by Heads of State and Government at a special UN summit, which includes 17 Sustainable Development Goals (SDGs). The 2030 Agenda, a world-wide landmark achievement, highlights the importance of ensuring inclusive and equitable quality education and promotes lifelong learning opportunities for all, as it is recognized by its Goal 4.

Nowadays an increasingly important aspect of education concerns financial literacy and education. To begin with, it is necessary to make a distinction between the two concepts. According to the OECD, financial literacy is a combination of awareness, knowledge, skill, attitude and behaviour necessary to make sound financial decisions and ultimately achieve individual financial well-being; whereas financial education is the process by which investors improve their understanding of financial products and services and, through information and objective advice, develop the skills and confidence to become more aware of financial risks and opportunities, to make informed choices, to know where to go for help, and to take other effective actions to improve their well-being.

If we consider the European context, the EU contains in itself the world’s best performers (Nordic countries) as well as the countries that score below global average (Romania, Portugal) in financial literacy rankings. Also, for Italy the results are not encouraging; according to a G20 report on adult financial literacy with questions surveying knowledge, behaviour and attitudes in financial topics, Italy ranked only 19th. This evidence shows that there is still considerable scope for improvement, especially in Southern and Eastern European countries.

Financial literacy and education should therefore be an integral part of the policy agenda of the EU institutions and Member States, as they can help tackle some critical social problems. The first one is the pressure on the pension systems, caused by a rapidly ageing population, which requires empowering occupational and personal insurance systems. Another critical issue is mortgage-debt and its impact on the total debt of households. Finally, financial literacy is functional to inclusive growth.

As more and more EU citizens are asked to make their own decisions about such issues, financial literacy is vital for their life-time welfare. All these problems are especially sensitive in the case of young people and their future, both as investors – especially when they have to plan their savings for retirement – and as household owners.

Europe is facing a serious problem of an ageing population, especially in some countries such as Italy. This problem is also evident in the financial sector. Investors and their financial advisors are getting older year by year. According to the statistics of Assogestioni – the Italian association of asset managers – the average age of people investing into mutual funds is 60 (2018), with a general increase over the past; it was 52 years in 2002 and 58 in 2013. In 2018 the share of investors between 26 and 35 years has consequently decreased from 15% to 6%. Similarly, the average age of Italian financial advisors is 51 (2018), whereas only 11% of them are under 40.

This evidence clearly shows that it is necessary to promote financial education and advice among young people, both as potential investors and financial advisors. Financial education, being pivotal towards delivering fundamental social values, can be described as a process which enables citizens to enhance their knowledge of financial concepts and products, understand the risk-return trade-off and find the most suitable solutions to their needs and dreams. This process shall be considered a life-long activity which should begin at a young age.

The starting point is financial planning, based on a life-cycle perspective. Financial advice can be seen as a fully-fledged service which complements financial education, as it is aimed at providing citizens with personalized and integrated solutions (investment management, tax planning, retirement, family and health protection) according to a life-cycle perspective. However, financial education and advice can perform their social roles and achieve their inclusive goals only if we consider that, according to the above-mentioned statistics, it is crucial to get young people involved with tailored initiatives. For instance, policy incentives aimed at promoting job opportunities in the financial sector are vital for the future of the profession of financial advisors. At the same time, financial education needs to be promoted, starting from school age.

Italy provides some positive examples. Since 2009, ANASF and PROGeTICA have been organizing “Economic@mente® – Metti in conto il tuo futuro”, a financial education programme for high school students. Economic@mente® provides students with a set of skills, based on their personal experiences, in order to teach them how to manage their future savings throughout their life by means of simulations, practical classes and tests.

In light of this evidence, the framework is crystal clear. It’s time to act and everyone is called upon to contribute.

Vania Franceschelli
FECIF Vice-President & Foreign Affairs, ANASF

Technology can give advisers ‘opportunities that can revolutionise’ the sector

Advice has overtaken investment performance as the most valued aspect of an IFA or wealth manager’s offering and this means consumers need to have the best experience money can buy.

In a bid to stand out from the crowd, wealth companies are looking to virtual reality (VR) and artificial intelligence (AI) to bolster their interactions with clients.

John Gamble, director of professional services at tech provider C5 Alliance, told International Adviser: “AI and VR technology presents us with opportunities that can revolutionise our everyday lives.

“It can be used to enhance customer experience, especially in the finance sector, where advisers are dealing with clients from all over the world.”

Gamification

Virtual reality is used in many different sectors and is now becoming part of the weird and wonderful world of wealthtech.

Financial services tech provider Synechron, which wrote a masterclass article in June on client prospecting, has developed a virtual reality wealth journey accelerator which enables investors to visualise their own financial plans.

Answering yes/no questions on their retirement goals; they experience a personalised, VR-simulated journey to visualise their financial future – including home, holidays, health, and insurance.

“A key challenge facing many financial advisers and wealth managers today is that the ongoing advisory experience focuses on communicating investment returns rather than really engaging with clients,” Ben Musgrave, head of digital UK at Synechron, said to IA.

“By using VR, financial advisers and wealth managers have an opportunity to use innovative technology to fully engage with their clients, creating a highly-immersive experience that is ideal for identifying and gamifying goals, building relationships and communities, reinforcing positive behaviours, and generally delighting customers.”

Ben Goss, chief executive of Dynamic Planner, also told IA: “Visual tools like cashflow are powerful means of bringing potential futures to life.

“Today, systems use numbers and graphs, but VR provides an immersive experience which could help bring choices to life: ‘Save more now and you retire in this lovely, three-bed place in the sun. Save less and it’s this one bed’.”

AI

Elsewhere, AI is also becoming a fundamental aspect of a client’s experience with an IFA, including onboarding, which has already adopted the tech to improve accuracy, limit fraud and reduce manual intervention.

AI can play a vital part in terms of helping clients understand their investment appetite and make better decisions.

“The assessment of ‘attitude to risk’ will have far greater sophistication,” Thomas Lowe, head of product at Winterflood Business Services, told IA. “Artificial intelligence will be able to assess client’s biodata and tailor questions related to their profiles.

“While more distant on the horizon, artificial emotional intelligence will be able to understand client’s reactions to questions by reading facial expressions, which will then be utilised to determine assessment questions.”

Goss added: “Technology will do more of the heavy lifting.

“Probability-based models are already widely used to crunch the numbers and help build suitable strategies, which are more likely to succeed.

“As data sets grow, AI’s pattern recognition capabilities will be able to provide ever more valuable insights and assistance for advisers to spot potential opportunities and issues.”

Confusion

David Miller, investment director at Quilter Cheviot, said to IA, that using AI should not be confused with robo-advisers, which merely automates conventional ways of managing money.

Miller also discussed the future of AI in the wealth space.

“The reality is that hybrid solution, using a combination of human and artificial intelligence, are evolving; investment managers have access to huge amounts of information and perhaps without even realising it are using AI models to aggregate and simplify and, of course, all of us use ‘intelligent’ search engines like Google as part of daily life, “ he added.

“For now, the onus is on using all the tools at our disposal, including AI, to generate the best customer outcomes that we can.

“AI may be able to beat humans at games like chess and Go, but investment is far more complicated and so humans still have the edge for now.”

By Robbie Lawther

At the end of the parade, a few dozen people release yellow balloons into the sky and distribute leaflets saying “The yellow vests are not dead.” The police disperse them, quickly and firmly. Moments later, hundreds of “Antifa” anarchists arrive, throw security barriers on the roadway to erect barricades, start fires and smash the storefronts of several shops. The police have a rough time mastering the situation, but early in the evening, after a few hours, they restore the calm.

A few hours later, thousands of young Arabs from the suburbs gather near the Arc de Triomphe. They have apparently come to “celebrate” in their own way the victory of an Algerian soccer team. More storefronts are smashed, more shops looted. Algerian flags are everywhere. Slogans are belted out: “Long live Algeria”, “France is ours”, “Death to France”. Signs bearing street names are replaced by signs bearing the name of Abd el Kader, the religious and military leader who fought against the French army at the time of the colonization of Algeria. The police limit themselves to stemming the violence in the hope that it will not spread.

Around midnight, three leaders of the “yellow vest” movement come out of a police station and tell a TV reporter that they were arrested early that morning and imprisoned for the rest of the day. Their lawyer states that they did nothing wrong and were just “preventively” arrested. He emphasizes that a law passed in February 2019 allows the French police to arrest any person suspected of going to a demonstration; no authorization from a judge is necessary and no appeal possible.

On Friday, July 19, the Algerian soccer team wins again. More young Arabs gather near Arc de Triomphe to “celebrate” again. The damage is even greater than eight days before. More police show up; they do almost nothing.

On July 12, two days before Bastille Day, several hundred self-declared African illegal migrants enter the Pantheon, the monument that houses the graves of heroes who played major roles in the history of France. There, the migrants announce the birth of the “Black Vest movement”. They demand the “regularization” of all illegal immigrants on French territory and free housing for each of them. The police show up but decline to intervene. Most of the demonstrators leave peacefully. A few who insult the police are arrested.

France today is a country adrift. Unrest and lawlessness continue to gain ground. Disorder has become part of daily life. Polls show that a large majority reject President Macron. They seem to hate his arrogance and be inclined not to forgive him. They seem to resent his contempt for the poor; the way he crushed the “yellow vest” movement, and for his not having paid even the slightest attention to the protesters’ smallest demands, such as the right to hold a citizen’s referendum like those in Switzerland. Macron can no longer go anywhere in public without risking displays of anger.

The “yellow vests” seem finally to have stopped demonstrating and given up: too many were maimed or hurt. Their discontent, however, is still there. It seems waiting to explode again.

The French police appear ferocious when dealing with peaceful protesters, but barely able to prevent groups such as ‘Antifa’ from causing violence. Therefore, now at the end of each demonstration, “Antifa” show up. The French police seem particularly cautious when having to deal with young Arabs and illegal migrants. The police have been given orders. They know that young Arabs and illegal migrants could create large-scale riots. Three months ago, in Grenoble, the police were pursuing some young Arabs on a stolen motorcycle, who were accused of theft. While fleeing, they had an accident. Five days of mayhem began.

Democracy receding

President Macron looks like an authoritarian leader when he faces the disgruntled poor. He never says he is sorry for those who have lost an eye or a hand or suffered irreversible brain damage from extreme police brutality. Instead, he asked the French parliament to pass a law that almost completely abolishes the right to protest, the presumption of innocence and that allows the arrest of anyone, anywhere, even without cause. The law was passed.

In June, the French parliament passed another law, severely punishing anyone who says or writes something that might contain “hate speech”. The law is so vague that an American legal scholar, Jonathan Turley, felt compelled to react. “France has now become one of the biggest international threats to freedom of speech”, he wrote.

Macron does not appear authoritarian, however, with violent anarchists. When facing young Arabs and illegal migrants, he looks positively weak. He knows what the former interior minister, Gérard Collomb, said in November 2018, while resigning from government:

“Communities in France are engaging in conflict with one another more and more and it is becoming very violent… today we live side by side, I fear that tomorrow it will be face to face”.

Macron also knows what former President François Hollande said after serving his term as president: “France is on the verge of partition”.

Macron knows that the partition of France already exists. Most Arabs and Africans live in no-go-zones, apart from the rest of the population, where they accept the presence of non-Arabs and non-Africans less and less. They do not define themselves as French, except when they say that France will belong to them. Reports show that most seem filled with a deep rejection of France and Western civilization. An incressing number seem to place their religion above their citizenship; many seem radicalised and ready to fight.

Macron seems not to want to fight. Instead, he has chosen to appease them. He is single-mindedly pursuing his plans to institutionalise Islam in France. Three months ago, the Muslim Association for Islam of France (AMIF) was created. One branch will handle the cultural expansion of Islam and take charge of “the fight against anti-Muslim racism”. Another branch will be responsible for programs that train imams and build mosques. This autumn, a “Council of Imams of France” will be established. The main leaders of the AMIF are (or were until recently) members of the Muslim Brotherhood, a movement designated as a terrorist organisation in Egypt, Bahrain, Syria, Russia, Saudi Arabia and the United Arab Emirates — but not in France.

French President is aware of the demographic data. They show that the Muslim population in France will grow significantly in the coming years. (The economist Charles Gave wrote recently that by 2057, France will have a Muslim majority). Macron can see that it will soon be impossible for anyone to be elected President without relying on the Muslim vote, so he acts accordingly.

Macron apparently sees that the discontent that gave birth to the “yellow vest” movement still is there. He appears to think that repression will be enough to prevent any further uprising, and so does nothing to remedy the causes of the discontent.

The “yellow vest” movement was born of a revolt against exorbitantly high taxes on fuel, and harsh government measures against cars and motorists. These measures included reduced speed limits – 90 km/h on most highways — and more speed-detection cameras; a sharp rise in the penalties on tickets, as well as complex and expensive annual motor vehicle controls. French taxes on fuels recently rose again and are now the highest in Europe (70% of the price paid at the pump). Other measures against the use of automobiles and motorists still in force are especially painful for the poor. They were already chased from the suburbs by intolerant newcomers, and now have to live — and drive — even farther from where they work.

Socio-culturally disenfranchised

President has made no decision to remedy the disastrous economic situation in France. When he was elected, taxes, duties and social charges represented almost 50% of GDP. Government spending represented 57% of GDP (the highest among developed countries). The ratio of national debt to GDP was almost 100%.

Taxes, duties, social charges and government spending remain at the same level now as when Macron came in. The debt-to-GDP ratio is 100% and growing. The French economy is not creating jobs. Poverty remains extremely high: 14% of the population earn less than 855 euros ($950) a month.

“How else to explain that the post-WWII come-and-help-our-recovery slogan Gastarbeiter willkommen became an Auslander Raus roar in a matter of only two decades. Suddenly, our national purifiers extensively shout ‘stop überfremdung of EU, we need de-ciganization’ of our societies, as if it historically does not always end up in one and only possible way– self-barbarization. In response, the socially marginalized and ghettoized ‘foreigners’ are calling for the creation of gastarbeiterpartie. Indeed, the first political parties of foreigners are already created in Austria, with similar calls in Germany, France and the Netherlands. Their natural coalition partner would never be any of the main political parties. We should know by now, how the diverting of the mounting socio-economic discontent and generational disfranchising through ethno engineering will end up, don’t we?” – warned prof. Anis H. Bajrektarevic years ago in his brave and farsighted essay ‘Denazification urgently needed in Europe’.

Consequently, our top executives pay no attention to the growing cultural disaster also seizing the country. The educational system is crumbling. An increasing percentage of students graduate from high school without knowing how to write a sentence free of errors that make incomprehensible anything they write. Christianity is disappearing. Most non-Muslim French no longer define themselves as Christians. The fire that ravaged the Cathedral of Notre Dame de Paris was officially an ‘accident’, but it was only one of the many Christian religious buildings in the country that were recently destroyed. Every week, churches are vandalised — to the general indifference of the public. In just the first half of 2019, 22 churches burned down.

The main concern of Macron and the French government seems not to be the risk of riots, the public’s discontent, the disappearance of Christianity, the disastrous economic situation, or Islamization and its consequences. Instead, it is climate change. Although the amount of France’s carbon dioxide emissions is infinitesimal (less than 1% of the global total), combatting “human-induced climate change” appears Macron’s absolute priority.

A Swedish girl, Greta Thunberg, age 16, — nevertheless the guru of the “fight for the climate” in Europe — was recently invited to the French National Assembly by members of parliament who support Macron. She delivered a speech, promising that the “irreversible destruction” of the planet will begin very soon. A Baby-revolutionary added that political leaders “are not mature enough” and need lessons from children. MPs who support Macron applauded warmly. She received a Prize of Freedom, just created, which will be given each year to people “fighting for the values of those who landed in Normandy in 1944 to liberate Europe”. It is probably reasonable to assume that not one of those who landed in Normandy in 1944 thought he was fighting to save the climate. Such minor details, however, seem beyond Macron and the parliamentarians who support him.

Macron and the French government also seem unconcerned that Jews — driven by the rise of anti-Semitism, and understandably worried about court decisions infused with the spirit of submission to violent Islam –continue to flee from France.

Kobili Traore, the man who murdered Sarah Halimi in 2017 while chanting suras from the Qur’an and shouting that the Jews are Sheitan (Arabic for “Satan”) was found not guilty. Traore had apparently smoked cannabis before the murder, so the judges decided that he was not responsible for his acts. Traore will soon be released from prison; what happens if he smokes cannabis again?

A few weeks after the murder of Halimi, three members of a Jewish family were assaulted, tortured and held hostage in their home by a group of five men who said that “Jews have money” and “Jews must pay”. The men were arrested; all were Muslim. The judge who indicated them announced that their actions were “not anti-Semitic”.

On July 25, 2019 when the Israeli soccer team Maccabi Haifa was competing in Strasbourg, the French government limited the number of Israeli supporters in the stadium to 600, not one more. A thousand had bought plane tickets to come to France to attend the match. The French government also banned the waving of Israeli flags at the game or anywhere in the city. Nonetheless, in the name of “free speech”, the French Department of the Interior permitted anti-Israeli demonstrations in front of the stadium, and Palestinian flags and banners saying “Death to Israel” were there. The day before the match, at a restaurant near the stadium, some Israelis were violently attacked. “The demonstrations against Israel are approved in the name of freedom of expression, but the authorities forbid supporters of Maccabi Haifa to raise the Israeli flag, it is unacceptable,” said Aliza Ben Nun, Israel’s ambassador to France.

The other day, a plane full of French Jews leaving France arrived in Israel. More French Jews will soon go. The departure of Jews to Israel entails sacrifices: some French real estate agents take advantage of the wish of many Jewish families to leave, so they buy and sell properties owned by Jews at a price far lower than their market value.

Fighting the ghost

Macron will remain as president until May 2022. Several leaders of the parties of the center-left (such as the Socialist Party) and center-right (The Republicans) joined The Republic on the Move, the party he created two years ago. After that, the Socialist Party and The Republicans electorally collapsed. Macron’s main opponent in 2022 is likely to be the same as in 2017: Marine Le Pen, the leader of the populist National Rally.

Although Macron is widely unpopular and widely hated, he will probably use the same slogans as in 2017: that he is the last bastion of hope against “chaos” and “fascism.” He has a strong chance of being elected again. Anyone who reads the political program of the National Rally can see that Le Pen is not a fascist. Also, anyone who looks at the situation in France may wonder if France has not already begun to sink into chaos.

The sad situation that reigns in France is not all that different from that in many other Euriopean countries. A few weeks ago, an African cardinal, Robert Sarah, published a book, Le soir approche et déjà le jour baisse (“The evening comes, and already the light darkens”). “At the root of the collapse of the West”, he writes, “there is a cultural and identity crisis. The West no longer knows what it is, because it does not know and does not want to know what shaped it, what constituted it, what it was and what it is. (…) This self-asphyxiation leads naturally to a decadence that opens the way to new barbaric civilizations.”

That is exactly what is happening in France — and Europe.

Dr. Guy Millière, a professor at the University of Paris, is the author of 27 books on France and Europe.

Earlier version published by the GeterstoneInstitute under the title France Slowly Sinking into Chaos

Will this summer see a new Europe or the return to the “good old continent”? What are the challenges for our profession and our clients?

It will not have been easy but finally, Ursula von der Leyen was elected as head of the Commission and Christine Lagarde took the lead at the ECB, leading some commentators speaking about a new Europe.

But beyond the symbolism represented by these two nominations, should we anticipate a real renewal of the European Union – and what can we, as professionals, and our clients expect from the new team?

Our continent bears both the name of a Phoenician princess first loved by Zeus, and then given by him to another, and that of an icy moon of Jupiter. Will our new leaders prevent us from ending up as an abandoned and forgotten land of the Gods and bring us, after Brexit, to – at least economically – equal play with the other great powers?

What should we expect? A change in European policy and strategy or an extension of the one already implemented?

An analysis of the past 5 main leaders of the Union and the President of ECON, the commission which mostly deals with the subjects which concern us, is quite instructive.

While the new President of the Commission is a heavyweight of the German CDU, 3 times Federal Minister and, at times, imagined as being able to take over from the Chancellor, the Governor of the ECB is well known to have been a great advocate, as well as one of the most robust French Ministers of Economy and nothing less than Director General of the IMF.

Regarding the 3 men who complete the management team, we find Charles Michel. The former Belgian Prime Minister who was able to form and run a government in a country in the midst of a political crisis becomes the President of the Council, that is to say the “chamber” made up of the representatives of the Governments. Josep Borrell, a Catalan ex-Spanish Foreign Minister who has the distinction of also being Argentinean takes over our diplomacy. Finally, David-Maria Sassoli takes the Presidency of the Parliament; he is a former Italian journalist, classified between moderate socialism and the centre right, known to be a “facilitator” of trade.

With regards to the financial institutions of the Union, the ECON will be chaired by Roberto Gualtieri, an Italian socialist, historian by trade, who is involved in exchanges and negotiations with Latin America and, particularly, Brazil.

The 3 ESAs (the high-level EU regulators for Banking, Finance and Insurance) and the DG FISMA (Directorate for Stability and Financial Services), have not, for now, changed their leaders. They are presently headed up by Dutch, Spanish, Portuguese and French individuals.

What conclusions can we draw from the reorganisation?

First of all, it is not a reorganisation of substance!

Although some of the people have changed, the main civil servants are not, or not yet, concerned.

The policies are very new, even for 4 of them, who are “heavyweights” in their respective countries, often with major international expertise. However, they represent traditional, pro-European and even classic parties.

There is probably no inflexion of policy and logic to be expected with regards to the European project itself and what concerns us in the foreground, the internal market. The rise of new parties, anti-European or those with a wish for a different Europe will probably not have major consequences in the short term.

On the other hand, it is at the international level that the message and the claims of the Union seem very different. The newly established personalities seem to have been chosen for their connections and particularly good knowledge of other countries and cultures.

Overall it seems obvious to me that if the style can change, it will only be necessary to rely on the quality and personal perception of these leaders to open up new voices or think about new ways of doing things, but that in any case, the direction followed will remain the same.

So we should remember the programme that was announced to us: to begin with, there is the plan to revise the PRIIPS Regulation at the margin, since some of our opinions, which were not heard at the time, have ended up appearing as obvious corrections to make. Of course, the banking union project will still progress. Finally, more specifically in relation to our professions and our offerings to clients, the Capital Markets Union and all related projects such as PEPP, financial education, digitalisation of finance and savings, alternative financing methods and regulation, although very advanced, are yet to be completed and were recently announced as priorities.

The programme promises to be loaded and the stakes for both our members and their clients are considerable.

Of course, all the leaders and representatives of FECIF’s member organisations and the entire executive board team, will continue to carry the voice of our advisors and intermediaries and we will aim to organise, from September, a series of meetings with the new personalities in charge of, or important to, our sector.

Before then, I wish a very good month of August to all.

David Charlet
FECIF Chairman

Recent research in the UK has shown that 20% of people – more than 10 million people! – say they’ll work until they’re physically unable to do so, while around 6% – another three million people – say they expect to work until they die! The picture across Europe cannot be much different.

See more here.

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