Hoppe - Strategia.Politica. Media.

EU – a fleeting moment in time?

The EU is hogging the headlines – not because it is such an amazing construct with a strong and stable foothold in the global political framework, but paradoxically in connection with national and nationalistic ways of thinking. Diversified rather than united…
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Nina Hoppe - Strategia. Politica. Media.

Europe – to a greater or lesser extent? 

Recent events have uncovered a startling truth: the European Union always fails when it comes to preserving its Enlightenment legacy – that of civil liberties, defence of those freedoms and an open society. The question of how to protect our security, defence and freedoms is an important issue for which the European Union has no answers. Does this raise the threat of renationalisation and spell an end to the tremendous vision of Spinelli, Schuman & Co?

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Nina Hoppe Strategia.Politica. Media, aussenpolitische Beraterin "Public Affairs"

Europe, Europe. 

I didn’t really want to say anything about the current debate over the refugee/political asylum issue: the unqualified, self-satisfied comments on social media, the helplessness of national and EU governments and the blindness to global connections and goings-on. But I have decided to give free rein to my emotions – in my own way.
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Banking separation: separate for the purpose of unity

The current situation in Greece yet again makes it abundantly clear that a European-wide banking separation system is long overdue. It was not until the early summer of 2015 that the lame draft of the EU Economic Committee (ECON) within the European Parliament died a natural death. Yet banking separation is essential to the stability of monetary union and has a strong precedent in the Glass Steagall Act, which is well worth emulating.

A banking separation system was on the agenda of the last EU Commission as part of its central regulation measures. The system is very simple. The principle is that customer business should be separate from high-risk investment banking. The champion of UK banking separation, John Vickers, referred to this as “ring-fencing”. He spoke of protecting the sheep (commercial banking) from the wolves (investment banking) by ring-fencing them. Yet in that very market, representatives of the “too big to fail” banks have succeeded in distancing themselves from any effective banking separation system by a process of constant lobbying.
Michel Barnier, Internal EU Market Commissioner of the Barroso Commission, gave former head of the Finnish National Bank, Erkki Liikanen, the task of investigating possible structural reforms within the EU banking sector. The so-called Liikanen Report on the subject duly appeared in 2012. This was followed by EU member nations agreeing on a two-step approach (full details here), which was then brought to its knees by the Economic Committee of the European Parliament in the early summer of 2015.

Universal rather than separate banks
The reason for this failure was that the draft submitted by Swedish rapporteur Gunnar Hökmark (EPP) highlighted and indeed underlined the importance of universal banks and the need to prevent any strict separation of financial institutions into investment and commercial banks. This runs contrary, for instance, to the German Banking Separation Act, which requires that from 1 July 2015, investment banking and commercial business be divided into separate subsidiaries. If the EU law were to take a laxer stance, German banks would be at a competitive disadvantage within the EU (which would probably be no bad thing from a UK point of view).

Jeremy Corbeyn, a left-wing representative of the Labour Party, has recently re-ignited the Glass Steagall debate. He advocates implementing that particular banking separation model. Corbeyn is predicted to have a good chance of winning election as Leader of the Labour Party. Glass Steagall is a ready-made banking separation model that could be incorporated within the European legislative framework relatively easily.

Glass Steagall in the US election campaign
The Dodd Frank Act, only recently cited by President Barack Obama as a successful example of financial market regulation, has come under heavy fire during the current US primaries, within Obama’s party in particular. Apart from Hillary Clinton, who is thought to have a close relationship with the major Wall Street banks, in terms of financing her election campaign, all other Democratic Presidential candidates like Bernie Sanders and Martin O’Malley advocate re-implementation of Glass Steagall. (It was rescinded under Bill Clinton with disastrous and well-documented consequences for the global financial industry).

The “Glass Steagall Act” was brought before the House of Representatives in 1933 as H.R. 5661 by Henry B. Steagall, approved by the U.S. House Committee on Banking and Currency and enshrined in law on 16 June 1933 by President Franklin D. Roosevelt. The “Glass Steagall Act” provided for the introduction of a banking separation system, or institutional separation of a bank’s deposit and lending operations from its securities business. Banks had to decide whether to operate as business banks, offering classic deposit and lending products and services, such as account management and payment transactions, (commercial banking), or as investment banks dealing in securities (investment banking).  

Following the world economic crisis or Great Depression in the period between 1929 and 1933, banks had to contend with massive losses, thanks to strong integration and networking between investment and commercial banking, both on the securities side (stock exchange falls) and on the lending side (defaults on loans). The idea of separating the two segments was to ensure that such events did not repeat themselves.

Fintechs an example of banking separation in action
Proponents of the banking separation system, and the Glass Steagall model within the European Parliament in particular, led primarily by Philippe Lamberts of the European Greens, Fabio de Mesi of The Left and Jakob von Weizsäcker of the SPD, believe in the merits of a joint trans-Atlantic initiative to implement the Glass Steagall model of banking separation system in both the US and Europe. The latest developments in Greece, (bank suspensions, capital market controls due to the fact that purchase of state assets = domino effect), as well as the increasing threat of a financial collapse from China should give added impetus to this idea of sustainable separation of commercial banking from investment banking.

Not only that, since the current Turkish G20 presidency is focusing on the issue of “Financing SMEs”, a worldwide initiative to implement Glass Steagall or similar models would also be advisable. SMEs are a key economic, employment and economic stability factor, not only in Europe – in many emerging economies (including incidentally Russia and Brazil, as well as members of the BRICS) EMUs form the backbone of the economy. And, as their financial partners, customer banks are essential – whether analogue or digital. Furthermore, thanks to the Fintechs, systems are emerging in the digital world that follow the banking separation model. Fintechs are not universal banks but customer-focused digital banks. They generally offer a service geared to a particular target market, and so far they tend to be targeting classic “bank” customers.

However it will be a great political challenge to integrate this project into the major EU Commission project of Capital Market Union – particularly given the fact that a “Brexit” must be avoided or is undesirable in any event. This takes us right back to the start of my deliberations. We are in for some exciting political times. Stay tuned.

Nina Hoppe´s plea for the bank secrecy, transparent people and the role of digitalisation

Transparent people

The Austrian Federal Government is in the process of giving Austrians a new identity: that of being transparent people – a classic sign of a totalitarian state.

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Parliamentarianism – “Locke-ing it in”

The Hypo Commission of Inquiry was celebrated as a great achievement in the development of Austrian parliamentarianism – except, on closer inspection, it appears to be the exact opposite, or rather its swansong.

I first consult (Austrian legal philosopher) Hans Kelsen, who defines parliamentarianism as:

Development of decisive state will by a collegial body democratically elected by the people on the basis of universal and equal suffrage and according to the majority rule principle.

It is more than the will of the people that transparency, information and communication prevail in the case of Hypo. But it seems as if disclosure of all the facts and files is declining at the same time as the need for information is rising.

Separation of powers is painful

It is probably the blurring of a matter so important to our political system – the separation of powers – that is also at fault here. Montesquieu and Locke were the founding fathers of that principle. And they would be a little annoyed at the way it is being applied in the case of the Hypo Commission .

The Chairwoman of the Hypo Commission is the President of the National Council (the lower house of the Austrian Parliament). She is the second-highest ranked politician in this country, which means she holds a position of great responsibility to her people, i.e. to us. However, up until recently, that responsibility rested with Doris Bures in her role as SPÖ (Social Democratic Party) Infrastructure Minister in the government. And she has long been viewed as a trusted friend of Chancellor Faymann. To stay with that party: Jan Krainer is the Whip responsible for Hypo matters, Finance spokesman for the SPÖ and also a government advisor. No “Locke-ing it in” there either. And the current SPÖ party supremo is the former State Secretary, who was present for the nationalisation bail-out.

In the case of the ÖVP (Austrian People’s Party), on the other hand, there is a tendency for a protective wall to be erected in front of the ÖVP Finance Ministers (including Grasser). Yet the very opposite should be the case. After all, a new wing within the ÖVP – generally described as liberal – is now at the helm. Liberals tend to set store by values like the right to information. At the same time, however, that party is also obliged to uphold the liberal principles of data privacy and the right to private sphere protection (professional confidentiality and banking secrecy). It will be fascinating to see how that balancing act plays out. Judging by the first few meetings, stonewalling is the initial approach.

The opposition is divided. The FPÖ (Freedom Party) has to try and keep the damage away from its own party and frame it as a failure of the system and evidence of corruption – even though that party also contains members who had both federal and provincial government dealings with Hypo. Team Stronach is faced with similar dilemmas. Their man on the Commission of Inquiry, Robert Lugar, moved back in the day from the BZÖ (Alliance for the Future of Austria) to Stronach. They have to walk the tricky tightrope between denunciation and dismay – as do, incidentally, the Greens since they had MPs in the Carinthia provincial government when Hypo first got into strife. However, it has to be conceded that, to their credit, the Greens and the NEOS (The New Austria) – the only party, incidentally, that had nothing to do with Hypo thanks to its late birth as a political party – are fighting like mad for parliamentarianism, whether in an activist manner like Kogler or very pragmatically in the case of Hable.

95% of the Hypo Case files are not publicly accessible. This means that media reporting will be very much dependent on “Hypoleaks”, if any relatively objective or factual overview is to be provided. To which we as citizens of this country have a right, by the way – in view of the billions we are providing as financiers of this solution via such things as the tax system.

Transparency harms parliamentarianism?

Yet it would be really simple to arrange: an official Twitter account for the Hypo Commission of Inquiry, direct transmission of certain witness statements (with their consent and that of all parties involved), regular press briefings, etc.

The media is already casting aspersions that this minority commission is a unique phenomenon in the history of Austrian parliamentarianism. We can all only hope we are wrong, and that parliamentarianism will emerge strengthened rather than weakened by this Commission of Inquiry. As well as achieving clarity over Hypo, that should be the common goal of all the parties involved.

John Locke
…. The first and fundamental positive law of all commonwealths is the establishing of the legislative power; as the first and fundamental natural law, which is to govern even the legislative itself, is the preservation of the society and…of every person in it. This legislative is not only the supreme power of the commonwealth, but sacred and unalterable in the hands where the community have once placed it; nor can any edict of anybody else, in what form soever conceived, or by what power soever backed, have the force and obligation of a law, which has not its sanction from that legislative which the public has chosen and appointed ….

 

Nina Hoppe über Franz Vranitzky ("Vranz") und seine politische Vorbildwirkung und Nachhaltigkeit

The co-pilot 

I admit I was very worried. A plane crash in the middle of Europe, involving an airline I regularly fly with. I was alarmed and unsettled by it. Thought it could have happened to me too. Thought of the passengers. Hoped for their sake it was caused by a loss of cabin pressure. Was relieved when it turned out to be human error. Relieved? Yes – and from that point on sickened.

I read the first theories about the cause of the crash as early as Wednesday morning. Raised by the NYT in the European night. And speculation was soon rife: airline experts on TV, self-appointed airline experts in the form of frequent flyers on social media, the first hints of a suspected suicide. The name of the co-pilot was already winging its way to Europe from the US. Lufthansa withheld the names of the entire crew to protect their friends and family, and made reference to the fact that no final cause was anywhere near being established.

The matter became “pressing”

Then the French Public Prosecutor held a press conference and spelt out the name of the co-pilot. Several times. So everyone could write it down. I followed the live feed of that press conference and was horrified to learn the possible motive for the crash. But much more horrified by the way in which the private sphere of a supposed suicide victim was being treated.

The French and German media in particular fought for the latest findings, expressing no outrage that such highly sensitive data was being disclosed by the investigating authorities and played out in the media. The hounding of the co-pilot and, by association, his family/friends/neighbours/relatives had begun – in both the digital and analogue arena. This included headlines unworthy of any civilised society, accompanied by mumblings about the right of the public to be kept informed. The tabloid press was once again in its element. The nationalistic, flag-waving debate over Germany and Greece seemed almost intellectual by comparison with this witch-hunt. The media once again failed as the fourth estate, in both the digital and analogue sense. Why does Facebook routinely censor images of naked breasts but chose not to delete photos of the co-pilot? Due to ratings? Or, as they are now called, “clicks”? Alarming too how some public broadcasters behaved in Germany, lowering their standard of reporting to the depths of the tabloid press – and not for the first time either. The Edathy case was the most recent proof of this trend.

Depression as social stigma

Not only that, ever since then “depression” as an illness has been portrayed as a stigma and a socially irresponsible condition. Any person suffering from “such a” disorder should not be allowed to be a pilot. The control mechanisms failed. The employer failed. New, to my mind, seemingly useless measures such as the presence of two people in the cockpit at all times were immediately put in place to demonstrate rapid responsiveness. And Lufthansa has now installed its own administrative unit for monitoring its pilots. At the same time, people suffering from this illness are being sent the following signals: you are not perfect, look out! From now on you will be treated differently because you have a mental illness. And it will probably not work in your favour. … A new form of social isolation looms – and one that will only exacerbate such health conditions.

But what does this show us? It shows that we, as a civil society – mistakenly believing ourselves to be self-assured and enlightened – are nothing of the sort. We now suddenly want controls and supervision to protect ourselves from harm. We are voyeuristic about the way in which the private sphere of a dead man is dragged through the mud in public as a result of the investigations. We want and demand absolute security and transparency. But we will not achieve it. As long as people are people, there will always be some residual risk, which nothing and nobody can contain. At the same time, we oppose wholesale storage of data, the NSA and the surveillance state.

Perhaps we should take this opportunity to have a closer look at the importance of protecting our private sphere and how far we as a society already were before the digital wave and the media-cracy turned us into their plaything. Let us begin with ourselves – and shame others into doing the same.

 

Nina Hoppe on the lifting of banking secrecy and what it means to the image of austrian politicians

Maria Theresia and bank secrecy

In the wake of the tax reforms, (though it is questionable whether the word ‘reform’ is even appropriate in this context), bank secrecy will apparently go by the wayside. Many would probably say that is no reason for concern. “After all, those who have nothing to hide have nothing to fear”. But it is also a matter of our right to privacy and protection of the private sphere – the ordinary citizen’s claim to freedom from interference by the state.
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Nina Hoppe - Strategia. Politica . Media.

Edathy

There he was somewhere in Southern Europe in spring 2014. In a region which tourists from Central Europe particularly enjoy visiting at that time of year for its mild climate, spring-like temperatures and bright sunshine. Only he wasn’t there by choice. He was on the run – from malice, humiliation and defamation: Sebastian Edathy. In 21st century Europe.
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Nina Hoppe about the criticism of woman to woman in matters of equality and the weakening of its protagonists

Gender equality: woman versus woman

The ancient Roman comic playwright Plautus coined the expression

homo homini lupus est (“man is a wolf to his fellow man”).

I’d like to adapt it to fit what is known as the “gender debate” –

femina feminae lupa est

because I have noticed for some time that women can be the greatest opponents to gender equality, and I’ve been affected by this myself. The latest example I’ve come across is a lead article by Martina Salomon in the Austrian newspaper Kurier.
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