From Europe to geo-political consequences on business and much more
We focus on the rise of the far-right in Europe and whether France is the new Germany & doing business in a polarised world. Then India-Canada dispute in numbers. Finally, AI goes UFO hunting.
Rise of the far right in Europe?
This era seems to be a rise of nationalism and the so-called “far-right” across Europe (and probably across the entire world). This is further highlighted by the fact that these “far-right” parties now place themselves amongst the top three most popular parties across the majority of the countries within the EU.
In Poland, Jaroslaw Kaczynski’ of the Law & Justice party won the 2015 elections with a message of defiance toward the influence of EU policies related to immigration.
In Hungary, far-right-minded Prime Minister Viktor Orban capitalized on the refugee crisis in 2015 to consolidate his power.
In Italy, Giorgia Meloni has led the most right-wing leadership since World War II with a coalition of right-wing and centre-right parties.
In Germany, the far-right AfD is now the second-strongest party, forcing the Social Democrats to change policy and strategy to challenge it.
In Spain, the far-right party VOX came third in the July’23 elections, while the centre-right People’s Party (PP) gained the most seats by a single party.
In Austria, the Freedom Party (FPÖ), which was once led by a former Nazi, is polling at 28% a year ahead of elections, higher than its centre-right and centre-left rivals.
In Slovakia, Robert Fico, a pro-Russian demagogue with a record of floating conspiracy theories about George Soros, might become the next leader in September.
Many blame the impact of globalisation leading to work outsourcing to cheaper countries globally has led to huge dissatisfaction amongst the people, which has propelled the far-right parties to gain popularity, who promise nationalism across all spheres including manufacturing and stricter immigration laws to protect jobs for local people.
France is the new Germany within EU?
Our earlier newsletter mentioned that Germany has been economically struggling within the EU (link to the newsletter provided below).
As a result, there might be a “power vacuum” fight between the stronger countries within the EU to take the lead position and try to dictate the major policies that the EU needs to take concerning the rest of the world. Based on recent news articles in Bloomberg and other media houses, there are strong indications that France is influencing the EU’s new, stricter policy towards China.
EU has recently initiated a subsidies probe into Chinese electric vehicles, which could result in tariffs and a trade conflict. This evoked strong reactions from China.
The solar industry in Europe (with major organisations based out of France) has been struggling because of the low-cost Chinese exports. Due to the subsidy policy adopted by the Chinese government in this space, the cost of manufacturing a solar module within the EU is more than twice the modules available in the market, as mentioned by SolarPower Europe.
It is feared that the car industry would suffer the same fate. It’s also anticipated that Tesla was among the companies found to have likely benefited from subsidies provided by China.
France wants the EU to act as a counterweight between the US and China, and to create a fair competition among the world’s biggest economic blocs. France also seeks to build special ties with other potential partners such as India.
Geo-politics and corporations
Which came first? Geo-politics or business growth? Surely, it’s a very difficult question to answer; probably there’s no clear answer to this question! The relationship between geopolitics and business growth is complex and dynamic. Geo-politics can affect business growth by creating opportunities or challenges for firms and industries.
This is being noticed in today’s world of clear two sets of polarisations - between the West and the East and between the Global South and the Global North.
In 2023, the executives of top corporations (like Tesla, Coca-Cola, Blackrock, and 3M to name a few) have used the word “geopolitics” 12,000 times - almost three times that was used in 2020.
In 2022, around $180bn of greenfield FDI has been diverted across geopolitical boundaries which did and did not condemn Russia’s invasion. This amounts to approximately 15% of total FDI
IMF has estimated that in case of very hard stands taken by the different geo-political blocks, this would destroy almost 7% of total output. Just to put this number in perspective, this would be the size of the French and German economies put together.
Goods trade between the two “blocks” (based on UN voting patterns on the Ukraine war) have grown around 6% slower within these blocks.
The government of Germany has announced a new strategy earlier this year. It said that its biggest “companies should consider the possible dangers from the world’s politics when they make decisions” while making it clear that in case of wrong bets, these companies should not expect the government to bail them out.
Time will tell how this pans out in the long term and whether corporations are more driven by growth & profitability instead of focusing on political conflicts.
India - Canada dispute: some numbers
Everybody has read the ongoing India - Canada dispute raised publicly on 18th September by the Canadian Prime Minister alleging Indian state-sponsored killing of a Khalistan supporter, a Canadian citizen. So, not going into that dispute, let’s have a look at some trade numbers that can potentially be impacted shortly.
$26bn: investments between Canada and India in 2022. This is a growth of more than 35% in four years.
$21bn: Canada’s largest pension manager (Canada Pension Plan Investment Board) investment in India in the last year.
$8bn: Investments in India from other Canadian pension houses
In case these investments are pulled out from India, these pension houses are likely to see a dampening effect on their margins.
AI for UFO hunting?
Recently news from Mexico related to the “body of an alien” had made quite a noise across the world.
Almost during the same time, NASA had tabled their report on UFOs - whether those exist or not. The report stated that there is no conclusive evidence to prove the existence of aliens behind the unidentified aerial phenomena (UAP) sightings investigated by NASA. However, the report did not deny the possibility of potential unknown alien technology operating in Earth's atmosphere.
It was also mentioned that NASA recommended the use of artificial intelligence and machine learning as essential tools for identifying UAPs.
If that happens and breakthroughs come up in the future, then AI surely will go beyond our planet Earth!