A blog by an American expatriate living in the heart of New Europe

"It's a lateral transfer" -- George W. Bush, 43rd President of the United States
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Tuesday, February 21, 2006

Why opposing P&O's takeover by DP World isn't racism


Schroder Investment Management Ltd: 9.7%
HBOS: 4.84%
Threadneedle AM Ldt: 4.67%
Legal & General Investment Management: 3.54%

Democrats are once again bungling their argument, as Congressman after Congressman comes out against the proposed takeover of P&O by DP World, a port management company majority-owned by the Emerate of Dubai.

Democrats have turned this argument into one primarily about whether a foreign-owned company can be trusted to run America's ports, allowing voices in the Arab world to accuse them of racism, pointing out that America's security was not questioned when its ports were run by P&O, a British company.

However, there is one striking and very important difference. While DP World is a state-owned firm, P&O is privately owned - or so cursory research would appear to confirm.

I do not oppose a foreign-owned company taking control over management of such important security points. Whether based in Dubai, Britain, Poland or China, every business has one goal: profit. Their aims are not politics-based. If they were to let a terrorist attack occur, it would most certainly hit their bottom line, and that is not in their interest.

But state-owned firms are a different bird altogether. I was unfamiliar for the most part as to how state-owned firms worked until I came to Poland, where there are - literally - hundreds.

The scandals, affairs, and shady dealings of these companies are common and well-documented. Politicians gain control over these companies, and use them to achieve political goals. That's something different from the corruption you can find in privately-owned companies, where the goal is financial gain.

Is it not conceivable that any company owned by a foreign government - be it the UAE or Canada - might look to use its control over such a powerful tool for leverage in political disputes?

Yes. The UAE has, up to now, been a good partner for America in terms of trade, as well as battling terrorism. But that's not the point. The point is that companies owned by governments necessarily have secondary (and often primary) goals, which are political, rather than financial. Giving DP World control over America's ports doesn't put those harbors in the hands of foreign shareholders, it puts them in control of a foreign government.

And that is a risk not worth taking.

Speaking of labor mobility

Chicago Tribune:
Each month, Poland loses about 30,000 workers, many of them young and well-educated, to Britain, Ireland and Sweden. The three countries were the only members of the European Union that did not impose restrictions on immigration from the 10 new member states when the EU expanded in 2004.

Instead of flooding the market with "Polish plumbers,"--the European catchphrase for cheap, low-skilled immigrant labor--the tide of migration from Eastern Europe has fueled economic growth in Britain and Ireland. The unemployment rate in Ireland, already the lowest in the EU at 4.2 percent, dropped a further 0.2 percent with the arrival of 160,000 Eastern European workers over the last 20 months.

So, Poland is experiencing a brain-drain. But it might not be so bad. After all, the skills of the highly-trained programmers and computer technicians heading out of Poland are next to useless here - at least this gives them the chance to earn a bit more money, maybe sending some back to Poland. Who knows, maybe they'll return to Poland and start up a business in 10 or 20 years.

On the other hand, when it comes to doctors, Poland needs all the good ones it can get. But can we blame them for going to the UK when here they have to take on a second job to make ends meet?

Friday, February 10, 2006

Finns show common sense

Today Finland joined the UK, Ireland and Sweden as one of the only countries in the European Union to understand basic economics.


The Finnish government and labor market organizations agreed on Friday to relax the restrictions on the free movement of workers from new member states of the European Union.

After Estonia and other nine countries joined the European Union on May 1, 2004, Finland applied restrictions to the free movement of workers from eight new EU member states by two years as a transitional period.

The Finnish government and labor market organizations agreed on Friday that Finland as a whole would stand to gain from foreign labor and that an extended transitional period would have increased the size of the gray economy.

All parties agreed not to renew the transitional period limiting the free movement of workers from new EU member states. Finland will lift labor restrictions from May 1, and opens its labor market to new EU member states.

The European Commission, the executive arm of the European Union, urged on Feb. 8 more western European countries to open their labor markets to workers from new EU member states.

Dubya and the Duck

It seems not much notable occurred at today's meeting between Polish President Kaczyński and President Bush, though we did get another nice little lesson in friendship from Dubya - one that we've had before.

"I asked the president his advice on Ukraine," Bush said. "That's what friends do - they share information and share strategic thoughts."

There was no change in stance on the visa issue, and even little discussion of it, despite the Duck telling a Polish radio station before he left for the US that if Poles wouldn't get visa-free travel to the US, he'd work to make visas a requirement for Americans coming to Poland.

However, Kaczynski did take the olive branch extened by Vladimir Putin two weeks ago, when he said that Poles and Russians were "cousins", and that they should look to the present rather than squabble over past differences.

"There have been certain signals that might lead to an improvement of relations between the Republic of Poland and the Russian Federation," Kaczynski said. "We have no certainty yet, but these signals we have received, and we're hoping for an improvement in relations between Poland and Russia."

The sincerity of Putin's words remain to be seen, but many political analysts believe this could lead to a warming of relations.

PiS cuddling up to Putin? They're adopting his strongarm tactics, isn't it only natural that soon they start sharing strategic thoughts?

After all, that is what friends do.

Tuesday, February 07, 2006


Family values in Poland: Disable mothers


From Mitch Albom:

If there had been any question that Detroit could host the world's biggest party, doubts were erased. If there had been any question the spirit of this town outshines its struggles, it is gone now.


Someone wrote this week that Detroit was "auditioning for acceptance," and I guess that's accurate, hard as it is to hear, because you wonder sometimes why we care so much what the rest of the country thinks.

But if we suffer a wee inferiority complex, it manifests itself in good ways. Everyone had a bit of Chamber of Commerce in them last week. Time after time, when visitors were asked their impressions of this city, they said, "I can't believe the people are so nice."

And as they head for the airport this morning, let's think about what they saw while they were here:

They saw Aretha Franklin, they saw Kid Rock. They saw the spacious lobby of the Renaissance Center looking out to Canada. They saw Canada. They saw The Henry Ford. They saw the Max M. Fisher Music Center and Seldom Blues restaurant. They saw the Fox and State and Woodward Avenue under the lights. They saw Ford Field and Comerica Park. They saw our best manners and our welcoming attitude. They saw us deal with snow. They saw a football Sunday with a downtown heartbeat.

But here's the thing.

They saw things we can see all the time.

So maybe what we showed the world, we also showed ourselves.

Coming down Woodward on Sunday, I saw a man with a cup, tapping the loose change inside it, looking for cash.

"Collecting for next year's Super Bowl," he said. "Next year's Super Bowl, anybody?"

Back to business. Today is the first day of the rest of Detroit's life. Let's hope we make as much of the weeks ahead as we did of the week behind. And we remember the biggest lesson learned from this whole, crazy experience.


Don't let anyone ever say otherwise.

Friday, February 03, 2006

Is Poland winning with brinkmanship?

The government will tell you it is; European diplomats and legislators will tell you it’s digging itself deeper into an isolationist black hole

Over the past few months Poland has made itself infamous in the halls of Brussels for its outlandish brashness, it’s willingness to break deadline after deadline, its stubborn resistance in the face of the harshest EU threats, and its seeming desire to stand alone and spit in the face of 24 other member states. Ah, Europe. You didn’t know what you were getting when you signed on to Poland’s membership, did you?

The stances Poland has taken on two recent issues in particular have raised the hackles of European lawmakers, who are now beginning to think that every difficult EU negotiation from now on will come down to a standoff between Poland and the rest of Europe.

In the first case, Poland was the last holdout to approve a deal extending beyond 2005 the ability of ‘old’ EU member states to charge lower VAT rates on labor-intensive services such as shoemaking, window-washing and … selling home-improvement goods. The details can be found here.

In the end, Poland got what it wanted, the EU got what it wanted, but the Union was brought to the verge of crisis. Similar concessions were obtained by holdouts Cyprus and the Czech Republic, without such melodrama.

In the second case, Poland yesterday announced that if within three months UniCredit (formerly UniCredito Italiano and HVB) doesn’t sell the Polish branch of HVB it obtained when the companies merged last year, it will look to annul UniCredito’s original takeover of Polish Bank Pekao.

The issue here is that the government doesn’t want Pekao and HVB merging, because it would create a private bank larger than the state-controlled dominant player in the market, PKO BP. But UniCredit, realizing that owning the biggest bank in the biggest new EU member state might be a profitable asset, will never let go. Find the IHT report here.

How Poland could legally annul the earlier deal is a mystery, as experts call the idea “a fantasy”.

All EU institutions have cleared the UniCredito-HVB merger, as has every other EU member state – except Poland, who by itself is holding up consolidation in the EU’s banking market.

This has the rest of the EU fuming. They remember late December’s toil to reach a budget agreement the Poles would accept. They remember Prime Minister Marcinkiewicz, after finally winning the amount of promised structural funding he needed to finance his government’s plans, standing in front of the cameras and jubilantly exclaiming, “YES!” – clenched fist and all.

That’s beginning to lose Poland a lot of political capital in EU circles. Now, newer member states are becoming reluctant to stand by Poland in these disputes as they had earlier, and some suggest that Poland is risking its natural role as a power and regional leader in the Union with such abrasive tactics.

"Poland is missing a great opportunity. Instead of being one of the large members that give the direction to the European Union policy, the government is taking on a role of a defender of its own and others' interests, even against their will," Cornelius Ochmann of the Bertelsmann Foundation in Berlin told Reuters.

And that risk is perhaps the most dangerous: Without influence, Poland will be isolated and left out of decision-making, and lose the ability to defend its citizens’ interests. While a semi-win on EU VAT rates and a tough stance against mega-banks may give it the appearance at home of a scrappy mutt that won’t be bullied by the bigger dogs, in Europe, it is very fast becoming the runt of the litter.

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