FT Monday 26th May 2014

  1. Europe’s new Tower of Babel


The selection of large numbers of euro-sceptic MEPs in last week’s European elections could have major consequences of the ability of the Parliament to function. Whilst the largest grouping will remain the Centre-Right European People’s Party, led by Angela Merkel’s Christian Democrats, they will not have enough MEPs to command a majority. Nor will the centre-left grouping, the Socialists, which include the UK Labour Party. Important decisions such as who will be the next president of the European Commission after the retirement of Manuel Barroso this year will be affected. No group will have the numbers to press for their favoured candidate. The major talking point of the day will be the significant rise in numbers of euro-sceptic candidates. In France and the UK, the Front Nationale led by Marianne Le Pen, and UKIP led by Nigel Farage, respectively defeated the mainstream parties to win the greatest number of votes. Perhaps the only solace for mainstream parties will be that the nationalist euro-sceptic parties tend to dislike each other as much as they do the EU, traditionally making it difficult for them to put forward a cohesive strategy. 


  1. China clamps down on US consulting groups


The Chinese government has ordered state-owned enterprises to cut all ties with US consulting companies. China has accused companies such as McKinsey, Bain & Company, Strategy& and Boston Consulting Group of spying on Chinese companies on behalf of the US government. Coming just a week after the US indicted 5 officers in the Chinese PLA on charges of spying on US companies, this is seen as a largely retaliatory measure. There is much discontent in China over the way that the US has been conducting cyber espionage, particularly in the wake of the Edward Snowden revelations, which revealed the extent to which the US government was snooping. The consulting groups will certainly take a hit from the loss of Chinese state-owned business, but will not face a total ban from China. Private and multinational companies make up a large part of these US consulting groups business in China, a key growth market, meaning that they should still be able to remain profitable in the country.


  1. BP signs shale deal with Rosneft


Vladimir Putin has dealt another blow to the US and the West after a successful conclusion to the St Petersburg International Economic Forum. Whilst the majority of US CEOs stayed away from the conference in support of US sanctions against members of Putin’s inner circle, representatives of European oil giants did still decided to attend. BP reaffirmed its commitment to Russia with a $300million shale gas deal with its Russian partner Rosneft, of which it owns 19.7%. Also in attendance were the CEOs of Shell and Total who similarly agreed deals. This conference will be viewed as another personal victory for Vladimir Putin, who many felt had been weakened by his interferences in Eastern Ukraine and annexation of Crimea, having also signed a major gas export deal with China last week worth over $300bn. 


  1. Sisi expected to win presidential vote


Two days of elections in Egypt are expected to bring about the presidency of Abdel Fatah al-Sisi. This has been expected since the former general and now field marshal led a coup against the government of Mohammed Morsi. The Muslim Brotherhood, of whom Morsi was a member, has since the coup has once more been banned in Egypt, as it was for decades under the military backed presidencies of Nasser, Sadat and Mubarak. The Muslim Brotherhood has urged a boycott of the vote and a week of protests by its supporters.  Many Egyptians see Sisi as a secular strongman that can return Egypt to stability and he thought of as the candidate of the state, the army, and business. It is almost inevitable that he will be elected. Sisi is one of only two candidates running, the other a long term opposition activist running for the Socialist party, who is not expected to even come close in terms of support. The election of Sisi will represent a return to Egypt of authoritarian military backed government, and signal the virtual failure of the 2011 revolution. 


  1. Poroshenko claims victory in crucial Ukraine election


Ukraine’s disputed presidential elections have gone ahead and exit polls reveal that the winner, with over 54% of votes cast in his favour, is billionaire businessman Petro Poroshenko. Having made his fortune in the confectionary industry, Poroshenko is seen as a pro-European figure, but also has business links with Russia.  This could be seen creating the balance that the country requires. Poroshenko’s mandate is weakened by the fact that in the eastern Russian-speaking region of Ukraine, separatists groups massively disrupted the vote and turnout in some parts was less than 10%. This could potentially give Russia’s president Vladimir Putin a pretext to not recognise the vote. The first task of Poroshenko is to attempt to unify the country that has been massively destabilised in the past year first by the winter protests against ousted president Viktor Yanukovych, his decision to flee, then recent annexing of Crimea by Russia. 


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s