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Posted by Nutrimentia on 12-22-2003 01:44 PM:

US/(old) Europe are too connected to truly drift apart

Here is the text from a Salon.com article. Not sure if its available without a subscription. It isn't particularly slanted and does a fair job discussing how many of the choices in the world today are taken away by the "world today" itself. This is right in line with the thesis of Jihad vs McWorld by Benjamin Barber that I'm reading now. Great book even if some of its stats are now dated (it was published in 1995 and uses a lot of late-80s, early 90s numbers, but it is still valid. But I digress).


Anyway, here is the article. Maybe worth of interest here. I wish I had more time to contribute to the wonderful discussion in this forum, but sadly, I do not at this junction. I thought I'd have more time after my dissertation was submitted, but I'm even busier in some ways and kind of adverse to serious thinking for a bit as well. (dammit, two digressions in one post)

Here's the story:

quote:
Watch out for "Old Europe": She can bite. By Barry Lando


If the decision to cut France and Germany out of Iraq reconstruction money leads Europe to retaliate, hundreds of thousands of U.S. jobs will be at risk.


Dec. 18, 2003 _|_ PARIS -- As transatlantic bickering continues over Iraq, there's talk of America and Europe drifting apart. Washington's ruling party policymakers shrug at the thought. Good riddance. Who needs "Old Europe"? But if the political feud were to spill over into economic relations, the results could be devastating to Europeans and Americans.


While America's global military superiority is unmatched and unchallenged, its economic might is not -- something that many of those around President George W. Bush obviously fail to understand.


The ties between America and Europe have never been as tight, intertwined and vital to the peoples on both sides of the Atlantic as they are today. "The sooner opinion leaders on both sides of the Atlantic recognize just how entangled and interdependent the transatlantic economy has become, the sooner they will realize what is at stake and the stakes, indeed, are huge," write Joseph Quinlan and Daniel Hamilton of the Center for Transatlantic relations in Washington.


The largest part of U.S. corporations' overseas profits come from Europe. American subsidiaries in the U.K. alone employ more workers than they do in all of developing Asia. The amount of American money invested in Germany -- $300 billion -- is greater than total U.S. assets in all of South America. And despite all the talk about NAFTA, in the 1990s American firms sank nearly twice as much money into minuscule Netherlands as they put into Mexico. In 2000 the sales of U.S. affiliates to China were just one-quarter what they sold to France.


And despite all the bluster from Washington over the last year about punishing France and Germany, U.S. investments in those two countries actually soared. Why? Because, though there may be plenty of grumbling about traitorous Europe in U.S. corporate boardrooms, when it comes to pragmatic decision making, it's clear that Europe is still a much more attractive and lucrative overseas market than just about anywhere else on the globe. That's where the consumers are. That's where the profits are. And the best way to grab a slice of that market is not to export, but to go there and set up your own plants.


But that's only half the story. While American firms are flocking to Europe, European firms have been pouring even greater amounts into the United States. For the same reason: to exploit a huge and highly profitable market. Many of Europe's largest firms are more at home in the United States today than in Europe itself.


Already by 2000, Europeans held a whopping $3.3 trillion in U.S. assets, representing two-thirds of all foreign assets in the United States. Europeans have invested more capital in Texas alone than Americans have invested in Japan. And over the past year, while European and American leaders were slinging barbs across the Atlantic, European investment in the U.S. continued to soar.


Not least of all from the vilified French. Despite rabid anti-France rhetoric on bumper stickers, T-shirts and Fox News, despite "freedom fries" in the Senate restaurant, and "Freedom toast" with whipped cream on Air Force One, over the past year, the French were the second ranking foreign investors in the U.S. stock market -- and No. 1 in direct investments.


There are now some 2,500 French subsidiaries in the U.S., all of which, of course -- along with the capital pouring in from other European countries -- provided a vital boost to the U.S. economy, and tens of thousands of new jobs for Americans. European subsidiaries in the United States employ more Americans than American subsidiaries do in Europe.


Which is one reason why those Americans pushing for a boycott of "French" products have had such a tough time. Even if a patriotic consumer wanted to punish cowardly, money-grubbing "frogs," he'd have to be a committed student of mergers and acquisitions to spot tainted Gallic products.


Liquor: Stay clear of Dom Perignon, right? But what about Seagram's, Royal Canadian, Glenlivet, Wild Turkey Bourbon, Jacobs Creek Australian wines (all owned by France's Pernod Picard)?


Magazines: Woman's Day, Car and Driver (France's Hachette Group). Soft Sheen Black Hair Products, Helena Rubinstein, Giorgio Armani (L'Oreal), the Athlete's Foot (Group Rallye). The First Hawaiian Bank (BNP Paribas), RCA TVs and DVDs (Thompson), Motel 6 , Red Roof Inns (Accor), Nissan, which just built a giant $1.4 billion plant in Mississippi (Renault), Uniroyal Tires (Michelin), Taylor Made Golf Clubs (Adidas-Saloman).


Good old American entertainment? Smokey Robinson, Stevie Wonder, Motown Records, MP3.com, Polygram, the Sundance Channel, Universal Studios (all belonged to France's Vivendi until the flailing company recently shucked off its U.S. entertainment interests, a move that had nothing to do with politics. Vivendi, however, still runs the water system for cities like Indianapolis).


You could always hire a consultant from Ernst & Young to guide you through the tangled skein of corporate ties, but beware: Ernst & Young is also French-owned (Cap Gemini.)


O.K. But what about France's flagship product, fine wines? Surely the boycott must have had some effect there? But it turns out the dollar value of sales of French wines rose 8 percent over the past year. According to trade officials at the French embassy in Washington, there seems to have been no serious economic reprisals, to date, despite early fears. "At one point there seemed to be kind of a brush fire, but it didn't last long." Any decline of French (and other European) exports to the U.S. has much more to do with the increased value of the Euro, rather than the would-be boycott.


The Pentagon's recent announcement cutting French and German firms out of lucrative Iraq reconstruction products may be one final attempt to exact vengeance. The irony, however, is that in the United States itself a key customer of French subsidiaries is the U.S. government and the Pentagon. The huge French catering firm Sodexho, for instance, is paid over a hundred million dollars a year to feed U.S. Marines, at every one of their American bases. That eight-year contract was denounced last spring by a clutch of furious congressmen. They backed down when they realized that ending it would cost American, not French, jobs. Sodexho has 130,000 employees across North America.


That's for starters. Aerospatiale provides helicopters to the U.S. military and Coast Guard, while Dassault sells Falcon 20's to the Coast Guard. The American subsidiaries of France's Michelin supply the Pentagon with tires for everything from advanced fighter aircraft to tactical wheeled vehicles, not to mention sales to NASA for the Space Shuttle.


But just as important to the U.S. as the hundreds of billions of dollars in French -- and European -- investment is the European willingness to bear the brunt of the declining dollar and rocketing U.S. debt. The U.S. government is borrowing over $1.4 billion a day to finance its current account deficit. Much of the lending comes from Europe.


But what would happen if, say, Europeans became more interested in pouring their capital into Eastern Europe or China. What would happen if they were to lose faith in the dollar? If they were to reduce or suddenly stop investing in U.S. treasuries and the S&P 500? What would happen if all the blithe rhetoric by American leaders -- all that talk of punishing "Old Europe," and shrugging off worries of a split between the United States and Europe as trifling -- actually provoked a breakdown in economic relations between Europe and the U.S.?


A lot of questions for the folks on top in Washington to ponder.
__________________

The Law of Fives is never wrong. CzEch yerself b4 joo rEck yerself. Hi-yo!


Posted by mudded on 12-22-2003 02:53 PM:

Ha!

Cheers for a good read


Posted by philjit on 12-22-2003 04:55 PM:

quote:
Europeans have invested more capital in Texas alone than Americans have invested in Japan.


Goddamit! I was going to throw that factbite into the thread until I got to it!

Interestingly you know this is what I was mentioned with my discussion with tj about the whole Iraqi contracts things being a "con job" geared more towards domestic political opinion than anything else. From a purely business perspective the idea that France and Germany will actually be hurt by such things is silly. A point I think even tj conceded (although not the amalysis that it was for domestic consumption more than anything else).

The political rows going on are, in actuality, just that and little more. One look at the business pages will tell you it. A good article all in all. Europe and America, in terms of trade, are heavily intertwined it's true. We are are interdependent on each other as an inevitable outcome of globalisation.


Posted by Smug Git on 12-22-2003 05:09 PM:

If the wine thing is true, that is interesting (although the falling dollar will have hit imports, if the effect of the boycott (that the French were allegedly genuinely worried about) is weak, then that tells something (as did the Dixie Chicks issue) how weak the enthusiam behind consumer boycotts tends to be).

__________________

I want to live and I want to love
I want to catch something that I might be ashamed of


Posted by tigerjez on 12-22-2003 07:52 PM:

quote:
Originally posted by Phil
Interestingly you know this is what I was mentioned with my discussion with tj about the whole Iraqi contracts things being a "con job" geared more towards domestic political opinion than anything else. From a purely business perspective the idea that France and Germany will actually be hurt by such things is silly. A point I think even tj conceded (although not the amalysis that it was for domestic consumption more than anything else).


??

i think i conceded a point about globalisation, but yes... the boycott does actually hurt france & germany. to-wit:

1. the author is confusing all of europe with "old europe."

either that, or he's just being willfully blind to an obvious split/division of power in the EU. truthfully, i'm not sure why he's really writing about this issue now, because really, it's old news. i.e., the US is firmly in the driver's seat. the UK is riding shotgun for europe. france & germany have been relegated to the backseat, with several new US allies in europe vying to take over their positions.

the central issue here has been big money. old europe (france, germany, belgium) wanted a loaded game. they wanted bad contracts, favoring them, executed with hussein, to have stayed in effect. why should we reward them for taking a stand to preserve their trade with him? we shouldn't, so we didn't. this was much to the overt pleasure of european countries who don't mind having a straight deck-- several of whom would like to enter the global oil business scene for real (UK, spain, italy, portugal, eastern europe, denmark, netherlands e.g.) themselves.

for instance... does anyone think that the netherlands is on france's side and would prefer to see totalfinaelf unfairly get a contract rather than allow Royal Dutch Shell to bid straight-up for it? or UK's BP? or Poland wouldn't love a shot at breaking onto the oilfield scene? or Spain exporting refining technology?

apparently this author is oblivious to these things, but no one here should be.

2. france & germany will still have big corporate empires. they aren't going to be crushed. however, they will suffer more than we will because of the funds invested into them being moved to other parts of europe. what will really happen to germany & its local economy if the US rolls up its military and moves it to Spain? or Italy?

Can the US army buy sandwiches for US soldiers from a domestic company? You betcha. Sodexho may have to fire their american workers, but don't you think they'd be hired back in 15 minutes by the domestic who picked up a new contract to feed the entire military?

Can the US military buy helicopters from Boeing or Bell instead of Aerospatiale? Sure.

So, although i think salon is just behind the times here and employs some of their patent wishful thinking that the US will fail... i have to wonder why the author doesn't think an overt display by consumers to push US funds into investment away from France & Germany will somehow not affect them.

-- tj
__________________

"You people with your fancy lawyers and courthouses think the Lady of Justice is blind? Down here on the street, the Bitch got eyes."


Posted by Smug Git on 12-22-2003 07:59 PM:

Europe is a complicated issue, even if you stick to just talking about the EU (probably more complicated than the US is, for example). The UK is already in the oil business, tj; apart from being self-sufficient in oil in terms of quantity produced domestically (although that won't last forever) we have BP, which is a large oil company itself.

In general, even Britain cares more about its links with the EU than it does with the US, but there aren't any simple overarching statements about the EU that are of much more than trivial value. It could go any number of ways from here, as it is.

__________________

I want to live and I want to love
I want to catch something that I might be ashamed of


Posted by Desmond02 on 12-22-2003 09:11 PM:

that was a very good read, and the article does address a number of issues regarding just how important the economic links between the US and Europe are. We need Europe, and Europe needs us. it is obviously to our mutual benefit to be important economic powers, and to break down such a relationship over some sort of ignorant ideology put forth by the bush administration and reactionary media outlets like fox news is counterintuitive. but European solidarity will remain paramount in European affairs, and it will remain to be seen just how the situation goes from here...

__________________

lollerströssel


Posted by tigerjez on 12-22-2003 09:16 PM:

Smug, i'm not saying the UK isn't in the oil business.

I'm saying there are several eastern european companies who would like to enter it.

I am also saying that the UK & other foreign Big Oil (like shell) would like to compete for a chunk of it rather than see it locked up with totalfina or lukoil under bad deals with terror-sponsoring dictators.

finally, i'm saying that the UK would like to expand its oilfield services companies.



-- tj

__________________

"You people with your fancy lawyers and courthouses think the Lady of Justice is blind? Down here on the street, the Bitch got eyes."


Posted by Smug Git on 12-22-2003 09:23 PM:

quote:
Originally posted by tigerjez
Can the US army buy sandwiches for US soldiers from a domestic company? You betcha. Sodexho may have to fire their american workers, but don't you think they'd be hired back in 15 minutes by the domestic who picked up a new contract to feed the entire military?

Can the US military buy helicopters from Boeing or Bell instead of Aerospatiale? Sure.



One would imagine that they use these companies because they offer the best value. Nearly anything that you could possibly want can be bought from somewhere else, but cheapest is best (if we are capitalists, at least).

If the US hurts Germany and France, they fuck us in the UK, too. In that instance, we'd be better off to throw our lot in more with the EU, rather than less. Hostility towards EU members is counterproductive, in the end, unless you wish to pursue an isolationist and effectively protectionist policy.

Government borrowing is an interesting point too, of course; it'd not be in the interests of either side for there to be an eventual restriction in available sources of deficit funding for their governments, because that will drive up the price of such borrowing.
__________________

I want to live and I want to love
I want to catch something that I might be ashamed of


Posted by philjit on 12-22-2003 09:28 PM:

I was listening to the radio the other day and they were going around the so-called "New Europe" i.e Poland< Czech Rpeublic etc and asking the politicans there about the whole EU/US thing. I was surprised to hear most of them say "we are old Europe". Just an observation.


Posted by Smug Git on 12-22-2003 09:30 PM:

quote:
Originally posted by tigerjez
Smug, i'm not saying the UK isn't in the oil business.

I'm saying there are several eastern european companies who would like to enter it.

I am also saying that the UK & other foreign Big Oil (like shell) would like to compete for a chunk of it rather than see it locked up with totalfina or lukoil under bad deals with terror-sponsoring dictators.

finally, i'm saying that the UK would like to expand its oilfield services companies.



-- tj



All I was commenting on was your inclusion of the UK in a list of countries who wanted to enter the global oil business 'for real', when I would contend that we are already there. I'm sure that every country will want its fingers in the lucrative oil pie though, yes. However, those countries that you mentioned are pretty wedded to the EU, though, and such oil business as they might get couldn't possibly match the money that they make from dealing within the EU. While France and Germany may be seen to be bossing the EU, they are also amongst the small number of countries who make net contributions to it, so they are the hand that feeds to some extent (the UK and Holland are also net contributors); the UK's influence within the EU is less than might be expected from our relative size and wealth, because of the standoffish attitude of our governments, and Holland is small.

Interestingly, the comical and allegedly rightwing Silvio Berlusconi is going to bail out Parmalat, who may be up to $9 billion dollars in the hole. That man isn't any ally I want (but then, nor are Schroeder and Chirac).
__________________

I want to live and I want to love
I want to catch something that I might be ashamed of


Posted by Desmond02 on 12-22-2003 09:51 PM:

just one note real quick, the bush admistration and the media need to take lessons in history and semantics, and stop all this fucking blabbering about 'New Europe and Old Europe'. it just makes any student of history cringe...

__________________

lollerströssel


Posted by tigerjez on 12-23-2003 04:31 AM:

quote:
Originally posted by Desmond02
just one note real quick, the bush admistration and the media need to take lessons in history and semantics, and stop all this fucking blabbering about 'New Europe and Old Europe'. it just makes any student of history cringe...


it shouldn't. it's as apt a name as any. "old europe" being relative to the 20th century and even prior. new europe being the wave of the future. i.e., the 21st.
__________________

"You people with your fancy lawyers and courthouses think the Lady of Justice is blind? Down here on the street, the Bitch got eyes."


Posted by philjit on 12-23-2003 04:45 AM:

The problem is though tj is that, as I metnioned, the places being called "new Europe" actually, for the most part, consider themselves part of "old Europe", probably because they are. Poland is a good example, as is Hungary, the Czech Republic, Macedonia etc


Posted by Nutrimentia on 12-23-2003 10:32 AM:

quote:
Originally posted by Smug Git
... is counterproductive, in the end, unless you wish to pursue an isolationist and effectively protectionist policy...


Autarky is not possible today, rendering "isolationist" policies ultimately fruitless in essence. Maybe good for soundbytes on the domestic front in an election year, but there is no way that an substantial isolationist policy can be forged and sustained today.
__________________

The Law of Fives is never wrong. CzEch yerself b4 joo rEck yerself. Hi-yo!


Posted by Smug Git on 12-23-2003 03:05 PM:

quote:
Originally posted by tigerjez
it shouldn't. it's as apt a name as any. "old europe" being relative to the 20th century and even prior. new europe being the wave of the future. i.e., the 21st.


It was an uninspired soundbite by Rumsfeld, I thought; does the phrase have some other pedigree too?

It is a silly phrase; all the eastern European nations, pretty much, are clamouring to join 'old Europe'. As a British person, I think that the phrase is rank stupidity and Rumsfeld can take his ignorant demarcations elsewhere. There is plenty wrong with the EU, but this isn't part of it.
__________________

I want to live and I want to love
I want to catch something that I might be ashamed of


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