European Powder Keg
Pfäffikon SZ, Switzerland – The flaws of the European Union (EU) have been put under the carpet for too long. Additionally, the European citizen feels unerring whether he is gagged or helped by Brussels. Brussels went too far by wanting to form of the EU not only an economic but also a political stronghold. The result is that, after the Brexit, the economic door continues to open more instead of closing; enough ingredients for a European powder keg.
Association Agreement
2016 will be the year of European referenda. Perhaps the Dutch showed unnoticed a first sign in April this year. A large majority said “no” to the association agreement with Ukraine. Prime Minister Rutte of the Netherlands was forced to listen to the people, which resulted in an uncomfortable situation. How a single initiative of Jan Roos of the Dutch ‘GeenPeil’ can make a lot of change.
Italy
More and more countries are wondering whether they still want to belong to the EU. In October this year, for example, a referendum in Italy will take place in which the people can decide on far-reaching constitutional reforms. The government of Prime Minister Renzi of Italy thus taking a big risk, something for which British Prime Minister Cameron paid a high price. Renzi gives the Italians, after all, the chance to vote against his government. When Renzi loses, he has promised to resign. The most recent mayor elections in Rome and Turin, make clear that there is not to be trifled with the Italian opponents of the EU. A fly in the ointment is the staggering weakness of the Italian banking system. The Italians have failed to make a clean sweep in 2008 and get the bill presented now after the Brexit.
More Countries
The European door continues to open more. The anti-European developments in other European countries such as France, Austria, Finland, Hungary and the Netherlands should not be underestimated. When Italy put pressure and defines the euro as the cause of their economic problems, it can go fast. An Italian exit from the euro would have disastrous consequences for the EU.
It is not the fault of the British that Europe has a big problem. The EU has to blame itself by decades of arrogant and weak leadership. The Brexit could mean the wick in the European powder keg.
It remains for me to wish you a good weekend.
Jan Dwarshuis is a senior asset manager at Thirteen Asset Management AG, where he is responsible for the Thirteen Diversified Fund. Dwarshuis writes his columns in a personal capacity and is not paid for them. Nor is he paying for his columns to be placed. Professionally, he holds positions in major European, American and Russian stock funds. The information in his columns is not intended as professional investment advice or a recommendation to make certain investments. At the time of writing, he has no position in the above mentioned shares and has no intention of doing so in the next 72 hours.
