Down and Out in Davos

Its hard to feel sorry for yourself at the annual meeting of the World Economic Forum in Davos, Switzerland…the snow glistens in the crisp mountain air illuminated by a bright alpine sun; politicians, rock stars, media moguls and the captains of industry mingle effortlessly, safe under the vigilant but unfailingly polite gaze of about 2000 armed police…but then so many things are different today.

Instead of the usual mood of self satisfaction and privilege, the tone in Davos this year was positively defensive. Gone was the patina of entitlement, replaced instead with a palpable sense that at some profound level this collection of bankers, regulators and politicians had failed to read the writing on the wall, and for that omission the world as we know it will pay a stiff price. The good news is that while chastened by the financial crisis, this year’s attendees arrived in Davos with a resolve and a determination that I haven’t seen since I began attending. This was a no nonsense, get down to work, meeting. I didn’t see a single rock star (Bono doesn’t count because, well, he’s Bono). On the other hand we had an unprecedented number of Heads of State, all talking about what their governments would do to stimulate the economy, how the world community could turn this disaster into a long term opportunity, and how to make sure this kind of melt-down doesn’t happen again. Also present were most of the Commissioners of the EU, leading Finance Ministers from around the globe, and representatives from most of the major NGOs and multinational companies. In between the meetings to develop new green initiatives, to continue the fight against the digital divide, to resolve conflicts in the middle-east, and to advise President Obama on the first 100 days of his administration, a great deal of good old fashioned business got done.

From an Intel perspective this was probably our most successful Davos yet. We were able to engage, in depth, regarding the global sustainability challenge; continue our leadership role in education; renew positive relationships with several world leaders and leading regulators, and interact with a bunch of customers. Not bad for 4 days work. The schedule is grueling – most of us running on about 4 hours sleep each night – the support team probably even less. But putting aside all of the cynicism and the easy cheap shots, I leave Davos this year with a strange feeling. That in a time of great global uncertainty and with the prospect of prolonged economic suffering, this annual gathering of public, private, and academic thought leaders has re-committed to its core mission, “to improve the state of the world” and may just be our best chance for some kind of meaningful change.

Let’s hope so.

One Response to Down and Out in Davos

  1. Behnous says:

    European Protectionism.
    Is incompetence of the European commission, partiality of the aforesaid the Commission, hypocrisy, what is the role of the European Court of justice? Nowadays, the universalization and savage competition which animate the continents and the companies, one can only wonder about extravagances of the Commission. INTEL, Microsoft, Ryan Air, the Polish shipyards, the French farmers, the American shareholders who must invest out of purse with a view constitute a pension, the Chinese peasants who, in their turn, invest out of purse. Thousands of people injured by the European commission and as much of society victims of partiality… and the arguments of the European commission hardly miss extravagances.
    Arguments of the Commission:
    State aids
    According to the European commission, “a firm which receives an official support has an undue advantage compared to its competitors. Therefore EC Treaty interdict generally State aids, unless they are not justified by reasons of general economic development. To take care that this prohibition is adhered to and so that the derogations are implemented in a uniform way as a whole of the European Union, the European commission is charged to control the conformity of the State aid with the rules of the European Union.
    It must initially determine if a firm received a State aid, which is the case, if the support which is granted to him fills the following criteria:
    1) there is intervention of the State or by means of resources of State; this one can take various forms (for example, grant, interest rebate, tax reduction, guarantee, acquisition of a holding total or partial of the State in society or goods of goods or services in preferential conditions, etc);
    2) the intervention is suitable for affect the exchanges between Member States;
    3) the intervention confers an advantage to the recipient in a selective way, for example because it is limited to certain firms or certain lines of business, or firms located in areas given;
    4) competition is distorted or is likely to be it.
    On the other hand, the measures of general nature are not regarded as State aid because they are not selective and that they are applicable to all the firms, independently of their size, their geographical location or their line of business.
    Thus, article 87 contains the rules of substance governing the State aid, namely the general principle according to which the State aid is incompatible with the Common Market, as well as a list of possible derogations. The European commission adopted a certain number of guiding lines and interpretative managing staffs clarifying the modes of enforcement of the derogations, so as to guarantee a coherent implementation of the rules on the State aid in all the Member States and the lines of business. One can quote like examples the Community managing staff of the State aid with the R & D and the Community managing staff of the State aid for environmental protection.
    In the fields where the Commission acquired a sufficient experiment, it adopted a certain number of legal instruments known as exempting regulations per category, which define the conditions in which the Member States can implement assistances without notifying them to the Commission. One can quote like examples the assistances with the formation, employment and SME. To guarantee the transparency, the Member States nevertheless are held to send a card of information to the Commission little time after the implementation of the assistance.
    Article 88 states the fundamental procedure rules relating to the implementation of article 87, in particular the obligation for the Member States to notify at the Commission any project of granting of assistance and to put it at execution only after prior approval of the Commission. The provisions of the Treaty were supplemented by rules of procedure [regulation (EC) n° 659/1999 of the Council] and an implementing regulation [regulation (EC) n° 794/2004 of the Commission].
    Article 89 is the legal basis of the Council Regulations in the field of the State aid, such as and the regulation rules of procedure of enabling [regulation (EC) n° 994/98 of the Council] which are used as a basis for the exempting regulations per category.
    Trusts: article 81 of EC Treaty.
    The agreements between society or “firms” which lead to an appreciable restriction of competition are prohibited. In fact, they are null full, so that the rule of law commun run according to which “the agreements must be adhered to” is not applicable. The European commission or an authority of national competition can order at society to put an end to such lawful agreements and to impose fines to them to have concluded them. That is also worth for the not written agreements and the concerted practices.
    One can quote, as example, the agreements which consist with:
    - the agreement contributes to improve the production or the distribution of the products or to promote technological advance or economic;
    - to fix the buyer’s fees or of sale or other conditions trading;
    - to limit the production, the outlets, the technical development or the investment;
    - to distribute the markets or the sources of supply between competitors;
    - to implement discriminatory conditions to society which did not leave to the agreement, in their inflicting of this fact a disadvantage in competition.
    However, certain restrictive agreements between society are authorized because they are likely to encourage competition, for example by the promotion of technological advance or the improvement of the distribution. An agreement is authorized if the following cumulative conditions are met:
    - the agreement contributes to improve the production or the distribution of the products or to promote technological advance or economic;
    - the agreement holds to the consumers an equitable share profit which results from it;
    it restriction of competition is essential to the realization of the two preceding conditions;
    - the agreement does not eliminate competition for a substantial party of the products or services in question.
    On this basis, the Commission adopted regulations known as of “exemption by category”, which specify the conditions to which certain categories of agreements must answer. The restrictive agreements which meet the conditions of an exempting regulation per category are authorized pursuant to article 81.
    Dominant position abuses: article 82 of EC Treaty.
    This item, which prohibits the dominant position abuses, is applicable subject to the following conditions:
    - the firm occupies a dominant position, because of its market share and other factors, such as the presence or not of credible competitors and the fact that the firm in question has or not of its own distribution network and an privileged access to the raw materials, as many factors which are likely to make it possible the aforementioned firm to withdraw from the normal play competition;
    - the firm dominates the European market or a “substantial party” of this one;
    - the firm misuses its dominant position, for example as a practitioner of the prices too high to the prejudice of the consumers or the too low prices in order to exclude from the competitors of the market or to bar the access to new entrants of them, or by granting discriminatory advantages to certain customers.
    The European commission or an authority of national competition can prohibit an abuse and impose a fine with very undertaken which is made guilty from there.
    The role of the European commission.
    The Commission, in its capacity as guardian of the Treaties, can take the initiative to initiate a procedure against a lawful help is following a survey which it carries out of office is following received information of competitors and/or other interested parties which, conformément
    in article 20, paragraph 2, rules of procedure have the right to submit to the Commission information on the assistance supposed lawful.
    The recovery of the lawful state aids.
    Article 14, paragraph 1, the rules of procedure has that “in the event of negative decision concerning a lawful state aid, the Commission decides that the Member State concerned takes all the necessary measures to recover the state aid near its recipient”.
    Centers of Coordination: a legal system of tax avoidance in Belgium which distorts competition.
    Since 1983, Belgium profits from a tax regime particularly favorable for the centers of coordination. During this period, nearly 250 firms had service and guarantee, tax reduction, interest rebate under preferential conditions.
    Nearly unknown of the general public, the 250 centers of coordination present in Belgium are the example even of a subject which divides the majority of the people who speak about it. These centers of coordination represent purest legal tax avoidance.
    It is a tax gift which is made with the firms, and this tax gift was estimated, any provided for deduction, between 35 and 40 billion a year by the Council Finances itself. What wants to say that it is a completely official estimate from 35 to 40 billion.
    From a legal point of view:
    Since many years, the European commission seems to work in a discriminatory way with respect to certain Member States and this in spite of the judgments delivered by the European Court of Justice with respect to certain society.
    While referring to me with the various judgments delivered by the European Court of justice and with the decisions of the Commission, force is to note that the European commission distorts in a direct way the rules relating to competition. In addition to the distortion of pronounced competition, we can stress the passivity of the Commission as well as an obvious protectionism.
    Indeed, if Belgium, by the means of the centers of coordination, deprives itself of resources which are turned over to him in the form of assistances by the Funds of the European company, it seems clear that the Commission contributes in a direct way to the earnings inequalities.
    According to the lawyers of the European commission, the Commission is held to study the file on various aspects and one of the principal aspects touches the consumer directly.
    And as regards distortion of competition, it is hardly difficult to point the number of subjects – people or companies – injured, so much on the national plan, than at the European and worldwide levels.
    First of all, state aids are selective and allow society of FORUM 187, the Centers of coordination, an anti-competitive development. The resources which the state east gives up are generally compensated by taxes which penalize competition and the consumers. We do not forget to refer to the contribution of the various Member States which, in the forms of structural assistances, make it possible the Belgian authorities to balance the budget.
    In other words, the whole of the European consumers is put at contribution.
    Of course, the European commission and the Belgian authorities will have of another task to only take refuge behind the principle of solidarity. But, the principle of solidarity implies discriminations by no means: the French farmers who must refund state aids, the Polish shipyards which must close and cannot claim with a state aid which would be forwarded to settlement, etc.
    The tax measures which are of implementation affect the exchanges between Member States directly. Dismissals and delocalizations of many companies, more precisely, France and the Caterpillar group.
    The assistances which are not forwarded to settlement (Forum 187 and Centres of coordination) supported the expansion, the development, the acquisition and the bond of the shares of various society. As example, we can quote “Jupiler and Stella” which in the years 80s were two quite distinct society, which, after having merged to become Interbrew, set up the group INBEV, which, after having acquired various competitors became the first worldwide Brewer.
    It was also the case for the Arcelor group, which, not only, saw its bond progressing, but also, multiplied acquisitions.
    Of course, one cannot refer to the Arcelor group without its Center of Coordination and an office plurality of state aids supported by the European commission: CO2 quotas.
    The file CO2 is in itself very interesting because it shows a violation of the decisions of the European Court of Justice on behalf of the European commission – the latter relating to prohibition to cumulate state aid, on the one hand, and on the other hand, it invites us to wonder about the real aspirations of the western world through the Protocol of Kyoto.
    In the Arcelor file, the European Union reveals its true intentions, which, in my opinion, described a cheating frame of mind, guided by unspecified mercantile intention and which aims at slowing down the economic development of the other nations. More the good example remains this famous hunting for the tax shelters: the European commission closes the eyes on the activities of Belgium and great numbers of management are agitated full with heat and point the unpleasant accusing finger in the direction of Switzerland.
    Under the termes of article 87 §1 of EC Treaty, “except derogations provided for in this Treaty, are incompatible with the Common Market, insofar as they affect the exchanges between Member States, the assistances granted by the states or by means of resources of state in some form that it is which distorts or which threatens to distort competition by supporting certain firms or unquestionable production”.
    Since this prohibition is not absolute as paragraphs 2 and 3 lay down it, it is advisable all the same to moderate the exceptions to this principle. Are thus compatible with the Common Market, the assistances intended to cure the damage caused by the natural disasters or other exceptional occurrences (article 87 §2 b).
    In the same way can be regarded as compatible with the Common Market, the state aids intended to facilitate the development of certain activities or certain economic areas, when they do not deteriorate the conditions of the exchanges in a contrary measure with the shared interest (article 87 §3 c).
    According to article 88 §3 of EC Treaty, the Commission is in good time informed, to forward its observations, of the projects tending to institute or amend state aids.
    However, to appreciate the compatibility of a help, it falls on the Commission to put out of balance the beneficial negotiable instruments of the assistance with its negative negotiable instruments on the conditions of the exchanges and the maintenance of not distorted competition.
    Within the framework of the Centers of Coordinations, state aids in question not having any transitory negotiable instrument, the negotiable instruments on competition are permanent. It is besides the case of the assistances granted to Belgium, in particular with the Walloon region, and whose amounts and due dates are known and fixed by the European commission. Here are which should allow various companies an expansion by various acquisitions and a growth of the bond of these-same companies.
    Because, obviously, we find again companies which have their Center of Coordination and which is gathered under the ASBL Forum 187.
    Thus, the resources of Belgium and its areas are seen compensated by the European assistances up to 2013.
    Insofar as a derogation is granted to a Member State, the European commission creates a distortion of competition between States if the latter compensates for the “financial resources of the state” by assistances whose finalities would be illegitimate: Assistances of the Funds of the European Community.
    Lately (11-13-2007), the European commission decided to grant one transitional period to Belgium, it is obvious that none society is held to refund the state aids and this, in accordance with the decisions of the European Court of Justice: “the state is held to recover the whole of the state aids…”
    According to the Commission:
    If article 14, paragraph 1, the rules of procedure has that a Member State recovers the lawful state aids near its recipient, it adds that the Commission does not require the recovery of the state aid if, by doing this, it went against a general principle of Community legislation. It is what generally occurs when the question of legitimate confidence is concerned.
    However, by calling upon the legitimate question of confidence, the European commission did not garner measures aiming at making adhere to the Community legislation. That is out of doubt when we study Article 20, paragraph 2, of the rules of procedure which stipulate that the aforementioned Commission can take the initiative to initiate a procedure against a lawful state aid, that is to say following a survey that it carries out following received information of competitors and/or other interested parties.
    We observe a total passivity of the European commission which for political questions and doubtful does not take a spontaneous initiative, except if it acts of foreign companies.
    Lately, the sector of the car, whose VOLVO, solicited the Flemish government.
    Thus, the Volvo group which has its own Center of Coordination requires a new state aid of the authority. But, in order to circumvent the law, the Belgian authorities did not find anything of better than to offer, of the bank guarantees.
    In other words, if the Volvo group does not wish to refund the amount of the assistance – which is assembled to several hundreds of million Euros, it belongs the government – or to consumer – to refund the amount of the state aid.
    In short, it is, in my opinion, useless to be delayed on the passivity of the European commission which, after having granted one transitional period to Belgium (decision of November 13rd, 2007), decided to close the eyes on the new state aids granted by the Belgian authorities to society having a Center of Coordination.
    On the other hand, the foreign companies, such Microsoft and INTEL, will be never the purpose of such a passivity. That opposite, they are generally seen imposing fines which reach records.
    If the European commission supports a restricted number of firms and shareholders, it should all the same be recognized that the aforementioned Commission distorts the stockmarkets. On the other hand, the society condemned on the basis of of a state aid, a trust or an dominant position abuse, sees their braked development and the bond to plunge. What, undoubtedly, penalizes the consumers and the shareholders.
    What can we say to American people, who, to constitute a pension, must buy shares in the open market?
    What is the unavowed intention of the European commission? What are the expressed wishes?
    Obviously, the European commission wishes to develop with the detriment of the rest of the world: to dismantle the foreign companies which garner copious benefit (INTEL, Microsoft, Sony) and to slow down competition (new CO2 quotas offered to the Arcelor group and an insistent request relating to a reduction of the CO2 issuings on behalf of Europe). Obvious Protectionism and a reduction of the CO2 issuings on behalf of the rest of the world.
    I allow myself to recall to the European Union the industrial revolutions were born neither on the edges from Gange, nor in the town of Beijing. After two centuries of pollution and two centuries of plundering of the natural resources, I estimate that each people and each nation have the right to move and ensure his perenniality, in particular, the emerging countries.
    We could lengthily hold forth about violations of the basic rights of society, the shareholders and the consumers. The European commission and the European Court of justice misuse their position with a view distort, and this, in a direct way, the rules relating to Competition.
    The last developments and the passivity of the Commission with regard to the attitude of the Belgian government with respect to Forum 187 and the centers of coordination raise question: following the decision returned dated November 13rd, 2007, Belgian government decided to extend only a few advantages of the centers of coordination which will have exchange rate only until the end of 2010 for all companies.
    In other words, Competition remains distorted insofar as all the advantages – or state aids – aren’t granted in a systematic way, thus not strengthening the principle of equality.
    It is thus difficult to imagine a passivity of lawyers of Microsoft and INTEL. It is thus proven that the European commission, from its passivity with respect to Forum 187 and the Centers of Coordination, misuse its position with a view distort the competition (Stock exchange Exchange rates of condemned society which, on the number of bonds, reached amounts that a person who wishes to constitute a pension, cannot neglect).
    The European commission adheres to neither the Community legislation, nor even, famous Protocole of Kyoto. The truth does not do as well good in the world as its appearances make there of evil.
    For the European commission, the democracy is art to enact rules which can be transgressed and imposed on others. Patere quam ipse fecisti legem.
    Can you trust European Commission ?
    Please, forgive my English and my lack of practical experience.
    Thank you for your time.
    Behnous