Photo by Brian Taylor.
Both in Europe and the wider world, geopolitical risks are likely to make the next decade as uncertain as the current one, according to the keynote speaker at the 2019 Paper & Plastics Recycling Conference Europe, held in Barcelona in early November.
Federico Santi, a senior analyst specializing in Southern Europe for the New York-based Eurasia Group, remarked that Europe has become a more unpredictable place for business owners and managers to navigate as the world has shifted from a planet with unilateral leadership (provided by the United States) to a multi-lateral leadership model.
Adding to stress, said Santi, is that 2019 is poised to offer “the slowest [economic] growth globally in a number of years.” Santi said the lack of a unified response in how to deal with a potential recession is likely to be noticeable compared to 2008 and 2009, when “there was a fairly coordinated policy.”
That coordinated policy included “a commitment not to raise trade barriers,” added Santi, which seems remarkable in light of the global trade issues that have arisen with the onset of sparring between U.S. President Donald Trump, China’s Xi Jinping, and a number of other world leaders.
While President Trump garners much of the attention, Santi said there had been an emerging attitude in Western business and political circles that “China is something of a free rider in the global economy,” with a reputation for “not opening up” its economy while also becoming “more aggressive geopolitically.” Trump’s policies, added Santi, are “as much a product of this climate as a driver.”
In Europe, Brexit has provided another distraction for business owners and managers, as the United Kingdom’s government undertakes what Santi called a lesson in “how not to leave the European Union.” All options proposed by the U.K.’s Conservative Party will create a “net negative on the U.K. economy,” said Santi, with the so-called “hard Brexit” being “the most damaging.”
In better news for European recyclers, manufacturers and other business owners, the notion of leaving the EU has largely not spread to other nations, with “some push toward more integration” on display in the European Central Bank and other institutions, said Santi.
One additional source of division within the EU, however, has been provided by Xi Jinping’s China and its policy to entice European nations to join its Belt and Road initiative. While some nations, including Italy and Greece, have signed on to the effort in order to attract Chinese foreign direct investment, other EU member nations see a wedge that could reduce the EU’s institutional leverage.
Overall, Santi characterized the euro zone as being “close to economic stagnation,” although “not quite in a recession yet.” He said there are bright spots on the continent.
In response to a question as to which nations should be considered for a capital investment, Santi said (depending on the specific project) that France is “doing quite well” as its current government tries to fix a “rigid” labor system in an effort that is “slowly starting to bear fruit.” He also cited Portugal as “another positive story” that was vulnerable during the euro zone tension of 2015 and 2016. Since then, however, its economic recovery “has picked up speed” while politically it is “an island of stability.”
The 2019 Paper & Plastics Recycling Conference Europe was Nov. 5-6 in Barcelona, Spain. The event is organized by Recycling Today Events.