An SMS from Ernst (26): Of crime and punishment. The Feodor Dostoyevski version…

It is time to reintroduce an old friend to you. This is episode 26 of the SMS from Ernst: the Short Messages  Service.

Today is a special episode with some important and interesting news of last week. News that you might have missed in other newspapers... 

I call today's episode the Feodor Dostoyevski version, as all stories mentioned in it are about crime and / or punishment.

The following story was mentioned in the Dutch daily newspaper 'Trouw':

Brussels penalized Czechian corruption with EU subsidies mildly

Czechia has committed fraud on a large scale with EU subsidies. This is disclosed by secret documents of the European Audit Office and the European Commission that are in the hands of 'Trouw'.

As a consequence of the fraud, the European Commission diminished the funds for Czechia by €450 million. However, the sheer size of the irregularities appears to be a lot bigger. The European Commission seemingly tried to downplay the fraud.

In May, the Audit Office concluded that the Czechian authorities lied systematically to the authorities in Brussels. The Czechs ‘improved’ the results of audits to keep the corruption out of sight. For its necessary information, the Commission is very dependent on the member state who receives the subsidy. 

The secret reports mentioned here are the result of secret audits that took place randomly.

Officially, the commission calls the fraud ‘shortcomings in the functioning of Czechian governmental audit organs’. However, the Commission's own secret report from August 2012 speaks a different language: ‘The Commission cannot trust the [Czechian] results, as presented in the annual reports and audits’.

The secret reports describe how the fraud worked. Price agreements have been made. Projects are not assessed on their economic relevance. Budgets have been exceeded largely. Specificiations of governmental tenders have been rigged in such a way that only one firm could meet them.

To penalize Czechia, Brussels now pays 10% less support for infrastructure and 5% less for the environment. Combined, this is about €450 million. The percentages are the result of bargaining between Brussels and Prague. The Commission originally wanted to deduct one-third more, according to the secret report.

In Czechia, the loss of millions in subsidies has hardly become mainstream. ‘Neither Prague nor Brussels has any interest in publicizing these events’, according to a source in Prague that has good knowledge of these reports.

Everybody that thinks that the European Union spurs financial waste and fraud in the member states has one more justification to think so. However, there is a difference between not applying the (complex) rules of the European Union during an application for European structure funds and subsidies on one hand and straight-forward fraud on the other hand. This Czechian fraud seems to be of the latter category. 

I hope that the Czechs now understand that the EU and the European Commission are not stupid. I also hope that this message is clearly understood in other European countries as well, that have been planning to bend or break the rules. Especially in these times of economic hardship, the EU cannot waste money on corruption and fraudulent bogus projects.

Our second story is about fraud in a different way: forming a cartel and making agreements on mininum prizes.

This seemed to have happened in Spain, between the telecom behemots Telefonica, Vodafone and Orange. The following story comes from Reuters:

Spain fines Telefonica, Vodafone, Orange over texts

Spain's antitrust body said it fined telecoms companies Telefonica (TEF.MC), Vodafone (VOD.L) and France Telecom's Orange (FTE.PA) a record 120 million euros (97.65 million pounds) for charging too much for text messages.

The regulator said on Thursday Spain's three biggest mobile operators had exploited their dominant position between 2000 and 2009 and passed on overpriced services termination rates to consumers with high charges for text messages.

Former monopoly Telefonica must pay 46.5 million euros, while Vodafone and Orange must pay out 43.5 million euros and 30 million euros respectively, the National Competition Commission(CNC) said in a statement.

"Telefonica totally disagrees with the fine imposed by the CNC today because it considers it completely unfair," a Telefonica source said, adding that the company would appeal.

Vodafone, which has the second highest market share in Spain and no.3 player Orange, also said they would appeal the CNC's decision.

Telecom companies are regular guests of my blog (a.o. link1, link2, link3; use the search engine on top of my blog for much more info).

The enormous profits coming from the telephone calls (especially roaming calls outside the regular territory of the caller) and the number one cash cow SMS (‘the other one’) had made the large telephone companies too bold at the end of last century. The hundreds of millions European citizens calling and SMS-ing their heads off through their cellphones, seemed at the time like the goose with the golden eggs.

In the year 2000, the telecom behemots thought that the new technology of wireless, mobile internet (UMTS) would bring a time of unlimited profits for many years to come. This was the reason that these oligopolist companies overpaid heavily for the UMTS licenses that had been auctioned in the European countries (see the first aforementioned link).

UMTS became a real disaster, as the auctions turned into bottomless pits in Germany and the United Kingdom: in these countries prices had to be paid to the tune of €600 for every British and German citizen. 

On top of that, the people were not very enthusiastic about the telephones that were for sale in the beginning of the UMTS era. This circumstance made that UMTS had a very disappointing start with limited subscriptions, due to the disappointing possibilities, the high prices and the lousy telephones. That changed only when state-of-the-art telephones, like the Blackberry and especially the iPhone emerged on the market, that didn’t have the drawbacks of the earlier online telephones.

In order to stay alive during the difficult early years of this millennium, many telephone companies have seemingly chosen for a silent cartel; instead of offering the best possible price to their customers, they negotiated with their “competion-colleagues” a price for normal calls, roaming calls and SMS’s that would give everybody in the business a huge profit. Everybody that has called abroad in Europe for a few hours during a holiday or business trip knows what I am talking about.

Therefore I applaud the actions of the Spanish telecom watchdog. I also invite the Dutch, British, Italian and German telecom watchdog to do the same.

Although I can’t prove it, I wouldn’t be surprised if the telecom watchdogs would dig up a few ‘cartel bones’ after thorough investigations all over Europe. This is now especially important, as the Dutch auction of the 4G LTE Advanced network licenses has turned again into a financial disaster for KPN, Vodafone et al.

Let’s keep the telephone companies at close watch…

The last story is about another usual suspect in this blog: Ryanair. The Dutch Business News Radio station BNR reported that Ryanair has rigged the weights of starting airplanes. Here are the pertinent snips of this story:

Ryanair rigged the weight of airplanes

The Irish pricefighter has rigged the weight statements of its planes and has thus evaded millions in extra expenses. This is written by the German newspaper Die Welt (http://www.welt.de).

During the reporting process on the lift off-weights of its Boeing 737-800 airplanes, Ryanair would have reported up to 8 metric tons less in lift-off weight. By doing such, the airliner could have paid €17 per flight less in tariffs in Germany. This doesn’t seem like a lot of money, but on a yearly scale this could be €370,000 in Germany and even €50 million all over Europe, according to aviation experts who talked with Die Welt.

Ryanair didn’t want to react on rumours or speculations, but stated that it met the rules of Boeing and that it will answer questions of the European aviation authorities immediately. The German aviation authority DFS investigates the case. This could lead to legal steps and reclaiming of unpaid commissions.

I don’t have much against Ryanair. It is a quite cheap airliner that brings you all over Europe for a few bucks. What I do have against pricefighters in common and (unfortunately) especially Ryanair, is that these companies seem to bend the rules to the point where something has got to give. Unfortunately, you know what this means in an airplane.

Please, read once again the shocking witness story of aviation engineer Fred Bruggeman on the differences in the number of defects between outbound and inbound flights.

Pricefighters in aviation are litterally flying on the edge to remain profitable: every cent they spend less in repairs, kerosene, duties and other expenses adds to their profit in an industry where margins are very narrow.

Their message is (in my humble opinion): “we remain doing what we do until one of our planes crashes down. If such a thing happens, we first deny having done something wrong. If we can’t deny it anymore, we change our behavior for a while until the storm has blown over. Then we return to business-as-usual, probably”.

Please be careful during the holiday season…

Russian ban against US adoption has terrible blowback for Russian orphans and children-in-need

As you might know, Russia and America are currently contesting in – what the Dutch call –‘a match of long-peeing’. The cause for this contest has been the so-called Magnitsky bill.

According to Wikipedia:  

The main intention of the law was to punish Russian officials that were thought to be responsible for the death of Russian attorney Sergei Magnitsky by prohibiting their entrance to the United States and use of their banking system.

Russia responded by prohibiting Americans their entrance to Russia, when they had presumably been involved in human rights’ violations. So far, this has been a bread-and-butter conflict between the former archenemies. The United States and Russia are officially no enemies anymore, but still have a lot of hostile reflexes originating from the Cold War. “An eye for an eye” is one of those hard-to-abolish reflexes.   

The latest anti-American bill that has been passed by the Duma, the Russian parliament, is aimed at punishing the American people for the Magnitsky bill. This Duma-bill puts a ban on American adoption of Russian orphans and children-in-need.  Here are the pertinent snips from an article by the BBC:

Magnitsky row: Putin backs Russian ban on US adoptions

Russian President Vladimir Putin has defended a ban on Americans adopting Russian children, which has been proposed by the Russian parliament.

He said the bill, a response to the US Magnitsky Act which bars entry to Russian alleged human rights violators, was "appropriate".

Russian officials, he said, were not allowed to sit in on US cases involving the mistreatment of Russian children.

A number of cases where Russian children have died or been mistreated at the hands of US adoptive parents have made headlines in Russia.

Mr Putin said he still needed to read the Russian bill in detail, though he backed it in principle.

The rate of adoption in Russia is low. Some 3,400 Russian children were adopted by foreign families in 2011, nearly a third of them by Americans. The number of children adopted by Russian citizens was 7,416.

Americans have adopted around 60,000 Russian children over the past 20 years, with 19 recorded deaths among them. Over the same period, 1,500 orphans died in Russian adoptive families, according to the Russian prosecutor-general's office.

"The State Duma's response may be emotional, but I consider it to be appropriate," Mr Putin said, referring to Russia's lower house.

He called the US Magnitsky Act "unfriendly". The act replaced the US Jackson-Vanik amendment, which dated back to the Cold War.

"They have replaced one anti-Soviet, anti-Russian law with another... That is very bad. This, of course, in itself poisons our relations," Mr Putin said.

In this argument, I won’t judge Russia and the United States on their past behavior towards human rights. I conclude with the remark that both countries have a worrisome track record on this topic, during the Cold War AND during the War on Terrorism. In both cases it is a question of the pot calling the kettle black.

The only problem of this latest Duma-bill is that it has a terrible blowback for one of the most poor and pitiful groups in Russia: the orphans and children-in-need.

Many orphans and children-in-need  – physically and mentally challenged children or children with parents that are not able to take care of them anymore – spend their lives in terrible and tragic poverty in the Russian orphanages.

These children are neglected and abused, dirty and underfed and suffer often from dangerous and sometimes lifethreatening diseases, like psychic conditions, influenza, pneumonia, aids and tuberculosis.

Although in general their situation can not yet be compared to the situation in European and US orphanages, there is unfortunately still a big difference between the children in the two large Russian cities and those in the rest of the country.

Children in orphanages in the large cities Moscow and St-Petersburg generally live in beter circumstances than the children in rural areas. Besides that, they have at least a slight chance for a happy adoption, due to the much higher wealth ratio of the people there. These orphanages in Moscow and St-Petersburg might also attract more attention from wealthier Russians, as they have a better chance for media coverage from one of the Russian TV channels and newspaper.

The real problem lies with the orphanages in the vast rural areas of Russia, where lack of jobs and good housing, poverty, despair and alcoholism have taken their toll from the people. Especially these areas have a tradition of ‘everybody for themselves and God for us all’, as many of the people living there are just busy with surviving every day. They neither have the energy nor the money to help children-in-need.

People should remember that Russia, although it is an extremely wealthy country, is also a country where the wealth is divided very unevenly: Moscow and St-Petersburg bath in luxury, while the rest of the country hardly has a ruble to spend.

The most remarkable thing is perhaps, that 80% of the children in the rural orphanages still has parents. However, these parents are not able to take care of these children for various reasons, like poverty, a young age, a troubled family situation or alcoholism, which is still a giant killer among middle-aged men and women in Russia.

For many of these children, being adopted by United States’ citizens meant having the chance for a better life in the families of loving and caring American parents.

Some American parents have paid a fortune: not only to adopt their Russian child, but also to cure it from various diseases and affections, giving it a very good chance for a healthy and happy life. One of the most remarkable examples among these adopted Russian children is Jessica Long: a disabled girl from Siberia who won five golden medals (out of seven) on the London Paralympics 2012.

This chance is now taken away from these children by the Russian Duma.

The Russian newspaper Komsomolskaya Pravda shows in an article on this topic, how much many Russians are offended by this law, which is called Dima Yakovlev in Russia:

The State Duma adopted a law (i.e. the Dima Yakovlev law) that bans adoption of Russian children by US citizens.

On its last assembling day of 2012, the State Duma adopted the scandalous "anti-Magnitsky law", in which foreigners that violated against the (human) rights of Russian citizens, will be denied entry to our country. The law also prohibits Americans to adopt Russian children. This law in fact makes an end to the existence of the many Russian agencies that specialize in mediation in cases  where foreign people want to adopt a Russian orphan; often U.S citizens.

It would be reasonable to assume that, along with the ban on adoptions of Russian children by Americans, members of the Duma should help orphans, for instance by adopting a resolution that specifically asks the government to develop and adopt a program of "Russia without orphans". A program that provides financial assistance  to poor parents, to make sure that they don’t not give up their children for adoption. Besides that, we should encourage those who are going to become foster parents with tax incentives and better housing.

December 21 can be considered as a starting point, according to the Commission for Children's Rights, under the presidency of Pavel Astakhov :

“Today should be a serious turn in the social policy of the state: we should stop with waiting for help coming from foreigners, who come and "bring happiness" to our orphans. Instead we should learn how to reform our existing system of child homes and residential care facilities.

We must also reduce the number of social orphans: children that do have parents, but yet live in an orphanage. These are 80% of the children in children's homes. Families should get decent social financial assistance from the state in order to find a job, to build up their economy and to make their families feel safe and protected.”

However, human rights activist Valery Borshchev calls adoption of this law madness and is certain that this bill has already split society:

Apart from the tense political situation, related to the "Magnitsky Act", it is disgusting to fight political battles over the head of children-in-need. You really should not do that. The Duma has demonstrated that it is not concerned about the mood of society. Hundreds of thousands of signatures have passed, but no-one in the Duma moved. This law divides the country.” The Russian Duma is still willing to consider the appeal of citizens against the " Dima Yakovlev law". This was announced by the Vice-Speaker of the lower house of parliament, Sergei Neverov. Earlier, representatives of "Novaya Gazeta" (NG) handed 100,000 signatures over to members of the Duma. These signatures were collected in electronic form on the NG website of edition. However MP Ilya Ponomarev - one of the few who voted against the law, "Dima Yakovlev" - has doubts whether these signatures will have much impact on the situation.

It could be that president Vladimir Putin can still send this bill back to the Duma for revision, according political scientist Stanislav Belkovsky :

“In fact, the Duma punishes its own citizens - Russian children. Americans suffer very little damage from this law. They can adopt children from all around the world. Most orphans probably want to be in the most developed country in the world. Therefore, the meaning of the Act, as a response to the "Magnitsky Act", it very doubtful:

This article is translated by Google Translate and edited by me. There might be some translation errors, due to the poor quality of the Google translations. On top of that, I would advise people who speak Russian or have access to a better translation service to read the whole article on this topic.

In my opinion, this law and the preceding Magnitsky law is a contest in intercontinental long-peeing between the US and Russia.

Although the tensions between these countries are a logical result of the current crisis and the generally poor trust and confidence between Russia and the US, the consequences of these laws are grave: especially for people that have nothing to do with the problems.

I hope and expect that politicians in Russia (and the US) soon end this madness and stick to the original, bilateral agreements on adoption between these countries, as this Dima Yakovlev law is counterproductive and unfair.

On top of that, I hope that Russian orphans and children-in-need can look forward to a better life in their own country. However, as long as the egoism and ignorance rules among the powers that be in Moscow, I am not optimistic about it.

Dutch and German unemployment has been rising in 2012, but not as strongly as I predicted last year. Germany had hard time mid-year, but improved since then. Dutch labor situation deteriorating.

Today, the Dutch statistical bureau CBS presented its unemployment data for November, 2012:

Unemployment rate climbs to 7% 

• Unemployment growth 100,000 relative to one year ago 
• Increase WW benefits by over 12,000 
• Sharp increase WW benefits in sectors agriculture, hotels and restaurants and construction 

According to the most recent figures released by Central Bureau of Statistics (CBS), unemployment adjusted for seasonal variation increased by 16,000 in November 2012 to reach 552,000, i.e. 7% of the labor force.

Figures published by the Institute for Implementation of Employees’ Insurances show that the number of unemployment (WW) benefits rose to 322,000 in November, an increase by more than 12,000 relative to October.

Unemployment considerably higher

Unemployment increased by nearly 100,000 within twelve months. In November this year, 7% of the labor force were unemployed versus 5.8% on November 2011. The youth unemployment rate rose to an alarming 13.7% and more than 6% of over-25’s were unemployed.

The number of unemployed increased by an average 13,000 a month during the past three months. More than half were people older than 45. In October and November, unemployment among over-45’s rose more rapidly than in the preceding months.

Unemployment rate among young people substantially up

The number of current WW benefits grew by 4% to 322,000 in November. With a 13% increase, the number of unemployment benefits paid to young people under the age of 25 grew above average.

In December 2011, I wrote my outlook for 2012.  In this particular outlook (part 2), I was quite negative upon the Dutch labor market and slightly less negative upon the German labor market.

Unemployment

I’m very clear about unemployment. In 2012, I suspect it to rise by at least 3%-4% in The Netherlands and by about 2% in Germany. Rising unemployment will probably even be higher in the other Euro-zone countries, where the PIIGS will probably be the negative outliers; not only in sheer numbers, but also in the%age of increase.

Many companies, like the one that I work for, wrote red figures over the last three years since 2008. And although some companies still managed to make a decent profit during this period, I don’t expect the Dutch companies to maintain their excess personnel when the current recession proves to be a nasty one. The period of mass lay-offs that I noticed during this year has only just started, is my conviction.

And while Germany is currently still the ‘golden child’ in Europe with its massive exports all over the world, I cannot imagine that it can maintain this status in 2012. Germany will have to step back slightly and this will have immediate consequences for the German employment situation.

Today, at the end of 2012, I can say frankly that I have been much too pessimistic on both The Netherlands and Germany.  

Here are the charts for The Netherlands and Germany:

Dutch unemployment November 2011 - November 2012
Data courtesy of www.cbs.nl
Click to enlarge

German unemployment November 2011 - November 2012
Data courtesy of www.destatis.de
Click to enlarge 

In The Netherlands (data courtesy of www.cbs.nl), the unemployment rose by “only” 1.2% y-o-y, instead of the 3%-4% that I predicted. However, the unemployment among youngsters rose by 3.5% y-o-y, which is quite significant.

The German unemployment (data courtesy of Destatis.de) rose by only 0.1% y-o-y, in spite of it being 1% higher in January, 2012. Although the German youngsters seemed to have a hard time in especially the holiday period with a relative increase in youth unemployment of almost 40% in August 2012, the end result was quite good. In November, 2012, the y-o-y relative increase was only 5%.

The 3.5% rise of Dutch youth unemployment is absolute data. In relative data, it is 37%, much more than the 5% relative increase in Germany.

The German economy proves once again to be the powerhouse of the European Union. Although the crisis is also far from over in Germany, the largest economy in Europe seems to survive it without blinking. This is mainly due to Germany's strong large and small (artisanal) industries, the undisputed quality of its products and its world-wide exports that protect the country from the dire situation in problem zone South-Europe (i.e. the peripheral zone, where the PIIGS countries lie).

If you compare the data from both statistics bureaus, the current unemployment situation in Germany is even better than in The Netherlands, formerly the number two behind Austria when it came to unemployment. 

The Netherlands, with its large focus on exports to the PIIGS countries, suffers heavily from the difficult situation in South-Europe and the deteriorated circumstances on the domestic consumer market.

The fact that I have been too pessimistic on the Dutch unemployment situation doesn’t mean that this situation is actually healthy now: over the last three months the number of unemployed increased by 13,000 per month and this number might rise further, is my assumption:

• General consumer trust is at a very low level these days; this will definitely have repercussions for the numbers of shops and business-to-consumer companies in The Netherlands. Combined, this industry is a very large driver for jobs;
• Transport and distribution, a very important employer in The Netherlands suffers from the dropping exports to the PIIGS countries;
• The building and construction industry is going through a very hard time with soaring numbers of defaults and soaring unemployment. There is not even a shade of a solution for this battered industry;
• The ICT consultancy industry suffers from declining fees and numbers of assignments, especially in the financial industry. Important companies, like Logica, Ordina, Cap Gemini and others have to battle for every percent of margin;
• The financial industry is going through a period of mass dismissals and terminated contracts for temporary workers and consultants at ING, Rabobank, ABN Amro and SNS Reaal. Especially the financial situation of SNS Reaal is dire. The situation at the large Dutch insurance companies like ASR, Aegon and Delta Lloyd is hardly better;
• Also the Dutch manufacturing industry reports rising unemployment.

On top of that, there is a snag with the Dutch data: the increasing number of freelance professionals or ZZP workers (i.e. independents without personnel) that don't have an assignment does not count in any unemployment statistics.

Most freelance professionals work in the ICT industry and in the building and construction industry: the former are almost always very well educated (university or college level) and might still have a reasonable outlook for a job, while the latter are more often low-educated and work in an industry that sits on its knees.

If these ZZP workers dont have a job or an assignment, they will neither be counted as unemployed persons, nor will they receive unemployment benefit or welfare. The consequence is that this may be a group of people with (probably large) hidden unemployment and (in this case) grave financial problems; as they don’t receive any unemployment benefit and mostly have a hard time in qualifying for welfare benefit, there can be serious hidden poverty within this group.

Officials fear that the group of unemployed freelancers is already quite large and fast-growing. It would alter the Dutch unemployment rate considerably when the unemployed freelancers would have been counted in the official statistics.

The following article comes from a staff member of the Dutch Christian labor union CNV and sheds some light on the hidden unemployment and poverty of the ZZP freelancers. Here are the pertinent snips of this article:

Redefine the concept “ZZP worker”

‘Keep freelance professionals out of the Collective Labor Agreement (in Dutch: CAO)’. This message was spread by chairman of the PZO (i.e. platform of independent entrepreneurs) Esther Raats-Coster. The punchline of her story: more and more collective labor agreements have agreements on the fees of freelance professionals. This is an undesirable situation, according to Raats-Coster.

“What people seem to forget is that declaring CAO-conditions applicable to freelance professionals has a large impact on the freedom of the freelance professional as an independent entrepreneur. They are forced in an off-the-peg labor agreement: something that most zzp workers actually tried to escape from.“ This was stated by Esther Raats-Coster.

What Mrs Raats fails to mention in this article, is that this treasured freedom is worth nothing without an assignment.

In a report, called ‘the face of poverty’ (i.e. Armoedesignalement) from the Dutch Social-Cultural Planning Bureau and the CBS, it became clear that the number of poor people rose in The Netherlands during 2012 and will remain rising. For the first time, the number of poor freelancers is larger than the number of poor people working in paid employment: 175,000 vs 170,000.

This is a remarkable and worrisome given. To put it even stronger: although the unemployment is soaring currently, the growing group of freelance professionals with insufficient income keeps the official unemployment data low. They are not looking for a job, don’t apply for unemployment benefit and thus remain outside the unemployment radar. Even when they hardly can make ends meet.

Some freelancers still have a good assignment and thus enjoy a steady and considerable income. A growing group of freelancers is not so lucky: these are f.i. freelancers that cannot distinguish themselves from the others in the market. Or freelancers that are active in an industry with a high supply of labor and a low demand. Then the principle is: “if you leave, ten others are ready to work for me”.  

This puts pressure on freelance tariffs in industries with an excess in jobs that don’t demand any qualifications (“easy” labor). It puts also pressure on the wages of people that yet have a fixed contract.

This article is a must-read: even for people that are not big fans of labor unions. If you read Dutch or use Google Translate, please click the link.

In my opinion 2013 will be as much a nasty year for employment as 2012 has been. Perhaps, even nastier. Making predictions, however, remains difficult. 

What happened to the disappeared billions of Dutch pension funds? Was it the biggest legal robbery in Dutch history?

A large number of pension funds in The Netherlands has currently difficulties with their coverage ratios. That is no secret.

It is also no secret that the Dutch government and the Dutch national bank DNB played Jedi mind tricks to artificially increase the coverage ratio of the pension funds, by abolishing the risk-free swap rate and changing it to an ultimate forward rate (ufr) of 4.2%.

However, what fewer people know is how the Dutch government and some Dutch multinationals systematically ‘snatched’  money from the pension funds in the nineties: some large employers and the government refunded (litterally) billions of money from the pension funds that they had been obliged to pay earlier.

They did so, ‘because the money was splashing to the ceiling’ at the pensionfunds and the coverage ratios were skyhigh at the time. These ratios were well in excess of 200% at the time: this meant that the pension funds could pay all future obligations twice, as a consequence of fantastic results at the stock exchanges.

The parties responsible for the refunds thought that the remainder of the money would be enough to fund all pensions until eternity. They were proven wrong by the credit crisis and by the diminishing results at the stock exchanges.

When the coverage ratio of the pension funds became at a critical level last year, all parties that had been involved in this ‘great robbery’, refused to repay their share of the pension money: empty pockets! Now the pension funds must reduce their pension payments to current and future retirees, as a consequence of this ‘robbery'.

The Dutch, award-winning documentary series Zembla (i.e. Dutch Sixty Minutes) has made a documentary on this topic last year. I print here some snips of Zembla’s written documentation concerning the events with the pension funds’ money.

Report performance and coverage ratios pension funds

What caused the problems of the Dutch pension funds?

Pension reserves have been scooped out, in combination with too risky investment portfolios. Especially in the nineties things went wrong. In 1990, the coverage ratio was 230% (financial means vs. current and future obligations) in average and in 1999, it was 198%. A coverage ratio of 198% is absolutely not bad, but it should have been 320%. The nineties have been the best investment years ever. The AEX Amsterdam stock exchange multiplied sevenfold in that decade. Pension funds scored excellent yields. In 1990, the pension funds had a total capital of €170 bln; this should have been €720 bln at the end of 1999. In reality, they had only €450 bln in cash, leaving a deficit of €272 bln.

This deficit has been caused by large-scale refunds of pension money to the employers that established the fund. Also premiums that didn’t cover the costs, premium-free pensions and ‘royal’ arrangements for early retirement did the job.

Did the government not try to prevent this from happening?

No, the government actually started scooping out the pension funds itself. Companies were encouraged to skim the pension reserves and forward it to their own cash accounts. When they didn’t do so, the government would use the reserves for the coverage of the budget deficit. Summarized, pension funds have been abused in those days. The government thought that the sky was the limit, after the euphorical nineties. This was a common thought in those days, but the government and supervisors should have urged the pension funds to reckon with existing, common risks. They didn’t do this. To the contrary, they pushed the pension funds in the wrong direction. On top of that, the government directly scooped €15 bln out of ABP, the largest pension fund in The Netherlands, and it also used ABP’s money for the very costly early retirement plan (VUT). The government was herewith directly responsible for this process.

Didn’t the supervisor warn for too risky investments?

In the beginning of the nineties, the pension funds had very little stock in their portfolio. At the end of the nineties, the portfolio consisted of 50% stock. The funds initially profited from this strategy, but what goes up, must come down eventually. The pension funds took a heavy blow during the dot.com crisis (2001-2002) and in 2008 the credit crisis came on top of this. Not only the government and the supervisors did not see this coming, but also the advisors who decided about the contents of investment portfolios through mathematical and actuarial models. These portfolios had been put together with too much stock. If the asset mix would have been invested in fixed interest bonds, the coverage ratio would have been 114% in 2009.

What has been the role of the labor unions and employers?

Labor unions and large employers have battled for premiums that were much too low for covering future obligations. Both didn’t look at the interests of future generations, but instead made a party with the pension premiums of the participants in the pension funds (i.e. the workers). Pension money has been used for labor market policies.

[…]

What did we learn from this pension crisis?

If we knew in those days what we know now, the solutions would have been easy. Most important thing is that we learn what went wrong in order to get better performance in the future. The current situation is the result of a collective failure. However, the DNB and the Dutch government bear more guilt in the current, desperate situation of the pension funds than any other party. The government acted as a ‘robbing’ party itself and further stimulated companies to scoop out the pension funds. DNB made flawed assumptions towards the asset mix (too static and too risky) and underestimated the risk factor. These parties should have guided the funds, but instead sent them into a cliff.

Everybody who speaks Dutch or who is able to use Google Translate should read this confusing report and be amazed about the stupidity and ignorance of the governments that took part in and further encouraged this legal robbery. That the government has scooped out the pension funds and also encouraged private companies to do the same is bad by itself.

Worse is, however, that they don’t want to fill the void that has evolved out of this past policy, now that the pension funds do need the money desperately in order to meet their future obligations. Perhaps this has indeed been the biggest legal robbery in Dutch history.

I am not the only person that is worried about the consequences of these past events; no way. Besides the Zembla documentary team and the newspapers, there is also one prominent politician who cares about these events: Pieter Omtzigt of the Christian-Democrat party CDA. For this attention alone, Omtzigt deserves my full endorsement.

Although the current state secretary of Social Affairs Jetta Klijnsma seems to deny that these events actually took place in the past, Omtzigt doesn’t stop his investigation yet.

Here are some snips of a news bulletin that he put on the CDA homepage (www.cda.nl):

Skimming the common funds at the pension funds

Participants in pension funds have the right to know whether their employer skimmed the common funds of their pension fund.

Pieter Omtzigt has been investigating for more than a year, how many billions have been refunded during the last twenty years, from the pension funds to the employers who established these funds. Two proposals from his hand, in which he requested a summary of these refunds from Minister Henk Kamp [the former minister of Social Affairs - EL] have been denied for various reasons.

Omtzigt: The supervisor in the pension industry, De Nederlandsche Bank (i.e. Dutch national bank DNB), points to its obligation for secrecy, which prohibits the bank to disclose information on individual funds.

At the time, pension funds didn’t have an obligation to show these data in their annual reports, which is weird in hindsight. Besides that, many pension funds don’t exist anymore. However, for the funds that still exist it should not be too hard to get these data above water.

In the eighties and nineties, many people supposed that there were surplusses in the pension funds. In a number of cases, these surplusses have been refunded to the employers one-sidedly. Omtzigt: ’It is weird that when you invest €5 in an investment fund, you can read a one inch thick brochure with risks and information. However, when you are obliged to invest thousands of euro’s in a pension fund, this money should be used for pensions alone. The minister should offer full disclosure in this matter, especially now that funds have too little cash-at-hand to meet their future obligations.

I have nothing to add to that. However, I’m afraid that Pieter Omtzigt will have to fight a long and lonely battle with an unwilling minister and state secretary of Social Affairs. If the minister would make a confession on these actions in the past, this could lead to all kinds of claims by the current and future pensioners.

The CDA mentions the following names of large companies that skimmed their pension funds through a series of refunds:

Phillips

Thomassen & Drijver/Verblifa *

Koninklijke Econosto N.V *

HBG 

Robeco  

Unisys

Both companies marked with an asterisk don’t exist anymore as a independent company.

The Dutch newspaper Trouw shares some more information on Pieter Omtzigt request for information:

Pension funds have to explain past refunds

Pension funds should explain to their participants, what has happened with the billions of euro’s that have been refunded to the employers in the nineties. CDA Member of Parliament Pieter Omtzigt asked state secretary Jetta Klijnsma to make an agreement with the pension industry, in order to get more clarity on the skimming of the common funds that many employers did at their very successfull pension funds. Omtzigt wants to know how these refunds took place, how much money was involved and at which pension funds these refunds happened. “The pension funds refuse to give full disclosure until now”.

Companies that are commonly known for having received refunds from their pension funds are: Philips, Unilever, ABN Amro and Unisys. Omtzigt: this money has been used for dividends for the shareholders and bonuses for the management’.  An investigation has been held at five large pension funds – who all want to remain anonymous – whether these refunds took indeed place there in the period between 1985 and 2011. According to a PWC report, at these funds alone there had been refunds to the tune of €1 bln.

The arrangements on these refunds have not always been documented properly and were not always recorded correctly in the annual reports of the 1000 pension funds that existed in the nineties. In the meantime, these funds have merged to over 300 funds in 2012. These mergers didn’t make the bookkeeping of the pension funds more transparent. Bookkeeping documents need to be archived for seven years; this term is often already exceeded. PWC wrote: ‘Based on the available data from the pension funds, it is not realistic to expect that a useful summary can be produced of all refunds that took place’.

State secretary Klijnsma is reluctant to start an investigation, as ‘this could cost in excess of €10 mln’. Besides that, Klijnsma suggested, what does such an investigation bring?! From the pilot investigation, there was no evidence that the contracts concerning refunds between the labor unions and the employers had been unlawful.

And that is that. Omtzigt is clearly frustrated about these answers by the state secretary as billions of euro’s have probably disappeared, but he is yet empty-handed.  Thus one of the largest robberies is covered up by an unwilling government that fears damage claims.

To be continued…

4G (LTE Advanced) mobile internet auction: Mobile telephone companies in The Netherlands stepped in the same trap twice. Why the prospects for decent profits on mobile internet are even worse than in the time of UMTS.

Fool me once: shame on you…

Fool me twice: shame on me…

American proverb

In the ‘magical’ year 2000, the mother of all auctions for the telecom industry has been held in Europe: the auction of various UMTS lots (the first broadband mobile internet protocol) in a.o Germany, the United Kingdom and six other countries in Europe yielded record amounts to the money-hungry governments.

Especially the UMTS auctions in the United Kingdom (€39 bln), Germany (€48 bln) and (to a lesser degree) France (€20 bln) hit the jackpot for the governments. The following table is courtesy of Eric van Damme from the Tilburg University in The Netherlands.

Data courtesy of Eric van Damme, Tilburg University
Click to enlarge

The auctions had been so extremely successful in especially Germany and the UK that the Dutch government was overwhelmed when the Dutch UMTS auction ‘only’ yielded a pitiful €2. 7 bln, instead of the €9 bln that had been forecasted by finance minister Zalm. The Dutch government even ordered an investigation into the bids of Versatel (now Tele2 The Netherlands and one of my former employers) and Telfort, as it suspected foul play in the bidding process.

At the time, I was flabbergasted by the fact that the foolish and shortsighted telephone companies got stuck in a feeding frenzy to buy these UMTS frequencies and eventually offered these brainless amounts that they – in my humble opinion – hardly could earn back through sales of telephone subscriptions, telephone minutes and MB’s of data traffic.

If we do the math, you will see my point:

Germany had about 79 million inhabitants in 2000.

I estimate that Germany needed 25,000 UMTS antenna installations and switches for country-wide UMTS coverage (i.e. 25,000 nodes), based on the data from an article, written by telecom guru Eildert van Dijken in 2010. 

In that article Van Dijken stated that The Netherlands needed 3,000 UMTS antennas and basestations for country-wide coverage (link in Dutch). Germany has about 8.5 times as much territory as The Netherlands. Exact numbers might differ slightly, of course.

In the mentioned article, the total costs per node for LTE [Advanced] (i.e. Long Term Evolution; the modern variety of UMTS) have been estimated between €100,000 and €500,000 per node. However, in the year 2000, the UMTS technology was radically different from the previous technologies. It was also much more complicated than the current, new LTE protocol and needed new antennas, basestations and other new infrastructure everywhere. Therefore I estimated the costs per node at €750,000.

When 2/3 of the Germany population (i.e. 53 million) would take an UMTS subscription on their telephone (which obviously not all 53 million people did) and the UMTS installations and license would be depreciated / amortized in eight years (a considerable amount of time when you consider the speed of innovation and development), than every subscriber (!) had to yield an average profit of €160 per year to earn back the investments per node alone. This profit per subscriber would of course go up, when the number of subscribers would be less than 53 million.

Combined, all telco operators in Germany needed a necessary profit of €8.5 bln per year for eight years in a row to earn back the fixed costs alone. 

However, next to the fixed costs, there are variable costs of about €11,000 per telephone company per node per month (see again the article by Eildert van Dijken). This brought the operational costs for UMTS per year to at least €3.3 bln per telephone company for Germany, excluding all other overhead costs, like management, business administration, customer service and marketing costs.

Do you agree with me that this was a mission impossible in Germany and the UK? I truly hope so!

I dare to say that UMTS has not earned any telephone company one cent of real profit, if you leave loss compensation by the Internal Revenue Services and (probably) quicker amortization of the license-costs out of the equasion. Telephone calls and especially SMS have been the cash cows over the years that yielded the real profits. UMTS has been ‘dead on arrival’! 

Please prove me wrong with real evidence (data) if you can!

• It is a fact that the dotcom crisis started quite soon after the UMTS auctions. I am certain that the UMTS disaster in Europe has aided to this crisis! 
• It is another fact that KPN Telecom has been at the brink of defaulting, due to the costs of their investments in UMTS in The Netherlands and Germany. 
• And finally, it is a fact that the UMTS auctions were the beginning of a massive shakeout in the European telecom industry that changed the telecom landscape fundamentally.

After this disaster, it seemed that the Dutch telephone companies had learned their lessons the hard way. A previous auction of regular LTE (one step less advanced than "4G") in 2010 yielded about €300 million, which brought the total investment per telco for deploying LTE to about €1 bln (3000 nodes * approx. €300,000 + approx. €65 mln in license costs). This was still a considerable amount, but not impossible to earn back in those days, as SMS and telephone calls were still cash cows at the time.

However, last year the playing field changed considerably. People increasingly discovered apps like Whatsapp, Ping and Skype on their smartphones and were more and more reluctant to use the very expensive SMS services and telephone calls from the telco’s.

Instead they used these (almost) free apps, which required only a little amount of MB’s. In The Netherlands, the telco’s tried to pinch off these free apps, forcing their subscribers to use their official services. However, this attempt to (illegally) protect that market share was fortunately tackled by Dutch parliament.

My take has been and will be that internet and mobile computing will turn into a utility that will become as normal as electric light, gas and water. These mobile computing services could earn the telco’s as utility companies a decent profit, but nothing more than that:

In my opinion fixed internet and mobile internet will become normal utilities in the near future, just like electricity is a normal utility. You don’t think about it, you don’t compare it often with the offers of other providers (maybe only once a year when the contract expires)… It just needs to be there, when you plug it in; at the highest quality and against the lowest possible price.

Currently, there are lots of tricks and stunts that telecom providers pull to keep customers under contract, while paying lots of money:

• exclusive phone contracts (Apple(!)) with high subscription and usage fees; 
• cheap or free smartphones (non-Apple) with high subscription and usage fees; 
• opaque contracts and subscription forms that are impossible to comprehend for normal citizens; 
• contract-limits for data usage; 
• very expensive data usage beyond the contract-limits;
• pinched-off access to free apps that substitute dearly paid telecom services; 

I think this business model will disappear, only to be replaced with a business model that treats fixed and mobile internet as a utility. The customer buys a phone and pays a very limited fee per month for internet bandwidth. All ´classic´ telephone actions (calling, SMS-ing) will go via IP connections, as there is no need anymore to use the classic digital voice or data connections.

However, that is not how the telephone companies in The Netherlands are thinking about their future.

Yesterday, I was flabbergasted to read that an auction of LTE Advanced in The Netherlands (a true 4G mobile computing protocol) yielded no less than €3.8 bln: even more than the considerable €2.7 bln that had been paid for the UMTS licenses in 2000.

KPN Telecom, the biggest provider of mobile computing services in The Netherlands has paid no less than €1.35 billion for its lot. Its shareholders have to pay dearly for this ‘successful’ auction, according to an article in Het Financieele Dagblad (www.fd.nl) of today. Here are the pertinent snips of this article:

KPN cuts deeper in dividends after expensive auction for mobile internet

Telecom company KPN almost fully abandoned its policy of dividend payments for 2012 and 2013, in order to be able to afford its recent expense of €1.35 bln for new frequency space for telecom and internet traffic.

This became clear on Friday, 14 December, 2012 after the stock exchange had closed. CEO Eelco Blok of KPN responded that evening that the price that KPN had paid for the frequencies had been ‘considerable’. Still, he is convinced that KPN will earn sufficient yields on it. The service to customers has been secured for another 17 years and the new spectrum makes mobile data traffic more than ten times quicker than the current maximum, according to Blok.

However, just like other players in the industry, KPN seemed to be surprised by the price that had to paid for these warranties. The telco behemoth scrapped the closing dividend for 2012 and will reduce the dividend for 2013 to €0.03 per share from €0.35 per share. This action released €800 mln, but Blok could not tell yesterday, whether this amount was sufficient for keeping the balance upright or not.

The cable companies UPC and Ziggo abandoned the purchase of licenses, as ‘the prices had become too high’ in the auction, according to these companies.

Vodafone has paid the peak price in the auction, with €1.4 bln for nine relatively popular frequency blocks. T-Mobile and KPN collected 15 blocks each and paid €900 mln and €1,35 bln respectively. Contender Tele2 collected 2 blocks and paid €160 mln for it.

It seems that in the land of the blind, Tele2 is king: they paid a reasonable €160 mln for 2 blocks. Also T-mobile had not such a bad bargain. It seems that KPN and especially Vodafone are the real losers of this game of chicken. Ziggo and UPC took a fair decision, in my opinion.

In my opinion, CEO Eelco Blok of KPN needs to have his head examined for a number of reasons: 

• He obviously didn’t learn from the recent history of his company; 
• He obviously cannot calculate and thus paid a much too high price for these licenses; 
• He blames the high prices on the blind internet auction (mentioned in the remainder of the FD article), but his people had in fact not the capacity to offer a more decent price; 
• He doesn’t understand that 17 years is a much too long period to write off these investments. Eight years will be much closer for a realistic amortization; 
• He also doesn’t understand that the usage of the cash cows SMS and telephone calls will only further diminish in favor of Skype, Whatsapp, Ping and other future apps. 
• He thinks that his shareholders will accept the disappearance of their dividend for 2012 and 2013 with a resigned ‘smile of understanding’;

I hope that I made my point towards this new proof of auction feeding frenzy in The Netherlands. I will end with a snip of the  article by Eildert van Dijken (see the previous link):

The LTE-technology is indispensable to warrant stable mobile internet for the future. LTE on the 800 Mhz (and perhaps 900 Mhz) band is of great importance to develop a cost-effective national network.

Entering this market is not simple, as large investments are necessary. Keeping such a network in the air is also a very expensive business. The most important factor is getting large amounts of users to the network, that are willing to pay for these services. When looking at the current competition, this will not be easy for new parties in this business. Also existing parties must aggressively diminish costs to remain cost-effective in the long run.

Van Dijken hits the soft spot with this very well-written article. When reading it, you should remember that this was written after a relatively cheap auction in 2010 and before Whatsapp and Skype were really gaining momentum. 

2012's one month during LTE Advanced auction cost the leading telecom companies an enormous amount of money in an industry where margins are under further pressure and where the numerous Dutch wifi hotspots are another threat to the business model.

If I had shares in a telco, like KPN or Vodafone, I would run like hell to sell those. However, this should NOT be considered as an investment advice and I don’t take any responsibility if you follow this up.

Van Rompuy: ‘the EU should again be seen as a symbol of hope’. My question is: ‘how can you achieve that, Mr. Van Rompuy, as the leaders of the European Union seem to mess up all the time?!’

Today, 9 December 2012, the political leaders of the European Union Herman van Rompuy, Jose Manuel Barroso and Martin Schulz presented themselves in Oslo, the capital of Norway. Tomorrow they will receive the Nobel Peace Prize, on behalf of the European Union.

The Nobel Peace Prize is without a doubt the most controversial of the Nobel Prizes. Its presentation has almost always been accompanied by widespread discussions and sometimes even ridiculization. On top of that, you could state without exaggeration that it has been handed out to the wrong people on a number of occasions.

Some of the winners have been representatives of merciless regimes with masses of blood on their hands. Others received a Peace Prize, in spite of their ‘divide and conquer’- policy in past wars. Yet others received the prize without really achieving something remarkable.

This is the reason that the Nobel Peace Prize is more considered to be a incentive prize than a prize for real achievements, like the other Nobel Prizes. It is also not a true Nobel Prize, as it is handed out by Norway and not by the Nobel committee in Sweden.

This year the Nobel Peace Prize has been won by the European Union, precisely at the time that it is arguably going through the toughest period of its existence. The division and differences between the European countries are bigger than ever. On top of that, there is also much misunderstanding and miscommunication between the government leaders and the leadership of the European Union itself: the three musqueteers Barroso, Van Rompuy and Schulz.

How could it be that this prize has been won by the 27 frogs in the wheel-barrow that we lovingly call the European Union?!

Maybe that is exactly the point of the Nobel Peace Prize committee: ‘you have created something beautiful, don’t break it up on some stupid controversies’. You can compare it with parents that say to their quarreling teenage daughter and her boy-friend: ‘you are such a beautiful pair. Please stick together’.

This was for me the reason to be flattered and outright happy about the election anyway. Everybody that looks at the European Union as a bunch of fighting adolescents that don’t want to share their money when drinking in a pub, should look at the historical context of the EU.

The European Union has made an end to centuries of bloody wars in Europe and has brought the archenemies Germany, Great Britain and France under one, sometimes leaking, roof.

It has accomodated the countries of the former Warsaw Pact, it bound East- and West-Germany together again after 40-odd years of deadly hostilities and it brought a kind of peace and quiet in former Yugoslavia.

Summarized, it brought peace and prosperity in the South, the North, the East and the West of Europe. This is a massive achievement and therefore the EU deserves the prize enormously.

However, there is still a lot of work to be done. Maybe this amount of work triggered EU-president Herman van Rompuy in his speech this afternoon, when he stated that the EU should be a symbol of hope again:

EU will emerge stronger, bring hope, Nobel winners say

(OSLO) - Europe will emerge strengthened from its current crisis to again symbolise hope, European Union president Herman Van Rompuy said Sunday in Oslo where the bloc's leaders will collect this year's Nobel Peace Prize.

"The EU is going through a difficult period," Van Rompuy said. "I'm sure we will succeed. We will come out of uncertainty and recession stronger than before."

"We want Europe to become again a symbol of hope," he added at a press conference held on the eve of Monday's official Nobel peace awards ceremony.

[…] the award comes on the heels of yet another tough year for the 27-nation bloc, fighting to save the single currency after three years of a crisis that has also sapped political morale.

The chairman of the Nobel Committee, ardently pro-European Thorbjoern Jagland, stressed however that the EU had played a vital role over six decades in turning a continent at war to a continent at peace.

There were "a lot of disputes and even dramas" in those years, said Jagland. But "the disputes and dramas have never led to war. In the contrary they led to compromises."

Half a dozen EU leaders, including Britain's premier David Cameron, will snub Monday's event, held even as the union prepares to enlarge by embracing Croatia as its 28th member next year.

On hand in Oslo will be the leaders of the "big two" powers France and Germany, Francois Hollande and Angela Merkel.

As they pick up the Nobel medal, diploma, and near one-million-euro prize, there is increasing weariness with the EU which has led to a rise of eurosceptic and nationalist parties.

In my opinion, Herman van Rompuy is not the strong, colourful leader that an institute like the European Union seems to deserve, when you look at it superficially. He has – to state it more precisely – the charisma of a mannequin in a men’s fashion store, never distracting from the fashion it carries.

However, this lack of charisma is perhaps Van Rompuy’s strenght. He can state things that would be considered offensive from stronger leaders. He can make proposals that other people in Europe can’t without making enemies. And even if one of his proposals is taunted away towards the garbage can by a majority, he is not the person to lay down his portfolio. Instead, he works twice as hard on the next proposal… and the next… and the next….

People that doubt the success factor of this strategy, must remember that even the hardest diamond is worn out by the soft vinyl records it plays on a turntable. This soft approach by Van Rompuy et al. might be much better for the EU than the tough and decisive approach of the strong leader. Leaders have come and gone, but the EU has always moved forward during its history.

The European Union and its predecessors have rarely made very big steps  in their past: the biggest steps that the EU ever made have arguably been the Euro and the Schengen Agreement. The Euro has also been one of the most controversial steps it ever made.

Small steps are the name of the game in the EU: two steps forward, one step back. The countries of the EU have disagreements on almost every subject and have often totally opposite interests.

The countries of the EU have 27 different agenda’s, coming from 27 totally different populations that hated eachother’s guts in the not too distant past. On top of that these countries are eachother’s worst competitors on the areas of agriculture, industry, services and transport & distribution.

Still, the union moved on and achieved unbelievable results:

• One currency almost everywhere in the EU;
• No more borders and no more hassling by customs' officers of people, trucks and companies coming from another country;
• Enormous achievements in the standardization and improvement of quality and safety for agricultural produce, tools, quantitative units, household appliances, labor regulations and zillions of other important things that most people overlook, but make use of every day.
• A minimized amount of red tape between totally different countries;
• Surprising solidarity between the countries of the EU and a safe and peaceful Europe for everybody.

Now, as a consequence of the credit crisis and the enormous changes that it triggered within the European Union, it is time for a massive maintenance inspection of the EU:

• The EU and the ECB have spent hundreds of billions of Euro’s in keeping illiquid banks afloat without any visible results. The tax-payer might pay for this pleasure.
  
   
• The decision making process within the EU has speeded up so dramatically, pushed by the credit crisis, that the population started to leap behind and wants to keep things the same for a few years. ‘Further integration of the EU: not in my backyard!’
  
• The democratic content of the European Union is still worrisome, the control model with the EC at one side and the government leaders at the other seems disfunctional at best and the European Parliament is too much a king without a crown: it is there and it does a lot of work, but nobody knows what exactly.
  
   
• The EU ‘musqueteers’ want to move forward, while the government leaders hit the brakes continuously.
  
• Great Britain sings: ‘Should I stay or should I go’; France thinks about its subsidized farmers first and foremost; the True Finns are truly against the EU; Belgium seemed on its way to become the only ungoverned country in the world; some of the East-European countries have a hard time abolishing bad habits from their recent past; Germany is afraid that it must foot every bill in the EU; Italy… well, is Italy; Spain might become the first country with 100% unemployment  and Greece is just happy to live another day.
  
  And The Netherlands? It tries to break former Soviet-leader Nikita Gruschev’s world record of saying ‘nyet’ in political hotspots.

• Today the rumour was spread that the EU wants to appoint Mark Rutte as a leader of the Euro-group, successing Luxemburg PM Jean-Claude Juncker: that would shut him up, by making him responsible for the Euro. Rutte, of course, categorically denied!

In other words, the government leaders seemed to mess up all the time during the last five years.

Those are the difficulties that Herman van Rompuy et al. must find an answer to, in order to reinstate the European Union as the symbol of hope that it has always been and should be again.

So Mr. Van Rompuy: please pick up this prize with all the pride that you have stored in you. You have a truly herculean task to do in the coming years. You have my faith and I wish you good luck with it. We need the EU in Europe and we need you to take this honorable institute by the hand!