BackGo short has a new meaning for Sarkozy
Go short has a new meaning for Sarkozy
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The most recent is the Israeli-Hamas conflict in Gaza, where the peripatetic French president, uninvited by the participants, shuttled between Jerusalem; the West Bank town of Ramallah; Beirut, Lebanon; Damascus; and Sharm al-Shaykh, the Egyptian resort on the Red Sea; attempting to negotiate a ceasefire.
It’s hard to fault a man for wanting to end fighting that has cost the lives of more than 900 people and injured more than 3,700. Yet Sarkozy’s insistence on playing the hero sows confusion about who represents the 27-nation European Union. Remember former US secretary of state Henry Kissinger’s comment, Who do I call, if I want to call Europe? With Sarkozy running around holding press conferences while a parallel official EU delegation also tries to negotiate a ceasefire, it really makes one wonder.
If it persists, the resulting muddle over the long run isn’t good news for European financial assets. That’s especially the case when Sarkozy’s go-it-alone antics reach into the realm of finance, as they did last year when the French President set up a multibillion-euro sovereign-wealth fund to protect strategic French companies from foreign predators.
He again ruffled diplomatic feathers when, following a late November meeting of the Group of 20 (G-20) countries on the global financial crisis, Sarkozy said he would hold his own summit in Paris that would compete with a second one scheduled by the G-20. He also angered US officials with claims that they had agreed to negotiate regulatory changes when they hadn’t.
Many investors focus on geopolitical issues only when they are obvious, such as the 11 September terrorist attacks on New York and Washington. Yet politics forms an important backdrop to markets, particularly if policymakers are perceived as being unclear or divided.
Sarkozy’s tendency to freelance and his disregard for protocol raise doubts about the cohesiveness of EU policy. That will diminish the relative appeal of European stocks, bond and currency markets to international investors.
The French President initially began to strut his stuff when France held the rotating six-month presidency of the EU. That offered him a platform from which to broker a ceasefire to the Russian-Georgian war and a partial Russian withdrawal.
France ceased to hold the EU presidency on 31 December. The country is too small to challenge the US’ traditional role in West Asia. While France was the colonial power in Lebanon, it wasn’t in Palestine, where the UK was the imperial ruler.
What’s more, Sarkozy’s West Asia tour overlaps with an EU mission led by Czech foreign minister Karel Schwarzenberg and includes EU foreign policy chief Javier Solana. The Czech Republic took over the EU presidency from France on 1 January.
The French initiative raises the question of who represents Europe and is a signal to the rest of the world not to regard the Czech effort as serious. Taking the high road, Czech Prime Minister Mirek Topolanek said he welcomed Sarkozy’s participation.
Not the Italians. Franco Frattini, Italy’s foreign minister essentially told the Frenchman to bug out.
“When everyone conducts his own mission, it weakens the strategic position," he said. “Now there’s a new president of the EU," Frattini said, adding: “We must coordinate our action." Along with being criticized by Italy, Sarkozy’s calls for a ceasefire have been rebuffed by Israel, ignored by the US, snubbed by Hamas and dismissed by Syria.
He apparently had so much fun holding the EU presidency that he’s having a hard time letting go. In October, Sarkozy said he would like to extend France’s influence in the EU past 31 December, figuring he can be the economic head of an inner council of leaders from the 16 nations that use the euro—at least until 2010, when Spain, a euro-area country, assumes the EU presidency. Neither the Czech Republic nor Sweden, which will succeed the Czechs as EU president, is in the euro bloc.
The proposal is a non-starter. It’s an insult to the Czechs and Swedes. Germany objects to the idea of an economic government for Europe and to Sarkozy’s attempts to harness the independence of the European Central Bank. The UK is naturally suspicious of anything French. And Luxembourg Prime Minister Jean-Claude Juncker is already the current chairman of the Eurogroup of euro-area finance ministers.
To be sure, Europe should be represented by a strong leader. But that will have to wait for another day. Meanwhile, France’s president has pulled the rug out from under the Czech mission, debased the EU’s influence and left the world puzzled as to who speaks for the EU.
If he wants to do something useful, Sarkozy should offer the 7,700-man foreign legion as peacekeepers in Gaza. Until he does, it’s wise to be wary about owning European assets.
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