EUROPE 1992 or THE STROKE OF GENIUS
The examples bellow show what 1992 is all about. A shrewd publicity campaign and a manoeuvre to keep old Europe going. “By any standard, the 1992 publicity blitz has been a stroke of genius. Fronted in the UK by Lord Young, the ‘Europe open for business’ campaign has jolted thousands of businesses that harbored longstanding worries about’ abroad’. Curiously for an European campaign, the appeal has been largely chauvinistic: if we don’t take advantage of Europe the Germans or French will. There have been some missteps: regular stories surfaced about Lord Young evangelizing, an activity which he excels, to experienced Europe-hands.” Management Today, Nov. 1988. “ No one talks about Europe as a broken economy anymore, just that psychological change gives Europe a real chance to go forward.” BUSINESSWEEK INTERNATIONAL, Dec. 12, 1988.
With a lot of double-speak, contrasting views and vague and undefined promises, the Europeans man-aged to attract a lot of investment. In 1987 Americans spent 2.4 billion acquiring European companies and direct investment totalled $122 billion. Idem While the Europeans tantalize foreign investors with the immense possibilities open upon Europe’s integration, they at the same time, insinuate exactly the oppo-site. According to Mr. Leigh Wilson, CEO of Paribas North America “...investors could expect to see what he describes as ‘electronics equivalent of the Burgundian wars” as barriers are lifted in France and other EEC countries.”
In the other hand France new appointed Minister for Post, Telecoms and Space in his first public ad-dress confirmed his opposition to ‘wild cat deregulation of French telecoms. The Guardian of London cited in World Press Review, Jan. 1989, quotes Mr. Willy de Clercq, the European Commissioner for external relations, “...an outbreak of protectionism would hit Europe —the world’s biggest trading block whose fu-ture is umbilicallly linked to growth in world trade— hardest. We are not going to shoot ourselves in the foot” The Age of Melbourne quotes Mr. de Clercq warning foreign companies that they will not have au-tomatic access to Europe after internal barriers are removed after 1992.
In an article about the effects of 1992 in LDCs South (Dec. 1988) quoted Mr.de Clercq saying that “the creation of the single market will boost trade and growth. Europe will not be tempted by protectionism. The Fortress Europe is senseless and groundless.” That is followed in the same article by a statement, “The single market is not going to be our Christmas present to the rest of the world, one (EC) official says. The benefits of liberalization will not be extended to non-EC countries in an unilateral way” South, Dec. 1988.
But the best description of the above was made by The Economist, in its ‘Europe’s Internal Market Survey’, July 8, 1989... “Some people within the commission have to control interventionist instincts, rather as Dr. Strangelove controlled his right arm.” But being a herald of Europe 1992, in the next sen¬tence it recomposed itself: “But a surprisingly open market is being improvised on the run.”
The Europeans are taking the whole world to a ride. The commission estimated that, over five to six years, the community’s GDP could be raised by 4.5%, prices reduced by 6% and employment increased by 2 million. That contrasts with a study made by the Institute for Economy Research of Basel. The insti¬tute forecasted a real growth of 2.6% in the period 1993 to 2.000 and just 2.4% between 1987 to 1993. Süddeutsche Zeitung, Feb. 10, 1989.
The Cecchini and Bradley reports disagree in the rate of growth resulting of Europe after 1992. In an article about VAT in Europe The Economist The Economist, Jan. 13, 1990. for the first time used the word fraud to describe Europe 1992. “Do you imagine that sales of goods and services between EC coun¬tries will be indistinguishable from sales within a country? Wrong again. By such simple yardsticks, Europe’s most vaunted “single market” is set to remain a fraud.”
The Cecchini report estimated that the post-1992 single market could bring the European Community economic gains of 5% of its total GDP through the elimination of unnecessary costs, reduction of artifi-cially high prices and reaping economies of scale. Frenetic corporate activity, which is rapidly restruc¬turing European industry, is well under way. Yet there are serious risks that by far the most important opportunity of the 1992 process may not be taken...The European Commission says its aim is to stimulate competition. Fine. But what is in fact happening? A faulty model of competitive advantage, combined with understandable fears of the disruption that would accompany an unfettered transition, is leading European governments and companies into flawed responses to 1992.
Encouraged by governments, companies are rapidly merging and forming alliances. Such links are leading to highly concentrated national markets: in air transport, for example. Mergers or links between leading European competitors are replacing national champions with politically powerful "European cham-pions" such as Siemens, ABB and CGE, controlling large shares of the European market... Europeans is misunderstanding and misapplying the Japanese model. These practices threaten the very foundation of competitive advantage and the benefits of 1992...It is easy to see why companies pursue strategies of merger, alliance and cooperation: they are trying to limit the risk of going under. Such strategies limit upside potential but hedge against disaster. The Economist, Jun. 9, 1990.
There are too many vested interests in the show Europe 1992 for someone stand up and say the king is naked. Conferences and seminars have been organized to exploit the possibilities of 1992 without the idea being questioned. |
