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2017/Q2 Ukraine Newsletter

Jun
06

Amid the prolonged political instability and financial difficulties, Ukraine’s economy is demonstrating the hidden potential and distinct signs of recovery.

This gives us the reasons to assume, that the country is slowly coming back onto the radars of foreign investors, with upcoming deregulation and institutional reforms contributing to the overall economic upturn.

Read more in our latest Newsletter

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DUMP DUMB TRUMP – Admittedly A European View

Jun
01
The reality show in the White House continues. Between family members selling US visas to China, Ivanka cashing in 100 Million USD for a so far unknown foundation while her husband is closing a huge arms deals with the same clients, and the President practicing sword dance, the post WW II order is eroding faster than the Larsen C Shelf in the Antarctic. In between we learn, that the Real Donald is giving away his Real Phone Number to other heads of states, talking openly about the locations of nuclear subs, handing out Israeli intelligence to the Russians (while keeping European allies in the dark) and looking for communication back channels with nations suspected of hacking and influencing US elections.
Washington rumors are spreading, that the producers of House of Cards are increasingly annoyed, as viewers get bored with second class intrigues and plays of Frank and Claire Underwood, and are demanding instead bodycams and live streams from the West Wing of the White House. Netflix would love to negotiate with the Trump family on the licensing rights, and the “Trump First – All Others are Fake” movement could make another great, fantastic deal, creating millions and millions for the family, doing such a tremendous job for the country. Future tax benefits for the ultra rich need to be good for something.
But, serious. This US presidency, which could have been indeed a great opportunity for the US, is turning into an absurd theater with collateral damage beyond any imagination. Other Western leaders are starting to move from utter disbelief into open opposition and strategic re-orientation of their countries, not willing to embark on the twitter based America Only adventure at the cost of their countries and taxpayers.

7 days in office – who will call the bluff? | alt-think.com

The RealDonald proves to be very real. 7 days in office, and the world order is already shaking. The world is paralyzed, and in utter disbelief what is happening and how fast and how un-contested. Whoever had hoped or feared that the behavior of the President is different to the behavior of the President-Elect and…

Since our last contribution on US developments „7 days in office- who will call the bluff“ the White House Adhocracy has trumped all expectations:
  • Nato has been severely weakened. Article 5 no more unanimously supported. Individual states and EU to develop parallel defense structures to NATO
  • Russia and China have gained global recognition and increased their significance as a global partner
  • The armament race in the Middle East and around the globe has gained pace
  • Already sensitive intelligence services are on alert and less inclined to share
  • Global fight against climate change is substantially weakened
  • The „Donald-gut-feeling against substance and logic” has led to firing and deliberate brain drain from the White House
  • The American torch of freedom, human rights and democratic values is fading
Well the good news is, that populist movements in Europe are losing ground fast with every statement and action of Trump. He is also the single most important factor for faster European integration. The bad news is, that we can expect more and worse statements and actions, before this chapter of American history will be closed (and do not expect it to happen fast). By scrapping international agreements and contracts and focusing on a purely competitive win-lose approach in international politics, the US will lose its credibility as a reliable partner and as a global leader, opening the field for other players to fill this void. Nobody can tell today, to what this will lead.
The probability for a (successful) impeachment is very low, given the rightful constitutional hurdles for this process in the absence of a smoking gun fired by Trump. But, the bluff will be called more and more by the press, the FBI and the intelligence services; and of course Little Marco and Johnny Walker Mc Cain are always in to start a DUMP DUMB TRUMP campaign. As this will start nagging and hurting more and more, with a tsunami of news from special investigators, senate committees and administration insiders, there might be a case for a face-saving (reason to be found) resignation of the President. Or, we might experience the Real Donald starting a Real war on the Korean peninsula. He would not be the first to cover problems at home with escalation abroad. The probability of this scenario, unfortunately, is going up. Watch out, we are moving rapidly into unknown and turbulent waters.
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Vive la France – or not?

Apr
24
The first round of the French Presidential election is finally over. International press and investors are relieved and cheering, basing their enthusiasm on the following points:
  • The worst case, a run-off between the extreme right (Le Pen) and the extreme left (Melenchon) has not materialized
  • Everybody is counting on a home-run for Macron to beat Le Pen in the run-off in two weeks
  • And, omg, the researchers have been right in their forecasts this time (btw the first time in a major election since 2015)
In reality, the situation is far worse, than it looks at first glance. This election will be a further burden on France, which has already been punished by Hollande’s Presidency for the last five years, and it is doubtful whether the French population is yet ready for any serious improvement. Here is why:
  • France for the first time since WWII has nearly half of their voters who are blinded by either nationalist or communist ideas, and are openly against membership in the European Union. They are against all long needed reforms of the French economic system, in which today the bloated civil service is acting as an iron wall against any performance oriented reforms, in which the focus would have to be more on give and do than on take. This is a bad foreboding both for up-coming parliamentary elections and any reforms that would have to be explained to the population.
  • Macron, in case that he will win the run-off, will be a President without the Parliament’s backing, and it would be a miracle if he could engineer with his new movement a solid majority in the upcoming Parliamentary elections. The Co-habitation between President and Parliament from different parties had already proven very bad for political progress in France in the past, and is very hard to imagine how major reforms in France (which always co-incide with the „Misérables“ inspired burning of tires and blocking of roads, that is unfortunately enshrined in the French genetic code) could be executed in this setting. He will be a President who can only rely on the public vote, but if nearly half of the population will be on the barricades ..?
  • It is not yet clear, whether Macron will really win so clearly in the end. The voters from the extreme left might be tempted to vote for Le Pen and also some voters from the conservative party might not be amused to vote for a Mini-Hollande. And then …, there is still the chance of foreign meddling in the election, and the uncovering of a media hyped scandal. Francois Fillon has shown how fast a leading contender can burn to ashes.
France is in urgent need of a strong President, seconded by a strong Parliamentary majority, who can re-design the French societal contract to be able to cope with the challenges of the next decades. Illusions of an endless growth of the state have to be burned, and it will hurt. It will hurt the many people who believe that it is normal to start a pension at the age of 55, after having been exploited for decades by working 35 hours per week. The longer this illusion is kept, the more radical and revolutionary the answer will be one day in the not so far future.
The election result is a drastic outcry of the population, strengthening the extreme parties and weakening the established left and right, who have led France into the current disaster. As in other countries the middle class and the working people in the private sector have been sucked out by a bloated public sector and over-spending, state regulation, over-administered social systems which are in addition strained by too high un-employment, and a growing feeling that French politicians lack the courage for real reforms. The global role and importance of „la Grande Nation“ is diminishing fast and this is hurting the French ego. Someone has to tell the French, that greater wealth, higher employment and sound state finances, will only result from hard work, more flexibility, greater innovation, attraction of the best minds and entrepreneurs, rewarding and not punishing performance; and that it will not result from ever more taxes, more state employees, higher welfare benefits, more tricolore flags, less globalization, more deficits and state spending. Imitating Trump in a „France First“ movement will work even less with a home market the size of France and the top-down, Paris-centric corporate and industrial French culture.
We will see whether Mr. Macron is up to this task. It is definitely too early to cheer.
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The Divorce Battle has Finally Started

Mar
29
What a pity that Donald Trump is not residing in Downing Street No 10 but in the White House.
Otherwise there could be hope, that the execution of the mother of all divorces between the UK and the EU could still fail due to hasty, lousy or legally weak administrative action. But with the daughter of an Anglican priest at the helm of Britannia, there should be no doubt, that a clear and clean separation will be delivered at all cost for the family, or as she puts it: Brexit means Brexit!
For now, bullish stock markets and collective self-delusion, the illusion of regained independence and identity are keeping the spirits up. This will change rapidly.
Soon the public mudslinging will start and the hard numbers bite. Have a look at some very interesting numbers:
Time to hand over divorce papers 29/3: 1 Minute
Divorce Payment asked by EU: > 60.000.000.000 EUR
Annual Net UK Payment into EU so far: 11.000.000.000 EUR
Food Price Increase due to border controls: 8%
Number of Scots Against Brexit: 62%
UK Exports into EU of all Exports: 45%
Number of Trade Negotiators (pre Brexit) UK: 20
Hiring Gap New UK Trade Negotiators: 300
Number of Trade Negotiators (pre Brexit) EU: > 600
Number of EU Members in Top 10 UK Trading Partners: 8
For the rationale spectator, it is very hard to understand how the UK will be able to achieve in 18 months successful negotiations with the EU on terminating its membership and starting a new trade deal, with only a handful of experienced trade negotiators. And to make this job more difficult, Theresa May has raised high expectation for new trade deals with the US, China, India, Australia and many more. Btw. the EU is leading trade deal discussions with India for more than 10 years now, stalemating among others due to UK concerns on immigration.
Many fear the hard Brexit will end in a hard landing into reality. The financial services sector is already relocating, prices are increasing and will further do so, investment from EU countries into the UK has come to a standstill, political cohesion of the UK is rapidly eroding, the London real estate market is dead. Theresa May is well advised to call a general election and secure a comfortable majority before these effects will become visible.
In case that negotiations will turn sour, and if you look at the sheer numbers and the political significance for the UK and the EU, there will be a 80 % chance of just this happening, the relation between the EU and Great Britain will be seriously damaged, probably for a whole generation. This is the real danger for Europe and for each European, far worse than any economic downturn. Rapid lecture of Jane Austen’s „Pride and Prejudice“ should be mandatory for Liam Fox and the UK Trade Negotiators as „The Parable of the Lost Son“ for Michel Barnier and the EU Trade Team. Only a combination of less UK hybris and more EU generosity and tolerance, and a grand political gesture of good-will for the sake of the greater good can save us now from a centennial hangover. Probably we will first see a dramatic escalation and darkening of the negotiation process and results before any significant and productive process will gain ground.
The divorce battle has finally started. Let the mudslinging begin!

 

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2017/Q1 Ukraine Newsletter

Mar
07

The Lower House of the Parliament of Canada has ratified the free trade agreement with Ukraine. After completion of all the ratification procedures, Canada will abolish duties on 99.9% of Ukrainian imports. In turn, Ukraine will cancel 86% of duties on imports from Canada.

Read more in our latest newsletter.

UA NewsL 17

VI2Partners Ukraine Newsletter Q12017

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7 days in office – who will call the bluff?

Jan
27
The RealDonald proves to be very real. 7 days in office, and the world order is already shaking. The world is paralyzed, and in utter disbelief what is happening and how fast and how un-contested. Whoever had hoped or feared that the behavior of the President is different to the behavior of the President-Elect and to the the behavior of the Candidate has been proven tremendously wrong. What do we learn from the first days of the new President:
  • Election promises will be executed, fast and without compromise
  • The media will be bashed and intimidated
  • Twitter will remain the most important tool for policy announcement
  • White House and President will be ruthless providers of alternative facts
  • Policies are based on Presidential gut-feelings (the master dealer)
  • Whoever dares to criticize will immediately be publicly punished
  • The White House is dominating if not enslaving the GOP, the House and the Senate.
  • A desperate Theresa May is ready to prostitute the UK and its beliefs and values for the sake of a free-trade deal with the US
The humiliating treatment of the Mexican State and the Mexican President is un-precedented, and it sends a clear warning to other leaders and countries, who will be next in the line of fire: China, Japan, Germany, Iran and many more. The frightening thing about Donald Trump is that he has behavioral patterns of a narcissist gambler. He will march on without pity and fear, and will raise the stakes, until someone has the courage and power to call the bluff. The longer he can go on without resistance, the more dangerous the game will be for the US and for the World. The faster he will be forced into compromise and truth by US or international players, the better the outcome will be.

 

As Donald Trump is an enormously energetic change agent, he has a great potential to change the US, the economy, even the World for the better. But only if he will be contained, channeled, managed. This is unfortunately where the doubt comes into the play, as we have seen some patterns evolve over the past days that should be reason for concern. So who can call the bluff?
  • The GOPunlikely, they are recovering from the ashes of a divisive campaign and sun bathing in the glory of dominating house and senate, Paul Ryan has become a puppet.
  • The Democratsunlikely, the party is completely in shatters and powerless, and the message of taking care for the forgotten man and woman goes down well with many Dems
  • The Senatemore likely, Marco Rubio and Ted Cruz are waiting for their revenge and to position themselves as potential successors
  • The Pressvery likely, investigative journalists from the US will put a lot of energy into shedding light on Trump’s taxes, scandals, un-proper deals, lies. Every bashing will make them more hungry for the story
  • Russiaunlikely, they will ride this wave as long as possible and exploit the situation, that Trump has promised to improve the relationship
  • Europeunlikely, completely divided, in the middle of election campaigns, on the brink of EU collapse
  • Chinamore likely, after ending TPP, China is the partner of choice, and the economic power enormous, they will not be intimidated by Trump
  • CIAmore likely, huge mistake of Trump to alienate publicly the services, they have a life of their own and they can be dangerous
  • The Economyvery likely, It’s the economy, stupid! Impulsive actions and un-necessary trade wars might lead to more debt, weaker dollar and recession. The bluff would then be called by reality!
Donald Trump is one of the greatest marketing geniuses in the World. From the organization of his campaign, the public crushing and humiliation of his opponents, the brutal crippling of the truth and the admirable mastering of direct communication with his fans and the general public via Twitter, it is clear that he is a brilliant sales man and marketeer. We have bought him and his ideas, and we will continue to cheer, as everyone is hungry for simple answers, fast solutions, pride and love for the nation, strength of the military and rising wages for the forgotten people, and let us not forget: we love to be entertained.

 

The problem is, there are no simple answers and solutions in our complex world of today. And the big danger is, that we are buying into simple, often unreflected answers and concepts, that will prove very costly and damaging in the end. The US and the World will pay dearly: in case we will get into a trade war with Mexico and China, in case the US will further destabilize the European Union or in case the US is ceasing to be the leading torch of the free world. Fake concepts, fake news, alternative facts and outright denials, when proven wrong, will lead at a certain point to an enormous crash – like building a great casino with a grand opening, and ending in bankruptcy. It is time that someone calls the bluff. The stakes keep raising.
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Major changes mean major opportunities in 2017

Jan
12
As the White House turns into a reality show inspired boardroom, and major global policy changes are announced and we should better believe they will happen, many CEOs and leaders are still standing on the sidelines!

 

Wrong! Get prepared, lead and innovate, major changes mean major opportunities. When the rules of the game change, new winners appear and unexpected losers are washed ashore!

 

When you are still doubtful whether all of what we are experiencing is true or not, read this presentation from Mehlman Castagnetti. Some interesting insights guaranteed.

back briefing

 

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Kompromat – the new IT world order

Jan
11

Kompromat – Wikipedia

Kompromat ( Russian: компромат, short for компрометирующий материал) is the Russian term for compromising materials about a politician or other public figure. Such materials can be used to create negative publicity, for blackmail, or for ensuring loyalty. Kompromat can be acquired from various security services, or outright forged, and then publicized by paying off a journalist.

Yesterday, news outlets around the World were eager to spread the news about compromising facts (in Russian called Kompromat) that had been collected by the Russian secret service (and without doubt also by other services) on Donald Trump. Immediately speculations were brought up, fed by opponents and hungered for by sensation and scandal paparazzi, that the future most powerful person in the World could be potentially blackmailed, and immediately confidential parts of intelligence reports are publicly available on the internet and could be the storyline for a new James Bond movie (see below). Whether these reports are real Kompromat or fake news, we will never know.
trump-intelligence-allegations
The good news first: it can be seriously doubted that Donald Trump can be blackmailed. In German there is  the famous saying, that once you have been publicly embarrassed, you can behave as you wish, there is no danger of further embarrassment, in other words you have received a kind of carte blanche on public shame. We can agree, that as Donald Trump is the incarnation of political incorrectness, he has long time ago earned this carte blanche, and his followers will further cheer revelations on Russian honey traps and deal sweeteners. In reality this will kill any potential for blackmail. Even the toughest kompromat will not compromise the new President. For sure, this situation would have been much more serious given a party animal, political correct or even Mormon President would be in office.
Now to the more serious part of the story. We are seeing the tipping point, where our dependence on IT in every sector of our life is rapidly becoming our biggest threat, the Achilles heel of both the safety of the general public, but also of every individual. Influence Meddling with US elections, hacking of DNC and the kompromat on Donald Trump are just the tip of the iceberg, In reality, there is no protection of the state and by the state, there is barely any meaningful regulation and inter-country co-operation to increase the IT safety levels of our countries and us as citizens. I am convinced that this will be seen in very short time as one of the biggest scandals and acts of naivety of global politics and as a great failure of political as well as corporate leaders.
We invite you to reflect on the following topics:
  • Global criminal groups and terrorists will hit: the next big terror attack will be a cyber attack. Last year we have seen many tests for attacks – on telecom infrastructure, energy grids, banking systems and hijacking of devices. Although these were already impressive attacks, many experts believe that they were only test balloons for future, much more massive attacks.
  • Increased influence meddling in international political and corporate affairs: Do not believe it is only Russia. All(!) Governments who have the technological capabilities, use cyber activities to support their international policy agenda. This will increase dramatically, as the barriers for meddling go down and the tools and techniques get more refined. Whatever you see on the Government level, you will also see with a certain delay in the corporate sector.
  • Loss of authenticity of information: Nobody can say or verify, whether any piece of information, news or report is authentic or not. The proliferation of so-called fake news and the labelling of true news as fake news is on the extreme rise and the individual has practically no possibility to verify any received information.
  • Hostile activities against individuals and corporations: stealing of information and knowledge, break-ins into bank accounts and all other private data areas, diffamation with fake news or illegally placed documents and traces into your private areas, will be a serious threat to all individuals and corporates who are not extremely careful and/or protected.
  • Dark web transactions: We are aware and we allow parts of the internet to act openly and completely outside of any legislation, and to be used for national and international drugs, narcotics and arms proliferation as well as all other kinds of illegal activities. This is a time bomb for the future.
How can one react and prepare against these threats? Practically not much. A lot of time has been lost, and the global IT/Web architecture is open and fragile. So for now, protection seems to be the best available option. On the macro level this means:
  • Expect a massive international arms race in cyber war and IT defense measures
  • Expect the IT security industry will finally get the real big boost
  • Hopefully, the UN will start  to engage and found UNITA or similar, as a special UN agency for IT regulation and protection against abuse of the global web.
And on the micro-level?  As even Angela Merkels phone can be listened, consider that all phone calls, all emails, all SMS and even your Vibers and Whatsapps are hacked, listened to and surveilled and might be used against you by your own or foreign Governments, by criminals and by political or business opponents. In this case hold it with Donald Trump: write and talk less sensitive information on phone/internet. Get invested commercially into IT security and apply it for yourself, and do not put too much trust in any news, in the political or economic arena, it could be fake, or fake fake, or verified fake, or falsified truth, or simply a kompromat. You name it.
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The civilized world must change thinking!

Dec
20
Not all President-elect Tweets in the past have proven so spot-on as the one, Donald Trump tweeted yesterday following the presumably islamistic terror attack on a German christmas market in Berlin, and further terror attacks in Istanbul and Zurich the very same day.
The civilized world must change thinking!
He could be right. By now, we know the symbolic public and state procedures that have followed similar attacks in Paris, Nice, Brussels, Istanbul and elsewhere: We condemn the attacks, we stand in solidarity with the families of the victims and the traumatized cities, we vow to protect our open societies and democratic values, we will not allow terrorism to influence our daily behavior and we will make intelligence and security services around the globe co-operate more closely.
But is this really enough? Debatable.
The real danger that we face today is, that by applying a too soft and open view on the terrorist threat, we will undermine the very basis of our democratic systems: the monopoly of power of the state in combination with the state responsibility to protect our safety. In case that a democratic Government cannot render this guarantee, people will start to go for the extreme. And select a leader who can deliver on the process without any compromise or as a Philippine citizen had put it yesterday: Duterte (President of the Philippines) is bad for human rights, but the people can walk safely in the streets again. The problem with these leaders is that once they are unleashed, it is very difficult to tame them back.
In order to find a cure for the current threats, we have to first face the ugly face of reality, throwing all political correctness overboard. Do not start the blame game of past events, actions or political decisions, but simply take a clear view of the current situation:
  1. By allowing millions of islamic refugees and former islamist fighters uncontrolled from crisis regions into our countries, we have imported a real security threat
  2. Terrorists can freely move within Europe and supply themselves with weapons. They hate us and want to harm and kill us
  3. Islam has a serious problem if it cannot control extremist movements and terror. Terror today is not buddhist, hindu, jewish or christian; we have seen 100% islam background
  4. There is a series of Governments, who openly or covertly (but known to our Governments) support islamist and terror organizations around the World
  5. Some countries are better than others in protecting their citizens
Accepting these truths, one can work to find and execute a cure, for which logically there have to be the following cornerstones:
[Preamble]
The objective must be total eradication and fight on all fronts. Half-hearted responses will not work.
  1. 100% registration of all refugees and returnees from war zones. Regular security checks. Maximum surveillance. Check of identities with home countries. Lots of surprise checks and controls. 100 % surveillance of any islamist movement. Zero tolerance for islamist ghettos or no-go zones for police and security forces.
  2. Immediate two year suspension of Schengen agreement for all countries. Military grade fight agains trafficking groups in EU and abroad. Immediate repression against all open and covert market places for weapons within Europe. Create European centers of excellence to strongly oppose terrorism: finance, cyber, trafficking, identities. This could be a great European project, better than building new armies.
  3. Serious discussion with islamist leaders around the world to make them understand their responsibility for peace and to motivate them for strong and sustained messages against war, terrorism, hate. If they do not comply,  immediately blacklist them and their followers, and fight them financially and electronically.
  4. Out and highlight Governments and leaders loud and clearly who support, finance or tolerate terrorism or provide hiding space for terrorists. Stop immediate co-operation with countries who are not complying, even if this comes with an economic impact for us. Start UN Security council initiative to fight terrorism jointly with all veto powers in the UN: US, Russia, UK, France and China all have a shared interest in stopping this danger for humanity.
  5. Learn from countries like Israel, who live for decades with enormous terrorist threats how to protect, prevent and enjoy life at the same time. It is possible. But surveillance and protection have to start much earlier and at different inflection points, and the European countries have to learn a lot.
Although helpful in the long-term it does not help now to talk about development aid or peace initiatives for crisis regions. The enemy has already arrived and moves within our societies, as all terror attacks in the past have painfully proven. We need to act in our countries.
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2016/Q4 Ukraine Newsletter

Dec
12

2016 could be regarded as a year of political and economic consolidation for Ukraine. With the ongoing Ukraine/Russia conflict posing a threat to the future development as well as the new US policy towards the given conflict being yet to forecast, there are definitely plenty of positive signs on Ukraine’s political horizon. We will share quarterly information on the developments in Ukraine in our new UKRAINE NEWSLETTER section.

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vi2partners-ukraine-newsletter_q4-2016

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