Dijsselbloem’s role in jeopardy Long wait before next Dutch government is formed Roel Janssen, Advisory Board he leadership of the Eurogroup of finance They felt he had confirmed northern two options for forming a coalition: both Tministers is in doubt following the results prejudice against southern countries, would include Rutte’s People’s Party for of the Dutch election, which are being felt insinuating that the latter were freespending Freedom and Democracy (VVD), the Christian beyond the country’s borders. Mediterraneans. The Portuguese prime Democrats and the Social Liberals. The fourth Jeroen Dijsselbloem, the Dutch finance minister Antonio Costa called Dijsselbloem’s party could either be the progressive Greens minister and Eurogroup chairman, saw remarks ‘racist, xenophobic and sexist’ or the small Christian Union. his Labour party (PvdA) lose 29 of its 38 and demanded his resignation from the Unlike the period after the 2012 Dutch seats in the election on 15 March. Though Eurogroup. elections, when action was needed to tackle Dijsselbloem was re-elected, he will have to As chairman, Dijsselbloem’s defence of the effects of the financial crisis, the economy relinquish his post as finance minister once austerity policies has put him at odds with is booming and the budget is in balance. After a new government is formed because his the Italian and Portuguese governments. four years of austerity, there is fiscal room to weakened party is not expected to be part The Spanish, who have long campaigned for loosen the budgetary reins and this may ease of the ruling coalition. He had hoped to see the baton to pass to a southern European Rutte’s task. out his five-year term as chairman of the country, are thought to be keen to replace The prime minister, having consolidated Eurogroup, which ends in January 2018. him with , the Spanish VVD as the largest party and halted the That ambition was put in doubt when he minister of economy. advance of Wilders, will undoubtedly use faced calls to resign over remarks he made his renewed political clout in Brussels and to the German daily Frankfurter Allgemeine. Loss of momentum for European populism could be inclined to be more strongly pro-EU Dijsselbloem told the paper that countries in The priority for , the Dutch prime than before. The loss of momentum for the the northern euro area had shown ‘solidarity’ minister, is to pull together a coalition, a task populism that had appeared to be sweeping with the south during the crisis, but that that could take months. To achieve a majority Europe may well have implications for this solidarity came with ‘duties’. He went on: ‘I in parliament he needs the support of three year’s elections in France and Germany. cannot spend all my money on liquor and other parties. Although ’ far- ▪ women, and beg for help afterwards.’ right (PVV) holds the Roel Janssen is an author of economic and financial affairs Spanish, Portuguese and Italian politicians second highest number of seats, no other books. He covered economics and finance for Dutch and media were quick to condemn him. party will work with it. This appears to leave newspaper NRC Handelsblad for more than 30 years. Italy must protect minority shareholders Corporate governance is good, but enforcement is poor Lorenzo Codogno, London School of Economics and Political Science he lack of protection for minority the sale of Ansaldo STS, operating in high business school shows that countries with Tshareholders in Italy has become technology for railway and urban transport, effective legal frameworks to protect minority increasingly apparent in recent months, and to Hitachi. The evidence it presented suggests shareholders tend to have more robust not just in the case of the troubled Banca that deliberate actions were taken to the financial markets. This is because investors Monte dei Paschi di Siena (MPS). This issue detriment of minority shareholders, in which are more willing to take risks. It is not enough may become a serious difficulty for the Consob only partly intervened. the law, but what matters is enforcement, country when attracting foreign investment. and for that, the administrative ability to On paper, Italy has some of the most Safeguarding independent directors implement rules. In Italy, the mirror effect of advanced legislation for the protection of At issue is corporate governance and the this phenomenon is the relatively high value of minority shareholders. Even in the Anglo-Saxon safeguarding of independent directors whose the private benefits of control. There are many world, requirements and corporate control to duty it is to protect the interests of minority reasons why the culture of equity investment is protect minorities are not as stringent as in shareholders. Ansaldo STS’s shareholders still underdeveloped in Italy, but this problem is Italy. However, there is a gap between the rules voted at the request of Hitachi, the majority certainly part of the story. and their application. The Italian Securities and shareholder, to remove an independent Given that bank credit channels tend to Exchange Commission (Consob) is attracting director accused of ‘excessive diligence’ improve slowly, and domestic savings are most criticism for this failure. The treatment for challenging some majority shareholder diversifying into other countries’ assets, of small shareholders in relation to MPS, the decisions. This sets a dangerous precedent in it becomes essential for Italy to be able struggling banks in the Veneto region and which the so-called ‘action of responsibility’, to attract foreign investment to support in several other cases goes beyond ordinary meant to serve as an effective means of economic growth. Proper enforcement of mistakes. Most striking is the lack of public protecting all shareholders, was used by the minority shareholders’ protection is central explanation about Consob’s actions, or inaction. majority shareholder to eject a particularly to this. In January international investment fund diligent director appointed by the minority. ▪ Elliott, frustrated by the lack of response Consob remained silent on the matter. Lorenzo Codogno is Visiting Professor at the London School from Consob, published information on its A paper by Mauro Guillén of Wharton of Economics and Political Science, and Chief Economist at website that it had sent to the regulator about University and Laurence Capron of Insead LC Macro Advisors.

12 | EUROPE omfif.org April | ©2017