November 20, 2018
The car industry faces yet another scandal with the arrest of Carlos Ghosn, the larger-than-life head of the Nissan-Renault alliance. He faces various allegations of improper behaviour, including under-reporting of his income to the Japanese financial authority. This came as a total surprise to the industry and to observers. The now-likely removal from his leadership positions also puts into question the Nissan-Renault alliance itself. The arrest will not only shake the industry but also ripple through the French political debate. The French state is a major stakeholder in Renault, and Emmanuel Macron was quick to point out that they will watch the situation closely. But there is also a more indirect political effect: Macron is currently faced with a grassroots movement that is ready to bring its frustrations out onto the streets in their yellow traffic vests, and this affair might further strengthen their outrage.
The BBC reported last night that Ghosn’s income under-reporting is not a matter of tax evasion. But the media coverage of the case in France is showing a detailed interest in the salary and conduct of Ghosn, and in his closeness to Macron. Even if the allegations eventually lead to nothing, Ghosn's fall from grace risks antagonising the less well-off against the elites, as well as the French regions against the globalised world. Many tweets noted that Macron had no words for the fuel tax protesters but immediately reacted to the Ghosn arrest. It provides new munition for the protesters, some of whom already vowed to continue their road-block demonstrations. About 27,000 went to the streets on Monday, and there is already an online count of about 20,000 for this coming Saturday. Businesses are starting to raise concerns that, if the protests continues, the the economy will be affected.
Politically this is a tricky territory for Macron to navigate through safely. He has no clear partner to get out of this stand-off with the protesters, as neither the trade unions nor the mayors will come to his rescue. This risks isolating the president even more, notes Cécile Cornudet. How can he respond to a movement without an identified interlocutor, organisational structure or order? Macron's strength was once that he crushed the intermediary institutions to get his reforms through and to stay clear of conformism. Now it seems to become his weakness.
We also have stories on how the Diesel scandal is driving voters away from the German grand coalition; on Deutsche Bank's role in Danske Bank's Estonian money laundering scandal; on the Eurogroup's reaction to the Franco-German eurozone budget proposal; on Andrea Enria's ideas on bank supervisory transparency; and on Theresa May's domestic victories and setbacks.