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Europe's Annus Not-So-Horribilis: Why 2018 Wasn't All Bad

Even as it contends still with Brexit and the rise of right-wing populists, the European Union did enjoy some 'almost good news' this year.

The battle over Brexit continues
The battle over Brexit continues
Dominique Moisi

-Analysis-

PARIS — It's fair to say that 2018 was a difficult year for the cause of democracy in the world. And yet, as the old saying goes, "While there's life, there's hope." The words are particularly appropriate for the European Union, where despite some obvious setbacks, there are still reasons — however dim they may seem to be — for optimism.

We can draw an inventory of them, with no particular order or hierarchy, and note, for example, that in its Brexit negotiations with Theresa May, the EU maintained its unity, despite attempts at division and successive renegotiations in London. It's also worth pointing out that the populists in power — from Hungary to Italy by way of Poland — no longer wish to leave Europe. They hope, rather, to steer the European project in a new direction, or at least to give it a new meaning.

In this quick catalogue of "almost good news," there are some specifically national developments as well. In Poland, for example, resistance to the ruling government is growing and organizing itself, even if the youth are now much more conservative and nationalist than they've been at any point since the fall of Communism. Still, Polish society remains deeply divided. Unlike in Hungary with Viktor Orbán, Polish society hasn't blindly followed the line of populist party leader Jaroslaw Kaczynski.

The return to power of the followers of classical liberal democracy, committed to Europe's traditional values, is no longer a distant ideal, but a scenario that may be close and could come true as early as the next elections, in the spring. After all, Poland's current prime minister, Mateusz Morawiecki, is himself the moderate face of the country's ultra-conservative regime and, as such, a possible transitional figure.

In Germany, the Green Party's strong showing in the last regional elections is another source of hope, and not just for Germany. In some states, the Greens fared much better, than the far-right party AfD. They are united, responsible, "centrist" and deeply pro-European. In short, they're a model that environmentalist parties in other EU countries would do well to follow.

Also in Germany, Angela Merkel, although weakened and on the way out, has managed to make "her" candidate, Annegret Kramp-Karrenbauer, her successor as head of her party, the CDU. Her end of reign is less humiliating than one could have feared.

This is a lose-lose game.

In Britain, the British vote for Brexit was even more nightmarish in its political and economic consequences than its worst opponents had assumed. To avoid a vote that would have been disastrous for her, Theresa May was forced to stall and ask for a new deadline without any guarantee that time is on her side. This is, of course, a lose-lose game between Britain and the EU, but the probability of a second referendum, although still low, is increasing significantly. A few days ago, I heard a fine connoisseur of British political life estimate the probability to be more than 25%.


Even in France, though nothing is yet resolved, the intervention of President Emmanuel Macron has helped to calm at least some of the protesters who were eager, in the aftermath of a terrorist attack in Strasbourg, not to add more unrest. How can you make a revolution without revolutionaries? The "yellow vests" are neither a repeat of 1789 nor the equivalent of the 1917 Russian Bolshevik party. My apologies to the few far-left supporters who believe this.


The United States, meanwhile, has been moving further and further away from Europe in recent years. Still, there's a very strong psychological interdependence between the two continents. The victory of Brexit in the British referendum paved the way for Donald Trump's victory, and the latter strengthened the populist side in Europe, if not in the world, as evidenced most recently in Brazil.

Now that some time has passed and all results have been properly counted, the mid-term elections of this past November appear to be an encouragement for the Democrats and a warning for the Republicans. A defeat for Donald Trump in the 2020 presidential election is far from guaranteed, but is certainly possible and could open a new cycle and provide a source of hope and encouragement for supporters of classical liberal democracy on both sides of the Atlantic.


On a more global level, the evolution of global geopolitics is at the heart, if not the primary raison d"être, of the European project. It's no longer a matter of ensuring "never again" through reconciliation and gradual integration, as was the case in the aftermath of World War II. Nor is it a matter of giving the world the image and reality of a more humane and effective governance model, even if this objective remains. It's quite simply a matter of guaranteeing the security of the European Union and of its member states. A security that is less self-evident than ever, since America is moving away, Russia is moving closer, China is expanding its ambitions and Britain is scuppering itself.


But neither can the European Union be content with an exclusively security-oriented purpose. Today, the French are expressing the impossible double wish of having more protection from their government and paying less in taxes. In their relations with the EU, Europeans too are perfectly contradictory. They want to free themselves from its shackles, and yet expect it to protect them more than ever.

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Economy

Air Next: How A Crypto Scam Collapsed On A Single Spelling Mistake

It is today a proven fraud, nailed by the French stock market watchdog: Air Next resorted to a full range of dubious practices to raise money for a blockchain-powered e-commerce app. But the simplest of errors exposed the scam and limited the damage to investors. A cautionary tale for the crypto economy.

Sky is the crypto limit

Laurence Boisseau

PARIS — Air Next promised to use blockchain technology to revolutionize passenger transport. Should we have read something into its name? In fact, the company was talking a lot of hot air from the start. Air Next turned out to be a scam, with a fake website, false identities, fake criminal records, counterfeited bank certificates, aggressive marketing … real crooks. Thirty-five employees recruited over the summer ranked among its victims, not to mention the few investors who put money in the business.

Maud (not her real name) had always dreamed of working in a start-up. In July, she spotted an ad on Linkedin and was interviewed by videoconference — hardly unusual in the era of COVID and teleworking. She was hired very quickly and signed a permanent work contract. She resigned from her old job, happy to get started on a new adventure.


Others like Maud fell for the bait. At least ten senior managers, coming from major airlines, airports, large French and American corporations, a former police officer … all firmly believed in this project. Some quit their jobs to join; some French expats even made their way back to France.

Share capital of one billion 

The story began last February, when Air Next registered with the Paris Commercial Court. The new company stated it was developing an application that would allow the purchase of airline tickets by using cryptocurrency, at unbeatable prices and with an automatic guarantee in case of cancellation or delay, via a "smart contract" system (a computer protocol that facilitates, verifies and oversees the handling of a contract).

The firm declared a share capital of one billion euros, with offices under construction at 50, Avenue des Champs Elysées, and a president, Philippe Vincent ... which was probably a usurped identity.

Last summer, Air Next started recruiting. The company also wanted to raise money to have the assets on hand to allow passenger compensation. It organized a fundraiser using an ICO, or "Initial Coin Offering", via the issuance of digital tokens, transacted in cryptocurrencies through the blockchain.

While nothing obliged him to do so, the company owner went as far as setting up a file with the AMF, France's stock market regulator which oversees this type of transaction. Seeking the market regulator stamp is optional, but when issued, it gives guarantees to those buying tokens.

screenshot of the typo that revealed the Air Next scam

The infamous typo that brought the Air Next scam down

compta online

Raising Initial Coin Offering 

Then, on Sept. 30, the AMF issued an alert, by way of a press release, on the risks of fraud associated with the ICO, as it suspected some documents to be forgeries. A few hours before that, Air Next had just brought forward by several days the date of its tokens pre-sale.

For employees of the new company, it was a brutal wake-up call. They quickly understood that they had been duped, that they'd bet on the proverbial house of cards. On the investor side, the CEO didn't get beyond an initial fundraising of 150,000 euros. He was hoping to raise millions, but despite his failure, he didn't lose confidence. Challenged by one of his employees on Telegram, he admitted that "many documents provided were false", that "an error cost the life of this project."

What was the "error" he was referring to? A typo in the name of the would-be bank backing the startup. A very small one, at the bottom of the page of the false bank certificate, where the name "Edmond de Rothschild" is misspelled "Edemond".

Finding culprits 

Before the AMF's public alert, websites specializing in crypto-assets had already noted certain inconsistencies. The company had declared a share capital of 1 billion euros, which is an enormous amount. Air Next's CEO also boasted about having discovered bitcoin at a time when only a few geeks knew about cryptocurrency.

Employees and investors filed a complaint. Failing to find the general manager, Julien Leclerc — which might also be a fake name — they started looking for other culprits. They believe that if the Paris Commercial Court hadn't registered the company, no one would have been defrauded.

Beyond the handful of victims, this case is a plea for the implementation of more secure procedures, in an increasingly digital world, particularly following the pandemic. The much touted ICO market is itself a victim, and may find it hard to recover.

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