Geopolitics

Angela Merkel, Last Act For Europe's Super Middle Manager

Angela Merkel in the German Bundestag
Angela Merkel in the German Bundestag
Carl-Johan Karlsson

"The nation-state on its own has no future... "


Angela Merkel's apparently ominous declaration in late May was actually part of what might be the strongest vote of confidence in recent memory to ensure the future of the European Union. After years of touting austerity and protecting national fiscal sovereignty, the German Chancellor has suddenly teamed up with French President Emmanuel Macron to launch a 500-billion-euro European Union recovery fund that mutualizes members' debt for the first time. It's a fiscal U-turn justified by the risks of the "deepest recession since the Second World War."

No doubt that risk is very real, and Merkel is now urging swift adoption at the upcoming EU summit in mid-July — while also reminding the so-called Frugal Four (Austria, Sweden, Denmark and the Netherlands) — that populist extremists would pounce on a divided EU.

Macron and Merkel discussing the European reconstruction plan. — Photo: Kay Nietfeld/DPA/ZUMA

But the German leader changing her stance overnight simultaneously tells us plenty about the precariousness of the situation. Dutch author Joris Luyendijk described the claims about populism as half-truths, as "refusing mutualized debt will fuel populism in the south. But by adopting mutualized debt you are going to fuel populism in the north."

And it gets worse. Adding to the deepening of the perennial north-south rift, which has festered since the Greek debt crisis, there is also the cultural and political east-west divide. More recent entries like Poland and Hungary risk undermining the union since EU membership has failed to deliver on all the envisioned post-Communist economic potential.

And in the middle of all of this sits Germany, which coincidentally embarks today on its six-month rotating EU Council presidency. Europe's largest economy, contributing a quarter of the Union's GDP, is still wrestling with its 20th-century history and what it means to be a nation. There is an inherent paradox in Merkel dismissing the nation-state as much of the world looks to her country to rescue the European Union. If she pulls it off, it would be a fitting final act of a political career successfully managing a world of paradox.

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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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