Lloyd’s Chairman Details ‘Success Factors for Europe’

Lloyd’s Chairman, Lord Peter Levene, speaking at a symposium in St. Gallen, Switzerland, outlined what he feels are essential components of “success factors for Europe.”

Levene began his remarks by stating as a “key belief” that modern Europe cannot function effectively without both a structure, which allows competition, and supported by a culture which encourages it. “Now that may not seem like an unreasonable or radical position,” he continued. “But if you’ve read the headlines recently, you’d be forgiven for thinking that Europe was heading in the opposite direction. At the end of last year, European Commissioner Charlie McCreevy, for whom I have the highest regard, warned of a ‘strong wind of protectionism’ blowing through the European Union. We have seen disputes with China and India over cheap clothing exports. We have read about tariffs on China and Vietnam’s shoe and leather exports. And we have heard accusations of ‘economic patriotism”, as rules are broken on foreign takeovers and competition – in sectors as diverse as energy and gambling. What on earth is going on?”

He stressed Lloyd’s strong commitment to “the principle of free trade and a level playing field,” noting that the insurance industry especially “relies on an open trading environment.” Neither companies nor nations could share or “spread their risk across the global marketplace” without it.

Europe’s future success is dependent upon four key factors, Levene continued, which he identified as follows:
— First, further economic reform and completion of the single market;
— Second, European governments must create a climate in which business is able – and is encouraged – to innovate ;
— Third, Europe must be able to argue its trade interests on the wider world stage;
— And fourth, only a truly competitive Europe can anticipate and respond to opportunities and threats in the rest of the world – and I am thinking at the moment of Asia in particular.

He went on to discuss the topics at length. Levene combined a denunciation of economic protectionism, noting that it works against the best interests of both companies and consumers, with a strong plea for free market economies. “Experience shows that where intervention prevents free market forces, everyone is a loser,” he stated.

Levene praised the efforts of EU trade commissioner Peter Mandelson, who he said has described the current Doha Round of trade reform talks as a “‘struggle for Europe’s soul’ between those who favored an ‘open Europe’ and ‘the forces of protectionism, populism and, at times, even xenophobia’.” [Ed Note: Lloyd’s Chairman did not mention Mandelson’s ambiguous position on farm subsidies, which are seen as one of the main impediments to further progress].

While praising the openness of the EU to the insurance sector, Levene took a swipe at “unjustifiable, discriminatory and protectionist requirements in the US.” [A reference to the 100 percent trust fund reserve requirements, which do not take into account reinsurance and hit Lloyd’s particularly hard].

“From where I’m standing,” Levene concluded, “I’m more convinced than ever that We must push ahead with economic reform to complete our single market; We must deliver a climate in which business is able – and is encouraged – to innovate; We must be credible in arguing our trade interests on the wider world stage; And we must be ready to anticipate and respond to opportunities and threats which emerge in China, India and elsewhere.

“As a global trader whose success has been built on 300 years of international trade in insurance and reinsurance, it is Lloyd’s firm hope that Europeans can pull together and succeed.”

The full text of Lord Levene’s address may be obtained on the Lloyd’s Website at: www.lloyds.com.