Crisis in Europe. Europe’s Worst Nightmare: The Collapse of the Trans-Atlantic Security Framework
For decades, Europe prospered under a delicate yet advantageous arrangement: a robust welfare state supported by affordable Russian energy and the protective shield of American defense spending.
This trans-Atlantic security framework enabled European nations to allocate substantial resources to social programs, healthcare, and education, while maintaining relatively modest military budgets—averaging just 1.8% of GDP among NATO’s European members in 2022, compared to 3.5% for the United States, according to NATO data.
Inexpensive Russian oil and gas, which accounted for over 40% of the EU’s gas imports before 2022 (per Eurostat), drove industrial growth and domestic comfort, fostering a quality of life that became a global benchmark.
Europeans not only benefited from this system but actively promoted it and LECTURE IT.
Leaders from Berlin to Brussels embarked on international campaigns, advocating the merits of their model: a blend of capitalist enterprise and socialist safety nets, sustained by favorable geopolitical circumstances. However, those circumstances have now shifted, and the era of stability has concluded.
The Perfect Storm: A Continent in Crisis Today, Europe confronts a confluence of crises that threaten to dismantle its postwar prosperity. Small businesses, vital to many European economies, struggle under tax burdens reaching up to 50% in countries like France and Belgium (OECD, 2023), stifling entrepreneurial activity.
Innovation, once a cornerstone of European progress, has stagnated:
EU spending on research and development remains at 2.3% of GDP, lagging behind 3.4% in the U.S. and 2.7% in China (Eurostat, 2022). Government deficits have escalated, with the EU’s average debt-to-GDP ratio rising to 91.5% in 2023 (European Commission), a consequence of pandemic-era expenditures and energy subsidies following Russia’s invasion of Ukraine.
The social fabric is also deteriorating.
Poverty risks are increasing, with 17.4% of EU citizens at risk of poverty or social exclusion in 2022, up from 16.5% pre-pandemic (Eurostat), as inflation and energy costs disproportionately affect the vulnerable. Reports of police brutality against minorities, such as the 2020 protests in France over systemic racism, have deepened distrust in institutions.
Censorship concerns are emerging, with the EU’s Digital Services Act (2022) sparking debates over freedom of expression versus regulation. Additionally, excessive bureaucracy—exemplified by the 26,911-word General Data Protection Regulation (GDPR)—fuels widespread frustration.
This convergence of challenges creates fertile ground for extremism.
Far-right parties, such as Germany’s AfD and France’s National Rally, have gained traction, exploiting fears of economic decline and cultural erosion. Populist successes in 2024 national elections signaled a rejection of the established order. Europeans long recognized that their prosperity was fragile, a structure vulnerable to disruption. That disruption has now arrived.
Europe’s Enduring Strengths Despite these challenges, Europe should not be dismissed. The continent retains significant strengths. Its governance systems, including Germany’s federal framework and Scandinavia’s transparent democracies, remain global models.
Quality of life, even under strain, surpasses many peers:
the EU boasts a life expectancy of 81.3 years (WHO, 2023) and ranks highly on the UN’s Human Development Index. Public policy innovation excels in areas like renewable energy, with the EU targeting 42.5% renewables by 2030 (REPowerEU plan).
Cities like Vienna and Zurich continue to lead global livability indices (Mercer and The Economist), while public-private partnerships have fostered smart cities—Stockholm’s eco-districts and Barcelona’s tech-driven infrastructure—balancing efficiency and sustainability.
Madrid, Malaga, and Valencia in Spain are admirable examples of dynamic cities with economic resilience. They attract millions of people from around the world, offering security, enjoyment, friendliness, integration and business opportunities for newcomers. (Internations 2024)
Nevertheless, as conditions grow more challenging, Europe must adapt to avoid irrelevance. The decline of affordable Russian energy (imports fell to 15% of EU gas by 2024, per IEA) and an uncertain U.S. security commitment, underscored by skepticism toward NATO during the Trump era, necessitate a strategic reassessment.
Five Recommendations for a Resilient, Revitalized Europe
1. Rebuild Energy Independence with Green Innovation Europe must prioritize renewables and nuclear power to replace Russian fossil fuels. In 2023, wind and solar generated 22% of EU electricity (Ember); scaling this to 50% by 2035 is achievable with focused investment—€800 billion annually, per McKinsey estimates. Leveraging France’s nuclear expertise and Denmark’s wind technology could reduce geopolitical dependence while boosting employment.
2. Reduce Bureaucracy to Support Entrepreneurship Streamlining regulations is essential to bolster small businesses. Simplifying tax codes—reducing Belgium’s 50% effective rate for SMEs to 30% through clearer deductions—and eliminating regulatory redundancies could enhance competitiveness. Adopting Estonia’s digital governance model could improve the EU’s standing on the World Bank’s Ease of Doing Business index.
3. Strengthen Defense Autonomy With U.S. reliability in question, Europe must enhance its military capacity. Increasing collective defense spending to 2.5% of GDP by 2030, from 1.8%, and expanding the EU’s €8 billion Defense Fund could support joint initiatives, such as advanced drone development, reducing reliance on NATO.
4. Invest in Human Capital to Address Poverty Combating rising poverty requires investment in education and reskilling. Scaling Germany’s vocational training model across the EU, backed by a €50 billion “Future Skills” initiative, could equip the 17.4% at-risk population for economic shifts, while progressive taxation mitigates inequality.
5. Promote Balanced Digital Regulation The EU must refine the Digital Services Act to prioritize transparency over restrictive control, drawing on Switzerland’s light-touch regulatory approach. This would foster trust and innovation while preserving freedom of expression.
Conclusion: A Pivot, Not a Collapse The end of the trans-Atlantic security framework need not mark Europe’s demise. Its history of resilience—from postwar recovery to the euro’s endurance—demonstrates a capacity for adaptation. By harnessing its strengths and addressing its vulnerabilities, Europe can emerge not merely intact but fortified, charting a course on its own terms.
This version maintains a serious, analytical tone while refining the language for clarity and precision, as requested.
Bernie Sanders last piece published on The Guardian remind us a scream from leaders all around the world: Climate Change is a Justice & Leadership Crisis.
Sanders, known to be a democratic radical leftist, suggests a radical idea: The U.S. and China must mutually cut their military budgets and use the savings to intensify their efforts towards improving energy efficiency, transitioning to sustainable energy, and ending reliance on fossil fuels. The additional funds could also aid developing countries impacted by climate change.
Let me give you the number behind Sanders idea:
It is proven that a just and fair transition to sustainable development is possible with a minimum investment comparing against the large amount on damage that climate change catastrophes will cause. The world will require USD $175,000 trillions.
Hence, the total amount to provide clean energy and eradicate poverty will cost us $87.5 trillion USD.
The United States has one of the highest military budgets in the world, coming in at around $750 billion annually. China, with the second-largest military budget, spends approximately $250 billion per year (aparrently).For a total of €1 USD trillion a year.
Climate Change and The World War III
The United Nations has estimated that it would take an additional $10 trillion per year in public and private spending for all developed and developing nations to meet the 17 Sustainable Development Goals by 2030.
With China and the USA giving up their military budgets, the world should expect a cut on military budget from all developed countries to meet the additional $10 trillions a year remaining.
But a simple budget allocation would never solve the biggest threat humanity has ever faced on its existence. That is why, we will always repeat: Climate change is a Justice and Leadership Crisis.
Climate Change necessitates international cooperation and is being critically threatened by political tensions, specifically between the U.S. and China – the two greatest carbon emitters globally.
Due to record-breaking heatwaves and temperatures, increasing wildfires, and damage caused by natural disasters, urgent action is required at a global scale.
In recent years, there has been encouraging progress in transitioning from fossil fuels to renewable energy sources. Various countries, including the U.S., China, and the European Union, have made substantial investments in clean energy and energy efficiency.
Solar energy is already attracting more capital than oil for first time and it’s predicted that by 2025, renewables will overtake coal as the leading source of global electricity.
The War of China and USA must be against climate change Transition Energy Solar
Despite these advancements, current efforts are not sufficient to avoid significant and irreversible damage to the earth. If countries do not invest more and operate with greater urgency to reduce carbon emissions, the world could cross the critical temperature threshold by the early 2030s.
The U.S. has admitted more atmospheric carbon than any other country since the Industrial Revolution, with China recently taking over as the biggest carbon emitter due to its rapidly growing economy.
Further more, it’s clear that heightened military spending in both countries, in lieu of allocating these resources to combat climate change, is proving detrimental.
Beyond thinking about whether it is possible to lay down your arms and start investing more in solar panels and turbines, leaders around the world must join Sanders’ call and RADICALIZE the cry: We need a war against climate change, and NOT an arms war between the United States and China.
Our vision is straightforward: Redefine the concept of leadership. In our perspective, leaders making a social impact are no longer limited to armed revolutionaries, street activists, or politicians addressing the masses, let alone foundations.
We are convinced that leaders who truly have a social impact include companies that generate wealth, startups with groundbreaking technology, and public policies that utilize innovation and evidence to address social, environmental, and economic challenges.
In 2010, the Latinomics Leadership Forum was born, to later evolve into what you know today as The Global School for Social Leaders.
Since then, we have committed to redefine leadership:
We coined the term Holistic Leadership,
We compiled the most important leadership lessons from more than 300 interviews with renowned leaders.
We designed more than 30 methodologies and tools for founders & decision makers.
More than 1,000 leaders have participated in our programs.
We reach more than 100,000 public & private sector leaders via social media and email.
It all started as a blog, and today we have become an awarded educational organization, recognised by the UN, The University of Oxford, the EU commission and The Government of Austria.
Humanity is facing one of the most radical changes in our history:
Global geopolitics is undergoing a big shift in powers, leading to changes in rules, models, systems, and leadership.
The technological race is reshaping the way we work, rendering many current knowledge and skills obsolete and paving the way for entirely new ones.
The climate crisis will be the most difficult challenge we will have to face, forcing us to develop new ways of subsistence and governance as a society.
In this emerging world, there is a pressing need for a fresh vision and redefinition of leadership that encompasses our historical context.
The Global School for New Leadership seeks to amplifying the voices of global leaders from both the public and private sector, who are actively addressing present challenges:
Leaders who draw upon the lessons of the past to shape novel solutions for present and future issues.
Leaders who possess a comprehensive perspective on our interventions while also being connected to a growing universal identity.
Conscious leaders about our responsibility as temporary managers of our planet.
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More and more people are choosing Purpose-Driven Stories. This year, COVID-19 brought many days of isolation, which allowed us to rethink our purpose, goals, projects, and in general our life. This year was also the year of Climate Movements.
Synch with this trend, we want to share with you the best of our content this 2020. More than 700,000 impressions throughout this year.
Best Articles:
1. Letter to Humanity from 2050 by Christiana Figueres, former Executive UN Climate Change Convention. CLICK HERE
2. Doughnut Economics by Claudia Winkler, Co-Founder of GOOOD Network. CLICK HERE.
3. Happiness is expensive by Roberto A. Arrucha, Director of The Global School for Social Leaders. CLICK HERE.
Best Videos*
1. 5 words for a local future by Helena Norberg-Hodge, Director of Local Futures.
2. 5 Indigenous Activist you should follow.
3. Earth Overshoot Day EXPLAINED.
Best Linkedin post
1. Pears grow in Argentina, packed in Thailand. CLICK HERE.
2. All 7 Countries With The Best Response To Covid-19 Have 1 Thing In Common: Women Leaders.
Having a private chat-bot taking questions and contact information from visitor to your website is an easy but powerful tool to start conversations.
Having a virtual secretary or chat-bot on your website generates 30% more conversations.
Tip: We recommend you to take a look at your Google Analytics (or your analytics provider) and analyze your Avg. session duration, in order to set up your chat-bot entrance at the right time before your visitors leave your website. 5 seconds from starting is too soon, 60 seconds might be too late.
2. Booking & Meeting Forms.
Allowing your potential clients to book a meeting with you directly into your website, is saving time and effort.
Stop asking your clients to e-mail you, let them book a meeting with you increases 50% chances to close that deal.
Tip: If you work in different time zones, you can have an extra question allowing your costumers to choose time-zones. You can also send a converter by email using a time zone converter, click here, or use calendly if you are just starting.
3. Keyword Research.
You can write as much as you want about the topics you consult. However, a professional consultant must write a piece of text with a clear balance between value, usability and marketing.
You don´t need to sell your services in every article, but each one of your text needs to validate your expertise and reputation, you must be always valuable for others.
SEO optimised articles increase your online presence and reputation by 50%.
Tip: Before you start creating content, go and visit AnswerthePublic.com, to find out what are the key search around your industry.
4. Start talking to the camera.
Are you planning to launch an online event or hold a webinar?, Or just creating more visual content? You need to start talking to the camera right now. Therefore, consider this a preparation campaign where you can explore whether your content is valuable and attractive enough.
Online events boost your customers’ engagement by 60%.
Tip: You do need a super production to start, but be sure you have: A good mic, A good light and a lot of confidence.
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Coursera, the popular platform of online education, just released the Global Skills 2020 Index (GSI). The index compares the mastery of skills in ten industries and eleven areas of study in 60 countries worldwide, turning Switzerland, Finland and Austria the Cutting Edge Global Skills learners in the world. Tech vs Mindfulness, where should you invest your time and money?
The GSI aims to develop a timely study of the changes that occurred in virtual learning from the consequences generated by the global pandemic. It states that the recovery in a post-pandemic world will rely on broad reskilling.
The report displays global rankings that were developed in core skills in business, technology, and data science. It shows that Switzerland, Finland, Austria, and Russia were the most consistent in the top five countries in the three ranking categories.
By contrast, countries such as Mexico, Venezuela, Peru, Pakistan, and Nigeria are among the most lagging in essential skills in business, technology, and data science.
Top five innovative countries in essential skills
BUSINESS
1. Switzerland
2. Austria
3. Denmark
4. Finland
5. United Arab Emirates
TECHNOLOGY
1. Russia
2. Belarus
3. Switzerland
4. Ukraine
5. Finland
DATA SCIENCE
1. Russia
2. Switzerland
3. Belgium
4. Austria
5. Finland
In addition to this global ranking of essential skills, the report highlighted the following key ideas:
1. Countries with higher skill proficiencies are also those with higher labour force participation rates. A country’s skill proficiency across domains is positively correlated (56%), with the fraction of its working-age population active in its labour force. (Secondary data: World Bank)
2.Countries with equal internet access rates are also those of higher skill proficiencies. There is a significant and positive correlation (65%) between a country’s skill proficiency across domains and the percentage of its population using the internet. (Secondary data: World Bank).
3. The with more highly skilled talent, especially in technology skills, see higher stock returns and less disruption from COVID-19. The correlation between an industry’s skill proficiency and its stock performance in the United States in one year was 43% across all the domains of skills and 39% in the fields of technology. (Secondary data: Fidelity)
4. Of the 200 million higher education students whose studies were interrupted by COVID-19, 80% are located in countries with emerging or lagging skills. 80 % of the students enrolled in tertiary education are in countries that have closed schools due to COVID-19 and are listed in the bottom half of the world rankings for business, technology, and data science skills. (Secondary data: UNESCO)
Beyond Hard Skills.
In contrast, the same report shows that the demand for personal development skills such as confidence, stress management, and mindfulness has grown by 1200% among individual learners. People are turning to courses like Yale University’s Science of Well-Being to mitigate mental and emotional distress caused by the pandemic.
I know, there is a looooonngg and passionate discussion on how important humanities will become the most relevant field of study when the AI starts coding and engineering better than humans,
Vs
We should be teaching our toddlers how to code, build robots and develop apps.
However, we will save that conversation for another post. Right now, When we talk about job satisfaction, the same countries rank different, according to the Global Employee Engagement Index.
2. South-America: Chile (7.8/10), Perú (7.6 / 10), Brazil (7.6 / 10), Argentina (7.5 / 10)
3. Europe: Romania (7.9 / 10), Austria (7.7 / 10), Swtizerland (7.4 / 10), Turkey (7.4 / 10)
4. Africa: Nigeria (7.7 / 10), Kenya (7.4 / 10), South Africa (7.3 / 10)
5. Asia: India (7.9 / 10), Thailand (7.6 / 10), Indonesia (7.4 / 10).
Several surveys of across the world acknowledge the imperative of pack the workforce with more than hard skills. Even some employers identify lack of soft skills as the area where young job-seekers have the largest deficiency, with growing evidence that non-cognitive or soft skills are important for a range of life outcomes.
As a result, a growing number of youth programs have incorporated a soft skills training component – examples include the entra 21 program in 18 Latin American countries, or the Jordan NOW program.
But how do we measure what soft skills youth have? Let us share with you 5 tools that can help you out:
1. The World Bank STEP skills measurement exercise employs such an approach in multiple countries, measuring personality traits, grit, and behavior skills.
2.The 16 personalities test is a funny and interactive tool to explore more about yourself and what drives you.
3.Social Style Matrix. An effective method to understand how both you, and the people you need to work with, think and make decisions.
4. The Global Talent Trends series of post by Linkedin invited experts on. the topic Soft Skills, Dr John Sulivan summarizes 12 ways of assessing soft skills.
Tech vs Mindfulness? Instead: Mind, Body Soul.
At The Global School for New Leadership, we use a great tool called “Purpose-Driven Leader Self-Assessment”, a holistic approach on personal leadership and impact beyond work or professional purpose, it´s more about what really balance your life-purpose as a leader.
You can also take a look at the recommendations of Gifted Healthcare.
Roberto A. Arrucha
I work with Purpose-Driven Organizations & Entrepreneurs in 3 main challenges: 1. Powerful & Meaningful Communication, 2. Income Generation & Marketing, 3. Holistic Leadership.
Have you also seen the exponential surge of Wellness and Wellbeing courses, coaches, workshop, retreats, etc.?
COVID-19 is forcing us to rethink our wellbeing, however, we have crashed to the wall: Happiness is expensive, this is the case of Europe.
For some of us who come from the global south, we find the concept of happiness as a commodity, extremely weird and complex, more related to the industrialised world than a universal value. Now, everyone wants access to happiness, but none dare to challenge the status quo of an accumulation based society anxious by consumerism:
Like working out harder to lose weight but keep eating pizza every night.
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You are paying more for “happiness” than taxes.
Recently, a study was released about how expensive is Happiness in Europe, published by Mckinsey: The pandemic’s negative impact on well-being in April was up to 3.5 times the losses experienced in GDP; This means, for every euro lost due to the economic burden, 3 euros were lost due to life-dissatisfaction.1
For example, If you are earning a salary of 2,700 euros per month, the economic collapse due to COVID-19 wiped out on average 540 euros of that salary, but your life-dissatisfaction wiped out 1,620 euros, transforming your real salary into 1,080 euros per month or a cut of 60% of your salary!1
Happiness is expensive in Europe and getting more and more expensive. If you embed this, into the ecological footprint of every European country, consuming 3 up to 9 countries available resources, or per capita: 2.8 planets for satisfying the European consumer2, turns out that European happiness is expensive, luxury, exclusive and an unsustainable goal, near 10 times more expensive than any other human in the world (Except USAmericans).
Furthermore, if you consider the high addiction of alcohol and drugs in Europe, 200% higher than in the global south countries 3, you start to draw a better picture of the problem:
OurExpensive, Destructive and Non-sustainable life-dissatisfaction for ourselves and the planet.
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What about the world happiness report? Well, it just confirms it.
Even the WHP, where Europe ranks on top, acknowledges this: Industrialised societies relies mainly on GDP and income for their life-satisfaction, reducing happiness to a simple commodity.
Unlike the Happy Planet Index, placing ourecological footprint and personal wellbeing as the key components of life satisfaction, ranking on top the countries close to the Ecuador.
Communities around the world are begging rich countries to reduce consumption, and learn how to live happier and sustainably, like the campaign from the Himalayas #ILiveSimply, where people highly hit by climate change, are joining to call the world in a single shot out:
“Please live simply, so others can simply live¨
Now we see funded research, training, certifications, workshops, etc. An army of persons is trying to incorporate wellbeing to their everyday life, but at the same time, they find themselves caught in a complex system based on high consumption fuelled by an anxious economy.
As a foreigner in this land, I often face the same feeling when another foreigner goes to my country and I find out that people still buy water in plastic bottles for survival.
Water is a human right, and it should be available cost-free. Can happiness be considered as essential as water for our existence?
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I want to believe that all this wellbeing, wellness and happiness movement in Europe and industrial countries are based in an inside-out transformation for the well of our relationship with ourselves and our planet, but numbers say otherwise, maybe moments of happiness will become another commodity in this accumulation-based society.
In only a few weeks of reduced physical exercise, heightened stress and anxiety, limited access to diagnostics and care are likely to have longer-term health consequences for every European resident, which eventually will turn out in a public health issue and a priority for policymakers.
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How can policymakers design real wellbeing policies after a long tradition of enlightenment and individual responsibility?
How can governments think not only beyond GDP but activities, incentives and metrics for a mentally healthy society? Is possible a European policy on living happily with less? Happiness is expensive and is getting out of control.
Furthermore, how can Europe think about holistic development and personal wellbeing in the middle of a technological war where Europe has decided to stand up and oil the economic machinery as a geopolitical strategy, putting even more pressure to its taxpayers (aka citizens).
It´s an unknown territory where there is no book or manual written, where it´s finally time to open our minds into a more holistic approach on the development, more human and less economical, on how other cultures live more prosperous with less impact in their mental health and the health of the planet.
–
A New Formula of Happiness. Our development framework.
After more than 10 years of working in more than 20 countries across 4 continents, and having a sensitive understanding of what the most satisfying cultures have in common,
I have summed them up in 3 easy goals: the Humanity Development Goals (HDGs), an inside-out invitation to rethink development in a holistic way rather than a single policy intervention. The HDGs complement and go beyond The Sustainable Development Goals (SDGs).
1. Mckinsey Group. Report: Well-being in Europe: Addressing the high cost of COVID-19 on life satisfaction: https://www.mckinsey.com/featured-insights/europe/well-being-in-europe-addressing-the-high-cost-of-covid-19-on-life-satisfaction
2. Footprint Network Report 2019.
3. Our World in Data. https://www.footprintnetwork.org/content/uploads/2019/05/WWF_GFN_EU_Overshoot_Day_report.pdf
The necessary containment measures against COVID-19 have engendered an unprecedented global economic crisis, combining supply and demand-side shocks. Now, the pandemic is affecting Latin America and the Caribbean (LAC) and countries are bracing for the ripple effects. Just months ago, many countries in the region experienced a wave of mass protests driven by deep social discontent, frustrated aspirations, persistent vulnerability and growing poverty. The crisis will exacerbate these problems.
Beyond the magnitude of the impacts on already weak health systems – some 125 million people still lack access to basic health services – the overwhelming socio-economic impact of the crisis could disproportionately fall on vulnerable and poor households if ambitious policy responses are not put in place.
First, the downturn could be disastrous in a region that ended in 2019 with no economic growth. The sharp decline of global demand is affecting exports, with a deterioration of terms of trade for several countries. While the collapse in oil prices can be a relief to the oil-importing Central American economies, it will affect fiscal and external accounts of several South American countries, as well as Mexico and Trinidad and Tobago. Chile and Peru will suffer from a decline in copper prices.
On the supply side, activity has come to a halt due to containment measures but also disruptions in global value chains and imports of intermediate inputs, particularly affecting Brazil and Mexico. The decline in tourism, commerce or transport could be steep, significantly affecting smaller and less diversified economies, including many Caribbean countries.
The global tourism economy could shrink between 45-70% in 2020.
Rising international volatility and uncertainty are weighing-in too. Large financial outflows are causing currency depreciation and reducing the value of financial assets in debt and equity markets. The situation will likely worsen. UNCTAD’s most recent estimates suggest foreign direct investment (FDI) could decline globally by 30-40% in 2020-21.
Second, the recession could wreak havoc amidst already deteriorating social conditions. Many companies could go bankrupt, particularly micro, small and medium enterprises (MSMEs), which represent 99% of firms and 60% of formal employment in the region. The job loss could be colossal, hurting the vulnerable middle class (people living on USD 5.5-13 a day in 2011 PPP prices) who make up 37% of the population. These citizens are already caught in a social vulnerability trap that reduces resilience: a vicious circle of informal jobs, little or no social protection and, and low and volatile savings.
Almost two-thirds of workers in the region are informal and most of them have no safety net to face an economic setback. Many are own-account workers, working in the subsistence economy, living day-by-day, and are at risk of slipping back into poverty. While major social assistance programmes cover most poor households, they only reach 40% of vulnerable households. Moreover, 61% of vulnerable informal workers do not benefit from any form of social protection and are unable to mitigate risks such as quarantine or rising healthcare spending. Here lies one of the main challenges of this crisis for the region: avoiding a widespread expansion of poverty, which already affects 25% of the population. First estimates from ECLAC project that poverty in Latin America could go from 185 million to 220 million people in 2020.
Innovative policies to contain the impact of the crisis on the most vulnerable
Latin American and Caribbean countries are delivering policy responses that support the most vulnerable individuals, households and firms, including internal migrants. Several governments have announced monetary and fiscal measures. For instance, central banks in Brazil, Colombia, Mexico and Peru, have reduced interest rates or adopted liquidity measures to uphold domestic demand and facilitate business. However, the exchange rate pass-through to inflation makes these policies temporary and limited. Countries like Argentina, Brazil, Colombia and Peru have announced temporary expansion of some of their cash transfer and in-kind programmes, and additional transfers to reach vulnerable people not covered by existing programmes. Some financial intermediaries are postponing credit payments for the most vulnerable firms and households. To help business and household cash flows, Argentina, Brazil, Chile, Colombia, Costa Rica, Dominican Republic, El Salvador, Paraguay and Peru have announced the deferral or temporary reduction of certain tax payments, as well as temporary payment cancellations for selected public utilities or the suspension of social security contributions.
It is essential to constantly evaluate the implementation and effectiveness of these measures and to re-adjust if necessary, especially those aimed at the poorest and vulnerable population. From mid-March 2020, most countries moved away from targeted assistance to more universal cash and in-kind transfers, after assessing that their existing tools and programmes were not enough to reach the broader vulnerable population. Moving forward, governments must use the momentum to design and invest in more inclusive social-protection systems, expanding coverage to informal workers and protecting them from future shocks. Investing in social protection is investing in inclusive growth.
Reform and rebuild the social pact to ensure a long-term and sustainable recovery
The mass protests of 2019 revealed the need to rebuild the social pact and public trust. However, the political capital to address these challenges was low. Yet, in contrast to the 2008 financial crisis, the current crisis may present an opportunity to create consensus among citizens around major pending reforms, and to recover common values, such as intergenerational solidarity and social responsibility – a strong antidote to the invisible virus that is populism. To this end, clear national strategies, involving the voices of all relevant actors, must take into account how the Coronavirus crisis is exacerbating the existing development traps.
The crisis is highlighting the need for more financing for public services, particularly healthcare. From 2006 to 2018, the share of population in Latin America and the Caribbean satisfied with the quality of healthcare services fell from 57% to 42%, well below the OECD (70%). This decline is a manifestation of the institutional trap: despite efforts to improve public services, public institutions are failing to respond to citizens’ demands, deepening distrust and dissatisfaction.
Tax and expenditure systems need to be reformed to strengthen fiscal positions and place people at their centre. For tax, options include increasing marginal direct personal income tax, property taxes, environment related taxes, and eliminating tax expenditures. These measures should contribute to increasing progressivity and tax collection (standing at 22.8% of GDP vs. 34.3% of GDP in OECD countries in 2017). In terms of expenditures, governments should support income security for the most vulnerable, enabling them to plan, cope with risks and transition to the formal economy. They should also strengthen investment to promote financially and environmentally sustainable MSMEs with better insertion in local and global value chains to overcome the regional productivity trap.
Global action needed to face the crisis
A coordinated and coherent international approach, involving multilateral banks, bilateral public and private actors and international organisations, is urgent. “We need a level of ambition similar to that of the Marshall plan”, in which Latin America and the Caribbean must have a voice. We need an exceptional financial package to translate policies into action, particularly for countries entering the COVID-19 crisis with on-going international discussions for the management of their public debt, such as Argentina and Ecuador. This is the time to unleash the power of international co-operation in the region – underpinning financial measures with mechanisms for knowledge-sharing, policy dialogues and technological transfers, to spur a lasting, sustainable recovery and a reinvigorated multilateral system.
This blog was originally published on OECD Development Matters and ispart of a series on tackling COVID-19 in developing countries. Visit the OECDdedicated page to access the OECD’s data, analysis and recommendations on the health, economic, financial and societal impacts of COVID-19 worldwide.
By Federico Bonaglia, Deputy Director, OECD Development Centre, and
By Sebastian Nieto Parra, Head of Latin America and the Caribbean Unit, OECD Development Centre.
A crisis is always an opportunity, and I love the entrepreneurship spirit before a crisis, disruptors become lifesavers and visionaries, but there are also poachers and crows, who wish to see a world where banning human interaction and working remotely forever, become a norm.
As you already noticed, the coronavirus crisis brings a new dynamic on how to make business. Remote solutions are popping up and Businesses are moving online: Educators, Managers, Doctors, etc….
Zoom, Google Hangout, Skype, Facebook Live, etc, etc, etc… are at their maximum capacity. And more are joining the “remote” fever.
No more waking up, dressing up, dealing with grumpy faces in the subway or bus. No more morning bad jokes, gossips and complaints at the office. Aleluya!
When 70% of people hate their job, it is obvious the option of remote work sounds a dream coming true…. till the chains of the routine traps you again.
Like Yoga was never mean to break the chains of your mind, trapped in a purposeless job of a broken economy, why then you think Zoom will replace a meaningless career or job?
Is remote work a real solution?
The tech world already declared war to humans a long time ago:
3. Uber Eats plans for replacing your hungry with gluttony.
4. Netflix plans for stoping you queuing at the cinema.
Edtech is already worth 43 USD Billions, and indeed they offer quality and affordable knowledge, but Education? With up to 80% dropouts in online courses, it seems the education is becoming a “drug” product for personal branding addicts rather than an added-value experience for your professional and personal development.
During times of pandemic, a face-to-face ban is capitalised by techno-anxious *I would add a facepalm here, but I’ve been advised against it*
When the crisis is over and the time to return to the office comes: the post homework depression might hit hard, and we should all no blame our workplace for that, instead we should rethink the purpose of our skills in the economy and wonder if we really do well to the planet and to ourselves.
Remote work is not a panacea, and this vision is shared by thousands: ONLINE CAN NEVER REPLACE HUMAN INTERACTION.
Yes, digital tools are great for collaboration and learning, but they will never provide you with authenticity, empathy, moral imagination, satisfaction and real systemic thinking through direct contact with real people, their struggles, their dreams, our planet, its beautiful nature and moreover its complexity.
Online tools provide with a great opportunity, but also with a trap of automatizing and disconnecting ourselves from others. Go 100% remote will not change the fact you hate your job. Do not get into the trap of “online” will save the world. Instead…
It´s time to defend our humanity, heal ourselves from our excesses and restore our relationship with our mother earth.
The day to defend humanity has finally arrived, time to re-build social contracts, reprioritise our values, and understand the fragility of our systems and our planetary boundaries.
There is a lot of disruption needed in the real world:
1. To move to a circular economy, we need to go out and talk to our farmers. 2. To build peace and justice, we need to go out and bring people together, listen and understand their pains. 3. To end poverty, we need to build alternative social systems and stop asking billionaires for charity. 4. To achieve sustainable development goals, We need to reconcile ourselves with our planet.
Our mother earth is shouting out for change and we need to listen.
Let´s be honest, no everyone will survive the coronavirus crisis …. buuuut what it doesn´t kill you make you stronger. Here 5 lessons (or changes needed) for your business model to thrive this crisis.
1. Variable Vs Fixed Cost.
Do you remember that last part of your business model canvas? Yes, that one in the left lower corner. Yes, you and everyone ignored it.
Well, finally you are paying attention to this super important base of your business: COST STRUCTURE.
You are not struggling cause the lack of income, you struggle due to your bills are piling up and you won’t have money to pay them.
Dividing your cost structure between Variable vs Fixed Cost will allow you to leverage fairly the operation of your business according to the market conditions.
Paying so much on a fancy office when your clients rarely visit you? Time to work from a co-working space.
2. Revenue Streams.
Everyone wants to hunt the big fish, everyone wants Steve Jobs and Elon Musk in the portfolio of clients, it seems sometimes a “status quo” than a real business model.
Let me ask you, do you have a revenue stream or revenue streamS? Do your income generators have you back?
I know, it sounds easier than it is, however, having the power to develop at least 2 income generators from the same or different activities is a life-vest during shaky moments.
E.j. If you sell a hand cream (luxury product), you can also sell a disinfectant soap (they are running out now from the stores). DIVERSIFY your income, and prioritise a cash flow activity.
3. Running a business is not always about making money.
It is about providing value, and when your functional value proposition runs out (better process, cheaper, higher quality) due to market uncertainty, your emotional value proposition will stand out.
How is your brand making feel your customers when purchasing your product/service? Do they connect with your why? Your client’s loyalty will be challenged the following days and their feeling of belongingness will decide your survival.
4. Time to re-arrange partnerships.
If you are relying on your partners to keep your business floating during this crisis, it is time to rearrange and rethink your partners.
Like clients, partners need also qualification:
Are they providing you with a better value proposition? Are they reducing your cost structure? Are they providing you with valuable communication and distribution channels?
If the answer is NO. You need to stop collecting logos on your website and collect real value.
5. Are you enjoying this moment? If your answer is no, time to say goodbye.
If you are not enjoying this challenge, if you don´t feel excited about the opportunities ahead, leave this business immediately. If you blame the coronavirus for your business failure and collapse, it is time to abandon it. The coronavirus crisis gives you an excellent opportunity to close down and Start Doing What You Love.
Is it time to re-arrange your Business Model? Let me help you out to survive the coronavirus crisis.
20 years as an entrepreneur and 10 as a social entrepreneur working for social entrepreneurs and impact-driven businesses is kind of good skill at this moment, huh?
😀 Download my Social Business Canvas for FREE HERE, and work from home. Or…
😍 Have a 1 hour 1:1 consulting session with me for only €150,
Since 2010 we have had the privilege to host our headquarters in Vienna, Austria. And we would like to share with you our top reasons that confirm we live in the most liveable city in the world.
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Roberto A. Arrucha – 
