He is 68 years old, but has no intention of sitting behind the geraniums. Former diplomat Ron Keller has become a storyteller after a long career in the international financial-economic and political world. And he continues to tell his geopolitical story for as long as necessary. "There is a dark cloud hanging over the world. If we want to have that road, we first have to know where it comes from."
Keller gives lectures almost daily. At home and abroad. Two weeks ago he was in New York, for a lecture for a group of American investors. Sometimes he emphasises the current global geopolitical turbulence in a lecture, while at other times he considers the war in Ukraine in more detail. He often talks about 'the US under President Trump' and about Europe with its many 'political and financial-economic challenges'.
Keller is able to connect the past to the present like no other. He himself does not think that is surprising, because he has had a unique combination of functions in his career. He began his career as a personal assistant to the Minister of Finance. A position in which he worked closely with the World Bank and the IMF in Washington. After the fall of the Berlin Wall, he represented the Dutch government in the establishment and launch of the Eastern Europe Bank. As a result, he saw with his own eyes the hope in Eastern Europe for a better economy grow. "I happened to be the first Westerner in Ukraine in 1991. The country was just two hours old."
Subsequently, Keller was involved in the creation of the euro at the European Union. And after a period of five years at the Ministry of Foreign Affairs, where he was responsible for Dutch development cooperation, he became Dutch ambassador. Among others in Ukraine, Turkey, China and Russia.
As a former ambassador, Keller is often invited to radio and television programs. Through his earlier work, he not only knows Russia like the back of his hand, he also regularly sat at Putin's table. Today he was a guest at the General Members' Meeting of the Dutch Association of Insurers. We spoke to him a week ago at Hotel Des Indes in The Hague. For a geopolitical story, but also for much-needed history. "Because if you want to know what to do, you first have to understand what was there."
"Not only insurers, the entire business community wants to know what is going on in world politics. This applies to a Swiss bank, to a Dutch insurer and even to a dairy farmer in Friesland. But if you want to know what's coming your way, you first have to understand why the current conflicts have arisen. You can simply say that Trump does wild things or Putin is a brute, but that doesn't answer the question of where that dark cloud comes from. Only when you see the underlying trends, the roots actually, can you move on. And believe me, those roots don't just disappear."
"Understanding what is going on now is difficult for everyone. Also for me, but with my experience I can somewhat explain how it could have come to this. Most companies, including insurers, still live in the world of globalisation. But that world is no longer there. In many of my lectures, I take the audience back to the nineties, after the end of the Cold War. At that time, we talked about connection and cooperation worldwide. We were going to reinvent the world and would no longer argue about which country had the best system. On the contrary, from now on we all started to look at the economy and our society in the same way. Countries such as Russia, China and Poland also went along with this idea of the market economy, because they wanted to get rid of their poverty. Market thinking made its appearance and everyone spoke the same language. Opportunities arose for insurers. Russia and China suddenly wanted to hedge risks and opened their market to let insurers in. It was fantastic, because everyone now looked at the world in the same way. Prosperity would increase everywhere. And, perhaps most importantly, peace finally came."
"We were really convinced 35 years ago that building the economy and prosperity together would lead to peace. Because why would you still go to war if you agree and work together? It was very logical for us, in the Netherlands and in Europe. After the Second World War, we had chosen that approach ourselves. The European Union was founded to connect us. One market and therefore never again war. Of course we were naïve. An example. I have worked for the public sector for half of my career and was involved in the creation of the euro, among other things. We made that euro in six months and at one point I said to the ministers: we are almost done, but it is not finished yet. It's good, the ministers replied. No, I said, it's just not finished. There is not yet one capital or one insurance market. We'll do that later, the ministers replied. We have one currency. It will come and will forever connect France and Germany. There will never be war in Europe again, because of the euro. A goosebumps moment."
"Many people still think that if you can connect prosperity and economy, it will automatically lead to peace. The American sociologist, philosopher and political scientist Francis Fukuyama once wrote a fantastic book about this: The End of History and the Last Man. If there is no power struggle, everyone benefits. That book has had an enormous influence. On policymakers, but also on politicians and companies. There was hope, but if we look at the present, since the end of World War II, there are now more conflicts than ever. How is that possible? Because each country has taken a different turn and has mainly been guided by emotional aspects. Those are those roots. Countries have emotions. The power struggle is in our DNA, as it were. From 1990 onwards, without us realising it, a new power struggle is going on. Since that time, the Americans have been terrified that somewhere on earth there is a competitor who is more successful than they are. Nowadays, Trump writes it on his baseball cap (Make America great again!), but his predecessors actually had exactly the same objective. Reducing competitors, whether in Europe or China. That also explains the rivalry between the US and China that has existed for years: who will be 'the biggest'."
"And what about Russia. In 1990, we all thought the Russians were happy. Finally they got rid of that twisted dictatorship and could now choose their own leader. We tried for ten years. They have introduced the market economy, but have not adapted their political system. The result? Oligarchs who could become very rich and total chaos. Nothing worked and that simply has to do with the fact that Russia is Russia. Just as America is America and went into a cramp, Russia has reintroduced its own 'familiar' system. I have spoken to Putin about 25 times for my work and each time he came back to the fact that Russia was humiliated at the end of the Cold War. According to him, all foreign companies came to pick the golden eggs in Russia. He often said to me: you just want me to adopt your culture and norms and values. Actually, you want me to become a Dutch citizen, but why don't you become a Russian? And to be honest, that was a good question. The Russians still feel humiliated and angry. Even angrier than they have been in the past thousand years. So they take revenge and want to restore their former superpower status, by force if necessary. The fact that we have not realised that in Europe for a long time can be called naïve."
"For a long time, we thought that China would also adapt to our democratic standards and to our rules for the market economy. Neither happened. China still has a centrally controlled economy. Every Chinese company eventually falls under the communist regime, but China has introduced elements of the market economy. They did that cleverly. They started making all kinds of simple products that they sell worldwide. So use the market, but don't import it yourself. That worked like a charm. Especially because the wage costs were so low. China has experienced enormous economic growth, also because they have started building at full speed. Roads, ports, infrastructure, houses. A lot of building. China came out of poverty and many people still think that China just keeps growing and growing. A total misconception. Every year, the Chinese economy slows down a notch. This is because labour costs have gone up and many simple products now come from Vietnam, Bangladesh or Myanmar. China is facing declining exports, while construction has come to an almost complete standstill. A month ago, I was riding a high-speed train through China with my wife. We came across one city after another. I said to her: why don't we stop here sometime? Then she said: didn't you look closely? No one lives in those cities at all. China has built to build and now has a huge problem, because mass unemployment is imminent."
"In short, America, Russia and China are all not feeling very well. India does that best. They have to deal with moderate growth, because there are all kinds of glass ceilings in that society. But India has another problem. They don't really know who is friend and who is enemy. Is China a rival or a trading partner? And what about the US and Europe? India is making itself small and is operating a bit hesitantly on the world stage. But 1.4 billion people live there, so the potential is definitely there."
"Now that the superpowers are clashing with each other again, we also see other problems emerging. One example. When Putin invaded Ukraine, sanctions packages were drawn up. Again, well-intentioned, hoping that Putin would end the war, but Putin turns that matter around again: don't worry, I'll take care of the Russian economy. Unfortunately, those sanctions have had another unintended side effect. The oligarchs who stole all factories and raw materials in Russia in ten years and then settled in Europe have left for Africa out of fear of our sanctions. There they are fully engaged in the commodity trade and the mercenary business. Partly because of this, the number of conflicts in Africa has increased fivefold. You don't hear a Dutchman about that. On the contrary, we are happy that those pocket-fillers have left our Zuidas. But in a few years' time, we will still be presented with the bill. Then there will be millions of Africans at the gate of Europe. So apart from the fact that we are naïve in Europe, we still do not have the strategic capacity to think about these kinds of effects. If you now ask 27 countries what we should do about the problems in Africa, you get 27 opinions."
"And then Europe. Of all the superpowers in the world, we are the most naïve. We still think that every Russian yearns for democracy, that every Chinese now lives in a market economy and that the Americans will always help us out. Three times wrong. It is well-intentioned arrogance. We mean well, but for the average Russian, democracy equals chaos. Pensions that are not paid out, hospitals and schools that are closed. The Russian experienced that in the early nineties. And he just wants to have food, get his pension paid and hospitals that run. We have insufficient knowledge and understanding of other cultures or the history of other countries. And therefore not of their motives. The real problem in Europe, however, is Europe itself. We are 27 countries that are far too busy nationally, while we should be careful not to become the victim of the bill. We are by far the weakest link. If there is a conflict in the Middle East, we don't even get calls any more, but we do have to deal with the economic consequences or with the refugees. If we don't do anything, we will be eaten. This means that we must work together and develop a single strategic vision: in the field of foreign policy, but also in the financial and economic field. Trump or Putin are often looked at now, but let's start with ourselves. The partitions in Europe have to go. Suppose we create one insurance market, one energy market and one defence market, then we can not only grow three to five times as fast economically, but also unleash a lot of innovative power. Real innovation requires scale. And there is no such thing with 27 countries. Let's face it, we can't even develop a fighter jet in Europe. If we put all the technological knowledge of those 27 countries into one European knowledge market, we will get somewhere. And of course you can. If the political will is there, anything is possible. We were able to build a euro in six months, because there was political will. Then much more must be possible. We just need to start thinking really European and make fewer national rules."
"That also applies to insurers. They need to scale up more, work together at European and sometimes even global level. Dutch companies, including insurers, still think too much at the national level and often see too little of the opportunities that Europe offers. If we continue to protect our financial market nationally, we will never be able to create a decisive European financial sector that can compete with China or America. Where else are the opportunities? That question is often asked. And I don't want to end on a gloomy note, but I advise insurers to think about the threats at this juncture. This applies not only to insurers, but to all of us. The world has changed. The world we have been used to for the past 35 years, full of predictable economic growth, is no longer there. The global economy is slowing down, investments are falling. Uncertainties are increasing structurally. We all have or will have to deal with that. A credit insurer probably more than an insurer that sells home contents insurance, but be prepared. Read the IMF's international reports and learn how geopolitical turbulence threatens the global economy for a long time. It is not a shower that blows over, but a dark cloud that will linger for a while. I would say: buy an umbrella and a raincoat. To end on a positive note: realise that uncertainties and other risks are coming. It's going to rain for a longer period of time, so make sure you're ready."
(Text: Miranda de Groene - Image: Ivar Pel)