Rosa & Roubini Associates

118 Pall Mall London SW1Y 5ED | +44(0)207 1010 718

Making sense of this world

For any enquiry, please contact

Rosa & Roubini Associates is a consultancy firm providing independent research and advisory services

To discuss subscribing to our services, please contact us

About us

Independent Research and Advisory Services

Advisory Services

R&R provides independent advice on global issues

Find out more

Independent Research

R&R provides truly independent research on the global economy

Find out more

R&R Weekly Column

European Elections, 2019: A Key Test For The Survival Of The EU


by Brunello Rosa

20 May 2019  


All EU states will hold elections for the European Parliament this week, between Thursday May 23rd and Sunday May 26th. The EU Parliament will be completely renewed, with all 750 seats up for grabs. Because the UK will still take part in this election, the number of MEPs elected will not fall to 705, as had been planned to occur until the UK asked for its first extension to the Article 50 process in late March.

We have already discussed the importance of this election in a number of publications, particularly as a result of the increase in the share of seats that “populist” parties are expected to win. In our paper on the rise of the Populist International, we anticipated how these populist parties might eventually increase their power during this parliamentary term if an economic and financial crisis were to shatter the alliance between the European People’s Party (EPP), Socialists, Liberals, and, perhaps, the Greens, which is expected to emerge following the elections this week. In order to achieve that, the populist parties will have to make an agreement with the EPP, as, for example, has occurred in Austria, where the EPP’s Chancellor Sebastian Kurz is allied with FPÖ’s Heinz-Christian Strache. They would do this by making use of the presence of populist, authoritarian, or nationalistic parties within the EPP, such as Victor Orban’s Fidesz (which has been temporarily suspended from the EPP for its anti-Juncker campaign in Hungary). 

In this respect, there have been very interesting developments, recently. A couple of weeks ago, Orban himself declared several weeks ago that he will not support the EPP’s candidate for the European Commission presidency (so-called Spitzenkandidat) Manfred Weber. This could be a signal of an initial rupture between Fidesz and the EPP, which would have the effect of making the EPP smaller yet less “compromised” by populist parties. On the other hand, a rupture of this kind would also make the group of populist parties larger in the new EU Parliament. This week, the Austrian government itself collapsed after the release of a video showing Strache dealing with supposed intermediators of Russian interests

Click here to read previous columns


So, the future of the EU is at stake in this election. But the election’s importance is not only limited to its historical and geo-strategic significance. The implications for future European policymaking have been discussed at length in a series of papers we wrote about the ongoing European musical chairs game, in which all the most important EU positions will be filled in coming months, including the presidencies of the EU Commission, Council and Parliament and, most importantly for financial markets, the ECB. 

The choice of who heads these institutions will make it clear what fiscal policy stance the EU will take; crucially, at a time when tensions over Italy’s deficit and debt are re-emerging. Consequently, this will determine what the ECB will be asked to do to support the fragile and uneven expansion of the Eurozone economy (which is now slowing down) or to save the euro area from a possible breakup when the next crisis hits (as the ECB did previously during the crisis of 2011-2012).

As usual, these European elections will also be read with a domestic lens within all of the EU countries. In Germany, they could mark the end of Angela Merkel’s tenure as Chancellor (in favour of her successor as CDU leader Annegret Kramp-Karrenbauer), especially if Merkel decides to lead the EU Council. In France, Macron will need to convince his electorate that he can still win more votes than Marine Le Pen’s party (now re-named Rassémblement National). 

In Italy, this election will be a referendum on Salvini’s leadership, and could mark the collapse of the fragile M5S-Lega coalition. In the UK, where the participation in this election is considered a national humiliation, these elections will probably mark the departure of Theresa May from Number 10 Downing Street in the coming weeks, whether Brexit is delivered or not  

Latest research

Fin-Tech: Towards A Tech-Driven Cold War


by Klecha & Co. and Rosa & Roubini Associates

21 May 2019

READ paper

US-China Trade War Risks and Impact on US Inflation, Growth and Fed’s Monetary Policy


by Nouriel Roubini and Brunello Rosa

16 May 2019

read paper

MARKET VIEWS - Lebanon: An ‘Unstable Equilibrium’ Supported By Capital Inflows


by Alessandro Magnoli, Farah Aladsani, Fawaz Sulaiman Al Mughrabi

14 May 2019

read paper

The Geopolitical Corner by John Hulsman

Venezuela and the Iron Laws of Revolution


1 February 2019


“You cannot make a revolution with silk gloves.”- Joseph Stalin

Introduction: The Old Monster’s Wisdom


In December 2014, my good friend and colleague Teun Van Dongen and I wrote a piece in which, we systematized what crucial factors determined whether a revolution succeeded or failed. This current piece will draw heavily on our ground-breaking work*, in assessing the chances for successful revolution in Venezuela. 

We wrote, “We began with a story about Joseph Stalin at the height of World War II. In December 1942, the Red Army was finally turning the tables on the Wehrmacht. After a seemingly endless series of debilitating defeats, the Soviets brought the German war machine to a halt at Stalingrad, where the Wehrmacht’s notorious Sixth Army found itself surrounded, outnumbered and outgunned. Back in the Kremlin, Stalin was planning the offensive that would put an end to the battle in his namesake city and seal the fate of the German army. He decided that General Konstantin Rokossovsky should lead the operation rather than General Andrey Yeremenko, who had been responsible for the defense of Stalingrad until then.” 

“The Soviet dictator could tell, however, that Marshall Georgi Zhukov had his reservations. “Why don’t you say anything?” he asked, to which Zhukov replied: “Yeremenko will be very hurt.” Understandably nonplussed by this sudden display of concern for other people’s emotions from a commander who had never had any qualms about using his men as mere cannon fodder, Stalin shot back: “It’s not a time for feeling hurt. We’re not schoolgirls, we’re Bolsheviks!”” 

“In the early, heady, irrational days of the Arab Spring, for our sins both of us were forced to attend foreign policy events where we were breathlessly told in no uncertain terms that the political rules of the road had been entirely upended; history no longer mattered. The telecommunications revolution allowed people to organize so quickly, efficiently, and differently--to share information at the speed of the click of a computer key--that the days of tyrants everywhere were surely numbered. Twitter, Facebook, You Tube and the rest had definitively changed the world beyond all recognition. Power was out, communicating was in.” 

“Just a few years on, surveying the ruins of the Arab Spring in Egypt, Bahrain, Libya, and especially Syria, these callow utopian claims look more than a little silly. But beneath this colossal analytical failure a far more important point needs making. There are iron laws governing revolutionary outcomes, outputs that have been tested and proven by history. The place to start is with Stalin’s quotation—people living alone in their basements with their parents are unlikely to be latter day Robespierres, Castros, Lenins, or Maos. But if it is easy (and necessary) to mock the ridiculous pretensions to world-historical change CNN and the others made in the first flush of the Arab Spring, it is far more important to look at what actually makes for successful revolutions, in order to underline the real reasons for the failure of Revolution 2.0.” 

The First Law: Organize (And not online)

We wrote, “A gloomy but almost infallible rule of revolutions is that the most organized group almost always wins. The pro-independence American colonists may (just) have amounted to a plurality—and never more than that--but they were far better organized than the pro-English colonists ever were. Likewise, the Bolsheviks in Russia never had anything close to majority popular support, any more than the French Jacobins did. What all three revolutionary groups did possess however was a relatively disciplined, centralized leadership, capable of quickly and decisively taking decisions, that crucially would be followed by their supporters in the field. 

“In other words, there was praxis, a Greek notion meaning the unity of thought and action. This decisive advantage allowed all three to overcome vast popular opposition to their revolutionary goals, as despite the impressive numbers opposing them, the enemies of all three were ultimately unable to coherently turn numerical superiority to their advantage, given their disorganized nature.”

For a long while, this has been the Venezuelan opposition’s besetting sin. Despite having an opponent in President Nicolas Maduro who is as deeply uncharismatic and he is an economic illiterate—Chavez without the charisma—has has managed to rather easily maintain power as the opposition has been deeply fragmented, bickering constantly. A major reason for this is that its putative head, Leopoldo Lopez, is as divisive as he is popular, as envied as he is admired. 

Lopez, in promoting the claims of his protégée Juan Guaido, the Head of the National Assembly and now declared interim president, appears to be cleverly turning attention away from himself and toward a fresh face unscarred by years of internecine battles. This clever approach has made it quite possible that at long last the Venezuelan opposition has sufficiently organized to challenge the Maduro regime for supremacy.

The Second Law: Have a winning narrative

We wrote, “Revolutions, for all the giddy slogans and millennial promises, are very practical things when it comes to assuming power…In revolutions it is never enough to state the obvious—that the entrenched leadership is corrupt, incompetent, and unfeeling. Better to have a goal and then revolt, rather than to rise up and then try to figure out the reasons why…Something better must be offered as a governing program (however unrealistic) that binds revolutionary supporters together as it energizes them, an ultimate reward for the revolutionary risks being taken that is fervently believed in.”

“The best two single revolutionary examples regarding controlling the narrative come from the two extremes of the American and Russian Revolutions. Indeed, the whole point of Jefferson’s magisterial Declaration of Independence was to lay before mankind the reasons for the colonists’ revolt—what their ill-treatment at the hands of the English Crown amounted to—and then to offer a very attractive way forward, based on the principles of life, liberty, and property, individual freedoms leading to democratic self-governance. Even today, it is hard to think of a more persuasive and seductive document for advertising a cause than Jefferson’s masterpiece.” 

“Ironically, about the only other narrative in contention would have to be Lenin’s invocation of ‘Peace, Bread, and Land’ at the start of the Bolshevik Revolution of 1917. Peace was shorthand for ending the Tsar’s hated and calamitous entry into World War I, a folly the weak Kerensky government perpetuated to its great cost. Bread meant a focus on the internal chaotic conditions within the Russian Empire itself would be the new priority. And Land signified that at last the deeply unpopular nobility would be forced to share the bounties of the country with the vast majority of its citizens. Incredibly timely, the slogan was startlingly on point as to an articulated revolutionary program, one that secured wide popularity. It is a prime example of the fundamental benefit of working out the reasons for revolution, ahead of having one.” 

Here again, the Venezuelan opposition has had time to do some real thinking. Refusing to be drawn into the great power machinations buffeting their proposed revolt—with the US, and regional powers Brazil and Argentina on their side, even as long-term Maduro backers Cuba, China and Russia oppose them—Guaido has consistently seen events in terms of the nationalistic hopes of native Venezuelans; that to stand tall again, the country must not only displace the thuggish, corrupt, crooks now running it, but install Social Democratic nationalists who have the country, and not either their selfish interests or foreign bakers, at the center of their thinking. Such an old-fashioned nationalist revolution as a narrative ought to play well with both the people in the street, as well as the crucial armed forces.

Read Previous Geopolitical Comments by John Hulsman

The Third Law: Shoot

We wrote, “Revolutions may be carried out in the name of hopes, dreams and ideals, but their outcomes are decided by force. In revolutions, much like in love and war, everything is fair, and revolutions are often literally matters of life and death for the parties involved. Consequently, rules, rights and institutional norms mean little to nothing in revolutionary situations. This being the case, it is unsurprising that many successful revolutionary organizations and movements put much effort into building or gaining control over the armed forces.” 

“For instance, even in the days preceding the October Revolution, Leon Trotsky, at the time the Bolsheviks’ second in command after Lenin, was already bringing the Russian army under Bolshevik control, aware of the need to protect the revolution against its many enemies. In the same vein, Trotsky later played a major role in the build-up of the Red Army, which was instrumental in saving the Bolshevik regime from being crushed by a group of rogue counter-revolutionary generals from the Imperial Russian Army.”

“Other obvious examples of the importance of military clout for the survival of a revolution include China, Cuba and the US. In Cuba and China, the revolution marked the end of a protracted military struggle, and the American Revolution was only saved from defeat by a military force that was hastily cobbled together to fend off the attempts of the British Crown to restore order in the colonies.” 

“If these examples tell us anything, it’s that revolutions are often the beginning (Russia, America) or the end (Cuba, China) of a fierce armed struggle for control. Revolutions are challenges against very powerful groups and institutions, which are highly unlikely to abandon their position without a fight.” 

While Guaido is to be lauded for immediately offering an amnesty to the armed forces—long in thrall at the senior levels to both Chavez and now Maduro—if they come over to his side, this has yet to happen in a meaningful way. While the army has not yet crushed the Venezuelan opposition’s bid for power, neither has it turned against the clueless Maduro regime. 

At a senior level it may be too much to hope this will happen. The Maduro government has long had a military hue, where senior officers have shared in plundering the state; it is hard to see them easily betraying a president who has allowed their corruption to flourish. However, mid-level officers--the Majors and Colonels who have not been enriched and who may well have family members amongst the demonstrators--may just be able to be reached. For at present, despite his best efforts, Guaido has been unable to swing the army around to his cause. Without it, it is impossible to see how the opposition can ultimately win.

The Fourth Law: Find Your Useful Idiots

We wrote, “It is true that revolutionaries are often driven by a fanatical belief in the correctness and righteousness of their own view and display an equally vehement hostility towards the views of others, but that has not kept them from building coalitions to achieve their political goals. Short-lived as such alliances may be they are crucial to the fulfillment of the revolutionary project.” 

“One of the most dramatic demonstrations of the importance of building coalitions in revolutionary campaigns concerns the Chinese Communist Party (CCP) under Mao Tse-tung, one of the most cold-blooded, calculating practitioners of realpolitik on the radical left. In 1927, the CCP was suddenly attacked by the Guomindang, a nationalist movement that had joined forces with the communists to fight the warlords who ruled China at the time.”

“The Guomindang killed thousands of communists in this surprise attack, but for Mao this was no reason not to restore the alliance a decade later, when he needed more manpower to rid China of the colonial reign of the Japanese emperor. Afterwards, of course, the communists turned against the nationalists again, and defeated them in a guerrilla war that would end with the Chinese revolution of 1949.” 

“Another revolutionary leader who displayed tactical acumen in dealing with other parties in the revolutionary struggle is Fidel Castro, who managed to draw on very different sources of support for his guerrilla campaign against the Cuban dictator Fulgencio Batista. 

When it served his purposes, Castro explicitly sought to unite the anti-Batista opposition around a common strategy, knowing full well that his guerrilla forces would stand a better chance if they wouldn’t have to go it alone. The Bolsheviks and the Shia firebrand Ayatollah Ruhollah Khomeini, who became Iran’s head of state after the toppling of the Persian shah in 1979, found their useful idiots as well, making and breaking all the coalitions they needed to in order to achieve their goals.” 

“In order to be a credible partner to other parties in a conflict, an organization must have someone who can speak on its behalf. One of the main disadvantages of the decentralized, networked organizational structure of the protest movements in the Arab Spring is that they lacked this ability to act as an interlocutor that other parties can count on.” 

“Few revolutionary movements and organizations achieve success entirely on their own, and especially since in the Arab Spring the protest movements found themselves in a situation where other players were holding the guns, they made a grave error by not putting more effort into winning over some useful idiots.” 

The Venezuelan opposition has tried to encourage this coalition-building process, both with the military and by encouraging disaffected segments of the Venezuelan elite to join it. So far, despite being analytically on target in seeing the value of such (temporary) alliance building, this necessary coalition has yet to form.


We wrote, “there are these fundamental lessons to be learned from successful revolutions, iron laws that apply from Castro’s Cuba to Adams’s America. Just as they applied in the past, these iron laws can be an invaluable analytical guide for the future, pointing out the likely success of future insurrections…As Stalin terribly but accurately observed, ruthless men who understand the cold but enduring lessons of power win revolutions, not those involved in a Children’s Crusade.”

By looking in detail at the iron laws of revolution, it is clear that the efforts to unseat the Maduro regime have come a good way, but are not there yet in terms of ultimate success. While the opposition is now more united than ever before, and while a coherent nationalist narrative for why demonstrators must take the risk of rebelling has been put forward, without force behind their project and without alliances with mid-ranking officers in the Venezuelan army and disaffected members of Maduro’s elite, at present the revolt amounts to a tantalizing near miss. 

However, the analytical metric ahead is clear. If Guaido and his supporters can ally with the men with the guns, his success is almost certain, just as a failure to do so will lead to his demise. The iron laws of revolution tell us everything in Venezuela now sits on a knife’s edge.

This article was originally published on the  Author's LinkedIn Page. John Hulsman's new book, To Dare More Boldly: The Audacious Story of Political Risk, was published by Princeton University Press in April 2018.'

* see

R&R offers yearly subscription services and tailored research

If you want to activate a trial of our research and services

CALL US ON  +44 (0)207 1010 718


Looking Ahead

The Week Ahead


Week  20 - 26 May 2019


Uneven Growth Slowdown Continues 

In the EZ, the manufacturing sector is expected to remain weak (EZ Markit manuf. PMI, c: 48.2; p: 47.9; Germany Markit manuf. PMI; c: 45.0; p: 44.4). 

On May 23-26, 2019 the EU parliamentary elections are likely to register a strong performance of populist and nationalist parties – e.g.: the French National Rally (Rassémblement National) is ahead in the polls. 

In Japan, growth is expected to remain stagnant (GDP Q1, c: 0.3% y-o-y; p: -0.3) and the industrial sector is likely to decelerate (IP: c: -4.6% y-o-y; p: -1.1). 

Inflation is expected to remain subdued in Japan (c: 0.4% y-o-y; p: 0.5%) and the UK (a: 2.0%; p: 1.9).   

The Quarter Ahead


Geopolitical Risks Weigh On Economic Growth And Financial Stability

In the US, the macro-conditions for Fed cuts – at the moment not in place – could start materializing. Trade tensions with the EU and Japan are likely to soften: President Trump deferred the decision to place tariffs on EU and Japanese carmakers, who “now have 180 days to agree to a deal that would ‘limit or restrict’ their exports to the US”. In the US, rising global trade tensions reinforce expectations of a rate cut in 2019: the market probability increased to 73% (p: 57%). Delayed China-US trade talks and the possibility of a trade war are likely to keep the USD supported.

The US-UK Special Relationship could be affected if the UK were to allow Huawei to build 5G infrastructure.

In the EZ, analysts are pessimistic about the economic outlook as sentiment falls (a: -1.6; c: 1.0; p: 4.5). 

In the UK, a fourth vote on PM May’s Brexit plan will take place on June 3. Another defeat would increase pressure on PM May to resign. 

In China, as US-China trade hostilities reignite (new tariff on USD 60bn of US imports will be effective from June 1), the PBOC is likely to retain a supportive stance (an RRR cut has already been announced for small and mid-sized banks). The USD/CNY will likely be range-bound around 6.9, after depreciating from 6.7 on trade tensions. 

India remains vulnerable to capital outflows driven by trade war escalations; below-target inflation and a weak growth outlook justify the RBI’s accommodative path. 

In Turkey, political tensions with the US are likely to rise, as the Turkish foreign minister stated “neither postponing nor cancelling the delivery of the Russian S-400 system, scheduled for July, is ‘on the agenda’”.  

Last week's Summary (13 - 19 May 2019)

Real Economy: Further Indications Of Global Slowdown 

In the US, retail sales came in weaker-than-expected (Retail Sales Apr., a: -0.2% m-o-m; c: 0.2%; p: 1.7%), due to lower spending on clothes, appliances, and building materials. 

In the EZ, Q1-2019 growth stalled (a: 1.2% y-o-y; c: 1.2%; p: 1.2%) and IP remained weak (IP Mar., a: -0.6% y-o-y; c: -0.8%; p: -0.3%). 

In the EZ, inflation remained unchanged at 1.7% y/y.

In China, the government announced retaliatory tariffs on imports from the US, and all April data showed weakness: retail sales (a: 7.2% y-o-y; c: 8.6%; p: 8.7%), IP (a: 5.4% y-o-y; c: 6.5%; p: 8.5%), new home sales, and fixed asset investment declined. 

In Turkey, the monthly C/A deficit rose to its lowest level since October 2015 (C/A Mar., a: USD -0.589 bn; c: -0.984bn; p: -0.718bn). Inflation remains subdued.  

Financial Markets: Trade Tensions Slow Down Chinese And US Markets

Market drivers: trade tensions and disappointing economic data in both the US and China overshadowed positive indicators in Europe. 

Stocks: w-o-w, global stocks fell (MSCI ACWI, -0.8%), led by the US (S&P 500, -0.8%). EM tumbled (MSCI EMs, -3.6%). Volatility remains unchanged (VIX S&P 500, 0 points to 16.0, 52w avg.: 16.1; 10y avg.: 17.4). 

Bonds: Globally, indices rose w-o-w (BAML Global bond index, 0.3%). In EMs, weekly issuances have increased to USD 6.9bn (p: 5.3) and EUR 19.6 (p: 0). In MENA, debt supply stands at USD 53.7bn y-t-d compared to USD 50.8bn over the same period in 2018. 

FX: the USD appreciated against a basket of currencies (DXY, +0.7%); the EUR and the GBP fell (EUR/USD, -0.7% at 1.116); (GBP/USD,  -2.2% at 1.272). EM currencies declined (MSCI EMs, -1.1% at 1,612).

Commodities: Oil prices increased (Brent, 2.3% to 72.21 USD/b). 

Making Sense of This World

Subscribe to receive our free weekly Viewsletter "Making Sense of This World"

Read R&R's Past ViewsLetters

Go to The Archive

R&R Working Paper Series

“Hoping For A Rebound” - Key Takeaways From The IMF Spring Meetings 19-4-2019

Contact Us


For any enquiry please send an email to:

Rosa & Roubini Associates

118 Pall Mall, St. James's, London SW1Y 5ED, United Kingdom

+44 (0)207 1010 718