No one is really fine in the European gas chamber but – just to paraphrase Orwell – someone is finer than the others. It is Germany, as you can easily imagine.
Earlier this year, the German industrial production recorded no annual growth and consumer confidence was at very low levels.
However, as is now well-known, since the beginning of the Euro phase Germany has destroyed our manufacturing industry and is replacing us in the major global markets: China, Russia (except for the crazy sanctions due to the situation with Ukraine – an operation much more linked to the US and NATO actions than to the Russian ones).
Hence the crisis of German production was short and regarded the relative compression of the Chinese market, as well as the much more severe negative cycle of the US production.
However, when markets are stolen from the others, everything gets easier and quicker.
The story began with the Social Democrat Chancellor, Gerhard Schroeder, shortly before the phase of the EU single currency started, when – also thanks to the “reabsorption” of the German Democratic Republic (GDR) still underway – he managed the forced lowering of the German mark value and the companies’ production costs, already below the expected Euro waterline, so as to make the “great German factory” already competitive even before the introduction of the single currency.
Moreover the Euro certainly enabled Italy, which was not at all prepared for the single currency, to reconstruct its own debt record, which was approaching the end with an imminent “Argentina-style” perspective.
But the single currency, inevitably too “high,” destroyed the purchasing power of wages and salaries, by halving them, and doubled both production costs and consumer prices.
Italy experienced an 80% deflation, which lasted six month, of which you can easily imagine the social effects.
Social effects experienced not even after the Second World War lost – and that says it all!
Hence Italy was forced to increase exports, which made us gain some positions on the world market, but destroyed – due to an usurious and virtually absent ruling class – the great State-owned industry, sold at a loss, however with one-off “transfers and payments” to the old and new political forces.
Furthermore, the shift to a stupidly “high” currency value further destroyed Italy’s banking system, which is now playing a secondary role compared to the large liquidity areas being created both within the EU and in the rest of the world.
In fact, Italy experienced recession for at least five of the past eight years.
Still today, Italy’s GDP is lower than in 1999 and its sovereign debt has grown by 133% since 1999. Furthermore, since the introduction of the Euro the national average productivity has steadily declined.
But what does it has to do with Germany? Certainly it has to do with Germany.
In fact, the European Union is unable to manage the huge German current account surplus – and indeed it remains silent before it. Said surplus is over 8% – a percentage that no EU Treaty allows and which also funds the current remarkable growth of wages and salaries in Germany (4.5% on average), besides refinancing the local domestic demand, which is the real engine of growth in the current phase in which exports are flagging.
Since the beginning of the 2006 crisis, caused by the US “financial bubble” on the European monetary and banking markets, Germany has slowly but relentlessly forced the other EU countries to be more fiscally “correct”.
This means to increase their domestic taxes in order to support the expected lower purchase of government bonds and to “cash” money to add to their coffers in case of few renewals of bonds at maturity.
Nevertheless, even freshmen in Business and economic universities know that if taxation increases, domestic consumption will decrease and that if the internal market shrinks, there must be an equivalent share of exports offsetting that loss.
However, if the Euro external value changes for each individual country of the Area, Italy’s EU competitors recording a stronger and more stable external value of the Euro will take markets away from Italy also at equivalent prices.
This has meant basically destroying the Italian, Spanish and sometimes even French companies to favour both Germany and the German industrial expansion area beyond the old Iron Curtain.
Since the very beginning, the German labour outside German borders has supported the country’s expansion onto global markets at highly competitive prices, while Italy and the other regions which had not been cynically prepared for the Euro geoeconomics have collapsed under the weight of the unsustainable costs of their exports and international competition.
While former Italian President Ciampi was visiting China’s Great Wall, Chancellor Schroeder quickly landed in Beijing and in one single day signed all the contracts concerning the remarkable expansion of the Volkswagen Group into China.
It is worth recalling that this was exactly the same paradigm used by the Federal Republic of Germany (FRG) against the German Democratic Republic (GDR), reduced to an Anschlűss country, both to avoid the competition of Communist Germany’s companies, which were not performing so poorly, and to use – at a much lower cost – the labour force “released” from those areas.
Hence the model with which the Federal Republic of Germany (FRG) bought the German Democratic Republic (GDR) – with our money, and sometimes even with the GDR money – was replicated for the rest of Europe.
Incidentally, at that time the “moralistic” rules on rigour, which found many inexperienced advocates (but we would also say agents of influence) applied not even to Germany which, in the phase of “rigour”, made three-year investment plans accounting for 5.2% of GDP.
Also at geopolitical level, the strategic relationship between Germany and the United States makes economic sense: the pressure of sanctions against Russia, guilty of taking back what is its own in Crimea and part of Ukraine, undermines the economies more interrelated with Russia, including Italy’s – hence a crisis adds to the other.
The US interest is very clear: the more the European economic fabric and common interest crumble, the more the Dollar area – and, in any case, the US commercial and financial expansion area – is guaranteed and expanded.
The more the United States come back to Europe, the more the German bilateral power on the USA increases and the bilateral power of the other EU countries proportionally decreases. After the notorious “Arab springs”, the latter are now reduced to an internal struggle (such as Italy vs. France for Libya) or to a “joint action” – often fully ineffective – with the United States which, however, think they must walk out of the Middle East, after having madly set fire to it.
In a recently-published book, a CIA executive has candidly admitted that the United States “hoped that the democratic uprising would destroy Al Qaeda” – and we have seen with what tragic and uncontrollable outcomes.
Not to mention the case of the war in Syria and its impact on the EU welfare, which will shortly become totally unsustainable and will place the less cautious and far-sighted EU countries in a tragic situation while, on the contrary, it will create opportunities for profitable investment for the North European and US banks and private insurance companies.
After the EU restrictive rules on the EU Member States’ public budgets, with the 2011 regulations known as “Two Pack Regulations”, France has set itself – at least partially – against the financial (and later political) Germanization of the European Union, while Italy has continued to use the debt lever and the lucky chance provided by the ECB Governor, Mario Draghi, with the programme designed to repurchase – on the secondary market – the surplus of government bonds of countries like Italy.
But it will not last.
There are only two possibilities: either the sequence of “sacrifices” and budgetary constraints is applied – and forget about the story that States spend too much and badly, because all States do so – and hence Italy will no longer have a domestic market to support its industrial output, because it also has a low labour productivity, or it shall incur debt on financial markets and ultimately collapse under the burden of the interest generated by that debt.
Obviously, they will help us die.
Later, they will buy our companies at low cost so as to incorporate them in their European and global networks, with the national workforce that will be a variable – and not a constant – factor of business calculations and profits which will go abroad.
In 2013, Italy already ranked second in the list of Mergers and Acquisition (M&A) of German companies – and it just so happened during the crisis – and currently over 30% of the Italian companies which are now no longer nationally-owned have already been sold to the Germans.
Only in 2013, for example, we recorded as many as 23 deals of German small and medium-sized companies (SMEs) which acquired Italian companies, out of a total of 171 sales of national SMEs between 2013 and 2014.
Given the complexity of these operations, it is obviously not possible to speculate on the activities which are still in progress.
Hence the issue lies in undermining a country and then buy it at very low prices.
A strategy which has long been developed and that Italy, for the fatal inability of its ruling class, did not prepare on time, i.e. before the Euro’s entry into force.
What can be done? Getting out of the single currency is useless.
However, Italy must operate freely on the major global markets where the country can still compete with its European “allies” – and it shall do so quickly and with harsh and resolute methods.
And it must accept foreign to foreign transactions not denominated in Euro, as with China and the Russian Federation.
This is what good intelligence and a ruling class not consisting only of mere parvenus and upstarts, like the current ones, would be for.
Iceland’s Historic(al) Elections
The morning of September, 26 was a good one for Lenya Run Karim of the Pirate Party. Once the preliminary results were announced, things were clear: the 21-year-old law student of the University of Iceland, originating from a Kurdish immigrant family, had become the youngest MP in the country’s history.
In historical significance, however, this event was second to another. Iceland, the world champion in terms of gender equality, became the first country in Europe to have more women MPs than men, 33 versus 30. The news immediately made world headlines: only five countries in the world have achieved such impressive results. Remarkably, all are non-European: Rwanda, Nicaragua and Cuba have a majority of women in parliament, while Mexico and the UAE have an equal number of male and female MPs.
Nine hours later, news agencies around the world had to edit their headlines. The recount in the Northwest constituency affected the outcome across the country to delay the ‘triumph for women’ for another four years.
Small numbers, big changes
The Icelandic electoral system is designed so that 54 out of the 63 seats in the Althingi, the national parliament, are primary or constituency seats, while another nine are equalization seats. Only parties passing the 5 per cent threshold are allowed to distribute equalisation seats that go to the candidates who failed to win constituency mandates and received the most votes in their constituency. However, the number of equalisation mandates in each of the 6 constituencies is legislated. In theory, this could lead to a situation in which the leading party candidate in one constituency may simply lack an equalisation mandate, so the leading candidate of the same party—but in another constituency—receives it.
This is what happened this year. Because of a difference of only ten votes between the Reform Party and the Pirate Party, both vying for the only equalisation mandate in the Northwest, the constituency’s electoral commission announced a recount on its own initiative. There were also questions concerning the counting procedure as such: the ballots were not sealed but simply locked in a Borgarnes hotel room. The updated results hardly affected the distribution of seats between the parties, bringing in five new MPs, none of whom were women, with the 21-year-old Lenya Run Karim replaced by her 52-year-old party colleague.
In the afternoon of September, 27, at the request of the Left-Green Movement, supported by the Independence Party, the Pirates and the Reform Party, the commission in the South announced a recount of their own—the difference between the Left-Greens and the Centrists was only seven votes. There was no ‘domino effect’, as in the case of the Northwest, as the five-hour recount showed the same result. Recounts in other districts are unlikely, nor is it likely that Althingi—vested with the power to declare the elections valid—would invalidate the results in the Northwest. Nevertheless, the ‘replaced’ candidates have already announced their intention to appeal against the results, citing violations of ballot storage procedures. Under the Icelandic law, this is quite enough to invalidate the results and call a re-election in the Northwest, as the Supreme Court of Iceland invalidated the Constitutional Council elections due to a breach of procedure 10 years ago. Be that as it may, the current score remains 33:30, in favor of men.
Progressives’ progress and threshold for socialists
On the whole, there were no surprises: the provisional allocation of mandates resembles, if with minor changes, the opinion polls on the eve of the election.
The ruling three-party coalition has rejuvenated its position, winning 37 out of the 63 Althingi seats. The centrist Progressive Party saw a real electoral triumph, improving its 2017 result by five seats. Prime-minister Katrín Jakobsdóttir’s Left-Green Movement, albeit with a slight loss, won eight seats, surpassing all pre-election expectations. Although the centre-right Independence Party outperformed everyone again to win almost a quarter of all votes, 16 seats are one of the worst results of the Icelandic ‘Grand Old Party’ ever.
The results of the Social-Democrats, almost 10% versus 12.1% in 2017, and of the Pirates, 8.6% versus 9.2%, have deteriorated. Support for the Centre Party of Sigmundur Gunnlaugsson, former prime-minister and victim of the Panama Papers, has halved from 10.9% to 5.4%. The centrists have seen a steady decline in recent years, largely due to a sexist scandal involving party MPs. The populist People’s Party and the pro-European Reform Party have seen gains of 8.8% and 8.3%, as compared to 6.9% and 6.7% in the previous elections.
Of the leading Icelandic parties, only the Socialist Party failed to pass the 5 per cent threshold: despite a rating above 7% in August, the Socialists received only 4.1% of the vote.
Coronavirus, climate & economy
Healthcare and the fight against COVID-19 was, expectedly, on top of the agenda of the elections: 72% of voters ranked it as the defining issue, according to a Fréttablaðið poll. Thanks to swift and stringent measures, the Icelandic government brought the coronavirus under control from day one, and the country has enjoyed one of the lowest infection rates in the world for most of the time. At the same time, the pandemic exposed a number of problems in the national healthcare system: staff shortages, low salaries and long waiting lists for emergency surgery.
Climate change, which Icelanders are already experiencing, was an equally important topic. This summer, the temperature has not dropped below 20°C for 59 days, an anomaly for a North-Atlantic island. However, Icelanders’ concerns never converted into increased support for the four left-leaning parties advocating greater reductions in CO2 emission than the country has committed to under the Paris Agreement: their combined result fell by 0.5%.
The economy and employment were also among the main issues in this election. The pandemic has severely damaged the island nation’s economy, which is heavily tourism-reliant—perhaps, unsurprisingly, many Icelanders are in favor of reviving the tourism sector as well as diversifying the economy further.
The EU membership, by far a ‘traditional’ issue in Icelandic politics, is unlikely to be featured on the agenda of the newly-elected parliament as the combined result of the Eurosceptics, despite a loss of 4%, still exceeds half of the overall votes. The new Althingi will probably face the issue of constitutional reform once again, which is only becoming more topical in the light of the pandemic and the equalization mandates story.
New (old) government?
The parties are to negotiate coalition formation. The most likely scenario now is that the ruling coalition of the Independence Party, the Left-Greens and the Progressives continues. It has been the most ideologically diverse and the first three-party coalition in Iceland’s history to last a full term. A successful fight against the pandemic has only strengthened its positions and helped it secure additional votes. Independence Party leader and finance minister Bjarni Benediktsson has earlier said he would be prepared to keep the ruling coalition if it holds the majority. President Guðni Jóhannesson announced immediately after the elections that he would confirm the mandate of the ruling coalition to form a new government if the three parties could strike a deal.
Other developments are possible but unlikely. Should the Left-Greens decide to leave the coalition, they could be replaced by the Reform Party or the People’s Party, while any coalition without the Independence Party can only be a four-party or larger coalition.
Who will become the new prime-minister still remains to be seen—but if the ruling coalition remains in place, the current prime-minister and leader of the Left-Greens, Katrín Jakobsdóttir, stands a good chance of keeping her post: she is still the most popular politician in Iceland with a 40 per cent approval rate.
The 2021 Althingi election, with one of the lowest turnouts in history at 80.1%, has not produced a clear winner. The election results reflect a Europe-wide trend in which traditional “major” parties are losing support. The electorate is fragmenting and their votes are pulled by smaller new parties. The coronavirus pandemic has only reinforced this trend.
The 2021 campaign did not foreshadow a sensation. Although Iceland has not become the first European country with a women’s majority in parliament, these elections will certainly go down in history as a test of Icelanders’ trust to their own democracy.
From our partner RIAC
EU-Balkan Summit: No Set Timeframe for Western Balkans Accession
On October 6, Slovenia hosted a summit between the EU and the Western Balkans states. The EU-27 met with their counterparts (Albania, Bosnia-Herzegovina, Serbia, Montenegro, North Macedonia and Kosovo) in the sumptuous Renaissance setting of Brdo Castle, 30 kilometers north of the capital, Ljubljana. Despite calls from a minority of heads of state and government, there were no sign of a breakthrough on the sensitive issue of enlargement. The accession of these countries to the European Union is still not unanimous among the 27 EU member states.
During her final tour of the Balkans three weeks ago, German Chancellor Angela Merkel stated that the peninsula’s integration was of “geostrategic” importance. On the eve of the summit, Austrian Chancellor Sebastian Kurz backed Slovenia’s goal of integrating this zone’s countries into the EU by 2030.
However, the unanimity required to begin the hard negotiations is still a long way off, even for the most advanced countries in the accession process, Albania and North Macedonia. Bulgaria, which is already a member of the EU, is opposing North Macedonia’s admission due to linguistic and cultural differences. Since Yugoslavia’s demise, Sofia has rejected the concept of Macedonian language, insisting that it is a Bulgarian dialect, and has condemned the artificial construction of a distinct national identity.
Other countries’ reluctance to join quickly is of a different nature. France and the Netherlands believe that previous enlargements (Bulgaria and Romania in 2007) have resulted in changes that must first be digested before the next round of enlargement. The EU-27 also demand that all necessary prior guarantees be provided regarding the independence of the judiciary and the fight against corruption in these countries. Despite the fact that press freedom is a requirement for membership, the NGO Reporters Without Borders (RSF) urged the EU to make “support for investigative and professional journalism” a key issue at the summit.”
While the EU-27 have not met since June, the topic of Western Balkans integration is competing with other top priorities in the run-up to France’s presidency of the EU in the first half of 2022. On the eve of the summit, a working dinner will be held, the President of the European Council, Charles Michel, called for “a strategic discussion on the role of the Union on the international scene” in his letter of invitation to the EU-Balkans Summit, citing “recent developments in Afghanistan,” the announcement of the AUKUS pact between the United States, Australia, and the United Kingdom, which has enraged Paris.
The Western Balkans remain the focal point of an international game of influence in which the Europeans seek to maintain their dominance. As a result, the importance of reaffirming a “European perspective” at the summit was not an overstatement. Faced with the more frequent incursion of China, Russia, and Turkey in that European region, the EU has pledged a 30 billion euro Economic and Investment Plan for 2021-2027, as well as increased cooperation, particularly to deal with the aftermath of the Covid-19 pandemic.
Opening the borders, however, is out of the question. In the absence of progress on this issue, Albania, North Macedonia, and Serbia have decided to establish their own zone of free movement (The Balkans are Open”) beginning January 1, 2023. “We are starting today to do in the region what we will do tomorrow in the EU,” said Albanian Prime Minister Edi Rama when the agreement was signed last July.
This initiative, launched in 2019 under the name “Mini-Schengen” and based on a 1990s idea, does not have the support of the entire peninsular region, which remains deeply divided over this project. While Bosnia and Herzegovina and Montenegro are not refusing to be a part of it and are open to discussions, the Prime Minister of Kosovo, Albin Kurti, who took office in 2020, for his part accuses Serbia of relying on this project to recreate “a fourth Yugoslavia”
Tensions between Balkan countries continue to be an impediment to European integration. The issue of movement between Kosovo and Serbia has been a source of concern since the end of September. Two weeks of escalation followed Kosovo’s decision to prohibit cars with Serbian license plates from entering its territory, in response to Serbia’s long-standing prohibition on allowing vehicles to pass in the opposite direction.
In response to the mobilization of Kosovar police to block the road, Serbs in Kosovo blocked roads to their towns and villages, and Serbia deployed tanks and the air force near the border. On Sunday, October 3, the conflict seemed to be over, and the roads were reopened. However, the tone had been set three days before the EU-Balkans summit.
German Election: Ramifications for the US Foreign Policy
In the recent German election, foreign policy was scarcely an issue. But Germany is an important element in the US foreign policy. There is a number of cases where Germany and the US can cooperate, but all of these dynamics are going to change very soon.
The Germans’ strategic culture makes it hard to be aligned perfectly with the US and disagreements can easily damage the relations. After the tension between the two countries over the Iraq war, in 2003, Henry Kissinger said that he could not imagine the relations between Germany and the US could be aggravated so quickly, so easily, which might end up being the “permanent temptation of German politics”. For a long time, the US used to provide security for Germany during the Cold War and beyond, so, several generations are used to take peace for granted. But recently, there is a growing demand on them to carry more burden, not just for their own security, but for international peace and stability. This demand was not well-received in Berlin.
Then, the environment around Germany changed and new threats loomed up in front of them. The great powers’ competition became the main theme in international relations. Still, Germany was not and is not ready for shouldering more responsibility. Politicians know this very well. Ursula von der Leyen, who was German defense minister, asked terms like “nuclear weapons” and “deterrence” be removed from her speeches.
Although on paper, all major parties appreciate the importance of Germany’s relations with the US, the Greens and SPD ask for a reset in the relations. The Greens insist on the European way in transatlantic relations and SPD seeks more multilateralism. Therefore, alignment may be harder to maintain in the future. However, If the tensions between the US and China heat up to melting degrees, then external pressure can overrule the internal pressure and Germany may accede to its transatlantic partners, just like when Helmut Schmid let NATO install medium-range nuclear missiles in Europe after the Soviet Union attacked Afghanistan and the Cold War heated up.
According to the election results, now three coalitions are possible: grand coalition with CDU/CSU and SPD, traffic lights coalition with SPD, FDP, and Greens, Jamaica coalition with CDU/CSU, FDP, and Greens. Jamaica coalition will more likely form the most favorable government for the US because it has both CDU and FDP, and traffic lights will be the least favorite as it has SPD. The grand coalition can maintain the status quo at best, because contrary to the current government, SPD will dominate CDU.
To understand nuances, we need to go over security issues to see how these coalitions will react to them. As far as Russia is concerned, none of them will recognize the annexation of Crimea and they all support related sanctions. However, if tensions heat up, any coalition government with SPD will be less likely assertive. On the other hand, as the Greens stress the importance of European values like democracy and human rights, they tend to be more assertive if the US formulates its foreign policy by these common values and describe US-China rivalry as a clash between democracy and authoritarianism. Moreover, the Greens disapprove of the Nordstream project, of course not for its geopolitics. FDP has also sided against it for a different reason. So, the US must follow closely the negotiations which have already started between anti-Russian smaller parties versus major parties.
For relations with China, pro-business FDP is less assertive. They are seeking for developing EU-China relations and deepening economic ties and civil society relations. While CDU/CSU and Greens see China as a competitor, partner, and systemic rival, SPD and FDP have still hopes that they can bring change through the exchange. Thus, the US might have bigger problems with the traffic lights coalition than the Jamaica coalition in this regard.
As for NATO and its 2 percent of GDP, the division is wider. CDU/CSU and FDP are the only parties who support it. So, in the next government, it might be harder to persuade them to pay more. Finally, for nuclear participation, the situation is the same. CDU/CSU is the only party that argues for it. This makes it an alarming situation because the next government has to decide on replacing Germany’s tornados until 2024, otherwise Germany will drop out of the NATO nuclear participation.
The below table gives a brief review of these three coalitions. 1 indicates the lowest level of favoritism and 3 indicates the highest level of favoritism. As it shows, the most anti-Russia coalition is Jamaica, while the most anti-China coalition is Trafic light. Meanwhile, Grand Coalition is the most pro-NATO coalition. If the US adopts a more normative foreign policy against China and Russia, then the Greens and FDP will be more assertive in their anti-Russian and anti-Chinese policies and Germany will align more firmly with the US if traffic light or Jamaica coalition rise to power.
|Issues Coalitions||Trafic Light||Grand Coalition||Jamaica|
1 indicates the lowest level of favoritism. 3 indicates the highest level of favoritism.
In conclusion, this election should not make Americans any happier. The US has already been frustrated with the current government led by Angela Merkel who gave Germany’s trade with China the first priority, and now that the left-wing will have more say in any imaginable coalition in the future, the Americans should become less pleased. But, still, there are hopes that Germany can be a partner for the US in great power competition if the US could articulate its foreign policy with common values, like democracy and human rights. More normative foreign policy can make a reliable partner out of Germany. Foreign policy rarely became a topic in this election, but observers should expect many ramifications for it.
Nigeria becomes the first country in Africa to roll out Digital Currency
The Central Bank of Nigeria joined a growing list of emerging markets betting on digital money to cut transaction costs...
US Targets Militants in Turkish-Held Area in Syria
Central Command spokesman Army Major John Rigsbee announced on Friday, October 23, the killing of senior al-Qaeda leader Abdul Hamid...
Multilateralism ‘struggling’ to solve world challenges
While multilateralism remains “committed to solving global challenges”, the deputy UN chief said on Sunday, United Nations Day, it is...
Do You Really Need Name-Brand Cartridges?
Cartridges from printer manufacturers like Hewlett-Packard are notoriously expensive. Considering the price of their basic equipment, ink may cost almost...
General Colin Powell: A Decent Man in Indecent Society
Theologian Reinhold Niebuhr’s (1892-1932) famous treatise Moral Man and Immoral Society (1932) needs significant revisitation through a personal case: former...
Support the UN’s leadership position and multilateralism
Despite its inability to fully satisfy people’s expectations on some issues, the United Nations and its agencies, as well as...
Taliban Takeover and Resurgence of Al-Qaeda in Afghanistan
As a Security and International Relations student and someone who lived in Afghanistan, I believe that the withdrawal of the...
Defense4 days ago
Will India be sanctioned over the S-400 Air Defense System?
Intelligence4 days ago
Sino-Russian regional activities after Afghanistan
Economy3 days ago
Sustainable Agriculture in Modern Society
East Asia3 days ago
Importance of peace in Afghanistan is vital for China
International Law2 days ago
The End of the West in Self-annihilation (Intentionality, Directionality and Outcome)
Africa3 days ago
Muscle Alone Will Not Be Enough to Release Nigeria from a Perpetual Stage of Instability
Reports3 days ago
Renewable Energy Jobs Reach 12 Million Globally
South Asia3 days ago
Bangladesh violence exposes veneer of Indo-Bangladesh bonhomie