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The Brexit issue

Giancarlo Elia Valori

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Currently Great Britain’s annual net budgetary transfers to the European Union amount to 13 billion pounds. In various forms, every year the European Union injects 7 billion pounds into the British economy.

Hence, while – as a result of Brexit – Great Britain shall renegotiate the trade agreements with the European Union, it shall simultaneously reshape its trade flows also with the United States, Japan and China.

Not to mention the 60 Commonwealth nations, which would become a new and huge replacement area for all the economic sectors in which the EU incurs more difficulties in promoting British companies.

It is certainly a great economic change, but also a strategic and geopolitical revolution which many experts are already analyzing in Great Britain.

It is also worth recalling that over 50% of the current British trade regards the EU, while the trade balance with the other nations refers to Treaties reached only through the frame, namely the European regulatory framework.

And not all European frames have favored the British economy.

It is a painful mystery how we can imagine a Union of countries competing one another, with largely overlapping economies, in a context of international trade expansion, which uses one currency only (but this is not the British case), but has no common tax policy nor pools the public debt.

An eternal situation of countries which always quarrel and compete, but have more convergent interests than it may seem.

Sooner or later, however – as always happens within alliances – a leader creating a hierarchy will emerge.

Hence Brexit is Great Britain’s way to say that it no longer wishes to accept a German-led European Union.

Therefore Great Britain is reacting to an EU crisis which is structural and has not only merely commercial roots, but also strong geopolitical and strategic ones.

In fact, the idea of some British economists is that reformulating the Treaties with the EU itself and, at the same time, with China, the Russian Federation and the United States – pending the TTIP – is more useful than indulging in a massive negotiation between the EU and these external commercial areas.

A negotiation that would inevitably favor the continental economies at the expense of the British one, which has another productive configuration compared to the German or the Spanish ones.

Hence, at analytical level, the pros and cons, namely the Brexit and the Bremain are equal, and no one can now evaluate the specific weight of each economic or political choice.

For Great Britain remaining in the EU means to avoid the tariff barriers and the commercial brokerage costs which the Union has abolished.

Therefore leaving the European system could be dangerous.

Nevertheless, given Great Britain’s economic size and importance, the Brexit supporters think it is always possible to negotiate new and more favorable terms and conditions with the EU.

Moreover, outside the European Union, Great Britain will be in a position to renegotiate a new global tariff system without being obliged to be subject to EU regulations.

The new trade rules could certainly stimulate further internationalization of the British economy, which would have open doors in China, Japan and Russia.

All this while EU exports are shrinking.

With Brexit, Great Britain could also decide to carry out dumping on growing markets and quickly replace the exports of many EU countries, especially those in crisis.

Furthermore Great Britain pays 340 pounds a year to the EU for each household, while earning approximately 3,000 for each household.

Moreover, should Great Britain leave the European Union, the average costs would not decrease, because there would always be costly mechanisms for access to the European market or to the other geoeconomic systems.

Conversely, should Great Britain stop making transfers to the EU, the 350 million pounds a week (half of the British school budget), which are the cost for remaining in the EU and comply with its rules, could be spent to create new companies and improve vocational and scientific training – an issue to which Great Britain is particularly sensitive, as is the case with all the economies in which the service sector is particularly large and developed.

Moreover, leaving the EU does not absolutely mean reducing migration flows to Great Britain, as claimed by the Brexit opponents. After all, Great Britain could carry out more stringent controls at its borders thus avoiding – as currently happens – differentiating between the immigrants coming from the EU and the ones coming from other continents.

Furthermore, many Brexit supporters point out that now Great Britain counts for very little within the EU and hence it is highly unlikely for this situation to improve if voters decide to stay in the EU.

The British Treasury Ministry, which is firmly opposed to the country leaving the EU, notes that Brexit could make the British GDP shrink by 6% as from 2030.

We do not know how Prime Minister Cameron’s government has made these calculations.

Let us imagine it assumes an increase in the prices of goods and services imported from the EU, but this is by no means certain.

We are in a phase of structural deflation and competition among the EU Member States is such that Great Britain could take advantage of this situation by focusing on one country or the other.

As usual, the future renegotiation of Trade Agreements will lead to favor some sectors and penalize others.

Today no one can predict what the British top exports to the EU will be in the coming years, and not even the structure of European exports to Great Britain.

Hence, the British government reiterates that, in case of Brexit, the British GDP would decline by 5-6%.

And shall we not also consider the inevitable expansion of British trade in the Commonwealth region?

Again, rational forecasts cannot be made – everything will depend on the political mechanism of the upcoming negotiations and on a strategic and geoeconomic context full of variable factors rather than constant ones.

A global context which is changing very rapidly and it is unpredictable both in relation to Great Britain and the EU.

It is not at all certain that the pound sterling – which is currently 5.6% undervalued compared to its commercial value – shall remain “low”, thus attracting capital from abroad.

Indeed, it is likely that – after the signing of the TTIP between Great Britain and the United States – there will be an increase in the pound sterling at purchasing power parity and a parallel increase in the euro.

The advocates of Great Britain’ stay in the Union, provide the following assessment on the Leave costs.

The transport costs would increase (by 4-7.5%) since most of the vehicles used are produced in the EU region.

However, setting the great British automotive industry again into motion could become reasonable, with a large market outside the EU which requires being motorized.

A replacement economy would be created in the British transport sector which would increase employment.

Furthermore, obviously the means of transport have a short payback time which implies a decreasing trend of unit costs.

With Brexit, the prices of alcoholic beverages would increase (again in a 4-7% range), which is certainly bad news for all pub-goers.

But which is the British share of alcohol imports from the EU?

The British producers and dealers of this industry report that the imports are decreasing steadily, from about 151 million bottles in 2010 to 142 million ones in 2014.

The British government also charges high excise duties on alcohol, in addition to the EU common taxation.

As we can see, also the structure of alcohol prices in Great Britain is more complex than it may seem and the industry will be probably able to resort to effective replacement practices, to the delight of all British barfliers.

Again according to the Bremain supporters, food prices would increase by 3-5%.

However, how can such a statistical evaluation be made on one of the most diversified markets?

We do not know, nor do we know what the average British nutrition style is, although everyone knows that the British cuisine does not certainly stand out for quality.

Have you ever found an English restaurant abroad?

The already high prices of the selected, high quality and “high end” food products – almost all imported and consumed by the British upper classes –

are likely to further increase.

But probably the prices of lowbrow food for the working class, traditionally scarcely influenced by imports, will not rise much.

Clothing prices are expected to increase between 2% and 4%, but we think that the price of high fashion and luxury products imported from France and Italy may increase.

While, today, the networks selling low-cost clothes already largely defy EU regulations and manufacturing processes.

Again according to the Bremain advocates, as a result of Brexit, on the best possible assumption, the average revenue per household would fall by approximately 1.9% per year.

On the worst possible assumption, the purchasing power per household would decrease by over 4% per year.

But how? It is totally inconceivable that a country like Great Britain shall forcedly renegotiate, with the EU or the WTO, less favorable terms and conditions than those currently existing with the EU.

In fact, after the possible Brexit, Great Britain could follow the Norway’s and Switzerland’s examples and join the European Economic Area (EEA) and EFTA.

Or it could renegotiate trade agreements with the WTO only.

Hence are we sure that both negotiations would make Great Britain obtain much more draconian terms and conditions than the EU ones? And why?

On the contrary, it is likely for Great Britain to create good synergies with the Swiss Confederation, which walked out of EFTA in 1993, as well as with the other EEA countries, thus taking advantage of the weight of its economy and its world standing on the financial and stock markets.

Are we sure that a second trade agreement with the EU would be harder than the current one for Great Britain, after the EU possibly discovering the clout of the British economy no longer subject to its regulations?

Or its ability to “do harm” to the EU countries on global markets?

In that case I think that many countries would do everything to bring Great Britain back into the EU, after the possible Brexit.

Again at commercial level – and here the Bremain supporters show to have credible arguments – if Great Britain adhered to the EEA there would be more transaction costs for British exporters to those countries, with the inevitable reintroduction of quotas and administered prices for agricultural and fishery products.

Being outside the EU, Great Britain should renegotiate – and not always from a position of strength – trade agreements both with the European Union and other 50 countries, in addition to having to renew temporary trade agreements with other 67 nations.

A situation of “economic uncertainty” which would block British companies’ decisions and investment, besides driving back a lot of capital which could be used in the British production system, as well as in its innovative finance.

However, as the Brexit supporters maintain, the time schedule may be reduced by a standardization of negotiations.

A dangerous, albeit not impossible, choice.

Moreover, if Britain were to use only the WTO for tariffs and trade, it should decide its import tariffs on its own.

Nevertheless, if Great Britain decided to maintain zero tariffs with the EU countries – which is in its own interest – it should unilaterally reduce its tariffs for imports from all the WTO members, should there be no specific preferential agreements with particular countries.

However the EU economic and political leverage vis-à-vis Great Britain is still very significant: only 8% of EU exports go to Great Britain, while over 50% of UK exports go to the EU region.

Only 3.1% of European GDP depends on exports to Great Britain, while 12.6% of the British GDP depends on trade with Europe.

But man does not live by bread alone.

Brexit is the materialization of Great Britain’s dream of a new global role, the memory of an imperial past, as well as confirmation of the fact that the British people are not, and will never be, fully Europeans and the other way round.

In these cases, we should well revise the EU Treaties and rethink the structure of the European single currency – which luckily Great Britain has not adopted – as well as create a new myth for the whole continent, including Great Britain.

This is exactly what will never happen and the EU business as usual will also destroy many of the good results the EU has achieved over the years.

Advisory Board Co-chair Honoris Causa Professor Giancarlo Elia Valori is an eminent Italian economist and businessman. He holds prestigious academic distinctions and national orders. Mr. Valori has lectured on international affairs and economics at the world’s leading universities such as Peking University, the Hebrew University of Jerusalem and the Yeshiva University in New York. He currently chairs “International World Group”, he is also the honorary president of Huawei Italy, economic adviser to the Chinese giant HNA Group. In 1992 he was appointed Officier de la Légion d’Honneur de la République Francaise, with this motivation: “A man who can see across borders to understand the world” and in 2002 he received the title “Honorable” of the Académie des Sciences de l’Institut de France. “

Europe

The geopolitical substance of the fall of the Berlin Wall

Giancarlo Elia Valori

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Currently the material break, rather than the real fall, of the Berlin Wall is at the core of many strategic and historical misrepresentations.

 The naive rhetoric of “global democracy” that broke into Potsdam for the will of the conscious people – just to use an old definition of Communist propaganda – or the inevitable victory of the famous Western values over everything else.

Nonsense. The negotiation, which also led President Mitterrand and Prime Minister Thatcher to use the single EU currency, namely the Euro, as strategic blackmail against the unified German Mark, was geopolitical and military strategy.

 Meanwhile, the shrewdest leaders in Western Europe struggled to say they did not want unification – but it was just so.

 Giulio Andreotti’s witty remark is now well-known, “I love Germany so much that I want two of them”, but also Prime Minister Thatcher and President Mitterrand had many doubts, which were never dispelled.

 The French Socialist President was clearly against German unification. Probably his aides were not fully against it. They imagined a united Germany, although without military protection, but President Mitterrand was certainly against it.

 All what I heard from the agents of the French intelligence Services and the many friends I had in France agree on this point.

 For a moment, President Mitterrand’s France even thought of its own geopolitical and military shield for the German Democratic Republic(GDR), and anyway invited Erich Honecker, the GDR leader for a State visit to France, in which he was treated as a Head of State.

 At the time no one treated the GDR leaders like that.

 The French idea was to stop reunification indefinitely and then negotiate . from a position of strength – the ways and timeline of a democratic “federation” between the two Germanies.

 The role of the two Germanies in the EU remained unknown, but it was clear that the future French presence in the German Democratic Republic was France’s decision-making axis, also from an economic viewpoint.

 The German Democratic Republic was by no means a collapsing State. Until July 1, 1990, the day of its dissolution, it had paid all its international debts.

Probably Krenz and Hohnecker’s heirs-politicians of the old world -thought that the USSR would continue to support them and the day before July 1, 1990, it was West Germany that decided a one-to-one exchange rate.

 Beforehand, the exchange rate between the two Germanies was 1 to 4.44, and – as we can easily imagine – it was a real disaster for the German Democratic Republic.

It obviously lost all the Soviet COMECON markets and then – as an Italy ante litteram – it also lost Western markets.

 Production in East Germany collapsed by 30% in a short lapse of time. After the elections in West Germany, East Germany was on its last legs and agreed to reform some laws: unemployment ceased to be unconstitutional, in a country that had the Compass and the Hammer, two Masonic symbols, in its national coat of arms. Later Potsdam’s Germany entered the West as a whole of regions, not as an autonomous State.

 The West Treuhandanstalt privatized companies in a superficial way, but those that had been destroyed by the one-to-one exchange rate – decided overnight – were sold at budget-friendly prices.

With specific reference to private homes, 2.17 million lawsuits were initiated, but it was President Gorbachev himself, with a destroyed State budget, who accepted the economic and political destruction of the old East Germany to get credits from West Germany.

He also accepted reunification within NATO, again to plug the Soviet budget holes, but even gave Chancellor Kohl free rein on the treatment of the old GDR leaders.

 This is how the story went.

However, the French President, who wanted above all a moderate approach to German reunification, was not – in principle – against reunification, but wanted it without destabilizing President Gorbachev, in particular, while Prime Minister Thatcher’s Great Britain was always explicitly opposed to reunification.

  The Iron Lady, in fact, fully supported President Gorbachev’s project in the USSR. She did not want destabilisation in Eastern Europe and finally she did not want the US costly acquisition of the old Soviet Union, with possible unpredictable effects.

The “grocer’s daughter” – as Queen Elizabeth II snobbishly called her -thought that, in a different context, there would also be a fully British part in the sharing of the spoils of the collapsing USSR.

 Acquisition estimated by Jeffrey Sachs at 10,000 billion US dollars in business terms, which then generated all the vouchers distributed to USSR citizens that later Yeltsin’s government probably produced in greater quantities than needed.

 As foreseeable, during the economic and food crisis of 1992-1993 many vouchers got into the wrong hands- those of the future “oligarchs”.

By their very nature, however, the German events happened when someone (possibly the USA or the Soviet Union) strongly stepped up the pace of riots in the GDR streets so as to reach an immediate and irrational reunification.

 What, in fact, could be the rationale of an USSR that, at the end of its Communist history, gave up the pearl of the Soviet Empire, namely East Germany?

I remember that when we talked about it, the former Italian President, Francesco Cossiga, was convinced that the Soviet Union had offered to the West that big poisoned chalice, namely reunited Germany, to block it and make it uncontrollable.

The German bite was too big to be swallowed and digested calmly and quietly.

Prime Minister Thatcher knew all too well that united Germany would decide the future of the Eurasian peninsula.

However, Chancellor Kohl, who was very clever, made President Gorbachev understand that Germany would easily bear the costs for the return back home of the Soviet troops stationed in East Germany, while Kohl himself easily won the 1990 German election he would probably lose  without the prospect of reunification.

Despicable – and I say so without pretence – was instead Angela Merkel (who owes his political career to Chancellor Kohl that discovered and sponsored her) who, at the funeral of the great German leader, while Helmut Kohl’s wife tried to hug her, retracted by saying “keep your distance”.

 Without Helmut Kohl, Angela Merkel would have been just an ordinary immigrant from the GDR, with a Protestant theologian father inevitably compromised with the Communist regime, and she herself the youth leader of the Eastern Party, SED. No one has ever fully investigated Merkel’s role in the GDR intelligence services.

As a strategist born, Francesco Cossiga knew what the real stake with reunification was and endeavoured with Kohl to slow it down, but not to avoid it, by promoting a phase of integration between the two Germanies that would be decided – in an ad hoc Conference – by the other European nations, as well as by the USA.

 Margaret Thatcher was firmly opposed to it.

 The real turning point was the end by self-destruction of Gorbachev’s regime in the USSR, which allowed the fast and irrational reunification, seen above all – as Kohl wanted – as an “enlargement” of the Federal Republic of Germany (FRG).

 The USA had no idea on which to work.

There were those who, in the State Department, thought of a more solid Europe, with the old GDR unified with the FRG, against everything was rising in the old USSR. There was also CIA, which rightly saw how useful was, for the United States, a new weak Europe to allow the non-competitive penetration of the US capital into Russia and Central Asia.

One of the most attentive U.S. analysts was John Mearsheimer, according to whom the end of the Cold War had put an end to the great powers that had dominated the Eurasian peninsula until that time, starting from the end of World War II.

 This meant that, from then on, world instability would probably return to the heart of Europe – a strategic dream of which the USA had never ceased to dream.

 The US decision-makers still recalled a classic piece by Walt Whitman, the author of Leaves of Grass, who wrote:

“I see the European headsman;

He stands masked, clothed in red, with huge legs, and strong naked arms, And leans on a ponderous axe.

Whom have you slaughtered lately, European headsman?

Whose is that blood upon you, so wet and sticky?”

Hence to interpret the current US global strategy for Europe, even Walt Whitman would be enough.

Let us analyze the geoeconomic and strategic determinants of German reunification.

Before committing suicide with his family, after having heard of the Morgenthau Plan, which provided for the forced ruralisation of Germany, Goebbels said: “They want to turn my country into a potato field”.

 It was a plan that, inter alia, envisaged peaceful collaboration, not the future Cold War with the USSR.

 The US directive JCS 1067, however, signed on May 10, 1945, provided exactly for the full entry into force of the Morgenthau Plan.

  350 factories, still in perfect working order, which had to be moved to France or the Soviet Union, were dismantled ab ovo and many German patents were also transferred, including that of aspirin.

 The fact underlying the nationalization of the German occupied allied areas was that the cost of maintaining a population impoverished of any factory, technology and productive income was too heavy to bear, precisely by the occupiers themselves.

 The reconstruction business, the esoteric solve et coagula of the U.S. speculative post-conflict strategy, was in crisis, because the surviving Germans could not pay for the goods that the Americans wanted to sell them.

 The speech delivered by General George C. Marshall at Harvard in 1947, before 15,000 students of the prestigious U.S. University, was in fact designed primarily for the USSR. It had been written by Chip Bohlen, an expert on Soviet affairs, and spoke of “millions of European citizens starving and even dying”.

 The city-country relationship, designed by Marshall in his famous speech, was the design of a correlation with the Europe of cities, namely the European and Western one, which finally reached the eternal Eurasian granaries, since the Journey of the Argonauts on a quest for the “golden fleece”, i.e. the huge expanses of wheat fields of the East.

 Another assessment made by the United States was that widespread anger among Germans, after World War II, would lead to the same political results of the First World War after the unfair Agreements of Versailles, opposed by Keynes in vain.

 Moreover, the planned process of West Germany’s impoverishment would have brought wind also in the USSR sails and, considering its productive dimension, it would also have stopped the relaunch of the rest of Western Europe freed by the Allies.

 It was precisely the fear of the “Communist contagion” that made it possible for the United States to fund the United Nations Relief and Rehabilitation Administration (UNRRA) which,as from 1943 – four years before Marshall’s speech at Harvard – tied the German territories to itself in order to avoid them falling into the coils of the Communist regime, according to the certainly correct US plans.

To some extents, however, this triggered Stalin’s foreseeable reaction. It was exactly the United States that asked Great British and France to unify – under its own protection – all the Western Allies’ control zones in Germany. It should be recalled that the French occupation zone was a source of primary information for the Communist penetration into the rest of the West.

 The deutschemark was in circulation at the time – a currency revalued as against the old mark and printed directly in the United States.

Hence the USSR-controlled zone was flooded by huge requests for goods to be bought with the deutschemark, considering that they were at capped and supervised prices.

At that juncture, Stalin ordered to stop the inflow of food into Germany and into the USSR-controlled area, but it was impossible and hence he tried to make the deutschemark not valid in the USSR-controlled areas.

 The rest is recent history, including the German reunification.

Reverting to Mearsheimer, we can better understand – as the US analyst said – that since then the United States has been “the peacemaker of the European region”.

Going back to our previous considerations, the greatest coldness for German reunification was expressed precisely by Prime Minister Thatcher, who stopped in Moscow after her State visit to Tokyo in September 1989, where she spoke to Gorbachev in private, in the Hall of Saint Catherine at the Kremlin.

 The Iron Lady clearly told Gorbachev that she did not want German unification at all, because she thought that “the post-war equilibria would be undermined by the new territorial changes”.

 She was perfectly right.

Just because of its inevitably pluralistic and equal partnership logic, Europe could not contain a Great and New Germany that, alone, represented all the “European plain” that was the plain where – as Raymond Aron maintained – the final war of the Worlds between East and West would be waged – a war also planned as early as 1995, at least by the heirs of the former USSR.

Regimes disappear, but the objective laws of geopolitics do not.

Hence Prime Minister Thatcher told Gorbachev that “NATO would not endeavour for the end of the Warsaw Pact”.

We must also recall Operation Unthinkable, which envisaged the penetration – from the Balkans – of the Allies and, above all, of Great Britain, to block the direct passage of the Red Army to Germany and to directly control the whole European continent, after the end of the hostilities, with or without the US involvement.

 The plan advocated by Churchill was not implemented.

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Eastern Partnership Countries: Buffer Zone or Platform for Dialogue?

Ekaterina Chimiris

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2019 marks the 10 th anniversary of the Eastern Partnership, a political initiative the EU launched in 2009 for developing relations with six eastern countries of the former socialist bloc. The collaboration program with Armenia, Azerbaijan, Belarus, Georgia, Moldova and Ukraine was primarily intended as a means for introducing these countries to the European experience and approaches to developing their economies, political institutions and civil society. Given current events, however, Russia has a highly negative perception of the EU’s policies concerning the Eastern Partnership, viewing them with an utmost mistrust, while this program’s results have so far fallen short of expectations.

The program’s 10 th anniversary allows Europe to draw some interim conclusions and attempt to modify the agenda. The experience has thus far proved that the development of each member state of the Partnership is unique, which makes collaboration based on identical standards and measures challenging.

On the other hand, as soon as Russia began to oppose the European discourse on the domination of European values in these countries, almost immediately, the EU started shaping the image of an “aggressive Russia” striving to expand its area of influence.

The Eastern Partnership countries face a difficult choice between the European and Russian development tracks. Such opposing policies have resulted in some countries joining the confrontation between the two poles, thus becoming a buffer zone between them, while some states prefer to be outside observers and strive to create a venue for potential collaboration between the opposing parties.

The power of values and discourse

Considering the situation in terms of the theory of discourse (M. Foucault), we see that broadcasting one’s values is far from a harmless practice. At some point, the gift of democratic and liberal values will transform into a carefully thought-through strategy for expanding power onto new territories. In the information dominated world of today, those who set the discourse framework determine the rules of the game and run the situation. So the objective of each centre is to spread their value models and practices as broadly as possible.

We should also take into account the overall tendency of European civilization to proselytize and promulgate its value models.

That has been its invariable behavioural strategy in the international arena since the time of the great European empires. Eurocentrism, otherwise known as the rejection of other cultures and perception of foreign practices as barbaric and uncivilized, still exists in Europe today in various forms.

Our European partners broadcast their values within the framework of the Eastern Partnership as part of aiding more institutionally backward countries. Essentially, in a crisis, more powerful actors introduce their rules of the game to draw new resources and territories into their area of influence. Simultaneously, an unattractive image of the opponent is created. Russian and European media have been doing this for the last five years.

The Eastern Partnership is a war of values and institutional systems

Robust European economic development throughout the 20th century is the basis of the appeal of European democratic institutions. Favourable living conditions, a free creative environment, and understandable, yet strict rules of life attract the best minds from developing countries. Cooperation with Europe opens the way to institutional innovation and knowledge but does not guarantee security and protection of national interests for, in particular, Armenia (Nagorno-Karabakh) and several Balkan states.

At the same time, Russia perceives the Eastern Partnership as Europe’s geopolitical project aimed at expanding its influence. Yet several experts believe that Europe today is not in conflict with Russia, with the central conflict being between Russia and the US. Nonetheless, this underlines a legitimate question as to whether the EU is capable of developing its own geopolitical strategy.

When the project was planned in 2009, an entirely different picture of the world and outlook were constructed. Back then, the planning did not account for China’s growing role or the influence of the Islamic factor. These ascendant international forces do not see any distinct differences between Russia and Europe. China’s growing global power and the spread of Islam (particularly of its radical forms) can become common challenges that Europe and Russia will have to think about combating together.

In 2009, Russia’s view of the situation was not taken into account or only one-sidedly; today, Russia’s proactive position has come as a great surprise for many in Europe. Moscow demands that its opinion and interests be taken into account, and they do not fit well into the old model of the Eastern Partnership.

The experience of implementing the program has demonstrated that joining the Eastern Partnership in no way means that the journey will be wholly positive. Europeans blame integration failures on the intense pressure exerted by Moscow on some countries’ leaders. Despite that, the Partnership countries are now themselves, too, in the process of choosing a collaboration formula. Generalizing current experience, we can identify the Partnership states’ two basic strategies concerning the two opposing poles, Russia and the West: the buffer zone strategy or the dialogue platform strategy.

The buffer zone is a situation of confrontation between the poles of influence when they are engaged in conflict on their periphery, without involving their resources. We see this in the open conflict in the Donbass, when passionate radicals find no outlet for their energy at home and are willing to take part in military gambles in a neighbouring state. Take, for instance, Moldova, where the outcome of the people’s political choice depends on who supports the candidate, Russia or Europe. In Georgia, success in domestic politics also largely depends on the elite’s foreign political preferences. Buffer countries have chosen a zero-sum game strategy, betting on one player only and thus putting themselves in a more vulnerable position. If their chosen side loses, they also lose.

The bridge metaphor has not taken root, and experts lean somewhat toward the platform for dialogue metaphor. Belarus is active here, providing a venue for the peace talks on the Donbass; Armenia acts as a prototype testing range for EU–EAEU economic cooperation; Azerbaijan, which was, until recently, a closed state geared toward its prosperity, is another example. The position of a platform for dialogue is stronger and more stable in the long term, though it is costlier to implement this strategy. The transaction costs involved are rather high.

Non-zero sum game

Currently, EU–Russia relations concerning the Eastern Partnership countries are stuck in the zero-sum game mode: the “West or Russia” choice cuts off many additional opportunities for these countries. With the US actively intervening in European processes, no-one is insured against the negative-sum game scenario unfolding.

Armenia has taken realistic stock of the situation and is seeking options for cooperating with the two regional associations on mutually beneficial terms. Belarus is pursuing a similar policy. Such actions prompt frequent media attacks on the states concerning “cooperation with the West” or “cooperation with Russia.”

Europe’s expert community is gradually developing a concept of the importance of studying and understanding Russia’s position and Russian discourse. Since sanctions bring economic difficulties but do not influence Russia’s political and social climate, while confrontation results in nothing but mutual losses, the need to seek alternative ways to collaborate is becoming imminent.

Moving toward a non-zero sum game appears to be the most favourable outcome. Yet there can be no way out of confrontation without implementing a specific dedicated policy. I will outline several possible steps that are already being mentioned in expert discussions. First, one should focus on fact-based rather than stereotype-based knowledge of each other. In this respect, developing EU studies in Russia and Russian studies in Europe is the desired format for restoration and development. Second, expert knowledge should not be obstructed if it draws conclusions that do not fit perfectly into the general propaganda framework. Third, when making a specialist assessment, findings must be called into question, and non-standard solutions must be sought. It is useful to compare discourses used by Russians and Europeans to denote the same facts. Imposing one’s expert opinion will not bring positive results, even if this is initially successful.

Additionally, a separate important task is to seek common goals for Europe and Russia. The experience of cooperating in the Arctic demonstrates that Russia and Europe can interact effectively in the face of a common threat. Finally, in the future, it will benefit all parties to create venues for dialogue in the Eastern Partnership countries. In this situation, Eastern European countries will undoubtedly compete to be the best and most convenient such venue. Growing competition will result in improved quality and reduced transaction costs. Such venues may also become specialized. Negotiation hubs on various issues, with a developed infrastructure and expert support, constitute a somewhat favourable alternative to buffer zones in an armed and political confrontation. For the Eastern Partnership countries, it will mean developing education and further training programs in negotiating practices. As a result, instead of buffers, states can become regional and global confidence-growth points.

From our partner RIAC

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Will European Parliament make a genuine political force within the EU?

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The approval of the make-up of the European Commission is stalling – quite unexpectedly for most politicians and experts in Europe. In October, members of the European Parliament (EP) rejected three candidates for the Commission who had been put forward by its new Chairperson, Ursula von der Leyen. Approval was denied to representatives of France, Romania and Hungary. The official reason in all cases is “conflict of interests”. What happened will “only” delay the coming into power of the new European Commission, most likely, until December 1. A number of EU states have been expressing concern over an ever increasing politicization” of the EP. According to observers, this marks the beginning of a new wave of struggle for the redistribution of power within the EU’s governing bodies, which will have long-term consequences.

The elections to the EP held in May this year put an end to the dominance of two large factions – Christian Democrats and Social Democrats, who maintained leading positions in this structure for several decades. The trend towards fragmentation of the EP’s deputy pool persisted. After representatives of the left-wing and center-right parties lost the majority, smaller factions and groups came to the fore. Given the situation, skeptics predict a greater risk of the European parties returning to the “confrontational model”, which is fraught with a further decrease in the efficiency of legislative effort, a decline in the ability of the All-European legislative organ to take quick decisions and a set of difficulties in floating long-term, strategic initiatives without losing their essence.

Despite the fact that parties that support a further political integration within the EU retain the majority in the European Parliament, there have been important changes in the balance of power among the leading factions – their political “weight” was leveled. Such an alignment of forces is set to intensify frictions while tackling priority issues on the European agenda. For years, coalition agendas within the European Parliament have been formed not on the basis of long-term political programs, but solely with a view to obtain a situational majority. Nevertheless, supporters of the pro-European parties expect their self-organization and cooperation to be enhanced by a further promotion of the practice of appointing candidates from major European parliamentary factions to key positions in the EU’s governing bodies – the so-called practice of “leading candidates” (Spitzenkandidaten). For 20 years, the European Parliament “has been promoting the idea of ordinary people participating in the selection of the head of the EC – the executive branch of the EU,” – Natalia Kondratyeva of the Institute of Europe, Russian Academy of Sciences, says. The procedure was first put into practice in 2014. Until the announcement of the outcome of the May elections, statements were made about a “firm intention” to continue this practice in the new political cycle. After the May elections, representatives of leading parties that won seats in the EP remained optimistic about the viability of the “leading candidates” procedure. However, political strategists were quick to suggest forming a sustainable coalition in the EP under the new conditions. Taking advantage of the situation, some heads of the executive power in the EU member states tried to minimize the participation of European deputies in the process of forming the governing bodies of the Community. As a result, none of the “leading candidates” received any posts in the EU executive bodies.

Paradoxically, this behind-the-scenes bargaining over the candidacy of the new head of the European Commission, which resulted in the de facto removal of the EU legislative body from the decision-making process, has led to an increase in the political influence of the EP. For a start, the badly hurt European MPs supported the candidacy of the new President of the European Commission, Ursula von der Leyen, approved without their participation, with a minimum majority of just over 51 percent of the vote (383 votes out of 747 attending the meeting). As of this autumn, the European Parliament has been demonstrating an unequivocal desire to boost its role, to strengthen the system of checks and offsets, which the EU citizens explicitly voted for in May. By mid-October, it had become clear that the European Parliament was taking upper hand while the battle for posts in the European Commission dragged on. The President of the European Commission was about to announce the strategic priorities of the EU executive body at a meeting of the EU leadership. However, after the vote-down of three candidates, the President of the European Parliament David-Maria Sassoli said that he could not provide an accurate forecast on the time of the next vote to approve the new composition of the European Commission. Even though France, Romania and Hungary submitted their candidates fairly quickly. Even now, in November, the exact date of voting on the composition of the EC, which, according to the regulations, must be approved without delay, on the day of the session, is not known. Meanwhile, if the newly elected members of the EC plan to get down to work on December 1, its approval by the European Parliament should take place during the November plenary meeting.

Experts recall that von der Leyen won by a narrow margin this and that the “unsignificant majority” she received is of a “very fragmented” nature. Therefore, we cannot completely exclude such a development of events in which the European Parliament may dismiss the proposed composition of the EC altogether. In late October, a senior European diplomat, speaking on condition of anonymity, remarked that a refusal of parliamentarians to give credit to the future composition of the European Commission “would be a crisis of enormous proportions.” Meanwhile,  President of the European Parliament Sassoli believes that the current situation indicates the responsible attitude of deputies towards the composition of the executive bodies of the European Community and speaks of their position in principal on procedural matters.

A few days later, the European Parliament added fuel to the flames of disagreement between the legislative and executive branches of the European Union, by expressing almost unanimous condemnation of the decision of the EU Council to postpone the beginning of negotiations on granting membership in the Community to Albania and Northern Macedonia. Manfred Weber, head of the European People’s Party faction and former top candidate for the post of head of the European Commission, described the decision of the EU Council as a “slap in the face” of applicants “which ruins the credibility” of the Community. A representative of the second largest faction, the Social Democrats, Brando Benifey, expressed “profound disappointment.” Co-chairman of the green faction, Philip Lamberts, has referred to the decision as “a signal of great concern.” Speaker Sassoli voiced the almost unanimous opinion of the European deputies, urging the leadership of the EU states who opposed new negotiations on the expansion of the Union, first of all, France, to reconsider their position.

Meanwhile, Europe is in for more heated debates over the parameters of the EU’s common budget.

In such conditions, the most likely outcome is compromise and half-measures in decision-making, which is fraught with a further political disorganization of the EU and its fragmentation on the national and regional principles. In addition, as The Economist writes, a further fragmentation of the EP’s deputy corps means that none of the leading EU countries boasts “levers” of political influence on the decision-making process. Even President of France, Emmanuel Macron, and von der Leyen herself, a representative of another leading EU country, Germany, do not have them. At present, Macron acts as a leading EU politician and enjoys tremendous influence among leaders of member countries. However, as the recent events demonstrate, his months-long efforts which were aimed, at first, at expanding the liberal fraction in the EP, and then at boosting its influence among the deputies, have not yielded much fruit. As for von der Leyen, her formal reliance on the European People’s Party (EPP), which still maintains its positions as the largest faction in the EP, was substantially undermined by the political humiliation it experienced as a result of its de factor exclusion from the process of approving the candidacy of the former defense minister of Germany to the post of head of the EC. As a result, von der Leyen is not deemed “our kind” among EPP deputies.

All this affects, first of all, the German “tandem” with France, which is already brimming with numerous differences and compromises. In the meantime, the growing frictions within the EU do not simply reflect the “growth of nationalist sentiment”. The EU is still balancing on the verge of transition to a ‘two-speed Europe’ model. This spring, Macron came up with several dozen initiatives and measures to push the EU towards “European sovereignty”, and promote democracy and trust. Germany, in turn, spoke in favor of creating within the EU, after the exit of Britain, “five” leading countries, which would embrace Germany, France, Italy, Spain and Poland and could take “part in the management of the European Union directly.”

As it happens, the reverse side of the much cherished changes is the strengthening of the political system within the EU. EU citizens are increasingly dissatisfied, on the one hand, with the chronic “deficit of democratic control”, the striving of politicians to gain more power, including at the supranational level, while avoiding their greater accountability to voters. On the other hand, a policy that is gaining strength among the traditional establishment is to “compromise for short-term alliances”, even at the cost of a permanent struggle for power between institutions. The current composition of the European Parliament fully reflects the mood of Europeans. Centralization of Europe will bring back the political struggle, which seemed to have become a relic of the past for many parties in the traditional establishment, will trigger a clash of ideas, a greater independence of European deputies, so unwelcome for many national leaders. All these vividly reflect the trends in the current European policy which is becoming more and more factional and “diverse”. As a result, the situation is becoming less and less manageable due to the growing number of EU member states, and, consequently, the diversity of political interests represented in the community. Consensus, so indispensable for a common policy, is becoming increasingly illusory. The time of “sustained” and even “flexible” alliances within the EU is over. Coalitions have become not just situational – they are increasingly spontaneous, which threatens to paralyze the political institutions within the Community. 

From our partner International Affairs

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