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The strategic consequences of Brexit

Giancarlo Elia Valori

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Though with a knife-edge majority, Great Britain has relinquished its economic and political relationship with the EU. Obviously account shall be taken of the many people who voted in favour of Bremain, since they will not disappear all of a sudden, but also the strategic, military and geopolitical effects of this new UK position shall be assessed.

A position which today seems to be mainly economic and commercial, but which will soon herald wider choices than the mere give-and-take between Great Britain and the European Union.

For sure the British people have never liked the European Union.

In 1975 Margaret Thatcher put strong pressures for the United Kingdom to adhere to the European Union, but the idea of the Iron Lady was to become member with a view to controlling a powerful entity, such as the EU, thus avoiding the creation of an axis between France and Germany to isolate Great Britain – as, indeed, later happened. Also from the commercial viewpoint.

Prime Minister Thatcher decided to adhere to the EU as some businessmen do with potentially dangerous companies of which they buy a significant shareholding so as to better manage them from inside.

It is worth recalling that there was still the Cold War that Great Britain was fighting with great care and intelligence wisdom.

At the time, both Prime Minister Thatcher and the other EU statesmen viewed the European bloc as an economic agreement preventing the USSR from extending its economic, if not military, influence over what the French philosopher, Raymond Aron, called “the great Central European plain.”

The plain that the Warsaw Pact planned to quickly conquer so as to reach the Atlantic and seal the UK into its North Sea.

Without Great Britain, there would be no European nuclear arsenal and the French one would fall immediately into Russian hands.

Furthermore, in her book of 2003, Statecraft: Strategies for a Changing World, Margaret Thatcher did not dismiss the possibility of Brexit as “unthinkable”, but thought that the issue had to be analyzed very carefully.

It had to be assessed in terms of strategic and commercial routes and in terms of UK influence over the EU decision- making process, as well as for assessing the balance between the euro and the pound sterling.

These are the decisive factors of the EU-UK matrix, not others.

Currently the European framework is obviously much more complex than in the 1970s.

It is not true, however, that the Union rescued Europe from the fratricidal wars which scarred it as from Napoleon I onwards. The European Civil War, as the German historian and philosopher Ernst Nolte called it.

Conversely peace in Europe was preserved by the military balance between NATO and the Warsaw Pact.

The “economic basis of the war” between Germany and France, from Alsace-Lorraine to the Ruhr region, was an old strategic concept which had already been solved with the European Coal and Steel Community (ECSC) in 1951.

Nevertheless, as from 1980 onwards, it was precisely Margaret Thatcher who put pressures on the EU to “get her money back,” by considering the agreements between the EU and the UK unnecessarily too burdensome for her country.

In her speech delivered in Bruges in 1988, the Conservative Prime Minister spoke clearly against “a European super-State exercising a new dominance from Brussels”.

This is the core of the issue: the British people have never wished to turn the economic “contract” among the European Member States into a specifically political contract. They wanted and still want to have a free hand in the global financial framework. Finally they intend to avoid the geopolitical effects of the economic and trade ties established in Brussels.

Great Britain is a State, a great nation, which needs overall global autonomy which, on the contrary, the EU manages according to covertly Franco-German interests that are potentially opposite to the UK ones.

It is not the British leaders’ perception, it is the truth and, however, in politics, perception counts as reality, if not even more.

As is in A Midsummer Night’s Dream by William Shakespeare.

With this choice, Great Britain, which still has the “imperial dominance spirit of Lawrence of Arabia” – as the former Italian President Francesco Cossiga who, however, was a close friend of Margaret Thatcher, called it – is trying to play some cards which, despite the “mists of tomorrow”, are potentially valid.

Firstly, the relationship with the United States, also at economic level, comes back to the fore.

When in 1976 the United States celebrated the bicentennial of their independence (from Great Britain, by the way), a British sailor arrived in the New York port holding a banner with the inscription: “Come back home, guys, we have forgiven you.”

Hence Great Britain still considers itself an empire – currently a British empire of finance and technology, but anyway still an empire.

With a view to becoming again “what it is” – along the lines of Friedrich Nietzsche’s journey of becoming a free spirit – Great Britain just needs to revive and revitalize its special relationship with the United States.

As early as 1958, a Mutual Defense Agreement was signed between the United States and Great Britain regarding the two nuclear arsenals while in 2010, thanks to a subsequent bilateral treaty with the United States, Great Britain had the opportunity of overcoming many of the controls and limits imposed by the Americans on its advanced defense technologies – limits imposed also on NATO members.

Great Britain is the second largest economy of the English-speaking world and the sixth largest world economy. It is the largest US trading partner and a member of the UN Security Council. It hosts the highest number of US military bases abroad and, above all, it is the global financial hub which periodically rescues US banks from their insolvency crises.

Hence it is clear that Brexit can be seen as a major US strategic success and outlines the end of the “third pole” between East and West which sometimes the EU has dreamt of being.

The dollar zone has never liked the euro. Quite the reverse, it has fought it harshly.

For the United States, the European single currency was and still is a strong competitor, as well as a threat to their role as hegemonic global financial power – an insane “Napoleon’s dream”.

Moreover, the idea of bringing the euro to an often forced parity with the US dollar has undermined EU exports, by compelling them to be carried out with a currency having a too “high” value which has restricted the end-markets.

Not to mention the many temptations generated by the euro on world commodity markets: it is true that – among many other assessments and considerations – the United States attacked Saddam Hussein for his still secret choice of trading most of his oil and petroleum products in euros.

It is also true that, in the phases characterized by great international tensions, Iran traded part of its oil and petroleum products in euros, especially on the “stock exchanges” in Kish and in the other islands of the Persian Gulf.

The Brexit effects, however, increase the volatility of the pound sterling against the dollar, with a spread of approximately 15% compared to the pre-referendum values.

Financial analysts’ imbalances which, by now, are mainly trolls, namely IT automatisms.

Certainly Great Britain will not be granted a preferential treatment by the United States in the framework of the TTIP negotiations.

US President Obama has explicitly warned that the UK would be at the “back of the queue” in any trade deal with his country if it chose to leave the EU and would have the same treatment and the same barriers to entry as countries like China, Brazil or India.

Nevertheless Barack Obama is about to leave the US Presidency and, if Donald Trump were to be the next President, he will have every interest in dividing the European competitors and favoring them against the aggressive practices of countries like China and, in the future, India.

Also Hillary Clinton cannot avoid using this leverage offered by Great Britain for the TTIP negotiations.

The British TTIP is a bet on the future which, however, the UK could win by relying on its great financial strength.

Bilateral trade between the United States and the UK is very significant: America is the first destination of UK exports and the United States are the third generator of imports for the UK, after Germany and China.

North America and Great Britain are the largest mutual foreign investors.

A situation which cannot change all of a sudden, in spite of the US discontent and dissatisfaction with Brexit.

Furthermore the British government stated that TTIP could provide to the British economy a surplus of approximately 10 billion pounds a year.

There is the need to recover much of the Brexit cost and rebuild a strategic and military relationship with the United States which the UK sees as the only bulwark against two EU and NATO structural dangers: the EU decision-making weakness in the Middle East and the explicit German polemic against the Atlantic Alliance’s anti-Russian posture, which has been mounting in recent months.

Two dangers that the UK wants to avert: the recovery of German geopolitical autonomy tending to Eurasia and the EU structural weakness faced with Middle East tensions.

In Great Britain’s mind, Germany is always the country of the old definition by Lord Ismay, who was NATO Secretary General from 1952 to 1957: “The Atlantic Alliance’s purpose is to keep the Americans in, the Russians out and the Germans down”.

Great Britain does not want the strategic and economic exchange between France and Germany, in which Germans buy French government bonds massively and, in return, are entitled to the “enhanced and extended protection” of the French military nuclear power.

Great Britain does not even want a euro which, as “a German mark in disguise”, penetrates the major British export expansion areas.

Moreover, considering the EU strategic inanity, Great Britain fears for its corridors to and fro its Asian Commonwealth.

With its operations in Crimea and Ukraine, the Russian Federation blocks and distorts the direct line between Great Britain and India, besides changing the balance of power in Central Asia, where the UK has still strong interests.

Since 2001 to date, Great Britain has deployed its military units in Afghanistan, in the framework of the US Enduring Freedom operation, not only for mere “Atlantic loyalty” as other countries (including Italy) have done, but to still afford the regional strategic viability and role which are essential for it to keep Northern India, the central Asian countries and the routes from Southern China.

Those who think globally, as the decision makers of what was once a great Empire, do not stop doing so all of a sudden.

Unfortunately the EU’s mistakes are known to everybody: an artificially overvalued currency – maybe to compete with the dollar; an insane disconnection between EU foreign and economic policy; the idea of simultaneously controlling 29 countries which are all competing one another, with different tax systems and public spending mechanisms, not to mention the autonomous and conflicting public debt securities markets.

The EU could certainly reform itself by establishing, within the ECB, a single market of government bonds, possibly managed (and not tiered and capped) with the issuance of “European debt securities”.

That Germany does not want, and with good reason.

Moreover the Union could also make the various Member States develop an export plan, with a view to analytically protecting one commodity or the other, without dangerous generalizations (even for us).

From chocolate to wine, up to the hilarious theory of the ”Polish plumber” – popularized by Philippe de Villiers as a symbol of cheap labor coming from Central Europe as a result of the Directive on Services in the Internal Market during the EU Constitution referendum in France in 2005 – in the field of exports, so far Italy has lost and has hence paid for its mistakes related to its “scarce incisiveness” in Europe.

It is worth recalling that the Polish plumber. was supposed to come and work in the EU at the same rates he charged in Krakow. However, the cost of living in this Polish town is very different from the cost of living in the center of Munich.

Abstract free-trade and liberal theories, typical of a bad macroeconomics handbook, mixed with archaic protectionism – this is exactly what the EU has often been.

Hence, following the ideas of General de Gaulle, another great “Eurosceptic”, the issue lies in returning to a Europe of Nations and States where only what is already in common is decided jointly – and it could not be otherwise…

This means European protection from asymmetric shocks, selective penetration of new foreign markets and domestic liberalization of goods and services.

The idea of making the EU be the comptroller of the Member States’ public budgets, with abstract and binding rules, paves the way for a number of exceptions which inhibit the rule, or for a covert economic struggle between EU rich and poor countries.

We have already experienced it in Greece and this could also happen in Italy and Spain.

Furthermore, the EU has insisted on implementing a common “foreign, security and defense policy”, with the obligation to “make the Member States’ civilian and military capacities available to the EU”.

Shall this be done in agreement with NATO? Where is the chain of command of this 29-Member State army? Who develops its plans and sets its goals?

All this is for stabilization, humanitarian and conflict prevention missions, disarmament or military assistance and advice.

And what is the role played by the United Nations, despite all its limits?

In short, as from a certain phase onwards, which we could identify with the 2001 crisis, the European Union has believed to be what it was not and had not been conceived and meant to be.

After all, even the old anti-Soviet dissident Vladimir Bukovsky, was not entirely wrong when, from his new English homeland, equated the European Union with his old USSR.

Hence if the EU is able to reform itself not only at organizational, but also at domestic financial level, it will be in a position to keep on selling its merchandise: protection against asymmetric shocks, a strong currency widespread in the world, as well as a free internal market.

Conversely, if it continues to pursue its Napoleon’s dream of “uniting Europe”, it will have to face “one, a hundred, a thousand Brexit” – just to paraphrase Che Guevara’s words.

Furthermore, the issue does not lie in asking – as the Italian politicians do – for “greater budget flexibility” in exchange for abstract reforms which may be suitable for the Finnish people, but not for the Flemish population.

The problem is completely different: to have the possibility of drafting autonomous budgets so as to subsequently check their effects over a period of two years, without prior diktats.

Briefly, a more modest EU will survive very well – even after Brexit.

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. “

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Russia–EU Relations in 2020: Opportunities, Limitations and Possible Trends

Dr. Andrey KORTUNOV

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Any attempt to predict the development of Russia–EU relations in the upcoming years must certainly acknowledge the fact that relations between the two sides have remained remarkably stable since 2014, and the momentum of current dynamics (or, instead, the momentum of no dynamics) will most likely continue. 2019 marked European Parliament elections, the “overhaul” of the European Commission and other EU governing bodies, as well as the formation of a new balance of political power on the continent. It may be safe to assume that 2020 will be a quieter and altogether less nerve-wracking year for the European Union, although certain states (for example, Poland or Italy) may very well have some surprises in store. Additionally, a shift towards tackling the most critical issues associated with Brexit is a distinct possibility.

Most experts believe that the political system in Russia has a sufficiently large “safety margin” to pass through 2020 without being exposed to any significant destabilization risks, and the accumulated financial “safety cushion” will allow the country’s leadership to guarantee socioeconomic stability despite possible fluctuations in the global economy or world energy prices, or any changes to the international sanctions regime against Moscow. A real political challenge to the authorities may appear later, probably no earlier than the parliamentary elections of September 2021. Accordingly, it is unlikely that any new domestic factors will pop up before the end of 2020 that may trigger a significant shift in the EU’s approach to Moscow or Russia’s approach to Brussels.

Uncertainty Factors

Nevertheless, the features and orientation of internal processes in the European Union and Russia will undoubtedly influence their bilateral relations. In our opinion, the main uncertainty factor for the European Union rests in the level of political unity and the ability or inability of the new European Commission to successfully withstand centrifugal trends in the EU, as well as pressure exerted by populists in individual EU member states. Clearly, the new offensive launched by populists and deepening internal contradictions within the European Union will tempt Moscow to use the organization’s disunity to achieve “separate” agreements with its traditional European partners. At the same time, many in Europe will inevitably lay principal responsibility for confusion and vacillation in the European Union at Moscow’s doorstep. A strong and cohesive European Commission will restrict the possibility of the Kremlin pursuing “selective involvement” with convenient European partners.

On the other hand, it is highly unlikely that a weak and disjointed European Union will dare to launch a serious internal discussion of the prospects of its Moscow strategy beyond the five “Mogherini principles” that were formulated four years ago, given its concerns about further undermining the already fragile foreign political unity of its member states. It is common knowledge that the ongoing sanctions regime against Russia is less of an instrument of exerting influence on Moscow than it is one of the few remaining symbols of “European unity.” A weak European Union will be forced to prioritize maintaining the existing status quo and minimizing potential change-associated risks.

For Russia, the main uncertainty factor, it would seem, is still the level of socio-political tension in the country, and how authorities respond to it. If tensions continue to grow during 2020 (which can be expressed, for instance, in an increase in the number and size of rallies, picketing, demonstrations and other manifestations of street political activities) and the authorities tighten the screws in response (dispersing rallies by force, carrying out pre-emptive arrests and searches, holding trials and imposing harsh sentences), the European Union will be forced to somehow respond. This will inevitably create additional obstacles to the dialogue between Brussels and Moscow, energizing the forces that have no desire whatsoever to pursue discourse with Russia.

If the overall level of tension turns out to be relatively low and the response of the authorities relatively mild, then a prerequisite for the Russia–Europe dialogue will be more favourable. In addition to everything else, a low level of tension will serve as an additional argument for those forces in the European Union that consider Russia’s socioeconomic and political systems to be sufficiently flexible and adaptive, to remain stable for the foreseeable future. If this is the case, then it makes no sense for the European Union to repeatedly postpone dialogue with Moscow in the hope that inevitable radical political changes will take place.

The following external factors affecting relations between Russia and the European Union in 2020 will likely be most significant:

1. The outcome of the 2020 United States presidential election. Victory for the Democrats would mean that erstwhile transatlantic solidarity will be at least partly restored, and the United States and the European Union will be able to coordinate their policies towards Russia better.

Moscow will once again face a “consolidated West,” which will inevitably restrict Russia’s room for political manoeuvre. On the other hand, should Donald Trump emerge victorious, this will likely further deepen contradictions between the United States and the European Union, which will allow Moscow to solidify its current tactical advantages in its relations with the “disjointed West.”

2.The state of U.S.–China relations. Further exacerbation of the trade, economic, political and military confrontation between the United States and China, as well as the movement of the international system towards rigid bipolarity, will create additional restrictions for interaction between Russia and Europe, for instance, in implementing multilateral “Eurasian” projects. Russia will be oriented towards an increasingly close alliance with China, while Europe will be forced to follow in the wake of the policies of the United States. Conversely, if the confrontation between Washington and Beijing softens, this will allow Moscow and Brussels to avoid many of the restrictions that a rigid bipolar configuration entails.

3. The situation in the Middle East. Unexpected and significant negative dynamic in the Middle East (escalation in Syria or Lebanon, an acute crisis in Egypt or Saudi Arabia, a conflict between Iran and Saudi Arabia or between Iran and Israel, or a new large-scale outflow of refugees from the region) may prove to be essential incentives for deepening Russia–Europe cooperation, especially if the situation worsens against the background of the United States continuing to roll back its commitments in the region. The preservation of the current status quo also means that Russia and the European Union will be able to maintain their current (low) level of interaction in the region. However, certain escalation scenarios (for instance, Damascus launching a large-scale offence on Idlib, with one of the parties to the conflict using chemical weapons) will create an additional problem for Russia–EU relations. Any aggravation of the problem of migration from the Middle East to the European Union will be construed as part of Moscow’s hostile strategy towards Europe.

4. The global economic situation. The global economy may enter another stage of the cyclical crisis in 2020, or even fall victim to a systemic global financial crisis similar to that of 2008–2009. The future systemic crisis will likely be more dramatic than the previous one, since the principal actors in the global economy are less inclined today to cooperate than they were ten years ago. The new crisis will undermine the economic foundations of Russia–EU relations and give rise to more pronounced protectionist and nationalist sentiment in both the European Union and Russia. In a crisis, the opportunities for positive interaction between Moscow and Brussels will be limited. Conversely, economic acceleration in the European Union and Russia will increase the interest of both parties in expanding cooperation.

Probable Risks

The current trends in Russia–EU relations carry a number of risks that should be mentioned when predicting possible scenarios for the further deterioration of these relations:

The general deterioration of European security due to the expiration of the INF Treaty; the degradation of confidence-building measures; and the start of an arms race, including hi-tech weapons (understanding that the military-political situation in Europe cannot change drastically in 2020, and military spending in European countries is not expected to rise sharply);

The continued competition for influence in the post-Soviet space, including Eastern Europe, the South Caucasus and Central Asia (the collapse of the political coalition in Moldova in the autumn of 2019 is a negative sign); and the further divergence of stances on the Donbass settlement will have a particularly negative effect on relations;

The intensification of sub-regional competition between Russia and the European Union (this competition appears to be particularly dangerous in the Western Balkans, given the possibility of an acute political crisis in one or more of the countries in the region);

The intensification of the information war in Europe (in particular, the European Union may approve a “blacklist” of Russian media outlets, while Russia may significantly expand its own list of “undesirable” European organizations); we cannot rule out the possibility that investigations may be launched in some EU states in connection with accusations of Russia interfering in their elections and supporting separatists and political extremists.

The harsh confrontation between Russia and some EU member countries in pan-European organizations (PACE, OSCE); 2020 will be a challenging year in the history of these organizations, which will be put under immense political pressure;

The further politicization of energy cooperation between Russia and the European Union (for instance, the emergence of new issues in completing work on Nord Stream 2; and the blatant refusal of some EU states to prolong gas contracts with Russia);

The clash between Russian and European interests in some regions of the world, including Africa and Latin America; and competition between Russia and Europe for preferential relations with Turkey might posit a particular issue.

Unfortunately, “black swans” may very well throw a spanner in the works – the unfortunate incident in Salisbury in March 2018 and the events in the Kerch Strait in November of the same year are prime examples. Such events may again lead to a deterioration of relations between Moscow and Brussels, regardless of who is to blame. A distinctive feature of Russia–EU relations today is that significant progress should be visible along the entire line of interaction between the parties, while a single negative event in any of these areas is enough to provoke a new crisis. This makes the process of restoring even limited cooperation extraordinarily fragile and unstable. And this a situation will continue throughout 2020.

Potential Opportunities

At the same time, we can identify several most promising areas of Russia–EU cooperation where, under favourable circumstances, certain practical results may be achieved as early as 2020:

Progress in settling the conflict in the east of Ukraine. The recent domestic political scandal in the United States in connection with Ukraine further obstructs Washington’s constructive involvement in resolving the crisis. The Ukrainian crisis is objectively less critical for the United States than for Europe, and certainly for Russia.

On the other hand, the new leadership in Kyiv is more focused than its predecessors on achieving a peaceful settlement to the situation in the Donbass. By all accounts, Moscow is ready to (or could) demonstrate more flexibility than before in its approach to Ukraine’s implementation of the Minsk agreements. If progress is achieved at the upcoming Normandy Four summit in terms of implementing the Steinmeier formula, then opportunities will appear as early as the first few months of 2020 to involve the European Union in the peace process, including post-conflict reconstruction programmes in the Donbass.

Expanding interaction in the “shared neighbourhood.” Neither Russia nor the European Union are interested in further escalation in the area. The example of several post-Soviet states, for instance, Armenia, shows that the balance of influence between Russia and the European Union does not necessarily have to be a zero-sum game.

Deepening interaction on Iran-related issues. The positions of Russia and the European Union on topics such as the Iranian nuclear and missile programmes and Iran’s role in Syria and the Middle East are not identical, although they are close. Given the current escalation in relations between Iran and the United States, as well as between Iran and Israel (this trend will most likely continue in 2020), Russia and the European Union can and should coordinate their actions more closely concerning Iran.

Launching full-fledged dialogue between the European Union and the Eurasian Economic Union. In 2020, this dialogue can be moved from the current technical to political level. It could include coordinating multilateral cooperation in Central Asia, implementing the European “connection” concept and possibly even discussing progress in implementing China’s “Belt and Road” project.

Developing a new “energy/environmental plan” for Europe. There is reason to hope that politically difficult problems related to Nord Stream 2 and the future of gas transit via Ukraine will be partially resolved in 2020. If this does happen, then it may be possible to try to “depoliticize” the European energy agenda. This could include, for instance, climate change, prospects for energy cooperation between the European Union and the Eurasian Economic Union, issues of standards, energy security and energy efficiency, training personnel and the exchange of experience.

Making Europe’s Russian sanctions regime more flexible. We should not expect the European Union to lift the sanctions against Russia in 2020, even if progress in settling the Ukrainian crisis is achieved. However, the European Commission might set itself the more modest task of modifying the mechanisms of applying the sanctions. History shows us that sanctions, especially bilateral sanctions, do not work if the sides do not have the option to respond to even small behavioural shifts promptly. In mid-2016, Frank-Walter Steinmeier proposed modifying the EU’s sanctions mechanism, and this idea has maintained its relevance for the last three and a half years.

Preserving pan-European areas. Despite the growing divide in Europe along the East-West axis, common European areas of science, education and culture can still be maintained. If progress is achieved in other areas in 2020, then the connecting role of humanitarian areas should be strengthened further. For instance, the parties could spearhead a joint plan to liberalize the visa regime or introduce visa waivers for students, scientists, scholars, artists and cultural figures.

Developing a new “road map” for the development of the OSCE. 2020 will mark the 10th anniversary of the Astana declaration, the 30th anniversary of the Charter of Paris and the 35th anniversary of the Helsinki Final Act. Structured dialogue on military and political issues was launched in 2016, and it turned out to be one of the most productive formats of East-West communication in Europe. The OSCE still needs political support from both the European Union and Russia.

Of course, we should not assume that activating some or even most of the abovementioned areas of cooperation in 2020 will result in a “reset” of Moscow–Brussels relations. The current “strategic disconnection” between Russia and Europe is not caused by their differences on specific issues (even issues as serious as Ukraine and Syria), but rather by their profoundly opposing views on the fundamental problems of global politics, its contents, driving forces, priorities and the desired model of the future world order.

Until these differences are overcome, relations between Moscow and Brussels will remain primarily focused on rivalry. Consequently, the next common task for Russia and the European Union is to cut the costs and reduce the risks that are inextricably related to such rivalry. However, achieving even modest progress in this area in 2020 and creating an atmosphere of positive dynamics would be a significant outcome of the year that concludes a challenging decade in global politics for both the European Union and Russia.

From our partner RIAC

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The Prisoner of Geography: Orbán’s perception of geographical pragmatism

Péter Kacziba, Ph.D.,

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Between the beginning of September and the end of November 2019, the Hungarian government has received an exceptionally high number of foreign officials. Among others, Viktor Orbán’s cabinet has hosted Aleksandar Vučić Serbian, Andrej Babiš Czech, Peter Pellegrini Slovak, and Antti Rinne Finnish prime ministers as well as received Vladimir Putin, Recep Tayyip Erdoğan and Charles Michel, the new elected President of the European Council. Besides the highest level, the five foreign ministers of Turkic Council have also been hosted, while after six years of demonstrative absence, the German Foreign Minister Heiko Maas has also paid a visit to Budapest. 

Even though the visits of Mr. Maas and Charles Michel received less enthusiastic media coverage, the Hungarian government regarded all meetings with special attention. Besides tide security and traffic restrictions, the high regard has also included the introduction of a new political rhetoric which maintained the most important frameworks of Hungarian foreign policy but added a new interpretation based on geographical pragmatism. The new discourse characterized the joint press conferences given respectively by Viktor Orbán and the Russian and Turkish counterparts where the Hungarian PM presented his foreign policy as an approach driven by the unchangeable conditions of geographical realities. As Mr. Orbán described it to Vladimir Putin, “the basis of our political cooperation is a very simple geographical fact, that no country can change its house number”. According to Mr. Orbán, the geographical conditions of Hungary tie Budapest to the Berlin–Moscow–Ankara triangle which geopolitical environment determines the potentials of Hungarian foreign policy. 

Although the geographical explanation is not a new feature in the rhetoric of Hungarian foreign policy, the importance of Germany, and generally the West, was deliberately ignored in recent years. Since the visit of Angela Merkel in August 2019, this trend has begun to change. While the Russian and Turkish friendly approach remained to be a crucial part of the Hungarian foreign policy, Mr. Orbán seems to rebalance the relations and attempts to normalize partnerships with the West, and particularly with Germany. If the rebalancing continues, Hungary could turn back to the original frameworks of the Global Opening foreign policy that attempted to find a delicate balance between the West and the rest. 

The shifting balance of Global Opening

Since coming to power in 2010, Viktor Orbán and his FIDESZ party have made significant changes in the Hungarian foreign policy. The Atlantist or Westernizer approach was supplemented by the doctrine of Global Opening which diversified Hungary’s previously EU-, US- and NATO-based foreign policy and aimed to reduce unilateral dependence on the West. The original framework of this new foreign policy direction first redirected Hungary’s attention towards the global East (2010) and then the global South (2015). The often-criticized approach, according to the official explanation, was meant to respond to the new global trends and intended to channel the Hungarian economy into the seemingly skyrocketing developing markets. The new strategy made efforts to establish cooperation with globally (Russia, China) and regionally (Turkey) significant countries and also resulted in a more active and sometimes more confrontational foreign policy towards neighbouring countries.

Though the original, economy-oriented idea of Global Opening did not aim to divert the country from its traditional Euro-Atlantic direction, domestic illiberal measures, friendly relations with Russia and the anti-EU rhetoric automatically generated antagonistic feelings among Hungary’s Western allies. The growing Western criticism and the FIDESZ’s harsh responses to it further deepened the disputes, and, by 2016-2018, pushed the increasingly isolated Hungarian government towards Moscow and Ankara. While Vladimir Putin and Recep Tayyip Erdoğan became frequent guests in Budapest, the Sargentini report condemned the Hungarian government over the violation of basic European values and the European People’s Party suspended FIDESZ’s membership. Relations reached the lowest point during the campaign of the 2019 European Parliamentary election when many from the EU centre labelled the FIDESZ as a far-right and even a fascist party, and when the Hungarian government accelerated its anti-EU, Stop Brussels campaign.

Damage control and rebalancing

The European Parliamentary elections in May and the Hungarian local elections in October 2019 turned out to be crucial milestones as the FIDESZ suffered serious, though not fatal, setbacks. On the European level, the assumed breakthrough of the populist parties remained to be an illusion, while on the local level, the Hungarian opposition parties gained majorities in ten major cities, including Budapest. On one hand, these developments pushed FIDESZ towards a more cooperative attitude and altered both domestic and external strategies. On the other hand, certain members of the EU and NATO have also begun to change their tone and seemed to realize the potential danger of Hungary’s isolation. As part of the correction process, Donald Trump briefly hosted Viktor Orbán at the White House in May and Angela Merkel travelled to Hungary in August. The chancellor’s visit soon was followed by the reciprocated visits of Hungarian and German foreign ministers and high-level consultations with EU officials. By the summer of 2019, the domestic communication of the Hungarian government has also begun to change and started to cease the anti-EU campaigns.

While the above-mentioned visits and meetings are signalling a new willingness to engage in a dialogue, Hungary and its Western allies are still divided by significant differences. In this sense, Budapest seems to publicly acknowledge the improvement of bilateral, state-to-state relations but shows reluctance to admit Hungary’s dependence on the EU. At the same time, the vast framework of EU itself hinders the rapprochement process. Although Angela Merkel’s realpolitik recognized the need for normalization, others from the various commissions and parliament fractions still consider the FIDESZ as a traitor or a Trojan horse. These controversial responses significantly influence the Hungarian domestic and foreign policy rhetoric which rejects harsh criticism with even harsher reactions. Even though the already difficult situation is further complicated by political and ideological differences on issues such as migration and asylum-seeking, Ursula von der Leyen seems to be ready to move on and begin with a fresh start. The incoming president of the European Commission showed her determination by nominating the FIDESZ delegated Olivér Várhelyi to the post of Enlargement and Neighbourhood Policy Commissioner, a position which was highly appreciated by the Hungarian government and was eventually approved by the European Parliament.

Geographic pragmatism

The Hungarian prime minister has a reputation of adopting theoretical interpretations for the legitimization of his practical policies. In recent years, he quoted Hungarian authors (e.g. Sándor Karácsony) when explaining his governance techniques or recalled Fareed Zakaria’s concept when outlining frameworks of illiberal democracy. Like the previous examples, the new foreign policy rhetoric also seems to resemble authors of international politics, mainly from the fields of geopolitics. Coincidence or not, especially Tim Marshall’s Prisoners of Geography (2016) has interesting similarities with the recent rhetoric Mr. Orbán has used. As in Marshall’s book, emphasizing the importance of physical realities, indicating the determining effects of geography or stressing the geopolitical laws of power all became part of the recent interpretations and defined Mr. Orbán’s speeches at bilateral press conferences. The new rhetoric justified the Hungarian developments through geographic pragmatism and by the recognition of geopolitical realities that position Hungary in the overlapping area of German, Russian and Turkish sphere of influences. As the prime minister put it, “…the reality is that to the left of us there’s the land of the German iron chancellors, to the right the Slavic military peoples, and down south the vast population masses of Islam. Hungary lives its life within this triangle, and within this geographical region it has been the task of governments down the centuries to create balance, to create peace and security, and for us to build relations in all three directions, so that the three capital cities and the three powers which are so much larger than us have an interest in the success of Hungary.”

While Orbán’s new interpretation seems to realize how the normalization of German-Hungarian relations could support this vision of success, it maintained the original ideas of Global Opening and aims to keep solid relations with Russia and Turkey. Though the prime minister marked the line by including Berlin to the triangle of regional powers, he also stated that not dreams or philosophies will determine “who in the world we like the most” rather the geographical realities. According to Mr. Orbán, besides Germany, Russia and Turkey are also parts of the greater geographical environment of Hungary, consequently, the country’s foreign policy should acknowledge their decisive role and must maintain pragmatic relations with them. In terms of security, the pragmatic relations mean closer ties and cooperation with NATO members such as Germany and Turkey, while it also comprises a policy of conflict prevention which helps to avoid bilateral disputes between Hungary and Russia. According to Mr. Orbán, the decisive role of regional powers also includes dominant economic performance that has to be respected and exploited by Hungary. On one hand, as a small Central European state with limited material resources, Hungary needs the energy supplies, the financial and industrial investments, or the high-technology and military equipment that these regional centres could offer. On the other hand, Hungary may offer various benefits in return. The country’s strategic location with valuable memberships positions, the relatively cheap but skilled labour, or the increasing purchasing power are just a few examples to prove the possible benefits of foreign investors. The recently announced military modernization of the Hungarian Armed Forces is another major example: beyond Germany, Turkey and Russia, Trump’s transactional diplomacy also seeks to get a piece from the large military tenders.

The limits of balancing

Besides benefits, geographic pragmatism and balancing foreign policy have their limits too. It is highly questionable, for instance, what members of the Berlin–Moscow–Ankara triangle think about each other and, maybe more importantly, how they see the Hungarian peacock dance in the middle of the triangle. In this sense, Mr. Orbán’s recent foreign policy statements were directed not only towards the domestic audience but to the regional partners as well. Though the statements presented Hungary as a country that maintains strategic partnerships with both the West and the East, in reality, conflicting interests significantly constrain the options of balancing. Germany, for example, is highly concerned about the growing Russian influence in Hungary and considers it as a security breach and a politicoeconomic mistake. According to this view, the relocation of previously Moscow-based International Investment Bank, the construction of Paks 2 nuclear power plant or the recently signed long-term gas contract with GAZPROM could be labelled as perfect examples of such mistakes. Besides Russia, Budapest has also troubles to explain friendly relations with Turkey who is condemned by the EU for launching the contradictory Operation of Peace Spring. In this case too, Hungary pursued a contrasting strategy: it conditionally supported Turkey’s actions and even vetoed the EU’s draft resolution that was jointly prepared to condemn Ankara. Although the veto was re-evaluated later, it showed how difficult is to play in two teams at the same time. 

The Hungarian behaviour during the days of Operation Peace Spring also demonstrates those ideological differences that further constrain Mr. Orbán’s geographic pragmatism. While the Hungarian government has no ethical dilemmas to oppose the implementation of illiberal models, the country’s Western allies feel moral obligations to condemn domestic developments in Russia, Turkey or Hungary. These Western allies consider Hungarian domestic developments as being incompatible with the basic principles of European values and regard Hungary’s close ties with Russia and Turkey as a partnership that could undermine the unity of EU or NATO. The Hungarian government, however, has different interpretations. In the case of Russia, it considers Moscow as part of the wider European geopolitical environment, as a Great Power who influence the Central European matters either Hungary likes it or not. As the indispensable Russian influence may be exploited by balancing foreign policy, the regional impacts of Turkey can be also utilized. In this regard, the Hungarian government views Ankara as a key actor in migration and urges the EU to open closer cooperation with Turkey to prevent new influxes of asylum-seekers. 

A unique example or the victim of circumstances?

The key question at this point is whether balancing Hungarian foreign policy will produce positive results or fail to find the middle ground between the conflicting interests of regional powers. Hungary seems to be an exceptional example, yet other countries in the region face similar dilemmas. Their responses usually follow two not too distinct path: either trying to serve the needs of all regional powers or limiting the interests of one by using the influence of another. The choice between these two options is further complicated by the wider geopolitical transformations. From the Central European perspective, especially the Ukrainian and Syrian conflicts are problematic as these globally defining struggles have increased disagreements among regional powers and boosted their external activities. With such developments, Central European states have found themselves in a difficult position of contradictory expectations. On one side of the region, there is Moscow and Ankara, both have begun to look for weak links and been practising hardly refusable policies to influence smaller members of the EU. On the other side, there is the EU and Washington, both expect a much clearer stand on democratic values, Western principles and generally a much stronger commitment to maintaining the alliance unity.

In these kinds of circumstances, it is quite difficult to find a win-win situation. As Tim Marshall’s Prisoners of Geography put it, “Geography has always been a prison of sorts – one that defines what a nation is or can be, and one from which our world leaders have often struggled to break free.” Nevertheless, Central European states have always found their limited yet flexible ways to navigate between regional powers and their contradictory interests. It seems Hungary has also developed a path which we may call by various names – geographic pragmatism, Global Opening or balancing foreign policy – at the end all mean a survival strategy between the West, the East and the South. One should wonder, however, is it the survival strategy of Hungary or just those who lead it?

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Europe

Is North Macedonia good enough for NATO but not good for the EU? How to salvage the relations

Iveta Cherneva

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image: NATO

At the NATO Summit today, NATO Secretary General Stoltenberg was asked a question by a North Macedonian journalist in the context of North Macedonia’s debut this week as NATO’s newest member. Is North Macedonia good enough for NATO but not good enough for the EU?, is the questions that was lurking over the Summit. For an answer to this, we should look towards French President Emmanuel Macron.

Commentators and politicians alike, have loudly pointed to the Macron veto of Albania and North Macedonia as a mistake.

Getting no for an answer need not mean falling off the European map for them, however.

As EU’s political dialogue with Georgia seem to suggest, there are many layers of cooperation that fall just short of accession talks and prove to provide value for both sides. For Georgia, this is in the form of EU’s Eastern Partnership.

“Something similar to EU cooperation with Georgia could be a model for engagement with the Western Balkans”, told me journalist Georgi Gotev.

Western Balkan nations, due to their geographical belonging, and not only, have the right to feel different from and more European than Georgia and the rest of the East Partnership countries.

Nevertheless, the relationship the EU has built with Georgia shouldn’t be underestimated as a potential blueprint for bringing closer EU’s backyard called the Western Balkans which has the right to be offended.

The influence of Russia and China is prominent in both Georgia and the Western Balkans region which is one more reason not to allow the Western Balkans to drift away.

Georgia has trade agreements with both China and the EU. Similarly, China’s security influence is felt on the Western Balkans in Serbia where Chinese policemen are now patrolling in the country.

Georgia’s precarious security relationship with Russia sometimes takes the shape of full-blown war. For that and other reasons, a real dialogue for EU membership with Georgia is not really possible, despite Georgian enthusiasm. Displaying the EU flag is a common practice in Georgia.

Again with Western Balkan countries, one can see the EU flag being waved too, as a sign of political enthusiasm. And similar to Georgia, but to a much lesser extent, Russian political influence in some Western Balkan countries presents one reason for skepticism in opening accession talks.

All that does not mean that there are no mechanisms for the EU to engage the Western Balkans and to somehow salvage the shaken relationship.

For Tamar Chugoshvili, first vice-chair of the Georgian Parliament, EU’s Eastern Partnership has delivered. “Its results have been the Association Agreement, the Free Trade Agreement, and the visa-free movement”, she said. This is an engagement blueprint that could work for some Western Balkan countries.

Although an EU partnership involving labor movement at this point might be a stretch for Georgia and the Western Balkans alike, democracy and human rights dialogue needs to continue being a component of EU’s engagement. Apart from trade and tourism, the EU has still a lot to offer in terms of soft power and norm diffusion.

Finally, an important difference is that Georgia was never led on to believe it was coming close to accession talks for EU membership; that’s why expectations were always different. For Albania, but especially for North Macedonia which changed its official name as a prerequisite, disappointment and frustration are more than natural reactions.

So, a Georgian blueprint with an enhanced trade partnership might work for EU’s engagement provided Western Balkan countries overcome their resentment and swallow that bitter taste that Emmanuel Macron left in their mouth. For that to happen though, the EU would need to pour a whole lot of new water their way.

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