Following the referendum on UK membership of the European Union (EU), upholding Brexit, world politics is expected to herald a period of immense instability and turmoil. There is likelihood of economic crisis in Europe and UK, even globally.
Unexpected or unintended?
Britain’s exit from EU is now almost final, pending only some formalities and the EU is pushing for early conclusion of the Brexit deal. It is quite clear that British Prime Minister David Cameron had not expected the referendum to lose, thereby forcing him to quit, having found no other credible alternative. The result is primarily the outcome of a political miscalculation by Cameron and allies that caused geopolitical and financial issues. The British capitalist lords are staggering about as they try to pick up the pieces while the situation spirals out of control.
Geopolitical relations in Europe have been destabilized as a direct consequence of the Brexit. Without Britain anchored in Europe, relations between France and a far more powerful Germany will deteriorate. Equally, relations between the EU and the United States—for which Britain provided a bridge—will be thrown into flux.
Martin Schulz, president of the European Parliament, insist there must be no delay in Britain invoking Article 50 of the Lisbon Treaty to formally initiate exit proceedings, so as to limit financial damage and impose a harsh settlement on Britain that will serve as an example to others. Far-right forces in Europe are now demanding referenda in their own countries, including the National Front in France and similar parties in Slovakia, Poland, Italy, the Netherlands, Denmark and elsewhere.
Amid dire warnings of economic catastrophe and the boost the referendum gave to right-wing, anti-immigrant nationalists, millions fear for the future. A petition is circulating that has gained some three million votes for another referendum to be held.
There is widespread shock and anger at the Brexit outcome in the UK, even among some who voted for leaving the EU. The result indicates anger on the art of the Britons in the very project of EU- an integration of basically different entities with varying degree of geopolitics and economic variations.
Meanwhile, the UK itself is in danger of breaking apart. Conservative Party and Labour Party could split, amid speculation of a snap general election. The Scottish National Party is pressing for a second independence referendum and also seeking early talks with Brussels and EU member states. In Northern Ireland, where the referendum vote was polarized along Republican and Unionist lines, the most severe crisis since the formal end of the civil war in 1998 is looming.
The historic Brexit that democratically became a reality create Brutish soverign nation once again after decades of being a part of EU, is feared to kickstart another “Great Financial Crisis” of 2008, and threatens to blow up even further, if more European countries exit for EU. The Bank for International Settlements (BIS), has warned of deep-rooted problems in the global economy.
The economic cost of the successful referendum by Britain to cede from EU is aid to be very high globally. The ongoing market sell-off wiped $2.5 trillion from the values of world equities markets on June 24 itself is the most visible manifestation of a much deeper crisis of the global economy. both the International Monetary Fund has warned in effect that the USA and world economy face conditions of stagnation characterized by a long-term reduction in growth rates.
The BIS report said the world economy was threatened by a ‘risky trinity’: debt levels that are too high, productivity growth that is too low, and room for policy manoeuvre that is too narrow.” It cast doubt on the ability to continue to combat crises with monetary policy. However, the BIS had no solution to the ongoing crisis besides further austerity measures. It called for slashing government debt while improving the “quality of public spending… notably by shifting the balance away from… transfers.”
Virtually every global central bank issued a statement saying it would either begin or was ready to implement a further expansion of liquidity measures in response to the share selloff. Markets are increasingly betting that the Federal Reserve will halt, or even reverse, its announced plans to begin raising interest rates. These conditions have weakened productive investment, fueled a global expansion of debt, making it near impossible for central banks to respond in an effective manner to the eruption of new crises.
In the latest such measure, the Japanese government of Prime Minister Shinzo Abe and the Bank of Japan announced the provision of additional funds to the financial system.
The growth of negative interest rates, promoted by central banks seeking to reassure the markets, is a risk with “a long fuse, with the damage less immediately apparent and growing gradually over time. Such rates tend to depress risk premiums and stretch asset valuations, making them more vulnerable to a reversal by encouraging financial risk-taking. All the actions taken by global central banks since the 2008 crisis have only exacerbated the cancerous growth of financial parasitism. At the end of May, close to $8 trillion in sovereign debt, including at long maturities, was trading at negative yields—a new record.” Due to the continuous infusions of cash into world markets, monetary policymakers have found it harder to push inflation back in line with objectives, leading to economic slump.
The types of fiscal austerity measures and labor market restructuring called for by the BIS have been brought forward in every major economy in response to the 2008 crisis. These range from the USA, where state education spending has been slashed by 25 percent, to Greece, Spain, Portugal and, most recently, France, with the implementation of the El Komri labor reforms by the Hollande government, where sweeping social cuts have been combined with attacks on protections for jobs and conditions.
Austerity policies have transferred ever more wealth to the financial elite, who have proceeded to use their cash hoards for speculation and financial parasitism, fueling a vicious cycle of economic stagnation, rising inequality and financial crisis, in turn inflaming international antagonisms and the growth of protectionism.
The global economy cannot afford to rely any longer on the debt-fueled growth model that has brought it to the current juncture, the “persistent and otherwise puzzling” global slowdown in productivity growth. It tellingly attributed the slowdown to the effect of a massive series of booms and busts that have characterized the global economy in recent years as it has become increasingly dominated by financialization and speculative mania, fueled by virtually unlimited cash from global central banks.
A full scale disintegration of the EU is now a real possibility – yes, only a possibility and not necessarily the reality, mainly because Germany would not let EU disintegrate.
EU Integration was an attempt by the ruling classes of the continent, with the support of the United States, to prevent a new eruption of national conflicts that had twice plunged the world into all-out war. However, “unity” within the framework of capitalism could never mean anything other than the domination of the most powerful nations and corporations over the continent and its peoples.
The fracturing of the EU along national lines that is now taking place is once again driving inexorably towards world war. But the EU cannot be put back together again. The Brexit result has made manifest a broader crisis that is insoluble within capitalism because it is rooted in the fundamental contradiction between the integrated character of the global economy and the division of the world into antagonistic nation states based on private ownership of the means of production.
Europe must be united. However, this cannot be done on a progressive basis through efforts to preserve the moribund institutions of the EU or other bureaucratic mechanisms. The progressive and democratic unification of Europe can be achieved only from below, through a revolutionary struggle for socialism across the continent led by the working class.
The likely economic fallout from the Brexit vote on the rest of the world over could be huge. In addition to the direct trade effect, business investment around the globe is likely to be dampened somewhat due to the heightened uncertainty about the global implications of Brexit and the tightening of financial conditions. Companies now delay investment projects to assess how Brexit could affect them.
One impact on the government is the effect on the value of its holdings in banks. The value of the government’s holding in RBS and Lloyds Banking Group dropped by about £8bn, although it has recovered somewhat since.
The pound has dropped considerably against the US dollar; less so against the euro. That has not had a great deal of impact on the economy so far, although it is likely to stoke inflation in due course. National income is reported in pounds so will not be hit automatically by a weaker pound, although it will suffer in comparison with other countries – the status as the world’s fifth biggest economy may be threatened.
There may already have been an impact on the economy or the public finances but there are no data as yet showing that. Throughout the campaign pro Brexit leaders argued that UK would save money from not contributing to the EU Budget.
However, the impact on global growth and inflation is likely to be relatively small – and almost certainly not large enough to push the global economy into recession. UK import demand would be minimal as the UK accounts for only 3.6% of global imports of merchandize goods.
This could lower potential growth even further and would likely lead to higher wage and inflation pressures.
Chancellor of the Exchequer George Osborne says that companies have already started cutting back on investments following the vote to leave the European Union.
The Brexit shock is likely to intensify the pressure on current and future mainstream governments to address inequality and limit migration.
Of course, Europe, USA and the rest of nations would undertake urgent measures to minimize the impact of Brexit and according to reports the European Union has already begun action in the respect. Investors will have to factor in a higher chance of a stagflationary outcome over the next three to five years: even lower growth or near-stagnation coupled with a significant rise in inflation. This could lower potential growth even further and would likely lead to higher wage and inflation pressures.
Of Multilateralism And Future To Europe Recalibration
As the key-note panelist at the Modern Diplomacy and IFIMES conference today in Vienna, the former Secretary General of the Paris-based Organisation for Economic Cooperation and Development in Europe, and former senior minister in several Canadian governments, just delivered highly anticipated speech.
This panel in addressing the future of Europe is invited to answer this question:
“Is there any alternative to universal and pan-European multilateralism? For the purpose of my remarks I am interpreting “ universal and pan – European multilateralism’ as moving forward with achieving more EU integration supported by institutions appropriate to a kind of federal structure in line with the thinking of the Spinelli Group. But it also raises the question of global free trade which I promoted as Secretary General of the OECD and continue to believe must be the word’s future in addressing poverty and opportunity, especially for the worlds developing countries. But it has to be managed in a way sensitive to the challenges of both.
In these brief comments I intend to offer my view on the answer to this fundamental question about the future of Europe.
To begin, I would amend the question by adding the word “good” before “alternative”.
There certainly are alternatives some of which could set Europe on a path back to a collection of independent sovereign states and undo the remarkable progress in building a secure European Union in the post WWII period.
Many years ago when looking at the extraordinary work and vision of statesmen like Jean Monet trying to build a lasting and prosperous European Union, I came across a comment of British Historian H.A.L. Fisher in the preface to his 1936 book, A History of Europe. In part it read as follows:
“[No] question [would be] more pertinent to the future welfare of the world than how the nations of Europe … may best be combined into some stable organization for the pursuit of their common interests and the avoidance of strife.“
Although we appreciate the Marshall Plan’s amazing contribution to the Europe of today, it contributed more to restoring Europe physically while providing humanitarian assistance. Of course, the OEEC which evolved into the OECD in 1961 did provide an important framework and mechanism for economic and social development which continues to this day.
Fisher’s vision of a strong, unified Europe remains very much work in progress and that work really began with Jean Monnet’s initiative to create the European Coal and Steel Commission. I will comment on that in a moment But I remain convinced that Fisher was right, and the great rebuilding of Europe and the EU after the Second World War must and will endure notwithstanding the barrage of criticisms from euroskeptics, now emboldened by the United Kingdom’s Brexit vote of June 2016. Admittedly my conviction is based on the EU having strong, visionary leadership, which has not yet fully materialized.
Think of this. Although Greece represents less than 3 per cent of the Euro zone economy, euroskeptics used its financial crisis as ammunition to predict its withdrawal from the eurozone and the possible unravelling of the entire EU. The Greeks rejected that option: there was no Grexit. Austrians also rejected right-wing populist nationalism in the 2016 Presidential election of Van der Bellen, a strong supporter of the EU.
The support for Brexit in the UK referendum was an unexpected shock for some, but it pleased others who wish to see the EU unravel and claim that the UK attitude reflects views held in other major European countries. I keep hearing and reading that the United Kingdom has rejected the EU, as if it were an overwhelming victory. Bolstered by misrepresentations and downright lies it was a very slim referendum victory but Brexiters will argue that it was validated by Boris Johnson’s subsequent margin of electoral victory.
There are also others, especially President Trump who appear to be hostile to the emerging global role that the European Union is likely to play as it completes its evolution to a unified international force. This has become even more important as the United States under Trump becomes increasingly isolationist and opposed to international multilateralism constructed by visionaries over the past 75 years.
In a stunning commentary in Foreign Affairs (summer 2016), Professor Jakub Grygielof the Catholic University of America, implies that the upside to the EU crisis will be a return to independent sovereign nation-states across Europe. Indeed, that would be an upside for American isolationists. It would remove from US competition the largest unified single market in history and reinstate the possibility of future wars on the continent that this great European experiment was designed to prevent – as it has.
Some of Grygiel’s comments appear designed to create a false impression of the views of Europeans. Here is a cheerful observation to support his thesis: “a Europe of newly assertive nation-states would be preferable to the disjointed, ineffectual, and unpopular EU of today. There’s good reason to believe that European countries would do a better job of checking Russia, managing the migrant crisis, and combating terrorism on their own than they have done under the auspices of the EU.”
Really? What is that “good reason” that escaped the attention of the statesmen and nation builders like Jean Monnet in post-war Europe? Grygiel also says that the EU is ineffectual, which is true in some cases, as it is with many, if not most supranational bodies, including much of the United Nations (UN) activities. And what of the United States itself?
Sadly the world is watching that formerly great republic floundering in the face of numerous serious challenges both social, economic, even racial, not even capable of effectively addressing the Covid-19 crisis through what is becoming a dysfunctional government under a Commander in Chief who proudly presents himself as a narcissistic ignorant bully.
And non Europeans, especially Americans, systematically ignore the EU’s successes. One good example being the collective research of 28 networked European countries that produce one-third of the world research’s output – 34 per cent more than the United States and more than China. This was documented at the time of the Brexit debate in New Scientist. (June 2016). These are the kind of synergies that could be sacrificed should the EU dissolve, and it may already be compromised by the withdrawal of the UK which has much world first class research.
Hopefully the; United Kingdom will stay united and prosper in the post Brexit period. However, there is good reason for concern as the Financial Times Martin Wolfe wrote at the time (June 24,2016). He said:
“David Cameron took a huge gamble and lost. The fear mongering and outright lies of Boris Johnson, Michael Gove, Nigel Farage, The Sunand the Daily Mail have won. The UK, Europe, the West and the world are damaged. The UK is diminished and seems likely soon to be divided. Europe has lost its second-biggest and most outward-looking power. The hinge between the EU and the English-speaking powers has been snapped. This is probably the most disastrous single event in British history since the Second World War.
Yet the UK might not be the last country to suffer such an earthquake. Similar movements of the enraged exist elsewhere – most notably in the US and France. Britain has led the way over the cliff. Others might follow.”
Will others follow the United Kingdom over the cliff? Alina Polyakova and Neil Fligstein, writing in the International New York Times at the time of the Brexit vote( July 2016), relied on polls that suggest that will not happen. They say, “Britain is not, and never has been, a typical member of the European Union, and in no country but Britain do populists and other euroskeptic forces have the 51 percent of votes needed to pull their countries from the union.”
Obviously, those in the UKwho wanted Brexit must have believed it is good for them and presumably for the United Kingdom, even if it means losing Scotland and perhaps Northern Ireland. The City of London will also suffer, but no one can estimate what the damage will be until all the terms of exiting are known.
Jacques Delors, who has dedicated much of his life to the European dream both in public office and after retirement through his Paris-based foundation, made the following observation in an inter- view in 2012 with the Handelsblattnewspaper: “If the British cannot support the trend towards more integration in Europe, we can nevertheless remain friends, but on a different basis. I could imagine a form such as a European economic area or a free-trade agreement.”
That might be the happiest outcome in the wake of Brexit. The real beneficiaries of Brexit are the remaining EU members inspired by people of the experience and quality of Jacques Delors and members of the Spinelli Group. The latter founded in 2010 as a network of thousands of politicians, individuals, writers, and think tanks looking to revive the momentum toward a federalist structure for the EU.”
In fact, the Brexit vote and Johnson’s arrival as Prime Minister may have strengthened the resolve of many EU countries and prominent Europeans to accelerate the integration process in line with federalist thinking.
Obviously those having the foresight to realize the importance of greater integration and an emerging federalist model, such as the Spinelli Group, would be blocked by a United Kingdom, were it a member, to have reforms move in the opposite direction, consistent with Prime Minister Margaret Thatcher’s famous Bruges speech in 1988 where she said,
“We have not successfully rolled back the frontiers of the state in Britain, only to see them re-imposed at a European level with a European super-state exercising a new dominance from Brussels. Certainly, we want to see Europe more united and with a greater sense of common purpose. But it must be in a way which preserves the different traditions, parliamentary powers and sense of national pride in one’s own country; for these have been the source of Europe’s vitality through the centuries.”
This could hardly be seen as an endorsement of a federalist system of any kind, because decentralization, especially with the preservation of parliamentary powers, meaning full sovereignty, is incompatible with federalism. She could have added that the elements she wished to see preserved have also been the source of bloody European conflicts throughout the last millennium, including three wars between France and Germany in the 70 years between 1870 and 1939!
Consideration should be given to some steps that must be taken to realize the collective potential of the EU as a major global player, which it could never be if its members revert to sovereign nation- state status. Indeed, as other major countries grow in economic clout, it has been pointed out that not even Germany would be in a new G8. Only a united EU could have influence on the global stage.
Skeptics like Professor Grygiel, many of them American, seem blinded by the headlines and glare of current events, failing to place them in a broader historical context. Reviewing the remarkable evolution of Europe since the Second World War, I hope that the long-term success of Europe is inevitable. But as the great American judge Oliver Wendell Holmes once noted, “the mode by which the inevitable comes to pass is effort.” European leadership must now make that effort. It is critical not only for Europe, but for the world today.
A strong, unified Europe is also important for the emergence of global multilateralism and the further evolution of globalization. Since the end of the Cold War we have been living in a world dominated by just one superpower: the United States. Fortunately, that superpower has been a very open market and largely, but not entirely, militarily non-aggressive. Sometimes referred to as the “importer of last resort,” it continued to run current account deficits opposite many trading partners, especially China.
The American economy had enough strength and resilience to emerge slowly but with growing confidence from the global financial crisis of 2007–08. To become a companion economic locomotive, Europe must continue to open its markets, eliminate distorting trade subsidies, and undergo substantial structural reforms in labour, services, and manufacturing markets to stimulate European economic growth. I hope that the results of the Europe 2020 exercise and its follow up will help in that regard.
If that does not happen, the United States might use its economic muscle to focus increasingly on bilateral agreements that are becoming a serious impediment to global free trade.
If Europe had successfully moved to a more centralized and coherent federal model of government it could have reached the objectives adopted by the EU in 2000 (often referred to as the Lisbon Agenda), which was stated in the Lisbon Declaration (24 March 2000) as follows: “The Union has today set itself a new strategic goal for the next decade: to become the most competitive and dynamic knowledge-based economy in the world, capable of sustainable economic growth with more and better jobs and greater social cohesion.”
Well, that failed. A review of progress chaired by the former Dutch Prime Minister Wim Kok reported in 2004 that the strategy had fallen well short of its objectives. The diagnosis of the problems of broad structural reform was good, but implementation of reforms was seriously lacking. Kok’s review carried much credibility as he had overseen the continuation and completion of the major Dutch structural reforms originally introduced by his more conservative predecessor, Ruud Lubbers. Kok was also a regular participant in many international conferences, and during our discussions it was apparent to me that he was a talented consensus builder.
There is much to be said for such consensus builders, who enable intellectual and political opponents to better understand competing views. Strengthening such relations between European political leaders will be important in bringing cohesion and stronger integration to the EU in line with the objectives of the Spinelli Group.
The Lisbon Declaration, now replaced by the Europe 2020 strategy, has five ambitious objectives related to employment, innovation, education, social inclusion, and climate/energy. The world would benefit greatly from Europe attaining those objectives.
Today only the EU and Japan might to come close to matching the United States in per capita GDP in the coming years.
Demographic projections show Japan’s population in serious decline, but an expanded EU which should evolve with Turkey as a major player, would have a much greater population and a much larger market than the United States.
The objectives listed above can only be realized when the peoples of Europe achieve a consensus on what kind of legal community they truly wish to be, and so far, progress to that end has been in fits and starts. The failure of the Lisbon Agenda, the rejection of the proposed constitution in both French and Dutch referenda, and now the exit of the United Kingdom underscore the difficulty of moving toward a flexible federal structure.
The use of the word federal seems to be an anathema for many Europeans. It is worth remembering that with the creation of the European Coal and Steel Community inspired by Jean Monnet in 1951, the French government declared that it would “provide for the setting up of common foundations for economic development as a first step in the Federation of Europe.”
Today there does not appear to be any coordinated and broad- based visionary leadership like that of Jean Monnet that led Europe out of the destruction and chaos of the Second World War.
Perhaps the Greek crisis, the withdrawal of the United Kingdom from the EU, and continuing economic performance under potential will awaken Europeans to the need for a truly federal-type European Union, with strong central government institutions where appropriate, accompanied by the protection of individual nations’ precious linguistic and cultural identities. The genius of federalism is that it can accommodate great diversity in many areas.
What is the way forward? Where is the higher vision to achieve what is imaginable but not yet within reach? I suggest that the answer is to reconcile the various goals of Europeans, what I call the three Ms: minimizing frictions, maximizing synergies, and maintaining sovereignty.
Some believe they can achieve the first two without a dilution of sovereignty. That is not possible. From my Canadian experience with Quebec, however, I know that it is possible to minimize frictions and maximize synergies while maintaining cultures and national identities. In the case of Quebec, the French language, civil law, religion, and culture have been protected since the Quebec Act of 1774, which is one reason why separatist movements have never succeeded.
I see this kind of flexible federal structure, with necessary variations, in Europe’s future. Loss of Europe’s various languages and cultures would alter the character of the continent, moving it in the direction of the United States. The historical evolution and the nature of the “self-willed” peoples of Europe, as Fisher described them, make that path neither feasible nor desirable.
I finish these comments with a quote from a recent letter distributed by Thierry de Montbrial, the founder and head of the prestigious French public policy think tank IFRI.
“But it stands to reason that we in Europe in particular should capitalise on building the Union in order to prove the viability of a third way between the United States, that great democracy which still claims to be a liberal one, and the People’s Republic of China, which still claims to be communist. Most of us want to remain close to American democracy, but we refuse to become its vassals, notably as part of an Atlantic Alliance retrofitted to that end. There is an urgent need to clarify NATO’s truly shared objectives. As for the European Union, despite all the whining in recent weeks, it continues to sail ahead in stormy seas, as it always has…..
If there is one part of the world where multilateralism is making headway despite countless hurdles, it is the European Union. There is still a very long way to go in Europe and, even more so, on a planetary scale. But history is moving in that direction, for the alternative is collective suicide. There is no doubt that global warming, pandemics and more or less intense wars are foreseeable in the world’s near-term future. At least we can hope to limit the damage, which, after all, was the case during the Cold War. Let us be convinced of the European Union’s responsibility in that regard.”
I agree…who cannot?
Trans-Atlantic relations and the Western Balkans
Authors: John Cappello and Ari Mittleman*
The sudden cancelation of the planned White House meeting between the Presidents of Serbia and Kosovo provides an opportunity to pause and examine where the United States and European allies can most effectively collaborate when approaching the Western Balkans.
The President of the European Commission Ursula von der Leyen announced that rather than President Donald Trump she will host the leadership from both countries in Brussels.
Regardless of venue, it is in the best interest of the United States and our European allies to consistently devote time and attention to this complex region.
Examples of Moscow and Beijing working to degrade the Western democratic values while advancing their authoritarian vision grow at alarming rates.
As the largest country in the Former Yugoslavia, Serbia is a key to a stable, secure, and peaceful Balkans. Dialogue with and, ultimately, recognition of Kosovo is a must. Washington and Brussels should regularly repeat these sentences as they will only benefit the region.
As British Prime Minister Winston Churchill famously quipped, “the Balkans produce more history than they can consume.” History is happening before our eyes and it begs the question whether Washington and Brussels are looking in the right direction.
The day after Kosovo declared independence in 2008, President George W. Bush recognized the world’s newest country declaring the milestone would “bring peace to a region scarred by war.”
Too often, those who examine the Balkans dwell on the past. The scars of war certainly do take time to heal. However, the very real concerns of everyday citizens – especially the millennial generation born after the war – need to be considered.
Security from armed conflict cannot be overstated, but economic security is equally important.
Looking through younger eyes as they enter the workforce, move into their first home and raise their children is what Balkan politicians too often neglect to do.
A pledge for greater regional economic cooperation is the most important commitment which can come out of the White House meeting.
Improved economic prosperity will provide politicians in the Western Balkans the latitude to make the tough decisions. Washington and Brussels are well positioned to mentor, promote and invest in this type of collaboration.
Special Envoy Richard Grenell pledged that the White House focus on making economic progress in the region.He suggested that efforts toward a political solution be the purview of Brussels. Innovative economic policy initiatives cannot come soon enough and all free market democracies can play a role.
The median age of Serbia is 41. The World Bank estimates that the population, of seven million, is poised to shrink to 5.8M over the next three decades. This would be a 25% drop from 1990. Countless young Serbs are leaving rural communities and mid-sized towns for Belgrade. Many others leave Belgrade for Berlin, New York and elsewhere abroad.
Kosovo has the youngest population of any European country. Approximately one quarter of citizens are 14 or younger. However, it consistently also has the highest unemployment numbers across all generations.
The everyday lives of young families in the region benefit from the ability for regional cross border freedom to travel, low cost reliable energy, and investments that do not amass multi-generational national debt. Both governments – along with Washington and Brussels –will benefit by looking through this lens.
Last October the leaders of Serbia, Albania and North Macedonia met in Novi Sad. With much fanfare, they announced loose details for what was quickly billed a “mini-Schengen”. The Schengen area has been a socio-economic game changer across 26 countries and there is no reason why a variation in the Balkans would not have quantifiable and positive results. Naturally, the devil is in the details and this has been put on hold by the Pandemic. Washington and Brussels should jumpstart this and encourage collaboration between Belgrade, Pristina, Podgorica and Sarajevo.
Just last week, the region moved significantly closer to having more affordable and reliable electricity. A 400 kV transmission line between Kragujevac and Kraljevo was commissioned. The entire project will run from Ukraine to Italy. German financing provided a 15M EUR loan. Brussels can incentivize opportunities for modernizing the electricity grid and do so in a context which opens tenders for American and European firms and dissuades sweetheart deals for Chinese state-owned enterprises.
The day after the Orthodox Christmas President Vucic attended the commissioning of the Turk Stream natural gas pipeline in Istanbul. He was joined by Presidents Putin and Erdogan and Bulgarian PM Boyko Borisov. Russia manipulates gas prices playing countries across Eastern Europe against one another. Monopolies are never good.
Washington previously devoted considerable attention to the Trans-Adriatic Pipeline which ultimately originates in Azerbaijani waters and will be the first European pipeline to fully bypass Russia. The European Bank for Reconstruction and Development (EBRD) working with 16 commercial banks has just dedicated a 1B EUR loan. Assuming an imminent completion of TAP, Brussels must expedite plans to make the Ionian Adriatic Pipeline spur a reality. This would dramatically transform the energy interconnectedness and, therefore, economic security of Montenegro, Croatia and Bosnia. It was a 2018 EBRD priority and must remain.
Soon after returning from Washington in March, President Vucic categorically declared, “European solidarity does not exist. That was a fairytale on paper. The only ones who can help us in this difficult situation and that is China.”Mask diplomacy has been exhibited most clearly in Serbia.
Beijing presents a broad challenge for Washington and Brussels. While attention has rightfully been focused on 5G development, attention must be much broader. Beijing presents a very practical relationship to countries like Serbia not yet in the EU. Politicians in the region see Chinese overtures through the lens of election timelines and immediate “wins” rather than seamlessly never-ending discussions about opening EU chapters.
What started as Chinese investments in critical infrastructure has now progressed into a much deeper presence across academics, media and cultural activities.
Indeed, even in Croatia, an EU and NATO member, the largest bridge project in Europe is being built by a Chinese state-owned firm. This came at the expense of an Austrian bidder.
Modern roadways and improved transportation hubs cannot be discounted. A previously two-hour trip from Belgrade to Cacak now takes less than 50 minutes.
This is not an argument for Chinese investment, but for pragmatism and understanding that prolonged delay EU enlargement has real consequences in the lives of everyday individuals.
The one meeting President Vucic had with the Trump Administration in March was with the leadership of the new Development Finance Corporation (DFC). Should an investment proceed, it should aim for not only maximum employment ripple effects, but also demand cross border regional collaboration. When it comes to investments in the Balkans, regular open dialogue should occur between the DFC and the EBRD.
As the debate continues about the future of Trans-Atlantic relations and the fallout from the cancelation of a White House Summit, the fact remains that consistent targeted attention to the needs of everyday people in the region has been lacking.
A debate over the academic term “Trans-Atlantic” must not draw lines where EU and NATO borders end. In the end, it is in the interest of all involved to have a Europe whole, free and at peace. This means we must not overlook what is often referred to as the “soft underbelly” of Europe.
With the dust starting to settle after elections in Serbia, a new government in Kosovo, Germany at the helm of the EU Council Presidency and sustained bipartisan interest from Washington – real and meaningful regional socio-economic progress is possible.
*Ari Mittleman, Founder and Publisher of Balkan Insider, lived and worked in Croatia and Montenegro focused on community and economic development initiatives.
US troop withdrawal from Germany: Berlin’s first step towards political independence
Germany has always been one of Europe’s leading countries on practically all economic performance indices. At present, according to NASDAQ, it occupies fourth place among the world’s top economies (after the USA, China and Japan) with the GDP amounting to 3,86 trillion US dollars. Thanks to its economic potential, Germany has always been attractive as a geopolitical ally and partner.
Following the defeat in the Second World War in 1945 Germany was divided into two zones of occupation –the German Democratic Republic GDR (under the control of the USSR) and the Federative Republic of Germany (under American, French and British control), de facto becoming a division line of entire Europe. Four years after the end of the war, on April 4, 1949, the United States created NATO – a project designed to “foster stability and promote wellbeing in the North Atlantic region”. In fact, the North Atlantic alliance was setup to strengthen American influence in Europe and guarantee its “protection against Soviet influence”. A statement to this effect was made by Anders Fogh Rasmussen, NATO’s former secretary-general, in his article recently.
Six years later, in 1955, at Washington’s initiative the Federative Republic of Germany was admitted into NATO as part of the second expansion of the alliance, which aggravated the international situation. Such attention to Germany on the part of the USA is attributed to the fact that the White House was determined to embark on a “new occupation” of the country: at that moment the Pentagon viewed it as the main operation base in Europe – German territory provided everything necessary for the creation of a contemporary military infrastructure of the united armed forces of NATO.
According to the German government, at the end of the Cold War there were a maximum number of American soldiers in Germany – more then 200 thousand, which looks like occupation, but under a different name and a convenient pretext. At present, according to reports, 35 to 39 thousand American servicemen are deployed in Germany. Meanwhile, President Donald Trump reported the presence of 52 thousand American servicemen on the territory of Germany, which gives grounds to suspect the intentional suppression of information on the real number of US soldiers deployed in Germany and in Europe as a whole.
Also located on the territory of the Federative Republic of Germany are the headquarters of the main military command of the USA armed Forces – the European and the African divisions, which exercise control of US forces, including assault drones, operating in Afghanistan, Yemen, Syria and Libya. All this makes Germany an in voluntary participant of military operations which are conducted in Central Asia, in the Middle East, and in Africa. Consequently, it’s German cities with American military bases deployed in them that serve as targets of attack for forces with which the US wages an armed struggle for defending their own national interests.
On his part, Donald Trump at the start of his presidential term embarked on the policy of exerting pressure on the United States European “allies” demanding more participation in financing NATO operations. A few days ago he signaled readiness to withdraw more than 9 thousand servicemen from Germany allegedly because of Berlin’s failure to meet membership requirements relative to financial payments into the NATO budget (two percent of the national GDP). All this fits well into the US policy of blackmail and pressure on European countries. In the first place, Germany, as the “driver” of European economy. This statement has also been confirmed by NATO’s Secretary-General Jens Stoltenberg, who said that he has discussed reduction of US military presence in Europe with Donald Trump. However, he said, there has been no final decision on the withdrawal of American troops from the territory of Germany. The presence of US Armed Forces in Europe meets the interest both the United States and united Europe.
Significantly, the German leadership is consistent in defending their position on the issue. German Ambassador to the United States Emily Haber said that US troops in the FR Germany are not for its protect on but for ensuring trans-Atlantic security and position in the military force in the direction of Africa and Asia, if needed. German Foreign Minister Heiko Maas describes relations between Washington and Berlin as “complicated”. Through making a good use of political and diplomatic tactics, the German military and political leadership sends a clear message to the White house saying that they do not need American “military care”.
In addition, as experts say, anti-American sentiments are gaining strength in the German society with more and more people calling for a revision of such a cooperation format. In the opinion of German political analysts, at present, relations between Berlin and Washington are at the lowest level in recent years, since President Donald Trump looks at Angela Merkel as his number one political rival in Europe. On their part, representatives of business circles believe that Germany should introduce sanctions against US energy and telecommunication companies and should boost taxes on the supplies of American LNG.
What is clear without any doubt is that the times of political correctness in German-American relations are gone. Europe is forced to act decisively to protect itself against an overt interference of Washington in the domestic affairs of European states. Germany, being no exception, is taking practical steps to fight against the political dictate of the United States.
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