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The Eurasian project and the geopolitics of Brexit

Giancarlo Elia Valori

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With specific reference to Brexit – an issue that we have analyzed extensively – we need to define both its effects on Europe’s new geopolitical configuration and those relating to the structure of European and world finance.

In this phase it is highly likely for the central banks to allow markets to have only a limited reaction to Brexit, without favoring the spreading of contagion with excess liquidity for bailouts and with an unreasonable credit squeeze.

The goal of the national central banks, and certainly of the ECB, will be to confirm the level of interest rates reached last February, with some fluctuations which will allow marginal gains for investors and a different distribution of potential risks.

The Bank of England has set aside over 344 billion pounds for “stability measures”. For the time being they are certainly sufficient.

As to the Stock Exchange, bankers will make it fall to minimum levels quickly so as to subsequently bring it back to more reasonable values – namely 50% approximately – reached immediately after the counting of ballots in the British referendum.

There will be no summer collapse of the stock markets, which could certainly be electorally exploited by the US tycoon Donald Trump, and hence no snowball effect on European economies and financial markets.

After Brexit, however, there is Italy around the corner. It is always worth recalling it.

But what is the real geopolitical effect of the undeniable weakening of the European Union after Brexit?

Meanwhile, all global markets have simultaneously fallen after the news coming from Great Britain and the pound has dropped to its lowest level since 1985.

Hence the effects of an EU internal political choice are crucial and decisive for world markets considering that Great Britain is a country sitting in the UN Security Council since its creation, as well as a member of the nuclear club and a leading military power.

Great Britain is also a country having strong economic ties with China, as evidenced by the visit paid by President Xi Jinping to London last September.

The UK government is determined to make British private capital be invested in the Chinese state-owned companies, not to mention the project to build a large nuclear power station in England mostly with Chinese capital.

It is worth recalling that currently China manages over 155,000 state-owned companies with a total amount of over 104 trillion yuan.

If the British economy falls temporarily into a range between 0.6 and 3%, the UK internationalization and the integration of the Chinese economy into the EU framework will be severely damaged – with seriously negative repercussions also for the rest of Europe.

And even without an expansion of the internal market, which will be further hit as a result of the new unfavorable pound-euro exchange rate.

But what is the real strategic framework in which we move after Brexit?

Let us analyze some medium-long term effects:

a) Brexit makes the prospects for creating the Eurasian system recede further. But it could favor both the EU de facto separation from the NATO strategic framework and the complete weakening of the TTIP negotiations with the United States because a less politically credible EU will certainly not be in a position to face them.

b) The new configuration of the Eurasian system is more complex than we could predict even a few months ago.

c)The integration between Russia and China, the transformations of the Chinese finance and the new Russian posture in the Middle East mean only one thing.

d) In other words, the EU expulsion from its Near Abroad and the elimination of its potential of mediation with the OPEC Arab region, as well as its marginal role in the new equilibria with Iran after the nuclear JCPOA, and finally its possible closure to the Chinese project Silk and Road Initiative, at least at maritime network level.

The solution could come from a EU comprehensive agreement with the Russia-China axis, so as to pacify the Maghreb region, on the one hand, and the region stretching from Central Asia to the Horn of Africa, on the other.

Finally if the EU is not able to stabilize Libya, it will show to everyone it has no geopolitical relevance and this factor will be clearly considered by the other global decision-makers.

The Libyan issue is a typical case of European ignorance and foolishness: the fight against ISIS in Derna, and particularly in Sirte, is now led by the forces of the military operation Al Bonyan Al- Marsoos (“The solid structure”), somehow affiliated with Al Farraj’s Government of National Accord (GNA) but not receiving orders from it.

While the only internationally recognized Libyan government has no control over its armed forces at a time of harsh and bitter confrontation, the international community has no leverage over Libya and, hence, over the whole Maghreb region, which is about to be integrated – not in a fully subordinate way – into the EU economic and regulatory framework.

According to the latest data available, trade between the North and the South of the Mediterranean region has grown by 413% and 321% for Turkey and Algeria, respectively.

Israel has recorded a 10% increase and we shall see how the Middle East and the Mediterranean region will change once the strategic and military agreement between Turkey and Israel will inure all its effects. This agreement – albeit with the Russian military protection – will restore the political-military contacts between Turkey and Israel for the passage of gas networks from the Israeli Leviathan gas field to the Turkish and Cyprus market outlets.

While it is worth recalling the agreement between Russia and Israel for military and intelligence coordination, which requires the actual protection of the Golan Heights from the Shiite jihad raids.

Hence a new Mediterranean framework which makes the EU smaller and strategically marginal, while the United States only plan to seal the Russian Federation on its borders into the Eurasian peninsula and to carry out some destabilizing operations towards the Chinese region, by selectively distorting some Chinese autonomous regions and other Central Asian countries, both through the rift created by the crisis in Ukraine and through autonomous actions from Northern India.

Hence we are faced with a growing Eurasia, characterized by the ever closer union between the Russian Federation and China, while the EU weakens, shrinks and splits, with the now sickening propaganda against the “bad” and “nationalist” British people and against the most fallacious and imaginative approach of current political science, namely “populism”.

If the EU is able to design a strategic system in relation to Eurasia, enabling Europe to expand its borders and make them safe and if NATO becomes a military tool à la carte for its major countries, the end of Europe – the Europe of Robert Schuman, as well as Thomas Mann’s – will be very near.

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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The Rise of Far Right Populism in Europe Ahead of EU Elections

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Authors: Punsara Amarasinghe and Eshan Jayawardane*

Populism in Europe as a civilizational legacy has a deeply rooted history which dates back to Greco Roman antiquity and as it has been recorded by classical historians like Livy, the overarching political structure of Roman republic nailed by populism that arose as a result of the loopholes of the system. The role of Publius Cloudius against Roman nobility during the late republic was a reflection of how populist discourse functioned in classical world. Nevertheless the principles emerged after the post second world war Europe such as social welfare system, social democracy and cultural integration reduced the gravity of populist discourse as a powerful political tool. Moreover the mass migration of political refugees from Eastern Europe to Western Europe during cold war was a phenomenal factor that encouraged west and its citizens to accept refugees or asylum seekers more dearly and it was rather a display of European values. But  as all good things come to an end this wave of immigrations from Non-European countries to Western Europe gradually conceived the seeds of socio economic and political turmoil in the continent that finally paved the path for a greater revival of populist politics in Europe.  Especially the political trajectory created with the Syrian refugee crisis since 2015 in Europe has compelled the people to look for Right wing politics as an alternative. Recent discussion held in Warsaw, Poland between Italian deputy prime minister Matteo Salvini and Jaroslaw Kaczynsi shows the spark of far right populist coalition in European Union against its center right more socio democratic leadership of Germany and France. The significance of this meeting lies in the fact that how EU politics has been changed in the recent years before its troubled policies over the illegal immigration and refugee crisis and this Polish Italian axis seems to create a decisive impacts upon the upcoming elections to EU parliament.

As a matter of fact in the past, it never really mattered much if the Euro election was carried by the left or the right: the result was the same anyway. The parliament has always been keeper of the federalist flame, but the unorthodox political upheavals Europe envisaged for past two years have such as BREXIT in 2016 and Trump’s victory in US presidential elections have upset the center right liberal orthodoxy in EU. Moreover it is a fact not be ignored that how national politics in European countries have taken a populist bend as a consoling since most of the common people in Europe are gutted by the refugee crisis and economic deprivation.  Especially being the undisputed forerunner in EU Germany has faced severe social issues since 2015 as Angela Merkel  decided to not to close Germany’s borders resulting in the arrival of more than one million of people.  Last August in Italy the Migrants mainly coming from former Italian colony Eretria had been stranded at a port in Sicily before Italian deputy premier Salvini finally allowed them to disembarked after Ireland and Catholic Church in Italy agreed to take most of them in. Apart from Italy most of European states have been exposed to the wave of populism mixed up with far right ideological elements. For an example elections held in Sweden in 2018 September dragged the country into a political limbo as the results of the elections did not leave either main parliamentary block with a majority and its far right anti-immigrant party Sweden democrats won 17.6% of the votes. Being a country that has resisted populist politics and far right wing ideology since the end of its notorious dictator Farco’s era, Spain too has witnessed the new wave of populism in its national level politics. The dazzling impact created by Santiago Abascal’s Vox party at the election held in Andalusia by gaining 10.97 % of the votes and 12 out of 109 cannot be ignored despite the fact that his party is still in its infancy stage.

Populist discourse spreading across Europe has not been emerged out of the blue as it is imbued with how common people in Europe perceive the socio economic and political circumstances currently. It was a misconception that many analysts believed that rise populism sprang from the financial collapse and unemployment, because it is evident that the rise of populism has not been solely attributed to the economic crisis. If economic growth had been decisive in Poland, which enjoyed the faster growth rate in Europe between 1989 and 2015, the populist Law and Justice Party would never have become the country’s dominant political force. The bitter truth portraying from the rise populism is non-other than Europe antipathy over mass immigration and their concern for preserving common European values. This aptly shows from how Hungarians have rallied around Mr. Victor Orban as he triumphantly calls himself the defender of Christian Europe. On the other hand such xenophobic notions like cultural preservation, growth of Islam have been clearly captured by populist parties as drawbacks created by the apathy of European Union and its center right liberal democracy. Perhaps the influence coming from Putin’s Russia can be taken as one pivotal factor that has intensified the populist discourse, because president Putin’s knack on ethno nationalism and religious traditionalism seem to have allured the populist movements in Europe.

It is a fact beyond dispute that the rises of populist political parties under its far right ideologies in the backdrop of European Union parliamentary elections have destabilized the continuation of European integration under liberal center right outlook. The populist plan to expand their numbers in EU parliament in 2019 May elections have begun to upset the ostensible stability of EU and its French German leadership or perhaps this year Europe will face the arch encounter between newly emerged far right populism and the social democracy that has been the ruling slogan in Europe since 1968 in an open space.

*Eshan Jayawardne holds BA in Sociology from Delhi University and MA in International Relations from Jawaharlal Nehru University in New Delhi. He is currently serving as a guest lecturer at Sri Lanka Open University. He can be reached at eshan.jayawardane[at]gmail.com

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Europe-US: Results of 2018 and prospects for 2019

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Speaking at a December 4 news conference in Brussels following a two-day meeting of NATO foreign ministers, US Secretary of State Michael Pompeo said that the rule-based multilateral world order that for many decades has served the collective interests of the Western nations is no longer working. He backed up this claim by citing the weakness and incapacity of the United Nations, the Organization of American States, the African Union and some other international organizations.

Much to the Europeans’ surprise, while holding up the NATO alliance as an “indispensable” institution, Pompeo also put the European Union on the list of outdated and unviable ones. These “shocking” comments wrapped up the past 12-month period, probably the most tense in trans-Atlantic relations since 1945.

By the start of 2018, relations between the US and the EU were characterized by a great deal of uncertainty. On the one hand, in the US National Security Doctrine published in mid-December 2017, Trump finally reiterated Washington’s commitment to Article 5 of the North Atlantic (Washington) Treaty, which is something Europeans had been waiting for. He also promised to support America’s European allies against the imaginary “threat” from Russia and China, which he described as “revisionist countries” out to change the existing world order.

On the other hand,the US National Security Council’s view of the countries’ competition in the world conforms to Hobbes’ “all against all” principle. In other words, it rejects the idea of multilateralism, which is a fundamental principle the countries of “old” Europe stick to. Moreover, the entire world order that the US helped establish after 1945, is described as the source of a flurry of serious challenges to America. The Strategy section, devoted to the “world of universal competition,” makes no mention whatsoever of America’s “allies,” while the repeated mention of the obligatory “mutual benefit” of allied relations looks like an undisguised desire to “monetize” friendship.

Washington’s practical steps made in 2017 left Europeans wondering about the price (in the financial sense of the word) Trump would expect them to pay for honoring America’s trans-Atlantic obligations. As a result, Europe was torn between the desire by a sizeable part of its establishment to retain the US leadership , even at the cost of far-going concessions, and a growing disillusionment with the policy of its overseas partner.

The past year confirmed the Europeans’ worst fears: the world, according to Donald Trump, is a world without global rules, a world where the strongest always comes out on top. The White House acted as if it viewed the European Union not so much an ally, as a competitor to fight with. In the spring, Trump suggested to the French President Emmanuel Macron that he pull France out of the European Union in return for a lucrative bilateral trade deal with the US.

Trump supported the UK’s exit from the EU, and even threatened the British Prime Minister Theresa May with economic “measures” in the event of a “softer” Brexit. On June 1, Trump imposed duties on steel and aluminum imports from Europe and threatened to slap new ones – this time on imported European autos.

During the G7 summit in Canada in June, President Trump tried to drive a wedge between the Europeans. Finally, during the NATO summit in July, Trump made it clear that if Europeans refused to “cooperate,” Washington could roll back its military support and even withdraw the US military contingent from Germany. Washington has also made it clear that he considers any further EU foot-dragging on defense spending hikes as a deliberate policy by Europeans, who view the United States as an unfailing guarantor of their security.

During the first half of 2018, the Europeans openly pushed back against Trump’s insistence that his G7 or NATO partners accept the dramatic change in Washington’s approach to these pillars of the Western world, their goals and objectives.

The emergence of Donald Trump has exposed the “royal nudity” of the European Union, which has not yet outlined a common foreign policy on major tracks, or come up with anything in terms of strengthening its power in order to be able to stand up to Washington’s demands.

On the other hand, the heavy-handed and self-serving US policy is too inconsistent as it tries to win over only the partners it can rely on in its fight against Chinese and Russian “revisionism.”

And still, watching the growing signs of US hostility, Europeans start asking themselves a virtually existential question, and that is where the current US Administration is going? Is this the beginning of a long-term trend, a fundamental change in US strategy, or a tactical zigzag meant to achieve some short-term goals? If it is the latter, just like it happened before, then will it be enough to just “wait it out”? If it is the former, will the EU opt for strategic autonomy as part of an increasingly amorphous, but civilizationally homogeneous West, or will it have to solve the colossal task  of creating a full-fledged European “power center” that would interact with the US, mainly, if not exclusively, on the principles of “Realpolitik”?

At the same time, a “wait-and-see” tactic could backfire against Europeans. On the other hand, the “all-strops-out” trade war between the US and China, which broke out last year, is forcing the EU to perform a balancing act, maneuvering its way between the world’s two largest economies. This necessitates an independent geo-economic policy in the face of a looming global economic recession. The long-term challenge to Europe is to build a new, previously unknown, system of international architecture: “economic bipolarity between the United States and China and strategic bipolarity between the United States and Russia.”

Experts believe that if Europeans want to push back against Washington’s plans and avoid the EU’s fragmentation, they should start thinking about making Europe stronger, and do it now.

By mid-2018, more and more European politicians had realized that, in the wake of the Cold War, Washington’s policy in Europe was aimed at undermining Europe’s global competitiveness. The question is, however, to what extent the American establishment as a whole shares Trump’s stated goal of maintaining or increasing America’s dominance, even at the cost of economically destroying the “allies,” who are now being perceived by Washington as competitors.

Trump’s initiatives are clearly aimed against the very idea of European unity, which fuels European suspicions about his desire to implement the classic “divide and rule policy” in Europe.

Having all these factors in mind, the EU’s overarching task was to work out measures to resist Trump’s four-pronged “geopolitical attack” in trade, defense, on Iran and migration policy. On June 6, the European Commission approved €2.8 billion worth of import duties on US-made goods. Following the July visit to Washington by the European Commission President Jean-Claude Juncker, the Europeans achieved at least a semblance of a “truce” in their trade relations with the US. Surprisingly to many, the reconciliation had a demonstrative, even flashy character. After meeting Juncker, Trump said that the US was putting on hold the planned introduction of new tariffs on imported European goods, and would work to settle existing trade disputes in order to avoid a full-scale trade war.

According to experts, Europeans have no wish at all to share with the US the burden of a new economic slump, which Trump’s “reckless” protectionism may entail. Therefore, the EU could best respond to Trump’s policy by assuming the role of the leader of countries committed to preserving the rules of liberalism in international trade. The EU’s economic potential matches that of the United States and its economy is almost the only area of international relations where the bloc can act on a par with, or even independently, from Washington.

However, even though unable to compete economically with the US on a one-to-one basis, EU members remain divided on many issues. Fully aware of this, Donald Trump uses every opportunity available to try to pit them against one another.

So, capitalizing on Europeans’ discord over migration, Trump has banked on unraveling the traditional European political parties by mixing all the trends. Newly-appointed US ambassadors openly support far-right populist parties in Italy, Germany, Britain, and in Central Europe.

Meanwhile, the traditional European parties are preparing to challenge Eurosceptics in the upcoming elections to the European Parliament, set for May 2019. Internationally, the EU responds by ramping up diplomacy aimed at cobbling together coalitions without the US in a bid to preserve the existing world order. In July 2018, the EU and Japan agreed to set up a free trade zone; Brussels has likewise been intensifying efforts to establish a free trade area also with MERCOSUR, Australia and New Zealand, and is actively engaged in informal efforts aimed at promoting liberal values and institutions.

The EU’s stance concerning the US sanctions on Iran, has been equally firm, prohibiting companies and individuals located on the territory of the EU from following American sanctions against Iran. According to the new EU rules, European firms hurt by US sanctions will be able to demand compensation. Brussels also reiterated its commitment to the 2015 nuclear deal with Iran, and is actively looking for ways to circumvent US financial hegemony and sanctions. The EU is mulling an independent system of financial settlements, the European Monetary Fund – an analogue of the IMF – as well as financial instruments that would be “completely independent” from Washington. However, ensuring even a simple majority of “yes” votes by individual EU members on these issues will not be easy.

The biggest hurdle here is security, because without the United States, NATO as a military organization becomes virtually ineffective  making Europe hostage to America when it comes to security. This effectively weakens the EU’s hand even on the continent, let alone the world. The European NATO members face the hard choice of either playing the role of US-led partners, which may imply their agreement to weaken European unity to benefit Washington’s new foreign policy interests, or stay the course of greater independence, including in matters of collective defense (European army), which, however, is fraught with a great deal of uncertainty.

With the onset of autumn, the issue of “European sovereignty” sprang to the top of the EU leaders’ agenda. At the end of August 2018, the French President Macron and the German Foreign Minister Maas went on record emphasizing the need for Europe to play a new role and “strengthen” its position in the global alignment of forcesemerging in the world. In early November, Macron and the German Chancellor Merkel reiterated their call for a “European army,” “real pan-European armed forces.” Moreover, the US was named among the threats Europe needs to defend against.

During the past year, Europe was making mainly tactical steps aimed at making up for the damage caused by US sanctions. Simultaneously, it was actively looking for a future strategy of trans-Atlantic relations, as well as ways for institutionalizing its independent identity, both in foreign policy and defense.

There is little doubt that all of Europe will not turn its back on America, even though most of the countries of “old” Western Europe have been seeking greater “strategic autonomy” for the EU and a system that could function without relying on the hegemonic might of the United States. By contrast, many Central and East European states are making every effort to strengthen ties, above all military, with Washington, so Europe is still wondering how it can possibly to preserve the “old order.”

The outcome of the November 2018 mid-term elections in the US showed  that American voters were losing faith in Donald Trump’s way of handling the country’s foreign policy and foreign trade. With Democrats regaining control of the lower chamber of Congress – the House of Representatives – Trump may need a positive foreign policy agenda, and what better way to achieve this than to restore constructive relations with traditional allies and negotiate with the Europeans? Including on joint measures to “contain” Russia.

Simultaneously, the notion, whereby the EU project is on the brink of collapse and so the US needs to present NATO as a new unifier of Europe is getting increasingly popular in the United States. This is the idea that was pitched late last year by none other than US Secretary of State Mike Pompeo.

This could pull the rug from under the feet of not only those who seek Europe’s strategic autonomy, but even the advocates of a more centralized EU. Therefore, the question of whether the leading European countries will go beyond pacifying voters with talk about the creation of an “independent center of power” remains open. And further moves by the EU in relations with the United States, at least until the May elections to the European Parliament and the change of leadership of the European Commission, will largely depend on Washington’s policy towards its European allies.

First published in our partner International Affairs

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A clear signal for the German chancellor

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It’s a difficult time for the Chancellor of Germany. She had to pass the power inside the Christian Democrat Party to her rival, Kramp-Karenbauer. In a conference, Karenbauer rejected claims that she was the “mini Merkel”.

“People consider me a ‘mini,’ a copy, a simple ‘more of the same,’ but I can tell you that I stand here as my own person, just as life has shaped me and of that I am proud,” she said.

Angela Merkel has announced that she will step down of power in 2021, but the polls conducted in Germany has intensively worried her. The results of these polls indicate that the total popularity of the two traditional German parties, the coalition of the Christian and Social Democrats, have fallen below 50%. This suggests the unpopularity of the coalition government among the German citizens. Merkel now has to run the weak coalition government until 2021!

Many analysts of Europe’s affairs believe that Merkel’s power is actually over. The Chancellor of Germany is no longer the symbol of power in the united Europe. She has lost the power of managing the power equations in her country. In other words, Merkel has become a “passive player” in Berlin, the European Union and the Eurozone.

This is while Merkel had previously said that she hoped her planned departure would end bitter fighting in her weak and fractious right-left coalition, confessing that “the picture the government is sending out is unacceptable”.

According to an Infratest dimap survey, the Alternative for Germany (AFD), the Green Party and Liberal Democrats are now increasing their relative popularity to challenge the two ruling parties (Christian Democrats and Social Democrats) and to end the domination of the two traditional German parties on the power equations in Berlin.

Undoubtedly, Merkel can’t be now regarded as a successful politician at the head of the political and administrative equations of Germany. At the beginning of the German coalition government, many analysts believed that the presence of Social-Democrats alongside the Christian Democrats was a big mistake.

The anti-EU and anti-immigration party of “Alternative for Germany” has become the main opposition party in the German parliament. On the other hand, as the current trend continues and the popularity of the two traditional German ruling parties drops in the polls, they will lose more votes in the upcoming German elections in 2021.

What is happening today in Germany is a big catastrophe for Merkel, the Christian Democrat and, subsequently, the Social-Democratic Party. It’s not possible to restore the political power of these two parties in the near future, that is, as long as they are working together in the coalition government of Germany. On the other hand, the political equations in Germany are so complex that none of the traditional German parties will be able to win the majority of seats in the parliament.

As a result, a large part of the German authorities’ time and energy will be consumed by forming a coalition government (which will be a weak one). This will undermine the position of Germany’s leadership in the United Europe. In this sophisticated game, the Alternative for Germany (which the other German parties are unwilling to join) have been struggling to broaden its political and social popularity.

This extremist party hopes that other right-wingers, including French national leader Marin Le Pen, will be able to win good results in the elections and other political platforms in their country, and that their victory will influence Germany.

Merkel is no longer the symbol of Christian Democrats’ power in Germany’s and Europe’s equations. Political history of the German Chancellor as the EU leader has come an end at a time when her substitute (in the event of a relative and fragile victory in the country’s next general elections), should devote her power to attempts for the formation of a coalition or minimal government in Berlin. Without a doubt, Angela Merkel never imagined that she would have to permanently withdraw from power in Europe by 2021, as an incapable chancellor.

First published in our partner MNA

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