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Additional considerations on Brexit and its strategic value

Giancarlo Elia Valori

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Brexit has been the largest European strategic transformation since the end of the Cold War. Those who cannot read the primary geopolitical data between the digits of a long economic calculation are bound not to even understand the economic and monetary effects of Brexit. However, it is useful to analyze what Brexit means, also from the strictly economic viewpoint.

The cultural, anthropological and identity values have had a decisive impact on Brexit. These are the values which we usually attribute to “populism”, but which are part and parcel of each electoral behavior, currently as in the past.

Those who believe only in the “rational voter” of neo-positivist theories, or in the voters who scientifically analyze all the options available to them – by also believing they will come true – are always bound to be disappointed.

However, let us analyze data and statistics, even though we have already focused on them in other articles. Net migration has almost doubled in the UK, up to over 183,000 new arrivals in 2016. Furthermore migrants account for a 0.5% yearly increase in the total number of British workers.

With specific reference to international trade, the EU is the recipient of approximately 50% of UK exports. It is also worth recalling that the European rates for manufactured goods to be exported have more than halved since 1991. It is not a matter of “entry barriers”. The European red tape for the 100 types of most costly regulations developed by the EU, costs Great Britain approximately 33 billion pounds a year.

It is also worth recalling that as many as 52,000 new rules were enacted by the European Parliament between 2000 and 2013. National markets cannot be protected with odd and irrational laws and by-laws, but with precise foreign exchange operations and with tough negotiations with the potential EU trade partners. According to the latest data available, the financial services exported from London to the EU are worth 14.4 billion pounds a year. Finally, the European Union alone accounts for 46% of foreign investment in Great Britain.

In all likelihood, said investment will be replaced by the Chinese, US and probably Middle East Foreign Direct Investment (FDI), possibly with a predictable new Israeli presence. It is worth recalling, however, that the UK annual cost for its EU membership amounts to 10.4 billion pounds per year. It is interesting to note that the migrants coming from the EU provide a 20 billion pound contribution to the British public budget.

As a result of Brexit, the real estate and property value is bound to fall by at least 15%. Furthermore, in some London areas, the value of houses has already decreased by at least 30%. As already stated in previous articles, the solutions to Brexit are the UK adhesion to the European Economic Area (EEA) or to EFTA, as is the case with Norway, Iceland, Liechtenstein and Switzerland. Switzerland is not a EEA full member, but it is an EFTA member and it long negotiated autonomous bilateral agreements with the EU.

I do not think that Great Britain has ultimately much to gain from entering a bilateral system of European trade, as was the case with the above mentioned countries. Hence the best solution is the Swiss one, but it requires tough and long-lasting negotiations.

The British productive sectors not exporting to the EU account for 85% of the British GDP. For them Brexit is not a problem, but probably one of the solutions. As can be easily understood, the strictly economic – and hence political – issue determined by Brexit is not as simple as we may assume. A solution for the UK could be opening to non-EU markets, especially for the British financial products.

For the time being, the exports of these products to China account for a mere 2% of all UK financial exports, but nothing prevents the size of bilateral trade from increasing substantially and quickly.

In 2014 also Switzerland reached an agreement which significantly reduced non-tariff barriers to China for its banks and financial holdings. Nevertheless we must be careful of competitors. With regard to the export of these products, Germany has recently grown more than the United States and Switzerland itself, at least since the 2000s. Hence only China is left to Great Britain for a useful financial trading treaty. Nevertheless, at strategic level – which is what interests us most – the Brexit impact on the UK nuclear system must be analyzed.

The leaders of the EU nuclear power companies and EDF, in particular, maintain that Brexit will have no impact on the Hinkley Point C project, namely the first nuclear power station built in Great Britain after at least 20 years of nuclear freeze. This plant, which should be operational as from 2025, will supply 7% of British electricity. China will acquire a 33.5% shareholding of this plant (equivalent to 28 billion dollars), but it wants to build two new nuclear power plants, again with EDF, at Sizewell, Suffolk and at Bradwell, Essex.

The power plant in Essex will use only Chinese technology. EDF has a 66.5% stake in all these new projects, but China is not alone in this sector: NuGen, the joint venture between Toshiba and the French Engie, is planning a new plant in West Cumbria.

Moreover, HorizonNuclearPower is building a nuclear reactor in two sites, namely WylfaNewydd, on the island of Anglesey, and Oldbury-on-Severn, Gloucestershire. Hence Great Britain will become the European autonomous energy hub and there is nothing to prevent us from imagining substantial exports of electricity between Great Britain and the EU Member States which are most haunted by the antinuclear fashion. Finally, from the strategic viewpoint, the Russian Federation is not totally dissatisfied with Brexit.

After the British vote, the anti-EU front certainly includes Poland – which has not adhered to the single currency – as well as Sweden, Latvia, Lithuania and Estonia, which are part and parcel of the anti-Russian front but, by leaving the EU system, would inevitably limit their geopolitical scope of action. Russia is betting – certainly not in the short term – on a fragmentation and disruption of the European Union, which is harmful for NATO itself, namely the Russian primary enemy, but then the link between Western Europe and Eastern Europe would be weakened. This is a primary goal for Russia.

Hence Russia would incur fewer difficulties in rebuilding its traditional area of influence in the Eurasian peninsula. At economic level, for Russia the Brexit impact is less beneficial than we may assume. The wealthy Russians have invested over 5 billion pounds in the UK real estate market. Furthermore, volatility on international financial markets increases and this is a situation not favoring the economies which are experiencing difficulties such as Russia’s.

Moreover – on the assumption of an EU disruption – if the euro fell, oil would come under pressure, with great and severe damage for the Russian Federation. Therefore, for President Putin this would be a strategic victory, but it would mean a future characterized by economic uncertainty.

Finally Israel sees the decreasing weight of a country which is now alien and almost an enemy from the ideological viewpoint. Nevertheless it is managing a new strategy of opening to some countries, including Russia, and it is also pursuing its project for being no longer militarily dependent both on the United States and on some EU friendly countries.

Hence, also in this case, the Brexit impact will be limited.

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 "La Centrale Finanziaria Generale Spa", he is also the honorary president of Huawei Italy, economic adviser to the Chinese giant HNA Group and member of the Ayan-Holding Board. 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 of "Honorable" of the Académie des Sciences de l'Institut de France

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US-EU possible soft tactic to contain Iran

Payman Yazdani

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The US withdrawal from the Joint Comprehensive Plan of Action (JCPOA) has created a new rounds of speculations about the three European major players’ (the UK, France and Germany) capabilities and abilities to keep the deal alive without the US.

Following the US President’s unilateral move to withdraw from the Iran’s Nuclear Deal, lots of diplomatic and political efforts have been made both by the European and Iranian officials to keep the internationally achieved deal alive.

Islamic Republic of Iran has announced that it will remain in the JCPOA just if the EU can guarantee Iran’s benefits and interests under the JCPOA in the absence of the US, otherwise Teharn will leave the deal, too.

Despite all measures taken and political promises made by the European sides to keep the JCPOA alive, over the past ten days many big EU firms and international companies have announced their decisions to stop their activities and operations in Iran including Total, Eni, Siemens, Airbus and Maersk.

Just couple of days after the US withdraw from the JCPOA, French gas and oil giant Total has announced that due to return of the US sanctions against Iran it has to pull out of Iranian Southern Pars oil field.

Italian oil giant Eni has also decided to abrogate its agreement with Iran to study oil and gas in Iran.

Maersk as the biggest shipping company in the world has announced that due to its vast activities in the US and to avoid possible US punishments, it will stop its activities in Iran.

Considering the limited capabilities and potentialities of the EU to challenge the US hegemony and also the fact that EU governments cannot force private sectors to work with Iran, it is not realistic to expect the EU to save the JCPOA.

As I mentioned in my previous writing, the possibility of job division between the US and EU to contain Iran should not be ignored.

All facts on the ground imply that all EU measures and promises to keep the JCPOA alive will only result in remaining of some small European companies in Iran. Big companies that can invest and transfer technology to Iran will leave Iran to avoid the US possible punishments. This possible soft and indirect US-EU tactic can help the joint goal of the US and EU to contain Iran.

By this tactic, firstly the EU can buy time and contain Iran so that not to leave the JCPOA. Secondly, the EU will pave the way for selling of its products and services in Iran’s market without investment and transferring technology. Thirdly, Iran’s incomes and revenues will be limited which Americans and the Europeans consider it as a good soft and indirect way to increase pressure on Iran to limit Iran’s regional influence and missile capability.

First published in our partner Mehr News Agency

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Internally weak EU cannot be strong international player

Payman Yazdani

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Commenting on the EU capabilities to protect its interests against the US unilateralism, Italian political science professor, Dr. Pastori Gianluca believes that an internally weak EU cannot be a strong international player.

The US president’s decision to withdraw from the Joint Comprehensive Plan of Action (JCPOA) despite the US key European allies’ opposition has raised so many questions about the global weight of the EU.

Despite many promises from EU key states to keep the JCPOA alive without the US, many believe even if the EU decides to do so the block won’t be able to challenge the US President’s decision due to its internal disunity and limitations. The issue was discussed with political science associated professor of Milan Catholic University of the Sacred Heart, Dr. Pastori Gianluca.

How can the EU protect the right of its companies working and investing in Iran? Is it feasible?

European companies have always had good economic relations with Iran and these relations have grown even stronger in the last few years. I do not think that this attitude will really change in the coming months. In the past, the US already adopted secondary sanctions against countries investing in Iran (e.g. with the ‘Iran and Libya Sanctions Act’ in 1996), but their impact on the behaviour of foreign investors was quite limited. At that time, even some US companies managed to bypass the sanctions operating through foreign branches. Moreover, US-EU relations are currently quite tense, also due to the US will to introduce tariffs on European export. For this reasons, I think that, while the European governments will take a low profile in face of new US sanctions, on the political level they will keep on supporting their national presence in Iran.

Despite being an economic superpower, the EU is not able to protect its interest against the US unilateralism in recent year. Why?

The main problem is that the EU still faces difficulties in transforming its economic power into political power. Traditionally, the EU has been quite effective in promoting and protecting the economic interests of its members but has been far less effective in the political filed. There are many reasons to explain this state of things. As an economic community, the EU exists since 1957, when the European Economic Community was established, while the political union is far more recent. Moreover, the different member states have different visions of the international system and different interests to pursue. Finally, many of them are very jealous of their own sovereignty in international matters and are not ready to submit this kind of matters to a meaningful coordination or – even more — to subordinate them to a common foreign and defence policy.

The EU officials have talked about independent EU over the recent years. Considering the existing facts and EU potentialities, how feasible is it? What are the obstacles to this end?

The EU is currently facing one of the most difficult phases in its history. Anti-European parties are gaining strength in several member states, while the results of the referendum held in 2016 on the exit of the UK from the Union (‘Brexit’) have shown that integration is a reversible process. In the long term, this is the main problem that the EU has to face to affirm its international role. An internally weak EU cannot be a strong international player. At the same time, the development of a strong international profile can help to re-launch the European project, showing to the member states that the EU can be helpful even in the political field. Worth noting, since 2017, several countries are striving to implement a more effective common security and defence policy, largely due to Donald Trump’s proclaimed will to reduce the US engagement in Europe.

First published in our partner Mehr News Agency

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Europe: National Sovereignty versus International Conquest, at Stake over Iran

Eric Zuesse

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Europe now faces its ultimate ideological fork-in-the-road, which it has thus far ignored but can no longer ignore: They need to decide whether they seek a world of nations that each is sovereign over its own territory but over no other (and this would not be a world at war); or whether they seek instead a world in which they are part of the American empire, a world based on conquests — NATO, IMF, World Bank, and the other U.S.-controlled international institutions — and in which their own nation’s citizens are subject to the dictatorship by America’s aristocracy: the same super-rich individuals who effectively control the U.S. Government itself (see this and this — and that’s dictatorship by the richest, in the United States).

Iran has become this fateful fork-in-the-road, and the immediate issue here is America’s cancellation of the Iran nuclear deal that America had signed along with 6 other countries, and America’s consequent restoration of economic sanctions against Iran — sanctions against companies anywhere that continue trading with Iran. First, however, some essential historical background on that entire issue:

The U.S. aristocracy overthrew Iran’s democratically elected Government in 1953 and imposed there a barbaric dictatorship which did the bidding of the U.S. and allied aristocracies, by installing the Pahlavi Shah there, just as they had earlier, in 1932, installed the Saud King in Saudi Arabia — which land never ever had known democracy. As Wikipedia says of Ibn Saud, who became King in 1932, “After World War I, he received further support from the British, including a glut of surplus munitions. He launched his campaign against the Al Rashidi in 1920; by 1922 they had been all but destroyed,” with Britain’s help. Similarly, the U.S. and its British Imperial partner installed Pahlavi as Iran’s Shah in 1953. This was done by U.S. President Dwight David Eisenhower. After the death of the anti-imperialistic U.S. President FDR, in 1945, the U.S. Government quickly became pro-imperialistic under President Harry S. Truman (whom imperial England’s Winston Churchill wrapped around his little finger), and then even more so under Eisenhower, so that during the brief presidency of Ike’s successor President JFK, the anti-imperialistic ghost of FDR was coming to haunt the White House and thus again threaten the conjoined U.S.-UK’s aristocracies’ surging global control. Kennedy was quickly souring on, and coming to oppose, imperialism (just as FDR had done) — he was opposing conquest and dominion for its own sake. So, he became assassinated and the evidence was covered-up, so that the CIA, which Truman had installed and which Eisenhower placed firmly under the control of America’s aristocratically controlled military-industrial complex, became increasingly America’s own Deep State, designed for global conquest (though using an ‘anti-communist’ excuse and cover for their real and ruling motive of global conquest and dominion).

When the U.S.-imposed Shah was overthrown by an authentic revolution in 1979, America’s continued alliance with the UK-U.S.-installed Saud family turned into a U.S.-UK alliance against Iran, which nation has ever since been demonized by the U.S. and UK aristocracies as being a ‘terrorist regime’, even though Saudi Arabia actually dominates global Islamic terrorism, and Iran is opposed to terrorism (except to terrorism that’s aimed against Israel). And everybody who knows anything on sound basis is aware of these established historical facts. But, actually, the U.S.-Saudi alliance is even worse than that: global Islamic terrorism was invented and organized by the U.S. aristocracy in conjunction with the Saud family starting in 1979 when Iran freed itself from the U.S.-UK dictatorship and restored Iranian sovereignty (even though in a highly compromised Shiite theocratic way, nothing at all like the secular Iranian democracy that had been overthrown by the U.S. and UK aristocracies in 1953). The U.S. and Sauds created Islamic terrorism in 1979 in order to draw the Soviet Union into Afghanistan and ultimately used these terrorist proxy “boots on the ground” so as to force the Soviets out of Afghanistan — thereby draining the Soviet economy in the hope of ultimately conquering the U.S.S.R. and then conquering Russia itself, which the U.S. President GHW Bush on the night of 24 February 1990 made clear that the U.S. and its allies must do — he gave the European vassal-nations their marching-order on that date, and they have reliably followed that order, until now.

Russia, which the U.S. aristocracy craves to conquer, is an ally of Iran (which they hope to re-conquer). The basic principle of America’s aristocracy is repudiation of national sovereignty. That’s what the U.S. Government globally stands for today. Russian Television headlined on May 11th, “‘Are we America’s vassals?’ France vows to trade with Iran in defiance of US ‘economic policeman’” and reported that U.S. President Donald Trump’s re-imposition of U.S. economic sanctions against any companies that do business with Iran, is being resisted by all the other nations that had signed the Obama-Kerry nuclear accord with Iran, the “JCPOA” treaty: UK, France, China, Russia, U.S., and EU (which is led by Germany). The U.S. regime knows that if even America’s allies — UK, France, and Germany — hold together with Iran, to defy the Imperial actions punishing them for continuing with Iran even after the U.S. pull-out from the treaty, then the Western Alliance will be jeopardized, if not terminated altogether, and finally the Cold War, which GHW Bush had ordered the allies to continue even after the end of the U.S.S.R., and of its communism, and of its Warsaw Pact military alliance mirroring America’s NATO alliance, will finally end also on America’s side, just as it had ended in 1991 on the Soviet Union’s side. Such an end to the Cold War would possibly cause America’s military-industrial complex — and the stock values of mega-corporations such as Lockheed Martin — to collapse.

Thus, the U.S. aristocracy is afraid of peace replacing their existing permanent-war economy. All those trillions of dollars that have been invested in machines of mass-murder abroad, could plunge in value, if UK, France, and Germany, terminate the Western Alliance, and become individual sovereign nations who join with Iran — another individual sovereign nation — to say no to the Imperial power (the U.S.), and yes to national sovereignty, which sovereignty constitutes the sole foundation-stone upon which any and all democracies are constructed. No democracy can exist in any nation that is a vassal to some other (the imperial power). In a world where national sovereignty is honored, democracy would not necessarily exist everywhere, but it would no longer be internationally prohibited by an imperial power, which inevitably is itself a dictatorship, no real democracy at all.

On March 3rd, the 175-year-old imperial magazine, The Economist, headlined against China as an enemy in this continuing Cold War, “How the West got China wrong” and explained “the Chinese threat”:

“China is not a market economy and, on its present course, never will be. Instead, it increasingly controls business as an arm of state power. … Foreign businesses are profitable but miserable, because commerce always seems to be on China’s terms.”

The imperialistic view is that the international dictator and its corporations should rule — there should be no real sovereign other than this dictatorship, by the U.S. regime now, since America is today’s imperialist nation.

Perhaps Europe now will make the fateful decision, between international dictatorship on the one side, or else the supreme sovereignty of each and every nation on the other, to determine its own laws — and to require any corporation that does business there to adhere to its legal system and to none other: the supremacy of each nation within its own territory, not of any international corporations, not even of ones that are based in some international-bully country that says it’s “the one indispensable nation” — meaning that every other nation is “dispensable.” Russia won’t accept that. Iran won’t accept that. China won’t accept that. Will Germany accept it — the land of the original: “Deutschland über alles”? Will France? Will UK?

Americans accept it. The U.S. public are very effectively controlled by America’s aristocracy. A Yougov poll at the start of 2017 (the start of Trump’s Presidency) asked over 7,000 Americans to rate countries as “enemy”, “unfriendly”, “friendly”, “ally”, or “not sure”; and, among the 144 rated countries, Americans placed at the most hostile end, in order from the very worst, to the 13th-from-worst: North Korea, Iran, Syria, Iraq, Afghanistan, Russia, Libya, Somalia, Pakistan, Palestine, Saudi Arabia, Yemen, and Sudan. Other than Saudi Arabia, which the U.S. Government treats as being its master if not as being its very top ally, and which is, in any case, by far the U.S. military’s biggest customer (other than the U.S. Government, of course), that list from Yougov looks very much like, or else close to, what America’s aristocracy would want to see targeted, as being America’s ‘enemies’. So, other than Americans’ including the top ally both of America’s aristocracy and of Israel‘s aristocracy, Saudi Arabia, on that list of enemies, the list was very much what the U.S. aristocracy’s ’news’media had been promoting as being America’s ‘enemies’. In fact, even though those ‘news’media haven’t informed Americans that 92% of Saudi Arabians approve of ISIS, or that the Saudi royal family financed and organized the 9/11 attacks (in conjunction with others of George W. Bush’s friends), Americans view Saudi Arabia hostilely. That’s acceptable to America’s aristocracy, because the Saud family’s hatred is focused against Iran, the main Shiite nation, and the U.S. public (have been deceive to) prefer Saudi Arabia over Iran. In fact, a 17 February 2016 Gallup poll showed that Iran was seen by Americans as being even more hostile toward Americans than is Saudi Arabia. So, America’s aristocracy have no reason to be concerned that their chief ally and second-from-top governmental customer, the Saud family, are unfavorably viewed by the U.S. public. Both in America and in Saudi Arabia, the aristocracy effectively controls its public. Thus, the American people think in the way that the American aristocracy want them to — supporting any conquest (e.g., Iraq 2003, Libya 2011, Syria 2012-) that the aristocracy want to perpetrate. Of course, the way to achieve this control is by means of the windows through which the public get to see the world around them, which windows on the world are the nation’s ‘news’media.

On May 12th, Fairness and Accuracy In Reporting (FAIR) reported that the American people are very effectively controlled to believe Iran to be America’s enemy and very dangerous to us. The headline was “Media Debate Best Way to Dominate Iran” and the article documented that the American people are being very intensively propagandized by the aristocratically controlled media, to favor aggression against Iran, and are being heavily lied-to, in order to achieve this.

So, though the American public will continue to support the American Government (despite distrusting both their government and their ‘news’media), foreign publics aren’t so rigidly under the control of America’s aristocracy; and therefore Europe’s aristocracies could abandon their alliance with the U.S. aristocracy, if they strongly enough want to. Their ‘news’media would obediently do whatever they’re told, and could begin immediately portraying the reality of the U.S. Government, to their people — including, for example, the reality that the U.S. stole Ukraine

, and some of the participants have even confessed their roles; Russia did not steal Crimea (and the Crimea-Ukraine issue was the alleged spark for the ‘restoration’ of the Cold War — which The West never actually ended on its side, only Russia did on its side).

An end of The Western Alliance (America’s empire) could happen. But it would require — from the EU’s leaders (and/or from Turkey’s Erdogan) — courage, conviction, and a commitment to national sovereignty’s being the foundation-stone to any democracy anywhere, and this change-of-political-theory would be something drastically new in Europe (and-or in Turkey), which is a region that has historically been staunchly supportive of empires, and thus supportive of dictatorships (ones that are compliant — foreign stooge-regimes). That would require a historic sea-change. Iran’s peace, if not Iran’s very existence (and maybe even world peace), might be depending upon this slender hope.

first posted at strategic-culture.org

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