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Conference Geopolitics and History

Giancarlo Elia Valori

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Geopolitics is a strange science or, more precisely, a specific “thinking style”. While History reconstructs facts and interpret them ex post, according to the classic and still valid Cicero’s line of “Historia magistra vitae”, in geopolitics the basic rationale is future-oriented and not past-oriented: what shall I do, in History, to reach certain results?

Which are the initial conditions, the limits and the opportunities among those which occur once, as the Machiavellian Fortune, or those regarding the constant material features of a country?

As Giovanni Sartori always said, certainly all social sciences are series of data in which we can see similarities or not. However which data is needed to make a good geopolitical project?

I will try to answer this question: applying history to geopolitics enables those who have the character and the talent to do so to significantly improve the fortunes of their own country or even to change them.

Sometimes even to overturn them. As Italy, after World War II, and Japan, another defeated country, which were both the winners of the post-war period.

In fact, in his address at the 1947 Paris Conference, De Gasperi was right in saying he knew that “only the winners’ personal courtesy” was on his side.

Italy, however, had its Protectorate in Somalia, which ended in 1960.

Was it a serious geopolitical choice?

Certainly so because everyone knew that the colonial phase was almost over and that the geographic and business cycle of the time could do without the colonial system.

It was the geopolitics of trade between industrial countries while, when possible, the Third World played the card of unearned income and rents on raw materials or, in the Pro-Soviet socialist countries, it created “import substitution industries” to reduce our exports and slow down our development.

Later the great Italian development of the 1960s focused on large state-owned enterprises.

Private companies, however, woke up to reality and developed through exports and a fast-growing domestic market

Another lesson that current governments should learn is that there are not fully export-oriented economies, which kill their domestic markets to better compete on the “great international market”. It is nonsense and a crazy idea.

Both markets must develop harmoniously.

I remember it well – I had a first-hand experience in this regard. What was the geostrategic relevance? It was very simple.

The issue lay in competing with our allies without being noticed, by possibly invoking the right reasons of our opening to the Third World, where the “imperialists” that had won the Second World War were not very well-liked.

Without raw materials, but with plenty of labour force available and a perfect Mediterranean positioning, our fate was decided and settled.

The State managed raw materials at affordable prices for companies and the latter triggered internal development off.

At the time, increasing public spending was funded by growth itself.

The risk was well-run because, as great professionals, we tried to avoid the inflationary effects of export-driven growth with different currencies, often deliberately manipulated to create us problems – and I well remember Guido Carli leading, at first, our Exchange Office and later the Bank of Italy.

That ruling class had the highest degree of Italy’s geopolitical perception.

Compared to current times, the clashes between Colombo and Giolitti were a great piece of work between professionals, while today we seem to be in a nursery school.

They knew and we knew that our development mechanism was the one outlined by the State-Market mix, but without cherishing too many illusions about our private enterprises’ level of awareness.

State socialism?

Sometimes so, but it was the only way to grow fast and without too much inflation or too many asymmetric shocks.

If you want speed, you need to have a highly planned economy while, if you are interested in the ability to adapt to markets, you can be carried away by the slowness of the many free random transactions.

We had quietly inherited the public enterprises’ model built by Fascism, including IRI, IFI and the other public companies for restructuring and upgrading enterprises, but we had adapted it to the theory of social personalism – halfway between Emmanuel Mounier, the intellectual of reference for Pope Paul VI and the extraordinary legacy of the “Code of Camaldoli,” the document with which the Catholics were leading the new Republican Italy.

Once again there was a maximum level of geopolitical consistency.

We social Catholics were the only political force massively present in Italy. We represented the true Italy and we had a very good relationship with the United States.

Defending Tradition and our People after a defeat and, in the meantime, preparing economic revenge.

We also turned temporary aid, namely the Marshall Plan – officially known as the European Recovery Program (ERP) – from post-war economic and humanitarian aid, much less relevant than we currently believe, into the first step for reconstructing our whole economy, including the one which bothered our winners.

The perception level of Italy’s place in the world, ranging from Pasquale Saraceno to Ezio Vanoni and, immodestly, myself, was almost at the maximum level.

Hence we had to thank our Anglo-Saxon friends, but we had not to be relegated to be the fifth wheel of their business cycle.

Italy was and had to be master of the Mediterranean and open itself to Eastern European markets, even to the Soviet Union’s, having the largest Communist Party in the world in electoral terms.

It was our idea and we played that card with the image of a young, energetic, free and democratic Italy.

We said to our Allies we could follow them in the “Cold War” – and, indeed, what we did in that field will never be fully told by history – but they had not to annoy us when it came to opening markets to our manufactured products.

And there was that perception even when, with Enrico Mattei, Francesco Cossiga and Bettino Craxi, we upset some plans of our British and American friends.

Politicians devised the great economic and social strategies and even the way to make them be swallowed up and digested by the most recalcitrant among our Western friends.

That was the free geopolitical competition between nations; we were taking our history back after decades of protectionist freezing.

However we protected ourselves very well, even better than our Japanese competitors.

You may say we produced Motta-Alemagna “State panettoni” – and, indeed, we were criticized for that “entrepreneurial State” which was expanding also to less strategic economic sectors. However, if the well-known family brands were lost in comforts, pleasures and debt, what was the fault of the State which recovered factories, equipment and workers and kept on producing excellent cakes?

Nevertheless everything was over with the end of fixed exchange rates in 1971.

Oil became the primary market of the US dollar and, more strictly, of the US economy cycle, while Kissinger made a deal with the Saudis to “manage” the petrodollars coming from the oil price increases following the “Yom Kippur War”.

So America funded the Vietnam War and its failed project of “New Society” – a pocket-size Welfare State in the land of Protestant private enterprise extremism.

We were so accurate in our geopolitical perceptions that while we were close friends of the Arabs in the Middle East, we were also a stable and reliable point of reference for our Israeli friends.

It was not duplicity or double-dealing, but full geopolitical awareness of our limits and our potential.

More importantly, we had to protect our development rate.

The Moro affair, however, marked the end of the First Republic, the era in which Italy – with Andreotti, Craxi, Cossiga, Moro, Ugo La Malfa and the many friends trivially called “secular politicians” – had rebuilt the country precisely on the basis of a perfect geopolitical and strategic knowledge of our new role in the world.

Moro was assassinated and this destabilized our global military and economic security network, inductively leaked from the Red Brigades to our economic and non-economic competitors and enemies.

Hence it was the end of our “secret geopolitics”, as a result of Moro’s death, that stifled and blocked economic growth and our winning production formula.

And what about today?

If there is a ruling class not even understanding the geopolitics basics, this is exactly the current Italian ruling class.

We have sold everything just to make money and go back again into the eternal limbo of secular stagnation, which is a negative Kondratiev cycle for everyone, but especially for those who suffer it due to their competitors.

The entry into the Euro area, which had not to be taken for granted, was carried out by calculating the last six months of the Lira-German Mark ratio, a particularly good time for Italy.

As if, being sixty, we had to jump as in our prime.

No one said anything at the time.

It suited to Germany which, meanwhile, had become Italy’s global competitor. We could complain about it, but we did not.

Thatcher, Mitterrand and Kohl – constantly in touch with Cossiga – in fact accepted the German reunification just because they could take the German Mark hostage – as they had done with aspirin – and called it euro.

The statesmen of that Europe knew it perfectly, whereas our petty politicians take everything for granted. They are selected only for their appearing on TV and are now a prey to the lobbies’ money.

In fact, approximately 40 lobbies operate out in the open in Italy’s Parliament.

Obviously the First Republic’s ruling classes dealt with lobbies but, except for some rare cases, they were not influenced by them.

Too strong was the Party’s control for the worst to happen.

Now, after the ill-conceived privatizations – and that was the real reason for the shift from the First to the Second Republic – the State does no longer organize economic life and the results are before us to be seen.

Private individuals can never be farsighted and organize large companies for many years.

There is no capital, the business owner family is divided and the heirs are not up to expectations.

Pure liberalism and laissez-faire are good for small companies, while for the large and very large ones the State is needed, with its regulatory power, its wealth of capital and its professional managers.

Just as war is too serious a matter to be left to the military, the economy is too important a matter to be left only to capitalists.

Currently it is as if the memory of the First Republic’s geopolitics in a different context had remained, thus producing sometimes grotesque results.

A persisting “American myth”, while today the United States look well beyond Europe they now consider to be ruined, and thus a possible prey.

A sort of tender and comic loyalty to those who use the economic and strategic levers to eliminate us, such as the easy purchases of our companies and the failed economic expansion which, in fact, makes us others’ prey.

We have not even seized the Brexit opportunity.

We have not even our banks any longer. In the period of “Quantitative Easing” started by Mario Draghi, the Bank of Italy’s liabilities in the Euro system slumped: in September they fell to -354 billion euro.

We have no longer our banks – hence the transactions of the European monetary area penalize us, while capital is fleeing our country.

And when the European Quantitative Easing ends – much to Germans’ delight – what will happen to our funds and debt securities, which few actually want under the current conditions?

There is not even a sign that our ruling class has developed a few working assumptions, or at least leading us to think they know what is going on.

The underlying idea seems to be that everything is inevitable and dark, hence we might as well devote ourselves to Twitter, to the media, to appearances on some talk shows – in short, to the “image”, which seems to be particularly important for politicians’ popularity in today’s communication society.

Obviously we record booming foreign investment in small and medium-sized Italian companies – mostly minority shareholdings – but where are the profits going?

In the fashion world, the “Made in Italy” absolute model, the Arabs bought almost everything: Corneliani, Dainese, Tiffany and Gucci by Bahrain, while “Valentino” by Qatar. There are 15,800 French companies operating in Italy, not to mention banks: BNL-Paribas, Crédit Agricole, etc. In the energy sector EDF purchased Edison, but French companies also operate in the public transport sector in some Northern cities and in Tuscany.

Nothing wrong, in principle, but how do we respond to these attacks?

Are we doing at least the same? Not at all.

Currently the Italian penetration into the EU and US production systems is quite good, but not enough yet.

The level of our purchases “outside the area” is certainly not such as to equate what is lost.

According to my calculations, 24% of the total foreign acquisitions in Italy is operated by us externally.

Unicredit has a 9.7% Islamic shareholding, including the Emirates’ Abaar fund and LIA, the old Gaddafi’s bank, now disputed and contended by the two major factions.

The same holds true for BPM, with different percentages and with the agreement between Sanpaolo and Qatar’s National Bank.

Do you believe that all these large and politically significant bargains and business are governed by the relevant Italian authorities?

Not at all, there is only the naive myth of the self-regulating market.

I fear that this applies also to military security and intelligence – everyone can buy anything without the secret services being in a position to say “no”!

We all know that the Italian Stock Exchange is owned by the London Stock Exchange.

The corporate structure of the Italian Stock Exchange, however, also includes a bank from Dubai and another sovereign investment fund from Qatar.

Once again, power flows which operate without control, discernment and often even without most of the ruling class knowing about them.

Will this power structure have some impact on our policies in the Middle East? Will these capital dislocations influence our decisions?

Certainly so, but the flows must be controlled, otherwise they will govern and rule us.

The market is free, but the government has to manage and regulate it anyway.

Nations have not disappeared in the liquid world described by the all-too-famous sociologist Bauman. They have only been relocated. They do so every day, in a context in which there is a non-declared ongoing and creeping war.

It is the clash and confrontation between regions of the world, which occur in many concrete and abstract places.

In fact Europe is bound to lose and be broken up into areas – governments like it or not.

Hence the winner is whoever remains nation.The loser is broken up and becomes “liquid”.

The other pole is the United States, which will become increasingly autonomous and independent from the losing European Union.

In South America and Africa “bubbles” will materialize with homogeneous characteristics by production type, but they will change very quickly. The same will happen to Central and Southern Italy, which will be “attached” to North Africa up to becoming an economically and strategically homogeneous region.

Also Northern Italy, Switzerland, Austria and Slovenia will tend to build a united bloc. Central Germany and France will still play the scene of Kerneuropa’s unity, while Scandinavia, the post-Soviet republics of the old Hanseatic League and the Netherlands will be integrated northwards.

Italy has lost – hence it will be divided, irrespective of laws or Regions.

With a view to further highlighting Italy’s crisis – the crisis of those who have definitely lost the globalization fight – we need to mention the young people leaving the country after graduating, or anyway “trying their luck” and looking for a land of opportunity elsewhere, now that Italy is at the core of all misfortunes.

A dead country cannot give hope to life, namely to young people.

Why should one stay in Italy without any prospects?

Nevertheless the State and families pay generously for youth education and the fruit of their children’s skills are used by other countries, which invested not even a euro in their education and training.

In 2015 the Italians who left the country to live abroad permanently were 107,529. Not all of them are enrolled in the Register of Italians Abroad (AIRE) – hence we may also assume they are twice that number.

36.7% of these 107,529 Italians are young people aged between 18 and 35, who moved to Germany as many of their grandparents had done several years ago, before our great post-war reform.

There is no German motorway or Alpine Swiss flyover not built with the hard work, tears and blood of our children from the South of Italy.

However, 69.2% of those who moved abroad, did so to Europe.

Hence it did not take much to keep them home – the homologies with our EU colleagues are still many.

On average, the college and university years cost 3,000 euro for those who remain at home and over 8,000-9,000 euro for the young people who move to other cities.

The calculation is easily made, considering that in 2014-2015 – the latest years for which data is available – the total number of registered university students is 270,145.

A huge mass of young people and investment that are destroyed in a closed circuit characterized by the death of any hope, slammed doors, underpaid jobs for which there was certainly no need to study, as well as a biological, affective and professional life – if any – which is fulfilled when it is too late.

It is not a problem of money, but rather the knell of any hope in Italy, that you can see in the eyes of the many young people who have excellent diplomas and degrees, which cannot be used to make the country grow and change. Young people who are trapped in a repetitive circle of life with only one thousand euro a month – if any – to survive.

Not to mention how this situation affects pension schemes, which now provide only pocket money for these young people.

A death spiral: young people cannot settle down and give birth to children – hence the State’s fiscal crisis worsens thus leading to ridiculous pensions.

How can a country survive in this way? How long can we still keep an advanced production system in place, when university students have decreased by 20% over the last decade and academics and experts – “les savants”, as Saint Simon called them – leave the country?

Darkness at noon for Italy, as when Jesus Christ died.

How many factories and companies have gone bankrupt, often as a result of oppressive taxation and baroque bureaucracy. How many entrepreneurs have killed themselves to avoid the stigma of bankruptcy – the same stigma of failure looming large over the many young people who cannot find a job?

How many chances of surviving has a country based on this equation: fewer companies, fewer workers, less-skilled jobs and much less generational turnover?

We recorded over 700 suicides for economic reasons.

44% of them were committed by entrepreneurs; 40% by unemployed people and 10.3% by employees.

In the first half of this year they are already 81 (+28%).

Currently Campania has replaced Veneto as the region most affected by this sad record – and we can easily imagine the many issues related to economic lawfulness.

However, the fact that businessmen sometimes attempt suicide or work on the verge of viability – by possibly paying workers and not taxes, otherwise they could not even survive – means only one thing.

It means that social processes are not governed and that they are not managed by efficient authorities. They are allowed to go away as productive “bubbles”, while they should be included in a program – also a public one – to regulate them.

We should never leave the development of the small companies in my beloved Veneto region at the mercy of the German or Austrian cycle fluctuations and, when the former Yugoslav republics are available, we should compete, organize new markets and improve technologies.

We should not let technology and crafts go to Northern Europe, where our models are copied and sold at a lower price.

Work must be protected – certainly in a new way compared to the old tariff barriers – but we can hardly believe that such a sensitive mechanism can be left in the hands of small business owners or their tiny banks.

It was said that the First Republic was suffering from “production gigantism”, but the incompetent Second Republic is floundering in a phase of obsessive dwarfism and, sometimes, narrow-mindedness.

Our large companies – the few ones which have survived – are those who were born as small ones during the First Republic and that – sensitive to international laws and above all to the national interest – we have protected, nurtured, sometimes rescued and often funded.

There is no economy without national planning, especially now that all productive systems compete at the same time in the world.

In fact, when I look to the industrial policy of the latest Italian governments, I just become speechless.

The crisis always kills the smallest companies and Italy is a country that structurally does not protect its SMEs.

Renzi’s government has not even rescued one single small company and it has not implemented any policy to create others.

Scarce tax relief and no bureaucratic streamlining and simplification for the 5,332 new small technology companies set up between 2013 and 2015 while, over the same period, 1,127,167 traditional companies were registered as “new”, of which only 51% are real enterprises, but a mere 4% was created to develop an innovative idea.

Hence this is Italy’s new disastrous geopolitical equation: a few firms, that are still decreasing in number, of which very few ones develop innovation; falling domestic demand and total workforce, while Italy’s economic and social fabric is deteriorating.

A hetero-directed country, without its own memory or culture, forced as any South American banana republic to follow the fads and diktats of those who are winning the ongoing daily war, which is the third world war.

A ridiculous ruling class that presents world leaders with football players’ jerseys and purrs and applauds those who mocks it. A country which pretends to be what it no longer is, namely a great industrial country, our old First World Manufacture.

A non-existent political culture – whereas it is precisely politics which is culture at its finest – while schools become indoctrination centres for the most foolish fads and myths.

A country which does not know that the old alliances are dead, and that it must look for new ones, eastwards, in China, in the new string of pearls of Xi Jinping’s “maritime Silk Road”, or in the new technology society, as done by Israel.

As Leo Longanesi brilliantly said, “the modern grows old and the old comes back into fashion”.

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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All Those Croatian Presidents

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Stjepan Mesic

Since those days when it emerged from the ruins of the Yugoslav federation as an independent state, Republic of Croatia had 4 Presidents – 4 men and a Lady President. The first one whom only death, in the opinion of many, saved from the International Hague Tribunal, but who is still (or because of that?) called by his admirers “Father of the Nation” was a self-proclaimed “Mesiah”, who although “only” a President acted as master and commander. One of his closest collaborators remembers how Franjo Tudjman asked him once: “To whom should I leave Croatia?” For a monarch without heirs from the 19th century a quite appropriate question. But, for the President of a modern state that found its way to the international scene at the very end of the 20th century – unthinkable!

On the wave of the desire for changes, which grew more and more as dark sides of the war for independence and of the privatization and transition started (but only started) to emerge, Tudjman was after his death succeeded by a former highly positioned politician of his Party who broke all ties both with Tudjman as well as with the Croatian Democratic Union (HDZ), because he could not and would not support their policy towards Bosnia and Herzegovina. Before doing that he, alas, following the official HDZ policy, gave a couple od “antologic” statements which he found himself in a position of explaining even after years. However, Stjepan Mesić displayed enough honesty and political courage to admit these statements and escapades and to apologize for them, saying they were wrong and out of place. He won the presidential elections twice and although he is by his enemies from the right still branded both as a clown and as a traitor, he initialized key processes aimed at putting Croatia on the world scene again, after it was, at the end of Tudjman’s rule, practically put into international isolation because of his policy towards minorities, especially the Serb one, and to human rights in general.

Mesić opened the way for returning antifascism (although already put into Constitution) to the place it deserves in the Croatian society; without any reservations he labeled fascism and its Croatian version (Ustasha) as evil and as a crime; he opposed the historical revisionism that was present from the very beginnings of the Croatian state;  ha changed the attitude towards minorities, in the first place, the Serb minority and he favored the return to Croatia of those Croatian citizen of Serb origin who fled the country during the war; he laid foundations for a everyday’s normalization of the relations in the region; he opened Croatia to the world, presenting it as a partner willing to cooperate on the terms of full equality with everybody. Despite diminished powers, because Croatia switched after Tudjman’s death from semi-Presidential to parliamentary system, he knew how to resolutely say “no”, when Croatia’s interests were at stake (for example resisting the pressure to make Croatia part of the so called Coalition of willing put together by the US for the purpose of invading Iraq). And he never ceased repeating that he is a citizen-President whose job is not to rule, but to serve.

After his 10 years in office a new tenant came into the Office of the President – university professor and composer, candidate of the left, Ivo Josipovic. There can be no doubt that he too wanted to be a “real President”, that he even had some ideas how to do this (let us forget his statement that he intends to compose an opera, while being President), the fact remains that he – objectively – managed to halt or to freeze many of the positive processes started by his predecessor; though at the same time some of them he simply copied, repeating for example in the Israeli parliament the excuse, on behalf of the Croatian state, for the crimes committed by the Ustasha against Jews. If he is going to be remembered for anything, it will be for being a weak President, who – by not being able to define himself and by not understanding what politics is all about, practically put in the position of the President Kolinda Grabar Kitarovic. Because, apart from the HDZ voting machinery, people did not vote for her, wanting just her as the new President, but because they were, to put it mildly – fed up by Ivo Josipovic. He did not know how to make real contact with citizens (contrary to Mesic, who was a virtuoso in doing this) and the citizens did not understand him – for example when he announced that he will run for the second term with he concept of a new Constitution.

The first woman-President in the short history of Croatia, presented a respectable C/V (minister for European Integration, Foreign minister, ambassador to the US, assistant to the Secretary General of NATO). But, very soon it became apparent and it remained apparent through her 5 years in office that she came totally unprepared and unfit for the position. She was intoxicated by the ceremonial accompanying the position of the President, she was literally in love with the military component of the function (although the President is the Supreme commander only in times of war), she loved uniforms and weapons and, above all – she was obsessed – by moving her Office from one town to the other (together with a ceremonial military unit that was present during the playing of the national anthem and raising the flag upon her arrival; in normal circumstances it is just the President visiting this or that town, or region of Croatia, which was – but without the pomp upon which she so insisted – done by Mesic, by Josipovic, even by Tudjman. 

She will be remembered by stubbornly repeating some notorious lies (such as that Croatia/Yugoslavia was behind the Iron Curtain, or that Croats were not allowed in times of Yugoslavia to call themselves as Croats, or that the Ustasha salute (For homeland – ready) was an ancient Croatian salute (here she eventually admitted, most probably under pressure from outside, that she was wrong, blaming one of her advisers for this!). She will not be remembered for her policy, even not for the “3 seas concept” she so loved to speak about, although it is not her concept at all. But she will be remembered as an enthusiastic cheer leader during the World soccer championship, as somebody who embraced sweaty soccer players in their wardrobes and – as her term in office started to come close and closer to its end – as somebody who liked to sing in public (even “discussing” this with some media, objecting that they reported she does not know how to sing, although – she said – “I sing well”). Finally she will be remembered by a series of public appearences which made many people to raise their eyebrows and than to start laughing at her (“My friend, the American general”, or “they say it’s not possible, but I tell you it is possible; I have already arrangements with certain foreign countries that Croats will go there for schooling, return after that to Croatia and work on-line from their homes for 8.000 Euro monthly”, ending with “I will stay in Croatia, although I have offers from all around the world”. She loved to sing a song whose text portrays part of Bosnia and Herzegovina as Croatia, she boasted that the pop-singer, icon of the political right whose most popular song begins with the Ustasha salute “For homeland – ready!” is her favorite singer, and let us stop here, although there would be much more. She missed no opportunity to equale antifascism (calling it communism) with fascism and she loved to remember how both of her grandparents were partisans, but turned into anticommunists right after the victory in 1945. About her being sent to school in the US she said that her father sent her there and not Tito (“forgetting” that Tito was at that time several years dead already).

She made peace with the HDZ prime minister, because she needed her party’s support in the election campaign. All the HDZ politicians started to repeat, as parrots; “She will win!”. She lost. If she manages to get into history, than history will remember her as somebody who transformed the role of the President into a stage act and managed, instead of policy that should be waged at the top of the state, to present a rather bad “patriotic” reality show.  

It is high time for “realpolitik” to replace this reality show. Yes, we might expect some surprises from the President-elect too, some of them might not please those who voted for him. But, one thing is sure; because of Zoran Milanović nobody who really cares for Croatia and for Croatia’s reputation in the world, will not blush, or feel ashamed (which was not the case in previous 5 years). Milanović in not an “unknown”, both in Croatia and in the world, neither as a person, nor as a politician (chairman of the Social-democratic party, Prime minister). It is a known fact that he too, sometimes, speaks and even acts faster that he thinks, putting himself in the position to explain afterwards what he really wanted to say or demonstrate (the most benign example is his jumping from a APC and falling to the ground before TV cameras, and saying laconically only: “I wanted to boast”.

In retrospect: the first “mesianic” President saw himself as the owner of the country and behaved accordingly. The second, and history will one day admit this, was a President, as Presidents should be. The third did not know how to be the President and the fourth, the Lady President, understood and performed her duty  as a cheap reality show. One should hope, the time is ripe for a “realpolitiker”, someone who is fully aware of the fact that he is the President of a small country, but at the same time aware of its (meaning his) responsibility for the state of democracy in Croatia, for the situation in the region and for Croatia’s place in the world. Voters do remember Milanovic from previous times. So it is no surprise that on internet one can read such a commentary: “Good luck, don’t slip, because we will not forgive.”

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US naming of first corrupt Bulgarian official is a joke

Iveta Cherneva

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Last week, US Secretary of State Mike Pompeo announced the first ever designated Bulgarian official barred from entering the United States over corruption, under Section 7031(c) of the Department of State, Foreign Operations, and Related Programs Appropriations Act.

The newly implemented non-judicial mechanism to “fight corruption” in Bulgaria had many here in high hopes. Would the US really name names and help Bulgarian society clean up by pointing the finger and sanctioning the most corrupt and dangerous elements?

Well, don’t hold your breath.

The glaringly political and self-serving designation disappointed many here. The US government black-listed a Bulgarian judge and the only thing he is known for is that he allowed a pro-Russia society activist to visit Russia and receive an award from Russian President Putin, while the pro-Russian activist was under investigation over espionage charges.

The decision struck many here as something out of an outdated Cold War scenario. 

The US is not really fighting corruption with this move — it’s just settling old scores with a pro-Russian judge. Actually one does not even have to be pro-Russia to ask themselves if a decision we don’t like automatically becomes corruption. The US has not provided any evidence for corruption — whether the judge was paid, whether there were any shady dealings, etc.

The US has a long way to go if it wants to show that corruption rather than pro-Russian interests is what it is really after in Bulgaria. As this is just the first designation in a long list to come, the US Embassy in Sofia would do well to address actual corruption that Bulgarian citizens are sick of. That’s the way to win over Bulgarians.

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Britain after Brexit: Between US and EU

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On January 31, the United Kingdom left the European Union, after three years of exhausting negotiations in which the terms of the “divorce” were postponed several times. Now, Britain is setting sail free. A staunch supporter of the exit, Prime Minister Boris Johnson claims that breaking away from the EU will “liberate the country from a terrible” yoke “.” Johnson promises the British “a decade of prosperity and opportunity.” A major advantage to the breakaway is believed to be the prospect of a new rapprochement between Britain and the United States. How realistic are these expectations?

US current President Donald Trump spoke strongly in favor of Brexit from the very beginning. He called for a most dastic form of severing relations between Britain and the European Union, in return for which he promised the British a comprehensive free trade agreement in the shortest possible time. In September last year, British media reported that Trump and Johnson had allegedly agreed to sign a free trade agreement, which “will become the largest-scale deal the United States has ever reached.” According to these reports, the final signing of the contract is scheduled for July 2020. The terms of the transaction will not take effect immediately but after the Brexit transition period, which, according to the current agreements between London and Brussels, will come to a close in December 2020.

On January 25, US Treasury Secretary Stephen Mnuchin said he was optimistic about the possibility of concluding a US-British free trade agreement this year. According to Reuters, Donald Trump also tends to consider the feasibility of reaching an agreement with the UK before the US presidential election in November. Britain, in turn, expects to use the agreement with the United States as an argument during trade negotiations with the EU. Both London and Washington declare their intention to “substantially expand” bilateral trade. Meanwhile, Mnuchin, along with a number of American Congressmen, have already made it clear that they deem unacceptable London’s plans to introduce a tax on digital services by such American IT giants as Facebook, Google and Amazon. So differences in the economic sphere are already in place now.

The doubts of the American establishment are also clear. Ten years ago, optimists believed that Britain’s future was unimaginable without the EU. Simultaneously, “special relations” with the United States enabled London to become a major moderator and, perhaps, the only Western country capable of streamlining the predictably inevitable weakening of American hegemony. At least, it was done with minimal losses for the entire “golden billion”, and in case of success it made possible extending its leading position among other world players for the foreseeable historical perspective.

When the “impossible” – Brexit – became reality, it became clear that the appearance of yet another “variable” in Europe could be beneficial for both Washington and London. The United States gets an effective tool of influence on Europe – it will make use of the differences between London and a number of East European countries traditionally oriented at the UK, and the other leading EU capitals. And the United Kingdom gets a chance to return to the “top of the world” with the support of still strong, but not so “strategically astute” or “politically flexible”, America.

By now, skeptics say, the nature of British-American relations has changed irreversibly. The trade deal could become a major stumbling block. In the first place, Trump has so far signed only one truly fundamental trade agreement – a new version of NAFTA. He is always seeking to dictate his will – “particularly, if the partner is weaker or in need.” “And for the United States, Britain is, at best, a satellite, not an equal partner.” In addition, with less than a year to go before the US presidential election, voters expect Trump to step up protective measures, rather than make concessions. Secondly, a full-scale trade agreement is subject to approval by the Congress. Trump is currently at “war with the Democrats.” Many Republicans may also come forward with requests to secure significant concessions from London. These could be farmers, the Irish lobby, who would want concessions over the border between Northern Ireland and Ireland, and representatives of IT corporations.

Thirdly, a trade agreement with the EU is more important for London. According to the BBC, British exports to the EU are 2.5 times higher than to the United States. The EU share in UK imports is almost 5 times higher than that of the US. The European market is closer and larger, while the overseas market is much smaller. Technically, an agreement with the European Union seems to be more achievable, given that now both parties have “common rules and standards”. Moreover, success in trade negotiations with the EU will deprive London of the opportunity to make substantial concessions to America. Finally, comprehensive trade agreements are prepared for years, if not decades. There could be exceptions, of course, for example, a kind of “mini-transaction” confined to a particular industry. However, such deals “will be problematic to present to the public as overwhelming success of Britain on the global scene and they will hardly make an adequate compensation for the break with the EU.” It is also unclear whether London is willing to pay the political price. For example, Trump may require unconditional support in the confrontation with China, or Iran, as a “bargain”. Or he may ask for a rejection of the “digital tax.” As a result, it will not be a trade agreement, but only a “transaction concerning trade”.

Meanwhile, in geopolitical sphere, relations between London and Washington are far from perfect too. In the summer of 2018, the UK expressed interest in establishing cooperation with the participants in the Comprehensive and Progressive Agreement for the Trans-Pacific Partnership. The latter is an upgraded version of the Trans-Pacific Partnership, which Trump, in the very first weeks of his presidency, renounced as “not beneficial” for America. Britain’s position also clashes with that of the US on the preservation of a nuclear deal with Iran. Moreover, in addition to supporting Europeans, Germany and France at the diplomatic level, Britain was among the initiators of a European payment mechanism to circumvent US sanctions against Iran (INSTEX), which, however, has yet to become functional.

According to The Economist, in January this year, British Secretary of Defense Ben Wallace publicly questioned Washington’s credibility as an ally. Present-day Britain, he said, is far from always ready to fight on the side of America. Wallace also expressed regret over his country’s “very strong” dependence on the United States for military aviation, as well as for electronic intelligence and surveillance. “We need to diversify our options” in these areas, – summed up the head of the military department of the United Kingdom. British experts were quick to remark that there had been no statements of this kind in London’s official statements of the past 70 years. The British leadership is still hoping to pursue the country’s own programs of creating advanced weapons, including fighters and spy satellites. Finally, what causes London’s growing concern is Trump’s “contempt for the allies” and the difference in strategic priorities. One British diplomat commented in The Economist as follows: “We fear Russia more than anyone else, while the US is wary of China. ”

What triggered the bulk of political and trade differences between London and Washington is London’s intention to include the Chinese company Huawei into the suppliers of equipment for fifth-generation telecommunications networks. The United States accuses Huawei of acting on orders from official Beijing to “spy” on residents of Western countries and even damage communications systems. Washington has been doing its utmost to convince all its allies that it is true. Last December the US introduced an amendment to the 2020 defense budget under which the government is to cut intelligence data exchanges with those allies that have endorsed the use of Huawei technologies in fifth-generation networks. The amendment will first concern anglophone countries that form the Five Eyes alliance whose members are involved in tight-knit cooperation on intelligence data exchanges and integrating electronic espionage infrastructure. Washington commentators describe the amendment as a “warning signal”.

The head of the US State Department Mike Pompeo did his best to put pressure on Britain, including in the course of his meeting with the head Foreign Office in Washington in January. However, what the US has achieved so far is Britain’s reiteration of its commitment to its former position under which Huawei will be kept away only from the “most sensitive” in terms of security elements of British IT and communication infrastructure. The US executive and legislative branches of power have reacted differently. The day before Brexit, on January 30th, Pompeo visited London, where he assured the British about the inviolability of privileged relations within the Five Eyes group. According to Reuters, Mike Pompeo expressed optimism over the prospect of signing a trade deal. Simultaneously, a number of Republican Senators have signaled unavoidable obstacles in the way to a bilateral trade agreement, which will entail London’s decision on 5G.

Overall, it looks like we are in for a long period of struggle for influence on Britain between Europe and the US. President Emmanuel Macron of France, along with the European Commission’s Head of Task Force for Relations with the UK Michel Barnier and the EU’s High Representative for Foreign Affairs and Security Policy Josep Borrel, have made it clear that the EU is planning to maintain close ties with Britain, including in «security and defense», and in addressing global issues in a multilateral international format. «The EU and Britain share history, geography, culture, common values and principles, and in international relations they are both committed to a multilateral approach on the basis of rules». Rules in this context mean European rules and standards. 

As for the US, Washington began to move «away from Europe» in the days of George Bush Jr. and continued to do so under Obama. For many Europeans it has long become clear that Trump’s European policies of the past three years smack of the old imperial principle of “divide and rule”. Apparently, the EU leadership have grounds to believe that the British will quickly come to the understanding that the current “world order” is impossible to preserve. The times of «symphony» between Thatcher and Reagan are a thing of remote past. Donald Trump is but a sign of the changes, not their cause. As said above, some principal figures in the Johnson Cabinet have said openly that the pattern of relations with America which came into existence after 1945 is going into the past. It looks like the prime minister is secretly hoping to organize a geopolitical “auction” in which two coasts of the Atlantic will bet for new terms of a union with the Foggy Albion. Right now, however, as Brexit critics say, after leaving the EU, Britain is playing the role of «a minor empire squeezed between two major ones». Is this the kind of future breakaway supporters want for their country?

From our partner International Affairs

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