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.
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”.
The French Dispatch: The Year 2022 and European Security
2021 has been rich in negative events for European security: the world has witnessed the collapse of the Open Skies Treaty, American-French discord concerning AUKUS, the termination of the official dialogue between Russia and NATO, and the migration crisis on the Polish-Belarusian border.
Over the past year, the Western countries seem to have been searching for new strategies. Since the end of 2019, NATO has been developing a new concept, and in June 2021 at the summit in Brussels, to the displeasure of sceptics, it was possible to agree on its basis—the transatlantic agenda NATO 2030 (# NATO2030) . While the broad formulations and a direct hierarchy of threats still require clarification, new projects in the field of weapons development, combating climate change, and increasing interoperability have already been declared.
In parallel, since the end of 2020, work has continued on the EU European Parliamentary Research Service project—the Strategic Compass. The dialectic between Atlanticism and Europeanism softened after Joe Biden came to power in the United States, but the European interests and red lines retain their significance for transatlantic relations. In 2022, together with the rotating post of the President of the EU Council, the role of a potential newsmaker in this area has been transferred to Emmanuel Macron, who feels very comfortable in it.
On December 9, the provisions of the Paris programme were published under the motto “Recovery, power, belonging” France, as expected, is reiterating its call for strengthening European sovereignty. The rhetoric of the document and its author is genuine textbook-realism. But now for the entire European Union.
Objectives of the French Presidency, are not articulated directly but are quite visible—making the EU more manageable and accountable to its members, with new general rules to strengthen mobilisation potential, and improve the EU’s competitiveness and security in a world of growing challenges.
Paris proposes reforming the Schengen area and tightening immigration legislation—a painful point for the EU since 2015, which has become aggravated again in recent months. This ambitious task has become slightly more realistic since Angela Merkel’s retirement in Germany. At least a new crisis response mechanism on this issue can be successful, even if it is not fully implemented.
In addition, the Élysée Palace calls on colleagues to revise the budget deficit ceilings of the Maastricht era to overcome the consequences of the pandemic and finally introduce a carbon tax at the EU borders. The latter allows for a new source of income and provides additional accountability for the implementation of the “green” goals by member countries.
The planned acceleration of the adoption of the Digital Markets Act (DMA) and Digital Services Act (DSA), developed by the European Commission at the end of 2020, is also aimed at unifying the general legislation and consolidating the European position in the world. In other words, the French Foreign Ministry quite soberly assesses the priority areas and vulnerabilities of the European Union and focuses on them, but with one exception.
A special priority of the French presidency is to strengthen the defence capabilities of the EU. On the sidelines, the French diplomats note that the adoption of the Strategic Compass in the spring of 2022, as originally planned, is a fundamental task, since otherwise the process may be completely buried. With a high degree of probability, this is so: the first phase of the development of the Compass—the general list of threats—lasted a year, and consisted of dozens of sessions, meetings, round tables with the involvement of leading experts, but the document was never published. If Macron won’t do it, then who will?
As the main ideologist and staunchest supporter of the EU’s “strategic autonomy”, the French president has been trying for five years to mobilise others for self-sufficiency in the security sphere. With his direct participation, not only the Mechanism of Permanent Structured Cooperation (PESCO) in the defence area was launched, where France is the leader in a number of projects, but also the so-far failed European Intervention Initiative. Even without focusing on French foreign policy traditions and ambitions, the country remains a major European arms exporter and a nuclear power, where the military-industrial complex is closely affiliated with the state.
Implementing the 2022 agenda is also a matter of immediate political gain as France enters a new electoral cycle. The EU Summit will take place on March 10-11, 2022, in Paris, a month before the elections, and in any case it will become part of the election campaign and a test for the reputation of the current leader. Macron has not yet officially announced his participation in the presidential race, but he is actively engaged in self-promotion, because right-wing politicians espousing different degrees of radicalism are ready to take advantage of his defeats to purchase extra points.
The search for allies seems to be of key importance for victory at the European level, and the French Foreign Ministry has already begun working on this matter. In 2016–2017 the launch of new initiatives was predetermined by the support of Germany and the Central and East European countries. The change of cabinet in Germany will undoubtedly have an impact on the nation’s policy. On the one hand, following the results of the first visit of the new Chancellor Olaf Scholz to Paris on December 10, the parties announced the closeness of their positions and a common desire to strengthen Europe. On the other hand, the coalition of Social Democrats (SDP) was made up with the Greens and Free Democrats (FDP) who are not at all supporters of excessive involvement in security issues. What “strategic autonomy” means for France, constitutes a more restrained “strategic sovereignty” for Germany Therefore, an intensification of dialogue with Italy and Spain, which are both respected and potentially sympathetic, is likely. The military cooperation agreement concluded in the autumn of 2021 with Greece, an active member of PESCO, can also help Paris.
Gaining support from smaller countries is more challenging. Although the European project is not an alternative to the transatlantic one, the formation of a common list of threats is a primary task and problem for NATO as well. As mentioned above, it is around it that controversy evolves, because the hierarchy determines the distribution of material resources. The countries of Eastern Europe, which assume that it is necessary to confront Russia but lack the resources to do so, will act as natural opponents of the French initiatives in the EU, while Paris, Rome and Madrid will oppose them and the United States in the transatlantic dialogue. The complexity of combining two conversations about the same thing with a slightly different composition of participants raises the bar for Emmanuel Macron. His stakes are high. The mobilisation of the Élysée Palace’s foreign policy is one of the most interesting subjects to watch in the year 2022.
From our partner RIAC
Unilateral vs Bilateral Euroisation: Political, technical and practical issues in the curious case of north Cyprus
The island of Cyprus has been split between a Greek Cypriot south and a Turkish Cypriot north since 1974. The Turkish Cypriot state declared in the north is recognised only by Turkey, while the Republic of Cyprus in the south is recognised internationally and is a European Union (EU) member since 2004. In 2004, 65 percent of Turkish Cypriots voted in favor of the United Nations’ Annan Plan for reunification only for Greek Cypriots to reject it. As a result, Cyprus joined the EU as a de facto divided island. Despite joining the EU as a divided island, the whole of Cyprus is considered an EU territory. However, the EU law is suspended in the north until reunification is achieved.
This resulted in the euro being the legal tender only in the southern part of the island. With the recent and continuous depreciation of the Turkish lira, the long-standing question of whether and how the north could switch to the euro has once again intensified. While a bilateral adoption of the euro is not on the cards until a reunification on the island, north Cyprus could technically unilaterally adopt the euro. However this could cause complications in the future as the EU is adamant that unilateral euroisation cannot be used as a mechanism by Member States to circumvent the stages foreseen by the Maastricht Treaty.
Under normal circumstances, “Member States with a derogation”, i.e. the Member States that have not yet fulfilled the necessary conditions for the adoption of the euro are first required to enter the Exchange Rate Mechanism (ERM II) to achieve eurozone membership. This is a “waiting room” where any country aspiring to adopt the euro is required to stay for at least for two years. It is now a well-known fact that the ECB shares the opinion of the Economic and Financial Affairs Council (ECOFIN), i.e. the meeting of the finance ministers of EU Member States adopted in 2000, that this requirement should not be waived. Assuming the northern part of Cyprus is considered a Member State, the same principle will apply and therefore it would not be welcome to adopt the euro unilaterally, bypassing the convergence process foreseen by the Treaty for the adoption of the euro.
Currently, ERM II comprises the currencies of Bulgaria, Croatia and Denmark. Just like these countries, north Cyprus would be expected to peg its national currency to the euro and, given the consent of the European System of Central Banks, fixe a “central exchange rate” and a “deviation margin” under Exchange Rate Mechanism (ERM II) for a duration of no less than two years. If successful based on its ERM II performance, a final exchange rate would be determined and the redenomination would be done over a transition period.
In the case of north Cyprus, it is understood that the EU might have already agreed to apply a fast track approach where there would be a one-year transition period. However, this has not been confirmed officially by the EU so the EU’s stance in practice is not known. After all, even Denmark, a Member State which has negotiated an opt-out arrangement before the adoption of the Maastricht Treaty has been participating in ERM II although it chose not to adopt the euro. So the EU’s approach in the case of northern Cyprus would not expected to be too lenient. There is no way to find out unless north Cyprus continues the dialogue with the EU.
In the meantime, a more relevant question is whether a unilateral euroisation could be possible. The short answer is yes. For instance the euro was introduced in Kosovo and Montenegro that did not have a status of a sovereign state at the time. In both cases, the decision was made in 1999. Kosovo, defined the Deutsche Mark as the designated currency, which was replaced by the euro in 2002. Similarly, Montenegro introduced a parallel currency system in 1999, in which the Deutsche Mark was allowed to circulate alongside the then legal tender. In 2001, the Deutsche Mark became the only legal tender and was replaced by the euro in June 2002.
In the case of Montenegro, now an official EU candidate, the adoption of the euro without an agreement with the European Central Bank (ECB) was acknowledged by the European Commission as a measure which had to be taken due to “extraordinary circumstances” present in the country at the time. This could be precedent for north Cyprus. However, it is important to note that the ECB still supports the view that unilateral euroisation is not compatible with the Maastricht Treaty and cannot be a way to bypass the convergence process.
The implications of the Treaty framework for in the case of Montenegro currently remain unknown and are expected to be detailed “by the time of possible future negotiations for accession to the EU”. In particular it remains uncertain whether the country would be required to introduce its own currency before it can join ERM II. Should this be the case as Montenegro makes further progress towards EU membership, this would entail substantial operational and changeover costs. Authorities in north Cyprus, should therefore monitor the developments very closely.
Normally, non-euro area Member States are denied the option of unilateral euroization due the principle of equality, i.e. the EU considers bypassing the convergence process incompatible with the EU Treaty and actively discourages it.In particular, the Treaty sets out that there has to be a Community assessment of the fulfilment of these criteria and mutual agreement on the appropriate exchange rates. This means that the ECB does not welcome unilateral euroisation, as such an adoption of the euro outside the Treaty process would run counter to the underlying economic reasoning of European Monetary Union.
However, as north Cyprus is already an EU territory the adoption of the euro could be considered a “common interest of the EU” and therefore an exception could be possible. In fact, the policy of the EU with regard to the Turkish Cypriot community which was set out by the General Affairs Council in 2004 states that “the Council is determined to…facilitate the reunification of Cyprus by encouraging the economic development of the Turkish Cypriot community”. So in the case of north Cyprus, a switch to the euro could be allowed by way of exception although this would obviously imply circumventing the process of multilateral assessment by the EU Member States.
While the EU could give the green light to adoption of the euro by north Cyprus without a successful exchange-rate procedure under ERM II, it would not allow this to undermine the process of convergence prior to the adoption of the euro. In other words, the Convergence criteria outlined in the Maastricht Treaty would still remain relevant and important as the Treaty requires Member States to achieve a high degree of sustainable economic convergence before they can join the euro area.
In other words the economies of Member States with a derogation must be able to keep pace with those already using the euro. Exchange rate stability, for instance, is evaluated by assessing whether the exchange rate of the country’s currency has remained within the fluctuation bands provided for by ERM II for at least two years without devaluating against the euro.
Besides exchange rate stability, the convergence criteria also include price stability, sound public finances, and convergence in long-term interest rates. This means, for instance, that a country’s long-term interest rate, measured on the basis of long-term government bonds or comparable securities, should not exceed that of the three best-performing Member States in terms of price stability by more than 2 percentage points during the one-year observation period prior to the assessment.
On the other hand, a country is considered to meet the price stability criterion if its average inflation rate does not exceed the inflation rate of the three best-performing EU Member States by more than 1.5 percentage points during a one-year observation period. These criteria are intended to ensure the sustainability of public finances and that the government is able to manage its debts.
Article 140 (1) of the Treaty on the Functioning of the European Union (TFEU) requires the European Commission (EC) and the European Central Bank (ECB) to report to the Council, at least once every two years, or at the request of a Member State with a derogation on the progress of the country in fulfilling their obligations regarding the achievement of economic and monetary union. In addition to preparing these “Convergence Reports”, both the ECB and the Commission regularly monitor progress throughout the year.
A Convergence Report is normally published at least once every two years or at the request of an EU Member State which would like to join the euro area. Both the ECB and the European Commission issue these reports describing the progress made by non-euro area Member States towards achieving the criteria necessary for a country to adopt the euro. According to the latest report, among countries legally committed to adopting the euro, Croatia and Sweden fulfil the price stability criterion, Bulgaria, Czechia, Croatia, Hungary, Poland and Sweden fulfil the criterion on public finances, Bulgaria, Czechia, Croatia, Hungary, Poland and Sweden fulfil the long-term interest rate criterion. However none of them meet all the requirements for adoption of the euro. So convergence process is very strict and challenging.
In particular, it should be noted that convergence must be sustainable, meaning that satisfying the economic convergence criteria at one point in time is not enough and they are expected to be met on a lasting basis. A Member State’s general financial position is considered sustainable based on two criteria, namely, the government’s annual fiscal deficit should not exceed 3% of gross domestic product, and overall government should not exceed 60% of gross domestic product. This is very important for northern Cyprus as it will need to ensure that its economy is resilient.
It is known that the Maastricht Treaty provides some flexibility and the final assessment depends on the ECOFIN Council. Whether and how this would apply in the case of northern Cyprus remains a mystery. While details remain unknown to the public, the one-year transition period envisaged in the case of northern Cyprus could be related this. However, it should be noted that the decision on whether north Cyprus can adopt the euro would ultimately be a political one and would lie with the Council of the European Union. This means that representatives from all EU countries would be required to take a decision based on a proposal by the EC and after consulting the European Parliament.
Given that participation in the ERM II is a precondition for as well as fulfilment of the nominal convergence criteria to join the euro, it is binding and is unlikely to be waived for any country regardless of any special circumstances. This is because ERM II provides the framework to manage the exchange rates between EU currencies, which is necessary for exchange rate stability. As such north Cyprus would be expected to participate in the mechanism without devaluing its central rate against the euro before it can qualify to adopt the euro.
While no provision of the EU Treaty states explicitly that Member States with a derogation must have their own currency, the Treaty is by and large based on this assumption. In addition, the entry into ERM II is decided by mutual agreement of all ERM II parties, which consist of the ministers of the euro area Member States, the President of the ECB and the minister and the central bank governor of Denmark, as the only non-euro area Member State currently participating in the mechanism.
So in the case of north Cyprus adoption of the euro could mean that the country should first introduce its own currency. This could be a more viable alternative and north Cyprus could then peg its currency to the euro as a preparation for an eventual switch to the euro. Indeed, some countries joined ERM II with their preexisting currency pegs. To give a recent example, the currencies of Bulgaria and Croatia were already closely tied to the euro at the time of applying to the ERM II. Bulgaria had a currency board, first with the Deutsche Mark, and subsequently with the euro after 1999. Croatia had a peg first with the Deutsche Mark, and from 1999 to the euro, with a narrow band.
During this process, legal requirements should not also been underestimated. Article 140(1) of TFEU requires the convergence reports to assess the compatibility of national legislation, including the statutes of the national central bank and the Statute of the European System of Central Banks and of the ECB. There could also be additional unprecedented requirements and countries may be required to commit to implementing specific policy measures on a variety of topics. For instance, in the case of Bulgaria and Croatia, such requirements range from the anti-money laundering framework, state-owned enterprises and the insolvency framework, to the non-banking financial sector, corruption and even organised crime. It is highly unlikely that the national legislation in north Cyprus is currently compatible with that of the EU as the latest convergence report suggests that the respective national legislations in none of the seven new EU Member States would be deemed “fully compatible” with the exception of Croatia.
In fact, the former north Cyprus President Mustafa Akıncı himself had confessed that “serious work” would needed to ensure the harmonization of the national institutions with the EU acquis. As can be seen in the case of Croatia and Bulgaria, this has now become a prerequisite not only for joining the EU but also in terms of adopting the euro as a new Member State. For instance, this was the main reason behind the delay in Bulgaria’s acceptance to ERM II. Bulgaria was able to get the green light to join ERM II two years after it formally announced its intention to join the mechanism.
The delay was due to the requirement imposed by the Eurozone governments requiring Bulgaria to join ERM II and the Banking Union simultaneously. This prerequisite is known as “the Cooperation Decision” and requires Member States which adopt the euro to also participate in the Banking Union, i.e. the Single Supervisory Mechanism (SSM), the Single Resolution Mechanism (SRM) and the Single Resolution Fund (SRF). . Therefore, participating in ERM II with a view to later adopting the euro will also involve preparing for joining the Banking Union.
This requirement will now apply to all future candidates including north Cyprus. However, it should also be noted that the procedure for entering the Banking Union is separate from the assessment of the convergence criteria. Joining the Banking Union is irreversible and involves direct powers of the SSM and the SRM over its banking system. This has important implications for the banking sector as banks that will come under the direct supervision of the ECB will also be subject to the direct supervision of the Single Resolution Board (SRB).
To be more specific, this means that, the ECB will become responsible for the direct supervision of the significant credit institutions following the “significance assessment process”. This applies to banks considered to meet the “materiality criteria” as set out in the SSM Regulation (Regulation 1024/2013) and the SSM Framework Regulation (Regulation 468/2014). The criteria include “economic importance for the country” so could technically apply to banks in north Cyprus despite their insignificant sizes in comparison to the EU economy. Therefore, for new joiners like north Cyprus the accession process would involve not only the harmonization with the aquis but also the strengthening of their institutions and administrative capacity that will enable them to implement and monitor the enforcement of the harmonized legislation.
Therefore, adoption of the euro by north Cyprus, bilaterally or unilaterally, would not be as easy as it may look. More than anything else, this would require political will, courage and determination. The former President Mustafa Akıncı, a devoted supporter of a federal solution and the EU, had set an ambitious target of the euro going into circulation “from the first day” in the case of a reunification. However with the failure of the last reunification talks in 2017 in Crans Montana, Switzerland, political conditions have changed dramatically. The current President Ersin Tatar who is a very passionate proponent of the two-state solution is wholeheartedly against the EU and the euro. Therefore, the general stance towards the adoption of the euro in the northern part of the island remains fragmented. Given these circumstances, adoption of the euro in north Cyprus seems a distant prospect.
How Red Are the EU’s ‘Greens’?
Blood-red. But that’s a banned fact. (It will be documented in what follows.)
Here are the announced values (the “Guiding Principles”) of the European Green Party:
“Freedom through Self-Determination”
“Diversity, an Indispensable Condition”
“To sum it up, Sustainable Development”
This “Charter of the European Greens” fills-in those blanks by stringing together clichés, which 90% of the pubic will like, because they’re written so as to avoid (as much as possible) saying anything that’s broadly controversial. For example, “Our answer is sustainable development, which integrates environmental, social and economic objectives for the benefit of all.” (Oh? And how is that pap to be realized in actual policies? What are the measures, and the precise priority-rankings, when any of those values conflict with one-another, which is often?) The Green Party is simply conning liberals, but what is their reality? What are they actually doing, when in power? Inside their own country, and in the EU? Let’s take a very concrete (but broadly representative) case:
Germany, as I recently pointed out, is so corrupt that it has virtually no bans on who or what may donate to politicians. Foreign interests can donate, corporations can donate, even corporations that have government contracts (sell to the government) can donate, donations needn’t go through the banking system, donations may be accepted in any amount, anonymous donations are acceptable, etc. It’s super-libertarian. It is open-sesame to billionaires and centi-millionaires (the few people who have the most money) to control the Government by means of their ‘news’-media persuading the voters, and by means of political campaign donations to present the billionaires’ favored candidates’ viewpoints in the most favorable way — and their least-favored candidates in the least favorable way. It’s control by dollars, instead of control by voters. That’s libertarianism.
A March 2015 academic study showed that, of all 28 EU member-nations, the only five that were more corrupt than Germany were Malta, Austria, Denmark, Ireland, and Netherlands. Then, on 10 June 2015, a Pew survey in Germany, Poland, Spain, France, Italy, UK, U.S., and Canada, showed that, among those 8 countries, ONLY Germany (and by a big margin: 57% to 36%) opposed Ukraine joining NATO. However, when German and foreign billionaires s‘elected’ the new German Government that became installed on 8 December 2021, it appointed as the Germany’s new Foreign Minister the Green Party’s losing candidate for Chancellor, Annalena Baerbock, whose entire career as a candidate and as an official was the most notable for her strident advocacy for hostility toward Russia, and for Ukraine to be admitted into NATO (the anti-Russian U.S. military alliance). She thus became — though she lost her campaign for the Chancellorship — the most powerful Green Party politician in Europe or anywhere.
Immediately, she reversed Angela Merkel’s policies which had allowed the Russian-Swiss-German natural gas pipeline from Russia to Germany, Nord Stream 2, to be constructed to bring into the EU the least expensive of all gas to Germany, which is Russia’s pipelined gas. Gas-prices in Germany are now already soaring, and Germans will increasingly freeze, as a result of this ‘German democracy’ and its obedience to its billionaire masters in America.
However, many European billionaires are also being served by this ‘Green’ Party. Much like America’s Democratic Party (or liberal) billionaires, Europe’s liberal billionaires have been investing heavily in ‘green’ technologies, and are betting against their opposition, conservative billionaires, who are still committed to fossil fuels. So: the ‘Green’ Party represents liberal billionaires, against conservative billionaires.
On 8 September 2021, “Capital Radar” newsletter bannered “‘Most important choice for the next 100 years’: 1.25 million euros from the Netherlands for the Greens” (“„Wichtigste Wahl der nächsten 100 Jahre”: 1,25 Millionen Euro aus den Niederlanden für die Grünen”) and reported that:
• A Dutch tech billionaire donates 1.25 million euros to the German Greens.
• It is the largest donation in the party’s history.
• In an interview with RND, the major donor explains why Annalena Baerbock should steer the ship of state and why the federal election is so important.
Amsterdam. The Dutch entrepreneur and philanthropist Steven Schuurman [archive.md/ZjwWW] donated 1.25 million euros to the German Greens. It is the largest donation in the party’s history. Billionaire Schuurman, born in 1975, is co-founder and ex-head of the data search and analysis company Elastic and co-founder of Atlantis Entertainment. He has already donated millions in the Dutch election campaign.
The Greens have already received large sums of money this year: the pharmaceutical heir Antonis Schwarz [archive.md/COcng] bequeathed them 500,000 euros; the Greifswald Moritz Schmidt, who got rich through Bitcoin deals, one million euros; and Sebastian Schel’s net heir, 250,000 euros. The election program for the federal election states: “Party donations should be capped at an annual maximum amount of 100,000 euros per donor.” [But Germany has separate laws for candidates, and no limits are placed on donations to them.]
Schuurman was quoted as saying that, of the three candidates for Chancellor, only Baerbock took global warming seriously. He ignored the more pressing and sooner danger of avoiding a nuclear war, on which Baerbock’s policy-commitments are rabidly anti-Russian. No U.S.-and-allied billionaires — either liberal or conservative — are opposed to that. But those policies are blood-red, and now.
At the level of the EU itself, the most powerful person over the entire European Union has been a lifelong hater of Russia, the American billionaire George Soros, who controls the Open Society Foundation and other ’non-profits’ that have poured billions of dollars over decades (starting in 1993, just two years after his self-declared war against communism in Russia had become no longer an excuse when Russia abandoned communism in 1991) into color-revolutions targeted against Russia. On 5 November 2017, Alex Gorka at Strategic Culture, headlined “The Myth of European Democracy: A Shocking Revelation”, and opened:
It’s an open secret that the “Soros network” has an extensive sphere of influence in the European Parliament and in other European Union institutions. The list of Soros has been made public recently. The document lists 226 MEPs from all sides of political spectrum, including former President of the European Parliament Martin Schulz, former Belgian PM Guy Verhofstadt, seven vice-presidents, and a number of committee heads, coordinators, and quaestors. These people promote the ideas of Soros, such as bringing in more migrants, same-sex marriages, integration of Ukraine into the EU, and countering Russia. There are 751 members of the European Parliament. It means that the Soros friends have more than one third of seats.
George Soros, a Hungarian-American investor and the founder and owner of Open Society Foundations NGO, was able to meet with President of the European Commission Jean-Claude Juncker with “no transparent agenda for their closed-door meeting.”
Many but not all of his agents at the European Parliament are Greens. U.S.-and-allied billionaires donate to all politicians that are ready, willing, and able, to advance the U.S. empire to encompass the entire world, and don’t donate to just to one Party.
Soros was a major funder of the coup-operation that started in the Obama Administration (led by Victoria Nuland under Hillary Clinton) by no later than June 2011 to overthrow Ukraine’s democratically elected President, Yanukovych, and replace him by a racist-fascist (or nazi) anti-Russian regime and to seize Russia’s largest naval base, which was and is in Crimea, to turn it into a U.S. naval base. (Putin was able to block the latter attempt.) Hillary and Obama had first met with Yanukovych in 2010 and failed to persuade him to push for Ukraine’s NATO membership in NATO, but he said no — NATO then was very unpopular among Ukrainians. During 2003-2009, only around 20% of Ukranians wanted NATO membership, while around 55% opposed it. In 2010, Gallup found that whereas 17% of Ukrainians considered NATO to mean “protection of your country,” 40% said it’s “a threat to your country.” Ukrainians predominantly saw NATO as an enemy, not a friend. But after Obama’s February 2014 Ukrainian coup, “Ukraine’s NATO membership would get 53.4% of the votes, one third of Ukrainians (33.6%) would oppose it.” Obama turned Ukraine around — from being a neutral country on Russia’s border, to being a nazi anti-Russian country. And Annalena Baerbock is a strong backer of today’s nazi Ukraine.
However, the ‘Green’ Party is green in one way: it follows the dollars, not the voters. Other than that way of being green, it’s really only blood-red. Even the ‘Green’ Party’s proposed policies against global warming are futile to prevent global burnout, and they ignore the only policy that, even conceivably, might halt global warming: to outlaw the purchase of stocks and bonds of fossil-fuel-extraction companies. So: they are total fakes. The response of billionaires is to bet either for crackpot business-ventures to halt global warming, or else for extending yet further into the future the use of mainly fossil fuels and ignore even the pretense of caring about the welfare of the generations yet to come. In other words, all billionaires, both liberal and conservative, are really only blood-red, for expanding yet further their empire, in the final analysis.
This doesn’t come from what the voters want; it reflects ONLY what the billionaires want. Here are some data showing that despite all the billionaires’ propaganda for expanding yet further the U.S.-and-allied empire, a majority in some countries — including Germany — don’t want it:
Only Germans “oppose Ukraine joining NATO”: 57% to 36%
“Ukraine Joining EU” opposed by Germans 54% to 41%, opposed by French 53% to 46%
“Oppose Supplyiing Ukraine with Arms Against Russia: Germans 77% to 19%, French 59% to 40%, Italians 65% to 22%.
In 2013, the median favorability of Russia in the EU was 37%; by the time of 2015 it had become 26% — 26/37 or 30% less than only two years earlier, which is to say prior to
Obama’s having grabbed Ukraine in a very bloody U.S. coup. (Obama was the most successful heir to Hitler since WW II, and was especially successful in jeopardizing the national security of the Russians by grabbing Ukraine on Russia’s border and intensifying the anti-Russian military alliance, NATO, whereas Hitler’s attempt to conquer Russia had turned out to be an colossal failure.)
So, Baerbock — the most powerful ‘Green’ politician in Europe, and even anywhere, though she had failed at the ballot-box — gets here hate (against Russia), her warmongering, not from the voters, but from the sheer cravings of U.S.-and-allied billionaires, to expand their U.S.-and-allied empire, to encompass the entire world. That’s what she (and many Green Party politicians) push for the most.
The ‘Greens” are actually blood-red, for war.
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