This year marks a decade since Kosovo proclaimed its independence, and that independence has by now become a hard fact. The country has been recognized by 106 UN members (according to Serbian data, or by 114 countries according to Kosovo itself), including 23 EU members (with the exception of Greece, Cyprus, Spain, Slovakia and Romania) and all its regional neighbours (with the exception of Serbia and Bosnia-Herzegovina; the latter refuses to recognize Kosovo’s independence because of Republika Srpska’s position). Kosovo’s international status was further strengthened by the UN International Court of Justice, which officially recognized the republic’s independence on July 22, 2010. The court’s fairly controversial verdict reads that Kosovo’s declaration of independence does not breach international law. Brussels contributed in the form of the Stabilisation and Association Agreement between the EU and Kosovo, which was signed on October 27, 2015 and came into force on April 1, 2016. However, it will take Kosovo a long time to prove that its statehood is tenable.
The new-fangled state is facing the same old structural problems that were caused by the territory’s socioeconomic and sociocultural underdevelopment, rather than by the fact that it was not an independent state. Kosovo’s archaic economy spawns skyrocketing unemployment, mainly among the youth, which in turn nurtures socio-political radicalism, international crime and growing Islamic extremism. Getting rid of Kosovo’s established reputation as a pan-European mafia transit hub for drugs, human trafficking and contraband goods will also require huge efforts. The territory’s reputation will not benefit from the findings of the Kosovo Specialist Chambers and Specialist Prosecutor’s Office, which is starting to look in the crimes perpetrated by the Kosovo Liberation Army (KLA) in 1998–1999. Although Serbia, with the backing of Russia and China, has thus far refused to formally recognize Kosovo’s independence, there are many things indicating that this firm stance may not last for long.
Kosovo and Serbia
Serbia has already de facto recognized Kosovo’s independence – under Aleksandr Vucic’s Serbian Progressive Party and Ivica Dacic’s Socialist Party of Serbia, both of which are viewed as nationalist and pro-Russian parties – in accordance with the 2013 Brussels agreement on the normalization of relations. Belgrade transferred the Serb-populated northern portion of Kosovo to Pristina in order to be able to begin negotiations on accession to the European Union. All Serbia received in return from Kosovo was a promise to set up a fairly notional Community of Serb Municipalities, which never materialized.
Belgrade also made significant concessions to Brussels with regard to other aspects of its Balkan policy. Seeing as the Serbian leadership continues to make one self-detrimental compromise after another in the talks with Pristina under the aegis of Brussels, we may assume that Belgrade is prepared to do virtually everything in order to be accepted into the EU. The “intra-Serbian dialogue” on the Kosovo problem initiated by President Vucic and the draft amendments to the Constitution of Serbia (which currently describes Kosovo as part of Serbia) are aimed at dismantling the last remaining legal obstacles to Belgrade’s recognition of Kosovo. No other outcome is to be expected, given that accession to the EU is Belgrade’s declared foreign policy priority, and it is supported by both the ruling parties and the majority of the opposition. For Brussels, a legally binding treaty on the comprehensive normalization of relations between Belgrade and Pristina is a mandatory condition of Serbia’s accession. In an attempt to further stimulate Vucic to speed up the process, the EU has announced that Serbia might become a member in 2025, provided that Belgrade completes the pre-accession talks and normalizes relations with Kosovo by 2019 at the latest. The Serbian leadership will hardly have the political will and diplomatic skills required to withstand the pressure being applied by Brussels and Washington.
Many rational arguments may be offered in support of the resolution of the Kosovo issue. The preservation of de jure sovereignty over Kosovo will keep Serbia hostage to a frozen conflict in the foreseeable future, leaving it surrounded by active and potential EU and NATO members. Serbia has been unable to recover control over the territory which it effectively lost back in 1999.
At the same time, a rational analysis of the situation indicates that Serbia does not really need such an outcome due to a number of unsolvable demographic, economic and political problems. Should the territory become part of Serbia again, the high birth rate among Kosovo Albanians (a constant source of demographic expansion) would seriously threaten to change Serbia’s ethnic composition, which is something that has already happened in Kosovo itself. Kosovo, which used to be described as the most economically backward and subsidised territory in Yugoslavia, would be too heavy a burden for Serbia’s economy. Indeed, Kosovo was a constant source of ethno-political conflicts in Yugoslavia – under the royal dynasty, then during the Tito regime and finally under Slobodan Milosevic. Given the plethora of internal socioeconomic problems, Serbia does not have the capacity, need or indeed incentive to spend its limited resources on Kosovo. This much was recognized in the proposal made by Serbia during the 2007 talks on the status of Kosovo to grant the region broad autonomy – essentially independence – on the condition that this autonomy would not be enshrined in international law, and that neither Kosovo nor the Kosovo Albanians would be represented in Serbian government institutions.
It is true, however, that the idea of abandoning a relic of national history, the birthplace of the medieval Serbian state and the site of the historic Battle of Kosovo against the Turks, is extremely unpopular. It encroaches on the legend of Kosovo as enshrined in the country’s folklore, the cornerstone of Serbian mythology. The influential Serbian Orthodox Church is also extremely unhappy with the government’s policy on Kosovo, although there is no unity of opinion within the church itself. Furthermore, history demonstrates that the church leaders are not prepared to enter into an open confrontation with the state. The political forces demanding that Serbia choose Kosovo over the EU are extremely weak and represent a negligent minority in parliament.
The recognition of Kosovo by a significant number of UN members, in violation of UN Security Council Resolution 1244, the fundamental documents of the OSCE and the principles declared by the EU with regard to the newly independent post-Soviet and post-Yugoslav states set an international legal precedent that could be applied in other conflict zones . This precedent gives separatists forces in similar situations elsewhere in the world additional incentives, pretexts and legal grounds to either demand the Kosovo scenario or oppose it. The list of EU countries that abstained from recognizing Kosovo indicates these European states wanted to safeguard themselves against similar developments, and not without good reason.
Just as Russia had warned, the first talks about the possibility of Kosovo’s independence elicited a lively response in the “unrecognized” post-Soviet territories of Transnistria, Nagorny Karabakh, Abkhazia and South Ossetia. For their part, the GUAM Organization for Democracy and Economic Development member states (Georgia, Ukraine, Azerbaijan and Moldova) were quick to declare that, irrespective of the result of the final Kosovo settlement, it must not set a precedent. The subsequent developments in Georgia and Ukraine proved that Russia had been correct in its predictions.
It would be naive, of course, to expect an automatic domino effect in all the regions in which separatist movements are present. Each separate conflict has its own causes, effects, development dynamics and unique balances of forces. Not a single separatist movement in Western Europe has used Kosovo as a precedent in its cause. The Catalan separatists find the example of Slovenia more fitting, and the Spanish government has been stressing that the Catalan case has nothing in common with Kosovo. Nevertheless, it is becoming increasingly obvious why Spain did not recognize Catalonia’s independence.
Kosovo might prove a more relevant example and, therefore, a precedent, for Republika Srpska in Bosnia-Herzegovina, and for the Macedonian proponents of a Greater Albania. Republika Srpska President Milorad Dodik periodically threatens Washington and Brussels with a referendum on the republic’s secession from Bosnia-Herzegovina, and cites Kosovo as a precedent for doing so. The National Assembly of Republika Srpska issued the threat twice in 2008, in light of Kosovo’s declaration of independence. The threat was never implemented, for obvious reasons. Republika Srpska’s secession is impossible and senseless without the active support of Belgrade, something that will not happen given Serbia’s EU aspirations. For this reason, the latest escalation in such rhetoric was nothing more than a way to increase the popularity of Dodik party’s on the eve of the local elections in Republika Srpska held on October 2, 2016. The results of the election confirmed the effectiveness of the tactic: Dodik’s Alliance of Independent Social Democrats increased the number of local self-administration bodies under its control by a third. There appears to be no reason to give up on this successful rhetorical tool in the 2018 Bosnian general election. It is also the most effective instrument in the fight against restrictions on Republika Srpska’s rights and the continuing attempts to centralize Bosnia-Herzegovina. Dodik made it clear, however, that a secession referendum is not on the agenda just yet.
It would appear that the political crisis in Macedonia, which lasted for one year, created a very favourable environment for the implementation of the long-standing nationalist idea of a Greater Albania. However, the Albanian leaders in both Albania and Macedonia resisted the temptation to avail of the situation, limiting themselves to strengthening their institutional and political positions in the Macedonian political arena. Albanian Prime Minister Edi Rama invited the leaders of Macedonia’s Albanian parties to visit Tirana (their positions following the snap parliamentary election held on December 11, 2016 were critical in terms of which of the two rival Macedonian parties would ascend to power). Rama consolidated these forces on a single platform, thus playing a key part in identifying the winning party in the protracted political crisis in Macedonia. Rama’s electoral motives are easy to explain: Albania was readying itself for presidential and parliamentary elections. The Democratic Party, the main rival of the ruling Socialists, had boycotted parliament since February 2017 and is threatening to boycott the elections. They followed through with the threat during the presidential election. In this situation, Rama desperately needed a success story, something that would promote him to the role of the leader of all Albanians. It was only US intervention that forced Albania’s two main parties to strike an agreement on the parliamentary election. Rama’s rhetoric abated somewhat after he won the election and in the run-up to the launch of talks on Albania’s accession to the EU.
The Political Situation in Kosovo
The forced coalition of Kosovan President Hashim Thaci’s Democratic Party of Kosovo and its main rival, Prime Minister Isa Mustafa’s Democratic League of Kosovo, was inconvenient for the former. Pressure from the radical nationalist opposition grew. Major breakthroughs in relations with the EU were looking remote (unlike its neighbours, Kosovo does not yet have EU candidate status, nor does it enjoy visa-free travel to EU countries). Brussels insisted that Pristina adhere to the unpopular commitments it had made to ratify the border delineation treaty with Montenegro that had already been signed, set up the Community of Serb Municipalities and resume the dialogue with Serbia that had been suspended by Kosovo. The upcoming Special Tribunal in Kosovo is an additional irritating factor both for Thaci, who commanded the KLA, and for his former brothers in arms. It was the ideal time for the president to strip the opposition of its monopoly on patriotism and remind everyone who was actually running the country. This required an intricate political manoeuvre: during the vote of no confidence in the government initiated by the opposition on May 10 2017, the pro-government Democratic Party sided with the opposition. The Mustafa cabinet was overthrown and a snap parliamentary election was set. Thaci’s main concern was to configure political power in such a way as to guarantee immunity to former militants who had taken part in conflicts across the former Yugoslavia. This is why the Democratic Party entered the parliamentary campaign in a so-called ‘pistol coalition’ with the Alliance for the Future of Kosovo led by the infamous Ramush Haradinaj and nominated the latter for prime minister. Haradinaj, a former field commander accused by Serbia of war crimes who has been acquitted on two separate occasions by the Hague Tribunal due to lack of evidence (witnesses for the prosecution would either be intimidated into recanting their statements or die under unclear circumstances), and who already served as Prime Minister of Kosovo in 2004–2005, is known for his harsh nationalist statements.
The snap parliamentary election held on June 11, 2017 demonstrated the population’s low confidence in the ruling political elites, and the popularity of bellicose nationalism. The ‘pistol coalition’ won 39 out of the 120 parliamentary seats. For the first time in history, the radically nationalist opposition party Vetevendosje (Self-Determination) came second with 32 seats (against 16 in the previous convocation). The Democratic League of Kosovo, which had led the previous cabinet, won 29 seats. The so-called Serb List of Belgrade-backed candidates got nine out of the 10 seats contested, gaining significant political weight in parliament. The young leader of Self-Determination, who had sided with the Democratic League, was being tipped for premiership, but the situation played out differently in the end. Haradinaj won the sympathies of the New Kosovo Alliance and offered its leader and Kosovo’s biggest businessman, Beghjet Pacolli, the post of Minister of Foreign Affairs. The Serbian government endorsed the Serb List’s support for the ‘pistol coalition’, and other nationalist minorities followed suit. Representatives of the Serb List even made it into the Haradinaj cabinet, despite the fact that mere weeks prior to that, Belgrade had demanded that Kosovo’s new prime minister be extradited as a war criminal. As a result, Kosovo received a fragile coalition majority with 61 seats in parliament and a government that can be ruined by any of the members at any moment. Under pressure from Washington and Brussels (the new prime minister was initially denied visas to the United States (US) and the United Kingdom), Haradinaj gradually began to go back on his hot-headed election campaign promises.
Kosovo and Albania
On January 22, 2014, Kosovo and Albania signed an agreement on cooperation and strategic partnership. The governments of the two countries have been holding regular joint sessions ever since (once each in 2014 and 2015, and two in 2017). The sides have voiced the intention to unite their diplomatic missions in a number of countries “for the sake of economy.” Albania has granted Kosovo Albanians and Serbian Albanians the right to apply for jobs without work permits. In April 2017, the Albanian leaders once again joined efforts to directly blackmail Brussels and Washington: Hashim Thaci and Albanian Prime Minister Edi Rama were joined by the leader of Albanians in Serbia, Jonuz Musliu, to issue virtually simultaneous statements to the effect that, should the prospect of the integration of the Western Balkans into the EU continue to decline, then the possibility that Albania and Kosovo will merge into an all-Albanian state cannot be ruled out. Rama explained that his country would prefer EU membership to this Greater Albania. Nevertheless, he and other Balkan leaders have repeatedly stated that the EU’s foot-dragging on the accession issue was threatening the region’s stability. This tactic has proved effective in the past, and will certainly be resorted to in the future for the purpose of stimulating European integration processes. Even though politicians actively employ the idea of uniting all Albanians in their election campaigns, and as a way to apply pressure on their Western patrons, they are unlikely to dare implement this scenario without the approval of the US and the EU. It is clear that Washington and Brussels will be against the idea, because in such a case the integrity of Bosnia-Herzegovina would be difficult to preserve.
Kosovo and the EU
In an attempt to repair its shaky influence in the region, Brussels has been forced to revise its strategy and make EU expansion to the Western Balkans a priority for 2020–2025. Serbia and Montenegro are the primary two candidates. The other contenders, which have been watching their rivals with jealousy, will try to jump the queue. The competition is aimed at making them more loyal to Brussels, enabling the latter to manage the region more efficiently and strengthen regional stability. However, local leaders have realized by now that the threat of destabilization is an effective lever of influence on the EU. This is another reason why Kosovo will remain a weak link in terms of local stability. The pace and timeframe for European integration will be a hot topic in discussions between Brussels and the candidate countries, or between the old and new EU members. We can expect the relatively latent political confrontation to continue, with the candidates trying to persuade Brussels to expedite their accession to the EU, including by way of periodic fits of “non-EU” behaviour, which are particularly characteristic of Albanian politicians in both Kosovo and Albania. That said, the regional elites will remain firm in their commitment to joining the EU, which has sent them a positive signal in its new strategy for the Western Balkans.
The US has no plans to leave the region either. Kosovo still has much to do in order to be accepted into the EU, and there is no point in even guessing at when that might happen. However, the country may get a coveted UN seat much sooner. This would not help solve Kosovo’s fundamental problems, but there are plenty of countries in the world whose tenability is dubious.
First published in our partner RIAC
 Guidelines on the Recognition of New States in Eastern Europe and in the Soviet Union // Bulletin of the European Communities Commission. 1991. Vol. 24. No. 12, p. 119.
Honorouble Justice Petric: Opening the Vienna Process conference on Int Women’s Day
It is a great honour for me to have the opportunity to address you today at an International conference on behalf of the organizers – International Institute for Middle East and Balkan Studies (IFIMES), fastest developing European media platform – Modern Diplomacy and other two co-organisers, not present today. I convey to you their all-hearted greetings with the wish that the conference be fruitful and successful.
I also take this opportunity to thank Ambassador Emil Brix, Director of the Vienna School of International Studies for collaboration.
I wish wisdom and foresightedness to today’s conference entitled “Europe – Future Neighbourhood: Disruptions, Recalibration, Continuity”. The topic of today’s event – second in the newly established Vienna Process – is important, not only for Europe but for the whole world. Given that our institute has a Special consultative status with ECOSOC in the UN, and that my country is soon to take up the EU Presidency, our obligation is even greater to deal with such topics.
Excellences and friends,
Today we mark an important historic date; International Women’s Day. I am truly delighted and honoured that we have so many ladies among the moderators, panellists, partners and viewers. Our daughters, sister and mothers are not only nicer, but are the brighter half of the mankind, too. Happy and organically healthy International Women’s Day to each and everyone of you!
And now, before closing, let me express our appreciation that our four partners are again with us: Diplomatic Academy Vienna, Modern Diplomacy, Culture of Peace and European Perspectives. Among the academia, media and other associated partners from 4 continents, we are indeed honoured to partner with the important Specialised Agency of the United Nations – UNIDO, as well as with the world’s second largest multilateral system after the UN, that of the OIC on this event.
This, second consecutive, gathering of the Vienna Process in its birth place – capital of Austria, is the best basis for our next step: conferences in Geneva in May and in Barcelona in September this year.
Special thanks to our key-notes; Commissioner Várhelyi, State Presidents Vella of Malta and Meta of Albania, as well as Excellency Zannier – our newly apointed Director for Euro-Med for chairing the important, first Panel, on cross-Med cooperation, Miss Mazlic of Al Jazeera and Ms. Harvey of Ban Ki-moon Center for charing other two highly topical panels.
Due appreciation goes to our fellows in Brussels, London, New York, Ottawa, Athens, Geneva, Paris and in Vienna for making this event and our Process possible.
Finally, a sincere thanks to all our panellists today. There valuable exchanges will be mutually beneficial to all of us gathering today for the battement of our common future and security in Europe and beyond.
New constructivism needed towards Europe’s East
Authors: Eugene Matos de Lara and Audrey Beaulieu
On the historic date of 0March 08th – International Women’s Day, a large number of international affairs specialists gathered for the second consecutive summit in Vienna, Austria. This leg of the Vienna Process event titled: “Europe – Future – Neighbourhood at 75: Disruptions Recalibration Continuity”. The conference, jointly organized by four different entities (the International Institute for Middle East and Balkan Studies IFIMES, Media Platform Modern Diplomacy, Scientific Journal European Perspectives, and Action Platform Culture for Peace) with the support of the Diplomatic Academy of Vienna, was aimed at discussing the future of Europe and its neighbourhood in the wake of its old and new challenges.
This highly anticipated conference gathered over twenty high ranking speakers from three continents, and the viewers from Australia to Canada and from Chile to Far East. The day was filled by three panels focusing on the rethinking and revisiting Europe and its three equally important neighbourhoods: Euro-Med, Eastern and trans-Atlantic (or as the Romano Prodi’s EU Commission coined it back in 2000s – “from Morocco to Russia – everything but the institutions”); the socio-political and economic greening; as well as the legacy of WWII, Nuremberg Trials, the European Human Rights Charter and their relevance in the 21st century,
The event was probably the largest gathering since the beginning of 2021 for this part of Europe.
Along with the two acting State Presidents, the event was endorsed by the keynote of the EU Commissioner for European Neighbourhood and Enlargement, Excellency Olivér Várhelyi. The following lines are short transcript of what he has said opening the Vienna Process event:
The COVID-19 (C-19) has brought numerous challenges to the table in terms of cooperation, adaptation but, mostly, resilience. As the crisis may be considered as a breaking point by some, European Commissioner for Neighborhood and Enlargement, Excellency Várhelyi, insisted on the opportunity emerging from it for the European Union (EU) and Eastern Europe to reinforce their collaboration to build a more stable area of “shared democracy, prosperity, stability and peace”.
Throughout the crisis, the European Union has been a key actor for Eastern Europe and its response to the virus, providing the region efficient economic and physical support, which have allowed thousands of lives to be saved. However, despite the necessity of this help, the European Union has more significant projects and ambitions regarding its relation with Eastern Europe states.
In 2020, the EU issued a proposal on the Eastern partnership mostly focused on resilience which unfolds in five pillars. The first pillar is addressed to the reinforcement of investments in the economy and connectivity. It, notably, aims to “further enhance support to small and medium enterprises”. These are EU’s backbone, accounting for over 90% of the business activities; the EU hosts 24 million small businesses. This economic machine together generates more than half of the EU’s GDP. The EU has great interest to keep them afloat during the C-19 crisis.
The EU parliament in December 2020 reported on the need for the Commission to reevaluate their support to these medium and small enterprises. They need more resources to overcome bureaucratic requirements that will exponentially burden their ability to thrive during and past C-19. Small businesses are recognized as indispensable to achieve innovative and sustainable goals. An example of this are initiatives to incentivize companies to take up e-commerce, yet only 17% of the small businesses in the EU have digitized commerce.
The second pillar is related to investments in the green transition. While Western Europe has demonstrated a positive approachregarding Paris Agreement goals, Eastern Europe seemed more reluctant. This attitude couldbeexplained by theirstaple-basedeconomy and by more significant matters on their plate, such as corruption and the reinforcement of the rule of law. Thus, the second pillar bridges with the first pillar since environmental issues should influence the investments and the development of small and medium enterprises and the development of the economic sphere.
The third pillar is about investing in digital transformation. The digital world iscontinuallyevolving, and states need to adapt to this reality, especially considering it could be a pivotal instrument to get the economy back on track. The pandemic has been a great opportunity for countries to develop their digital sector. Enterprises have had to beingenious and proactive in adapting their activities to this new reality, which could be a game-changer for the future. Countries will have to grasp this opportunity and make the best out of it. Investing in technologies could also be profitable to other goals that have been set, such as investments that need to be done in the reinforcement of the rule of law, credible justice reforms and efficient public administration (fourth pillar). Indeed, digitization of information combined with robust cybersecurity platforms is the key to more opened and more transparent administrations. In parallel, other strategie swill need to beelaborated in order to enhance respect of the rule of law and reachdemocratic standards, in fact, a key point to the enlargement of the EU.
Finally, the fifth pillar is about investing in fair and inclusive societies. Eastern Europe countries are real mosaics in terms of ethnicities, religions and languages. Inequalities and social cleavages between these groups are still omnipresent in most Eastern Europe societies, and they need to be addressed to build a more united Europe. Several Eastern European states have elevated policiesthat bridge social ethical and cultural differences in the first place both in their national and EU integration political agenda. Indeed, bridging social gaps isa fundamental action in managing differences and for the upbringing of a healthy democracy.
The next reunion regarding the partnership will take place next fall and focus on three critical matters: recovery, resilience and reform. Although the COVID-19 crisis cannot forever guide interstates initiatives, its consequences have forced the world to adapt to several new realities. Consequently, European countries will need strong measures to recover, and those should be translated by measures addressing the creation of employment and economic growth to stay competitive in international markets. As the EU Commissioner Várhely imentioned, “socio-economic recovery is the absolute priority”, so we should also be expecting opportunities to reform social and political norms to face not only new issues but also trends that were very present in the past that are now simply accelerating.
What to Do with Extraterritorial Sanctions? EU Responses
One of the important decisions of the new US administration was its revision of the sanctions policy inherited from President Donald Trump. The “toxic” assets of the departed team include deterioriated relations with the European Union. The divisions between Washington and Brussels have existed since long before Trump’s arrival in the White House. The EU categorically does not accept US extraterritorial sanctions. Back in 1996, the EU Council approved the so-called “Blocking Statute”, designed to protect European businesses from restrictive US measures targeting Cuba, Iran and Libya. For a long time, Washington avoided aggravating relations with the EU, although European companies were subject to hefty fines for violating US sanctions regimes.
The situation deteriorated significantly during the Trump presidency. At least three events served as a cold shower for the EU with respect to the bloc’s relationship with the US. The first was the unilateral withdrawal of the United States from the JCPOA—the “Iranian nuclear deal”. Trump renewed American restrictions on Iran in full, and then significantly expanded them. His demarche forced dozens of large companies from the EU to leave Iran; they were threated by the American authorities with fines and other coercive measures. Brussels was powerless to convince Washington to return to the JCPOA. The EU authorities were also unable to offer their businesses guarantees of reliable protection against punitive measures being taken by the US Treasury and other departments. The second event was Washington’s powerful attack on the Nord Stream 2 pipeline project. Trump has openly opposed the pipeline, although the Obama administration was also against the pipeline. Congress has passed two sanctions laws targeting Russian pipeline projects. The US Congress and the State Department directly warned European business about the threat of sanctions for participating in the project. In addition to Iran and Russia, concern in the EU was also caused by the aggravation of US-Chinese tensions. Brussels distanced itself from Trump’s cavalry attack on China. So far, US restrictions against “Chinese communist military companies”, telecoms and officials have minimally affected the EU. However, Washington aggressively pushed its allies to oust Chinese technology companies. It cannot be ruled out that in the future, US foreign policy towards China will become a problem for Brussels.
For the EU, all these events have become a reason to think about protection from extraterritorial US sanctions. The work on them was carried out by both European expert centres and the European Commission. Currently, we can talk about the formation of a number of strategic goals, the achievement of which should allow the European Union to increase its stability in relation to extraterritorial sanctions of the United States and other countries.
Such goals include the following:
Strengthening the role of the euro in international settlements. Already today, the euro ranks second after the dollar in international payments and reserves. However, unlike the United States, the EU does not use this advantage for political purposes. Many transactions between European businesses and their foreign partners are carried out in US dollars, which makes them more vulnerable to subsequent coercive measures. Calculations in euros could reduce the risk of transactions with those partners against whom the sanctions of the United States or other countries are in effect, but the sanctions of the UN Security Council or the EU itself do not apply. Here the EU authorities have laid serious groundwork and have a good chance of achieving their goal.
1.Creation of payment mechanisms, which cannot be stopped from the outside. INSTEX, a payment channel for humanitarian deals with Iran, is often cited as an example of such mechanisms. In 2020, the first transactions were made. However, success in this area raises questions. INSTEX has been widely advertised by EU politicians, but initial expectations were too high. The mechanism has not yet justified itself, even for humanitarian purposes. The Treasury Department can impose blocking sanctions against INSTEX at any time if it considers that the mechanism is being used to deliberately circumvent US restrictions against Iran. Switzerland’s SHTA mechanism, which is used for humanitarian deals with Iran, looks much better. It was created jointly with the Americans and it should not have any problems with functionality. However, regarding payment mechanisms in the EU, there are not only humanitarian transactions. There’s also the matter of plans to create secure transaction mechanisms in the trade of energy or raw materials; the question of what prospects these have for implementation remains.
2.Ensuring the possibility of unhindered settlements and access to other services for individuals and legal entities in the EU that have come under extraterritorial sanctions. In other words, we are talking about the fact that a citizen or a company from the EU, which fell, for example, under the blocking sanctions of the US Treasury, could make payments within the EU. Now European banks will simply refuse such transactions, and the courts are likely to side with them. In fact, the European Union wants to create infrastructure that has already been created, for example, in Russia. Moscow was considering the establishment of a national payment system even before the large-scale sanctions of 2014. Despite the limited weight of Russia in the global financial system, the country has its own sovereign payment system, which allows its own citizens to carry out transactions on its own territory.
3.Updating the 1996 Blocking Statute. In particular, we are talking about the development of an instrument of compensation for companies that have suffered from extraterritorial sanctions.
4.Creation of information databases in the interests of European companies under the risks of extraterritorial sanctions, as well as the provision of systematic legal assistance to companies that have come under foreign restrictions. In particular, we are talking about assisting European companies and citizens of the EU countries in defending their interests in US courts, as well as using other legal mechanisms, for example, within the WTO.
If necessary—balancing the extraterritorial measures of the United States or other countries with restrictive counter-measures.
However, the EU sanctions agenda is far from limited to the threat of extraterritorial sanctions. Ultimately, the United States is an ally and partner of the EU, which means that the opportunities for smoothing out crisis situations remain broad. Collaboration at the agency level is also highlighted as a recommendation. Moreover, after Trump’s departure, the United States may be more attentive to the concerns of the European Union.
The main priority remains the development of the EU’s own sanctions policy. Here many problems and tasks arise. The main ones include the low speed of decision-making and poor coordination in the implementation of sanctions. The centralisation of sanctions mechanisms in the hands of Brussels is becoming an important task for the European Commission.
The article is published as part of the Valdai Club’s Think Tank project, continuing the collaboration between Valdai and Observer Research Foundation (New Delhi).
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