Which country has already suffered the greatest losses through the new U.S. strategy announced a year-and-a-half ago by President Donald Trump?
Clearly not Russia, whose relations with Washington were far from perfect even under the previous U.S. administration. Nor is it Mexico or Canada: even Trump is unable to turn the tables on the United States’ relations with its closest neighbours so rapidly and radically. With the exception of Iran, Syria, Cuba and the other habitual targets of U.S. attacks, Germany and China have the most reason to be unhappy with the current U.S. policy.
Trump has been applying particularly strong pressure on Berlin and Beijing; the two countries’ current and, more importantly, potential losses from America’s protectionist stance far exceed the losses of all the other US trading partners combined. In addition, Washington has a serious political axe to grind with Germany and China. Berlin is being chided for its “insufficient contribution” to the NATO budget and its unswerving commitment to the Nord Stream II gas pipeline, whereas Beijing is suspected of “hegemonic aspirations” in the Asia-Pacific and of its attempted “expansion” into the Indian Ocean.
If talking common sense, Chancellor Merkel and President Xi would be better off keeping closer to each other: they stand a better chance of weathering the pressure from the United States as a united front than on their own. Given the two countries’ impressive combined potential, the transcontinental Berlin–Beijing axis could become a worthy strategic response to the unprecedentedly strong and brutal U.S. pressure, even more so if this alliance secures the support of several other major countries between the Brandenburg Gate and Tiananmen Square. Including Moscow, which has its own agenda.
How likely is such a new alliance to emerge in the foreseeable future? What are the potential opportunities and limitations of a rapprochement between Germany and China? What consequences would increased cooperation between the two countries have for Russia? The answers to these questions are critical not only to the future of the Eurasian space, but also to the fate of the new world order as a whole.
The Chinese Groom and the German Bride
The Berlin–Beijing axis first manifested itself as a possibility immediately after the new president took office in the United States. Trump’s electoral victory raised serious concerns in China, and came as a true shock to the German political establishment. Symptomatically, on the eve of the G20 summit in Hamburg in July 2017, Trump paid a demonstrative visit to Warsaw at the precise moment that Germany–Poland relations were experiencing yet another dip. Coincidentally or not, Merkel was rolling out the red carpet for Xi Jinping in Berlin. Six months prior to that, China had been announced as Germany’s largest trading partner for 2016 for the first time in history.
Beijing’s interest in Berlin is not confined to China’s desire to further expand bilateral trade, boost investment and secure access to the latest German technology. With the new U.S. administration in power, the Chinese government is looking for ways to demonstrate its increased concern for the global problems Germany worries about, from climate change and WTO reforms to assistance to African countries. The Chinese leadership’s traditional statements as to the importance of free trade, the dangers of protectionism, the advantages of multilateral approaches and the need to adhere to the common rules of the game (Xi Jinping’s keynote address in Davos, Switzerland in January 2017 is one example) are primarily intended for Berlin’s ears.
It is hardly surprising that in the emerging romance between China and Germany, Beijing plays the role of the decisive and persistent young man, whereas Berlin is the wary and calculating girl eager to gain the most from the potential relationship. To begin with, China is much stronger than Germany in terms of its economic and demographic potential, geopolitical position and military might. China is a permanent member of the UN Security Council, and also possesses nuclear arms. In other words, China is a full-blown major power, whereas Germany right now is not. Therefore, any relationship between the two countries will inevitably be asymmetric, with the balance tipped in China’s favour, and this asymmetry will need to be compensated for in one way or another.
Second, China has greater room for manoeuvre in the international political arena than Germany. Currently, the country is not a party to any rigid politico-military or economic blocs; BRICS and the Shanghai Cooperation Organisation, these amorphous and barely binding associations, are beside the point here. Germany, for its part, has numerous fairly tangible obligations within NATO and the European Union. Berlin may be the driver of the European Union, but within NATO it often finds itself playing supporting roles. To continue with the romantic parallels, China the young man is single and free, whereas the girl is bound by close ties with numerous and often quite demanding European relatives, and is unwilling to sacrifice these ties under any circumstances. Whether the existence of “relatives” gives Germany extra bargaining chips in its contacts with China or actually weakens its position is a moot question, but the significance of this factor should not be underestimated.
Third, potential rapprochement is being hindered by the fundamental differences in values. It is difficult to build a strong relationship of trust if one of the partners has a conservative religious background and the other is an inveterate atheist. Germany today is perhaps the leading vector of traditional liberal values, not just in Europe but in the whole world. China’s political model of authoritarian modernization, for its part, is the exact opposite of Western liberalism. Predictions to the effect that the emergence of a middle class in China would inevitably result in the country drifting towards Western-style pluralistic democracy have so far been proven wrong. If anything, China appears to be drifting in the opposite direction.
Fourth, the Berlin Fräulein already has a young man, one that has for decades remained her key partner, protector and, to a great extent, an indisputable authority and guru. That young man lives in Washington. Germany and the United States have had their share of misunderstandings and even quarrels over the years; suffice it to recall Berlin’s resolute opposition to the U.S. intervention in Iraq back in 2003. Yet, until very recently, very few in Germany could picture their country’s future outside the close military, political and economic alliance with the United States. Remove that support, and the entire structure of Germany’s foreign policy would collapse in no time.
This last argument needs to be addressed in greater detail. It would be fair to say that in all of its long and sometimes dramatic post-World War II history, Berlin has never been exposed to attacks, threats, blatant pressure and even blackmail on the part of Washington on a scale similar to what has been going on in the past 18 months. Never before have the views of the leaders of the two countries been so far apart and the level of mutual trust so low.
One could, of course, argue that Trump will eventually go and the American people will remain. However, it was these same American people that elected Trump as their president in the first place in November 2016, albeit not unanimously. In fact, Trump’s popularity in America appears to be growing rather than declining. Whatever the case, it is obvious that Berlin will continue to suffer from the political and psychological consequences of the current transatlantic relations crisis long after the current president leaves the White House. The bilateral relations are not going to return to what they were during the times of the Obama administration any time soon, despite the hopes of German politicians and intellectuals with their orthodox Atlantic world view.
Five Lessons in Seduction
As we can see, China is to play the leading role in the emerging rapprochement. How can Beijing possibly dispel Berlin’s doubts as to the purity of its intentions? What price would the Chinese leadership have to pay for this? Let us take a closer look at Berlin’s main fears.
First, Berlin is extremely uncomfortable with Chinese investors methodically buying German businesses that specialize in the most promising sectors of technological development. Germany suspects that China is driven by more than just commercial interests; that it is, in fact, pursuing a national strategy aimed at gaining a technological advantage over the West in general and Germany in particular by the end of next decade. China invested nearly $14 billion in Germany in 2017, or almost two-thirds of its total investments in Europe.
Germany became aware of the potential threat. In 2018, Berlin partially nationalized one of the country’s largest power grid operators in order to prevent Chinese investors from buying into it. Preventive measures were also taken with regard to a major German hi-tech machine-tool specialist company that resulted in a potential Chinese buyer being forced to abandon its plans. These steps evidently contradict the general principles of Germany’ foreign trade policy, and would have been impossible just a few years ago (Russia’s Sberbank did fail to buy Opel at some point in the past, but then the deal fell through due to the position of General Motors, the U.S. owner of the German car maker).
What could China do in this respect? The most logical solution would be to provide for maximum possible reciprocity by granting German investors unhindered access to the hi-tech sector of the Chinese economy. This remains a problematic topic: China’s hi-tech sector is still largely impenetrable to foreigners. Greater transparency of business practices and a consistent fight against corruption would also raise Germany’s trust in Chinese investors. Beijing is sure to find these steps to be quite difficult and even risky, but a serious relationship with Berlin is bound to come at a price.
Second, Germany is concerned about the possibility of the balance of its trade with China changing dramatically in the coming years. Unlike the United States, Germany currently enjoys a significant surplus in trade with Beijing: exports stood at $96 billion in 2017, and imports amounted to $71 billion. Some fear, however, that the recently unleashed trade war between the United States and China may prompt Beijing to switch a significant portion of its exports to Europe, including Germany, which has the most capacious market in Europe. As a result, Germany could not just lose its current surplus, but would eventually find itself in a situation similar to that in which the United States currently finds itself.
These fears are justified: sooner or later, Beijing will ask Berlin to balance out bilateral trade. It would of course be a grave mistake to do so in the style of Trump, i.e., by twisting Germany’s arm. Quite on the contrary, the Chinese leadership has a great opportunity to demonstrate how different its balancing-out methods are from those used by the United States.
Furthermore, if the full-scale U.S.–China trade war eventually breaks out, Beijing could invite Germany to replace the United States as an exporter to the Chinese market. Germany already exports about twice as many cars to China as the United States, but U.S. exports are still significant at about 10 per cent of the market. China could discuss this opportunity with its German partners.
Third, Germany is rightly irritated by Beijing’s activity in Berlin’s “backyard” – that is, in Central and Eastern Europe and the Balkans. One particular irritant for Berlin is the 16+1 cooperation mechanism created by China for these countries, which involves regular meetings at the highest level. This format is perceived in Germany as China attempting to undermine European unity and gain backdoor access to the European Union. First, because the format involves 11 EU member states alongside five non-aligned countries of the Western Balkans. Second, because the 16+1 mechanism gets to discuss, among other things, issues pertaining to the EU remit (infrastructure development, e-commerce, etc.). An additional vexing point for Berlin was the fact that the latest 16+1 summit took place just several days before the July 2018 EU–China summit.
One could, of course, dismiss Germany’s suspicions and fears as being unreasonable and even hypocritical. After all, Germany consistently opposes any “privileged interests” in Europe and promotes all countries’ sovereign right to choose their partners and cooperation formats. Should Beijing resort to such rhetoric, it would doubtlessly earn a standing applause from Moscow. It is, however, hardly in China’s best strategic interest to ignore Germany’s fears, no matter how unfounded: Berlin is more important to Beijing as a potential strategic partner than all of Central Europe and the Balkans. So, if the road to Berlin lies through Brussels, then Beijing will take it.
Beijing has already made token concessions to the European Union: in future, 16+1 summits will be held once every two years and not annually as before. The Chinese leadership has been consistent in stating unequivocally that Beijing is interested in a unified European Union. Beijing has been careful not to support Eurosceptics, populists, right-wing radicals and other marginal forces within the European Union. Yet China could do even better, such as offering Berlin a joint China–Europe development programme for the Western Balkans in order to refute any suspicions about a possible hidden agenda on the part of China that is aimed at “infiltrating” this very important European region.
Fourth, in assessing the advantages and disadvantages of closer cooperation with Beijing, Berlin naturally wonders how this rapprochement would affect its relations with other Asian partners: Japan, India, the ASEAN countries, Australia, New Zealand, etc. It would certainly be extremely short-sighted of Germany to sacrifice these relations or even give its historic Asian friends a reason to doubt its strategic political priorities.
It is, therefore, in Beijing’s best interests to promote the potential Sino-German axis not as a stand-alone bilateral geo-economic project, let alone a geopolitical one, but rather as an important component of a broader multilateral plan aimed at creating a single Eurasian economic space. The implementation of this plan should prompt individual Asian countries to gradually forget about their bilateral disagreements in the face of the common long-term development targets. It would be too foolhardy of Beijing to seek Berlin’s direct support for its stance on the territorial disputes in the South China Sea, or to prompt Germany to side with China in its conflict with India.
Fifth, the most difficult obstacle to closer cooperation between China and Germany is the current gulf between Germany’s liberal political system and China’s authoritarian one. No sane politician in Berlin can possibly overlook the human rights violations in China, neglect the fate of Chinese dissidents, turn a blind eye to the discrimination against ethnic and religious minorities, ignore the existing restrictions on the dissemination of information and many other manifestations of Chinese authoritarianism. These values have always been and will continue to be a bone of contention in bilateral relations.
However, just because a fundamental solution of the values problem cannot be reached does not mean no progress is possible in this respect. China’s symbolic concessions with regard to individual dissidents are absolutely important (in the latest such development, Liu Xia, the widow of Nobel laureate Liu Xiaobo, was permitted to travel to Germany). It appears to be of even greater import, however, for the two countries to develop contacts along the lines of civil society, education, culture, youth and women’s organizations. For this to happen, China needs to turn Germany into a “fashion,” so as to change the Chinese public’s perception of the West as being primarily associated with the United States.
Why is Trump Not Afraid?
Even the remote and purely hypothetical possibility of a China–Germany alliance should be the cause of great concern for any serious politician in Washington. There is hardly any other geo-economic combination on the planet capable of posing such a threat to the United States, this key economic, financial, scientific and technological centre of the modern world. History teaches us that a war against two strong adversaries at once can rarely be won. A China–Germany alliance, even a short-lived one, should appear particularly threatening to the current U.S. administration, which is in the habit of assessing international challenges primarily from the standpoint of America’s short-term economic interests.
Is Trump afraid of a trade and economic war on two fronts? He appears not to be. If he were afraid, he would be behaving somewhat differently. At the very least, he would be more tactful and understanding with regard to one of his oldest and most reliable European allies. So far, however, quite the opposite is true. It seems at times that the President of the United States is actually pushing the German bride into the embraces of the Chinese groom. Such shocking behaviour needs some rational explaining.
Some of Trump’s political opponents tend to explain the President’s behaviour as manifestations of his personality quirks. In their opinion, he is simply unable to keep a comprehensive picture of the world in his mind, nor does he want to think strategically. Therefore, the reasoning goes, Trump views the United States’ relations with Germany and China as separate and unrelated prongs of America’s foreign policy. He does not give a though to the possible consequences for the Germany–China relations of America’s growing pressure on Beijing and Berlin.
Another explanation of the Trump administration’s policy can be described as “the presumption to power of the United States”: the White House is closely monitoring the progress of the attempted Germany–China rapprochement, but does not believe that it will succeed. The United States’ relations with both Germany and China remain asymmetric: the latter two are more dependent on the United States than the other way around. The White House may be under the impression that even if Berlin and Beijing unite efforts, they will still be unable to create a global financial, economic and technological centre that would be independent from Washington. Furthermore, neither China nor Germany has dared so far to resort to symmetric measures in response to the latest bouts of U.S. economic pressure. Therefore, the White House has no cause for concern, at least not in the foreseeable future.
The third and, in our opinion, most convincing explanation is that the Trump administration is simply incapable of imagining that German politicians are prepared to revise their views on the world, and of Germany’s desirable place in that world. U.S. political circles have long grown used to the periodic outbursts of anti-American sentiment in Germany; these outbursts are not perceived as posing any serious threat to the U.S.–Germany alliance for as long as they do not affect the German political establishment. This was the case during the German anti-war movement in the late 1970s and the early 1980s and during George W. Bush’s presidency. History may yet repeat itself under Trump, too.
One thing is obvious, however: Trump is applying much greater pressure on Germany than his Republican predecessors. The United States is making a show of demeaning not just the current German leadership, but the German political class as a whole, precisely when marginal German nationalism is beginning to awaken from its protracted slumber (as evidenced by the success of the Alternative for Germany party in the latest election). The combination of the imminent systemic crisis in Germany’s domestic politics and the loss of reliable international support in the form of the transatlantic partnership could create the prerequisites for an “ideal storm” in German politics with most unpredictable consequences.
The cockiness with which the current American leadership is treating Germany may eventually result in something similar to what Moscow got in exchange for its arrogance towards Berlin. Such a comparison might be farfetched, but we believe that it merits attention.
Russia had long believed that its “special relationship” with Germany would remain no matter what. Moscow was banking on the Germans’ “historical guilt” over the country’s role in World War II, and expected Berlin to never forget the role Russia had played in Germany’s unification. There were hopes for the rapid development of bilateral trade and economic cooperation, including with Germany’s leading major businesses.
Busy with all these calculations and hopes, Moscow overlooked the moment when it lost its erstwhile status as Berlin’s “privileged partner”; Germany stopped being an unconditional lobbyist for Russia’s interests in the Euro-Atlantic community. Moscow equally overlooked the moment of the generational change in German politics, with a new generation of leaders emerging in the political arena for whom the World War II and even the unification of Germany were nothing more than mere episodes in the country’s centuries of dramatic history.
It would of course be oversimplifying things to draw direct parallels between Germany’s Ostpolitik, which has long disappeared, and its modern, still fairly viable Atlanticism. Fidelity to Atlantic unity has always run much deeper in German society than its adherence to “Eastern politics” and Berlin’s willingness to maintain the “special relationship” with Moscow. Still, the Trump administration could benefit from looking at Russia’s experience, which is something that it is obviously not doing. Therefore, even without China factored in, it is obvious that the risks for the transatlantic partnership continue to grow.
An Axis or a Triangle?
Unfortunately, Russia does not appear to be in a position to play a leading part in the new game that is beginning to unravel in Eurasia. Its economic potential is too limited, and its positions in the emerging Eurasian interdependence system are too weak. On the other hand, Russia cannot afford to stay on the outside, since its future will largely depend on the outcome of the emerging confrontation of the Unites States with Germany and China.
The successful development of cooperation between Germany and China would be beneficial to Moscow, if only because it would deprive Washington of its current monopoly to determining the fundamental rules of the game in the global economy. There is very little hope that relations between Washington and Moscow will improve any time soon; for as long as the United States gets to dictate the rules, Russia will be consistently ousted to the periphery of the world economy. There is also the constant threat of extraterritorial U.S. sanctions, as illustrated by Iran.
In the meantime, China and Germany are Moscow’s main trade partners and are likely to retain this status for a long time. In fact, economic ties with Beijing and Berlin remain complementary for Russia: the countries are Moscow’s main points of entry into the global economy. It would, therefore, be entirely logical for Russia to feel enthusiastic about the possibility of taking part in the creation of the Berlin–Beijing axis and attempting to turn it into an equilateral triangle.
It should be noted that Russia has no interest whatsoever in the destruction of the present liberal world economic order, whose protection is to serve as the foundation of the China–Germany rapprochement. This, despite the fact that the term “liberalism” has recently acquired strong negative connotations within Russia. Just like any other participant in the international economic system, Moscow may have its problems with some aspects of this world order. However, excessive protectionism, the abandonment of multilateralism, the decline of universal international economic organizations and the world splitting into opposing trade blocs would do nothing to help Russia integrate into the global economy; nor will they facilitate the country’s economic modernization.
The opportunity to integrate into the China–Germany cooperation processes would provide Moscow with additional room for manoeuvre, enabling it to offset the “turn to the East” by a re-activation of contacts with the West. In the long run, the China–Germany axis could turn into one of the pillars of the “Greater Eurasia” concept, which has been actively discussed in Moscow of late.
However, a rapprochement between Germany and China per se would not automatically generate new opportunities for Russia. Beijing may well stick to its long-standing practice of pursuing parallel political courses in its relations with Moscow and Berlin. Germany in the current situation would certainly prefer to develop cooperation with China without involving Russia, which has only been creating problems for Berlin – at the very least until the Ukrainian crisis has been truly resolved. It is, therefore, extremely important for Moscow to not become the odd man out in the China–Germany alliance, and to contribute its unique advantages to the axis.
These advantages should certainly go beyond Russia’s geographical situation: there are plenty of transit options between China and Germany, not all of them passing through Russian territory. Moscow should, therefore, look for different kinds of opportunities, such as tripartite development projects for the Balkans, Central Asia and Afghanistan. Other opportunities could include initiatives that would marry security to development, such as migration management, the prevention of political radicalism and addressing the challenges associated with new technologies. In any eventuality, Russia’s value for both Germany and China will be largely defined by its ability to shift from the current inertial economic model to an innovative one.
In addition, as was already mentioned, no separate Russian or Chinese policy with regard to Germany can exist out of the broader EU context. Neither the United States, nor China, nor Russia will replace the European Union at the centre of Germany’s universe. Therefore, Moscow cannot expect to be on good terms with Germany while simultaneously being on bad terms with the European Union. Just like with China, the road to Berlin for Russia inevitably runs through Brussels. So, this road needs to be taken, no matter how long, winding and difficult it may turn out to be.
There may be different opinions about the chances the potential China–Germany alliance has to succeed. It is possible that an alternative geo-economic structure will emerge instead, such as a Berlin–Tokyo axis or a close partnership between the European Union and India. It appears indisputable, however, that the major actors in the global political arena are now required to make major, non-orthodox and perhaps even paradoxical decisions.
So far, most of these actors have been biding their time, hedging emerging political risks, carefully calculating the balances of group interests, maintaining the status quo and hoping that the situation would somehow rectify itself, solely on the strength of their having chosen “the right side of the barricades.” This is perhaps how Roman aristocrats behaved towards the end of the Empire.
Trump is not one of them. He is often rightly accused of being unprofessional, impulsive, lacking in strategic vision and of many other sins. That said, he is actually trying to solve the United States’ global problems rather than postponing them until the next term in office or not passing them on to the next generations. In other words, Trump is a man of action, a trait rarely to be found in the contemporary world. For this reason, until other leaders in Europe and Asia begin to demonstrate a similar capacity, Trump will always have, at the very least, an important tactical advantage over his opponents.
First published in our partner RIAC
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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