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A New Redrawing of Balkan Borders: A Road to Hell

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More than a decade after Kosovo region’s unilateral declaration of independence from Serbia, the issue of redrawing borders is back on the agenda. The ongoing negotiations between Belgrade and Pristina on the settlement of bilateral relations under the auspices of the European Union may lead to an unexpected result – the breakaway of Serbia’s three predominantly Albanian-populated southern Serbian regions of the Presevo Valley and their accession to Kosovo – which, in turn, will be carved up into Serbian and Albanian parts. Such a scenario, in turn, can set off disintegration processes in Macedonia, Bosnia and Herzegovina, Montenegro and even Greece (with Albanians enclaves in the north).

The Pesident of the self-proclaimed Kosovo Republic, Hasim Thaci, said that in the event of an agreement signed between Belgrade and Pristina, the Presevo Valley adjacent to the Kosovo border, would likewise join Kosovo.

According to him, “the requests of the Albanian population of the Presevo Valley for joining Kosovo are institutionalized,” and if an agreement is reached between Belgrade and Pristina, neither the EU, nor NATO or the US would be able to interfere with its implementation. Moreover, he said that the problem of Presevo will soon be discussed in Brussels anyway.

However, he once again ruled out the possibility of Kosovo proper being divided into Serbian and Albanian parts (which is increasingly being discussed in Serbian political and public circles), although he was rather vague about the possibility of “adjusting the Kosovo-Serbian border.” For his part, Serbian President Aleksandar Vucic supports the idea of carving up Kosovo, which he argues would help avoid a new conflict.

“A territory, if you don’t know how to treat it or who it belongs to, is always a source of potential conflicts and problems.” “I am foursquare behind this [separation] and this my policy, whether people like it or not. I am holding out for separation with Albanians,” Vucic stated. rts.rs.

Serbia’s current Foreign Minister Ivica Dacic was the first top-level politician to come up with the idea of dividing Kosovo, describing it as a long-term compromise solution to the Kosovo conflict. In an interview with the Pristina-based Albanian-language newspaper Zeri, Ivica Dacic, who was then First Deputy Prime Minister and Interior Minister, said that “the only real solution is to leave the Serbs in Serbia and separate the other part where Albanians live. It will be a working mechanism to quickly solve the problem. Other options will be just a waste of time.”

However, the idea of partitioning Kosovo can now become part of a broader “package” agreement on the normalization of relations between Belgrade and Pristina. The European Commission makes Serbia’s admission to the European Union, which in this case could come in 2025, strictly conditional on a legally binding agreement signed by Belgrade and Pristina.

Many media outlets consider the division of Kosovo and a territorial exchange a very likely scenario. The Croatian newspaper Jutarnji List even claims that the matter is already a “done deal,” and warns of possible negative consequences: “In fact, it’s not just Kosovo. Pandora’s box may be thrown open. This could have a knock-on effect. Just imagine the worst possible scenario the partition of Kosovo could lead to. Bosnia and Herzegovina would immediately follow suit, followed by Macedonia. Montenegro could possibly come next.” jutarnji.hr

The Albanian leaders of southern Serbian Presevo Valley, which is home to three mixed Serbian-Albanian communities, admitted the possibility of a “territorial exchange” as envisaged by pertinent agreement between Belgrade and Pristina, as early as in 2012. The leader of the Presevo community, Ragmi Mustafa, emphasized that the three communities (Presevo, Medvedja and Bujanovac) “must join Kosovo,” while “northern Kosovo must join Serbia.” He believes that a pertinent proposal should be discussed in Brussels.

“I think that this holds the future for our region,” he said. A year before that – in the summer of 2011 – representatives of Albanians living in Kosovo and Presevo Valley, including Ragmi Mustafa, met in Gnilan and adopted a resolution on “facilitating the return” of Presevo Valley communities to “independent Kosovo Republic,” including with the participation of the international community. The latter, according to the participants, would help deter the Serbian government from “obstructing the free will of the Presevo Valley population.”

Accurate and reliable data on the ethnic composition of the three communities is not available. However, if we compare the estimates, we will see that 90 percent of Albanians and 10 percent of Serbs live in Presevo, 60 percent of Albanians and 30 percent of Serbs live in Bujanovac and 30 percent of Albanians and 60 percent of Serbs live in Medvedja. Thus, Albanians now constitute an absolute majority in  Presevo and Bujanovac.

Just as the President of the Turkish International Cooperation Agency in Ankara, Umut Arik, warned as early as in the mid-1990s, all talk about creating a security system in the Balkans makes no sense until “decisions relating to nation-states can be made and revised unilaterally”. This is exactly what has recently been happening around Kosovo. What is also evident is the interrelated development of disintegration processes going on in the Balkans. This may force the leading world powers and international institutions to abandon what they have professed all these years – “a policy focused on the state, rather than territory” as the University of Pristina professor of public law Enver Hasani puts it.

Such a policy provides for solving the problems of each Balkan country separately from one another. This approach was at the heart of the Stability Pact for Southeast Europe, devised by the European Union and introduced in 1999.

The unilateral declaration of independence for Kosovo in 2008 embedded in this concept a provision about the “uniqueness of the Kosovo case.”

However, amid the current impasse around Kosovo Serbs and the growing activity of Albanian nationalists, the international curators of the Balkan settlement, above all the most business-minded and openly cynical of them in the form of the administration of the US President Donald Trump, could switch to a “territory-focused policy,” which views a region not as an combination of already established states, but as a system of territories in dynamic equilibrium and, therefore, capable of reformatting.

“For some Balkan politicians, talk about territorial division and redrawing of maps is like adrenaline,” the Croatian newspaper “Jutarnji list” rightly wrote.

“The question is, what will happen to the federation of Bosnia and Herzegovina? Will this catastrophic disintegration of Bosnia and Herzegovina affect Croatia, or will a peaceful Bosnia finally emerge taking in “parts of Croatia”!? Another question is, how would the Bosnians and their defenders, such as Turkey, react to this?! Perhaps, for Serbia, the matter would not be limited to Presevo, and the processes would affect both Sandzak and the very north of Serbia. On the other hand, the exchange of territories with Kosovo could raise the issue of ‘consolidating the Albanian nation,’ which would revive old ideas of dividing Macedonia. And with the process of Albanian consolidation on and with the Republika Srpska already  part of Serbia, this would whet Serbian appetite, if not for the whole of Montenegro, then at least for its ‘Serbian parts,’” the newspaper forecasts and makes a sad conclusion: “Despite the seeming simplicity (“we give you, you give us”), this decision leads to hell.” jutarnji.hr

In all fairness, any new changes in the situation in the Balkans – and above all, the delineation of borders – will raise the discussion to a higher international level and may potentially bring them back to the floor of the UN and the UN Security Council where Russia  wields a veto power.

Simultaneously, such scenarios are forcing Belgrade to work more closely together with Moscow, which is one of its key international allies.

The Serbian political class is aware that it cannot move forward without progress toward resolving the long-standing Kosovo issue. But in order to save face with its constituents, the Serbian leadership has to come up with some settlement in which Serbia will not be perceived as the total loser of the Kosovo dispute. To that end, Serbia must have a great power backer in the negotiating process, and as Serbia lacks a patron in the West, Russia is useful in that role. As long as Kosovo remains in play and as long as Serbian leadership lacks a settlement acceptable to public opinion, Russia will have a high place in Serbian foreign policy considerations. The West should be cognizant of this. For their part, both the European Union and the United States need to be aware that close ties between Russia and Serbia are in large part the result of taking Serbia and the Balkans for granted,” The American Interest emphasizes.

Given the situation at hand, Russia needs to figure out the possible options of such a reformatting of the Balkans and choose the ones, which are best suited to its geopolitical interests and those of its allies and partners in the Balkans region and beyond.

First published in our partner International Affairs

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How the issues of migration and asylum are reshaping the politics of Belgium

Ahmad Abu Sen

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It was a big surprise for many people seeing the Belgian government break up after intensive negotiations between all parties involved. Mr. Charles Michel , the prime minister, representing the center-right and liberal parties supporting the UN Migration Compact on the one hand, Mr. Theo Francken (State’s Secretary for Asylum and Migration) and his N-VA-colleagues occupying ministerial posts within the government strongly opposing the Compact on the other hand. The NV-A (New Flemish Alliance) even threatened to leave the government if Mr. Michel insisted on approving the Compact, hoping that by doing such, Belgium would not approve the Compact or at least abstain.

Through his political career as a State’s Secretary for Asylum and Migration Mr. Francken demonstrated a very strict policy towards migrants and asylum seekers as well as refugees. By implementing extremely tough measurements, he hoped to limit the numbers of asylum seekers who choose Belgium as the final destination of their long often journey of hardship and misery.

Starting from discharging massive campaign  against refugees and asylum seekers in media, social media and even his own twitter account, executing one of the largest deportation action in Europe, to his putting a limit on the number of daily asylum applications by only allowing 60 people per day submit such claim, the latter sparking widespread anger. All of these procedures aimed solely at making Belgium less attractive a country of destination for asylum seekers, as Mr.Francken himself expressed. The strategy he maintained throughout his time in office was and is a clear reflection of the party he represents, the N-VA which has recently used improper photos for its campaign which they took form a campaign launched by one of the notoriously well-known extreme right German party.

The clearly incoherent cabinet, later to be known as Michel I,  survived for almost 4 years with visible discordant voices, though. It all started with “marathonic” negotiations to form the new government in 2014. At the time the N-VA , the relatively new formed party , won the largest number of seats among other parties in federal Belgian parliament , beating the deeply rooted Belgian  parties like the Christian democrats, the liberals, the socialists and the green. Allied with the Christian democrats  and the liberals the new Flemish alliance could successfully form the new cabinet.

The newly formed cabinet, at the time, would soon be hit by a series of problems, migration wise, amongst which the huge influx of refugees in 2015, which some refer to as the ‘asylum crisis’, was the first one. Apparently there were different voices within the government on how to handle the matter. The right wing was overwhelmed by the public pressure  to present a humane solution for these poor people  in the Maximilian Park. The park , which will play a central role in the shaping of Mr.Francken’s migration policy at a later stage, was in 2015 a place where over the course of several months thousands of asylum seekers took shelter including elderly, women and children while awaiting their asylum claim to be registered.  A Park that over time has also become be synonymous to a different approach on migration.

Soon after the biggest influx of asylum seekers in the history of the Belgian kingdom, a phenomenon that had existed  for decades started to draw public attention, the phenomenon of transmigration, people on the run who are in Belgium but only plan to stay there temporarily awaiting a change to get to the United Kingdom or another European country. The Maximilian Park became a meeting point for these people on the run who are mainly originary from Eritrea, Sudan and Ethiopia and who range from young children (as young as 12 years old) to grown-up men and women. Being forced out if their little tents in Calais and Dunkirk, they found themselves in the heart of the Belgian capital, profiting from the presence of international bus lines at the nearby Brussels-North railway station to try and get to the United Kingdom clandestinely. Or using the national railway network to get to local ports or highway parking lots to get aboard lorries or containers, hoping these would set course for the United Kingdom. Living conditions in the Park being in human, soon a citizen’s platform of hundreds of families willing to offer a place to eat and sleep to these people on the run emerged. This initiative was wildly criticized by the right wing and hardliners in the country . The police force was on high alert especially in the surroundings of the Park and the earlier mentioned Brussels North station.

New tough measurements were introduced including a wide spread man hunt for the (transmigrants) by the police, a scheme which was designed by both the Home Office and the State Secretary for Asylum and Migration. The photos of young men handcuffed ignited public outcry asking for a humane solution rather than arresting the unknowing migrants.  In the meantime Mr. Francken was bringing up even more sensitive issue for the public. With his broad scheme of deportation and his record number that no minister of migration has reached before, he began to lock up asylum seekers who failed to get their claims accepted by authorities as well as people who stay in Belgium illegally in detention centers as a step to deport them to their homeland soon after. A step which was widely criticized keeping in mind that families with children were also locked up.  The European supreme court issued a statement that this step contradicts the European laws and firmly stated that (you cannot lock up children in detention centers).

Among other things Mr. Francken also tried to introduce a separate social security system for refugees so they would receive lower social benefits than the Belgians, his attempt was doomed to fail due to the strict European equality laws.

The internal conflict within the government, reached its peak with the issue of signing the UN Migration Compact. With strong  opposition from the N-VA (which only started to criticize the Compact after 2 years of negotiations and after a formal approval by – amongst others – their own government ministers earlier on in 2018) and the willingness to sign it from its counterparts, many analysts expected the end of the coalition. N-VA constantly threatened to withdraw from the government if Michel insisted on going to Marrakesh to approve the Compact  . Michel decided to consult the parliament as a whole about the issue and the Compact was approved of by a majority of government and opposition parties, except the N-VA and the far-right Vlaams Belang.

Shortly after Michel travelled to Marrakesh and stated there Belgium approves of the pact. A collective resignation from N-VA ministers took place only one day before. A new State’s Secretary of Asylum and Migration was appointed, Mrs. Maggie De Block. Mrs. De Block introduced her first day at the office by declaring that she would l abolish Mr. Francken’s 60 asylum applications per day policy. She also promised to clear the mess in the federal asylum department ,known as FEDASIL , in order to fetch more places in the reception centers for the new asylum seekers. Furthermore, she gave her orders to offline the social media anti-asylum campaign.

It is a bit early to judge and to determine whether there is actually a new asylum policy, but it is crystal clear that the new State’s Secretary has come with a different tone. The coming months will reveal more about the new adapted policy.

While Mrs. De Block was busy clearing the mess in her new ministry, Mr. Michel’s new government, also known as Michel II, has failed to gain trust from the parliament. Both N-VA and Vlaams Belang are calling for early elections. The King himself has intervened to put an end to the chaos. He consoled all the parties except the extreme right wing Vlaams Belang.

Whether there will be early elections or not, the federal elections of 2019 will definitely shape the new governmental façade of Belgium including its migration and asylum policy. But more importantly the issue of migration and asylum will be heavily present in the parties programs. So it is not only the politics changing migration, but migration changing politics as well.

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Possible International “Package Solution” Formats on the Balkans Issue

Ekaterina Entina

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Authors: Ekaterina Entina and Dejan Novakovic*

Presently, an extremely unstable situation has developed in the Balkans, with a potentially adverse effect both on the Balkan countries and on the system of international relations as a whole. Intraregional actors are not able to cope with problems that have befallen them. Over the past two decades, they have not been able to attain any considerable progress in solving these problems, although they have managed to keep the dialogue going on all these years. External players pursue first and foremost their own interests in the Balkans. As a rule, they only slightly match with the real needs of the region and its population. Moreover, lately they have been concerned more with the policies dictated to them by an escalation of tensions between regional players.

Present-day situation

The European Union offered all the Balkan peoples a so-called “European future”. The political elites and the population of the countries belonging to the region cannot imagine themselves without such a future. Although the percentage of Euro-optimists among the population has gradually decreased, integration into Europe is still considered a natural process and, seemingly, the only possible choice for the Balkans. The EU and its member states have accumulated so much of their own crisis potential for the moment that it is impossible for them to cope with all the challenges that are shattering the region. Brussels simply has neither resources, nor desire to do it.

The United States is pushing forward only those decisions that assure their influence on the pan-European processes as well as strengthen their positions in the global confrontation. Russia, China, Turkey, and Saudi Arabia, which are accumulating more and more influence in the region, taken separately, are not so powerful. In any case, they are simply not able to offer any alternative to the “European choice”. However, they have never even planned to offer an alternative.

Most politicians and commentators agree that, as a result, the Balkans are turning into a tinderbox, just as they were a century ago. Existing problems are still not solved, while new ones are appearing on the horizon. Bilateral negotiations are dragging. Moreover, everything is happening either all by itself or through intermediary participation and even dominance influence of the US and the EU. Any attempts either to find unconventional approaches, or to put forward some new breakthrough initiatives are immediately extinguished by external players. In order to move the situation off the ground at least a bit, and achieve favorable dynamics, intra-regional political actors begin to use tactics of provocations, forcing all external players to react. The point is that this tactics only strengthens confrontational tendencies around the globe.

It seems, there is no indication that external actors will refuse to act unilaterally, and intra-regional political forces will suddenly become negotiable. However, it is also impossible to leave the situation on its own as well as to give a “carte blanche” to those who prefer destructive policies thus harming the Balkans and its peoples and the prospects for a comprehensive, sustainable, fair and comprehensive settlement.

Under these circumstances, it would be extremely advantageous and timely for Russia to offer a multilateral format of a “general Balkan settlement,” which would be undoubtedly beneficial to all intra-Balkan political actors and extra-regional powers as well. For the former, it would provide an opportunity to proceed with mutual exchanges on a wide range of issues, which are unlikely to be achieved through bilateral negotiations, and to obtain all necessary guarantees of stability and sustainable economic development. For the latter, it would suppress negative developments in the Balkans and minimize risks both within and beyond the region. At the same time, it will make it possible to turn the Balkans from the everlasting “apple of discord” into a well-built platform for cooperation, and, if successful, into an instrument that would be designed to weaken confrontation between all major actors, which has gone too far, as well as to redirect the entire system of international relations to a more peaceful path.

Even if such a proposal is met with hostility, it should be put forward. It will show who is a true friend and a true defender of the Balkan peoples’ interests, and for whom, adversely, their geopolitical ambitions and their own selfish interests are on top of any other considerations.

Some of the Lucrative “Multilateral Format” Scenarios

1.Regardless of the resolution of the post-Yugoslav heritage problems, formation of a permanent “Balkan Council” is a top priority. It would include representatives of Russia, the US, Great Britain, Turkey, France, Italy, Slovenia and Germany as international observers, with mediation on the part of the EU and the UN, and also envoys of all the Western Balkan countries. The logical way to give life to this format is to reframe and accelerate the work of the Regional Cooperation Council (created 10 years ago on the basis of the Stability Pact for Southeastern Europe; Russia, the US, and China took part in the deliberations of the Council, with the EU playing the main role).

2.Another scenario is the “Permanent Balkan Conference” led by the EU and mediated by high representatives from the U.S. and Russia. Such a decision could be enforced by changing the format of the Brussels talks, and with the consent of the Albanian and Serbian parties.

3.The third scenario is the “Permanent Balkan Conference — broad version” under the leadership of the UN Security Council. It would imply an increase in the number of Balkan negotiators and would entail a number of various territorial exchanges, based not so much on ethnicity, but on the geopolitical interests of each of the Balkan countries as well as on the guaranteed viability of such exchanges. In this case, territorial exchanges would be accompanied by the acceptance of regional economic interests as one of the end-results of the accession to the EU of all countries in the region. Thus, the newly created boundaries would have a positive symbolic value in the context of day-to-day life.

4.The fourth scenario is the creation of the “Balkan Union” modeled on the EU. Turkey, as an “eternal” candidate for the EU, might join such a “Union.” This scenario is most likely to be the least acceptable for Brussels, which wouldn’t like to see Southeastern Europe being capable of addressing Western Europe on an equal footing or very close to being equal. However, in the context of the recent developments, this scenario is considered to be the most rational one for the Balkan states themselves.

Long-term Scenario of a “Package” Settlement

The “spontaneous” territorial organization designed for the Balkan peoples did not bode well with them. Some representatives of the local establishment and the expert community pass the verdict that it ”failed miserably.”

Ethnic groups are divided between different political entities. And they do not always feel comfortable there. Their vital interests are threatened, and it is possible to keep them from possible collisions and redistributions only due to some external factors.

Many countries and regional entities alone are simply not viable. Their successful future can be associated exclusively with integration, association, alliances, searching for some other forms and components of statehood. They are able to exist normally only under external control or as a part of some other entity.

The entire political, social and economic space of the region is fragmented. These fragments are dispersed chaotically, but they are holding onto each other. However, reorganization of its format is again impeded mainly because of various external factors. Obviously, if it goes as erratically as in the first half of the 1990s, it will end in tragedy.

At the same time, it is at least unreasonable and pointless to ignore the real situation. Maintaining the artificial existence of ethno-national and territorial delimitation is leading nowhere. It will generate tensions, fuel various extreme nationalists and populists, accumulate crisis potential, which is already big enough. Therefore, within the region, as well as among the international expert communities, various actors and their configurations are holding a nonstop informal discussion in order to outline possible scenarios of the Balkans settlement in a long run.

Among the external actors, the UK is the one to be the most active supporter of the creation of “ethnocentric states”, namely, “great” Albania, “great” Serbia, and “great” Croatia. This scenario would mean the following territorial exchange:

“Great” Albania: the Republic of Albania, most of Kosovo, part of Macedonia, part of Serbia (Bujanovac and Presevo), Ulcinj part of Montenegro;

“Great” Serbia: the Republic of Serbia, the Republika Srpska with access to the sea in the Herceg Novi region (Montenegro) and the Serbian communities in the north of Kosovo, including North Mitrovica;

“Great” Croatia: Republic of Croatia, the third “entitet” in Bosnia and Herzegovina (Herceg Bosna (Herzeg-Bosnia));

Montenegro would receive a part of the Serbian Sandzak;

Bosnia and Herzegovina within the borders of the Federation of Bosnia and Herzegovina with the possible option of creating a confederation with Croatia / Serbia / Montenegro;

Macedonia would be in a worse position, left without most of its own territory. Moreover, a tendency to tear the remains among Bulgaria, Greece, Albania and Serbia is notable here. One of possible scenarios for Macedonia in this case is to form a confederation with Bulgaria or Serbia.

Only nationalist population of the region could support such a radical scenario, it would seriously shut off the Balkans from the EU in mid-term perspective. At the same time, in a long run, in the context of the region, this is one of the options for a long-term settlement of existing national problems.

The Importance of Provisional and Interim Measures

If the EU includes the whole mass of the region peoples implicitly overwhelmed with smoldering conflicts, that would entail its disorganization and weakening in its capability to resist external manipulation. On the contrary, if the EU doesn’t include the peoples, that would issue the verdict for the entire European project. In principle, the pan-European establishment understands this, although such a prospect really scares it.

However, in the context of Balkans, the EU rarely spoke with one voice. In other words, Member States that are actively spreading their policy outwards have very different goals in the region. Great Britain tends to support the Albanians at the expense of all other ethno-national formations of the region. France has a different vision: for Paris the most important thing is to protect its political and economic interests in a larger European region. That’s why the country is ready for certain exchanges. The disorder and strife of Balkan society are flowing into the neighboring countries. Thus, it is important for them to ensure its long-term stability and crisis-free development.

Germany takes an intransigent position regarding any territorial exchanges. As a result, it largely dominates the European Union. Berlin insists that it is totally unacceptable to implement any territorial exchanges and reorganize the Balkan political space as a whole. Any attempts will lead to the “Pandora’s box” opening with unpredictable consequences for the territorial organization of not only the region, but also of Europe in general. The whole post-war order across the continent will be threatened as well. This will undermine the legitimacy of all previous decisions. This will provide the grounds for raising the question of demarcations and territorial exchanges, inclusions and compensations in each part of the world. In this case, taking into account the artificial character of those processes, similar to the Balkans issue, there will be hell to pay.

In this respect, one cannot but agree with Berlin. Indeed, the “Pandora’s Box” should never be opened. The point here is that such an effect could be entailed by any bilateral private agreement on exchanges and revisions getting beyond multilateral inclusive format and “package solution,” especially under pressure from Washington, following nothing but its own geopolitical ambitions. It will be extremely difficult to control further destructive processes awakened by this approach in the future. At least, if it’s even possible.

However, including them in any of the above-mentioned multilateral formats changes the picture considerably. Firstly, it allows you to supply any action with organized and controlled character. Secondly, it provides an opportunity to combine all political decisions, which are separately unacceptable, belonging to different periods, into a single “package,” coordinated and approved by all. Thirdly, it opens the prospects of providing solid international guarantees for the “package settlement” on the spot. Fourthly, it establishes the rules of the game clear and acceptable to all players.

Thus, if the main intra-regional political actors as well as the external ones show goodwill and make bold enough to “split the Balkan knot” in the interests of the Balkan peoples, rather than in favor of some abstractions and geopolitical ambitions, each of them will be able to make a proportionate contribution to the common “Balkans issue” settlement. Such a contribution could consist in:

(1) rejecting any informational, military, political and economic provocations;

(2) supporting general legal regime of free economic activity for the whole region without any signs of discrimination;

(3) having a positive political influence on all those political forces, with which privileged relations are maintained;

(4) providing all necessary comprehensive international safeguards;

(5) financing the accelerated development of the region and the implementation of diverse economic projects that are useful and beneficial to its people.

* Dejan Novakovic, President of the Adriatic Council (Belgrade, Serbia)

First published in our partner RIAC

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The Reform of Europe: A Political Guide to the Future- Book Review

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The European Union is in the midst of a sea change.  The UK is headed towards a no-deal Brexit, Italy is being governed by far-right Euro-skeptics, Macron’s neoliberalism has ignited unprecedented protests across France and Angela Merkel has announced that she will step down in 2021.  Michel Aglietta, cofounder of the regulation school of economics, writes about how to turn this grim tide in The Reform of Europe: A Political Guide to the Future.

Aglietta explores the problems that Europe has been facing for decades: low productivity, stagnant wages, unemployment, frequent market crashes, intra-nation inequality, etc.  Much of these issues stem from bank negligence and recklessness.  The author writes, “In the current European situation, repairing the balance sheets of financial intermediaries is the priority if there is to be any hope of reviving credit. It involves the full, complete realization of banking union. The latter is indispensable if monetary policy is not to continue to be trapped by the banks’ inability to do their job.”Banks in Europe are, as we learned during the recession, are over-leveraged, which creates financial vulnerability and stagnant growth for companies and nations alike.

The over-leveraging of lenders creates another deadly problem: lack of liquidity.  Countries and companies alike have found it increasingly difficult to secure credit to grow or recover from the recession.  There’s a dimension of inequality in this credit shortfall; countries like Spain and Greece were only given loan options at exorbitant interest rates.  The ECB refused to help out these southern European nations; thus, they had to resort to devastating austerity measures.  Echoing Keynes, Aglietta writes that, “The success of the [Danish, Canadian & two Swedish balanced budget initiatives] derived from the fact that they were initiated when growth had been restored following a recession, not during the recession. Prior closure of the output gap was a condition of success.”  Thus, he advocates for establishing a lender-of-last-resort for EU nations.

A lack of liquidity also stymies investment; both pubic and private investment expenditures have been stagnant across Europe.  The average European company is falling behind in terms of R&D, automation machinery, exports and innovation.  European tech companies are likewise falling behind in the crucial AI race.  Governments are also failing to adequately invest in infrastructure, job re-training for the hordes of the unemployed, public childcare to encourage female labor participation and countless other issues.  Aglietta thus endorses a pan-European development bank that lends to Small-Medium Enterprises (SMEs) and national governments.

Serious reforms are needed amongst Europe’s major banks.  This will require unprecedented cooperation between EU members… unlikely, given the current political climate.  But as Aglietta wrote in his last book, there is no divorcing finance from politics.  All of the issues plaguing Europe will need to be addressed via unified government action and partnership with businesses, especially small businesses.  Unemployment across Europe has greatly retarded productivity and fanned the flames of xenophobia and fascism.  This problem will only become a bigger threat in the coming decades; the author writes that, “Automation reduces the need for unskilled labor and reinforces the need to invest in skills, to respond to demands for skilled labor. It follows that life-long education must become a fundamental right of citizenship.”  In the short term, Aglietta also vouches for the importance of instituting an EU unemployment insurance program.  Likewise, addressing inequities in female labor participation and wages will strengthen economic output, discretionary spending and household stability.

The book has a whole chapter devoted to an EU iteration of the Green New Deal.  A government investment initiative of clean energy jobs, sustainable infrastructure like wind farms, reversing water/air/soil pollution, retrograding old buildings, etc. will solve the aforementioned problems of unemployment and stagnant productivity.  Such ventures will have to be funded by a fairly valued carbon tax and pan-EU “green” bonds, among other things.  With the Trump Administration’s abdication of leadership on climate change, the EU can potentially challenge China for global dominance in the emerging green economy.

The Reform of Europe is a comprehensive look at the causes and solutions of the EU’s most pressing problems.  American readers will also sympathize with the book’s descriptions of the EU’s post-recession malaise and hear echoes of the progressive-Democrat agenda in things like the Green New Deal, free college and the reining-in of banks that use their creditors’ money-and the whole world economy- as their personal casino.  Aglietta addresses the inequality between Western Europe & the rest of Europe, men and women in the workplace, the educated and non-educated, workers and the shareholders, and citizens vs. polluters.  His solutions are steeped in modern monetary theory, which is contingent upon having a sovereign currency.  The euro is obviously a supra-sovereign currency, so Aglietta writes about the need for it to become a “complete currency” through the complete cooperation of EU members on fiscal and monetary policy.  A fully united EU can jumpstart liquidity, mitigate future market shocks, decrease intra-European inequality, increase civic engagement and even challenge the global supremacy of the dollar.  No one can argue that the EU as currently constituted is sustainable, what with Brexit, the rise of Euro-skeptic fascist movements in major countries like Italy and France, and the collapse of Greece.

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