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New anti-Russian sanctions to hit European energy sector

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The US plans to tighten sanctions against Russia, scheduled for November, is causing growing concern from the international business community, in the first place, from Europeans and those economic areas in which key players demonstrate maximum interdependence, including in the energy sector.

Among those who lashed out at the US intention to impose restrictions on Russian companies Rosneft, Gazprom and LUKOIL similarly to sanctions slapped on US Rusal in April this year, is the head of British Petroleum Bob Dudley. BP owns 19.75% of Rosneft shares and is Rosneft’s major private shareholder.

According to Bob Dudley, in the event of such a tightening of US sanctions, the European energy system will crumble. “I do not think this will happen. If you impose sanctions like Rusal on Rosneft, Gazprom or LUKOIL, you will cut off European energy systems, which is a little bit too much”, he said as he spoke at an Oil & Money 2018 Conference in London.

Bob Dudley is fully aware of the contemporary realities and the potential of Russian companies, particularly since BP and Rosneft have been developing a variety of joint projects. In 2015 BP acquired 20% in the Srednebotuobinsky field in Eastern Siberia and has been prospecting for oil within the framework of a joint venture with Rosneft – “Ermak Neftegaz”.

Reports say the share in the Russian company accounts for a third of the total production of British Petroleum. “In general, we consider Rosneft a fairly good partner,” Bob Dudley said in an interview with The Bloomberg, an American business news agency.

At present, the US Congress is considering two packages of anti-Russian sanctions. In the case of “spotting Russia’s attempts to influence the course of elections in the United States”, the White House is to block the resources of major Russian banks, including Sberbank, VTB and Vnesheconombank, and energy companies. Among the latter are  “Gazprom”, “Rosneft” and “LUKOIL”.

The forecast by the BP chief that the European energy sector will face severe crisis should the US Congress launch new sanctions echoes the moods that are gaining strength in Europe. A statement to this effect came from the Eastern Committee of the German Economy (Ost-Ausschuss der Deutschen Wirtschaft e. V.) which represents the interests of about 350 German companies and associations operating in Russia and other former Soviet republics, as well as countries of South Eastern Europe. The Committee’s Managing Director Michael Harms said that business in the European Union should not suffer because of cooperation with Russia. According to reports released in Germany, Western sanctions and Russian counter-sanctions have “negatively affected” more than 70% of German companies since March 2018. A study conducted by the above organization reveals that 94% of these companies would prefer the existing sanction regime against Russia eased. The East Committee of the German economy has expressed “tremendous concern” over the possibility of the US imposing new sanctions against Russia and against European companies running  joint projects with Moscow, including those involved in the construction of the Nord Stream 2 gas pipeline.

“We believe that any attempts to see implementation of sanctions in an extraterritorial format are unacceptable and at odds with international law,” Michael Harms said. He deems as inadmissible the imposition of sanctions on European business for cooperating with Russia.

This position is shared by top management of the French energy giant Total, which has been pursuing a number of joint projects with Russia which are vital for ensuring Europe’s energy security, including in the production of liquefied natural gas (LNG). In an interview with the French edition of Capital, Total CEO Patrick Pouyanne questioned the very effectiveness of anti-Russian sanctions – in other words, he doubted the key factor that caused their coming into effect: “I believe that the sanctions are ineffective. What they lead to is the fact that leaders consolidate forces around themselves without changing their policies.”

“Business communities in most European countries – the Czech Republic, France, Germany, Spain – believe that sanctions should be lifted at an early date. Some experts think that this should happen gradually but business thinks differently,” – says Ernest Ferlenghi, president of Confindustria Russia, an association of Italian business in Russia, who is a staunch opponent to sanctions. “Every lost day provides an opportunity for our competitors, especially in Asia. They have vast opportunities, particularly the Chinese, for investing money in various projects. They become more competitive due to a strong financial resource,” – emphasizes the Italian businessman.

Significantly, the most critical position on the further tightening of sanction against Russia has come from countries and companies which guarantee stability on the European energy market, in particular, those representing Germany and Austria. The Vienna-based newspaper Der Standard cites in this connection the successful activities of the Austrian energy concern OMV: “OMV relies on Russia, its CEO Seele maintains good relations with Russia. The head of the state-subsidized concern has managed to secure what he had already succeeded in achieving as head of BASF subsidiary Wintershall – participation in the development of a large gas field in Siberia, Urengoisky.” “As for the second major project – the construction of the Nord Stream 2 pipeline from Germany to Russia through the Baltic Sea – Seele enjoys political support”, – the newspaper says.

By introducing sanctions against top Russian energy companies that closely cooperate with European business the Donald Trump administration is in fact trying to make use of national legislation to secure the US financial and economic interests in Europe. According to reports, one of the reasons for tightening sanctions is the currently observed positive trends in the implementation of Russian projects in areas where the US is particularly vulnerable  – the export of pipeline gas and the production of LNG.

As for Russian gas supplies to Europe – which Washington sees as a direct competition considering its own liquefied natural gas supplies – this year PJSC Gazprom has the potential, for the first time after 2011, to reach a production level of over 500 billion cubic meters of gas annually. At the same time, annual exports to foreign countries can hit a record high of over 200 billion cubic meters.

Meanwhile, Russia’s PJSC NOVATEK, which mainly deals with LNG production, has announced the discovery of a gas condensate field with reserves of at least 320 billion cubic meters in the Arctic, on the North Obsk license area in the waters of the Gulf of Ob. This field can become a resource base for NOVATEK’s third LNG producing facility, the Arctic LNG-3. “The discovery of a new field is an important starting point for one of our future Arctic LNG projects. The North-Ob field is unique in terms of its reserves, boasts an advantageous geographical location, and has a huge resource base. On top of that, the experience we have gained suggests that we have every potential for the successful implementation of the new LNG project,” – said Leonid Mikhelson, Chairman of the Board of PJSC NOVATEK.

By 2030 the company expects to bring LNG production to 57 million tons per year, and provided extra resources have been tapped – up to 70 million tons. This will enable Russia to successfully compete with the top LNG producer, Qatar, thereby leaving the United States far behind.

Success of Russian energy projects and expansion of Russia’s ties with European partners in energy and other major sectors of the economy present, in the eyes of the administration of US President Donald Trump and the Congressmen, a key threat to American business interests. This is what underlies Washington’s “sanctions” policy and European leaders have increasingly been making a point of it lately.

First published in our partner International Affairs

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Why Tony Blair is so angry?

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The former British Prime Minister doesn’t have a good time! On the one hand, Tony Blair is witnessing the continuation of the Brexit process, and on the other hand, He’s in no way happy with what has happened inside the Labor Party! Tony Blair is one of the main opponents of the British withdrawal from the European Union.

He has repeatedly stated that another referendum could be held, and, if the British citizens vote against the Brexit, the earlier results of the 2016 referendum can be ignored. He’s gone a step further, and mentioned that the Brexit can never happen, even despite the public’s vote for leaving the EU.

Recently, British Prime Minister, Theresa May, expressed her satisfaction with the positive vote of the House of Commons to her plan for leaving the block. These remarks led to Tony Blair and his entourage taking positions against her. The UK former Prime Minister intended to use the Brexit to return to power in London and the Labor Party. In recent years, he has become the main messenger of the falsification of the Brexit.

However, the London-Brussels agreement on British exit from the EU can once again defeat Blair to in the country’s political circles. The truth is that London’s soft or hard exit from the EU is of no importance to Blair, but he’s after the renewal of 2018’s referendum. For the British prime minister, it does not matter that his country will leave Europe in the form of a “joint agreement” or “disagreement”.

UK’s former foreign secretary, Boris Johnson and some other senior members of the conservative party, however, believe that the House of Commons shouldn’t agree with London’s soft withdrawals from the European Union. They believe that the agreement reached between Theresa May and the EU authorities over the Brexit will be heavily imbalanced and will lead to the economic domination of the United Europe on England over the next decade.

On the contrary, EU leaders, including Chancellor Angela Merkel, have said they’re not willing to offer British officials more advantages in their negotiations. They have emphasized that there would be no more talks on Brexit.

Furthermore, the equation is much more complicated inside the Labor Party! Jeremy Corbyn, Leader of the Labor Party and Leader of the Opposition, has emphasized that by holding early elections and changing the government in London, it is possible to re-start the negotiations on Brexit with Brussels.

Beyond the debates that have raised among the conservatives and the Labor Party, Tony Blair is thinking about his own personal and political goals in the Labor Party and the Britain and international equations. Blair believes that if he can provide the ground for another referendum (and to prevent the realization of the Brexit), then his position will be restored among European politicians. It’s obvious that Tony Blair is very dissatisfied with the current agreements reached between the British and EU authorities.

Jeremy Corbyn is trying to make an investigation into Tony Blair for alleged war crimes during the Iraq War, and this issue is seriously threatening Blair’s political future. When Corbin was elected as the leader of the Labor Party, Blair could not hide his deep discontent in this regard. He has said Labor Party has undergone a “profound change” since Jeremy Corbyn became leader and he is not sure it will be possible for “moderates” to regain control of the party. “It is a different type of Labour party. Can it be taken back? I don’t know,” Blair said before.

It should be noted that Jeremy Corbyn had previously called for the trial of George W. Bush and Tony Blair for committing war crimes during the invasion to Iraq. The main question is, what would be Tony Blair’s next step in confronting his failures in the UK’s political scene? Is he willing to use the Brexit as a means to revitalize his already-lost position? This question will be soon answered, but probably the stream of events won’t be to Blair’s benefit in the future.

First published in our partner MNA

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The Rise of Far Right Populism in Europe Ahead of EU Elections

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Authors: Punsara Amarasinghe and Eshan Jayawardane*

Populism in Europe as a civilizational legacy has a deeply rooted history which dates back to Greco Roman antiquity and as it has been recorded by classical historians like Livy, the overarching political structure of Roman republic nailed by populism that arose as a result of the loopholes of the system. The role of Publius Cloudius against Roman nobility during the late republic was a reflection of how populist discourse functioned in classical world. Nevertheless the principles emerged after the post second world war Europe such as social welfare system, social democracy and cultural integration reduced the gravity of populist discourse as a powerful political tool. Moreover the mass migration of political refugees from Eastern Europe to Western Europe during cold war was a phenomenal factor that encouraged west and its citizens to accept refugees or asylum seekers more dearly and it was rather a display of European values. But  as all good things come to an end this wave of immigrations from Non-European countries to Western Europe gradually conceived the seeds of socio economic and political turmoil in the continent that finally paved the path for a greater revival of populist politics in Europe.  Especially the political trajectory created with the Syrian refugee crisis since 2015 in Europe has compelled the people to look for Right wing politics as an alternative. Recent discussion held in Warsaw, Poland between Italian deputy prime minister Matteo Salvini and Jaroslaw Kaczynsi shows the spark of far right populist coalition in European Union against its center right more socio democratic leadership of Germany and France. The significance of this meeting lies in the fact that how EU politics has been changed in the recent years before its troubled policies over the illegal immigration and refugee crisis and this Polish Italian axis seems to create a decisive impacts upon the upcoming elections to EU parliament.

As a matter of fact in the past, it never really mattered much if the Euro election was carried by the left or the right: the result was the same anyway. The parliament has always been keeper of the federalist flame, but the unorthodox political upheavals Europe envisaged for past two years have such as BREXIT in 2016 and Trump’s victory in US presidential elections have upset the center right liberal orthodoxy in EU. Moreover it is a fact not be ignored that how national politics in European countries have taken a populist bend as a consoling since most of the common people in Europe are gutted by the refugee crisis and economic deprivation.  Especially being the undisputed forerunner in EU Germany has faced severe social issues since 2015 as Angela Merkel  decided to not to close Germany’s borders resulting in the arrival of more than one million of people.  Last August in Italy the Migrants mainly coming from former Italian colony Eretria had been stranded at a port in Sicily before Italian deputy premier Salvini finally allowed them to disembarked after Ireland and Catholic Church in Italy agreed to take most of them in. Apart from Italy most of European states have been exposed to the wave of populism mixed up with far right ideological elements. For an example elections held in Sweden in 2018 September dragged the country into a political limbo as the results of the elections did not leave either main parliamentary block with a majority and its far right anti-immigrant party Sweden democrats won 17.6% of the votes. Being a country that has resisted populist politics and far right wing ideology since the end of its notorious dictator Farco’s era, Spain too has witnessed the new wave of populism in its national level politics. The dazzling impact created by Santiago Abascal’s Vox party at the election held in Andalusia by gaining 10.97 % of the votes and 12 out of 109 cannot be ignored despite the fact that his party is still in its infancy stage.

Populist discourse spreading across Europe has not been emerged out of the blue as it is imbued with how common people in Europe perceive the socio economic and political circumstances currently. It was a misconception that many analysts believed that rise populism sprang from the financial collapse and unemployment, because it is evident that the rise of populism has not been solely attributed to the economic crisis. If economic growth had been decisive in Poland, which enjoyed the faster growth rate in Europe between 1989 and 2015, the populist Law and Justice Party would never have become the country’s dominant political force. The bitter truth portraying from the rise populism is non-other than Europe antipathy over mass immigration and their concern for preserving common European values. This aptly shows from how Hungarians have rallied around Mr. Victor Orban as he triumphantly calls himself the defender of Christian Europe. On the other hand such xenophobic notions like cultural preservation, growth of Islam have been clearly captured by populist parties as drawbacks created by the apathy of European Union and its center right liberal democracy. Perhaps the influence coming from Putin’s Russia can be taken as one pivotal factor that has intensified the populist discourse, because president Putin’s knack on ethno nationalism and religious traditionalism seem to have allured the populist movements in Europe.

It is a fact beyond dispute that the rises of populist political parties under its far right ideologies in the backdrop of European Union parliamentary elections have destabilized the continuation of European integration under liberal center right outlook. The populist plan to expand their numbers in EU parliament in 2019 May elections have begun to upset the ostensible stability of EU and its French German leadership or perhaps this year Europe will face the arch encounter between newly emerged far right populism and the social democracy that has been the ruling slogan in Europe since 1968 in an open space.

*Eshan Jayawardne holds BA in Sociology from Delhi University and MA in International Relations from Jawaharlal Nehru University in New Delhi. He is currently serving as a guest lecturer at Sri Lanka Open University. He can be reached at eshan.jayawardane[at]gmail.com

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Europe-US: Results of 2018 and prospects for 2019

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Speaking at a December 4 news conference in Brussels following a two-day meeting of NATO foreign ministers, US Secretary of State Michael Pompeo said that the rule-based multilateral world order that for many decades has served the collective interests of the Western nations is no longer working. He backed up this claim by citing the weakness and incapacity of the United Nations, the Organization of American States, the African Union and some other international organizations.

Much to the Europeans’ surprise, while holding up the NATO alliance as an “indispensable” institution, Pompeo also put the European Union on the list of outdated and unviable ones. These “shocking” comments wrapped up the past 12-month period, probably the most tense in trans-Atlantic relations since 1945.

By the start of 2018, relations between the US and the EU were characterized by a great deal of uncertainty. On the one hand, in the US National Security Doctrine published in mid-December 2017, Trump finally reiterated Washington’s commitment to Article 5 of the North Atlantic (Washington) Treaty, which is something Europeans had been waiting for. He also promised to support America’s European allies against the imaginary “threat” from Russia and China, which he described as “revisionist countries” out to change the existing world order.

On the other hand,the US National Security Council’s view of the countries’ competition in the world conforms to Hobbes’ “all against all” principle. In other words, it rejects the idea of multilateralism, which is a fundamental principle the countries of “old” Europe stick to. Moreover, the entire world order that the US helped establish after 1945, is described as the source of a flurry of serious challenges to America. The Strategy section, devoted to the “world of universal competition,” makes no mention whatsoever of America’s “allies,” while the repeated mention of the obligatory “mutual benefit” of allied relations looks like an undisguised desire to “monetize” friendship.

Washington’s practical steps made in 2017 left Europeans wondering about the price (in the financial sense of the word) Trump would expect them to pay for honoring America’s trans-Atlantic obligations. As a result, Europe was torn between the desire by a sizeable part of its establishment to retain the US leadership , even at the cost of far-going concessions, and a growing disillusionment with the policy of its overseas partner.

The past year confirmed the Europeans’ worst fears: the world, according to Donald Trump, is a world without global rules, a world where the strongest always comes out on top. The White House acted as if it viewed the European Union not so much an ally, as a competitor to fight with. In the spring, Trump suggested to the French President Emmanuel Macron that he pull France out of the European Union in return for a lucrative bilateral trade deal with the US.

Trump supported the UK’s exit from the EU, and even threatened the British Prime Minister Theresa May with economic “measures” in the event of a “softer” Brexit. On June 1, Trump imposed duties on steel and aluminum imports from Europe and threatened to slap new ones – this time on imported European autos.

During the G7 summit in Canada in June, President Trump tried to drive a wedge between the Europeans. Finally, during the NATO summit in July, Trump made it clear that if Europeans refused to “cooperate,” Washington could roll back its military support and even withdraw the US military contingent from Germany. Washington has also made it clear that he considers any further EU foot-dragging on defense spending hikes as a deliberate policy by Europeans, who view the United States as an unfailing guarantor of their security.

During the first half of 2018, the Europeans openly pushed back against Trump’s insistence that his G7 or NATO partners accept the dramatic change in Washington’s approach to these pillars of the Western world, their goals and objectives.

The emergence of Donald Trump has exposed the “royal nudity” of the European Union, which has not yet outlined a common foreign policy on major tracks, or come up with anything in terms of strengthening its power in order to be able to stand up to Washington’s demands.

On the other hand, the heavy-handed and self-serving US policy is too inconsistent as it tries to win over only the partners it can rely on in its fight against Chinese and Russian “revisionism.”

And still, watching the growing signs of US hostility, Europeans start asking themselves a virtually existential question, and that is where the current US Administration is going? Is this the beginning of a long-term trend, a fundamental change in US strategy, or a tactical zigzag meant to achieve some short-term goals? If it is the latter, just like it happened before, then will it be enough to just “wait it out”? If it is the former, will the EU opt for strategic autonomy as part of an increasingly amorphous, but civilizationally homogeneous West, or will it have to solve the colossal task  of creating a full-fledged European “power center” that would interact with the US, mainly, if not exclusively, on the principles of “Realpolitik”?

At the same time, a “wait-and-see” tactic could backfire against Europeans. On the other hand, the “all-strops-out” trade war between the US and China, which broke out last year, is forcing the EU to perform a balancing act, maneuvering its way between the world’s two largest economies. This necessitates an independent geo-economic policy in the face of a looming global economic recession. The long-term challenge to Europe is to build a new, previously unknown, system of international architecture: “economic bipolarity between the United States and China and strategic bipolarity between the United States and Russia.”

Experts believe that if Europeans want to push back against Washington’s plans and avoid the EU’s fragmentation, they should start thinking about making Europe stronger, and do it now.

By mid-2018, more and more European politicians had realized that, in the wake of the Cold War, Washington’s policy in Europe was aimed at undermining Europe’s global competitiveness. The question is, however, to what extent the American establishment as a whole shares Trump’s stated goal of maintaining or increasing America’s dominance, even at the cost of economically destroying the “allies,” who are now being perceived by Washington as competitors.

Trump’s initiatives are clearly aimed against the very idea of European unity, which fuels European suspicions about his desire to implement the classic “divide and rule policy” in Europe.

Having all these factors in mind, the EU’s overarching task was to work out measures to resist Trump’s four-pronged “geopolitical attack” in trade, defense, on Iran and migration policy. On June 6, the European Commission approved €2.8 billion worth of import duties on US-made goods. Following the July visit to Washington by the European Commission President Jean-Claude Juncker, the Europeans achieved at least a semblance of a “truce” in their trade relations with the US. Surprisingly to many, the reconciliation had a demonstrative, even flashy character. After meeting Juncker, Trump said that the US was putting on hold the planned introduction of new tariffs on imported European goods, and would work to settle existing trade disputes in order to avoid a full-scale trade war.

According to experts, Europeans have no wish at all to share with the US the burden of a new economic slump, which Trump’s “reckless” protectionism may entail. Therefore, the EU could best respond to Trump’s policy by assuming the role of the leader of countries committed to preserving the rules of liberalism in international trade. The EU’s economic potential matches that of the United States and its economy is almost the only area of international relations where the bloc can act on a par with, or even independently, from Washington.

However, even though unable to compete economically with the US on a one-to-one basis, EU members remain divided on many issues. Fully aware of this, Donald Trump uses every opportunity available to try to pit them against one another.

So, capitalizing on Europeans’ discord over migration, Trump has banked on unraveling the traditional European political parties by mixing all the trends. Newly-appointed US ambassadors openly support far-right populist parties in Italy, Germany, Britain, and in Central Europe.

Meanwhile, the traditional European parties are preparing to challenge Eurosceptics in the upcoming elections to the European Parliament, set for May 2019. Internationally, the EU responds by ramping up diplomacy aimed at cobbling together coalitions without the US in a bid to preserve the existing world order. In July 2018, the EU and Japan agreed to set up a free trade zone; Brussels has likewise been intensifying efforts to establish a free trade area also with MERCOSUR, Australia and New Zealand, and is actively engaged in informal efforts aimed at promoting liberal values and institutions.

The EU’s stance concerning the US sanctions on Iran, has been equally firm, prohibiting companies and individuals located on the territory of the EU from following American sanctions against Iran. According to the new EU rules, European firms hurt by US sanctions will be able to demand compensation. Brussels also reiterated its commitment to the 2015 nuclear deal with Iran, and is actively looking for ways to circumvent US financial hegemony and sanctions. The EU is mulling an independent system of financial settlements, the European Monetary Fund – an analogue of the IMF – as well as financial instruments that would be “completely independent” from Washington. However, ensuring even a simple majority of “yes” votes by individual EU members on these issues will not be easy.

The biggest hurdle here is security, because without the United States, NATO as a military organization becomes virtually ineffective  making Europe hostage to America when it comes to security. This effectively weakens the EU’s hand even on the continent, let alone the world. The European NATO members face the hard choice of either playing the role of US-led partners, which may imply their agreement to weaken European unity to benefit Washington’s new foreign policy interests, or stay the course of greater independence, including in matters of collective defense (European army), which, however, is fraught with a great deal of uncertainty.

With the onset of autumn, the issue of “European sovereignty” sprang to the top of the EU leaders’ agenda. At the end of August 2018, the French President Macron and the German Foreign Minister Maas went on record emphasizing the need for Europe to play a new role and “strengthen” its position in the global alignment of forcesemerging in the world. In early November, Macron and the German Chancellor Merkel reiterated their call for a “European army,” “real pan-European armed forces.” Moreover, the US was named among the threats Europe needs to defend against.

During the past year, Europe was making mainly tactical steps aimed at making up for the damage caused by US sanctions. Simultaneously, it was actively looking for a future strategy of trans-Atlantic relations, as well as ways for institutionalizing its independent identity, both in foreign policy and defense.

There is little doubt that all of Europe will not turn its back on America, even though most of the countries of “old” Western Europe have been seeking greater “strategic autonomy” for the EU and a system that could function without relying on the hegemonic might of the United States. By contrast, many Central and East European states are making every effort to strengthen ties, above all military, with Washington, so Europe is still wondering how it can possibly to preserve the “old order.”

The outcome of the November 2018 mid-term elections in the US showed  that American voters were losing faith in Donald Trump’s way of handling the country’s foreign policy and foreign trade. With Democrats regaining control of the lower chamber of Congress – the House of Representatives – Trump may need a positive foreign policy agenda, and what better way to achieve this than to restore constructive relations with traditional allies and negotiate with the Europeans? Including on joint measures to “contain” Russia.

Simultaneously, the notion, whereby the EU project is on the brink of collapse and so the US needs to present NATO as a new unifier of Europe is getting increasingly popular in the United States. This is the idea that was pitched late last year by none other than US Secretary of State Mike Pompeo.

This could pull the rug from under the feet of not only those who seek Europe’s strategic autonomy, but even the advocates of a more centralized EU. Therefore, the question of whether the leading European countries will go beyond pacifying voters with talk about the creation of an “independent center of power” remains open. And further moves by the EU in relations with the United States, at least until the May elections to the European Parliament and the change of leadership of the European Commission, will largely depend on Washington’s policy towards its European allies.

First published in our partner International Affairs

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