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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.

Russell Whitehouse is Executive Editor at IntPolicyDigest. He’s also a freelance social media manager/producer, 2016 Iowa Caucus volunteer and a policy essayist.

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Belgrade and Pristina: Will a territorial exchange really happen?

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The European Union is dialing up pressure on Serbia and Kosovo in an effort to convince Belgrade and Pristina to sign an agreement on normalizing bilateral relations. This would allow Brussels to seize the initiative in the Balkans from the United States, which has previously managed to get the two sides clinch a similar deal on trade and other economic issues. Moreover, the EU is even ready to break from its previous policy and give a nod to a territorial exchange between Serbs and Albanians, which was categorically rejected, above all by Germany. However, while the Serbian leadership largely welcomes the idea, the Kosovo Albanians’ radically-minded leaders rule out any territorial concessions to Belgrade, thus deepening the Kosovo impasse.

Albin Kurti, the leader of the radical Vetëvendosje (“Self-Determination”) movement, who has regained the Kosovo premiership, categorically rejected the idea of any territorial exchange with Serbia, proposed by the EU’s High Representative for International Affairs Josep Borrell.

“I do not think that we should give anything away.” … “This is pressure from Serbia. They want us to give in,” Kurti said.

That being said, the former Kosovo president, Hashim Thaci, actively lobbied the idea of ​​a territorial exchange, even more than others. Back in August 2018, he and his Serbian counterpart Aleksandar Vucic reached a preliminary agreement on this when meeting on the sidelines of the European Forum in Alpbach, Austria. Thaci and Vucic voiced their intention to double down on signing a comprehensive deal, and invited the EU to act as its mediator and guarantor.

“We have a small window of opportunity,” Hashim Thaci said at the time. The planned agreement was supposed to be inked in Brussels already in September 2018, with the participation of the EU leadership. However, the whole process immediately hit a snag due to disagreements over border delimitation and opposition protests in both Belgrade and Pristina.

According to the plan, devised by Hashim Thaci, the delimitation issues should be discussed as a “package” and provide for a complex exchange of territories, including both the Serbian-populated North Kosovo communities of Leposavic, Zvecan and Zubin Potok (roughly one-fifth of the territory of Kosovo), and the southern Serbian communities of Buyanovac, Presevo and, preferably, Medvedja, adjacent to Kosovo, populated mainly by ethnic Albanians. The Kosovar leader argued that a territorial exchange whereby regions with a majority Albanian population would end up in Kosovo, and those with a predominantly Serbian population – in Serbia, would help ease tensions between Belgrade and Pristina.

According to the latest census in Serbia, about 90,000 people live on the territory of the three southern Serbian communities: in Presevo, 89 percent are Albanians and 9 percent are Serbs; in Bujanovac, 55 percent are Albanians and 34 percent are Serbs; in Medvedja, 26 percent are Albanians and 67 percent are Serbs. Thus, Albanians already make up the majority of the population of Presevo and Bujanovac. In Medvedja, their share has also been steadily rising.

While President Aleksandar Vucic generally agrees to the partition of Kosovo with the return of control over the province’s northern regions to Belgrade, he is still against the idea of extending the “package” exchange to include the southern Serbian communities of the Presevo Valley.

There is no unity on this issue outside the Balkans too, with Germany and France initially rejecting the idea of territorial exchanges as such, arguing that this could fire up tensions in North Macedonia and Bosnia and Herzegovina.

“The territorial integrity of the Western Balkan states is already a hard fact and cannot be changed,” German Chancellor Angela Merkel said.

Austria has been foursquare behind the partition of Kosovo as a means of normalizing relations between Belgrade and Pristina.

“If Serbia and Kosovo agree on a border correction, the agreement will have our support,” Austrian Chancellor Sebastian Kurz said.

The EU’s Commissioner for Enlargement and Neighborhood Policy Johannes Hahn equally favored the upcoming agreement. He urged his EU colleagues not to obstruct the deal between Pristina and Belgrade, even if it involves changing borders. Such an agreement, if it is reached, will be a one-off affair though and “should not be used as an example for solving other problems,” Hahn said at the end of August 2018.

The US administration backed the upcoming deal, with President Trump’s national security advisor John Bolton going on record saying that “Our policy, the US policy, is that if the two parties can work it out between themselves and reach agreement, we don’t exclude territorial adjustments.”

The agreement on the exchange of territories, drawn up in 2018 never came to fruition though. Responsibility for this failure lies with radical nationalist forces in both Belgrade and Pristina, not interested in any compromise solutions that won’t sit well with their own political intentions. While Serbian President Aleksandar Vucic is still in power and has not changed his position, Vjos Osmani, who replaced Hashim Thaci as President of Kosovo, is less inclined to accept any compromises with Belgrade.

This situation adds to EU and US headaches with Barack Obama’s de facto foreign policy team, now back in power in Washington, being eager to strengthen the position of the United States in the Balkans through more active military and political activity and pressure (not trade and economic scenarios and proposals, as was the case under Donald Trump). The EU and the US now have two options to choose from – either to ramp up pressure on Serbia in order to force it to recognize Kosovo without any territorial exchanges (which is more to the Joe Biden administration’s liking), or to convince the Kosovar leaders to accept territorial compromises (more preferred by the EU).

And here we should not forget about the Bosnian factor, since any changes to the status and borders of Kosovo will inevitably reflect on the domestic  political situation in Bosnia and Herzegovina and, in particular, on the position of the Bosnian Serbs. When briefing reporters a few days ago, the chairman of the Presidium of Bosnia and Herzegovina, Milorad Dodik, said that in any case he would insist on the implementation of the concept of “peaceful divergence,” that is, the disintegration of the country, which, according to him, is already happening. He stated that the integrity of Bosnia and Herzegovina cannot be maintained, and this is something that has increasingly been discussed by the international community.

“We are waiting for the moment when a peaceful gap becomes real,” Milorad Dodik noted, adding that he was not a warmonger and was only offering a way out of the current situation, which he described as unstable.

The EU too appears ready to “reformat” Bosnia and Herzegovina. When, during a visit to Sarajevo in early March of this year, Slovenian President Borut Pahor informally asked members of that country’s collective leadership whether a “peaceful divergence” was a possibility. Bosnian Muslim Shefik Jaferovic and Croat Zeljko Komšić responded that this was impossible, while Milorad Dodik, for his part, said that it was a likely scenario.

The current situation of “unstable equilibrium” around Kosovo and Bosnia and Herzegovina is serious enough to prod all the disputing parties to more actively seek Russia’s mediation. Serbia and Republika Srpska maintain partner relations with Moscow. Meanwhile, the disagreements between the EU and the United States could make the other participants in the discussions more accommodating, including the Kosovar Albanians, who are interested in normalizing relations with Belgrade and implementing large-scale regional projects.

From our partner International Affairs

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A leaderless ship: The Bulgaria’s political crisis and the storm to come

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Internal and international tensions

Politics tends to develop in a complex conundrum in all Balkan countries. Thus, never can observers take their eyes off the ball, investors feel completely safe or international partners express enduring satisfaction. In effect, this is the case also for bits of the region that have joined the European Union in the last decade. Recently, Bulgaria has been the most interesting hearth of, popular outrage, institutional instability and international tensions amongst the latter countries.

Actually, the atmosphere began simmering back in Summer 2020, when thousands of people took to the streets for several weeks. Arguably, the combination of the umpteenth high-echelon corruption scandal involving andthe pandemic-induced recession was only the most immediate cause. Swiftly, dissatisfaction led to vigorous calls for the Prime Minister’s and the Attorney General’s resignation and early election. Even the President of the Republic, Rumen Radev, broke with his supposed non-partisanship and joined the protestors gathering vast support. However, the winter suppressed street protests and Boyko Borisov, the Prime Minister, exploited the pandemic to justify his indifference.

In the meantime, the cabinet embroiled Bulgaria in a dispute which the country had refrained from ever since 1991. The so-called ‘Macedonian question’predates the Former Yugoslav Republic of Macedonia’s independence, but only then turned into a crisis. Indeed, the hardest-fought issue was that surrounding the use of the name ‘Macedonia’, which Greece opposed until the Prespa Agreement. But the newly named Republic of North Macedonia has failed to acknowledge the deep historical and cultural connection with Bulgaria. Eventually, the former’s lack of real cooperation led Sofia to veto the opening of negotiations on EU membership. Thence, scholars have criticised the country’s government while foreign politicians tried to persuade Borisov to lift his veto.

Against the background of such a delicate, multifaceted domestic and international circumstances Bulgaria celebrated regular election on April 4. The country needed everything but being left leaderless, but this is exactly what happened.

Election results: Who to form a cabinet?

The most recent elections speak volume about the difficulty in understanding Bulgarian politics and understanding what the popular sentiment is. For a start, GERB, Borisov’s party, lost about 300,000 votes falling from 33.65%in 2017, to 26.18% this year. Moreover, the nationalist collation United Patriots, GERB’s reliable allies, split up and failed to clear the 4% threshold. Thus, with his 75 MPs in the 240-seat Parliament Borisov had no more a majority and desperately needed a partner.

At the same time, the elections produced an unusually hostile environment for GERB. In fact, a number of new leaders and formations emerged — all of which declared GERB a “most toxic party”. Still, opposing Borisov’s “model”, as they use to say, was not enough to form a government. Neither the protest party There is such a people (ITN) nor the establishment Bulgarian Socialist Party (BSP) even tried. Therefore, the two smaller protest parties – Democratic Bulgaria (DB) and Stand Up! Bastards Out (ISMV) – and the Muslim Movement for Rights and Freedoms (DPS) had to accept new elections in July.

In effect, once the elections results became clear, no one nurtured many hopes for a stable government. The BSP had offered it external, conditional support to an ITN cabinet as the DPS and even GERB did. Perhaps, members of DB and ISMV could have joined the project to ensure wider representation. But all attempts failed in front of ITN’s leader, the showman-turned-politician SlaviTrifonov, display of “political fearfulness”. The ultimate result of these developments was the shortest parliamentin Bulgaria’s two-century history.

What the parliament produced

Without a fully-functioning political government and with a lame-duck Parliament, Bulgaria is traversing a difficult period. The legislature has yet to approve the Recovery and sustainability plan towards which the EU has granted €6bln ($7.3bln). Without these funds, it will be harder for the country’s economy to rebound after the last recession. At the same time, no one is in charge of managing the ongoing feud with the Republic of North Macedonia. Hence, Sofia can neither substantiate its claims and pretences vis-à-vis Skopje nor backtrack and let membership negotiations start. Finally, in the last weeks tensions between Bulgaria and Russia have risen with mutual expulsion of several high-ranking diplomats. In fact, Czech authorities have found out about a “Bulgarian connection” in the incidents allegedly blamed on Russian security services.

On the offense: ITN, DB and ISMV against GERB

Yet, the parliament has found not time to address any of these really pressing issues. As it often happens after the elections, foreign policy has disappearedfrom the order of the day. There was no discussion of either the bilateral relations with Russia nor the North Macedonian issue.

Representative from ITN, DB and ISMV wrapped up the Recovery plan into their wider attempt to publicly discredit GERB. Thus, they refused to let the competent executive official introducing the bill and pretended Borisov himself did it.

Meanwhile, the three parties and the BSP also forced a vote on the cabinet’s resignation. Hence, the government is officially in charge only of managing current affairs: it cannot update the budget or adopt new economic measures. The opposition also blocked the automatic renewal of key concession for Sofia’s airport and some highways to Borisov’s closest allies.

So-called ‘Protest parties’ also formed a parliamentary commission to investigate Borisov governments’ misdeed. However, the legislature will soon dissolve, so nothing will come out of it besides some gossipy kompromat. The only real change is a new electoral law,remedying to some of the previous legal framework’s most evident fallacies. The hope is that it will curb the purchase of votes and other instances of fraud.

Wait-and-see: Borisov’s unkind defence

Borisov’s loyalists in the government, in the Parliament and, more importantly, in the media are repelling this frontal assault vehemently.

Figure 1 Acting Prime Minister Boyko Borissov called the Parliament “a show” in a video on his Facebook page.

Acting foreign minister Ekaterina Zakharieva has spoken out against the supposed attempt to make 850,000 GERB voters ‘disappear’. The chair of GERB’s parliamentary group, Desislava Atanasova, accused other parties of having “failed to fulfil society’s interests”. Borisov himself went out for the biggest prey: President Radev.On Facebook he declared

I hope that Radev is not proud [of the result of last year’s protests …]: This parliamentary show costs 19 million [leva, €9.5mln] a day. It is better that they closed it because we would have gone bankrupt.

The opposition motto offers no way forward behind the idea that “What GERB did must be cancelled”. Yet, GERB is not less destructive in its agenda. Currently, Borisov’s clique is challenging both the moratorium of concessionsand the electoral reformin front of the constitutional court. According to many experts, the justices could strike down or rescale at least one of these two measures. Hence, all hopes for a real democratic change will likely evaporate as long as GERB holds the levers of power.

Forecast: A leaderless ship in a stormy sea

Some have been talking about the rebirth of parliamentarism. But partisanship, anger and personal hatred currently dominate Bulgaria’s politics. Thus, a disenchanted observer could only see the dismaying polarisationand personalisation of the mainstream political discourse. At this time, Bulgaria is like a ship whose crew has mutinied, but whose captain refuses to jump off. Fortunately, the peaks of the economic and sanitary crisis seem over — for now. But the international setting conspires against the vessel. A storm is mounting from the East and the West. Winds of reprisal spire from Russia, whereas the EU is increasingly discontent with Bulgaria’s management of the North Macedonian issue. Assuming that the next elections will produce a working government, either the mutineers or the old captain will be just in time to manage the gale. But should this not happen, the country may soon regret the current lull.

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Geopolitics of Europe and the Third Wave

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With hospitals filling up across the continent, new variants of the virus proliferating and vaccine shortages biting back, Europe can be seen to be under the third wave of the COVID crisis. This wave has been a confused sea across Europe in which some national epidemics are worsening, some are reaching their peak and some are declining. Although lockdowns have eased as vaccine drives make headway, the end of state emergency does not undermine the inevitable long-term consequences of the crisis. COVID has brought to the forefront new geopolitical dynamics and created risks for the foreign policy of the European Union on several fronts. Beyond the epidemiological challenge of the impending health calamity, economic, political and geopolitical challenges are also plenty.

The crisis has held up a mirror to the Western countries as their effectiveness in managing the pandemic has been distorted and has brought about de-Westernisation of the world. As globalisation is under strain, the crisis is bound to redraw the borders between the state and the markets in democracies such as the Member States of the EU. Such an environment is likely to emphasise on national initiatives to the detriment of international cooperation. In a post-COVID world, the EU may have to deal with its geopolitical problems with less external credibility as well as internal solidarity among its member states.  

The potential geopolitical consequences of the virus can be identified by extrapolating those trends that were taking place before the onset of the virus.  Amidst evolving global scenarios, there has been a constant push from the EU to establish itself as a relevant geopolitical actor to realise its global power aspirations. In this context, it becomes important to note the two areas of concern raised by the crisis consist of questions on the internal cohesion of the EU and Europe’s ability to adapt to the increasing rivalry and competition among other global powers. 

The EU as a player derives its identity from its supranationalism. However, with COVID wreaking havoc on the already unequal economy of the Northern and Southern Europe, the downslides of globalisation are being highlighted. This is likely to further embolden nationalist narratives, rather than European solutions. This will lead to the fragmentation of the region into its component member-states part, threatening the very identity if the Union. This has been a challenge to the EU as the Union recognizes solidarity as a fundamental principle as per Article 2 of the Treaty of the European Union. With the EU is facing the increasingly centrifugal ‘member states first’ approach put forward by the European capitals, the European integration project is under threat.

Further, with the pre-existing tensions between US and China, the European Union has been facing heat from both the sides of the Pacific. While the EU has put forward its own Indo-Pacific Strategy in order to constructively engage with the region, it continues to be challenged by America’s confrontational foreign policies and also being apprehensive of China’s refusal to open up their markets at a time of dwindling global economies, China’s assault on Hong Kong’s independence as well as China’s growing support towards the populist parties of Europe. The EU has come to perceive China as a systemic rival promoting alternative models of governance with this perception largely being shaped by China’s revisionist challenge and its alarming nationalist narrative. 

It is important to understand that coronavirus is not here to kill geopolitics. However, the European Union will have to strengthen their efforts towards ensuring that the pandemic does not kill the EU as a geopolitical force. The European Commission must step up its efforts to broker the Multilateral Financial Framework (MFF) among member states which was long pending even before the pandemic struck the continent. It would enable the Union to act collectively in funding recovery efforts in a post-COVID reconstruction of the economies. Further, the EU should focus on shortening their supply chains pursuing a policy of strategic autonomy such that EU’s external dependencies are diversified. The need of the hour is to rebuild an economically sound healthcare Europe while at the same time working towards a more geopolitical Europe. This will require EU to continue investment as a full-spectrum power in military as well as other security capabilities along with assistance and aid to the neighboring countries to rebuild their resilience in a geopolitically volatile environment. 

The EU needs to defend and promote the European model which is struggling to stand amidst the global battle of narratives along with maintaining its strategic autonomy in health, economic and other sectors. At the same time, the Union needs to bolster existing and forge new alliances in order to fill the gap on multilateralism. It needs to locate a strategic edge to resist the external pressures and protect its presence in the global scene and continue being relevant in the changing global order with its extraordinary transcontinental presence of soft power. 

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