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Italy and the Belt & Road Initiative

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There has been a growing scepticism with regard to the Belt and Road Initiative (BRI) project in many quarters, due to the lack of transparency with regards to terms and conditions as well as the economic implications for countries which are part of the project. A report published by the Center for Global Development (CGD) Washington in April 2018 flagged 8 countries (including Pakistan, Maldives, Laos and Djibouti where the level of debts are unsustainable.

Apart from red flag raised by a number of researchers, the removal of Pro-China leadership in countries like Malaysia, Maldives and Sri Lanka has also resulted in the problems of the BRI project, and China’s economic dealings (which are clearly skewed in favour of Beijing) with other countries drawing more attention.

The most vocal critic of China’s economic links has been by Malaysian Prime Minister Mahathir Mohamad. During a visit to China in August 2018, Mahathir not known to mince his words while alluding to China’s trade relations with poorer countries could lead to ‘a new version of colonialism’. Mahathir later on denied that his statement was targeted at China or the BRI. The fact is that the Malaysian Prime Minister did scrap projects estimated at well over 20 Billion USD (which includes a rail project, East Coast Link as well as two gas pipelines).

Top officials in the Trump Administration, including US Vice President Mike Pence, have also been critical of the BRI project for a variety of reasons. The major criticism from US policy makers has been the economic ‘unsustainability’ of the project as well as the point that the project is skewed in favour of China.

Italy to join BRI

As the debate carries on with regard to the BRI,no body can ignore the fact, that Italy (the world’s 8th largest economy) is likely to become the only G7 country to join the BRI.

During Chinese President Xi Jinping’s visit to Italy, later this month (March 22-24) a Memorandum of Understanding MOU, and could be signed. Senior officials in the government have been cautious, and have emphasised on the fact, that the MOU would be ‘non-binding’. Commenting on the status of the MOU, Undersecretary in Italy’s economic development ministry, Michele Geraci stated:

 ‘…it is possible that it will be concluded in time for [Xi’s] visit.”

Geraci a Sinophile, who has spent a fair amount of time in China, is said to be driving the ruling coalition’s policy (The Five Star Movement (M5S) and right leaning Lega joined hands to form a government in June 2018) towards China.

Italian PM, Giueseppe Conte while addressing a seminar, in Genoa, made the point, that while joining BRI would open new opportunities and horizons for Italy, Rome was likely to be cautious, and would not do anything in haste.

Current state of Italy-China relations

If one were to look at the state of China-Italy bilateral relations. China-Italy bilateral trade reached nearly 50 Billion USD in 2017. China is Italy’s largest trading partner in Asia. It would be pertinent to point out that ties between both countries are not restricted to the economic sphere.  There has also been a rise in Chinese tourists visiting Italy (over 1.5 million annually). Even in the sphere of education, linkages between both countries are rising. As of 2017, there were over 6,000 students Italian students in China and nearly 20,000 Chinese students in Italy.

The current government has given immense attention to China, and there have been 3 high level visits ever since the ruling coalition took over the reigns last June (senior officials who visited include – Italy’s Finance Minister Giovanni Tria, Geraci, and Deputy Prime Minister Luigi Di Maio — who also holds the charge of economic development minister). The Italian PM is also likely to attend the second Belt and Road Forum to be held in Beijing in April 2019.

The clear objective of becoming part of BRI, according to senior officials, is to get access for its goods and to also leverage its geo-political location within Europe.  During his visit to China in September 2018, the Italian Deputy PM had spoken in favour of Italy joining the project. The Deputy PM who had gone to attend the 17th Western China International Fair had made the point that Italy was identifying the possible avenues for participation in the project, and that the G7 country could benefit immensely, if it successfully harnessed it’s own economic and geographical strengths.

In  2018,the inaugural meeting of Italy’s China Task Force was held in Rome (this is headed by Michele Geraci). The key objectives of this task force are; to give an impetus to bilateral economic cooperation (to give a boost to Chinese investments in Italy, giving a push to Italian exports to China, cooperation in Research and Development) and also to explore how Italian companies could seek financing under the BRI initiative.  Italy has also been seeking to expand cooperation with China in Africa (the argument is that African growth will help in putting a check on immigration to Italy). Interestingly, former PM Paolo Gentiloni had urged EU and US to invest more in Africa, and to counter China’s growing influence.

Scepticism with regard to Italy-China economic relations

While the government has unequivocally spoken out in favour of this decision. Many argue, that Italy will need to develop it’s own infrastructure – especially the rail system, if it needs to benefit significantly from BRI. Given Italy’s current fiscal situation, too much investment into infrastructure seems highly unlikely. With China having invested in Piraeus (Greece) it is important that the Venice Port becomes more competitive. This will require not just economic investments, but strategic thinking.

There are those who also argue, that the current Italian government has given too much attention to Beijing, at the cost of relations with other countries. The China policy, it is argued will also have an adverse impact on EU’s common China policy

Unlike other Western countries, Italy has not given a very strong reaction on the Huawei controversy

Italian Deputy Prime Minister was quick to state that “We are in no way tilting the geopolitical axis,”

Italian PM also made it clear, that while Italy will join the BRI, it will ensure that this benefits both, and that EU norms and values are not forgotten.

It is argued, that by reaching out to Euro skeptics in EU, Beijing is trying to create divisions within the bloc. Countries like Hungary and Greece, which are being increasingly dependent upon China, have taken a different stance from other EU countries on issues such as The South China Sea and Human Rights violations.

The EU has been critical of the BRI..

It has even come up with its own version of BRI. In September 2018, EU’s strategy for connecting Europe and Asia. Senior EU officials including High Representative/Vice-President Federica Mogherini made it clear, that EU’s strategy was to enhance connect between Europe and Asia, and to ensure it was beneficial for both. The project would also take into account financial and environmental sustainability.

US reaction to Italy joining BRI

US also took note of Italy joining BRI. As expected, the US was critical of Italy’s decision to join the BRI. A White House National Security Council spokesperson, Garrett Marquis in a media interview stated:

“We view BRI as a ‘made by China, for China’ initiative,”

As mentioned earlier, senior members of the Trump Administration too have flagged the shortcomings of the BRI project and how the dependence of certain countries in Asia and Africa is rising.

Conclusion

It is important for countries within the EU as well as other countries sceptical of the BRI to adopt a more pragmatic stance towards Italy’s decision. One must also keep in mind the fact, that while speaking about signing an MOU with China it has left room for manouevre. It is also important for countries vary of increasing Chinese influence to themselves stand up for liberal values, and greater economic integration. One of the reasons for Beijing’s increasing economic clout, is increasing the inward looking economic policies being adopted by a number of countries – not just the US. At the January 2017, World Economic Forum (WEF) Chinese President Xi Jinping had warned against the increasing scepticism with regard to globalisation. Said the Chinese President:

‘Some people blame economic globalization for the chaos in our world. Economic globalization was once viewed as the treasure cave found by Ali Baba in the Arabian nights, but now it has become the Pandora’s Box.’

Very few leaders have spoken up on this issue forcefully enough. Similarly, if the US has flagged problems of the BRI it should be willing to invest in an alternative narrative. So far even if one were to look about the narrative of a ‘Free and Fair’ Indo-Pacific, Washington has not made significant financial commitment (In July 2018, the Trump administration did make a commitment of 113 Million USD for areas like energy, digital economy and infrastructure). While it is believed that the US IDFC (International Development Finance Corporation) created through BUILD (Better Utilisation of Investment leading to development act)  may be able to give the much required boost to some important connectivity projects, but it’s total budget estimated at 60 Billion USD pales in comparison to China’s budget.

The only country which has attempted to put up a cohesive alternative to BRI is Japan’s ‘Partnership for Quality Infrastructure’ (PQI). Japan along with Asian Development Bank will be providing over 100 Billion USD (50 Billion from Japan and 50 Billion from ADB) for infrastructure in Asia. Japan’s economic presence in Africa is also steadily rising, though it is assisting Africa in a number of other areas like health, education through Tokyo International Conference on African Development (TICAD) ( which is co-hosted by the Government of Japan, The World Bank, United Nations Development Programme (UNDP), the African Union Commission and the United Nations).

While it is true, that globalization may not be perfect and some scholars went overboard, but there is also no denying the point that populist policies which have favoured economic isolationism may have helped in achieving political successes, but their limitations are beginning to show in the economic sphere. It is for this reason, that even leaders like Mahathir who are critical of Chinese projects have stated, that if he were to chose between China and an ‘unpredictable US’ he would choose the latter.  Italy on its part must be cautious and should astutely balance its own interests and not allow Beijing to have a free run. Differences with the EU, should not lead to Italy and other countries becoming excessively dependent upon China.

There is no denying the fact, that Italy’s acceptance of the BRI has important implications which go well beyond EU.

Tridivesh Singh Maini is a New Delhi based Policy Analyst associated with The Jindal School of International Affairs, OP Jindal Global University, Sonipat, India

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Iceland’s Historic(al) Elections

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The morning of September, 26 was a good one for Lenya Run Karim of the Pirate Party. Once the preliminary results were announced, things were clear: the 21-year-old law student of the University of Iceland, originating from a Kurdish immigrant family, had become the youngest MP in the country’s history.

In historical significance, however, this event was second to another. Iceland, the world champion in terms of gender equality, became the first country in Europe to have more women MPs than men, 33 versus 30. The news immediately made world headlines: only five countries in the world have achieved such impressive results. Remarkably, all are non-European: Rwanda, Nicaragua and Cuba have a majority of women in parliament, while Mexico and the UAE have an equal number of male and female MPs.

Nine hours later, news agencies around the world had to edit their headlines. The recount in the Northwest constituency affected the outcome across the country to delay the ‘triumph for women’ for another four years.

Small numbers, big changes

The Icelandic electoral system is designed so that 54 out of the 63 seats in the Althingi, the national parliament, are primary or constituency seats, while another nine are equalization seats. Only parties passing the 5 per cent threshold are allowed to distribute equalisation seats that go to the candidates who failed to win constituency mandates and received the most votes in their constituency. However, the number of equalisation mandates in each of the 6 constituencies is legislated. In theory, this could lead to a situation in which the leading party candidate in one constituency may simply lack an equalisation mandate, so the leading candidate of the same party—but in another constituency—receives it.

This is what happened this year. Because of a difference of only ten votes between the Reform Party and the Pirate Party, both vying for the only equalisation mandate in the Northwest, the constituency’s electoral commission announced a recount on its own initiative. There were also questions concerning the counting procedure as such: the ballots were not sealed but simply locked in a Borgarnes hotel room. The updated results hardly affected the distribution of seats between the parties, bringing in five new MPs, none of whom were women, with the 21-year-old Lenya Run Karim replaced by her 52-year-old party colleague.

In the afternoon of September, 27, at the request of the Left-Green Movement, supported by the Independence Party, the Pirates and the Reform Party, the commission in the South announced a recount of their own—the difference between the Left-Greens and the Centrists was only seven votes. There was no ‘domino effect’, as in the case of the Northwest, as the five-hour recount showed the same result. Recounts in other districts are unlikely, nor is it likely that Althingi—vested with the power to declare the elections valid—would invalidate the results in the Northwest. Nevertheless, the ‘replaced’ candidates have already announced their intention to appeal against the results, citing violations of ballot storage procedures. Under the Icelandic law, this is quite enough to invalidate the results and call a re-election in the Northwest, as the Supreme Court of Iceland invalidated the Constitutional Council elections due to a breach of procedure 10 years ago. Be that as it may, the current score remains 33:30, in favor of men.

Progressives’ progress and threshold for socialists

On the whole, there were no surprises: the provisional allocation of mandates resembles, if with minor changes, the opinion polls on the eve of the election.

The ruling three-party coalition has rejuvenated its position, winning 37 out of the 63 Althingi seats. The centrist Progressive Party saw a real electoral triumph, improving its 2017 result by five seats. Prime-minister Katrín Jakobsdóttir’s Left-Green Movement, albeit with a slight loss, won eight seats, surpassing all pre-election expectations. Although the centre-right Independence Party outperformed everyone again to win almost a quarter of all votes, 16 seats are one of the worst results of the Icelandic ‘Grand Old Party’ ever.

The results of the Social-Democrats, almost 10% versus 12.1% in 2017, and of the Pirates, 8.6% versus 9.2%, have deteriorated. Support for the Centre Party of Sigmundur Gunnlaugsson, former prime-minister and victim of the Panama Papers, has halved from 10.9% to 5.4%. The centrists have seen a steady decline in recent years, largely due to a sexist scandal involving party MPs. The populist People’s Party and the pro-European Reform Party have seen gains of 8.8% and 8.3%, as compared to 6.9% and 6.7% in the previous elections.

Of the leading Icelandic parties, only the Socialist Party failed to pass the 5 per cent threshold: despite a rating above 7% in August, the Socialists received only 4.1% of the vote.

Coronavirus, climate & economy

Healthcare and the fight against COVID-19 was, expectedly, on top of the agenda of the elections: 72% of voters ranked it as the defining issue, according to a Fréttablaðið poll. Thanks to swift and stringent measures, the Icelandic government brought the coronavirus under control from day one, and the country has enjoyed one of the lowest infection rates in the world for most of the time. At the same time, the pandemic exposed a number of problems in the national healthcare system: staff shortages, low salaries and long waiting lists for emergency surgery.

Climate change, which Icelanders are already experiencing, was an equally important topic. This summer, the temperature has not dropped below 20°C for 59 days, an anomaly for a North-Atlantic island. However, Icelanders’ concerns never converted into increased support for the four left-leaning parties advocating greater reductions in CO2 emission than the country has committed to under the Paris Agreement: their combined result fell by 0.5%.

The economy and employment were also among the main issues in this election. The pandemic has severely damaged the island nation’s economy, which is heavily tourism-reliant—perhaps, unsurprisingly, many Icelanders are in favor of reviving the tourism sector as well as diversifying the economy further.

The EU membership, by far a ‘traditional’ issue in Icelandic politics, is unlikely to be featured on the agenda of the newly-elected parliament as the combined result of the Eurosceptics, despite a loss of 4%, still exceeds half of the overall votes. The new Althingi will probably face the issue of constitutional reform once again, which is only becoming more topical in the light of the pandemic and the equalization mandates story.

New (old) government?

The parties are to negotiate coalition formation. The most likely scenario now is that the ruling coalition of the Independence Party, the Left-Greens and the Progressives continues. It has been the most ideologically diverse and the first three-party coalition in Iceland’s history to last a full term. A successful fight against the pandemic has only strengthened its positions and helped it secure additional votes. Independence Party leader and finance minister Bjarni Benediktsson has earlier said he would be prepared to keep the ruling coalition if it holds the majority. President Guðni Jóhannesson announced immediately after the elections that he would confirm the mandate of the ruling coalition to form a new government if the three parties could strike a deal.

Other developments are possible but unlikely. Should the Left-Greens decide to leave the coalition, they could be replaced by the Reform Party or the People’s Party, while any coalition without the Independence Party can only be a four-party or larger coalition.

Who will become the new prime-minister still remains to be seen—but if the ruling coalition remains in place, the current prime-minister and leader of the Left-Greens, Katrín Jakobsdóttir, stands a good chance of keeping her post: she is still the most popular politician in Iceland with a 40 per cent approval rate.

The 2021 Althingi election, with one of the lowest turnouts in history at 80.1%, has not produced a clear winner. The election results reflect a Europe-wide trend in which traditional “major” parties are losing support. The electorate is fragmenting and their votes are pulled by smaller new parties. The coronavirus pandemic has only reinforced this trend.

The 2021 campaign did not foreshadow a sensation. Although Iceland has not become the first European country with a women’s majority in parliament, these elections will certainly go down in history as a test of Icelanders’ trust to their own democracy.

From our partner RIAC

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EU-Balkan Summit: No Set Timeframe for Western Balkans Accession

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From left to right: Janez JANŠA (Prime Minister, Slovenia), Charles MICHEL (President of the European Council), Ursula VON DER LEYEN (President of the European Commission) Copyright: European Union

On October 6, Slovenia hosted a summit between the EU and the Western Balkans states. The EU-27 met with their counterparts (Albania, Bosnia-Herzegovina, Serbia, Montenegro, North Macedonia and Kosovo) in the sumptuous Renaissance setting of Brdo Castle, 30 kilometers north of the capital, Ljubljana. Despite calls from a minority of heads of state and government, there were no sign of a breakthrough on the sensitive issue of enlargement. The accession of these countries to the European Union is still not unanimous among the 27 EU member states.

During her final tour of the Balkans three weeks ago, German Chancellor Angela Merkel stated that the peninsula’s integration was of “geostrategic” importance. On the eve of the summit, Austrian Chancellor Sebastian Kurz backed Slovenia’s goal of integrating this zone’s countries into the EU by 2030.

However, the unanimity required to begin the hard negotiations is still a long way off, even for the most advanced countries in the accession process, Albania and North Macedonia. Bulgaria, which is already a member of the EU, is opposing North Macedonia’s admission due to linguistic and cultural differences. Since Yugoslavia’s demise, Sofia has rejected the concept of Macedonian language, insisting that it is a Bulgarian dialect, and has condemned the artificial construction of a distinct national identity.

Other countries’ reluctance to join quickly is of a different nature. France and the Netherlands believe that previous enlargements (Bulgaria and Romania in 2007) have resulted in changes that must first be digested before the next round of enlargement. The EU-27 also demand that all necessary prior guarantees be provided regarding the independence of the judiciary and the fight against corruption in these countries. Despite the fact that press freedom is a requirement for membership, the NGO Reporters Without Borders (RSF) urged the EU to make “support for investigative and professional journalism” a key issue at the summit.”

While the EU-27 have not met since June, the topic of Western Balkans integration is competing with other top priorities in the run-up to France’s presidency of the EU in the first half of 2022. On the eve of the summit, a working dinner will be held, the President of the European Council, Charles Michel, called for “a strategic discussion on the role of the Union on the international scene” in his letter of invitation to the EU-Balkans Summit, citing “recent developments in Afghanistan,” the announcement of the AUKUS pact between the United States, Australia, and the United Kingdom, which has enraged Paris.

The Western Balkans remain the focal point of an international game of influence in which the Europeans seek to maintain their dominance. As a result, the importance of reaffirming a “European perspective” at the summit was not an overstatement. Faced with the more frequent incursion of China, Russia, and Turkey in that European region, the EU has pledged a 30 billion euro Economic and Investment Plan for 2021-2027, as well as increased cooperation, particularly to deal with the aftermath of the Covid-19 pandemic.

Opening the borders, however, is out of the question. In the absence of progress on this issue, Albania, North Macedonia, and Serbia have decided to establish their own zone of free movement (The Balkans are Open”) beginning January 1, 2023. “We are starting today to do in the region what we will do tomorrow in the EU,” said Albanian Prime Minister Edi Rama when the agreement was signed last July.

This initiative, launched in 2019 under the name “Mini-Schengen” and based on a 1990s idea, does not have the support of the entire peninsular region, which remains deeply divided over this project. While Bosnia and Herzegovina and Montenegro are not refusing to be a part of it and are open to discussions, the Prime Minister of Kosovo, Albin Kurti, who took office in 2020, for his part accuses Serbia of relying on this project to recreate “a fourth Yugoslavia”

Tensions between Balkan countries continue to be an impediment to European integration. The issue of movement between Kosovo and Serbia has been a source of concern since the end of September. Two weeks of escalation followed Kosovo’s decision to prohibit cars with Serbian license plates from entering its territory, in response to Serbia’s long-standing prohibition on allowing vehicles to pass in the opposite direction.

In response to the mobilization of Kosovar police to block the road, Serbs in Kosovo blocked roads to their towns and villages, and Serbia deployed tanks and the air force near the border. On Sunday, October 3, the conflict seemed to be over, and the roads were reopened. However, the tone had been set three days before the EU-Balkans summit.

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German Election: Ramifications for the US Foreign Policy

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Image source: twitter @OlafScholz

In the recent German election, foreign policy was scarcely an issue. But Germany is an important element in the US foreign policy. There is a number of cases where Germany and the US can cooperate, but all of these dynamics are going to change very soon.

The Germans’ strategic culture makes it hard to be aligned perfectly with the US and disagreements can easily damage the relations. After the tension between the two countries over the Iraq war, in 2003, Henry Kissinger said that he could not imagine the relations between Germany and the US could be aggravated so quickly, so easily, which might end up being the “permanent temptation of German politics”. For a long time, the US used to provide security for Germany during the Cold War and beyond, so, several generations are used to take peace for granted. But recently, there is a growing demand on them to carry more burden, not just for their own security, but for international peace and stability. This demand was not well-received in Berlin.

Then, the environment around Germany changed and new threats loomed up in front of them. The great powers’ competition became the main theme in international relations. Still, Germany was not and is not ready for shouldering more responsibility. Politicians know this very well. Ursula von der Leyen, who was German defense minister, asked terms like “nuclear weapons” and “deterrence” be removed from her speeches.

Although on paper, all major parties appreciate the importance of Germany’s relations with the US, the Greens and SPD ask for a reset in the relations. The Greens insist on the European way in transatlantic relations and SPD seeks more multilateralism. Therefore, alignment may be harder to maintain in the future. However, If the tensions between the US and China heat up to melting degrees, then external pressure can overrule the internal pressure and Germany may accede to its transatlantic partners, just like when Helmut Schmid let NATO install medium-range nuclear missiles in Europe after the Soviet Union attacked Afghanistan and the Cold War heated up.

According to the election results, now three coalitions are possible: grand coalition with CDU/CSU and SPD, traffic lights coalition with SPD, FDP, and Greens, Jamaica coalition with CDU/CSU, FDP, and Greens. Jamaica coalition will more likely form the most favorable government for the US because it has both CDU and FDP, and traffic lights will be the least favorite as it has SPD. The grand coalition can maintain the status quo at best, because contrary to the current government, SPD will dominate CDU.

To understand nuances, we need to go over security issues to see how these coalitions will react to them. As far as Russia is concerned, none of them will recognize the annexation of Crimea and they all support related sanctions. However, if tensions heat up, any coalition government with SPD will be less likely assertive. On the other hand, as the Greens stress the importance of European values like democracy and human rights, they tend to be more assertive if the US formulates its foreign policy by these common values and describe US-China rivalry as a clash between democracy and authoritarianism. Moreover, the Greens disapprove of the Nordstream project, of course not for its geopolitics. FDP has also sided against it for a different reason. So, the US must follow closely the negotiations which have already started between anti-Russian smaller parties versus major parties.

For relations with China, pro-business FDP is less assertive. They are seeking for developing EU-China relations and deepening economic ties and civil society relations. While CDU/CSU and Greens see China as a competitor, partner, and systemic rival, SPD and FDP have still hopes that they can bring change through the exchange. Thus, the US might have bigger problems with the traffic lights coalition than the Jamaica coalition in this regard.

As for NATO and its 2 percent of GDP, the division is wider. CDU/CSU and FDP are the only parties who support it. So, in the next government, it might be harder to persuade them to pay more. Finally, for nuclear participation, the situation is the same. CDU/CSU is the only party that argues for it. This makes it an alarming situation because the next government has to decide on replacing Germany’s tornados until 2024, otherwise Germany will drop out of the NATO nuclear participation.

The below table gives a brief review of these three coalitions. 1 indicates the lowest level of favoritism and 3 indicates the highest level of favoritism. As it shows, the most anti-Russia coalition is Jamaica, while the most anti-China coalition is Trafic light. Meanwhile, Grand Coalition is the most pro-NATO coalition. If the US adopts a more normative foreign policy against China and Russia, then the Greens and FDP will be more assertive in their anti-Russian and anti-Chinese policies and Germany will align more firmly with the US if traffic light or Jamaica coalition rise to power.

Issues CoalitionsTrafic LightGrand CoalitionJamaica
Russia213 
China312 
NATO132 

1 indicates the lowest level of favoritism. 3 indicates the highest level of favoritism.

In conclusion, this election should not make Americans any happier. The US has already been frustrated with the current government led by Angela Merkel who gave Germany’s trade with China the first priority, and now that the left-wing will have more say in any imaginable coalition in the future, the Americans should become less pleased. But, still, there are hopes that Germany can be a partner for the US in great power competition if the US could articulate its foreign policy with common values, like democracy and human rights. More normative foreign policy can make a reliable partner out of Germany. Foreign policy rarely became a topic in this election, but observers should expect many ramifications for it.

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