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Connectivity Italian Style

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Xi Jinping’s historic visit to Italy on March 21–23, 2019 was marked by the signing of a memorandum on Italy’s joining the Chinese Belt and Road Initiative. Despite the fact that 13 other EU countries have signed similar memorandums with China, the significance of Italy’s decision cannot be overstated, as it is the first G7 country and the first founding member of the European Union to officially confirm its readiness to participate in Silk Road projects.

Ever since Undersecretary of State at the Italian Ministry of Economic Development Michele Geraci announced the imminent signing of the document on March 5, 2019, warnings have flooded in from Brussels and Washington about the possible consequences of such a rash step. On March 6, U.S. National Security Council Spokesman Garrett Marquis said that the actions of the Italian government would end up harming Italy’s global reputation in the long term. Similar statements could be heard coming out of Brussels. On the eve of Xi Jinping’s visit, President of the European Parliament Antonio Tajani said that Italy was committing a grave mistake and that “selling ‘Made in Italy’ does not have to mean giving up your sovereignty to the Chinese.” As European leaders try desperately to form a common line of defence against China’s penetration into strategic sectors of the European economy in the run-up to the EU–China Summit on April 9, Italy is again showing no signs of European solidarity.

Italian Logic

 “I am convinced that Italy must respect its Atlantic allies and always fulfil its obligations. However, it may also choose how and where to go. We need to make a choice consciously and responsibly,” Deputy Prime Minister of Italy Luigi Di Maio said in the Five Star Movement blog in response to the alarmist signals coming from the United States. “I hope that the League adheres to the same principles, because I have seen various positions over the past few days, some of them shaped by what other countries want and not for the benefit of Italy.” “Today,” the Deputy Prime Minister continues, “the idea of ‘Made in Italy’ wins. With the Belt and Road Initiative, Italy has made the decision to be more sovereign… It is not a political union with China, but rather a business opportunity. The United States remains our main ally, and NATO continues to be our home. But the Belt and Road Initiative is a step forward for Italy.”

According to Prime Minister Giuseppe Conte, Italy’s participation in the Silk Road project is completely in line with the country’s membership in NATO and the European Union, since it is not a political union, but simply the possibility of trade and economic cooperation. What is more, by interacting with Beijing, Rome is determined to get its new partner to adopt European standards and norms in the bilateral relationship.

“The main task is to help Italian companies develop and expand exports to China comparable to that of France and Germany… Clearly, Italian security is of paramount importance to us, which is why we will analyse and assess extremely carefully what is going on in sectors that are of strategic importance for Italy and its allies – telecommunications, energy, ports and infrastructure. The security of the Italians comes first, followed by economic interests,” claims the League, so as not to scare its alarmist-minded electorate.

“I want to control the strategic sectors, to ensure national security. Because the keys to the house should belong to the Italian people,” Deputy Prime Minister Matteo Salvini stresses. Minister of Foreign Affairs Enzo Moavero Milanesi has traditionally tempered the discourse, assuring Italy’s European partners that it will act in line with EU documents and decisions, with the understanding that issues of security are a priority for all EU member countries. But the leader of Forza Italia, Silvio Berlusconi, does not share the enthusiasm of the current government, calling China a “communist and totalitarian” country “that seeks both economic superiority and political hegemony.” A fierce discussion is raging in the Italian media about the benefits and risks of the new partnership with China.

The idea of building up cooperation with China is not new. Paolo Gentiloni’s cabinet worked actively on developing ties with the country. Italy’s new “government of change” contains at least two people who actively support deepening cooperation with China, namely Minister of Economy and Finances Giovanni Tria and Undersecretary of State at the Italian Ministry of Economic Development Michele Geraci.

When he was still a student at the University of Rome, Giovanni Tria studied the success of the Chinese economy, and in the late 1970s he had the opportunity to observe the initial results of the economic transformation in Beijing first hand. His first official visit as Minister of Economy and Finances was to China. Michele Geraci is very familiar with China, having lived there for over ten years. According to Giovanni Tria, the new stage of relations between Italy and China will not only provide them with new opportunities to expand cooperation in sectors of mutual interest, but will also allow Italy to become a champion of developing cooperation between the European Union and China in addressing the key issues of globalization and international cooperation. In other words, Italy wants to significantly increase its role in the dialogue between the European and China, taking the initiative and positioning itself as a driving engine in the process. Despite the fact that 13 EU countries have already signed similar memorandums with China (Bulgaria, Croatia, the Czech Republic, Estonia, Hungary, Greece, Lithuania, Latvia, Malta, Poland, Portugal, Slovakia and Slovenia), they are, as far as Italy is concerned, peripheral countries that carry little weight in the EU economy and are incapable of becoming drivers of EU–China cooperation. Unlike Italy, which after Brexit will be the third largest economy in the European Union and which, moreover, is one of its founding members.

Geraci also acknowledges the desire to take the initiative in the dialogue, emphasizing that it is a matter of tactics: “Italy should feel more free than the other 27 EU member countries. China prefers bilateral cooperation and does not like to wait for the approval of the EU, which often takes a long time. That’s why we need to take the initiative… The does not mean circumventing Europe, but rather leading it and showing it the way forward.” According to Geraci, Italy has much to learn from China: how to achieve GDP growth of 9.5 per cent; how to save 900,000 people from poverty; how to increase the income of the rural population from $130 per capita to $13,000 per capita; how to effectively control internal migration, which makes up 15–20 million people per year in China, etc. Italy, for its part, should become the main European terminal of the Maritime Silk Route. However, in order to avoid becoming a “terminal to nowhere,” Italy must help China build the land section of the Silk Road, including in Central Asia and the Caucasus.

According to Geraci, the Italian government faces two main tasks in terms of ensuring the country’s economic interests: attracting investments (and if willing investors can be found, the relevant agreements need to be put in place as soon as possible) and increasing exports (where small and medium-sized enterprises need help to start exporting their goods to China). To be sure, China has invested heavily in Italy, although mostly in the form of mergers and acquisitions and the purchase of shares, rather than setting up new projects and enterprises. Accordingly, the government’s task is to reorient the flow of investments in such a way that they help create jobs and increase productivity and, consequently, GDP. Geraci complains that Italian investments have created 50,000–60,000 jobs, while just 2000–2500 have been created in Italy. According to him, China should have a vested interest in this because, in addition to its favourable geographic location, Italy has another important asset, namely, “know-how.”

The Realities of Economic Cooperation: The Balance is not in Italy’s Favour

China is one of Italy’s key foreign trade partners. In 2018, China accounted for 3 per cent of Italy’s total exports, which amounted to approximately 13.7 billion euros. China ranks fourth in terms of Italy’s exports, behind the European Union (55.5 per cent), the United States (9.1 per cent) and Switzerland (4.6 per cent). In terms of Italy’s imports, China is second only to the European Union (7.1 per cent of the country’s total imports). China is the first destination market for Italian exports in the Asia Pacific, and eighth overall. However, the trade balance began to tip in China’s favour in 2001. Despite the fact that the trade balance increased by 7 per cent in 2007, and by a further 9.2 per cent in 2016–2017, it was still not in favour of Italy. As of year-end 2018, Italian exports to China totalled 13.2 billion euros, while imports from China amounted to 30.8 billion euros. Italy is the third-largest importer of Chinese goods in the European Union, behind Germany and the United Kingdom, and the fourth-largest exporter Behind Germany, the United Kingdom and France. Italy’s share in the Chinese market stands at 1.1 per cent, compared to 1.4 per cent for France and 5.4 per cent for Germany.

Italy wants to significantly increase its role in the dialogue between the European and China, taking the initiative and positioning itself as a driving engine in the process.

In 2000–2018, Italy was among the main targets of China’s purchases” alongside the United Kingdom and Germany, with Italy attracting 15.3 billion euros, compared to the United Kingdom’s 22.2 billion and Germany’s 46.9 billion. China is the United Kingdom’s second-largest importer and exporter and the largest importer and exporter for Germany. According to analysts at the Italian Institute for International Political Studies (ISPI), Brexit could have a positive effect on these dynamics for the European Union, given the fact that the United Kingdom can no longer act as an entry point for investments into the EU markets.

Chinese capital is already penetrating into Italian infrastructure facilities. For example, China’s COSCO Shipping has owned 40 per cent of the shares in the Vado Ligure terminal on Italian Riviera since 2016, with another 9.9 per cent of shares in this terminal belonging to the Port of Qingdao in China. Chinese investors are also interested in the ports of Genoa and Savona, where an agreement is expected to be signed with Chinese Communications Construction Company (CCCC). There is talk about the implementation of the “Trihub” project in Trieste on the Adriatic coast. China Merchants Group is expected to invest in the project. The giant CCCC intends to make a huge financial outlay (approximately 1.3 billion euros) on the construction of the Port of Venice. Remaining in the Adriatic, China Merchant Group invested 10 million euros in the Port of Ravenna in 2018. Chinese have become shareholders in recent years in a number of companies that are key for the Italian economy, including FCA Italy S.p.A., Telecom Italia, Enel, Generali, Ansaldo Energia, Cdp Reti, among others. In 2015, China National Chemical purchased Pirelli, one of the world’s largest tyre manufacturers. More recently, the famous Italian brand Candy was purchased by the Chinese giant Haier. However, the number of Chinese “purchases” in the European Union has started to drop over the past two years, which may be due to the latter’s suspicious attitude towards Chinese capital in the context of the trade wars between Washington and Beijing.

It is not so easy for Italian products to break into the Chinese market, however. For example, recent studies carried out by the Italian National Institute of Statistics (ISTAT) show that in 2018, imports of agricultural products from China exceeded exports to China by 35 per cent. One reason for this is that Italian apples, pears and grapes cannot make it onto the Chinese market because of the ongoing trade barriers that are designed to protect national production.

On the whole, however, the history of economic cooperation between Italy and China in recent years has clearly not favoured Italy. Despite the fact that the actual volumes have increased, Italian exports to China went down in 2018, and Rome is clearly not in the economic position to dictate terms to Beijing. According to the European Commission’s most recent forecasts of GDP growth in the EU countries for 2019, Italy is expected to have the worst growth rate of all 28 member states, at just 0.2 per cent, while incoming investments will not increase until 2021.

Connectivity Italian Style: Naivety or Sober Calculation?

On the one hand, Italy’s approach to the Belt and Road Imitative and the prospects for cooperation with China may seem somewhat naïve and even rather bold. According to some experts, the difficult economic situation in the country may make it dependent on Chinese investments, while the experience of Greece and Sri Lanka is confirmation of the fear that the facilities constructed may eventually fall into the hands of the primary investor. The economic situation in Pakistan clearly demonstrates the risk of becoming dependent on China economically. In summer 2018, the new government of Malaysia expressed its dissatisfaction with the terms of its deal on the Silk Road Economic Belt. The experience of Eurasian Economic Union (EAEU) countries that signed memorandums on the Silk Road Economic Belt over five years ago shows that exports to China have not increased several times over. What is more, the transport routes did not connect the EAEU as countries of the Union had hoped. And the thousands of new jobs that had been promised to the citizens of Central Asian states never materialized.

The lack of transparent rules of the game. Dumping. The use of “grey” practices by Chinese companies. The absence of guaranteed reciprocity in commerce and investment. The use of business standards that are alien to those in the west. The prevalence of discriminatory practices against foreign companies entering the Chinese market. This is just a small list of the risks that come hand in hand with Chinese investments. And it would seem that the Italians are all too aware of this. So, what exactly is Rome hoping for?

In the run-up to the President of the People’s Republic of China visit, a number of Italian media outlets speculated that the purpose of the trip may be to take on a part Italy’s national debt. However, Minister of Economy and Finances Giovanni Tria stated that this was not the case, and that the Chinese investors were there to assess the prospects of purchasing Italian government bonds on the same terms as other foreign investors. In addition, according to Tria, the financial situation in the country had stabilized since the budget had been approved by the European Commission.

Judging by the words of Tria and Geraci, it can be assumed that Italy hopes to reclaim its position as a “protagonist” in determining the European Union’s foreign economic and political priorities. However, the take-it-or-leave-it approach taken by the Italian leadership in its decision to sign a memorandum with Beijing is unlikely to elicit enthusiasm in Brussels about the Italian initiative. What is more, given the desire of Paris and Berlin to form a single EU position on the global stage, the Italian government’s attempt to “run ahead of the train” will hardly be seen as a blessing for the European Union as a whole. And the fact that the Italian government recently backtracked on its decision regarding new rules of the game for foreign investors by not supporting the European Union’s consolidated position on Chinese investments and Huawei effectively reduces the country’s chances of becoming a driver of cooperation with China to zero.

It would seem, however, that Italy was left with no choice, and Brussels certainly shares a portion of the blame for this. The economic situation in the country really is difficult. Meanwhile, the Italian government is openly described as a “leprosy” in Paris and Berlin, and not as a third party in the “tandem” that is constructing a new Europe. Brussels predicts a deepening of the recession, offering no way out of the economic deadlock. Economic cooperation with Russia cannot be intensified because of the sanctions and the risk of an open confrontation with Brussels and Washington if they are ignored. This is why the new partnership with China is the only opportunity available to Italy on which Brussels has not yet defined a categorical position, be it positive or negative. So, Italy has to seize the opportunity while there is still a chance and hope that Washington will put forward a better option at the last minute…

First published in our partner RIAC

PhD in Political Science, RIAC Program Manager, Research Fellow at Centre for Global Problems Studies, MGIMO-University

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Taking For Granted … Be Wary

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The title of these comments is inspired by my personal experience in important areas of public policy both as a politician beginning in the 1970s and more recently as Secretary General of the OECD from 1996 until 2006. That was a very important decade as it ushered in the period which some day we thought would be known as the beginning of globalization on a grand scale.

When I took up my responsibilities in Paris at the end of May 1996 it was a time brimming with  optimism about the great future ahead for our children and generations to follow! We were about to say goodbye to one of the most brutal and bloody centuries in human history. Physical human suffering was compounded by poverty and misery of hundreds of millions, especially in the developing world.

Many of us involved at the international level in public policy saw major opportunities to address challenges which had eluded us in the past. Indeed we took a great deal for granted and I must confess that I certainly did. Why? Here are a few examples and the reasons for taking so much for granted.

  1. We had just witnessed major geopolitical restructuring in the wake of the fall of the Berlin Wall. The Soviet Union had collapsed and we assumed that the threat of nuclear war had disappeared with it;
  2. With the replacement of the GATT the ( WTO) we took for granted the exciting prospect of global free trade and investment, which would bring economic growth and rising prosperity everywhere, but especially to the developing world. We expected “trade” not “aid” to be the route out of third world poverty;
  3.  The expansion of the proven Marshall Plan formula to regions fractured by division and conflict. We took for granted that such approaches could bring peace to the war torn Balkans and perhaps even to the Middle East and  the Arab World;
  4. We took for granted that with the publication  of the Brundtland Report “ Our Common Future” on Sustainable Development  followed by the Rio Earth Summit in 1992, followed by the commitments in the Kyoto Protocol of 1997, that the decades long stalemate of slowing green house gas emissions (GHGs) (and therefore global warming) had been broken  and that multilateral international commitments would ensure the protection of the biosphere and its natural capital;
  5. We took for granted that improvements to the stunning success of healthy capitalism through universal principles of good corporate governance, supported by an Anti Bribery Convention, would control the greed inherent in the undue exploitation of unfettered capitalism.  We took for granted that the wealth and wage disparities would narrow, especially in the United States;
  6. We witnessed the remarkable rise of the European Union (EU) uniting former enemies. We took its expansion and global role for granted. Regarding the EU,  I often quote a paragraph from the preface of A History of Europe by H. A. L Fisher, a warden at Oxford University in the 1930s. He wrote: “[No] question [would be] more pertinent to the future welfare of the world than how the nations of Europe … may best be combined into some stable organization for the pursuit of their common interests and the avoidance of strife“;
  7. We also took for granted the gradual spread of democracy and democratic institutions into the former countries of the Soviet Union and elsewhere in central Europe, South America and Asia;
  8. Early misgivings about the ideological bent of  Recep Erdogan as the Prime Minister, and then President of Turkey, were dispelled as he initially seemed supportive of good governance, freedom of the fourth estate, free speech  and democratic principles. We believed him and took for granted that the remarkable reforms introduced by Mustafa Kemal, known as Ataturk, would ensure the survival of a secular democratic Turkey;
  9. We took for granted the United States as a lone global superpower, magnanimous and fair, the first true united nation with people drawn from all corners of the planet to its robust democracy and unlimited opportunities.

As we look back over the past 25 years it is obvious that much too much was taken for granted. Given that so few of the opportunities we assumed would bring the world to a much better place were seized by my generation, what do you perceive as a better way forward? When we open that discussion in a few minutes, I hope I have convinced you to take little for granted. Be wary, if not skeptical, about those who foresee only a prosperous and peaceful future for this wonderful planet.

We need to remind ourselves of the following and address the questions I raise in our general discussion.

1. We failed to engage Russia with the West and as a result are now strengthening NATO in an effort to contain Putin’s aggressive behaviour. History may show this to be the most egregious of all Western public policy failures in the post-Soviet Union period because of its impact on other areas of global concern where Russia should have been a partner. Is it too late to recover from a failure to engage Russia despite the Russian adventures in Crimea and the Ukraine?

2. The EU is increasingly fragile, with concern about the future of the euro common currency and the EU’s capacity to deal with massive immigration from the war-torn areas of the Middle East. Do the weaknesses of the EU reflect a too rapid expansion without strengthening institutions which would move it toward a more federalist structure promoted by the Spinelli group?

3. Tensions have grown between China and its neighbours over territorial disputes, convincing the United States to pivot from its European focus and increase its military presence in Asia. Does this refocussing plus a strengthening alliance between China and Russia herald the reigniting of another Cold War like the one my generation grew up with?

4.Now many more nations( and possibly terrorist groups) have access to nuclear weapons. Does that greatly increase the possibility of a 21st century nuclear war?

5.The global free trade agenda is in the doldrums with the failure of the Doha Round and the concomitant rise of protectionist rhetoric, especially in the United States ,at the highest political levels. Does this mean that global free trade is now beyond reach?

 6. Is the prospect of eliminating poverty in the developing world through trade and investment  dying?

7.Reductions in GHG emissions, especially CO2, but also methane, continueto elude us after decades of effort, showing how ineffectual the United Nations Framework Convention on Climate Change process has been and will be. The widely heralded but unenforceable Paris Agreement in the context of a history of failures is even dangerous because much of the public thinks our leaders have come to grips with this challenge (as we all did after the Kyoto Protocol was adopted in 1997). Do they do not realize that even if the agreed upon targets are achieved they are not sufficient to keep global temperatures below the level that the scientific community tells us is necessary to prevent dramatic and irreversible climate change?Is there resistance to developing a Plan B as a last resort to prevent unacceptable global warming? Solar radiation management , a form of geo engineering, seems to be broadly under consideration. Is that good or of concern? As areas of the world may become uninhabitable, will there be mass migration from areas of the developing word to more temperate climates?

8. For those who believe in democracy and perceived it as beginning to take root after the fall of the Berlin Wall and the collapse of the Soviet Union do subsequent developments undermine the confidence that many democratic governments may be in retreat?  In some countries, such as Thailand, there has been a return to a military dictatorship. In others, such as Russia and other countries that were formerly part of the Soviet Union, there is only a pretense of democracy with rigged elections, as in Belarus. There also appears to be backsliding in Turkey, a very important global player and a bridge between Asia and its historic Western allies. The situation in Turkey, which held such promise only a decade ago, is very worrisome. President Erdogan seems increasingly autocratic and intolerant of criticism and dissent. Failure of this democracy could be a sad, even tragic, development. Turkey is a major regional and global power, and through the influence of Atatürk it became an emerging secular democracy with a majority Sunni population straddling Europe and Asia. Atatürk showed the world what individual leadership supported by ethical standards could accomplish in a short period of time.

9. Is the world faced with a growing number of autocratic strongmen who would prefer to destroy the important international infrastructure if it constrains their personal ambitions? It would appear that when one combines the far east, parts of Eastern Europe, Russia, Turkey, China, North Korea, the Philippines, Thailand etc, more than 50% of humanity is or will soon be governed by “strong men“. With few exceptions such as Ataturk, history shows that such people have only one interest “me”.

President Trump gives every indication that he is anxious to join the ranks of these strongmen, initially by withdrawing the United States from the central role it had played through visionary leadership by building and helping to maintain the post war international and institutional architecture. His slogan “America First” should be interpreted for what it really is, namely, “Donald Trump First”.

There is a disquieting commentary in the New York Times of 16 December 2016 entitled “Is Donald Trump a Threat to Democracy” by Professors Steven Levitsky and Daniel Ziblatt of Harvard University. Here is an excerpt:

“Donald J. Trump’s election has raised a question that few Americans ever imagined asking: Is our democracy in danger? … Past stability is no guarantee of democracy’s future survival … Our research points to several warning signs.

The clearest warning sign is the ascent of anti-democratic politicians into mainstream politics. Drawing on a close study of democracy’s demise in 1930s Europe, the eminent political scientist Juan J. Linz designed a “litmus test” to identify anti-democratic politicians. His indicators include a failure to reject violence unambiguously, a readiness to curtail rivals’ civil liberties, and the denial of the legitimacy of elected governments. “

Mr. Trump tests positive on all counts. In the campaign, he encouraged violence among supporters and pledged to prosecute Hillary Clinton;

He haspage213image41232512page213image41225792page213image41222912threatened legal action against unfriendly media, and continues to suggest that he might not accept the election results saying the election will be rigged. If he loses will he in some way resist leaving office?

Since his 2016 election he has not changed his attitude on any of these issues.

David Frum, a Conservative and traditional Republican and a senior editor at the Atlantic published a book two years ago “Trumpocacy- The Corruption of the American Republic”. It has recently been released in paperback with a new preface by Frum which reviews the appalling record of this individual to whom Americans have entrusted the leadership of the most powerful nation in history.

In a concluding paragraph of the book he writes….” President Trump is cruel, vengeful, ignorant, lazy, avaricious and treacherous…”

Later he adds: “We are living through the most dangerous challenge to the free government of the United States that anyone alive has encountered. What happens next is up to you. Don’t be afraid. This moment of danger can be your finest hour as a citizen and as an American”

Today I cast Frum’s challenge to each of you in a global perspective rather than just American.

Yes, democracy can be fragile everywhere.

 We who live in well-established democracies must never be complacent or smug about the success of our societies. The comments of the Harvard professors above echo that concern.

Our democratic societies and their political systems must adapt to a rapidly evolving world. We are increasingly in that global village through forces of globalization amplified by communication and transportation technologies.

In line with the work of Charles Darwin, it has been said that “it is not the strongest of the species that survive, nor the most intelligent, but the one most responsive to change.” The same could be said of democratic governments and even empires.

What happens next to global free government is up to your generation of leadership. It is a humungous challenge, especially in countries where the seeds of democracy have never been planted or where they have enjoyed short life spans, Thailand and especially Turkey come to mind.

The future of democracy across the globe could be destroyed if the autocratic motives and moves of Donald Trump succeed, as they well might if I read the current political climate in the United States correctly. Despite shortcomings which need correction such as the unfortunate influence on elections through Super Pacs, the United States has been perceived for years as a remarkable democracy which others attempt to emulate. This may be about to change as it is increasingly viewed as government by the rich, of the rich and for the rich, and Trump does not appear to feel constrained by the institutional checks and balances of the constitution. He could put American democracy on the terrible path to an autocratic state which he seems to admire, especially in the Russia and Turkey of today.

In summary, what looked to be a promising future in all the major areas of concern in the 1990s has evolved into what could best be described as an economic, social, and geopolitical mess. But as bad as that story is, we have succeeded in making the future even more problematic with the arrival of global terrorism.

My generation must recognize the extraordinary failures of the past decades. Your generation must do better.

It seems that efforts to create consensus on major issues amongst many sovereign nations does not work. Is there not a better way forward in global governance? This is the last question I leave you with.

Have 190 counties not offered proof  of the impossibility of finalizing an international and binding free trade agreement known as the Doha Round, or as almost 200 countries have done in their efforts to find consensus on concrete solutions to address the challenges of climate change. Neither set of efforts, the first initiated through the WTO process and the second through the United Nations Framework Convention on Climate Change process, has delivered the results sought and it is unlikely they ever will.

Is starting small and gradually broadening an international consensus a better option? The EU successfully evolved from a small base but has it expanded too rapidly to consolidate and build upon its remarkable and successful beginnings? Even the G20 may be ineffectual because of size and economic and social diversity.

Does the difficulty of building broad consensus on these issues suggests that a structure more resembling the UN Security Council would be more effective? Could the Security Council itself with a limited membership of powerful countries become a global steering group and replace the G-7 process?

Whether we like it or not, each major power has spheres of influence over smaller regional powers through shared history, culture (sometimes language), and trade and investment.

When we compare human and societal evolution to a relay race one generation must pass the baton on to the next. In a small way that is what I am saying to you today. I hope our discussion will touch upon a number of these important and often controversial issues.

We have fallen behind in many respects in the early years of this 21st century, perhaps even forfeiting many of the hard-earned benefits of good capitalism and democracy to an ever increasing number of corrupt strong men and autocratic regimes.

Is that the future?

Remember the words Shakespeare attributed to Brutus:

“There is a tide in the affairs of men, Which, taken at the flood, leads on to fortune; Omitted, all the voyage of their life is bound in shallows and in miseries.”

I am persuaded that the latter may be our fate. We did not take the flood of opportunities at hand in the 1990s. Is it too late to recover through hard work, sacrifice and creativity in restructuring global governance for a better world.

What should we do? What can you do?

It will depend to a large extent on your personal values which I hope have not been irreversibly warped by admiration for the material success of greed and visible wealth of the famous 1% who dominate power and politics in the USA and increasingly elsewhere.

I have described the state of the world today as analogous to the fireplace at my country home. It is usually fully loaded with tinder, kindling and dry wood. All it awaits is a match. Unfortunately, in the world today there are many matches waiting to be lit and spread their deadly destruction to regions, if not the planet as a whole.

*This text is exclusively made as supplementary for a university lecture held on 28 OCT 2020. It is a part of the so-called ‘Geneva Lecture Series – Contemporary World of Geo-economics’, concepted and considered by prof. Anis H. Bajrektarevic for the Swiss University in Geneva.

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Economic situation is EU citizens’ top concern in light of the coronavirus pandemic

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In a troubled period marked by the coronavirus pandemic, trust in the EU remains stable and Europeans trust the EU to make the right decisions in response to the pandemic in the future. In the new Standard Eurobarometer survey released today, European citizens identify the economic situation, the state of Member States’ public finances and immigration as the three top concerns at EU level. The economic situation is also the main concern at national level, followed by health and unemployment.

In the new Eurobarometer conducted in July and August, concern about the economic situation is reflected in the perception of the current state of the economy. 64% of Europeans think that the situation is ‘bad’ and 42% of Europeans think that their country’s economy will recover from the adverse effects of the coronavirus outbreak ‘in 2023 or later’.

Europeans are divided (45% ‘satisfied’ vs 44% ‘not satisfied’) regarding the measures taken by the EU to fight the pandemic. However, 62% say they trust the EU to make the right decisions in the future, and 60% remain optimistic about the future of the EU.

Trust and image of the EU

Trust in the European Union has remained stable since autumn 2019 at 43%, despite variations of public perceptions during the pandemic. Trust in national governments and parliaments has increased (40%, +6 percentage points and 36%, +2 respectively).

In 15 Member States, a majority of respondents says they trust the EU, with the highest levels observed in Ireland (73%), Denmark (63%) and Lithuania (59%). The lowest levels of trust in the EU are observed in Italy (28%), France (30%) and Greece (32%).

The proportion of respondents with a positive image of the EU is the same as that with a neutral image (40%). 19% of respondents have a negative image of the EU (-1 percentage points).

In 13 EU Member States, a majority of respondents has a positive image of the EU, with the highest proportions observed in Ireland (71%), Poland and Portugal (both 55%). In 13 other Member States, the EU conjures up a predominantly neutral image for respondents, with the highest proportions observed in Malta (56%), Spain, Latvia and Slovenia (all 48%).

Main concerns at EU and national level

Citizens mentioned the economic situation as the most pressing issue facing the EU – over one-third (35%) of all respondents, a strong increase of 16 percentage points since autumn 2019, and rise from third to first concern. Concern about the economic situation has not been this high since spring 2014.

Europeans are also increasingly concerned about the state of Member States’ public finances (23%, +6 percentage points, the highest level since spring 2015), which moves from fifth to second place on a par with immigration (23%, -13 percentage points), the latter now being at the lowest level since autumn 2014.

In the midst of the coronavirus pandemic, health (22%, new item) is the  fourth most mentioned concern at EU level. The issue of the environment and climate change has lost ground, down 8 percentage points to 20%, followed by unemployment (17%, +5 percentage points).

Similarly, the economic situation (33%, +17 percentage points) has overtaken health as the most important issue at national level, rising from seventh to first position. Although in second position, health has had a notable increase in mentions since autumn 2019 (31%, +9 percentage points), taking it to its highest ever level over the past six years.

Unemployment has also increased considerably in importance (28%, +8 percentage points), followed by rising prices/inflation/cost of living (18%, -2 percentage points), the environment and climate change (14%, -6 percentage points) and government debt (12%, +4 percentage points). Mentions of immigration (11%, -5 percentage points), are at their lowest level for the past six years.

The current economic situation

Since autumn 2019, the proportion of Europeans who think that the current situation of their national economy is ‘good’ (34%, -13 percentage points) has declined considerably, while the proportion of respondents who judge this situation to be ‘bad’ has increased sharply (64%, +14 percentage points).

At national level, a majority of respondents in 10 countries says that the national economic situation is good (down from 15 in autumn 2019). The proportion of respondents who say the situation of their national economy is good ranges from 83% in Luxembourg to 9% in Greece.

The coronavirus pandemic and public opinion in the EU

Europeans are divided on the measures taken by the EU institutions to fight the coronavirus outbreak (45% ‘satisfied’ vs 44% ‘not satisfied’). However, a majority of respondents in 19 Member States is satisfied with the measures taken by the European Union institutions to fight the coronavirus pandemic. The highest positive figures are found in Ireland (71%); Hungary, Romania and Poland (all 60%). In seven countries, a majority of respondents is ‘not satisfied’, especially in Luxembourg (63%), Italy (58%), Greece and Czechia (both 55%) and Spain (52%). In Austria, equal proportions of respondents are satisfied, and not satisfied (both 47%).

However, more than six Europeans in ten trust the EU to make the right decisions in the future (62%). The most frequently mentioned priorities for the EU’s response to the coronavirus pandemic are: establish a strategy for facing a similar crisis in the future and develop financial means to find a treatment or vaccine (each 37%). 30% think that developing a European health policy should be a priority.

Europeans’ personal experiences of confinement measures were very diverse. Overall, close to three Europeans in ten say that it was fairly easy to cope with (31%), while a quarter say it was fairly difficult to cope with (25%). Finally, 30% say that it was ‘both easy and difficult to cope with’.

Key policy areas

Asked about the objectives of the European Green Deal, Europeans continue identifying ‘developing renewable energy‘ and ‘fighting against plastic waste and leading on the issue of single-use of plastic’ as the top priorities. More than one third think the top priority should be supporting EU farmers (38%) or promoting the circular economy (36%). Just over three in ten think reducing energy consumption (31%) should be the top priority.

Support for the Economic and Monetary Union and for the euro remains high, with 75% of respondents in the Euro area in favour of the EU’s single currency. In the EU27 as a whole, support for the euro has increased to 67% (+5).

 EU citizenship and European democracy

A majority of people in 26 EU Member States (except Italy) and 70% across the EU feel that they are citizens of the EU. At a national level the highest scores are observed in Ireland and Luxembourg (both 89%), Poland (83%), Slovakia and Germany (both 82%), Lithuania (81%), Hungary, Portugal and Denmark (all 80%).

A majority of Europeans (53%) say they are satisfied with the way democracy works in the EU. The proportion of respondents who are ‘not satisfied’ has increased, by 3 percentage points since autumn 2019 to 43%.

 Optimism for the future of the EU

Finally, in this troubled period, 60% of Europeans say they are optimistic about the future of the EU. The highest scores for optimism are observed in Ireland (81%), Lithuania and Poland (both 75%) and Croatia (74%). The lowest levels of optimism are seen in Greece (44%) and Italy (49%), where pessimism outweighs optimism, and France, where opinion is evenly divided (49% vs 49%).

Background

The ‘Summer 2020 – Standard Eurobarometer’ (EB 93) was conducted face-to-face and exceptionally completed with online interviews between 9 July and 26 August 2020, across the 27 EU Member States, in the United Kingdom and in the candidate countries 26,681 interviews were conducted in the 27 Member States.

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Could the EU Make its ASEAN Breakthrough with the Emerging Indo-Pacific Strategy?

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The Indo-Pacific policy guidelines that was announced by the German Federal Foreign Office last week, is a clear signal from Berlin in becoming a shaper for the international order in the volatile region. Entitled “Germany-Europe-Asia: Shaping the 21st Century Together”, the policy guidelines is the second of such document in the European Union (EU) after the Macron administration released its own Indo-Pacific strategy back in August 2019. But considering that Germany is the current president of the EU Council, this policy guidelines has been ever more significant. For one, Berlin has made clear its intention to lead Europe into this new Indo-Pacific charge as the ‘third power’ after the US-led coalition and China ⸺ an aim that is highlighted not just by this German government’s policy guidelines but also, incisively described by the French as the ‘mediating power’.

The release of such document, of course, reverberates different responses from political observers outside of Europe. For instance, Sebastian Strangio sees the German latest move as part of Europe’s reassessment of its approach to China and boldly predicts that other EU nations are to follow suit with their new stand on China. Prominent Filipino expert, Richard Javad Heydarian, meanwhile, is of the view that Germany’s pursuit as the shaper of international order is deliberately focused on the key regions which bear strategic importance to Europe overall. On the other hand, Xin Hua, adopts a pessimistic view on the ability of Europe to influence the Indo-Pacific region. With Berlin’s policy guidelines, the Chinese scholar sees Europe’s reliance on soft power (such as norms diffusion)to influence the Indo-Pacific region, in contrast to the US that projects its hard power in the region through military prowess in the region, will make it less than what it aimed as the shaper of international order.

Be it applause or skepticism, the observers are in the same view that Berlin’s latest move is a drastic shift from its previous ambiguous position on the Indo-Pacific region which has become the hotbed for the Free and Open Indo-Pacific (FOIP) vision pushed by the US and its military allies such as Japan and Australia. With this policy guidelines in place, it signals the seriousness of the German government in joining the Indo-Pacific region with the rest of the EU, as a third power that is independent from the US camp and China. What is left is the forming of a full European-level Indo-Pacific strategy and its implementation in the years ahead.

The ASEAN Context

In the ASEAN context, Germany’s move has created two questions that are worthy to ponder. First, how will this emerging Indo-Pacific strategy be different to Europe’s current cooperation policy toward ASEAN as a whole? This is the foremost question to ask among ASEAN member states as the German government’s Indo-Pacific policy  guidelines singled out the Southeast Asian bloc as the country’s focused cooperation partner in different areas of cooperation: climate change, marine pollution, rule of law and human rights, culture, education, science, trade and technology. That said, this is not the first time ASEAN appeared as the important partner for the EU.As a matter of fact, two-way cooperation has been ongoing since the establishment of dialogue relations in 1977.

As of 2020, two EU-ASEAN Action Plans have been agreed upon, implemented and in the middle of enforcement. Within the Action Plan (2018-2022) that runs through the year 2022, a myriad of cooperation areas has been outlined, spanning across political-security, economic and socio-cultural pillars. In particular, those areas of cooperation identified in Germany’s Indo-Pacific policy guidelines are within the trans-regional plan as well. What is new is that Berlin has set security policy as a special focus area for Indo-Pacific cooperation ⸺ a point that is emphasized by the German Foreign Minister, Heiko Maas in his press release following the announcement of the country’s Indo-Pacific policy guidelines. In line with such niche orientation, Germany can readily lead the European initiative to assist ASEAN in the two sub-areas of non-traditional security that do not have substantial cooperation but chiefly important in the coming months and years: cybersecurity and public health security. These two sub-areas will be the best start for the EU’s Indo-Pacific push in the ASEAN region.

Second, how will the EU’s Indo-Pacific approach be different from its current dogmatic approach in its cooperation with ASEAN? By all means, it is no secret that dogmatic adherence to rules and norms remained to be the greatest obstacle for the EU’s full amelioration of ties with ASEAN in the past years. As of today, the EU’s ban of Indonesian and Malaysian imports as well as its unease on Filipino President Duterte and Burmese junta’s human rights records, are the contentious issues that prevented the European bloc to go past its finishing line in negotiating a full free trade pact with ASEAN. From such case alone, it is clear that the European bloc’s normative stance predicated upon Brussels’ strictly defined rules, norms and values on climate change and human rights issues, is in play when comes to international cooperation with ASEAN.

Having said that, Germany’s latest Indo-Pacific policy guidelines do not precisely highlight of its normative stance apart from maintaining the international rules-based order in the volatile region. But on the other hand, Germany’s aim for the EU to become the shaper of such order also sparks an open-ended question of whether its strict adherence to rules, norms and values (as in the present) will continue to be the defining feature of its cooperation with ASEAN. From the Indo-Pacific policy guidelines, this question is yet to be answered by the German government and perhaps, this dilemma is to betackled in the EU’s emerging Indo-Pacific strategy. Should a pragmatic approach is adopted by the EU ⸺ as has been recently demonstrated by the conclusion and enforcement of the EU-Vietnam Partnership and Cooperation Agreement despite human rights concern in the ASEAN member state ⸺ it will definitely clear the normative obstacle for the eventual conclusion of a free trade pact with the Southeast Asian bloc. More than that, it stands to facilitate greater cooperation in all areas of partnership between the two regions.

All in all, the EU’s emerging Indo-Pacific strategy should need to address these two questions that have surfaced fromthe former’s past and current experiences with ASEAN. While the German government’s Indo-Pacific policy guidelines have set new tone to Europe’s engagement with the volatile region, such document has yet to tackle these two difficult questions. Only by tacklingthese two questions will the EU be able to make its much-needed ASEAN breakthroughwith the emerging Indo-Pacific strategy.

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