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The geopolitics of Brexit

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Brexit – sanctioned and endorsed by a mass vote for Boris Johnson’s Tories – will be the great geopolitical turning point for Europe, obtorto collo, and for the United Kingdom itself.

In fact, the decision taken by Prime Minister Cameron in June 2016 to hold a referendum already showed what would happen.

Cameron thought the referendum would silence the Tories’ Brexit wing with a stunning defeat, but – as is well-known – this has not happened.

The British Tory Prime Minister, in fact, did not achieve his goals with the negotiations in Brussels that year. As already said, David Cameron clearly thought he could give a sop and keep the Brexit- friendly Tory minority happy, but truth will out.

Let us put aside the traditional explanations about the reasons for the UK-EU break: it is not a matter of maintaining the supremacy of old Anglia over the British territories, such as Scotland, Cornwall or Wales.

This assumption is often reiterated by refined parlour geopoliticians, but it clashes with the results in Wales, where the votes in favour of leaving the EU are 52.5%, while in Northern Ireland, but especially in Scotland, the leave votes reach only 44.2% and 38%, respectively.

If anything, the pro-Europeanism of the island peripheries shows that Brexit cannot be used to “keep” Scotland and Ireland, not the other way around.

Great Britain has always renounced the European criterion of even closer union.

“We want our money back!” This is what Margaret Thatcher said at the European Council in Dublin in September 1979.

Boris Johnson’s “policy line” is exactly the same as Thatcher’s tradition.

Margaret Thatcher saw Jean Monnet-style dirigisme typical of the EU  as  a  huge  obstacle  to  her liberal  and  free-trade  project to modernise and revitalise the British economy.

Not even De Gaulle, however, wanted Great Britain within the EU. “Take your dreams of independent power and stick them up your Eiffel Tower”, as a London popular song went, after the French veto on Britain’s entry into the EU in 1963.

The fact is that France, Great Britain and Germany have all thought of the EU as a tool for their own national geoeconomic and strategic projects, unlike Italy, which has always been frantically looking for international organizations, treaties and groups to replace a national sovereignty that the Italians – after World War II – did not want and for which they were not prepared.

Moreover, what Leo Longanesi called “the waiter’s psychology” has always led our ruling classes to think that the international agreements into which Italy entered were a “gift”, a “favour”, possibly a “tip”.

It should be recalled that Great Britain did not want to be one of the Six countries which founded the European Community.

Even the pro-Europeans, like Harold Macmillan, wanted a “functional” and day-by-day approach compared to the European one, considered dangerously “federal” and basically authoritarian.

Hence, for the current Brexit voters the European Union is a real “usurper” that has too much power, despite the strong lack of democratic and electoral legitimacy.

It should be recalled that the EU was an American idea to make the economies of NATO’s European countries grow, thus maintaining national social and political stability.

Nothing more, nothing less. We will see what will happen to the EU with the US slow loss of interest in the Atlantic Alliance.

Moreover the EU has become the myth of a “third power” between the United States and the Warsaw Pact, with the creation of a single currency that has made the British financiers laugh and has outraged the United States, that find this Euro in their way, which is not a real currency, since it is not a lender of last resort, but rather mimics real currencies. Furthermore, it is also a rigid currency and hence it releases – on the factors of production – the market tensions that would otherwise affect exchange rates, as has always happened.

There were two other EU aspects that the British ruling class never liked from the beginning: the overwhelming power of the European Commission and the Court of Justice, of course, but above all the overwhelming power of France and Germany in the main decisions and on the integration progress itself.

The British obstruction to EU policies, which began in the 1980s,- a typical case of “negative leadership” – were for decades the only way for Great Britain to oppose a process that seemed inertial and, in any case, led by naturaliter anti-British powers such as France and Germany.

It is not a reflection of old gunboat geopolitics. It is a strategic assessment that is still completely exact and topical for Great Britain.

Indeed, the EU always acts as if geopolitics and the primary strategic interests of a country did not exist, covered by the roar of Beethoven’s Ninth Ode to Joy.

“All creatures drink of joy/At nature’s breasts/All the Just, all the Evil/Follow her trail of roses”.

Archetypal images, universal brotherhood, justice based on freedom of thought, concord based on Reason… a typically Masonic Ode, for the Schillerian Finale of the Ninth Symphony.

But times are now very different from Joy for the Germans defeated by Napoleon, the “world spirit on horseback”, as Hegel once described him.

Geopolitical interests, however, are either national or they are not, and the various countries’ forgetfulness of the global strategy – with the EU – was huge and very dangerous.

Also in Great Britain the visible outbreak of the rebellion against the European Union, which materialized with Brexit, was the issue of uncontrolled immigration.

For Great Britain, the mass of arrivals consists of economic migrants coming mainly from Eastern Europe, a situation that has led the British governments to restrict freedom of movement and has put the welfare system – already shrinking after Thatcher’s reforms – in great difficulty.

The 1982 Howe plan, inspired by the Iron Lady, already assumed a mandatory private health insurance, a share of contributions for State schools and a network of private clinics that would slowly replace the National Health Service (NHS).

We do not think it is reasonable to dismantle the Welfare State, but it will certainly be necessary to rethink a system that gives everything to everyone, even to the rich people, and gives everything to all newcomers, thus inevitably reducing the possibility of providing care for the poor or the now proletarianized middle class.

Instead of singing Ode to Joy, or possibly even the International, it would be better to study new systems to ensure dignity, health and good education to the poor people, but also to fund them with ad hoc taxes and fees paid by the rich people.

In our Western ideologies, we are still at the “Four Olds” against whom the ferocious and callow Maoist Red Guards polemicized: “Old Customs, Old Culture, Old Habits and Old Ideas”.

Therefore, Brexit can have the effect of rethinking also the EU “old” classifications.

An EU thinking about the East only to “bring democracy” with bombs or to destabilize the whole area, believing – as happens to all fools – to do good, or possibly to pedantically follow the North American strategic interests, which are not those of Europe.

As a man of great intellectual calibre, namely Alain Finkielkraut, said, “if Angela Merkel had not let one million immigrants into Germany in 2015, there would have been no Brexit”.

Hence Britain’s mass perception of an EU destabilising the nation States that are part of Europe, probably to weaken the national political regimes, possibly in search of a supranational sovereignty that is sometimes shown in some mediocre products of mainstream culture.

Pending  Brexit,  the  EU  has  also  been  negotiating  with  Great

Britain, using its negotiating superiority to maximise its potential.

Besides maintaining the principle of the four freedoms (freedom of goods, people, services and capital), the EU wanted above all to ensure that Ireland, including Northern Ireland, remained in the EU’s trade system.

Certainly, Theresa May’s soft Brexit created great tensions within her government, thus leading to the resignation of Ministers Boris Johnson and David Davis. However, the geopolitical essence of the issue is that the hard Brexit wanted by Johnson – who triumphed in elections – is a structural rapprochement to the United States, while both Britain’s stay in the EU and soft Brexit make the country remain within the French and German strategic area.

Hence the recent electoral choice made by Great Britain implies a clear defeat for France and Germany.

President Macron had also threatened Great Britain to make it “take backseat” and trail behind if hard Brexit materialized. Hence there would be a British blockade of French fishing vessels in British waters.

The soft Brexit agreement was certainly unfavourable for Great Britain: it would no longer be free to make bilateral trade agreements and treaties with any country, without the EU authorization, with EU goods and services freely entering the UK, but not the other way round. We can imagine what would have happened to Britain’s balance of payments.

Moreover, British financial services would have had a limited chance of entering EU markets.

A slipknot.

What will the hard Brexit produce? In the meantime a sharp deterioration in the already severe economic situation in Europe.

Brexit is above all a trade war, nothing else. Probably, the “hard” Brexit will produce recession and stagnation in many European nations.

Probably the British scenario will stimulate the strong no-Euro and no-EU minorities in the Euro countries to strengthen and demand not intermediate goals, but “everything”, i.e. exit from the EU.

At least for some time, it will stop the tendency to transfer national powers to the EU and, above all, it will quickly undermine the power of the European Court of Justice vis-à-vis individual States.

The French-German project was to strengthen the traditional trade freedoms for the whole EU but, at the same time, to protect their “national champions” – and now Brexit is stopping this great operation.

Moreover, both Germany and France have always tried to “export” their labour market and welfare solutions to the rest of the EU, including to EU countries with much less tax revenue and much higher public debt, thus “damaging” possible European competitors and making their mergers & acquisitions operations in Southern Europe easier.

Currently this French-German project is over – and this is certainly not a bad thing.

Therefore, Brexit will favour a further separation between the Northern EU and the less developed Southern Euro area, not to mention the increasing separation between Central and Western Europe in terms of migration policy.

Germany can now use its differential with France to seek the support of smaller EU nations.

We will also have a medium-term scenario, which is very likely: the EU is losing much of its military potential and is no longer the second largest economy in the world, which would explain the much smaller EU budget – after Brexit – and the mounting of tension and contrast between the EU and the United States.

Furthermore, if Britain leaves the EU – as it will certainly do in the near future – it will increase Europe’s tendency to reach trade, energy and industrial agreements with the Russian Federation.

Following Brexit, the EU countries will be ever less able to make quick and effective strategic choices.

Hence Brexit is Britain’s acceptance of the fact that it wants and can play its own interests around the world, since the EU is not – if ever – a big player in the global geoeconomy.

If anything, it is a big protected market – and this is its essence, not some backup singers of Beethoven’s Ninth.

Considering that Great Britain has skilful ruling classes and brave people, it does not want to deal every step with the EU. It does not want to tie itself to a geopolitical project that it believes to have failed – and it is certainly not wrong. Finally, it does not want someone else in Brussels to prevent or favour its choices.

The EU is an assembly of accountants who believe they are a War Cabinet. The new Tory government is convinced that the faster Boris Johnson’s Brexit the more the EU will give in shamefully.

Certainly, Britain’s power projection that will materialize soon, with trade and financial agreements with the whole Commonwealth, Japan, South Korea and China will usher in a new phase of economic development in the country that, however, will be ever worse distributed.

Advisory Board Co-chair Honoris Causa Professor Giancarlo Elia Valori is an eminent Italian economist and businessman. He holds prestigious academic distinctions and national orders. Mr. Valori has lectured on international affairs and economics at the world’s leading universities such as Peking University, the Hebrew University of Jerusalem and the Yeshiva University in New York. He currently chairs “International World Group”, he is also the honorary president of Huawei Italy, economic adviser to the Chinese giant HNA Group. In 1992 he was appointed Officier de la Légion d’Honneur de la République Francaise, with this motivation: “A man who can see across borders to understand the world” and in 2002 he received the title “Honorable” of the Académie des Sciences de l’Institut de France. “

Europe

Honorouble Justice Petric: Opening the Vienna Process conference on Int Women’s Day

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It is a great honour for me to have the opportunity to address you today at an International conference on behalf of the organizers – International Institute for Middle East and Balkan Studies (IFIMES), fastest developing European media platform – Modern Diplomacy and other two co-organisers, not present today. I convey to you their all-hearted greetings with the wish that the conference be fruitful and successful.

I also take this opportunity to thank Ambassador Emil Brix, Director of the Vienna School of International Studies for collaboration.

I wish wisdom and foresightedness to today’s conference entitled “Europe – Future Neighbourhood: Disruptions, Recalibration, Continuity”. The topic of today’s event – second in the newly established Vienna Process – is important, not only for Europe but for the whole world. Given that our institute has a Special consultative status with ECOSOC in the UN, and that my country is soon to take up the EU Presidency, our obligation is even greater to deal with such topics.

Excellences and friends,

Today we mark an important historic date; International Women’s Day. I am truly delighted and honoured that we have so many ladies among the moderators, panellists, partners and viewers. Our daughters, sister and mothers are not only nicer, but are the brighter half of the mankind, too. Happy and organically healthy International Women’s Day to each and everyone of you!

And now, before closing, let me express our appreciation that our four partners are again with us: Diplomatic Academy Vienna, Modern Diplomacy, Culture of Peace and European Perspectives. Among the academia, media and other associated partners from 4 continents, we are indeed honoured to partner with the important Specialised Agency of the United Nations – UNIDO, as well as with the world’s second largest multilateral system after the UN, that of the OIC on this event.

This, second consecutive, gathering of the Vienna Process in its birth place – capital of Austria, is the best basis for our next step: conferences in Geneva in May and in Barcelona in September this year.  

Special thanks to our key-notes; Commissioner Várhelyi, State Presidents Vella of Malta and Meta of Albania, as well as Excellency Zannier – our newly apointed Director for Euro-Med for chairing the important, first Panel, on cross-Med cooperation, Miss Mazlic of Al Jazeera and Ms. Harvey of Ban Ki-moon Center for charing other two highly topical panels.

Due appreciation goes to our fellows in Brussels, London, New York, Ottawa, Athens, Geneva, Paris and in Vienna for making this event and our Process possible.   

Finally, a sincere thanks to all our panellists today. There valuable exchanges will be mutually beneficial to all of us gathering today for the battement of our common future and security in Europe and beyond.

Thank you.

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Europe

New constructivism needed towards Europe’s East

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Authors: Eugene Matos de Lara and Audrey Beaulieu

On the historic date of 0March 08th – International Women’s Day, a large number of international affairs specialists gathered for the second consecutive summit in Vienna, Austria. This leg of the Vienna Process event titled: “Europe – Future – Neighbourhood at 75: Disruptions Recalibration Continuity”. The conference, jointly organized by four different entities (the International Institute for Middle East and Balkan Studies IFIMES, Media Platform Modern Diplomacy, Scientific Journal European Perspectives, and Action Platform Culture for Peace) with the support of the Diplomatic Academy of Vienna, was aimed at discussing the future of Europe and its neighbourhood in the wake of its old and new challenges.

This highly anticipated conference gathered over twenty high ranking speakers from three continents, and the viewers from Australia to Canada and from Chile to Far East. The day was filled by three panels focusing on the rethinking and revisiting Europe and its three equally important neighbourhoods: Euro-Med, Eastern and trans-Atlantic (or as the Romano Prodi’s EU Commission coined it back in 2000s – “from Morocco to Russia – everything but the institutions”); the socio-political and economic greening; as well as the legacy of WWII, Nuremberg Trials, the European Human Rights Charter and their relevance in the 21st century,

The event was probably the largest gathering since the beginning of 2021 for this part of Europe.

Along with the two acting State Presidents, the event was endorsed by the keynote of the EU Commissioner for European Neighbourhood and Enlargement, Excellency Olivér Várhelyi. The following lines are short transcript of what he has said opening the Vienna Process event:

The COVID-19 (C-19) has brought numerous challenges to the table in terms of cooperation, adaptation but, mostly, resilience. As the crisis may be considered as a breaking point by some, European Commissioner for Neighborhood and Enlargement, Excellency Várhelyi, insisted on the opportunity emerging from it for the European Union (EU) and Eastern Europe to reinforce their collaboration to build a more stable area of “shared democracy, prosperity, stability and peace”. 

Throughout the crisis, the European Union has been a key actor for Eastern Europe and its response to the virus, providing the region efficient economic and physical support, which have allowed thousands of lives to be saved. However, despite the necessity of this help, the European Union has more significant projects and ambitions regarding its relation with Eastern Europe states. 

In 2020, the EU issued a proposal on the Eastern partnership mostly focused on resilience which unfolds in five pillars. The first pillar is addressed to the reinforcement of investments in the economy and connectivity. It, notably, aims to “further enhance support to small and medium enterprises”. These are EU’s backbone, accounting for over 90% of the business activities; the EU hosts 24 million small businesses. This economic machine together generates more than half of the EU’s GDP. The EU has great interest to keep them afloat during the C-19 crisis. 

The EU parliament in December 2020 reported on the need for the Commission to reevaluate their support to these medium and small enterprises. They need more resources to overcome bureaucratic requirements that will exponentially burden their ability to thrive during and past C-19. Small businesses are recognized as indispensable to achieve innovative and sustainable goals. An example of this are initiatives to incentivize companies to take up e-commerce, yet only 17% of the small businesses in the EU have digitized commerce.  

The second pillar is related to investments in the green transition. While Western Europe has demonstrated a positive approachregarding Paris Agreement goals, Eastern Europe seemed more reluctant. This attitude couldbeexplained by theirstaple-basedeconomy and by more significant matters on their plate, such as corruption and the reinforcement of the rule of law. Thus, the second pillar bridges with the first pillar since environmental issues should influence the investments and the development of small and medium enterprises and the development of the economic sphere. 

The third pillar is about investing in digital transformation. The digital world iscontinuallyevolving, and states need to adapt to this reality, especially considering it could be a pivotal instrument to get the economy back on track. The pandemic has been a great opportunity for countries to develop their digital sector. Enterprises have had to beingenious and proactive in adapting their activities to this new reality, which could be a game-changer for the future. Countries will have to grasp this opportunity and make the best out of it. Investing in technologies could also be profitable to other goals that have been set, such as investments that need to be done in the reinforcement of the rule of law, credible justice reforms and efficient public administration (fourth pillar). Indeed, digitization of information combined with robust cybersecurity platforms is the key to more opened and more transparent administrations. In parallel, other strategie swill need to beelaborated in order to enhance respect of the rule of law and reachdemocratic standards, in fact, a key point to the enlargement of the EU.

Finally, the fifth pillar is about investing in fair and inclusive societies. Eastern Europe countries are real mosaics in terms of ethnicities, religions and languages. Inequalities and social cleavages between these groups are still omnipresent in most Eastern Europe societies, and they need to be addressed to build a more united Europe. Several Eastern European states have elevated policiesthat bridge social ethical and cultural differences in the first place both in their national and EU integration political agenda. Indeed, bridging social gaps isa fundamental action in managing differences and for the upbringing of a healthy democracy.

The next reunion regarding the partnership will take place next fall and focus on three critical matters: recovery, resilience and reform. Although the COVID-19 crisis cannot forever guide interstates initiatives, its consequences have forced the world to adapt to several new realities. Consequently, European countries will need strong measures to recover, and those should be translated by measures addressing the creation of employment and economic growth to stay competitive in international markets. As the EU Commissioner Várhely imentioned, “socio-economic recovery is the absolute priority”, so we should also be expecting opportunities to reform social and political norms to face not only new issues but also trends that were very present in the past that are now simply accelerating.

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What to Do with Extraterritorial Sanctions? EU Responses

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One of the important decisions of the new US administration was its revision of the sanctions policy inherited from President Donald Trump. The “toxic” assets of the departed team include deterioriated relations with the European Union. The divisions between Washington and Brussels have existed since long before Trump’s arrival in the White House. The EU categorically does not accept US extraterritorial sanctions. Back in 1996, the EU Council approved the so-called “Blocking Statute”, designed to protect European businesses from restrictive US measures targeting Cuba, Iran and Libya. For a long time, Washington avoided aggravating relations with the EU, although European companies were subject to hefty fines for violating US sanctions regimes.

The situation deteriorated significantly during the Trump presidency. At least three events served as a cold shower for the EU with respect to the bloc’s relationship with the US. The first was the unilateral withdrawal of the United States from the JCPOA—the “Iranian nuclear deal”. Trump renewed American restrictions on Iran in full, and then significantly expanded them. His demarche forced dozens of large companies from the EU to leave Iran; they were threated by the American authorities with fines and other coercive measures. Brussels was powerless to convince Washington to return to the JCPOA. The EU authorities were also unable to offer their businesses guarantees of reliable protection against punitive measures being taken by the US Treasury and other departments. The second event was Washington’s powerful attack on the Nord Stream 2 pipeline project. Trump has openly opposed the pipeline, although the Obama administration was also against the pipeline. Congress has passed two sanctions laws targeting Russian pipeline projects. The US Congress and the State Department directly warned European business about the threat of sanctions for participating in the project. In addition to Iran and Russia, concern in the EU was also caused by the aggravation of US-Chinese tensions. Brussels distanced itself from Trump’s cavalry attack on China. So far, US restrictions against “Chinese communist military companies”, telecoms and officials have minimally affected the EU. However, Washington aggressively pushed its allies to oust Chinese technology companies. It cannot be ruled out that in the future, US foreign policy towards China will become a problem for Brussels.

For the EU, all these events have become a reason to think about protection from extraterritorial US sanctions. The work on them was carried out by both European expert centres and the European Commission. Currently, we can talk about the formation of a number of strategic goals, the achievement of which should allow the European Union to increase its stability in relation to extraterritorial sanctions of the United States and other countries.

Such goals include the following:

Strengthening the role of the euro in international settlements. Already today, the euro ranks second after the dollar in international payments and reserves. However, unlike the United States, the EU does not use this advantage for political purposes. Many transactions between European businesses and their foreign partners are carried out in US dollars, which makes them more vulnerable to subsequent coercive measures. Calculations in euros could reduce the risk of transactions with those partners against whom the sanctions of the United States or other countries are in effect, but the sanctions of the UN Security Council or the EU itself do not apply. Here the EU authorities have laid serious groundwork and have a good chance of achieving their goal.

1.Creation of payment mechanisms, which cannot be stopped from the outside. INSTEX, a payment channel for humanitarian deals with Iran, is often cited as an example of such mechanisms. In 2020, the first transactions were made. However, success in this area raises questions. INSTEX has been widely advertised by EU politicians, but initial expectations were too high. The mechanism has not yet justified itself, even for humanitarian purposes. The Treasury Department can impose blocking sanctions against INSTEX at any time if it considers that the mechanism is being used to deliberately circumvent US restrictions against Iran. Switzerland’s SHTA mechanism, which is used for humanitarian deals with Iran, looks much better. It was created jointly with the Americans and it should not have any problems with functionality. However, regarding payment mechanisms in the EU, there are not only humanitarian transactions. There’s also the matter of plans to create secure transaction mechanisms in the trade of energy or raw materials; the question of what prospects these have for implementation remains.

2.Ensuring the possibility of unhindered settlements and access to other services for individuals and legal entities in the EU that have come under extraterritorial sanctions. In other words, we are talking about the fact that a citizen or a company from the EU, which fell, for example, under the blocking sanctions of the US Treasury, could make payments within the EU. Now European banks will simply refuse such transactions, and the courts are likely to side with them. In fact, the European Union wants to create infrastructure that has already been created, for example, in Russia. Moscow was considering the establishment of a national payment system even before the large-scale sanctions of 2014. Despite the limited weight of Russia in the global financial system, the country has its own sovereign payment system, which allows its own citizens to carry out transactions on its own territory.

3.Updating the 1996 Blocking Statute. In particular, we are talking about the development of an instrument of compensation for companies that have suffered from extraterritorial sanctions.

4.Creation of information databases in the interests of European companies under the risks of extraterritorial sanctions, as well as the provision of systematic legal assistance to companies that have come under foreign restrictions. In particular, we are talking about assisting European companies and citizens of the EU countries in defending their interests in US courts, as well as using other legal mechanisms, for example, within the WTO.

If necessary—balancing the extraterritorial measures of the United States or other countries with restrictive counter-measures.

However, the EU sanctions agenda is far from limited to the threat of extraterritorial sanctions. Ultimately, the United States is an ally and partner of the EU, which means that the opportunities for smoothing out crisis situations remain broad. Collaboration at the agency level is also highlighted as a recommendation. Moreover, after Trump’s departure, the United States may be more attentive to the concerns of the European Union.

The main priority remains the development of the EU’s own sanctions policy. Here many problems and tasks arise. The main ones include the low speed of decision-making and poor coordination in the implementation of sanctions. The centralisation of sanctions mechanisms in the hands of Brussels is becoming an important task for the European Commission.

The article is published as part of the Valdai Club’s Think Tank project, continuing the collaboration between Valdai and Observer Research Foundation (New Delhi).

From our partner RIAC

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