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Europe’s Digital Options for Boosting Competitiveness, Inclusion, and Convergence

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Digital technologies are transforming economic opportunities, a trend being accelerated as businesses and workers respond to the COVID-19 pandemic. The potential to raise productivity and to expand opportunities for firms that are small or in less developed locations is real.  But it is not being fully realized according to Europe 4.0: Addressing the Digital Dilemma, launched today.  The evidence shows a tension in the region’s presence in the digital space and in building a vibrant digital economy that benefits more people. Those technologies where European firms are most competitive are those where the benefits are most concentrated in larger firms and existing production hubs; those technologies with the greatest potential for inclusion are those where European firms are less competitive.

“Europe is a global leader in a number of operational technology fields such as smart robotics and 3D printing. But it lags in the spheres of transactional technology, such as online retail and ride-sharing, and informational technology, such as cloud computing and social media. The Europe 4.0 report suggests Europe can pursue opportunities to use technology to do more as countries seek greater market inclusion, competitiveness, and convergence,” Gallina A. Vincelette, Director for the European Union Countries at the World Bank.

Despite its advantages in operational technology, however, Europe also faces challenges in this area, including the fact these technologies tend to foster geographic concentration. It can also make it more difficult for smaller firms to compete without access to high cost advanced technologies.

“Encouraging the use of digital platforms can foster job creation,” said Vincelette. “The report shows that nearly two-thirds of firms in Europe that implemented digital platforms in their businesses experienced an increase in employment growth over the past three years. These benefits have been reinforced during the COVID-19 pandemic, with more reliance on technology and home-based work reducing operational costs and increasing competitiveness and market inclusion. In the context of the pandemic, digital connectivity has become an essential public good and prerequisite for business and operational continuity.”

While the report notes that transactional technologies have the biggest potential to boost market inclusion and geographic convergence in the region, only one in three small and medium enterprises in Europe use these platforms; and even fewer are globally competitive.

Informational technologies can also boost market inclusion by closing the labor productivity gap between large and small firms – with these technologies disproportionately benefiting small firms due to the low fixed cost of installation relative to hardware and the elimination of upfront capital expenditure. However, traditional informational technologies have not enabled greater geographic convergence in Europe.

According to the report, Europe can make progress on its digital agenda by embracing new technologies in ways that can boost simultaneously economic competitiveness, market inclusion, and geographic convergence. Reforms and investments focusing on scaling markets, shaping the commercial use of data, and smoothing the adoption of technology will help Europe achieve its triple digital objectives without compromising its social values. Completing the digital single market and closing gaps in infrastructure, skills, and logistics can help scale markets, while addressing challenges posed by AI in ways that are aligned with data privacy priorities can help inform the commercial use of data.

Finally, investments in frontier innovation, support to research and development, and capacity-building initiatives can help smaller firms and firms in lagging regions adopt technology more quickly.  

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Riyadh joins Shanghai Cooperation Organization

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Saudi Arabia’s cabinet approved on Wednesday a decision to join the Shanghai Cooperation Organization (SCO), as Riyadh builds a long-term partnership with China despite U.S. security concerns.

Saudi Arabia has approved a memorandum on granting the Kingdom the status of a dialogue partner in the Shanghai Cooperation Organization, state news agency SPA said.

The SCO is a political and security union of countries spanning much of Eurasia, including China, India and Russia.

Formed in 2001 by Russia, China and former Soviet states in Central Asia, the body has been expanded to include India and Pakistan, with a view to playing a bigger role as counterweight to Western influence in the region.

Iran also signed documents for full membership last year.

Dialogue partner status will be a first step within the Organisation before granting the Kingdom full membership in the mid-term.

The decision followed an announcement by Saudi Aramco, which raised its multi-billion dollar investment in China, by finalising a planned joint venture in northeast China and acquiring a stake in a privately controlled petrochemical group.

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Russia will deploy nuclear weapons in Belarus – EU and NATO went ballistic

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Baroness Goldie, who is an experienced Scottish politician and life peer who served as Leader of the Scottish Conservative Party from 2005 to 2011 and as the UK’s Minister of State for Defence since 2019, said to the Parliament: “Alongside our granting of a squadron of Challenger 2 main battle tanks to Ukraine, we will be providing ammunition including armour piercing rounds which contain depleted uranium. Such rounds are highly effective in defeating modern tanks and armoured vehicles.”

The Anglo-Saxon clique’s core objective is a calculated escalation of the proxy war that is certain to draw forth a robust reaction from Moscow, as predictable as night follows day, writes M.K. Bhadrakumar, Indian Ambassador and prominent international observer.

Indeed, that is precisely what happened when Russian President Vladimir Putin announced that Russia will deploy its tactical nuclear weapons in Belarus. Putin linked this to a request from Belarus in reaction to Baroness Goldie’s statement in London a week ago.

More importantly, Putin also drew the analogy of the US placing its nuclear weapons on the territories of the allied NATO countries for decades.

The EU and NATO went ballistic after Putin’s disclosure. EU’s chief diplomat Josep Borrell said Moscow’s decision was “an irresponsible escalation and threat to European security.” He promised to impose “further sanctions” against Belarus!

A NATO spokeswoman called Moscow’s decision “dangerous and irresponsible.” Interestingly, though, the Biden administration neatly side-stepped the issue, focusing instead that the US has not seen any signs that Russia has moved nuclear weapons to Belarus or anywhere else!

What is the game plan? First, the Anglo-Saxon clique would hope that the issue will create further disquiet and insecurity in Europe vis-a-vis Russia and would rally European countries behind the Biden administration at a time when fault lines were appearing within the transatlantic alliance over a protracted war in Ukraine that might be catastrophic for European economies.

However, Washington is hard-pressed to respond to Putin’s remark that Russia is only doing something that the US has been doing for decades.

The crux of the matter is, as with the Cuban missile crisis of 1962, the Russian decision on tactical nuclear weapons in Belarus is retaliatory, drawing attention to the US missiles stationed close to its borders. (An estimated 100 nuclear weapons are stored in vaults in five European countries — Belgium, Germany, Italy, Netherlands and Turkey.)

Worse still, the US practices a controversial arrangement known as “nuclear sharing”, under which it installs nuclear equipment on fighter jets of select non-nuclear NATO countries and train their pilots to carry out nuclear strike with US nuclear bombs. This is happening when the US, being a party to the nuclear Non-Proliferation Treaty (NPT), has promised not to hand over nuclear weapons to other countries, and the non-nuclear countries in the NATO’s sharing arrangement have themselves promised not to receive nuclear weapons from the nuclear weapon states!

The NATO declared last year that seven NATO countries contributed dual-capable aircraft to the nuclear sharing mission. These countries are believed to be the US, Belgium, Germany, Italy, Netherlands, Turkey and Greece. And all are signatories to the NPT!

There is no question that depleted uranium munitions are radioactive and toxic and their heavy use in the Yugoslavia and Iraq wars has been linked to birth defects and cancers. It has been tied to “the highest rate of genetic damage in any population ever studied” in Fallujah, the city subjected to two brutal US sieges during the invasion of Iraq.

Britain appears to be creating conditions in Europe to justify the basing of nuclear-armed US bombers at Lakenheath in Suffolk, which were removed in 1991 in line with the Intermediate Nuclear Forces treaty, stresses M.K. Bhadrakumar.

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Free will trumps determinism in Gulf politics

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Image source: twitter @MohamedBinZayed

China’s mediation to normalise Saudi-Iranian diplomatic ties has been widely welcomed internationally, especially in the West Asian region. A clutch of unhappy states that do not want to see China stealing a march on any front, even if it advances the cause of world peace, mutely watched, notes M.K. Bhadrakumar, Indian Ambassador and prominent international observer.

The US led this pack of dead souls. But the US is also on the horns of a dilemma. Can it afford to be a spoiler?

Saudi Arabia is not only the fountainhead of petrodollar recycling — and, therefore, a pillar of the western banking system — but also America’s number one market for arms exports. Europe is facing energy crisis and the stability of the oil market is an overriding concern.

Saudi Arabia has shown remarkable maturity to maintain that its “Look East” policy and the strategic partnership with China do not mean it is dumping the Americans. Saudis are treading softly.

Yet, the fact remains that the Saudi-Iranian deal drives a knife into the heart of the US’ West Asian strategy. The deal leaves the US and Israel badly isolated. The Jewish lobby may show its unhappiness during President Biden’s bid for another term. China has stolen a march on the US with far-reaching consequences, which signifies a foreign policy disaster for Biden.

Washington has not spoken the last word and may be plotting to push back the peace process from becoming mainstream politics of the West Asian region. The American commentators are visualising that the Saudi-Iranian normalisation will be a long haul and the odds are heavily stacked against it.

The Saudi official said China’s role makes it more likely that the terms of the deal will hold. “It (China) is a major stakeholder in the security and stability of the Gulf,” he noted. The official also revealed that the talks in Beijing involved “five very extensive” sessions on thorny issues. The most difficult topics were related to Yemen, the media, and China’s role, the official said.

Meanwhile, there are positive tidings in the air too — the likelihood of a foreign minister level meeting between Iran and Saudi Arabia in the near future and, more importantly, the reported letter of invitation from King Salman of Saudi Arabia to Iranian President Ebrahim Raeisi to visit Riyadh.

Iranian Foreign Minister Hossein Amirabdollahian remarked on Sunday with reference to the Yemeni crisis that “We [Iran] are working with Saudi Arabia on ensuring the stability of the region. We will not accept any threat against us from neighbouring countries.”

To be sure, the regional environment is improving. Signs of an overall easing of tensions have appeared. For the first visit of its kind in over a decade, the Turkish Foreign Minister was in Cairo and the Egyptian FM has been to Turkey and Syria.

Last week, on return from Beijing, Admiral Ali Shamkhani, secretary of Iran’s Supreme National Security Council headed for the UAE where President Sheikh Mohammed received him.

Soon after that Syrian President Bashar al-Assad arrived in the UAE on an official visit. “Syria has been absent from its brothers for too long, and the time has come for it to return to them and to its Arab surroundings,” Sheikh Mohamed told Assad during their historic meeting at the presidential palace.

Evidently, the regional states are tapping the “feel-good” generated by the Saudi-Iranian understanding. Contrary to the western propaganda of an estrangement lately between Saudi Arabia and the UAE, Sheikh Mohammed is identifying closely with the positive trends in the regional environment.

This is where China’s overarching role fostering dialogue and amity becomes decisive. The regional countries regard China as a benign interlocutor and the concerted attempts by the US and its junior partners to run down China make no impact on the regional states.

Fundamentally, both Saudi Arabia and Iran have compulsions to shift the locus of their national strategies to development and economic growth. This has received scant attention. The Western media has deliberately ignored this and instead demonised the Saudi Crown Prince and created a doomsday scenario for Iran’s Islamic regime.

That said, the known unknown is the tension building up over Iran’s nuclear programme… A Russian-Chinese coordinated effort is needed to forestall the US from raking up the nuclear issue in tandem with Israel and ratchet up tensions, including military tensions, in such a way that a pretext becomes available to destabilise the region and marginalise the Saudi-Iran agreement as the leitmotif of regional politics.

On balance, the regional states are acting on free will, increasingly and eschewing their determinism that was wedded to decisions and actions that were thought to be causally inevitable.

The realisation has dawned now that it is within the capacity of sovereign states to make decisions or perform actions independently of any prior event or state of the universe, stresses M.K. Bhadrakumar.

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