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Great Powers Competition in Moldova

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Moldova is the forgotten epicenter of tensions between the West and Russia, located between Romania and Ukraine, with no direct access to the sea since the territorial changes of the Soviet era. This country of 3.3 million inhabitants for 33,846 square km is plagued by ethnic divisions with Gagauzia and Transnistria, two territories diplomatically close to Moscow. Both the Kremlin and Brussels are reluctant to integrate Moldova into their respective zones of influence due to several elements detailed in this article, which has led to a political situation that has alternated pro-European and pro-Russian governments since the end of the Cold War.

Confirming this unstable political context, Maia Sandu, a pro-European Moldovan stateswoman, was elected president of the country on November 15, 2020, succeeding pro-Russian Igor Dodon. However, this election should not lead to a rapprochement between the West and Moldova, as the major powers are accustomed to considering the country as a political no man’s land, in contrast to the other members of the Eastern Partnership.

The Kremlin’s Reluctance to Take a Proactive Approach in Moldova

For Moscow, the lack of access to the Black Sea makes Moldova less strategically important than other countries in the region. As such, the Kremlin was more active in Crimea and Georgia with the diplomatic recognition of Abkhazia and South Ossetia, in contrast to Moldova, where no noticeable change has taken place in Transnistria since 1992.

This situation is paradoxical because a rapprochement between Moscow and Chisinau could confer many strategic advantages on the Kremlin. In this respect, better Russian-Moldovan relations would thus hinder any possible advance of the European Union and NATO in Molodva, and could also force Ukraine to reconsider its diplomatic approach vis-à-vis the Eurasian Economic Union (EEU). Moreover, the strengthening of military cooperation between Moscow and Chisinau would increase pressure on Romania, which is favourable to Moldova’s integration into Euro-Atlantic institutions.

Moscow’s cautious approach is all the more paradoxical given that Russia has sympathisers in Moldova with the two territories of Transdniestria and Gagauzia, Tiraspol and Comrat, wishing for rapprochement and even integration within Russia.

For Transnistria, which has been de facto independent of Moldova since the end of the Cold War and whose desire for integration into the Russian Federation was demonstrated by the 2006 referendum with 97.5% of the votes in favour, a diplomatic rapprochement between Moldova and Russia could improve relations between Tiraspol and Chisinau.

On an economic level, if Moldova joins the EEU, Transdniestria could be taken into account, with Chisinau considering it as part of its territory and Tiraspol having an economic interest in aligning its standards with those of Russia.

On the military level, an increased influence of the Kremlin in Moldova would make it possible to negotiate the integration of Chisinau into the Collective Security Treaty Organisation (CSTO). If this were to happen, the Kremlin could reduce the presence of Russian peacekeeping troops in Transdniestria. In effect, if Moldova joins the CSTO, Moscow would become the protector of Moldova and de jure of Transdniestria, as this territory is a part of Moldova in accordance with Russian, Moldovan and international law.

The withdrawal of Russian soldiers from Transnistria, who are monitoring the contents of Soviet military equipment warehouses, is a source of tension between the West and Russia. In November 2008, the NATO Parliamentary Assembly adopted a resolution calling on Russia to withdraw its forces in accordance with the commitments made at the 1999 OSCE summit in Istanbul. The UN General Assembly adopted a similar resolution (document A/72/L.58) calling on the Russian Federation to pull out of Moldovan territory in June 2018.

With Moldova close to Russia, Russian peacekeeping troops would be given the opportunity to withdraw or reduce their numbers, thus easing tensions between the international community and Russia. For the Kremlin, this would also allow it to optimise operating costs and allocate this budget to other peacekeeping operations, including the Nagorno-Karabakh troops, which have been operating since November 10, 2020.

The second pro-Russian territory of Moldova is Gagauzia, which extends over 1,830 square kilometres divided into four non-contiguous zones, grouping around fifteen communes into three districts. Unlike Transnistria, which is de facto independent of Chisinau, Gagauzia is incorporated into Moldova. The inhabitants are initially Turkish-speaking, largely Russified during the 19th and 20th centuries, and now culturally distinct from the Turks.

The Russian-speaking Gagauzs wish to move closer to Russia because they have little advantage in learning Moldavian (Romanian language). Historically, Russia appears to be a country that protects Gagauz interests, a fact that still permeates relations between Moscow and Comrat (the capital of Gagauzia) and bears witness to Moscow’s soft power in this territory.

Comrat is in favour of strengthening the influence of the Kremlin in Moldova in order to promote the Russian language against Romanian, but also to restrict the influence of Bucharest, the fear of the Gagauz being integrated into a “Greater Romania” which would not defend their interests.

Given these elements, and despite the strategic advantages that a rapprochement between Moscow and Chisinau could bring, Moldova remains a political no man’s land for Russia. Moscow’s reluctance to become more involved stems from several factors, the main one being the economic health of the country, the poorest on the European continent with a nominal GDP of $4,498, which means that integration into the EEU would not strengthen the latter’s economic power, making Moldova dependent on other members.

Enlargement of the CSTO into Moldova would lead to a deterioration in Moscow’s relations with the western world, particularly with Romania, and would have repercussions for all the countries of the Black Sea, which could encourage certain states such as Georgia to speed up their rapprochement with NATO and the EU.

An Expensive Investment That Diminishes Interest in the Western World

Moldova is of little economic interest to the EU, with the only competitive sector being agricultural products due to the abundance of rare earth. In addition, the corruption of elites and the departure of young graduates hampers the emergence of new services and active civil society.

Chisinau invests a mere 0.4% of its GDP in its armed forces, with fewer than 6,000 soldiers relying on Soviet equipment, and therefore of little interest to NATO. Apart from the lack of military means, Moldova is a neutral state that does not wish to join an alliance (NATO or CSTO). A poll carried out in 2018 shows that 22% of Moldovans are in favour of a project to join NATO and 43% against it.

While Moldova’s integration into the EU would be a strong symbol and testify to the resilience of Brussels’ soft power in a post-BREXIT context, it would be expensive and the EU would have to invest considerable sums within the framework of the Eastern Partnership to enable Chisinau to meet the accession criteria.

Integration into the Schengen area would trigger a demographic crisis, with young Moldovan citizens having few opportunities at home. Consequently, the European Union prefers to adopt an attitude similar to that of Russia and consider Moldova as a political no man’s land.

In this regard, the result of the elections of November 15, 2020, with Maia Sandu attests to the influence of western influence in the country, but also highlights the lack of confidence in Dodon’s leadership, who has not managed to achieve a rapprochement with Russia during his term as President.

The EU-Moldova cooperation sought by Maia Sandu will struggle to emerge due to the lack of human resources in the country and the absence of infrastructure to export and import goods. Moldova has not had the financial means to modernise its road and rail networks since the fall of communism.

Romanian Ambitions in Moldova

Because of its cultural and linguistic proximity to Moldova, Bucharest would like Chisinau to move closer to the Euro-Atlantic structures of which Romania is a member, even considering going as far as full integration with the rebirth of a “Greater Romania,” which brought the two states together from 1918 to 1940. This prospect is not acceptable to the Gagauz and Transnistrians, but also to many citizens and Moldovan elites, as the country would become an impoverished region of Romania with no control over its future.

Romania’s proactive approach is a source of apprehension for Russian speakers and an argument in favour of Transnistrian and Gagauz separatism. Bucharest is especially influential because the administration has adopted a policy of “passportisation” in Moldova. Romanian citizenship is granted to Moldovans who apply for it and can prove that they have a Romanian ancestor, thus granting European citizenship with its benefits. In total, more than 726,100 Moldovan citizens have thus become Romanians since the end of the Soviet Union.

A facetious remark circulating in Moldova mentions that the country is going to join the European Union, with or without the agreement of Brussels, since there will soon be no Moldovans and only Romanian citizens.

Beijing’s Soft Power in the Black Sea

As in the rest of the Black Sea, the Chinese influence in Moldova has increased in recent years. Beijing is interested in this territory because of the lack of infrastructure and the prevailing corruption, which allows Chinese companies to offer all types of partnerships in exchange for various counterparts.

In 2015, the Chinese company SOE China Shipping Container Lines launched container transport services in the Moldovan port of Giurgiulesti — the country’s only harbour accessible to Black Sea vessels — via the Danube, after signing a terminal services agreement with the national operator. This investment enabled Chisinau to export its products abroad, especially as its economy was suffering from the Russian embargo on Moldovan wine imports. According to local companies, the international free port of Giurgiulesti should continue its development and become a logistics platform with a business park enabling Chinese companies to access the European and Eurasian markets.

Moldova has started negotiations on a free trade agreement (FTA) with Beijing in 2017, removing barriers to the import of certain products and strengthening business exchanges. According to forecasts published by the Moldovan authorities, Moldova’s exports to China could increase by 39.85% and its GDP by 0.42% as a result of the FTA.

The most significant development took place in 2019, when Moldova concluded an infrastructure agreement with two Chinese contractors for the construction of nearly 300 kilometres of roads, at an estimated cost of $400 million. One road will surround the capital Chisinau and the other will link Ukraine to the north. Two Chinese companies — the China Highway Group and the China Railway Group Limited — will participate in this project, marking the first Chinese-led infrastructure project in Moldova. According to Chisinau, the projects will significantly improve traffic and contribute to overall economic growth. A total of 12 major Chinese companies also participated in the Chisinau Business Forum in April 2019, underlining their commitment to increase investment in the country. In the context of the Covid-19 crisis, the Chinese authorities announced that the debt of 77 countries, including Moldova, had been temporarily suspended.

Beijing’s choice to focus its attention on Moldova is explained by the country’s non-alignment, but also by the reluctance of Moscow and the European Union to become more involved. China is, therefore, meeting no resistance from the Russians or westerners.

For the Kremlin, Chinese investments in the region could harm the ambitions of Brussels and Washington in Moldova, China being an ally of Russia. While for westerners, China was providing considerable aid to the EU by modernising infrastructure, which could bring Chisinau closer to Romania and the EU because of the weakness of Chinese soft power, cooperation between Beijing and Chisinau is confined to the economic sector.

No Man’s Land or Chinese Gateway to the Black Sea?

In conclusion, Moldova is one of the epicentres of the tensions between the West and Russia, but the latter are reluctant to increase their involvement because of the unfavourable economic context, as well as the lack of direct access to the Black Sea.

For the EU and NATO, the results of the recent elections should, in theory, lead to a rapprochement, but in practice Transnistria and Gagauzia will hinder the most ambitious projects. Romania is called upon to play a leading role in this rapprochement, but the divisions between Bucharest and Chisinau are a reality to be taken into account and the rebirth of a Greater Romania seems unlikely.

Russia has a strategic interest in increasing its influence in Moldova by integrating Chisinau into the EEU and the CSTO, but this would encourage other Black Sea countries such as Georgia to draw even closer to the western world. Moreover, the presence of Russian troops in Transdniestria and the pro-Russian position of Comrat allow the Kremlin to remain present in the region, independently of Chisinau’s diplomacy, which does not encourage Moscow to develop a pro-active policy.

Beijing’s economic diplomacy seems to be producing results and bringing the two states closer together. In this respect, China has succeeded in modernising the Moldovan infrastructure despite obstacles rooted in corruption. This makes Moldova a potential laboratory for Chinese soft power and indirectly benefits both westerners and Russians.

In view of the results of the November 2020 elections, it seems appropriate to pay attention to the rapprochement between Russia and Transnistria, a process that could be accentuated if Maia Sandu confirms her pro-western policy. Gaguzia could gain in importance, as a move towards the EU and NATO could lead to the resurgence of separatism in this region.

Resources

CENTRAL INTELLIGENCE AGENCY (CIA), «The European Borders of the USSR», Office of research and Reports, 1955

CENTRAL INTELLIGENCE AGENCY (CIA), «The Challenge of Ethnic Conflict to National and International Order in the 1990s: Geographic Perspectives», Rapport de conférence, 1995

LAMBERT Michael, Stratégies de mise en place des Soft Power européen et russe en Moldavie après la guerre froide, Études de l’IRSEM n° 40, 2015, 94 pages (www.defense.gouv.fr/content/download/393969/5890290/file/Etude_IRSEM_n40.pdf)

LAMBERT Michael, Comprendre la présence militaire russe en Transnistrie, Revue Défense Nationale 2019/3 (N° 818), pages 107 à 112.

KLEIN Margarete, Russlands Militärpolitik im postsowjetischen Raum. SWP-Studie, 2018

BABAN Inessa, «The Transnistrian Conflict in the Context of the Ukrainian Crisis», Collège de défense de l’Otan 2015, Research Paper n° 122, 12 pages (www.ndc.nato.int/download/downloads.php?icode=468).

KLIMENKO Ekaterina, «Protected Armed Conflicts in the Post-Soviet Space and their Impact on Black Sea Security», SIPRI Insights on Peace and Security n° 2018/8, décembre 2018, 28 pages (www.sipri.org/sites/default/files/2018-12/sipriinsight1808_0.pdf)

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Ph.D. in History of Europe & International Relations, Sorbonne University - INSEAD Business School, (Geo)political scientist working on Sino-European/Russian relations and soft power in the 21st century

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The French Dispatch: The Year 2022 and European Security

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2021 has been rich in negative events for European security: the world has witnessed the collapse of the Open Skies Treaty, American-French discord concerning AUKUS, the termination of the official dialogue between Russia and NATO, and the migration crisis on the Polish-Belarusian border.

Over the past year, the Western countries seem to have been searching for new strategies. Since the end of 2019, NATO has been developing a new concept, and in June 2021 at the summit in Brussels, to the displeasure of sceptics, it was possible to agree on its basis—the transatlantic agenda NATO 2030 (# NATO2030) . While the broad formulations and a direct hierarchy of threats still require clarification, new projects in the field of weapons development, combating climate change, and increasing interoperability have already been declared.

In parallel, since the end of 2020, work has continued on the EU European Parliamentary Research Service project—the Strategic Compass. The dialectic between Atlanticism and Europeanism softened after Joe Biden came to power in the United States, but the European interests and red lines retain their significance for transatlantic relations. In 2022, together with the rotating post of the President of the EU Council, the role of a potential newsmaker in this area has been transferred to Emmanuel Macron, who feels very comfortable in it.

On December 9, the provisions of the Paris programme were published under the motto “Recovery, power, belonging” France, as expected, is reiterating its call for strengthening European sovereignty. The rhetoric of the document and its author is genuine textbook-realism. But now for the entire European Union.

Objectives of the French Presidency, are not articulated directly but are quite visible—making the EU more manageable and accountable to its members, with new general rules to strengthen mobilisation potential, and improve the EU’s competitiveness and security in a world of growing challenges.

Paris proposes reforming the Schengen area and tightening immigration legislation—a painful point for the EU since 2015, which has become aggravated again in recent months. This ambitious task has become slightly more realistic since Angela Merkel’s retirement in Germany. At least a new crisis response mechanism on this issue can be successful, even if it is not fully implemented.

In addition, the Élysée Palace calls on colleagues to revise the budget deficit ceilings of the Maastricht era to overcome the consequences of the pandemic and finally introduce a carbon tax at the EU borders. The latter allows for a new source of income and provides additional accountability for the implementation of the “green” goals by member countries.

The planned acceleration of the adoption of the Digital Markets Act (DMA) and Digital Services Act (DSA), developed by the European Commission at the end of 2020, is also aimed at unifying the general legislation and consolidating the European position in the world. In other words, the French Foreign Ministry quite soberly assesses the priority areas and vulnerabilities of the European Union and focuses on them, but with one exception.

A special priority of the French presidency is to strengthen the defence capabilities of the EU. On the sidelines, the French diplomats note that the adoption of the Strategic Compass in the spring of 2022, as originally planned, is a fundamental task, since otherwise the process may be completely buried. With a high degree of probability, this is so: the first phase of the development of the Compass—the general list of threats—lasted a year, and consisted of dozens of sessions, meetings, round tables with the involvement of leading experts, but the document was never published. If Macron won’t do it, then who will?

As the main ideologist and staunchest supporter of the EU’s “strategic autonomy”, the French president has been trying for five years to mobilise others for self-sufficiency in the security sphere. With his direct participation, not only the Mechanism of Permanent Structured Cooperation (PESCO) in the defence area was launched, where France is the leader in a number of projects, but also the so-far failed European Intervention Initiative. Even without focusing on French foreign policy traditions and ambitions, the country remains a major European arms exporter and a nuclear power, where the military-industrial complex is closely affiliated with the state.

Implementing the 2022 agenda is also a matter of immediate political gain as France enters a new electoral cycle. The EU Summit will take place on March 10-11, 2022, in Paris, a month before the elections, and in any case it will become part of the election campaign and a test for the reputation of the current leader. Macron has not yet officially announced his participation in the presidential race, but he is actively engaged in self-promotion, because right-wing politicians espousing different degrees of radicalism are ready to take advantage of his defeats to purchase extra points.

The search for allies seems to be of key importance for victory at the European level, and the French Foreign Ministry has already begun working on this matter. In 2016–2017 the launch of new initiatives was predetermined by the support of Germany and the Central and East European countries. The change of cabinet in Germany will undoubtedly have an impact on the nation’s policy. On the one hand, following the results of the first visit of the new Chancellor Olaf Scholz to Paris on December 10, the parties announced the closeness of their positions and a common desire to strengthen Europe. On the other hand, the coalition of Social Democrats (SDP) was made up with the Greens and Free Democrats (FDP) who are not at all supporters of excessive involvement in security issues. What “strategic autonomy” means for France, constitutes a more restrained “strategic sovereignty” for Germany Therefore, an intensification of dialogue with Italy and Spain, which are both respected and potentially sympathetic, is likely. The military cooperation agreement concluded in the autumn of 2021 with Greece, an active member of PESCO, can also help Paris.

Gaining support from smaller countries is more challenging. Although the European project is not an alternative to the transatlantic one, the formation of a common list of threats is a primary task and problem for NATO as well. As mentioned above, it is around it that controversy evolves, because the hierarchy determines the distribution of material resources. The countries of Eastern Europe, which assume that it is necessary to confront Russia but lack the resources to do so, will act as natural opponents of the French initiatives in the EU, while Paris, Rome and Madrid will oppose them and the United States in the transatlantic dialogue. The complexity of combining two conversations about the same thing with a slightly different composition of participants raises the bar for Emmanuel Macron. His stakes are high. The mobilisation of the Élysée Palace’s foreign policy is one of the most interesting subjects to watch in the year 2022.

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Unilateral vs Bilateral Euroisation: Political, technical and practical issues in the curious case of north Cyprus

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The island of Cyprus has been split between a Greek Cypriot south and a Turkish Cypriot north since 1974. The Turkish Cypriot state declared in the north is recognised only by Turkey, while the Republic of Cyprus in the south is recognised internationally and is a European Union (EU) member since 2004. In 2004, 65 percent of Turkish Cypriots voted in favor of the United Nations’ Annan Plan for reunification only for Greek Cypriots to reject it. As a result, Cyprus joined the EU as a de facto divided island. Despite joining the EU as a divided island, the whole of Cyprus is considered an EU territory. However, the EU law is suspended in the north until reunification is achieved.

This resulted in the euro being the legal tender only in the southern part of the island. With the recent and continuous depreciation of the Turkish lira, the long-standing question of whether and how the north could switch to the euro has once again intensified. While a bilateral adoption of the euro is not on the cards until a reunification on the island, north Cyprus could technically unilaterally adopt the euro. However this could cause complications in the future as the EU is adamant that unilateral euroisation cannot be used as a mechanism by Member States to circumvent the stages foreseen by the Maastricht Treaty.

Under normal circumstances, “Member States with a derogation”, i.e. the Member States that have not yet fulfilled the necessary conditions for the adoption of the euro are first required to enter the Exchange Rate Mechanism (ERM II) to achieve eurozone membership. This is a “waiting room” where any country aspiring to adopt the euro is required to stay for at least for two years. It is now a well-known fact that the ECB shares the opinion of the Economic and Financial Affairs Council (ECOFIN), i.e. the meeting of the finance ministers of EU Member States adopted in 2000, that this requirement should not be waived. Assuming the northern part of Cyprus is considered a Member State, the same principle will apply and therefore it would not be welcome to adopt the euro unilaterally, bypassing the convergence process foreseen by the Treaty for the adoption of the euro.

Currently, ERM II comprises the currencies of Bulgaria, Croatia and Denmark. Just like these countries, north Cyprus would be expected to peg its national currency to the euro and, given the consent of the European System of Central Banks, fixe a “central exchange rate” and a “deviation margin” under Exchange Rate Mechanism (ERM II) for a duration of no less than two years. If successful based on its ERM II performance, a final exchange rate would be determined and the redenomination would be done over a transition period. 

In the case of north Cyprus, it is understood that the EU might have already agreed to apply a fast track approach where there would be a one-year transition period. However, this has not been confirmed officially by the EU so the EU’s stance in practice is not known. After all, even Denmark, a Member State which has negotiated an opt-out arrangement before the adoption of the Maastricht Treaty has been participating in ERM II although it chose not to adopt the euro. So the EU’s approach in the case of northern Cyprus would not expected to be too lenient. There is no way to find out unless north Cyprus continues the dialogue with the EU.

In the meantime, a more relevant question is whether a unilateral euroisation could be possible. The short answer is yes. For instance the euro was introduced in Kosovo and Montenegro that did not have a status of a sovereign state at the time. In both cases, the decision was made in 1999. Kosovo, defined the Deutsche Mark as the designated currency, which was replaced by the euro in 2002. Similarly, Montenegro introduced a parallel currency system in 1999, in which the Deutsche Mark was allowed to circulate alongside the then legal tender. In 2001, the Deutsche Mark became the only legal tender and was replaced by the euro in June 2002.

In the case of Montenegro, now an official EU candidate, the adoption of the euro without an agreement with the European Central Bank (ECB) was acknowledged by the European Commission as a measure which had to be taken due to “extraordinary circumstances” present in the country at the time. This could be precedent for north Cyprus. However, it is important to note that the ECB still supports the view that unilateral euroisation is not compatible with the Maastricht Treaty and cannot be a way to bypass the convergence process.

The implications of the Treaty framework for in the case of Montenegro currently remain unknown and are expected to be detailed “by the time of possible future negotiations for accession to the EU”. In particular it remains uncertain whether the country would be required to introduce its own currency before it can join ERM II. Should this be the case as Montenegro makes further progress towards EU membership, this would entail substantial operational and changeover costs. Authorities in north Cyprus, should therefore monitor the developments very closely.

Normally, non-euro area Member States are denied the option of unilateral euroization due the principle of equality, i.e. the EU considers bypassing the convergence process incompatible with the EU Treaty and actively discourages it.In particular, the Treaty sets out that there has to be a Community assessment of the fulfilment of these criteria and mutual agreement on the appropriate exchange rates. This means that the ECB does not welcome unilateral euroisation, as such an adoption of the euro outside the Treaty process would run counter to the underlying economic reasoning of European Monetary Union.

However, as north Cyprus is already an EU territory the adoption of the euro could be considered a “common interest of the EU” and therefore an exception could be possible. In fact, the policy of the EU with regard to the Turkish Cypriot community which was set out by the General Affairs Council in 2004 states that “the Council is determined to…facilitate the reunification of Cyprus by encouraging the economic development of the Turkish Cypriot community”. So in the case of north Cyprus, a switch to the euro could be allowed by way of exception although this would obviously imply circumventing the process of multilateral assessment by the EU Member States.

While the EU could give the green light to adoption of the euro by north Cyprus without a successful exchange-rate procedure under ERM II, it would not allow this to undermine the process of convergence prior to the adoption of the euro. In other words, the Convergence criteria outlined in the Maastricht Treaty would still remain relevant and important as the Treaty requires Member States to achieve a high degree of sustainable economic convergence before they can join the euro area.

In other words the economies of Member States with a derogation must be able to keep pace with those already using the euro. Exchange rate stability, for instance, is evaluated by assessing whether the exchange rate of the country’s currency has remained within the fluctuation bands provided for by ERM II for at least two years without devaluating against the euro.

Besides exchange rate stability, the convergence criteria also include price stability, sound public finances, and convergence in long-term interest rates. This means, for instance, that a country’s long-term interest rate, measured on the basis of long-term government bonds or comparable securities, should not exceed that of the three best-performing Member States in terms of price stability by more than 2 percentage points during the one-year observation period prior to the assessment.   

On the other hand, a country is considered to meet the price stability criterion if its average inflation rate does not exceed the inflation rate of the three best-performing EU Member States by more than 1.5 percentage points during a one-year observation period. These criteria are intended to ensure the sustainability of public finances and that the government is able to manage its debts.

Article 140 (1) of the Treaty on the Functioning of the European Union (TFEU) requires the European Commission (EC) and the European Central Bank (ECB) to report to the Council, at least once every two years, or at the request of a Member State with a derogation on the progress of the country in fulfilling their obligations regarding the achievement of economic and monetary union. In addition to preparing these “Convergence Reports”, both the ECB and the Commission regularly monitor progress throughout the year.

A Convergence Report is normally published at least once every two years or at the request of an EU Member State which would like to join the euro area. Both the ECB and the European Commission issue these reports describing the progress made by non-euro area Member States towards achieving the criteria necessary for a country to adopt the euro. According to the latest report, among countries legally committed to adopting the euro, Croatia and Sweden fulfil the price stability criterion, Bulgaria, Czechia, Croatia, Hungary, Poland and Sweden fulfil the criterion on public finances, Bulgaria, Czechia, Croatia, Hungary, Poland and Sweden fulfil the long-term interest rate criterion. However none of them meet all the requirements for adoption of the euro. So convergence process is very strict and challenging.

In particular, it should be noted that convergence must be sustainable, meaning that satisfying the economic convergence criteria at one point in time is not enough and they are expected to be met on a lasting basis. A Member State’s general financial position is considered sustainable based on two criteria, namely, the government’s annual fiscal deficit should not exceed 3% of gross domestic product, and overall government should not exceed 60% of gross domestic product. This is very important for northern Cyprus as it will need to ensure that its economy is resilient.

It is known that the Maastricht Treaty provides some flexibility and the final assessment depends on the ECOFIN Council. Whether and how this would apply in the case of northern Cyprus remains a mystery. While details remain unknown to the public, the one-year transition period envisaged in the case of northern Cyprus could be related this. However, it should be noted that the decision on whether north Cyprus can adopt the euro would ultimately be a political one and would lie with the Council of the European Union. This means that representatives from all EU countries would be required to take a decision based on a proposal by the EC and after consulting the European Parliament.

Given that participation in the ERM II is a precondition for as well as fulfilment of the nominal convergence criteria to join the euro, it is binding and is unlikely to be waived for any country regardless of any special circumstances. This is because ERM II provides the framework to manage the exchange rates between EU currencies, which is necessary for exchange rate stability. As such north Cyprus would be expected to participate in the mechanism without devaluing its central rate against the euro before it can qualify to adopt the euro.

While no provision of the EU Treaty states explicitly that Member States with a derogation must have their own currency, the Treaty is by and large based on this assumption. In addition, the entry into ERM II is decided by mutual agreement of all ERM II parties, which consist of the ministers of the euro area Member States, the President of the ECB and the minister and the central bank governor of Denmark, as the only non-euro area Member State currently participating in the mechanism.

So in the case of north Cyprus adoption of the euro could mean that the country should first introduce its own currency. This could be a more viable alternative and north Cyprus could then peg its currency to the euro as a preparation for an eventual switch to the euro. Indeed, some countries joined ERM II with their preexisting currency pegs. To give a recent example, the currencies of Bulgaria and Croatia were already closely tied to the euro at the time of applying to the ERM II. Bulgaria had a currency board, first with the Deutsche Mark, and subsequently with the euro after 1999. Croatia had a peg first with the Deutsche Mark, and from 1999 to the euro, with a narrow band.

During this process, legal requirements should not also been underestimated. Article 140(1) of TFEU requires the convergence reports to assess the compatibility of national legislation, including the statutes of the national central bank and the Statute of the European System of Central Banks and of the ECB. There could also be additional unprecedented requirements and countries may be required to commit to implementing specific policy measures on a variety of topics. For instance, in the case of Bulgaria and Croatia, such requirements range from the anti-money laundering framework, state-owned enterprises and the insolvency framework, to the non-banking financial sector, corruption and even organised crime. It is highly unlikely that the national legislation in north Cyprus is currently compatible with that of the EU as the latest convergence report suggests that the respective national legislations in none of the seven new EU Member States would be deemed “fully compatible” with the exception of Croatia.

In fact, the former north Cyprus President Mustafa Akıncı himself had confessed that “serious work” would needed to ensure the harmonization of the national institutions with the EU acquis. As can be seen in the case of Croatia and Bulgaria, this has now become a prerequisite not only for joining the EU but also in terms of adopting the euro as a new Member State. For instance, this was the main reason behind the delay in Bulgaria’s acceptance to ERM II. Bulgaria was able to get the green light to join ERM II two years after it formally announced its intention to join the mechanism.

The delay was due to the requirement imposed by the Eurozone governments requiring Bulgaria to join ERM II and the Banking Union simultaneously. This prerequisite is known as “the Cooperation Decision” and requires Member States which adopt the euro to also participate in the Banking Union, i.e. the Single Supervisory Mechanism (SSM), the Single Resolution Mechanism (SRM) and the Single Resolution Fund (SRF). . Therefore, participating in ERM II with a view to later adopting the euro will also involve preparing for joining the Banking Union.

This requirement will now apply to all future candidates including north Cyprus. However, it should also be noted that the procedure for entering the Banking Union is separate from the assessment of the convergence criteria. Joining the Banking Union is irreversible and involves direct powers of the SSM and the SRM over its banking system. This has important implications for the banking sector as banks that will come under the direct supervision of the ECB will also be subject to the direct supervision of the Single Resolution Board (SRB).

To be more specific, this means that, the ECB will become responsible for the direct supervision of the significant credit institutions following the “significance assessment process”. This applies to banks considered to meet the “materiality criteria” as set out in the SSM Regulation (Regulation 1024/2013) and the SSM Framework Regulation (Regulation 468/2014). The criteria include “economic importance for the country” so could technically apply to banks in north Cyprus despite their insignificant sizes in comparison to the EU economy. Therefore, for new joiners like north Cyprus the accession process would involve not only the harmonization with the aquis but also the strengthening of their institutions and administrative capacity that will enable them to implement and monitor the enforcement of the harmonized legislation.

Therefore, adoption of the euro by north Cyprus, bilaterally or unilaterally, would not be as easy as it may look. More than anything else, this would require political will, courage and determination. The former President Mustafa Akıncı, a devoted supporter of a federal solution and the EU, had set an ambitious target of the euro going into circulation “from the first day” in the case of a reunification. However with the failure of the last reunification talks in 2017 in Crans Montana, Switzerland, political conditions have changed dramatically. The current President Ersin Tatar who is a very passionate proponent of the two-state solution is wholeheartedly against the EU and the euro. Therefore, the general stance towards the adoption of the euro in the northern part of the island remains fragmented. Given these circumstances, adoption of the euro in north Cyprus seems a distant prospect.

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Europe

How Red Are the EU’s ‘Greens’?

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Blood-red. But that’s a banned fact. (It will be documented in what follows.)

Here are the announced values (the “Guiding Principles”) of the European Green Party:

“Environmental Responsibility”

“Freedom through Self-Determination”

“Extending Justice”

“Diversity, an Indispensable Condition”

“Non-Violence”

“To sum it up, Sustainable Development”

This “Charter of the European Greens” fills-in those blanks by stringing together clichés, which 90% of the pubic will like, because they’re written so as to avoid (as much as possible) saying anything that’s broadly controversial. For example, “Our answer is sustainable development, which integrates environmental, social and economic objectives for the benefit of all.” (Oh? And how is that pap to be realized in actual policies? What are the measures, and the precise priority-rankings, when any of those values conflict with one-another, which is often?) The Green Party is simply conning liberals, but what is their reality? What are they actually doing, when in power? Inside their own country, and in the EU? Let’s take a very concrete (but broadly representative) case:

Germany, as I recently pointed out, is so corrupt that it has virtually no bans on who or what may donate to politicians. Foreign interests can donate, corporations can donate, even corporations that have government contracts (sell to the government) can donate, donations needn’t go through the banking system, donations may be accepted in any amount, anonymous donations are acceptable, etc. It’s super-libertarian. It is open-sesame to billionaires and centi-millionaires (the few people who have the most money) to control the Government by means of their ‘news’-media persuading the voters, and by means of political campaign donations to present the billionaires’ favored candidates’ viewpoints in the most favorable way — and their least-favored candidates in the least favorable way. It’s control by dollars, instead of control by voters. That’s libertarianism.

A March 2015 academic study showed that, of all 28 EU member-nations, the only five that were more corrupt than Germany were Malta, Austria, Denmark, Ireland, and Netherlands. Then, on 10 June 2015, a Pew survey in Germany, Poland, Spain, France, Italy, UK, U.S., and Canada, showed that, among those 8 countries, ONLY Germany (and by a big margin: 57% to 36%) opposed Ukraine joining NATO. However, when German and foreign billionaires s‘elected’ the new German Government that became installed on 8 December 2021, it appointed as the Germany’s new Foreign Minister the Green Party’s losing candidate for Chancellor, Annalena Baerbock, whose entire career as a candidate and as an official was the most notable for her strident advocacy for hostility toward Russia, and for Ukraine to be admitted into NATO (the anti-Russian U.S. military alliance). She thus became — though she lost her campaign for the Chancellorship — the most powerful Green Party politician in Europe or anywhere.

Immediately, she reversed Angela Merkel’s policies which had allowed the Russian-Swiss-German natural gas pipeline from Russia to Germany, Nord Stream 2, to be constructed to bring into the EU the least expensive of all gas to Germany, which is Russia’s pipelined gas. Gas-prices in Germany are now already soaring, and Germans will increasingly freeze, as a result of this ‘German democracy’ and its obedience to its billionaire masters in America.

However, many European billionaires are also being served by this ‘Green’ Party. Much like America’s Democratic Party (or liberal) billionaires, Europe’s liberal billionaires have been investing heavily in ‘green’ technologies, and are betting against their opposition, conservative billionaires, who are still committed to fossil fuels. So: the ‘Green’ Party represents liberal billionaires, against conservative billionaires. 

On 8 September 2021, “Capital Radar” newsletter bannered “‘Most important choice for the next 100 years’: 1.25 million euros from the Netherlands for the Greens” (“„Wichtigste Wahl der nächsten 100 Jahre”: 1,25 Millionen Euro aus den Niederlanden für die Grünen”) and reported that:

               • A Dutch tech billionaire donates 1.25 million euros to the German Greens.

               • It is the largest donation in the party’s history.

               • In an interview with RND, the major donor explains why Annalena Baerbock should steer the ship of state and why the federal election is so important.

Amsterdam. The Dutch entrepreneur and philanthropist Steven Schuurman [archive.md/ZjwWW] donated 1.25 million euros to the German Greens. It is the largest donation in the party’s history. Billionaire Schuurman, born in 1975, is co-founder and ex-head of the data search and analysis company Elastic and co-founder of Atlantis Entertainment. He has already donated millions in the Dutch election campaign.

The Greens have already received large sums of money this year: the pharmaceutical heir Antonis Schwarz [archive.md/COcng] bequeathed them 500,000 euros; the Greifswald Moritz Schmidt, who got rich through Bitcoin deals, one million euros; and Sebastian Schel’s net heir, 250,000 euros. The election program for the federal election states: “Party donations should be capped at an annual maximum amount of 100,000 euros per donor.” [But Germany has separate laws for candidates, and no limits are placed on donations to them.]

Schuurman was quoted as saying that, of the three candidates for Chancellor, only Baerbock took global warming seriously. He ignored the more pressing and sooner danger of avoiding a nuclear war, on which Baerbock’s policy-commitments are rabidly anti-Russian. No U.S.-and-allied billionaires — either liberal or conservative — are opposed to that. But those policies are blood-red, and now.

At the level of the EU itself, the most powerful person over the entire European Union has been a lifelong hater of Russia, the American billionaire George Soros, who controls the Open Society Foundation and other ’non-profits’ that have poured billions of dollars over decades (starting in 1993, just two years after his self-declared war against communism in Russia had become no longer an excuse when Russia abandoned communism in 1991) into color-revolutions targeted against Russia. On 5 November 2017, Alex Gorka at Strategic Culture, headlined “The Myth of European Democracy: A Shocking Revelation”, and opened:

It’s an open secret that the “Soros network” has an extensive sphere of influence in the European Parliament and in other European Union institutions. The list of Soros has been made public recently. The document lists 226 MEPs from all sides of political spectrum, including former President of the European Parliament Martin Schulz, former Belgian PM Guy Verhofstadt, seven vice-presidents, and a number of committee heads, coordinators, and quaestors. These people promote the ideas of Soros, such as bringing in more migrants, same-sex marriages, integration of Ukraine into the EU, and countering Russia. There are 751 members of the European Parliament. It means that the Soros friends have more than one third of seats.

George Soros, a Hungarian-American investor and the founder and owner of Open Society Foundations NGO, was able to meet with President of the European Commission Jean-Claude Juncker with “no transparent agenda for their closed-door meeting.” 

Many but not all of his agents at the European Parliament are Greens. U.S.-and-allied billionaires donate to all politicians that are ready, willing, and able, to advance the U.S. empire to encompass the entire world, and don’t donate to just to one Party. 

Soros was a major funder of the coup-operation that started in the Obama Administration (led by Victoria Nuland under Hillary Clinton) by no later than June 2011 to overthrow Ukraine’s democratically elected President, Yanukovych, and replace him by a racist-fascist (or nazi) anti-Russian regime and to seize Russia’s largest naval base, which was and is in Crimea, to turn it into a U.S. naval base. (Putin was able to block the latter attempt.) Hillary and Obama had first met with Yanukovych in 2010 and failed to persuade him to push for Ukraine’s NATO membership in NATO, but he said no — NATO then was very unpopular among Ukrainians. During 2003-2009, only around 20% of Ukranians wanted NATO membership, while around 55% opposed it. In 2010, Gallup found that whereas 17% of Ukrainians considered NATO to mean “protection of your country,” 40% said it’s “a threat to your country.” Ukrainians predominantly saw NATO as an enemy, not a friend. But after Obama’s February 2014 Ukrainian coup, “Ukraine’s NATO membership would get 53.4% of the votes, one third of Ukrainians (33.6%) would oppose it.” Obama turned Ukraine around — from being a neutral country on Russia’s border, to being a nazi anti-Russian country. And Annalena Baerbock is a strong backer of today’s nazi Ukraine.

However, the ‘Green’ Party is green in one way: it follows the dollars, not the voters. Other than that way of being green, it’s really only blood-red. Even the ‘Green’ Party’s proposed policies against global warming are futile to prevent global burnout, and they ignore the only policy that, even conceivably, might halt global warming: to outlaw the purchase of stocks and bonds of fossil-fuel-extraction companies. So: they are total fakes. The response of billionaires is to bet either for crackpot business-ventures to halt global warming, or else for extending yet further into the future the use of mainly fossil fuels and ignore even the pretense of caring about the welfare of the generations yet to come. In other words, all billionaires, both liberal and conservative, are really only blood-red, for expanding yet further their empire, in the final analysis.

This doesn’t come from what the voters want; it reflects ONLY what the billionaires want. Here are some data showing that despite all the billionaires’ propaganda for expanding yet further the U.S.-and-allied empire, a majority in some countries — including Germanydon’t want it:

Only Germans “oppose Ukraine joining NATO”: 57% to 36%

“Ukraine Joining EU” opposed by Germans 54% to 41%, opposed by French 53% to 46%

“Oppose Supplyiing Ukraine with Arms Against Russia: Germans 77% to 19%, French 59% to 40%, Italians 65% to 22%.

In 2013, the median favorability of Russia in the EU was 37%; by the time of 2015 it had become 26% — 26/37 or 30% less than only two years earlier, which is to say prior to 

Obama’s having grabbed Ukraine in a very bloody U.S. coup. (Obama was the most successful heir to Hitler since WW II, and was especially successful in jeopardizing the national security of the Russians by grabbing Ukraine on Russia’s border and intensifying the anti-Russian military alliance, NATO, whereas Hitler’s attempt to conquer Russia had turned out to be an colossal failure.)

So, Baerbock — the most powerful ‘Green’ politician in Europe, and even anywhere, though she had failed at the ballot-box — gets here hate (against Russia), her warmongering, not from the voters, but from the sheer cravings of U.S.-and-allied billionaires, to expand their U.S.-and-allied empire, to encompass the entire world. That’s what she (and many Green Party politicians) push for the most.

The ‘Greens” are actually blood-red, for war.

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