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Recession Looming Europe

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Europe has gone through a series of misfortunes over the course of the year 2020. While Brexit was underway for a stretch of 4 years, the pandemic was a challenge both unprecedented and unplanned for. With UK departing, along with its financial nucleus that served EU for decades, Europe sinks into economic peril that continues to cinch tight as the first month of the new year comes to a disappointing closure. However, with lockdowns imposing problems as the Covid variants surge throughout the region followed by a rather expected slump in the working sector, Europe’s economy is damaged beyond optimism of a speedy recovery. Now as the region suffers from a fatal blow of the pandemic and the health systems verge on a historical collapse, a recession is a harsh possibility lacing Europe.

The continent casts a gloomy shade of economic turmoil that partly stems from the strict policies in practice to control the infections beyond the already abysmal state. Eurozone suffered a drastic contraction to its GDP in the last quarter of 2020; the national income dipping down approximately 0.7% in the months of October to December. This was a sharp turnaround from the earlier recovery in the economy; a celebrated expansion of the Eurozone GDP by 12.4% in the preceding quarter. The rationale behind the steep recovery from the havoc wrecked by Covid being the resumption of economic activity after a prolonged lockdown. The expansion of the manufacturing sector followed by a flourish in the services sector shaped the growth. However, the slump bidding adieu to the yesteryear stems from the measures adopted by respective governments following the second wave of the Coronavirus. With strict adherence to lockdowns, sprawling nationwide in UK, the positive uptick in the economy tumbled down as ensue of a debilitated services sector caused by fretting tourism and social activities.

While the economic contraction was not as steep as the earlier forecasts of the expert economists; courtesy of the manufacturing sector continuing pace and rolling output even amidst lockdown, the European economy perished by a cumulative 6.8% in 2020. The UK, despite of its much-anticipated liberation from the European Union, faces much of the same issues but exponentiated by the idiosyncrasies posed by the Brexit Trade Deal. As trade disruptions are setting in with just one month going in the negotiated agreement, UK faces a crisis not only with wide Eurozone but within its own territory in the form of Northern Ireland. While the region continues to exist within the borders and jurisdiction of the Great Britain, the cross-border trade and restrictions post-Brexit pose a serious dilemma. With the new variants of the virus rampaging across UK, Lockdowns being extended and vaccination delays raking more problems, UK’s economy projects a gloomier picture following its bleak contraction of 10% last year as posted by the International Monetary Fund (IMF).

Not even halfway through the first quarter of 2021, and the optimistic figures earlier are playing a downturn on the prediction of the European economy. Although the economists worldwide have posited their opinion of a decline ‘Not like the one in the first quarter of 2020’, venerated institution’s like JP Morgan have adopted a pessimistic prediction of a 1% contraction in the first quarter of 2021; a polar stance to their earlier forecast of a 2% growth in the months of January to March. The predictions, however, were schemed before the lockdowns were re-imposed and ultimately skewed in the positive direction. Now with Europe’s biggest economy, Germany, posing a possibility of extending the lockdowns till late March and a full economic recovery ‘not on cards till 2023’, all eyes are on the European Central Bank as it convenes to decide on the monetary policy next week. Yet, with Nationalisation of vaccines giving birth to a new fiasco and doubts brimming in the post-Brexit Europe, a recession is the least of the concerns.

The author is a political and economic analyst. He focuses on geopolitical policymaking and international affairs. Syed has written extensively on fintech economy, foreign policy, and economic decision making of the Indo-Pacific and Asian region.

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Europe

Northern Ireland: Peace in the province – still a pipe dream?

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Photograph: Whyte's auctions

All eyes are currently  – and understandably – on the bitter and still unfolding war in Ukraine.

The first anniversary of the conflict recently passed with, sadly, no sign that it will end any time soon.

But it is not just Ukraine that should be of concern to political leaders, on both sides of the Atlantic.

Many in the UK and Europe had hoped – and assumed – that violence in a country much closer to home had been consigned to the distant past.

But, sadly, it appears this may not be entirely the case in Northern Ireland where, just this week, the terror threat level has been raised to “severe” after recent New IRA attacks.

MI5, the British security service, has raised the threat level from “substantial” to “severe,” meaning an attack is regarded as highly likely.

The move follows a rise in dissident Republican activity, including a gun attack last month that left a police officer fighting for his life.

This comes with Joe Biden, the U.S President, due to make a long-awaited and landmark trip to Belfast next month to celebrate 25 years of peace.

On Wednesday (28 March) Members of the European Parliament also commemorated the 25th anniversary of the Belfast Good Friday Agreement, which was designed to bring 30 years of violent conflict in Northern Ireland to an end.

This act of statecraft, it appeared, paved the way for the transformation of Northern Ireland by laying a new foundation for a safer, more prosperous and inclusive future for all.

However, the 25th commemorations come just weeks after a police officer was shot and seriously wounded in Northern Ireland, in an attack blamed on the dissident Republican group known as the New IRA and the raised level follows “an increase in levels of activity relating to Northern Ireland-related terrorism which has targeted police officers.

All parties hope that current tensions can be defused so that, truly, the dark days of what became known as The Troubles – a 30-year conflict which claimed the lives of over 3,000 people – will never be repeated.

But it is not just the current security situation in the province that has given cause for concern of late. The same might be said for the political landscape, with uncertainty about the so-called Withdrawal Agreement and Northern Ireland protocol only just now starting to fade.

It has been almost 7 years since the UK referendum to exit the European Union but hopes are high that the agreement recently brokered between the EU and UK – known as the Windsor Agreement – can deliver the smooth flow of trade within the UK (and protects Northern Ireland’s place in the Union).

Socialist MEP Pedro Silva Pereira,the  European Parliament’s rapporteur for the implementation of the Withdrawal Agreement, says, “While it has not always been an easy or pleasant path to get here, we are hopeful that the Windsor Framework lays the foundations for the building blocks of a new relationship with the UK.”

The so-called Windsor Framework is a new joint understanding that allows more flexible and more effective implementation of the trading arrangements for goods entering Northern Ireland from Great Britain, so that both the EU’s much-vaunted Single Market and the Good Friday Agreement can be fully safeguarded.

Jessika Roswall, Minister for EU Affairs of Sweden, says the Framework will benefit people and businesses in Northern Ireland and should allow the EU and the UK “to open a new chapter in our relations.”

Worryingly, the terror threat level in Northern Ireland may have suddenly been raised but the next few days will still see numerous  high level commemorations of the Good Friday Agreement.

Also known as the Belfast Agreement, the GFA was signed on 10 April 1998 by the British and Irish governments, and confirmed by referendums in Ireland and Northern Ireland in May the same year. The agreement established devolved political power-sharing structures for the nationalist and unionist communities in Northern Ireland, and brought the 30-year period of violent conflict in Northern Ireland to an end.

In Wednesday’s commemorative ceremony, European Parliament President Roberta Metsola hailed the Good Friday agreement (GFA) as one “which has instilled harmony between people”, adding that there were few examples in history of a “peoples’ peace agreement”.

People’s lives in Ireland have been transformed thanks to the agreement, Metsola said, adding that throughout the years preceding 1998, the European Parliament had provided a platform for the dialogue that led to peace.

European Council President Charles Michel said the GFA is a “remarkable achievement” steered by visionary leaders who did not fear compromise. It echoes the Treaty of Rome in 1957, he believes, citing how the tragedy of World War II inspired Europeans to build a unifying spirit and to draw borders that do not divide. He added that the two historical events are couched in the same ideal – “making the most of the richness of diversity.”

Commission President Ursula von der Leyen believes that “25 years ago, the impossible came true” and the Belfast Agreement “opened a new era of cooperation and was a new beginning”.

Since then giant steps forward have been taken, she states.

MEPs, at their sitting in Brussels this week, celebrated the GFA as a historic development that remains essential to peace and reconciliation in Northern Ireland. They reiterated that the Agreement was central to the EU’s negotiating of a post-Brexit relationship with the UK, as was the prevention of a hard border emerging on the island of Ireland. The EU, they said, should not just be a passive spectator to the GFA.

Beyond Brussels, the exact date for President Biden’s showpiece visit to Northern Ireland has not yet been announced – April 11 has been mooted – but it will top off a week of events to mark the GFA’s 25th anniversary.

Other architects of the deal including the former US senator George Mitchell, who chaired the talks between unionists and republicans that ultimately resulted in the IRA and loyalist paramilitaries laying down their arms, Tony Blair and the former taoiseach Bertie Ahern, who shepherded the deal over the line, will also attend.

Despite the recent and disturbing increase in violence, all will be hoping that, together with UK Premier Rishi Sunak’s recent deal with the EU, the 25th anniversary will help further cement a settled and peaceful future for the province.

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Why Europe Must Do More to Support Ukraine

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Image source: Czech Presidency

As we speak, the Islamic Republic of Iran, who is only weeks away from obtaining a nuclear weapon, is supplying drones on a systematic basis to Russia, who is deploying these indiscriminate weapons against Ukrainian civilians.   In recent days, 500 protesters gathered outside of the European Parliament in Brussels, where they voiced not only their indignation for the world’s silence in the face of Iran’s brutal suppression against its own people, but also their inaction as Iran essentially props up Putin’s war in the Ukraine.  By Iran backing up Putin, the Islamic Republic has become a direct threat not only to the State of Israel but also to Ukraine and all of Europe.   

As a former Israeli Communication Minister, I say that enough is enough.  Over five million people have become internally displaced persons and many more people have fled the Ukraine with little more than the clothing on their back merely because Putin could not accept that the Ukrainians wanted to veer towards the West and away from them.   They have savagely treated the Ukrainians merely for wanting to be part of the West, literally leveling entire buildings to the ground and transforming what used to be another European country into something reminiscent of Syria.    

Human Rights Watch recently reported, “Russia’s full-scale invasion of Ukraine on February 24 and the ensuing war had a disastrous impact on civilians, civilian property and energy infrastructure, and overshadowed all other human rights concerns in the country. Russian forces committed a litany of violations of international humanitarian law, including indiscriminate and disproportionate bombing and shelling of civilian areas that hit homes and healthcare and educational facilities.”

According to them, “In areas they occupied, Russian or Russian-affiliated forces committed apparent war crimes, including torture, summary executions, sexual violence, and enforced disappearances. Those who attempted to flee areas of fighting faced terrifying ordeals and numerous obstacles; in some cases, Russian forces forcibly transferred significant numbers of Ukrainians to Russia or Russian-occupied areas of Ukraine and subjected many to abusive security screenings.”

For all of these reasons, the sanctions against Russia must be much stronger than the presently are today.  After all, it was recently reported that Russia’s diesel exports have reached a record high this month despite the EU sanctions in place.   This is because these sanctions, although curtailing Russia’s energy exports, hardly put a halt to them, as China, India, the United Arab Emirates and many other countries still utilize Russian oil.      

Recently, Bloomberg News published the top six companies who continue to purchase Russian oil despite the imposition of sanctions by the West.  These include the Hong Kong based Noad Axis Ltd., which purchased 521,000 barrels of Russian oil till December; Dubai based Tejarinaft FZCO, which bought 244,000 barrels a day till December; QR trading, which purchased 199,000 barrels a day till December; Hong Kong based Concept Oil Services LTD., which purchased 152,000 barrels per day till December; Hong Kong based Belerix Energy LTD., which purchased 151,000 barrels per day till December; and Coral Energy DMCC, which purchased 121,000 barrels per day till December, although they stopped dealing with Russian oil from January 1.  

According to the Times of Israel, Tahir Karaev and Azim Novruzov are standing behind Coral: “What’s really funny, if you can call it funny, is that Mathieu Philippe appears as UBO for some of the vessels they operate after he was kicked out of UML because he was Coral’s man.”  

All of this makes a mockery of human rights and the desire for the Ukrainian people to obtain justice, after Russia essentially destroyed their lovely country.     The time has come for the world to sanction Putin harder.  The time has come to force China, India and other countries to stop trading in Russian oil.   The time has come for Putin to face the wrath of the international community due to the crimes against humanity he has committed.    The time has come for Putin to become truly persona non-grata in Europe.  

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If Paris sneezes, will Europe catch cold?

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Chinese President Xi Jinping meets with French President Emmanuel Macron in Bali, Indonesia, Nov. 15, 2022. (Xinhua/Shen Hong)

The Austrian Chancellor Metternich once said “Quand Paris s’enrhume, l’Europe prend froid” (“When Paris sneezes, Europe catches cold”). With the French President Emmanuel Macron all set to visit Beijing in early April, can France lead the rapprochement between the European Union and China?

“Une voix européenne”

Set to be accompanied by the President of the European Commission Ursula von der Leyen, the French President plans to “carry a European voice” on his state visit to China, the details of which were revealed by L’Élysée on Friday. On top of his list is the agenda to end the Ukraine War. Macron has called China’s engagement in resolving the Russia-Ukraine conflict that came in the form of a 12 point plan a “good thing“. Beijing’s position paper urges all parties to support Russia and Ukraine in negotiating a way out of the conflict while upholding the UN Charter and values such as respect for territorial sovereignty, abandoning Cold War mentality, non-interference in internal affairs among others.

The French President has further urged China not to militarily aid Moscow, an accusation made by the Western powers that Beijing has consistently denied. He plans to push China to use its influence over Russia so as to prevent the latter from using chemical or nuclear weapons. Macron noted  that the War would only come to an end if “Russian aggression was halted, troops withdrawn, and the territorial sovereignty of Ukraine and its people was respected”. Spanish Prime Minister Pedro Sanchez has also expressed a similar willingness and is ready to visit China in April. Luxembourg too resonates the opinion of engaging closely with Beijing.

Both Chinese and Western media reports note that this “competition to book flights to China” among EU leaders stems from their realisation that they “cannot lose China” owing to the latter’s increasing international significance. While many have voiced support for engaging with Beijing, not all are on the same boat.

A House Divided

The European Council meeting earlier this week, which remained focussed on Germany’s tussle with EU leaders on its decision to end the use of traditional combustion engine cars, did discuss China albeit in an inconclusive manner. While France, Germany, Spain and Luxembourg have signalled their intentions to engage with Beijing; Latvia, Lithuania, Sweden, Poland have expressed concerns over Chinese President Xi Jinping’s recent high profile visit to Moscow which is being seen as “cementing of a dangerous alliance”.  The concern is not just suspected military aid to Moscow but also the growing threat of a war between Beijing and Washington over Taiwan where Europe finds itself caught in the middle. Apprehensions too remain over increasing economic reliance on China.

While there has been no consensus on how the EU as a bloc must shape its China policy, Macron has clarified– although France values EU’s coordination, it follows an “independent foreign policy” thus highlighting that he would push to negotiate with China, with or without his regional allies.

Paris et Pékin

Beijing is not only France’s 7th largest customer and 2nd largest supplier (with a 9% market share in France) but also presents an opportunity for the French President who idealises Former leader General Charles de Gaulle to challenge what the French call hyperpuissance or unchallenged “hyperpower” of the United States. For Macron, relating himself to General de Gaulle is equivalent to “claiming to own a piece of the true cross”. Afterall, it was the General who defied Western allies to establish ambassadorial relations with Beijing in 1964, a period of simmering Cold War tensions that brought Paris seething criticism. Though Macron has no serious qualms with Washington, he does seek a voice that crafts his role as a major leader on the international stage.

On the domestic front, Monsieur le Président finds himself in trouble. The highly unpopular Pension Reform Bill that raises retirement age from 62 to 64 was passed without a Parliamentary vote, resulting in nationwide protests. Opponents suggest other measures such as increasing taxes for the rich and the corporates, a move refuted by Macron for the possibile harm it might bring to the financial system. Amidst a scenario where things have gotten as serious as nationwide halts in services and a no-confidence motion against the President, enhanced ties that bring more investments from China can help, an opportunity Macron will try hard to clinch. But the political environment certainly makes things difficult.

Worsening ties and a Confident China

The “Balloongate” controversy was yet to cool off when a new crisis in Sino-US relations erupted in the form of calls to ban the TikTok app over alleged illegal data collection which many in the US Congress suspect land in the Chinese Communist Party’s records. Parallely can be seen a change in Chinese attitudes towards Washington.

Amidst the recent session of the National People’s Congress, President Xi criticised  “Washington-led attempts” to “contain, encircle and suppress” China which pose  “serious challenges to Beijing’s  development” (“以美国为首的西方国家对我实施了全方位的遏制、围堵、打压,给我国发展带来前所未有的严峻挑战。”), a rare moment when the Chinese leadership has clearly named the United States in its criticism.

A policy shift too seems to be on the cards. Xi’s new 24 Character Foreign Policy, which Dr. Hemant Adlakha believes, marks “China’s new foreign policy mantra in the ‘New Era’ ” acting as its “ideological map to attain national rejuvenation by 2049”, has replaced Deng Xiaoping’s 24 Character Strategy  focussed on never seeking leadership and assuming a low profile. The characters “沉着冷静;保持定力;稳中求进;积极作为;团结一致;敢于斗争 ” which translate as “Be calm; Keep determined; Seek progress and stability; Be proactive and go for achievements; Unite under the Communist Party; Dare to fight” clearly demonstrate a more pronounced international role that China envisages for itself.

China’s confidence is further elevated by its success in brokering  peace between staunch rivals Saudi Arabia and Iran. With the handshake that brought the Sunni Arab Kingdom and the Shiite Persian theocracy together, Beijing has not only garnered accolades from nations across the region but has also succeeded in pulling American allies such as Riyadh to its side to some extent. Xi’s Moscow visit shows how he is determined to craft Beijing as an alternative negotiator to Washington, no matter how much criticism comes his way.

How much can France influence the EU?

As the political climate between US and China heatens, those trying to balance between the two would find the alley narrowing. But considering the stakes, Macron will try. The question however arises, how much of an influence could France exert on the EU?

Being the only Permanent seat holder of the United Nations Security Council post-Brexit, France certainly has a heavy weightage when it comes to policy making in the European Union. Macron too is a leader with a vision. His “grand plan” includes uniting the regional body as a strong political, economic and social bloc by shedding off the influence of the United States. However, there have being many tussles and Paris has found itself at loggerheads with many in the bloc including Turkey and Germany.

Macron has also raised eyebrows over his stance on Russia. After attempts to charm Putin failed, the French President assumed an ambiguous position which included criticising the war but not commiting to defend Ukraine. As expected, it did not fare well with the allies in Europe.

The air has finally cleared and a “defeat Russia but don’t crush it” stance has appeared. Monsieur le Président certainly wants to chart a pragmatic path that inflicts  minimum harm and that’s what would be a priority when he lands in Beijing to talk about the war. Would he receive the support of EU allies? Seems difficult, given his past misjudgements and the regional organisation’s recent tussles with Beijing ranging from trade negotiations to the issue of human rights violation.

How successful Macron gets in making EU negotiate with China also depends on how successful Beijing gets in getting Moscow on board, which after all is more difficult than dealing with Tehran and Riyadh. While Russia seems agreeable to China’s plan of ending the war, Putin has bigger ambitions and far lower stakes in launching an all-out war with Washington and allies than Beijing does. The deepening  “comprehensive strategic partnership of coordination for new era” between China and Russia remains unclear and so is how much dependence on Beijing would dictate any change in Putin’s plans. Even if China’s actions embolden Russia as claimed, Beijing knows it is in its favour to tone down Moscow’s belligerence considering the economic costs and military harm that Washington is capable of lashing. Macron too is unsure about how tightly he would like to embrace China. For now, better ties is what he eyes. The question arises –  If Paris sneezes in favour of resetting ties with Beijing, would the rest of Europe catch the cold? Only time will tell.

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