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View from Latvia: Is the EU Failing us?

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Photo: Ivars Utināns/Unsplash

On the historic date of March 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.

Among other notable speakers there was also a prominent EAF Lawyer of Latvia, Andrejs Pagors. His polemic, but very constructive views and suggestions contributed to the greatly mesmerising flow and outcome of the central conference’s panel. Central to his address was the question: A political bias and economic wellbeing – is reconciliation between the two possible? Following lines are his contribution to this highly successful Vienna Process event:

Latvia, like the rest of Europe, is experiencing the consequences of the Covid 19 (C-19) measures, which directly affects the economic state of the country and regions.

Small and medium-sized businesses are especially affected, for which the government has not yet developed a system of assistance, and the criteria for assistance do not allow all enterprises to apply for assistance from the state.

It should be noted that the crisis in Latvia did not begin in March 2020, but at the end of 2019. The drop in GDP was associated with a drop of transit and production sectors. A crisis or an epidemic has become the perfect cover for the lack of an economic development plan for the country.

The inadequate and purely concepted economic conduct of the government has led to the fact that the economic crisis will continue, and a more powerful wave awaits us, experts say. The government was not ready for the second wave of C-19 and the third wave is approaching for which we are not ready again.

Latvia is unique in that we are not trying to apply restrictive measures to save businesses that work in other European countries, but we come up with our own illogical measures that do not work, and we see that the number of cases is growing. Correct and logical measures will help to return to normal life, and this will allow the business to work productively and develop.

In all countries, except for Latvia, the government tried to support and prevent a drop in consumption of the inhabitants of their country, thereby supporting production. In Latvia, an unfortunate measure to ban trade in a number of goods led to the closure of production, which ultimately reduced tax revenues to the state treasury by 18.5%.

White flags at shopping centers symbolize a decrease in turnover and that the safety factor is running out. Enterprises that, due to restrictions, were unable to sell seasonal goods, did not receive working capital to purchase new goods. The government was slow to realize the opportunity to support the business by allocating money for working capital that could be used to pay off rent and pay utility bills.

A political bias and economic wellbeing – You can not have both

At the same time, the current authorities did not take any measures for state economy or rejection of non-priority projects. If we compare with other countries, the reduction of government officials began everywhere. In Latvia, the number of officials has not been reduced, even with a decrease in the amount of work. From every 1 euro of tax paid to the treasury, 0.15 euro is spent on the maintenance of the state apparatus.

At the same time, during the C-19 measures, Latvia turned out to be one of the leaders of the sanctions policy that was deadly for business. For 30 years Russia and Belarus have been using Latvian ports. And objectively for central Russia, Belarus, our three leading ports of Ventspils, Riga and Liepaja are more profitable than the Russian Ust-Luga. The tariffs are 25-30% lower, the speed of cargo clearance is faster.

However, the result of many years of anti-Russian rhetoric was Russia’s refusal to work with Latvia. The Kremlin used the administrative resource, and the goods went bypassing the Baltic countries. At the moment we have lost banking business, transit and trade with our neighbors Belarusians and the Russian Federation. Consequently, the economy became hostage to politics. There was hope for China. Moreover, scientists are sounding the alarm and note the slowdown of the Gulf Stream, which could nullify all the efforts of Russia and China on the northern sea route.

China has a well-known project – “One Belt – One Road”, it is also called the “New Silk Road”. Beijing was ready to work in both Latvia and Estonia. However, following in the wake of American policy, the Chinese were not allowed to enter the Baltic. And now, after the breakdown of the EU-China investment agreement due to the Uyghur agenda, there is no need to wait for investments from China. Hence, due to political problems, port complexes – just few years ago still among the most promising in the Baltics, is now threatened.

At the municipal or city level, the situation is the same as on the state level. Let me use as an example my own birth city: Jelgava (Mitava), 800 years of history and development. Where 20 years ago minibuses of the European level were produced and one of the largest sugar factories worked.

At the end of the 90s, the RAF plant with 4,000 employees was liquidated, and in 2006 the Jelgava “cukurfabrika” was liquidated, which produced sugar for the whole country and for export, gave jobs and developed agriculture, which was engaged in the cultivation of sugar beets. The political elites made concessions to the EU in exchange for positions and places in the Brussels apparatus. Now, Latvia buys sugar in Denmark. In 2010, a major investor in the production of railroad cars came to the city, but again political interference prevented the start of large-scale production in the city, although the amount of financial injection into the city was equal to the entire annual budget of the city. This time, the investor was from neighboring Estonia. But politics intervened here too.

Rocky 2020 showed us that things are not changing for the better. In addition to the war of sanctions with Russia and China, the “war of vaccines” was added. At the same time, the old national political establishment continues to live according to the principle “the state is us”, prioritizing its own interests, and not the country’s economy. I note that the C-19 measures have demonstrated the weaknesses of the EU. Recently, the European Commission diversified the procurement of vaccines returning it onto the Member States level – each country has the right to purchase it independently.

What will than happen next? If the EU cannot resolve important issues, maybe we, the EU states, need more autonomy in economic matters, in the implementation of national projects, too. And in the change of political teams that turned out to be inadequate to effectively tackle the mounting C-19 induced socio-political and economic crisis.

International private Law specialist of the University of Ottawa. He is the former publisher of the academic journal Border Crossing.

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Eastern Europe

A Grey Swan: Is There a New Conflict in Donbass?

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The prospect of a new exacerbation in Ukraine’s Donbass region has worried market players. It is difficult to talk about the strong influence of bellicose statements on the currency and stock markets. However, investors have again started talking about “geopolitical risk”. The key concern stems from the fact that the resumption of a large-scale armed conflict will inevitably lead to new sanctions against Russia. Moreover, the scale of such restrictions is difficult to predict, which gives rise to the uncertainty of expectations. Should strict sanctions be viewed as a baseline scenario? What is to be expected from the development of the situation?

Ceasefire violations in Donbass were already evident in winter. The ceasefire has been in effect since July 27 last year. However, on March 31, in the Contact Group on Conflict Resolution, the Ukrainian side raised the issue of a new ceasefire statement. In fact, this meant that Kiev considered the existing agreement invalid, citing cases of shootings and military losses. Moscow criticised this initiative. All this is happening against the background of the concentration of Ukrainian troops in the conflict zone. Russian troops are also moving to the state border. Statements by Ukrainian officials, who cited a conversation between ministers, about US support in the event of a war with Russia, added fuel to the fire.

A military exacerbation may well be viewed as one possible scenario. At least it is not devoid of precedent. During the August 2008 war in in Georgia, Mikheil Saakashvili launched a military campaign, citing the support of the United States, among other things, as one of his motivations. Later it turned out that such support was only conditional, but confidence in it could become a trigger for radical decisions. There is also the experience of the recent war in Nagorno-Karabakh. For a long time it was believed that it would be difficult for both sides to win in the conflict. As a result, Azerbaijan won a victory using new tactics: with the help of unmanned aerial vehicles. Ukraine also plans to use Turkish drones, although they have not yet appeared in large quantities in service in the Armed Forces of Ukraine. Kiev may also believe that a new conflict will have a high cost for Russia. Even in the event of the defeat of the Ukrainian Armed Forces, Moscow is unlikely to go beyond the existing boundaries of the DPR and LPR. New sanctions will be imposed against Russia. Perhaps the Ukrainian leadership also hopes for good luck. Even tactical successes in Donbass will strengthen the Ukrainian position.

However, this scenario is still extremely risky for Kiev. In recent years, Russia has shown that it is ready to take decisive action. Force can be used without undue hesitation. Moscow understands that the West will side with Ukraine in any scenario. But political support is one thing, and military intervention is quite another. The United States and its allies are unlikely to agree to such an intervention. Even the supply of lethal weapons will have its limits. Without a doubt, they increase the combat readiness of the Armed Forces of Ukraine. However, they are unlikely to allow it to achieve qualitative and quantitative superiority, even on the scale of the alleged theatre of military operations. The Russian army has undergone a high degree of modernisation. It is capable of rapidly concentrating well-trained and well-armed small units, units and large units. The threat of sanctions will also fail as a deterrent. There’s no doubt they will damage the economy. However, Moscow is unlikely to be stopped if it comes to a military conflict. In addition, Russia has a certain amount of space to vary the degree of its involvement. It can range from active support of the forces of the LPR and DPR to direct involvement in the conflict and the defeat of the Armed Forces of Ukraine in the conflict zone.

Apparently, the Ukrainian leadership does not intend to bring the matter to a direct clash. It is escalating the situation, trying to attract the attention of Western partners and gain points for the future. Most likely, the Kiev authorities initiated the current manoeuvres of their own accord, and they are not the result of the “insidious game” of the West. However, the American and EU diplomats may well use such manoeuvres to put pressure on Russia. The main threat is the loss of control over the situation, should the symbolic whipping turn into a real conflict.

In the end, full-scale military operations in Donbass in the near future are not the baseline scenario. Russia is a strong adversary; the risk of big losses for Ukraine are great. Accordingly, it is hardly worth considering a scenario of a sharp tightening of sanctions against Russia. No radical aggravation—no radical sanctions.

At the same time, politics likes surprises. Erroneous assessments, the personal ambitions of leaders, the peculiarities of group decision-making with their “shift to risk”, random incidents and much more can give rise to an extreme scenario. War in this case is a “grey”, rather than a “black swan”. It is unlikely, but its parameters are quite clear. Low chances of winning a war can be offset by high expectations of its consequences. Is it not an attractive scenario to give Russia a military slap in the face during an election year? However, in Moscow, such a scenario is also, apparently, expected. With appropriate organisational conclusions.

From our partner RIAC

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Eastern Europe

Blue Ocean Strategy for South Caucasus

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The recent arrival of Russian peacekeepers in Nagorno-Karabakh has underlined the difficulties for a number of international institutions–the United Nations (UN), the Organization for Security and Co-operation in Europe (OSCE), the European Union (EU) and the Eurasian Economic Union (EAEU)–to provide a diplomatic answer to violent conflicts that emerged in the aftermath of the collapse of the Soviet Union.

Nagorno-Karabakh is the latest example, as most of the ethnic quarrels in the South Caucasus are still ongoing since 1991, with Abkhazia and South Ossetia remaining de facto [1] independent from Georgia, while only one of the three recognized countries (Armenia, Georgia, and Azerbaijan), Armenia, has managed to join a supranational framework [2].

In over three decades, the political-economic context of the region has deteriorated with a continuous decline in birth rates coupled with emigration, difficult economic recovery and the rise of autocratic political regimes and confirmed cronyism. Some experts believe it is time for the South Caucasus countries to develop a Blue Ocean strategy [3] and abandon the idea of joining the Euro-Atlantic institutions (the EU and NATO) or Russian-led alternatives (the EAEU and the CSTO). This may seem challenging, but given the economic and diplomatic achievements of the past decade and the political crisis in the context of the COVID-19 pandemic, it is perhaps a viable option for restoring prosperity and stability in this part of the world.

What is the Blue Ocean Strategy and how can it be applied in international politics?

The Blue Ocean Strategy is a concept developed at INSEAD by Renée Mauborgne and W. Chan Kim. Although the approach usually applies to business strategy, it can be combined with a SWOT analysis to develop new geopolitical alternatives and provide innovative thinking in politics.

Therefore, by looking at the SWOT matrix for the South Caucasus, we can establish similarities between the countries and see how the Blue Ocean strategy approach can develop the “opportunity” part in the region:

SWOT Matrix of the South Caucasus
StrengthsLocated between great players – Russia, Turkey, EU and Asia – the South Caucasus can be successfully used as a platform for the production, transfer and transformation of goods; Favorable climate for the development of renewable energies and products in with a high demand on international markets (e.g. Georgian wine on the Chinese market).
WeaknessesDifficulties to overcome the events following the break-up of the Soviet Union (e.g. rhetoric regarding separatism in Georgia) and political repetition compulsion; Insufficient resilience to international influence, as highlighted by the interest of all parties in joining an alliance (e.g. the European Union), which makes it ambiguous for the state(s) to develop an independent international policy; Corruption and cronyism in governments resulting in a paucity of innovation by the institutions and little support for the growth of innovative businesses.
OpportunitiesUnder-explored markets such as renewable energy, biological agriculture and high-tech; Affordable and skilled labour resources available; Possible regional cooperation between the three main countries – Georgia, Armenia, Azerbaijan – instead of seeking different alliances outside the South Caucasus
ThreatsRemaining ethnic tensions (internal and external) and the constraint of continuous political repetition compulsion regarding the de facto autonomous territories; Laissez-faire the corruption and cronyism at all levels of the state hampering the development of innovative thinking and increasing the human capital flight (brain drain); An emphasis is on external actors to solve internal problems (e.g. the European Union to solve economic issues instead of investment in higher education and entrepreneurship).

By analyzing the SWOT matrix, we can establish similarities between the three recognized countries and the three de facto/partially recognized states–Abkhazia, South Ossetia, Nagorno-Karabakh–having close SWOT profiles.

As such, the SWOT matrix underlines the countries’ profiles in the South Caucasus, and difficulties seem to stem from weak institutions, with an enforced political repetition compulsion [4] by elites and citizens alike, rather than from external threat(s) [5]. Nonetheless, the external threat is presented as the main one (e.g. Russia in Georgia and Turkey/Azerbaijan in Armenia), while the problems seem to be mostly domestic, having a lot to do with corruption or difficulties to accept the change of borders in the post-Soviet order.

Towards the effective implementation of a Blue Ocean strategy in the South Caucasus

A major obstacle to effective implementation of a Blue Ocean strategy in the region will come from the phenomenon of repetition compulsion and the fact that elites and citizens are not used to listening to another political discourse, often asking for outside help to solve domestic issues. As such, we can assume that states in the South Caucasus will be more likely to continue to focus on finding external alliances instead of using their own internal resources to develop their potential.

This phenomenon is linked to the in-group bias, which is the tendency to assume that ‘your’ problems are coming from the outside (e.g. Russia in Georgia) instead of assuming the responsibility related to ‘your’ own failing policy [6]. Thus, a nation will tend, even more so in times of crisis, to assume that the problem is due to an outside event.

The second obstacle that states will face in the South Caucasus is that neighboring countries have an incentive in keeping the states located next to them under control. At present, the main outsiders–Russia, the EU/NATO and Turkey– have little or no interest in seeing the South Caucasus enjoy greater autonomy.

In fact, some have even developed the rhetoric of ‘grandiosity [7],’ which refers to an unrealistic sense of superiority, characterized by a sustained view of oneself as better than the other, which is expressed by disdainfully regarding them as inferior. This approach is implemented in numerous forms through instruments of power, such as the Eastern Partnership (EaP) which aims to promote European values without taking into account the possibility that a state in the South Caucasus may differ in the way it wishes and should develop.

In the eyes of many EU citizens, the EaP is a means of promoting EU’s identity such as democracy, while non-Europeans would point out such an instrument has been implemented to achieved an economic and/or political superiority (the rhetoric of ‘grandiosity’) over participating states as they can only wish, in the mind of the one implementing them, to be like the EU member states [8]. The rhetoric of grandiosity is identified when the proponent refuses to assume that it may be wrong (cognitive dissonance).

The South Caucasus nations will therefore have to change their internal thinking and concentrate more on what they have and develop strengths instead of waiting for outside assistance. For instance, rather than focusing on how to get the separatist territories back and who could help them achieve this geopolitical goal, in order to increase their internal performance and economic capacities they could focus on fighting corruption, thus making themselves in fine more attractive in the eyes of autonomist regions (soft power) and a valuable political alternative.

Once this is achieved, there will be resistance from the major players–Russia, the West, and Turkey–to seeing the South Caucasus states outside their sphere of influence, which will be another obstacle to the long-term development and continued implementation of the Blue Ocean strategy for self-development.

In many ways, the strategy for the South Caucasus can be inspired by South Korea, a country that, instead of focusing on recovering control over North Korea and explaining a poor economic performance because of the difficult regional context (proximity to the USSR and the People’s Republic of China), managed to see its national advantages and emerge as a self-sustaining economic power.

While North Korea remains a priority in foreign affairs, as does the relationship with Beijing, Seoul has focused on internal development after 1953, subsequently or complementarily on international alliances. Like South Korea, the South Caucasus might focus on solving internal issues before outside matters, especially considering the stagnation with para-states for already more than three decades.

  • [1]de jure according to some states such as Russia, Syria and Venezuela
  • [2]Armenia is a member of the Eurasian Economic Union, however without Nagorno-Karabakh which is recognised to be de jure part of Azerbaijan.
  • [3]Blueoceanstrategy
  • [4]Edward Bibring (1943). The Conception of the Repetition Compulsion. The Psychoanalytic Quarterly. 12 (4): 486–519.
  • [5]The situation in Abkhazia and South Ossetia is stabilised since 2008, and the rhetoric of a Russian interest in occupying the whole Georgia does not goes in line with a geopolitical reality. As such, Tbilisi could develop its internal policy on the short run and focus on the two “occupied” territories (Abkhazia and South Ossetia) on the long run instead.
  • [6]Hall. Taylor, Donald M.; Doria, Janet R. (April 1981). Self-serving and group-serving bias in attribution. Journal of Social Psychology. 113 (2): 201–211.
  • [7]Elsa F. Ronningstam (2005). Identifying and Understanding the Narcissistic Personality. Oxford University Press.
  • [8]Women’s rights, democracy, freedom of expression, human rights are all examples of what EU citizens believe they can bring to the South Caucasus through the Eastern Partnership. This does not mean that they are not valuable to the countries, but rather that the lack of debate on whether and why to promote them expresses ‘grandiosity’, the assumption of values superior to any others, similar to what happened during colonialism, when Europeans considered Christianity to be superior to any other religion in colonised countries.

From our partner RIAC

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Eastern Europe

Ukraine: Sociology and Nationalism

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Ukraine’s national identity and its moral values are still high on the agenda of Ukrainian sociologists despite the fact that 30 years have passed since Ukraine became independent. This is because the country’s national identity has yet to acquire a solid and clear-cut political, ideological and moral framework. It is still unclear what is Ukrainian national conscience and how it differs from that of Russia and Belarus.

According to sociologists, “survival values” prevail over “self-expression” values in Ukrainian vision of the world. Ukrainians are more concerned about economic wellbeing than about Ukrainian identity. Only residents of Western Ukraine are believed to have passed all three stages of the formation of national identity, as suggested by Miroslav Hroch. Professor Hroch identified these stages as demonstration of interest in national culture – efforts by the intellectuals to popularize this culture – penetration into the masses and support by the masses of the national culture corps created by the intellectuals. Central and Eastern Ukraine has been stuck in Stage Two for 30 years, – the professor says.

This opinion is echoed by some Russian and Belarusian sociologists and historians, who confirm that residents of Western Ukraine do have a national culture corps described by Professor Hroch, that is, a full-fledged national identity. But Western Ukrainians make up less than 15% of the population of Ukraine. And a country where more than  80% of residents have no clear-cut sense of identity, with clearly pronounced distinctive features, cannot enjoy political stability.

These 80% are directly or indirectly accused of “false” identity, and curiously enough, sociologists who are particularly active in digging into this area of research come from Western Ukraine. For them, the 80% majority, who are different from the 15% minority, are “Soviet-minded, russianized, Moscow-guided Orthodoxy-oriented” people. This sort of research is full of ideology, rather than impartiality of science. It has nothing to do with reality being at odds with the fact that the “non-sovietised” and “non-russianised” population make up the minority that are prone to political aggression only if the country is ruled by unpopular leaders, controlled by the West.

The attempts to sociologically explain the 2014 coup (Euromaidan) by a change in the course of society development and the arrival of the middle class in protest against the oligarch rule, are beneath criticism. The “arrival” would have been impossible without the use of smart technologies and socio-engineering gimmicks. The declared outcome of the “arrival” of the  middle class is equally disheartening: the power in Kiev is firmly in the hands of the oligarchs.

Ukrainian sociologists signal the possibility of Ukraine turning eastward under the influence of “Moscow- and Orthodoxy-guided” voters. In 30 years of national identity Ukraine has not become a unitary state, so co-existing as ideal models are two Ukraines – pro-Western and pro-Russian, whose ideological confrontation has not resulted in victory for either – the two models will continue to confront one another in the future.

What could reconcile the two parts of Ukraine is a massive restoration of domestic policy, accompanied by economic recovery and eradication of corruption. This could attract one of the parties, or at least, part of it, to the other. Vladimir Zelensky’s victory in the presidential elections is attributed to a smart political move which made it possible to win the votes of Central and partly Eastern Ukraine – which is home to the “russianized” and “Moscow- and Orthodoxy-guided” communities.  The population of Central Ukraine, which includes five regions (Vinnytsia,  Kirovograd, Dnepropetrovsk, Cherkassk, Poltava) is the most unstable in terms of identity, demonstrating readiness to support both pro-Western and pro-Russian candidates depending on whether this or that candidate will sound persuasive enough.

In reality, Ukraine is highly unlikely to discard the oligarch-dominated system of government. Ukrainian identity is represented by three “gurus” – Mazepa, Petliura, Bandera. A “Ukrainian patriot” has become synonymous to “Mazepinets”, “Petliurovets”, “Banderite”. Kiev cannot go beyond these definitions – it it does, it will lose the support of the US, without which it will face financial collapse. Further pursuit of the above mentioned triad-based policies does nothing to foster Ukrainian statehood. As a result, there is a vicious circle with no way out. If Ukraine pursues such a triad in the future, it is bound to face ethnic conflicts and escalation of domestic tension.

It is “for Ukraine” and other post-Soviet republics that there appear geopolitical and cultural value projects which have no future. Among them were “Native Realm” by Polish essayist and diplomat Czeslaw Milosz, the principle “maximum diversity  minimum space” by Czech writer Milan Kundera, GUAM, the Lublin Triangle, the Eastern Partnership, Association with the EU. Milosz and Kundera thought that  there would be a flourishing ethnic diversity on a piece of land known as Central and Eastern Europe, naively assuming it possible in the conditions of geopolitical advances of collective West eastward. In this scenario, Ukraine is given the role of a springboard, “a territory of war”, not peace.

Passing through the territory of Ukraine is the geopolitical division line between the West and Eurasia, so national unity is not what it should expect to ever happen. Given the situation, Ukrainian people are doomed to making the unavoidable foreign policy choice in favor of either the West, or Russia.  

Considering this, a split is inevitable, while efforts to keep the disintegrating regions together with the help of nationalistic bonds are counter-productive, as it leads to greater  confrontation.

The appeals from some Ukrainian writers to liberalize Ukrainian nationalism will result in nothing. Contrary to their statements that liberal nationalism cannot mutate into fascism, Nazism and racism, the ideology of Ukrainian nationalism has passed the liberalization stage and is fairly liberal in its present shape. Ukrainian nationalism was radical under Bandera and the Ukrainian Insurgent Army, but as it tuned out, its liberal variant is taking its bloody toll  in post-Soviet Ukraine (the burning of people in the House of Trade Unions in Odessa, the bombing of peaceful neighborhoods in Donbass, out-of-court reprisals against the dissenters – Oleg Kalashnikov, Oles Buzina). Even though Ukrainian nationalism is liberal, it is bloodthirsty.

Ukraine is thus facing gloomy prospects: part of the population that will reject this bloodthirsty ideology will be suppressed by the aggressive nationalist minority. Ukraine has already entered this phase and will stay in it long. Though, who knows… 

 From our partner International Affairs

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