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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.

Mete Feridun serves as the Chair of the Center for Financial Regulation and Risk Management and a Professor of Finance at the Department of Banking and Finance at Eastern Mediterranean University. He previously worked at the Bank of England, Prudential Regulation Authority, and the Financial Conduct Authority. He also served as a regulatory strategy consultant at PwC and has held various visiting professor positions at University of Cambridge, University of Oxford, London School of Economics and King’s College London.

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Davos more of a show, no longer so important

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“Davos has become more of a show, it’s no longer so important”, concluded Liviu Muresan from Eurodefense Romania at the end of the webinar recently jointly organized by Eurodefense Romania and the Bucharest-based MEPEI think-tank. In the aftermath of the Davos World Economic Forum, 20 key-note speakers invited to examine this year’s edition did not hesitate to cast a critical eye upon the outcome and some of them were very straightforward in assessing this year’s  WEF.

Adrian Severin, former Romanian minister of foreign affairs, gave a remarkable definition to the Davos WEF:  “something between mythology and reality because politicians come to Davos to look for intellectual validation and economic support, corporatists come to look for intellectual respectability and political assets, civil activists seek kinship with the political power and financial sponsorship. They make a network of self-legitimized supra-national power that combines the characteristics of occult interest groups, influence groups that associate oligarchic cynicism with democratic hypocrisy. A group of self- proclaimed prophets, self-confirming their prophecies.”

Experienced in foreign policy, Severin could identify new approaches during the Forum, so he portrayed in detail “the Davos WEF that turned from an incubator of ideas into a platform for launching messages and trial balloons, from a doctrinal workshop into a ballroom…from a political designer into a moral whistle-blower ….from a producer of doctrines into a producer of dogmas…from the champion of missionary realism into athlete of utopias ….from a platform of dialogue into a platform of war propaganda…from a believer in globalization into a promoter of globalism…from a follower of inclusion into a promoter of exclusion….Davos is at risk of losing popularity and political failure, it no longer solves problems, it either deepens the existing crisis or generates new crises .”

Severin argued that “this year’s edition was significant through the absences rather than through the presences because only Olaf Scholtz was present this year out of the G7 leaders….Russia and China were absent….The president of the European Commission has become a US ventriloquist , no longer representative of the European Union that is neither  Union, and no longer European…The main representatives of the US were absent. Those present discussed everything but the risk of having the world fractured into two blocks with incompatible cultural identities, with the Euro-Atlantic block increasingly weaker than the Indo-Pacific block and the Euro-African-South-American block…the discussion about green energy and other similar topics  is nonsense as long as solutions are not presented.”

Severin believes that the main concern should be “to stop the war in Ukraine and to normalize the dialogue between the Euro-Atlantic and the Euro-Asian blocks”, especially because this year’s theme was “Cooperation in a fragmented world”.

The most inspirational speech was given by Antonio Gutierez, the head of United Nations Organization, who referred indeed to the fragmented world, but Severin pointed to the fact that Antonio Gutierez gave such a speech in Davos and not in the UN in New York or Geneva, a sign of the failure of the UN, which means that the UN and the OSCE must be revived.

General Corneliu Pivariu, former head of the Romanian Military Intelligence, stressed that the Davos meeting actually does not solve any problem of the world. It speaks every year about economic inequalities without solving that, doing every year nothing else than acknowledging the deepening of inequalities. For instance, according to Credit Suisse, between December 2019  and December 2021, the global wealth increased with 42 trillion USD but 26 trillion USD belonged to the 1% richest population, and 16% to the rest of 99% of the world’s population. Another topic is global warming, which is also never curbed, and an Oxfam report released in November 2022 revealed that a billionaire’s annual emissions of CO2 are one million times higher than a person in the 90% of the world’s population.

Carlos Branco, senior analyst with the National Defense Institute in Portugal, confirmed that Davos meeting did not find solutions to the world’s problems. He reminded that, in Davos, Ursula Von Der Leyen, Olaf Scholtz and other leaders spoke of the need to make Europe independent in terms of energy but they did not explain how exactly Europe will manage to provide itself commodities and raw materials, since Europe currently has 37 strategic dependencies out of which 2% from China and 3% from Russia, while the new technologies will still make Europe dependent on Asia. “The future of Europe will depend on how it will position itself in relation to the advanced technologies, Artificial Intelligence,  a.s.o., but for the moment, Europe is trapped.”

As an outstanding expert on Asia, Viorel Isticioaia Budura, former Managing Director for Asia and the Pacific at the European External Action Service and former Romanian ambassador in China and Japan, pointed to the absence of many G7 leaders in Davos as well as of Asian leaders, among which China, which is “the beauty and Miss Universe of the world’s interdependency”, and mentioned the presence of many Asian business people in Davos this year, while reminding of the importance of Asian countries and of the three high-level summits organized in Asia last year, G20, APEC and ASEAN, and of what Anthony Blinken, the US secretary of state, called “the rest of the world”, namely, Asian countries that do not follow the Euro-Atlantic order but have become a significant part of the global economy. Isticioaia Budura wondered if the “re-globalization of the supply chains would be possible” and declared China “the champion and the promoter of globalization.”

Michael Zinkanell director of the Austrian Institute for European and Security, Vienna, expressed his opinion that “we a living in a bipolar world dominated by the US and China while Russia has no ability to project global power, and some clear conclusions after the Davos meeting are that instability is increasing in the world, the world is becoming more and more interconnected and energy independence and decarbonisation are very important for the future”.  Zinkanell sees natural disasters and socio-economic risks as the main concerns for the future, but also the interactions with some authoritarian countries that are trying to lead in this new multipolar world that will allow multilateralism.

Germano Dottori, editor of the Italian Geopolitical magazine, also agreed that Davos meeting became too politicized and not too useful but he sees the prospects for the future of the world “not so bleak like a few months ago.”

Flavius Caba Maria, president of MEPEI, the Bucharest-based think-tank that co-organized the webinar, expert on the MENA region, mentioned a few aspects among which that fact that the representatives of oil and gas companies were welcomed at Davos, unlike Glasgow, which is a sign that renewables cannot entirely meet the energy needs of humanity.

On the other hand, Caba Maria pointed to the BRICS countries and his remarks could be seen as complementary to the idea mentioned by several speakers that the Western institutions seem to have lost their ability to solve the global problems and to ensure economic equality.

Caba Maria emphasized that “the global South is establishing its own system of alliances, turning them into a source to transform global economy, thus creating a development alternative trend, different from the one promoted by the West, with three regional alliances looming: the African Union, the Community of Latin American States and Shanghai Cooperation Organization in Eurasia. Among all these countries, China stands out and everything that’s going on in China is of utmost interest for the other countries, because it has become the world’s largest economy.”

Facts to keep in mind for the organizers of next Davos meetings.

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Serbia must reject the ultimatum regarding Kosovo

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Photo: Presidency of Serbia / Dimitrije Goll

The President of Serbia, Aleksandar Vucic on January 20th  had a meeting with the Western negotiating team about the solution for Kosovo. European mediator Miroslav Lajcak, American envoy Gabriel Escobar, German and French special advisers Jens Ploetner and Emmanuel Bonne as well as Italian prime minister’s adviser Mario Talo once again discussed with the leaders of Serbia (and Kosovo) the plan(ultimatum) that should regulate relations between Belgrade and Pristina. Officially, the plan for a peaceful solution has not been presented to the public. However, Serbian media published the text of the plan and they clearly emphasize that it is an ultimatum from Quinta.  And what is even more important, no one from the Government of Serbia denied it.

Which clearly tells us that the Government of Serbia is releasing the plan(ultimatum) as a trial balloon. However, that decision turned out to be wise, because the reactions of the citizens of Serbia to the plan were more than clear on the point of view that the plan was unacceptable. Because that agreement, among other things, requires that Serbia in practice (de facto) recognize the violent secession of its own Province that is, allow Kosovo to join the United Nations.

The plan compiled by the advisers of the leaders of the two largest democracies in Europe – French President Emmanuel Macron and German Chancellor Olaf Scholz – represents a gross violation of UN Security Council Resolution 1244, the basic principles of democratic international relations, the UN Charter, and the OSCE Final Document.

The plan(ultimatum) for Kosovo, humiliates Serbia and the Serbian people by ordering that Serbia respect equality, sovereignty, territorial integrity and the so-called state symbols of Kosovo and all other countries, except it`s own sovereignty, territorial integrity and it`s internationally recognized borders confirmed by the UN, OSCE and other international organizations. Serbia is expected to cooperate in dismantling its own integrity, its own constitutional order and international reputation, so that no one could use the “Kosovo case” as a precedent for unilateral secessions, which primarily refers to Ukraine.

The fact that currently five members of the European Union (Spain, Romania, Slovakia, Greece and Cyprus) and four members of NATO do not recognize the independence of Kosovo shows how bad the acceptance of the plan would be for Serbia. The goal is also to place all responsibility for the victims and destruction on Serbia, as a victim of the NATO aggression in 1999, and to use this act to justify the aggression against Serbia, which was carried out against the international law.

Kosovo is not a frozen conflict, as claimed in the West and repeated by official Belgrade, nor it can be resolved by an ultimatum to Serbia. The best example of this is Cyprus, which was invaded by Turkey in 1974, and despite this, neither Turkey nor Cyprus (or Greece) agree to any ultimatums, nor does anyone give them. The question must be asked here, how is it possible for Quinta to issue an ultimatum to Serbia and why are the Serbian Government and the President of Serbia allowing it?!

The Serbian Government must apply new tactics

Negotiations on Kosovo with Quinta must first be conducted on essential matters. And that means, above all, the protection of the current Serbian population in Kosovo and the return of the 250,000 expelled Serbs. Regulating the status of Serbian state property in Kosovo, which was seized by the separatist government in the province. Plus, the return of stolen property to the Serbs, who were forcibly expelled from the province.

Also, bearing in mind the aggressive policy of the Kosovo separatists, who, contrary to the agreement with NATO, are sending special units to the north of the province, while perpetrating violence against the Serbs, a new strategy is needed. And this is primarily reflected in the fact that the Government of Serbia must help establish the Republika Srpska in the north of Kosovo. This means that the local Serbs would have their own police(including a special police unit), judiciary, prosecutor’s office, education, health care and control over border crossings. In other words, parity would be established in the armed forces, bearing in mind that it is not realistic to expect that Serbian president Aleksandar Vucic will ever approve the sending of the Serbian Army to Kosovo. In this way, Serbia would strategically strengthen its positions and would wait for a change on the geopolitical scene of the world, until favorable conditions are created for the full return of the southern Serbian province of Kosovo to Serbia.

Otherwise, if Serbian Government agree to Kosovo’s entry into the United Nations, it would mean that Kosovo could unite with Albania, about which Kosovo Prime Minister Albin Kurti also publicly spoke about. This would than open the issue of secession from Serbia of the Presevo Valley and the geographical region of Sandzak. And what is even more important, an incredibly strong pressure to abolish Republika Srpska in Bosnia and Herzegovina would begin. All of the above would have catastrophic consequences for the country of Serbia, but also for the entire Balkans.

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“The starry heavens above me…”* A plea for awareness and peace

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*Immanuel Kant: “Two things fill the mind with ever new and increasing admiration and awe, the more often and steadily we reflect upon them: the starry heavens above me and the moral law within me.” 

In the neighborhood with Russia

Who is actually aware today where the border of the former German Empire was once located? Or how far to the northeast the village of Nimmersatt and the nearby coaching inn Immersatt actually lay?   Nimmersatt was located at the northern tip of East Prussia, surrounded by the Baltic Sea to the west and Russia to the east and north. Russia – then Russian Lithuania – was our direct neighbor until 1918. The Memel territory was traditionally Prussian borderland, 120 km long and 40 km wide, stretching north along the Memel River. In 1422, the Treaty of Melnosee established the frontier, which remained almost unchanged until 1920. After the Pyrenean border, it is the second oldest in Europe.

Source: : de-academic.com

Located on the imperial border, Nimmersatt was the former German Empire’s most northeastern spot and was last in German hands in 1945.[1] Like Nimmersatt, there are many seemingly vanished places and landscapes in historic eastern Germany. But they have for the most part disappeared. These places bear witness to the fact that many Germans, consciously or unconsciously, are still deeply rooted in these seemingly vanished landscapes.

The German soul is closely connected with the East and its territories, especially with Germany’s historical East, including East and West Prussia and the Memel territory.

According to estimates, about 14 million refugees had to leave their homes after the Second World War, losing everything, all their belongings. About 2 million died in transit, and Germany lost a quarter of its territory.

As Simone Weil (1909–1943) once put it: “Rootedness is probably the human soul’s most important and most misunderstood need.”

Crises, conflicts and silver lining

If you look at today’s world, you see crises everywhere, wars and deep divisions in our societies. Fears are being fueled and images of “the enemy” that were actually long forgotten are being revived. The war that has been raging in Ukraine since 2014 has now escalated on the European continent into a proxy war between the United States and Russia. Russia is being declared the enemy. With its arms deliveries and military support,[2] Germany has also officially entered into the war with Russia.

What immeasurable suffering wars visit on mankind – a painful truth also understood by members of Germany’s “war generation” and their descendants, especially those with roots in Germany’s historical East. Germans and Russians look back on a common and consequential past; we share one of history’s darkest and most horrible chapters, beginning with Germany’s invasion of the Soviet Union on June 22, 1941 and the subsequent conquest of East Prussia by the Red Army.

Whatever happened, a shared history connects peoples, and Germans and Russians will therefore always be connected

Civilians are and always have been the ones who suffer most in war. During the Second World War, from 1939 to 1945, the Soviet Union had the most casualties: 24 million people,[3] 14.3 million of them civilians. Germany had a total of 7.7 million casualties, of which 2.2 million belonged to the civilian population.

In her old age, Mama, my mother, could still recall the terrifying whistling sound of the rocket launchers known as “Stalin organs.”[4]  During thunderstorms and when fireworks were being shot off, she would begin to shiver and sought shelter. Yet despite all the war trauma, the attachment to Germany’s historical East is part of the German soul and an integral part of the German cultural nation. Not for nothing was I christened Katja. Mama and my grandmother often affectionately called me “Katjuscha”[5] in their East Prussian dialect – a reference to the old Russian folk song.

The horrible sound of the Stalin organs was eventually forgotten. Bridges of reconciliation between Russians and Germans were built in large numbers after World War II, something that fortunately continues to happen.

Having left the Cold War behind us, which divided the world into good and evil or West and East, the world is evolving into a more complex, multipolar place – a multipolar world that could again give humanity a chance to create a new global world order of peaceful coexistence.

This might be possible were it not for the US, which seems to be resisting a multipolar world with all its might: The US wants to continue to assert its supremacy and influence worldwide. It has basically never withdrawn from Germany, and does not accept any other powers on the world stage. This US influence is expressed above all in the strategies of NATO and the EU, since they again rely on images of Russia and China as “the enemy” and on exclusion and division.

Shaktarp – when life comes to rest

The “Fifth Season” – Shaktarp in Lithuanian or, in Russian, Rasputitsa – is a special time, between the winter and spring season. It is the time of floods, of inundated meadows. This time was also called the time of “roadlessness” – the Memel territory and neighboring lowlands were neither passable, nor navigable during this period.[6] Life and people came to rest and there was thus time for reflection. Perhaps this is what our world sorely needs now.

It seems to me just the right time to pause, to rediscover and feel the magic of life. A magic that comes from looking at a piece of amber through which the sun is shining. Often found near the Baltic Sea, amber continues to fascinate people to this day. Sometimes known as the tears or gold of the gods, amber was once an important commodity, more valuable than gold, and it made its way across Europe on ancient trade routes from the Baltic Sea to Southern Europe and North Africa – one of the beginnings of globalization, or, rather, of the bonds that bring people together.

In addition to the Silk Road, the Amber Road has connected people, drawing them under the spell of this magical substance, which shines brighter than the sun.[7]

“States don’t have friends, states only have interests”

The observation made in 2013 by Egon Bahr, the German politician known for a commitment to peace and détente, remains true today: “International politics is never about democracy or human rights. It is about the interests of states. Remember that, no matter what they tell you in history class.[8] Otto von Bismarck and Charles de Gaulle, among others, have also pointed out that feelings and values have no place in politics. Only “interests and reciprocity should be used as a guideline.”[9]

Therefore, it is more important than ever to accept realities and define national interests. Values are volatile and often subject to the current zeitgeist. For example, no one called for a “feminist values-based foreign policy” until a German foreign minister from the Green Party did so. The much “cited community of values is not a form of governance, as it has not been legitimized by any democratic process.” [10]

We have been living in a multipolar world for a long time, with different forms of governments, democracies, dictators and authoritarian regimes.  But our international institutions and organizations, which were created after the Second World War, have not been updated.

According to a study by The Economist in 2021, only 45% of the world’s population lives in countries with democratic structures.[11] The ostensibly promising narrative of “change through trade” has not come to fruition. The expansion of economic relations with China that began in 1978 has been driven solely by economic gain. Even today, China offers a huge market for foreign products. The expansion of economic relations and the opening of the country in turn has helped move a significant part of the Chinese population out of poverty, and China’s technological backwardness has been quickly overcome. Both sides, the West and China, were and still are exclusively concerned with economic interests and geopolitical influence in Eurasia.

What is new, among other factors, is that the military no longer has a monopoly on wars and conflicts. We are increasingly experiencing ideologically fueled media and propaganda wars that deeply divide the population, make factual debates almost impossible, and drive humanity into division and thus into wars.

Ideology prevails over common sense and the heart

Fear and hatred are mighty propaganda tools – e.g., fear of the virus, fear of CO2 and distrust of Russia and China. The laborious and decades-long process of reconciliation between Germans and Russians, among others, has come to a standstill. Not only have economic relations been broken off, but cultural exchange has also come to a halt. Russian artists are being disinvited from performing if they have not publicly taken a clear stand against Putin. Political attitudes have become more important than art, and ideological attitudes are determining economic orientations and political decisions.

China – the surveillance state

The narrative of “change through trade” is now a thing of the past. China continues to pursue its “Grand Strategy.” What were once the dynasties of the Chinese Empire have become – since the founding of the People’s Republic in 1949 – the Communist Party, with current President Xi Jinping as its head, as emperor. In accordance with the “Chinese Dream,” the country is striving to become Number 1 in the world in all areas, including military power.

The drastic end of its zero-Covid policy shows how capable China is. The Chinese government has reacted, in a way that saves face, to the “spontaneous protests” and thus shown strategic flexibility. Thus, Xi Jinping has not only done the Chinese economy a great favor by lifting all Covid measures, he has also cemented his power and the power of the Communist Party. The transformation into a different system, propagated for so long by the West as justification for maintaining economic relations with an authoritarian regime, now seems more unlikely than ever. On the contrary, the Chinese government continues to pursue its strategy and to build a perfectly controlled, highly technological surveillance state.

China thus remains a very flexible economic partner and geopolitical player. This requires an equally flexible China strategy on the part of other countries. Supply chain disruptions must always be taken into consideration, investments in China should be thought about carefully and protected. Potential dependencies in the area of critical infrastructure and products, such as upstream inputs for pharmaceuticals, should always be avoided. Yet this also applies to economic relations with non-authoritarian regimes.

Moreover, dealings with China, economic and political, should be free of emotion, determined only by the relevant economic interests and reciprocity, for the benefit of all concerned parties. The fact is: China continues to go its own way and is a country in which the individual and individual freedoms play a very limited role.

Ideology has great importance in China – an ideology that is not only intended to hold the population together internally, but is the guiding principle externally for every political step on the world geopolitical stage. In dealing with China, one’s own national interests and reciprocity should always be the guiding principle. This applies not only to interactions with China, but especially to those with Russia as well.

We are all connected to each other.

Russia and the German soul

Let’s be realistic: Russia is a nuclear power; economic sanctions will not harm it in the long run as a country that is almost immeasurably rich in raw materials. On the contrary, sanctions allow Russia to diversify its gas market and thus no longer depend on just one customer.

A prime example:  the reactivation of the economic corridor running from China to Mongolia to Russia.[12] Further, the Russian gas pipeline to China will replace Nordstream 2.[13] In the course of securing its energy supply, China wants to keep its energy mix balanced and is thus increasing the share of natural gas. India is also a grateful purchaser of Russian gas.

Something that shows a decoupling from Russia is not so simple is the fact that from January to October 2022, Europe’s LNG imports increased by 40% over 2021. Russian LNG accounted for 16% of total European marine imports, with the main customers being France, Belgium, Spain and the Netherlands.[14] Instead of low-cost and environmentally friendly pipeline gas, the focus is now on LNG.

The resulting damage is now being felt by Germany in particular, as an industry-intensive and, compared to Russia, resource-poor country. The growing home-made energy crisis is driving deindustrialization in Germany; large companies are increasingly thinking of leaving the country; medium-sized enterprises – once the backbone of the German economy – are increasingly being destroyed; the country’s economic performance is declining; unemployment and poverty are the consequences.

And wasn’t the attack on Nordstream 2 the first terrorist attack against Germany since World War II?

The decisions and actions of the current Federal Government, with Olaf Scholz as Chancellor, are not in accordance with the oath taken “to prevent harm to the German people.”

“I swear that I will devote my strength to the welfare of the German people, increase its benefit, avert harm, uphold and defend the Basic Law and the laws of the Federation, fulfill my duties conscientiously, and ensure justice for all. (So help me God.)”

With or without God’s help, arms deliveries and military support to Ukraine, the homemade energy crisis, the intolerable excesses of gender-neutral language, so-called wokeness, cancel culture and uncontrolled immigration are also destroying not only the German soul, language and culture and putting pressure on the national budget, they are also continuing to widen already deep social divisions. None of this works to the benefit of Germany and the German people.

The power of culture, history and geography

“… the continuity of the state without which Germany would be much poorer – Germany did not come out of nowhere. Prussia was one of the most formative great powers in Europe and one of the most modern states in the world, with its effective administration, literacy down to the last street in the last village, and the rule of law at all levels.[15]

While there were serious political instabilities in the Weimar Republic, as the largest member of the German Empire, Prussia was politically very stable. Otto von Braun,[16] Prussian prime minister from 1920 to 1932 and a diehard Prussian and Social Democrat, reformed the state and school systems. Prussia was thus a “reliable pillar of the Weimar Republic.” But, following the so-called “Prussian blow,”[17] von Braun was removed from office.

The Reich’s control over Prussia, especially over the Prussian police, made it much easier for Adolf Hitler to establish a dictatorial regime in the course of the National Socialist takeover in 1933.[18]

The power of culture and shared history together with geography are enduring cornerstones that provide a strong foundation. “Between Russia and America lie oceans. Between Russia and Germany lies a great history,” wrote historian Michael Stürmer.[19] Vladimir Putin also quoted Stürmer in his speech to the German Bundestag on September 25, 2001.

Building bridges

My unshakable optimism tells me that it is not too late to return to our fundamental power, our culture and history, in order to create a new world order based on peaceful coexistence. What’s more, because of its geographic location, Germany should serve as a bridge between East and West.

Authoritarian regimes can only be changed from within, by their own people. Thus, Germany, too, can only free itself from its shackles from within, leaving behind the seemingly endless moralizing blame game and victimization loop and returning to what we Germans actually are: peace-loving, creative, innovative, technically expert and culturally sensitive.

How else should one interpret the famous “golden 20s” of the early 20th century? Here are some examples: Within a short time and despite the immense reparation claims made by the victorious powers based on the Versailles Treaty of June 28, 1919,[20] defeated Germany became the second most powerful industrial nation after the US – thanks to US credits, because banks in the US had faith in Germany’s economic power.  Further, as the treaty also prohibited motorized flight, some Germans made a virtue out of necessity, tinkered a bit and invented the glider.[21]

The economic basis for Germany’s return to its fundamental strength, to its roots, is first and foremost the need for a drastic reduction in the state administration and the number of its government employees.  The state should return to its original tasks: ensuring there is efficient infrastructure; a high-quality and affordable health-care system; high-quality, affordable and humane care for those in need; an excellent and free system of education; as well as ensuring internal and external security – in keeping with the oath taken to act for the good of the German people.

Changing our view of the world

The press, education and the health-care system, among others, must no longer be subject to competition and profit maximization, and could be transformed instead into foundations, for example.

Only a free press can ensure freedom of opinion and access to the full range of information. The monopoly of state media – such as broadcasters ARD and ZDF – and the ownership of media by billionaires – the Springer, Bertelsmann (Mohn) and Holtzbrinck families, among others – must end to create space for alternative media and sources of information. We need be well informed in order to become critical-thinking people in the sense of Immanuel Kant’s saupe aude.

The education system and especially the health-care system and pharmaceutical companies and their research must not be driven by profit maximization. Hospitals must not be run like businesses – health should be their exclusive concern. Old people’s and nursing facilities should be outfitted with the best possible equipment. The staff should be optimally paid. Profit should not play a role; all efforts should be guided by the desire to help people experience a graceful and respectful end to earthly life.

The divine within us and awareness

In his writings, Jacques Ancel, French geographer and geopolitician, proposed an identity of the heart, and a nation of the heart – the idea that people can connect and create a community based on a common history, language and culture. 

This path back to the heart reconnects us as human beings to the divine. We are all “soul people.” We are spiritual beings that come from the same source. This spiritual or divine expresses itself differently in various cultures and traditions, be it religion, Buddhism, shamanism or a closeness to nature.

We should shift back from the cold rational mind to the feelings of the heart. By doing so, we can create a new world view and a new world order. Such a reconnection to the heart and the divine in us would enable us to look at life and nature with reverence and love once again.

May we all become aware once again of our humanity and the many things that connect us.

Identity of the Heart – Back to the Roots – We Are All Love

References and further reading

Ancel, Jacques (1938):  Géographie des frontières, Gallimard.

Banik, Katja (2022): Im Rausch des Bernsteins – der historische Osten Deutschlands, www.katjabanik.com

Banik, Katja (2021): A clear view eastwards: Russia and Germany, www.katjabanik.com

Banik, Katja (2021): Without roots, no future. Decoupling ideologies, www.katjabanik.com

Bode, Sabine (2009): Kriegsenkel. Die Erben der vergessenen Generation, Klett-Cotta.

Brzezinski, Zbigniew (1998): The Grand Chess Board, Basic Books.

Die Bundesregierung (2022): Krieg in der Ukraine, www.bundesregierung.de

Deutscher Bundestag: Wortprotokoll der Rede Wladimir Putins im Deutschen Bundestag am 25.9.2001.

https://www.bundestag.de/parlament/geschichte/gastredner/putin/putin_wort-244966

Deutsch Historisches Museum (2022): Lebendiges Museum Online, Berlin.

Euractiv (2022): Russia says pipeline to China will replace Nordstream 2.

Dohnanyi, Klaus (2022): Nationale Interessen, Siedler Verlag, München.

Graichen, Hesse (2012): Die Bernsteinstraße. Verborgene Handelswege zwischen Ostsee und Nil, Rowohlt Taschenbuch Verlag, Hamburg.

Jähner, Harald (2022): Höhenrausch. Das kurze Leben zwischen den Kriegen. Rowohlt-Berlin.

Kossert, Andreas (2009): Kalte Heimat: Die Geschichte der deutschen Vertriebenen nach 1945, Pantheon Verlag.
Lasch, Otto (1959): So fiel Königsberg, Gräfe und Unzer Verlag.

Namzhilova, Victoria (2022): Economic Corridor China – Mongolia- Russia: Infrastructure in Focus, RIAC.

ostexperte.de, Nachrichten aus Russland und China, Berlin.

Putin, Wladimir (2021): Offen sein, trotz Vergangenheit, Gastbeitrag vom 22.6.2021 in der WochenzeitungDie Zeit.

https://www.zeit.de/politik/ausland/2021-06/ueberfall-auf-die-sowjetunion-1941-europa-russland-geschichte-wladimir-putin/komplettansicht

Pölking, Hermann (2022): Das Memelland. Wo Deutschland einst zu Ende war, bre.bra. verlag, Berlin

RedaktionsNetzwerkDeutschland (2022): www.rnd.de. Hannover.

Statista (2022): https://de.statista.com/statistik/daten/studie/1055110/umfrage/zahl-der-toten-nach-staaten-im-zweiten-weltkrieg/

Segelflugzeug.org (2022): www.segelflugzeug.org

Teltschik, Horst (2019): Russisches Roulette: Vom kalten Krieg zum kalten Frieden, C. H. Beck.

The Economist (2022): https://www.economist.com/graphic-detail/2022/02/09/a-new-low-for-global-democracy?fsrc=core-app-economist?utm_medium=social-

Wagener, Martin (2021): Der Kulturkampf um das deutsche Volk. Der Verfassungsschutz und die nationale Identität der Deutschen, Lau Verlag.


[1] Pölking (2022): Das Memelland. Wo Deutschland einst zu Ende war.

[2] Bundesregierung.de (2022) War in Ukraine.

[3] Statista (2022): https://de.statista.com/statistik/daten/studie/1055110/umfrage/zahl-der-toten-nach-staaten-im-zweiten-weltkrieg/

[4] https://www.youtube.com/watch?v=VduZuCsqL00

[5] https://www.youtube.com/watch?v=acPvvv1gqGg

[6] Pölking (2022): Das Memelland. Wo Deutschland einst zu Ende war.

[7] Graichen, Hesse (2013): Die Bernsteinstraße.

[8] Bahr (2013) Conversation with students, „Willy Brandt Reading Week,” Friedrich Ebert House Heidelberg.

[9] Otto von Bismarck.

[10] Dohnanyi (2021): Nationale Interessen.

[11] The Economist (2022): https://www.economist.com/graphic-detail/2022/02/09/a-new-low-for-global-democracy?fsrc=core-app-economist?utm_medium=social-

[12] RIAC (2022): https://russiancouncil.ru/en/analytics-and-comments/analytics/economic-corridor-china-mongolia-russia-infrastructure-in-focus/

[13] Euractiv (2022): https://www.euractiv.com/section/energy/news/russia-says-pipeline-to-china-will-replace-nord-stream-2-2/

[14] Rnd (2022): https://www.rnd.de/wirtschaft/fluessiggas-aus-russland-europa-importiert-rekordmenge-Y4DHLEMMPFEB5A5VSWZSLTVCD4.html

[15] PAZ, No. 47, 25.11.2022.

[16] German Historical Museum (DHM), https://www.dhm.de/lemo/biografie/otto-braun

[17] DHM, https://www.dhm.de/lemo/kapitel/weimarer-republik/innenpolitik/preussenschlag

[18] DHM, https://www.dhm.de/lemo/kapitel/weimarer-republik/innenpolitik/preussenschlag

[19] ostexperte.de, https://ostexperte.de/deutschland-und-russland-teil-1/

[20] DHM, Berlin. https://www.dhm.de/lemo/kapitel/weimarer-republik/aussenpolitik/versailler-vertrag.html

[21] Glider.org, http://www.segelflugzeug.org/segelflug_geschichte.php

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