European matters

[Crafty_Dog]

Is Europe on the Cusp of Another Migration Crisis?
Adriano Bosoni
Senior Europe Analyst, Stratfor
Emily Hawthorne
Middle East and North Africa Analyst, Stratfor
9 MINS READ

Mar 6, 2020 | 19:28 GMT

A photo of refugees and migrants waiting in line to receive blankets and food near the Greek border in Edirne, Turkey, on March 5, 2020.

Refugees and migrants wait in line to receive blankets and food near the Greek border in Edirne, Turkey, on March 5, 2020. Thousands have flocked to the border since the Turkish government announced it would allow migrants to cross into Europe on March 1.

HIGHLIGHTS

There is a high chance that a migration crisis in 2020 results in a situation similar to the one that unfolded in 2015, with Greece again bearing most of the weight of the migration influx.

But unlike five years ago, Germany will be more willing to protect the European Union's external border and less interested in accepting a large number of migrants.

Turkey will also be more willing to weaponize the country's landmark migrant agreement with the European Union to secure additional diplomatic and financial help from the bloc.

On March 1, Turkey announced it would no longer enforce an agreement with the European Union to prevent migrants from entering the Continental bloc. Since then, tens of thousands of migrants have been trying to enter Greece from Turkey, fueling fears of another looming migration crisis in Europe. In response, the Greek government has increased security at its borders and announced that no asylum requests would be accepted for a month — though it's far from certain whether Greece will be able to contain a continued flood of migrants at its doorstep. Unless Turkey changes its position in the coming weeks, there's a good chance Greece's sea and land borders will once again become the hottest access point for Europe-bound migrants. But unlike the crisis in 2015, Athens will find even fewer EU countries willing to help lift the load this time around.

The Big Picture

Because of its weak economy, Greece is not the final destination for most migrants. But in 2015, many migrants either ran out of resources to keep moving north to wealthier countries in Europe or they found that other transit countries, such as Serbia and Hungary, had closed their borders. While a new migration crisis will likely repeat some of these patterns, several new developments over the past five years will also play a significant role in shaping how a new crisis could unfold in the coming weeks.

Turkey Lights the Fuse

At the heart of the unfolding new migrant crisis is Turkey's willingness to gamble its landmark migrant agreement with the European Union. Turkey's struggling economy is having a direct political impact on the popularity of its government, and Ankara knows it might ultimately prove unable to ward off a Syrian and Russian incursion into Syria's Idlib province. The popularity of Turkey's ruling Justice and Development Party (AKP) also risks waning amid increasingly angry and cash-strapped Turks, who see the country's large refugee population as partially to blame for their grievances. This was made clear by the country's 2019 local elections, in which the AKP suffered sizable losses among urban voters living in closest proximity to refugees. This, combined with the economic headwinds Turkey has experienced since 2015, has created an even more hostile environment in Turkey for refugees. And in 2019, Ankara imposed tighter residency restrictions on refugees.


Against the backdrop of these mounting economic and political threats, an increasingly desperate Ankara has shown that it's willing to breach its migration agreement with the European Union to secure more support from the bloc. Specifically, Turkey wants more money to help provide for the refugees and migrants it is currently hosting, and more EU diplomatic support in its offensive against Syrian and Russian forces, including support for a no-fly zone and long-term refugee resettlement in northern Syria (which Germany has already given support for, but cannot provide alone). Ankara knows that threatening to scrap the existing migrant agreement can help force Brussels to fall in line. And should the March 5 cease-fire between Turkey and Russia fall through, Ankara will be even less likely to remove this lever of migrants as leverage in its EU negotiations.

Similarities to the 2015 Crisis

A new migration crisis would likely repeat some of the patterns of the previous crisis, including:

Greece's lack of capacity. Greece has very limited room to deal with new migrants and is likely already nearing its capacity.

Around 74,600 asylum seekers reached Greece last year, the highest number in the European Union. Some 42,000 of them are trapped in migrant camps in the islands, as Athens does not allow them to move to the mainland until their legal situation is cleared. Reports from the ground say that most migrants are crammed in facilities that are being used well beyond their capacity. In recent months, migrants have protested in some of the islands, particularly in Lesbos, which is home to some 25,000 asylum seekers.

Closed borders along the Balkan migration route. In 2015, many migrants found that countries along the so-called Balkan migration route to Northern Europe, including Serbia and Hungary, had closed their borders. Should another crisis unfold in the coming months, countries like Albania, North Macedonia and Serbia (which are not in the European Union) are likely to again close their borders in an attempt to block the migration route. Hungary, which is an EU member, may also do the same if migratory pressure increases significantly.

More money, less action out of Brussels. Under the European Union's current migration rules, migrants have to apply for asylum in the country where they first enter the bloc, which Greece has long argued unfairly places the burden on them. But a systematic, blocwide effort to distribute migrants across the European Union remains unlikely, as countries in Northern and Eastern Europe will reject any move to alter these rules. If the crisis worsens, and if the number of arrivals in Greece and other countries on the bloc's external border increases, we are instead more likely to see bilateral agreements, under which countries like Germany would accept small groups of migrants in an attempt to ease the pressure on Greece. Brussels, meanwhile, will likely continue to throw money at the problem as it has done in similar situations in the past. And indeed, we've already seen a bit of this, with the European Commission announcing it was sending Greece 700 million euros ($791 million) to help maintain the recent influx of migrants, as well as extra personnel from the European Border and Coast Guard Agency (also known as Frontex) to help protect Greece's borders.

Differences From the 2015 Crisis

In addition to these similarities, there are also some important differences that will shape how a potential migration crisis would unfold in 2020 compared with the crisis in 2015:

Stricter EU asylum policies. Some migrants will now have a harder time requesting asylum in 2020 than they did in 2015, especially those who have been in Turkey for years and cannot really claim to be running away from extreme hardship. While this could weigh negatively on some migrants' cost-benefit analysis of whether to attempt crossing into EU territory, the flow of attempted crossings in recent days shows that for thousands of migrants the risk is still worth taking.

If there is an influx of "new" asylum seekers, that is, people who are currently in Syria and have been displaced because of recent events in Idlib, they may have a better chance of successfully obtaining the refugee status, but it will still be hard. In January, Greece introduced new asylum rules that make the application process faster, which also has the goal of making deportations faster — though Athens will probably continue to struggle to enforce deportations, and many of the migrants whose asylum requests are rejected will probably remain in Greece and live in legal limbo.

If Turkey continues allowing migrants to flood its border, Greece could again become the epicenter of Europe's next migration crisis.

Germany's skepticism around asylum seekers. While Germany may accept a few migrants from Greece, it probably will not open its borders as it did five years ago. Germany reacted to the 2015 migration crisis by welcoming around a million asylum seekers into the country, which, in the long run, has weakened the popularity of Chancellor Angela Merkel and contributed to her decision not to seek reelection in 2021. Germany's open-door policy in 2015 also contributed to the rise of the far-right Alternative for Germany party, which has become the main opposition party since the country's 2018 general election. Germany's reaction to a new immigration crisis would, therefore, probably be different this time around. In fact, the German government has been posting tweets in Arabic, Farsi, English and German saying that Berlin supports Athens' recent efforts to protect the bloc's external borders, which is basically meant to discourage migrants from trying to enter the European Union.

Instead of taking in migrants, Germany is likely to support granting additional resources, money and assistance to Greece to help protect the border with Turkey. Berlin will also reach out to Ankara to try to keep the migration agreement in place, and even propose cooperation on issues such as establishing a no-fly zone in northwestern Syria. Finally, Germany will increase pressure on Russia to de-escalate the conflict in Syria. In this, the problem for Germany is that it has very limited influence on Moscow, a key actor in the war, and has little to offer to Turkey other than EU funds and diplomatic support.

Impact on Italy

At least during an early phase of a new migration crisis, Italy is unlikely to be significantly affected, as its weak economy will make it a less attractive final destination for migrants entering the European Union from Turkey compared with more financially secure countries such as Austria, Germany, the Netherlands and Sweden. Instead, the main threat for Italy is events in Turkey encouraging migrants in other parts of the world to try to reach the European Union. If this happens, migration routes that have been relatively calm in recent years could be reactivated, such as the Libya-Italy route.

In mid-2017, Italy reached a deal with the Libyan government to have the Libyan coast guard begin intercepting migrant boats in exchange for money, resources and training. But this deal is fragile for two key reasons:

Human trafficking organizations who transport migrants from sub-Saharan Africa to Libya, and then to Italy, may decide that the conditions are ripe again to resume their operations, which could overwhelm Libya's weak and fragile government.
The current Libyan government may also decide that a new migration crisis in Europe is a good opportunity to ask Italy for more money and resources in exchange for keeping their agreement in place.

A significant surge in the arrival of migrants would happen at a very difficult time for Italy. The country is expected to have very low economic growth in 2020, and the impact of the ongoing coronavirus outbreak could put it in a recession. Authorities in Rome recently announced a stimulus package to deal with the economic impact of the outbreak, but an immigration crisis would create additional problems for Rome's already strained coffers. At the same time, the Italian coalition government is fragile, and the opposition League party, which has a strong anti-immigration stance, is polling strongly. An early election in Italy within the context of a recession and immigration crisis would certainly increase the chances of the League winning the vote and accessing power — an outcome that would further spook financial markets and investors' already shaky confidence, given that some League members have pushed for Italy to leave the eurozone.

[Crafty_Dog]

   
    The EU Wasn’t Built for This
By: Allison Fedirka

Europe has always struggled to define what the European Union really means, particularly after the 2008 financial crisis. It was a harsh reminder that all its members have different political and economic needs, and every move it has made since then – financial compromises, Brexit, immigration reform – has only widened the differences, even as it has stoked nationalist sentiment. This bodes poorly for the EU's ability to confront its latest crisis: a two-front war against a virus and the economic and social unrest it threatens to unleash.
 
(click to enlarge)

Before the coronavirus outbreak, the EU knew it was approaching a recession. The only question was exactly when and how bad would it be. The virus helped answer these questions – now, and potentially catastrophic. It also meant that the questions of public health measures (a national issue) and economic recession (a union issue) became intimately linked. The bloc will be judged on its ability to manage the crisis with the goal of avoiding the chaos and decline that occurred after the 2008 financial crisis. As part of its efforts to stay ahead of the economic crisis, the EU included a public health component to its initial response, something no one expected Brussels to do. As a result, the bloc faces a defining moment as it has now positioned itself as a possible solution to problems national governments may not be able to solve on their own.

The EU was meant to foster economic prosperity and thus to prevent any more continent-wide wars from breaking out. In time, its mandate evolved, eventually including more complex arrangements such as a common currency, production standards, the free movement of people and so on – all to support trade, the common market and general economic well-being. By design, it needed to be prepared for economic crises, and though its record during the 2008 financial crisis leaves something to be desired, the union held nonetheless. Brussels enacted some strong central measures for the eurozone as constituent states imposed policies that at times rivaled the EU's, but the mutual dependencies and benefits of being in the eurozone have outweighed the costs of completely breaking ties.

But the bloc was never designed to address mass public health issues and there's no history of collaboration in this area. In the past decade, health and medical sectors have been standardized somewhat for the purposes of trade, but EU legislation generally allows its members to break rank when national security is at stake. The coronavirus has certainly become a matter of national security, and though Brussels will be judged on its ability to manage the current crisis (after all, it is still expected to play a role on the economic side of the problem), its performance will depend on the buy-in and cooperation of panicked member states that are likewise scrambling for answers.

Addressing the public health crisis puts two forces at odds. On the one hand, the bloc is trying to solve a problem as a community. This makes sense on the economic level as the economies are closely integrated. On the health side, there is also a case for an integrated response given the threat is a communicable disease, how freely the populations move among one another, the close proximity of multiple countries and the desire to maintain what trade is possible. On the other hand, the member states demonstrate that they consider themselves to be facing exceptional circumstances likened to a state of war. Such a likening is not unheard of given the scale of economic and human consequences brought about by the pandemic. Given the EU was built with the intention of decreasing the risk of wartime behavior, its tools and approach are not compatible with countries in war mode where the me-or-them mentality prevails. The EU was never designed to lead a war nor fight public health battles. Member states most affected by the virus find themselves needing to do exactly this.

However ill-suited the bloc may be, it understands that the coronavirus outbreak warrants a collective response. To that end, the European Council approved Commission proposals to help guide the bloc through the public health crisis. Earlier this week, it recommended closing borders, limiting internal trade to the essentials and allowing citizens to return home. The proposals also called on the capacities of rescEU, a union-owned reserve that provides assistance in extraordinary situations. Thus, the Commission is now taking stock of medical equipment, collectively procuring supply and distribution of existing stock with the goal of equitable access and minimizing potential shortages.

The problem is that member states are responsible for reporting stocks and determining how many supplies their people need, and it’s unclear how each government makes those determinations. It’s also unclear how well Brussels can coordinate supply efforts.
 
(click to enlarge)

However, it is clear what the EU needs to combat the crisis: face masks, ventilators, health care professionals, hospital beds and so on. But already there are reports of shortages. Estimates of the disease's progression show no country has sufficient ventilators, face masks and hospital beds to meet potential peak demand. Health care professionals were already scarce prior to new demand levels. (This is to say nothing of high demand outside of Europe.)

Some countries are able to meet their own needs better than others, hence the discrepancies in which members do and do not support EU initiatives. Germany, for example, is better suited than most to manage the crisis on its own. It has the largest medical device market in Europe (ahead of the U.K., France and Italy) and the third-largest in the world (behind the United States and Japan). With Switzerland, Germany is home to the two leading ventilator producers in Europe. Italy, by contrast, boasts just one low-capacity ventilator manufacturer. France has some, but Spain has none. German company DACH Schutzbekleidung is also a leader in medical masks, particularly outside of China, though other countries such as Spain, the Netherlands and France also can produce masks.

Yet even Germany faces a potential shortage of hospital beds and health care workers. Many of these workers come from Poland and enter Germany on a rotating basis for multi-month shifts. The recent border restrictions have disrupted the cycle, making it difficult for more health care workers to enter back in.

Between the outbreak, medical shortages and lack of self-sufficiency in the public health and medical industries, many EU member states have started to turn toward their national governments for answers. In response, Berlin and Paris have imposed export restrictions on medical supplies. Given the advantages Germany has as a producer of these goods, it’s not a surprise that one of Berlin’s first moves was to restrict exports to ensure domestic needs were met first. Over the weekend, Berlin and the European Commission came to an agreement that allowed Germany to approve exports of protective equipment such as masks, goggles and gloves. Since then, it has issued licenses for the export of protective equipment to Italy, Switzerland and Austria.

What recourse, then, is there for member states? Most have begun inching toward the nationalization of key companies or operations so that the government can directly control resources during the crisis. Spain and Italy nationalized private hospitals and have legal standing to do more if they want with other companies. Germany has called on hospitals to postpone nonessential surgeries. France declared a state of “sanitary emergency” on March 18 allowing Paris to take more action in the economic sector to provide for the health system. The government is also supporting local factories as they shift production lines to produce high-demand products such as masks. Romania restarted and nationalized a company that had closed before the crisis and enlisted the help of the military to resume work to produce disinfectants. Other companies have been put to work by the state and switched to producing masks, other protective equipment and biocides (though, notably, not ventilators).
Thus there are two competing solutions to the coronavirus crisis. The EU is stepping up to grow beyond its current role to show members it’s a reliable manager. It had to, given that the source of the economic problems it needs to address requires addressing ways to stabilize a public health crisis. Meanwhile, states encourage the very kind of nationalist tendencies EU membership is supposed to dispel. Ultimately, the EU’s efforts to keep the bloc together will rest more on its ability to weather the economic impact than the public health battle.   

[G M]

The EU is done.

   
    The EU Wasn’t Built for This
By: Allison Fedirka
Europe has always struggled to define what the European Union really means, particularly after the 2008 financial crisis. It was a harsh reminder that all its members have different political and economic needs, and every move it has made since then – financial compromises, Brexit, immigration reform – has only widened the differences, even as it has stoked nationalist sentiment. This bodes poorly for the EU's ability to confront its latest crisis: a two-front war against a virus and the economic and social unrest it threatens to unleash.
 
(click to enlarge)
Before the coronavirus outbreak, the EU knew it was approaching a recession. The only question was exactly when and how bad would it be. The virus helped answer these questions – now, and potentially catastrophic. It also meant that the questions of public health measures (a national issue) and economic recession (a union issue) became intimately linked. The bloc will be judged on its ability to manage the crisis with the goal of avoiding the chaos and decline that occurred after the 2008 financial crisis. As part of its efforts to stay ahead of the economic crisis, the EU included a public health component to its initial response, something no one expected Brussels to do. As a result, the bloc faces a defining moment as it has now positioned itself as a possible solution to problems national governments may not be able to solve on their own.
The EU was meant to foster economic prosperity and thus to prevent any more continent-wide wars from breaking out. In time, its mandate evolved, eventually including more complex arrangements such as a common currency, production standards, the free movement of people and so on – all to support trade, the common market and general economic well-being. By design, it needed to be prepared for economic crises, and though its record during the 2008 financial crisis leaves something to be desired, the union held nonetheless. Brussels enacted some strong central measures for the eurozone as constituent states imposed policies that at times rivaled the EU's, but the mutual dependencies and benefits of being in the eurozone have outweighed the costs of completely breaking ties.
But the bloc was never designed to address mass public health issues and there's no history of collaboration in this area. In the past decade, health and medical sectors have been standardized somewhat for the purposes of trade, but EU legislation generally allows its members to break rank when national security is at stake. The coronavirus has certainly become a matter of national security, and though Brussels will be judged on its ability to manage the current crisis (after all, it is still expected to play a role on the economic side of the problem), its performance will depend on the buy-in and cooperation of panicked member states that are likewise scrambling for answers.
Addressing the public health crisis puts two forces at odds. On the one hand, the bloc is trying to solve a problem as a community. This makes sense on the economic level as the economies are closely integrated. On the health side, there is also a case for an integrated response given the threat is a communicable disease, how freely the populations move among one another, the close proximity of multiple countries and the desire to maintain what trade is possible. On the other hand, the member states demonstrate that they consider themselves to be facing exceptional circumstances likened to a state of war. Such a likening is not unheard of given the scale of economic and human consequences brought about by the pandemic. Given the EU was built with the intention of decreasing the risk of wartime behavior, its tools and approach are not compatible with countries in war mode where the me-or-them mentality prevails. The EU was never designed to lead a war nor fight public health battles. Member states most affected by the virus find themselves needing to do exactly this.
However ill-suited the bloc may be, it understands that the coronavirus outbreak warrants a collective response. To that end, the European Council approved Commission proposals to help guide the bloc through the public health crisis. Earlier this week, it recommended closing borders, limiting internal trade to the essentials and allowing citizens to return home. The proposals also called on the capacities of rescEU, a union-owned reserve that provides assistance in extraordinary situations. Thus, the Commission is now taking stock of medical equipment, collectively procuring supply and distribution of existing stock with the goal of equitable access and minimizing potential shortages.
The problem is that member states are responsible for reporting stocks and determining how many supplies their people need, and it’s unclear how each government makes those determinations. It’s also unclear how well Brussels can coordinate supply efforts.
 
(click to enlarge)
However, it is clear what the EU needs to combat the crisis: face masks, ventilators, health care professionals, hospital beds and so on. But already there are reports of shortages. Estimates of the disease's progression show no country has sufficient ventilators, face masks and hospital beds to meet potential peak demand. Health care professionals were already scarce prior to new demand levels. (This is to say nothing of high demand outside of Europe.)
Some countries are able to meet their own needs better than others, hence the discrepancies in which members do and do not support EU initiatives. Germany, for example, is better suited than most to manage the crisis on its own. It has the largest medical device market in Europe (ahead of the U.K., France and Italy) and the third-largest in the world (behind the United States and Japan). With Switzerland, Germany is home to the two leading ventilator producers in Europe. Italy, by contrast, boasts just one low-capacity ventilator manufacturer. France has some, but Spain has none. German company DACH Schutzbekleidung is also a leader in medical masks, particularly outside of China, though other countries such as Spain, the Netherlands and France also can produce masks.
Yet even Germany faces a potential shortage of hospital beds and health care workers. Many of these workers come from Poland and enter Germany on a rotating basis for multi-month shifts. The recent border restrictions have disrupted the cycle, making it difficult for more health care workers to enter back in.
Between the outbreak, medical shortages and lack of self-sufficiency in the public health and medical industries, many EU member states have started to turn toward their national governments for answers. In response, Berlin and Paris have imposed export restrictions on medical supplies. Given the advantages Germany has as a producer of these goods, it’s not a surprise that one of Berlin’s first moves was to restrict exports to ensure domestic needs were met first. Over the weekend, Berlin and the European Commission came to an agreement that allowed Germany to approve exports of protective equipment such as masks, goggles and gloves. Since then, it has issued licenses for the export of protective equipment to Italy, Switzerland and Austria.
What recourse, then, is there for member states? Most have begun inching toward the nationalization of key companies or operations so that the government can directly control resources during the crisis. Spain and Italy nationalized private hospitals and have legal standing to do more if they want with other companies. Germany has called on hospitals to postpone nonessential surgeries. France declared a state of “sanitary emergency” on March 18 allowing Paris to take more action in the economic sector to provide for the health system. The government is also supporting local factories as they shift production lines to produce high-demand products such as masks. Romania restarted and nationalized a company that had closed before the crisis and enlisted the help of the military to resume work to produce disinfectants. Other companies have been put to work by the state and switched to producing masks, other protective equipment and biocides (though, notably, not ventilators).
Thus there are two competing solutions to the coronavirus crisis. The EU is stepping up to grow beyond its current role to show members it’s a reliable manager. It had to, given that the source of the economic problems it needs to address requires addressing ways to stabilize a public health crisis. Meanwhile, states encourage the very kind of nationalist tendencies EU membership is supposed to dispel. Ultimately, the EU’s efforts to keep the bloc together will rest more on its ability to weather the economic impact than the public health battle.

[DougMacG]

quote author=G M
"The EU is done."
------------------

Yes.  The EU was dysfunctional  before Brexit.  The economic growth rate in the best of times was near zero.  The EU without Britain is a greatly changed, greatly weakened group.  Greece, Italy, Spain were in really bad shape before Wuhan virus.  The open borders feature of the EU is now closed (probablly the only good news in this).  The weakening of their currency means they can't and won't buy American goods.  Without Britain, the 27 countries of the EU have but one nuclear 'power', France.  The greatest economic power in the EU, Germany, has been shutting down its electric power capacity, switching to 'solar without sunshine'.  Europe has the Muslim migration challenge, rising crime rates, stressed social spending systems, failing healthcare systems, demographic disaster, the failure of assimilation, the resumption of reliance on Russia, the debt crisis, already high tax rates and excessive burden of government spending.

Where does it go from here?  Down.  They will have a much harder time recovering economically than the US. 

From an American perspective, they will sadly become less and less relevant.  Less tourism, less strategic militarily, less important economically.

Then we have roughly half of America saying, let's be more like Europe.
----------------------
Case study, Italy:  https://nationalinterest.org/blog/buzz/coronavirus-could-create-massive-eu-debt-crisis-think-italy-137177

[ccp]

oh, but that merkel gal
is just great

[Crafty_Dog]

https://www.gatestoneinstitute.org/15803/coronavirus-european-union-unravels

[G M]

oh, but that merkel gal
is just great

Well, she is still in a strong second place for the worst German leader in history rating.

[Crafty_Dog]

Let's not forget the one who now heads to consortium with Russia doing the gas pipeline to cut Poland out of the loop , , ,

=====================


March 27, 2020   View On Website
Open as PDF



    The German Economy Is in Trouble
By: GPF Staff
 
(click to enlarge)
It’s no secret that the global economy has slowed down in March as major economies across the globe introduce measures to combat the coronavirus outbreak. Measuring the impact of these measures is challenging since data for this period has, for the most part, not be released yet. In Germany, however, the Ifo Institute’s business climate index, which measures sentiment among German managers in the areas of manufacturing, services, trade and construction, is a useful indicator.

And according to this indicator, the future doesn’t look good. In the institute’s own words, the sentiment among business managers has turned “extraordinarily dire.” “The German economy is in shock,” the institute said. The two sectors contributing most to the declining business climate were trade and manufacturing. More worrying than the plunge in the business climate, however, is the plunge in expectations for the next six months. As mentioned in GPF’s 2020 forecast, Germany is vulnerable to an economic downturn because of its dependence on exports, which account for 47.4 percent of the country’s gross domestic product, according to the latest World Bank figures. This means every 2 percent drop in exports will translate into a nearly 1 percent decline in GDP.   

[DougMacG]

Probably a bad sign:

https://www.msn.com/en-in/finance/topstories/finance-minister-of-german-state-commits-suicide-after-worrying-over-coronavirus-covid-19-economic-crisis/ar-BB11SkQ3

[G M]

Probably a bad sign:

https://www.msn.com/en-in/finance/topstories/finance-minister-of-german-state-commits-suicide-after-worrying-over-coronavirus-covid-19-economic-crisis/ar-BB11SkQ3

Wesbury: Upward mobility in German government indicates a return of bull market!

[Crafty_Dog]

https://www.cnbc.com/2019/03/25/italy-signs-deals-worth-2point5-billion-euros-with-china.html

[Crafty_Dog]

n Europe, COVID-19 Extends the Tenure of Fragile Governments
Adriano Bosoni
Adriano Bosoni
Senior Europe Analyst, Stratfor
7 MINS READ
Mar 30, 2020 | 17:21 GMT
An illustration of a microscope image of the new coronavirus and a surgical mask overlaying a 100 euro banknote.
A surgical mask and microscopic images of the new coronavirus overlay a 100 euro banknote. As it tears EU economies apart, the COVID-19 pandemic is also helping unite the bloc's formerly fragmented governments.

(Shutterstock/Kenan Stocks)
HIGHLIGHTS
As it tears EU economies apart, the pandemic is also bringing the bloc's fragmented political climate together. Though this renewed stability will only last as long as the health crisis....

The coronavirus outbreak is ravaging Europe’s economy by simultaneously bringing production, consumption, investment and trade to a near halt. But the pandemic is also helping freeze the Continent's political crises by forcing governments to unite against the escalating existential threat. Europe's political tumult, however, will return once the immediate contagion has abated. And several countries, in particular, will see a combination of financial and legislative fragility that will limit their ability to deal with the enduring economic repercussions. 

The Big Picture

European governments have reacted to the coronavirus crisis by pumping money into their economies. These efforts have, in part, been made possible by once-fragile governments putting aside their differences to introduce emergency measures. But when the coronavirus crisis is over, many governments will be made weak once again, hindering their capacity to quickly and effectively recover from the lingering economic impact.


COVID-19: Political Stability's Unexpected Ally

Several EU countries started the year with minority governments, caretaker administrations or unstable coalitions that the coronavirus crisis has since made much more resilient:

Italy

Before COVID-19 was detected in Italy, tensions between the country's coalition partners — the anti-establishment Five Star Movement and the center-left Democratic Party — were on the rise over issues such as the annual budget and reforms of the criminal justice system. Poor results in regional elections and the defection of several lawmakers to opposition parties had also further weakened the government. Prior to the outbreak, opinion polls had suggested the Euroskeptic League party could win if an early election was called, and would form a government with like-minded parties. A government led by the League would make investors nervous about Italy’s membership in the euro, adding political and economic uncertainty to Italy’s future.

The escalation of coronavirus cases and the drastic measures that followed, however, have since temporarily suspended Italy's political crisis. The March 29 referendum on a constitutional reform to reduce the number of lawmakers in the Italian Parliament has also been indefinitely postponed due to the COVID-19 crisis. Italy will probably not hold an early general election before the referendum takes place because of the complications related to electing members of parliament before the reduction in the number of lawmakers is enforced.


Germany

Germany's coalition government between the center-right Christian Democratic Union (CDU), the Christian Social Union and the center-left Social Democratic Party was also on the verge of collapse at the start of 2020. The partners have different views on fiscal policy, and were also trying to differentiate themselves in the eyes of voters after governing together for the majority of the past 20 years. Their poor performance in regional elections in late 2019 and early 2020 led to internal debates over whether to put an end to the coalition and hold an early general election.

But the arrival of COVID-19 has since put the coalition's crisis on pause. After months of virtual paralysis, the German government swiftly closed the country’s borders, announced tax benefits for companies and households, and offered government-backed loans to businesses. The outbreak also postponed the CDU’s plans to appoint a new leader. A party congress that was scheduled for April 25 has been suspended, and the new date has yet to be announced. The new CDU leader stands a decent chance of winning a general election and becoming the new chancellor after Angela Merkel's term ends in 2021. He or she will also have to decide whether to continue with Angela Merkel’s centrist approach, or to move to more right-wing positions to stop the party's continued hemorrhage of voters to the far-right Alternative for Germany party. But without a leader, the CDU will not be interested in exiting the government coalition and holding an early general election.

Belgium

In mid-March, the COVID-19 crisis convinced nine political parties in Belgium's parliament to put their ideological differences aside and formally support Prime Minister Sophie Wilmes’s caretaker government, which had been operating with limited powers since October. This formal support for Wilmes has granted her government full powers to pass emergency measures to cope with the outbreak. But while the coronavirus gave Belgium its first fully-fledged government since the inconclusive general election of May of 2019, the parties have only given their support to Wilmes for six months, after which she will have to ask for the confidence of parliament again in mid-September. If the worst part of the health crisis is over by then, the prime minister may struggle to win that vote and her government may in turn collapse, leading to renewed political turbulence in Belgium.

Romania

When the coronavirus crisis hit Romania, the country was struggling to find a new prime minister. Prime Minister Ludovic Orban of the center-right National Liberal Party was in power only in a caretaker role after losing a no-confidence motion in early February. Parliament was unable to appoint a successor, opening the door for a potential early general election. But after the COVID-19 outbreak took hold in early March, the Romanian parliament formally re-appointed Orban as prime minister, with support from some of the opposition lawmakers that voted to oust him just a month before. Shortly after his reappointment, Orban announced a stimulus package including cheap loans to companies and state support for workers who were suspended because of the pandemic.

A Fleeting Lifeline

Having stable governments in Europe is beneficial at a time when the Continent is feeling the immediate economic blow of the coronavirus outbreak. When governments do not have to deal with internal disputes and are united toward a common goal, they are in a better position to make decisions to mitigate the economic effects of crises, such as the current health emergency. But this new phase of political stability may not survive long after the danger has passed, as the sense of urgency that brought political adversaries together will be gone. And as a result, the governments that were fragile before the outbreak will see their disagreements resurface.

Political instability will return to many European countries at a time when their economies are still reeling from the aftermath of the COVID-19 crisis.

In addition, there will be a lag between the drop in contagion cases and the recovery of the economy. The eventual relaxation of quarantine measures will allow the services and industrial sectors to resume their activities as people are allowed to leave their homes and production and consumption gain traction again. The problem is that many businesses will not survive the crisis, and some of the workers that were suspended during the peak of contagion will not get their jobs back. Europe’s largest economies — including Germany, France and Italy — were already cooling down before the COVID-19 outbreak, meaning that the Continent's post-virus recovery will likely be slow and uneven.

To make things more complicated, slow economic growth, higher unemployment and fragile governments will coincide with the financial problems created by the policy reaction to the outbreak. Countries such as Italy, France, Germany and Spain have announced large packages of stimulus measures (including cheap loans for companies, assistance for self-employed workers and delays in tax payments) that will partially be financed by taking on additional debt. In a context of low growth, this decision will deepen their deficits and widen their debt-to-GDP ratios, which could make financial markets once more worry about whether this is sustainable.

Political instability will thus return to many European countries at a time when their economies are still reeling from the aftermath of the COVID-19 crisis. This will reduce the room for many governments to introduce structural reforms to deal with the growth problems that predated the pandemic. Meanwhile, the prospect of early general elections in large countries such as Italy and Germany will also result in households and investors postponing some of their spending and investment decisions amid the reemerging political uncertainty. This means that Europe will feel the consequences of the coronavirus outbreak long after the outbreak is put under control.

[Crafty_Dog]

By: GPF Staff
Anticipating an economic crash. According to a European Commission report, the economic crash resulting from the coronavirus pandemic could cause a recession deeper than the one that followed the 2008 financial crisis, which saw a 4.3 percent drop in the European Union’s gross domestic product. The report did not, however, specify by how much the economy would contract this time around. So far, European countries have introduced stimulus packages worth on average 2 percent of GDP and provided liquidity of around 13 percent – but the European Central Bank has already warned that 2 percent will not be nearly enough. Italian business lobby Confindustria has said it expects Italy’s GDP to shrink this year by 6 percent, it’s biggest fall since 1946. And though the EU is considering issuing so-called “coronabonds,” the head of the eurozone’s bailout fund warned that it could take up to three years to set them up.

[DougMacG]

South Europe hit hardest.  North Europe richer, can afford this, S. Europe poorer, can't.  N. Europe now missing UK. 

From the article:
"Portugal’s Prime Minister António Costa agrees: “Either the EU does what needs to be done or it will end.” Inaction, warned French President Emmanuel Macron, could be the death of the EU."
-----------------------------------------------------------------------------
https://www.wsj.com/articles/coronavirus-reopens-europes-old-division-11586386729?mod=opinion_featst_pos2

Coronavirus Reopens Europe’s Old Division
The economics of the pandemic pit the South against the North on the question of ‘corona bonds.’

By Walter Russell Mead
April 8, 2020

European Union flags fly outside the European Central Bank’s headquarters in Frankfurt, Feb. 13, 2015.
PHOTO: MARTIN LEISSL/BLOOMBERG NEWS
Usually it’s right-wing U.K. and U.S. euroskeptics who prophesy doom for the European Union, but in the past couple of weeks voices of gloom have come from the heart of the EU establishment.

Former European Commission President Jacques Delors spoke of a “mortal danger” to the bloc. Former Italian Prime Minister Enrico Letta warned of the “deadly risk” Europe faces. Spain’s Prime Minister Pedro Sánchez called this Europe’s “worst crisis since the Second World War.” Portugal’s Prime Minister António Costa agrees: “Either the EU does what needs to be done or it will end.” Inaction, warned French President Emmanuel Macron, could be the death of the EU.

The coronavirus has reopened old wounds and torn Europe in two along the old creditor-debtor line—a mostly Latin Southern Europe vs. a largely Nordic and Germanic North. The massive economic and social shock of the pandemic has hit every European country, but the Germans and their neighbors can manage, mostly, on their own resources. Southern states, many already burdened with high levels of debt and some having yet to recover from the 2007-09 recession, need help.

That much isn’t controversial. Even the tightfisted Dutch agree that the coronavirus is a once-in-a-century crisis that demands a pan-European response. The Northerners recognize that the bailouts following the 2007-09 recession didn’t work as well as hoped, and they understand, or claim to understand, the resentment that is so common in the South. They say they’re willing to approach this crisis in a generous spirit of European solidarity.

They have already agreed to lift the much-criticized deficit caps on member states. The European Central Bank is providing unlimited support for member states’ bonds, and the European Investment Fund is also ready to help. Beyond that, the European Stability Mechanism has about €400 billion ($435 billion) ready to be deployed. Another €100 billion fund will support crisis-hit businesses and workers. The Northerners are also signaling that in light of this unprecedented challenge, they are ready to live with a somewhat larger EU budget to help with the recovery.

But this isn’t enough for the South. Italy and Greece remember the humiliating conditions attached to the bailouts following the 2008 crash. The ensuing decade of austerity and slow growth generated a deep, bitter anger toward what the South saw as a stingy North. Public opinion in Italy, once among the most pro-European countries in the union, swung sharply against the EU. A March poll showed that 88% of Italians thought Europe was being unhelpful in Italy’s fight with the coronavirus, and 67% of those polled said that Italy’s membership in the EU was a “disadvantage.”

Against this background, Prime Minister Giuseppe Conte has taken a hard line against further conditional loans, demanding that the EU issue joint bonds in the crisis. Italy and other struggling countries could use the funds from these bond sales for relief and economic recovery, with taxpayers in Northern countries equally responsible for repaying the debt. Eight other EU member countries, including France and Spain, have joined in his demand.

To many Southerners, the need for “corona bonds” is obvious. Wealthy Northern countries have the resources to cope with the emergency. Germany, whose ratio of debt to gross domestic product is about 60%, can afford to subsidize small business, bolster its banks, and pay generous benefits to the unemployed—even as it provides health care to an unprecedented number of ailing citizens. Italy, with a debt totaling about 135% of GDP before the crisis, doesn’t have the fiscal firepower to cover these costs. Rome has had enough of bailouts and loans; it is insulting to be given strict conditions and required to accept oversight simply to take steps toward overcoming a national calamity.

Debt mutualization is a step too far for many in the North. At the time the euro was adopted, Northern voters were promised that the eurozone wouldn’t become a “transfer union” in which richer states would be compelled to support the governments of poorer (and, some say, less well-managed) states in the South. Introducing common EU bonds might weaken the power of euroskepticism and populism in the South—but it would increase such feelings in the North. Is the EU really better off if Italy is pro-Europe again, but Germany and the Netherlands turn euroskeptic?

A 14-hour marathon teleconference among EU finance ministers failed to reach a consensus Tuesday night over what conditions should be placed on emergency loans. The even more divisive issue of corona bonds was postponed to the future. Despite the dire warnings and the bruised feelings on both sides, the standoff is unlikely to end the EU. Realistically, Italy and other Southern countries have nowhere else to go. Hundreds of billions of euros will be needed to cover the cost of the epidemic and the economic closures and to launch the recoveries ahead. The U.S., Russia, China and international financial institutions aren’t going to bid against the EU for the privilege of bailing the Southerners out. It’s Brussels or bust.

[DougMacG]

https://www.theguardian.com/politics/2020/apr/12/boris-johnson-leaves-hospital-as-he-continues-recovery-from-coronavirus

[Crafty_Dog]

Stratfor Worldview
Southern Europe’s COVID-19 Crisis Is Just Beginning
7 MINS READ
Apr 13, 2020 | 10:00 GMT

HIGHLIGHTS

For many governments in Southern Europe, containing the COVID-19 contagion in the coming weeks may prove to be the easy part. After the immediate health crisis subsides in the region, much bigger economic and political troubles will quickly follow in the second half of the year. Countries including France, Italy,...

For many governments in Southern Europe, containing the COVID-19 contagion in the coming weeks may prove to be the easy part. After the immediate health crisis subsides in the region, much bigger economic and political troubles will quickly follow in the second half of the year. Countries including France, Italy, Spain, Greece and Portugal will experience deep recessions and severe fiscal problems, which in some cases will be made worse by the return of political instability and the strengthening of nationalist opposition parties.

The Big Picture

Countries in Southern Europe are currently focusing their efforts on containing COVID-19 contagion and mitigating the negative economic effects of quarantine measures. But this will come at the expense of worsening deficits and higher debt levels that, over time, could make investors nervous about the sustainability of debt in Southern Europe and trigger new financial crises across the Continent.

Deep Recessions

Most, if not all, countries in Southern Europe will be in a recession this year because of the quarantine measures implemented to contain COVID-19. Many economies in the region were already slowing down before the pandemic. In the fourth quarter of 2019, France’s economy contracted by 0.1 percent, Italy’s by 0.3 percent and Greece’s by 0.7 percent. Countries such as Spain (+0.5 percent) and Portugal (+0.7 percent) saw some growth, but it was weak.

The data for the first quarter of 2020 will be negative, but the data for the second quarter will be worse. Southern European countries introduced their toughest quarantine measures in March, which means that normal economic activity in January and February will somewhat mitigate the impact of the COVID-19 in the first quarter. But with the quarantine measures in full force in April, and a progressive lifting of the measures potentially starting in May, the second quarter will probably show deeper GDP contractions in Southern Europe.


It is impossible to know the exact duration and depth of the recessions since they will depend on the evolution of contagions and the progressive lifting of the lockdowns. But because many companies have gone out of business during the quarantine, and hundreds of thousands of workers have lost their jobs, production, consumption and investment will probably remain weak in the third and potentially even the fourth quarter of 2020.

Higher Unemployment
 
Unemployment rates fell steadily in Southern Europe since the peak of the financial crisis in the early 2010s. In early 2020, unemployment was below 10 percent in Portugal, France and Italy, and around 14 percent in Spain and 16 percent in Greece. But these rates will increase significantly in the coming months because many of the workers who lost their jobs or were suspended during the quarantine will not find immediate employment once the outbreak is over.

The quarantine measures are destroying millions of jobs in Europe. In Spain, almost 900,000 jobs (in a labor force of roughly 23 million) were lost between layoffs and suspensions in the second half of March alone. In France, nearly four million workers (in a labor force of around 30 million) were on state-subsidized furloughs at the beginning of April. In Portugal, by late March, companies had asked for state permission to dismiss more than 500,000 workers (in a labor force of less than 6 million). Unemployment benefits and state subsidies are not a full substitute for salary, which reduces the affected workers’ ability to consume and further weakens the economy.

Higher Deficit and Debt Levels

In recent weeks, national governments have pumped massive amounts of money into the economy in the shape of state-backed loans for companies, delays in tax payments for households, and assistance for workers who lost their jobs. A big part of these measures will be funded by taking on additional debt. So far, Southern European governments have been able to take on new debt at low-interest rates, partially because of the intervention of the European Central Bank in debt markets. But when the COVID-19 contagion is over, these countries will find themselves with higher debt levels amid deep recessions.

Italian business lobby Confindustria recently calculated that the country's debt could reach 147.2 percent of GDP in 2020 from 134.8 percent in 2019. Goldman Sachs, meanwhile, said that Italy's debt could reach as much as 160 percent of GDP this year. According to the Swiss financial services firm Credit Suisse, Spain’s sovereign debt will reach 105.3 percent of GDP in 2020 from 94.4 percent in 2019. And the Italian bank Unicredit said Portugal’s debt could reach 145.7 percent from 117.6 percent a year ago.


The main question that markets will try to answer after the COVID-19 pandemic is over is whether these levels of debt are sustainable. One of the places where they will look for answers is fiscal deficits, and the situation will not be reassuring. Before the current health crisis, some countries in Southern Europe were struggling to take their deficits below the EU-mandated threshold of 3 percent of GDP. But the broad trajectory was still toward compliance with the bloc’s requests. However, the massive stimulus packages in Southern Europe will lead to deficits that, depending on the calculation, could be between 5 and 10 percent of GDP in 2020 (some analysts suggest they could be even higher).

Credit rating agencies could react to these debt and deficit levels by downgrading the countries in trouble. This would make it more expensive for governments to borrow and, in countries such as Italy, would bring debt dangerously close to “junk” status, which means that many investors would not be able to purchase Italian debt because of their internal rules against the purchase of risky assets. A degradation in the quality of bonds would also have a negative impact on the assets portfolio of the banks that hold them — a problem that is particularly acute in Italy, where banks hold billions of euros in debt from the national government.

A heavier debt burden, combined with higher borrowing costs, would also constraint the Southern European government’s room to spend domestically because a significant part of public revenue would have to be used to service the debt. Over time, national governments may have to introduce spending cuts and tax hikes to increase state revenue and reduce their deficit, limiting their ability to emerge from the recession.

Southern European Countries will experience deep recessions long after the COVID-19 pandemic subsides, which could give rise to another wave destabilizing nationalist movements.

The economic crisis will also create problems for banks holding private debt. In recent years, banks in Southern Europe have been reducing their exposure to non-performing loans at a fast pace. But the risk of households and companies defaulting on their loans will increase hand-in-hand with the rise in unemployment and the contraction of economic activity. The four EU member states with the highest ratio of non-performing loans are all southern: Greece, Cyprus, Portugal and Italy. These are the places to look at for banks potentially failing because of the economic downturn.

Another Nationalist Wave?

The COVID-19 crisis brought temporary political stability to several countries in Europe. Politicians across the Continent have put their ideological differences aside to back emergency measures, increasing the popularity of many governments. But when the worst part of the health crisis is over, pre-existing political disputes will return. And governments that were either fragile (such as Italy’s) or unpopular (such as France’s) will see their old problems come back. Once the emergency passes, the blame game will begin as opposition parties focus their criticism on the things that the governments should have done differently. Nationalist and Euroskeptic parties in the south will attack countries in the north for their lack of solidarity, and will criticize the European Union for its slow reaction to the crisis.

The austerity measures could further complicate the political situation. During the financial crisis of the early 2010s, most of the governments that implemented unpopular spending cuts were punished by voters in the next election. The crisis also contributed to the emergence of anti-establishment parties, some of which had anti-immigration and anti-EU positions. So far, nationalist parties such as Italy’s League and France’s National Rally have struggled to take advantage of the coronavirus pandemic. But these kinds of parties thrive in times of recession, which means that the door will be open for existing or new parties to emerge as a result of the new economic crisis that is just now beginning Europe.

[DougMacG]

https://ukandeu.ac.uk/brexit-negotiations-what-do-we-now-know/#

[DougMacG]

Previously in this thread, Brexit [will] result in a shift of the balance of power in the EU (greater Germany) from the richer northern countries to the southern poorer countries.

https://www.dw.com/en/frugal-four-nations-counter-franco-german-eu-initiative/a-53545304

Austria, Denmark, the Netherlands, and Sweden put forward a counter-proposal to France and Germany's recently submitted €500 billion ($545 billion) coronavirus economic recovery plan, a source reported on Saturday.

Many saw  Chancellor Angela Merkel and French President Emmanuel Macron's initiative as an important step towards stronger European Union (EU) financial relations. However, the four fiscally conservative states – already reputed in the bloc as the "frugal four" – are seeking a unique emergency fund to re-strengthen the EU's economy.

[Crafty_Dog]

After Brexit, the Deluge
Boris Johnson faces many tests. If he can pass them, Britain may emerge stronger.

By Walter Russell Mead
July 20, 2020 6:29 pm ET


Few world leaders face as many staggering tests as Boris Johnson. Withdrawing from a trading bloc that accounts for 43% of British exports was already going to be the biggest challenge in U.K. foreign and economic policy for a generation. Then came Covid, and as if that weren’t enough, China imposed harsh new security laws in the former British territory of Hong Kong. The U.K. has offered British residence to qualified Hong Kong residents, suspended its extradition agreement with the city, and—in an unrelated decision that also enraged Beijing—announced plans to exclude Huawei from the U.K. telecommunications market. As China threatens retaliation, Britain will have to reform its relationship with its many European trading partners and weather the pandemic-induced recession sweeping the world.

Meanwhile, London’s resurgence as a global financial center—the biggest success for the U.K. economy since World War II—is under threat. The mix of financial deregulation and globalization since the 1980s has brought extraordinary benefits to British finance and service firms. But now many countries are turning toward reregulation and deglobalization. Financial centers like London may have to reinvent themselves to thrive. Worse, U.K. markets and investors will likely face harsher treatment from EU authorities in a post-Brexit world.

Relations with Moscow, already icy following the 2018 poisoning of a Russian defector on British soil, are also worsening. Last month, the U.K. angered both Donald Trump and Vladimir Putin by announcing its opposition to Russia’s re-entry into the Group of Seven. This Tuesday, British investigators are expected to announce evidence of Kremlin meddling in the Brexit referendum, the referendum on Scottish independence, and last December’s general election.

Speaking of Scexit, strong pro-secession sentiment in Scotland could boil over in next year’s scheduled Scottish elections. Recent polling shows a majority of Scottish voters favor independence, and the Scottish National Party is projected to win by a landslide.

As the EU turns inward, relations between the U.K. and its member countries are unlikely to improve. Europe’s political energy and financial resources will be directed toward addressing the economic tensions between North and South and the political tensions between the West and populist-ruled countries like Hungary and Poland. Unfortunately, a navel-gazing Europe has less energy for the kind of flexible and creative diplomacy that could build a strong new U.K.-EU relationship.

None of this is good for Britain, and it will certainly make Mr. Johnson’s tenure in Downing Street memorable, but it’s not the end of the world. U.K. exports to the EU and to China will suffer. They won’t disappear. Brexit and antiglobalism abroad will challenge London, but it has overcome challenges before. With the Battle of Brexit and the Corbynite era of the Labour Party both receding into the past, British politics may be settling down. And an infusion of entrepreneurial, talented and grateful Hong Kong people will likely boost U.K. prospects over the long run.

Although the North Atlantic Treaty Organization will remain the core of Britain’s security policy and relations with Europe will figure prominently in its diplomacy, Britain is looking elsewhere for its future. Fifty-two years after Harold Wilson announced that the U.K. was retreating from “East of Suez,” Mr. Johnson’s Britain is returning to the Indo-Pacific. The Five Eyes, Asian countries concerned about China’s rise, and longtime U.S. and U.K. allies in the Persian Gulf are the basis for a new grouping in world affairs in which Britain hopes to find a place. With a combined 29% of the world’s population and 46% of its gross domestic product, this bloc offers rich prospects for new British markets and partnerships.

The Gulf Arab states remain vital for the U.K. Close ties between British and Arab elites persist and will be critical to London’s future as a world banking center. We can also expect an intense U.K. effort to build ties with India, a natural alternative to China as both a market and a manufacturing platform.

The key to Britain’s new foreign policy will be Washington. Britain badly needs an ambitious new trade agreement with the U.S. and will hope to work with other members of the emerging Indo-Pacific entente to persuade America to make a rules-based trading system an integral part of its Asia policy.

For Washington, the U.K. remains a vital ally and Britain’s return to the Indo-Pacific is good news. British and American interests in the region are broadly aligned, and the development of a stable and prosperous region in the face of Chinese hostility will benefit from Britain’s presence. Secretary of State Mike Pompeo’s message to the U.K. today should be one of support and reassurance. It is very much in America’s interest for Britain to be great.

[Crafty_Dog]

   
    Eternal Brexit
By: George Friedman

In 2016, the British government called for a referendum on whether the United Kingdom should remain a member of the European Union. The British people voted to leave. Since then, there has been a struggle in Britain to reverse the decision and a struggle between Britain and the EU on the terms of the departure. It’s now 2020, and the process still isn’t finished. Given that the EU is based merely on a treaty – not a federation – sovereignty is a matter for individual states, not the “government” in Brussels. Treaties are arrangements between nations, not a merger of nations, and therefore are reversible.

Since we are about to see a new and presumably final round of negotiations on the divorce, with the EU now calling for a rapid resolution, even as the Irish question is now the blocker, the real issue is how this matter has dragged on so long. To anyone who has been divorced or seen one, it makes sense: Divorces are almost always filled with rage, recrimination, desires to inflict pain and sometimes the desire that the old affection be resurrected. The children are made pawns. Friends must choose sides.

The difference, of course, is that Britain’s relationship to the EU is simply a matter of national interest and not the result of a love affair. Britain and the EU lived together when they had to, but they never married. And so the lawyers continue to meet as each side creates more barriers to an amiable disengagement.

The first barrier to the separation was within Britain. The technocratic classes and the financial community took it for granted that Brexit would be rejected by the voters. When it wasn’t, they had two choices: face the fact that they had misunderstood their country, or label the vote flawed and the result of ignorance on the part of those who voted for withdrawal. Naturally they chose the latter, a decision that is primarily responsible for Brexit’s delay. If the ignorant voted for Brexit, all they needed was a little education in the error of their ways, or so the thinking went. The best strategy, then, was to delay Brexit and persuade the country that Brexit would be catastrophic so that the government could reverse the vote.

The problem was that the technocracy and the financial community were confusing their interests with those of the country as a whole. Free trade had benefitted many, but it had also left the industrial classes struggling as low-wage countries had access to the British market. The result was a near depression in the industrial heartland of Britain. As in other countries, those who benefitted from free trade were either indifferent or mostly ignorant of the price others were paying. They never imagined they would lose the referendum, but then they didn’t know how many unemployed industrial workers there were.

A second barrier concerned national sovereignty, particularly on immigration. The enlightened elite felt a moral obligation to help immigrants. They were in lockstep with the elite of the European continent on this. Of course, the immigrants would not be living with the elites in their neighborhoods. Immigrants live in low-cost housing, the same kind that the industrial class has lived in since its decline. The idea that immigration could not be blocked under EU rules meant not only a loss of national sovereignty but a burden to be uniquely carried by those who have lost the most.

The irony was that, historically, the political factions that championed the interests of the industrial working class and were hostile to the financial elite found themselves with the opposite stance: The industrial working class was now perceived as reactionary and racist, while the financial and technocratic elite was seen as enlightened. If opposition to Brexit was enlightened, then the vote could be reversed once the rest of the country understood as much. Hence the strategy to reverse the vote and reaffirm British commitment to the EU. This continued until the election of Boris Johnson settled the question.

The EU, meanwhile, did what it could to make Brexit unpalatable with a two-pronged approach. The first was to make it appear that Brexit would be financially catastrophic for Britain and relatively inconsequential to the EU. The second prong was to make the negotiations as difficult as possible, setting terms as onerous as possible and difficult for Britain to accept. The irony was that if Brexit was of so little concern to the EU as it portrayed, then the seemingly inflexible stance it took made no sense. In truth, losing free access to the second-largest economy in Europe was enormously important, and bargaining positions notwithstanding, some accommodation was essential.

The driving force in this strategy was an implicit alliance between anti-Brexit Britons and the EU. Both badly wanted to keep Britain in the EU, and the actions of each were meant to help the other. A rigid negotiating position by Brussels made a manageable Brexit seem impossible, and might strengthen the hand of anti-Brexit British. At the same time, the constant maneuvers to reverse Brexit strengthened Brussels’ hand since they were dealing with what might be a declining faction in Britain. Together, these two factions might break the back of Brexit.

The strategy failed, of course, because neither faction could recognize or concern itself with the price the British industrial class was paying. Both expected this class to weaken, but in fact, the faction remained intact and even attracted others. The lower class movements, labeled right wing by the elite, became more powerful and more extreme. The British problem became the European problem, same as it ever was.

We are now entering what seems to be the final phase. Brussels appears to be bitter at how long the process has taken, and the chief EU negotiator, who had been threatening and unrelenting in his negotiating strategy, appears to have been removed from his position. In other words, the EU is no longer the issue. Once Britain had decided to leave, there was nothing the EU could do except delay. The issue now is the historical British issue: Ireland. Ireland is in the EU and will stay. It wants free trade with Northern Ireland. Northern Ireland is part of the U.K. and therefore will leave the EU. The EU cannot permit free trade between an EU member and a part of Britain since that will turn into free trade with England, which is not nearly as much a problem for Ireland or Britain as it is for the EU. The EU is balking, and Britain is leaving. That may reignite the political conflict in Northern Ireland.

Marriages are wonderful things. Divorces are agonizing things for all involved. This is particularly relevant when the couple has merged as completely as a good marriage requires. The lesson for nations is that all alliances end in divorce. And the more focused and limited, the less agonizing the inevitable is. In a marriage, all are one, or should be. In a political arrangement that is never the case. It’s nothing more than nations pursuing their national interest. Until death do us part does not apply to nation-states.   

[DougMacG]

 “The eurozone is sliding further into a debt-deflation trap, risking a protracted economic depression in the southern countries and a slow-motion insolvency crisis. Large areas of the eurozone are at risk of debt deflation, a term used by Irving Fisher in the 1930s for when falling price levels cause real debt burdens to deteriorate in a vicious circle. It is extremely hard to break out of such a self-feeding process. It ends in mass default. The OECD’s worst case scenario sketches debt-to-GDP ratios next year reaching 229 percent in Greece, 192 percent in Italy, 158 percent in Portugal, 152 percent in France, and 150 percent in Spain. “We’re seeing a storm building up that may come to a head over the next six months,” said Ashoka Mody, the International Monetary Fund’s former deputy director in Europe.  ‘Debts have to be repaid and a lot of new debt has been guaranteed by governments that can’t pay.’”

https://www.telegraph.co.uk/business/2020/10/02/deepening-deflation-pushes-southern-europe-closer-debt-spiral/

[Crafty_Dog]

What will President Harris Biden do about this?

[Crafty_Dog]

https://www.gatestoneinstitute.org/16868/hungary-europe-borders

[Crafty_Dog]

In Spain, the Next Phase of Catalonia's Independence Push
7 MINS READ
Dec 21, 2020 | 15:40 GMT
Demonstrators hold a Catalonian flag ahead of a political meeting in Perpignan, France, on Feb. 29, 2020.
Demonstrators hold a Catalonian flag ahead of a political meeting in Perpignan, France, on Feb. 29, 2020.

(LLUIS GENE/AFP via Getty Images)

HIGHLIGHTS

Pro-independence forces in Spain’s Catalonia region will likely remain in power after February regional elections, but they are unlikely to achieve their secessionist goals in the near-to-medium term. Nonetheless, Catalonia’s persistent push for independence will risk eventually undermining its own political and economic stability, as well as that of Spain’s. It could also stoke a nationalist backlash in other parts of the country. Catalonia will hold an early regional election on Feb. 14, though the vote could be postponed depending on the evolution of Spain’s COVID-19 epidemic. Opinion polls suggest that secessionist forces, which include the Republican Left of Catalonia (ERC) and Together for Catalonia (JxCat) will win enough seats in the Catalan parliament to form a government. Both parties were involved in the illegal referendum and the 2017 unilateral declaration of independence, and some of their leaders are in jail while others have fled the country to avoid arrest. ...

Pro-independence forces in Spain’s Catalonia region will likely remain in power after February regional elections, but they are unlikely to achieve their secessionist goals in the near-to-medium term. Nonetheless, Catalonia’s persistent push for independence will risk eventually undermining its own political and economic stability, as well as that of Spain’s. It could also stoke a nationalist backlash in other parts of the country. Catalonia will hold an early regional election on Feb. 14, though the vote could be postponed depending on the evolution of Spain’s COVID-19 epidemic. Opinion polls suggest that secessionist forces, which include the Republican Left of Catalonia (ERC) and Together for Catalonia (JxCat) will win enough seats in the Catalan parliament to form a government. Both parties were involved in the illegal referendum and the 2017 unilateral declaration of independence, and some of their leaders are in jail while others have fled the country to avoid arrest.

In early December, the Barcelona-based El Periodico newspaper released a GESOP poll in which 22 percent of respondents said they planned to vote for the ERC. JxCat came in second at 19.4 percent, followed by the two unionist parties — the Socialist Party of Catalonia (PSC) and Ciutadans (Cs) — with 18.9 percent and 10.6 percent, respectively.

Some polls suggest pro-independence parties in Catalonia may, for the first time, receive more than 50 percent of the popular vote in the next election. If this happens, the secessionist parties — who already have a majority of seats in the Catalan parliament — will use it to legitimize their demands for a legally binding independence referendum. But a larger popular mandate in Catalonia is unlikely to change Madrid’s opposition to such a vote. 

Instead of making unilateral moves toward succession, the next Catalan government will likely focus on selectively challenging the authority of the Spanish central government, as it seeks to continue cooperating with Madrid in areas where it proves beneficial. The desire to secure extra national funding for the region, along with extra help in managing the spread of COVID-19, will compel Catalonia’s pro-independence parties to maintain a working relationship with Madrid. These parties will also want to avoid a repetition of the events of 2017, which resulted in the Spanish central government dismissing the Catalan regional government and taking direct control of the region. These tactical reasons to cooperate with Madrid — along with internal divisions within the pro-independence camp — will, in turn, reduce the probability of unilateral action to secede from Spain.

The COVID-19 pandemic has temporarily made Catalan independence a secondary issue for many voters. Similarly, the regional government’s immediate priority is to address the health and economic repercussions of the pandemic.

In recent months, the ERC and, to a lesser extent, JxCat have cooperated with the Spanish central government on certain issues. In early December, both parties voted in favor of the 2021 budget proposed by Spanish Prime Minister Pedro Sanchez’s government, which included roughly 2.3 billion euros in investment and fiscal transfers for Catalonia.

On Nov. 10, the Spanish parliament reformed a national law requiring that Spanish be the main language taught in schools throughout the country. This was a longstanding demand of Catalan and Basque nationalists that was made possible by the region’s cooperation with the central government.

ERC and JxCat are also interested in cooperating with the Spanish government to ensure the early release of the pro-independence leaders who are in prison. Madrid is currently considering pardoning the jailed leaders and modifying the country’s sedition laws that were used to detain them.

Small secessionist parties, like the left-wing Popular Unity Candidacy (CUP) are likely to continue demanding unilateral action and defend a confrontational strategy vis-a-vis Madrid, but their impact on actual policy will be modest.

Conservative parties in Spain will accuse the central government of being too lenient with Catalonia, which will likely exacerbate the country’s political polarization by opening the door to protests and the potential radicalization of some Spanish voters. Center-right Spanish political parties, including the Popular Party (PP) and Ciudadanos (Cs), will escalate their criticism of Sanchez’s government, accusing it of putting the country’s territorial unity at risk. In particular, Spain’s far-right Vox party will likely organize anti-government protests, trying to capitalize on growing nationalist sentiments across the country. Spain’s growing political polarization could pave the way for a center-right central government following the country’s next general election, which is scheduled for late 2023 but could happen sooner if the current minority government collapses before then. A more right-wing Spanish government would worsen Madrid’s relationship with Catalonia, increasing the probability of renewed unilateral action in the region.

As of late November, Spain’s Socialist Party was polling at roughly 28.8 percent, followed by PP at 18 percent. Recent polls also put Vox’s popularity at around 17 percent, an improvement from the 15.1 percent of the vote it received in the general election of November of 2019.

In late November, a group of 73 retired army officials sent a letter to Spanish King Felipe VI warning that the Spanish central government’s cooperation with secessionist parties was putting the country’s territorial integrity at risk. While this position does not necessarily represent the views of the active army officials, it coincides with the position of some nationalist political parties like Vox.

Spain’s central government only controls 155 of the 350 seats in the Congress of Deputies. While Sanchez managed to obtain 188 votes in favor of his budget, this majority could evaporate if nationalist parties in Catalonia and the Basque country stop cooperating with the central government.

Questions about Spain’s territorial integrity will continue to generate political and economic risk in the country, exacerbating the financial fallout from the COVID-19 crisis. The ongoing pandemic poses the most immediate threat to the Spanish economy, with domestic consumption and investment likely to remain depressed for at least several more months. In the longer term, the Spanish central government will also have to deal with worsening fiscal deficit and rising debt levels, which could raise questions in financial markets about the sustainability of Madrid’s fiscal policies. The risk of households and companies defaulting on their bank loans will remain high during 2021, as will the risk of companies going bankrupt — especially those that are small- and medium-sized). In a longer-term, the question of Spain’s territorial integrity will be of concern for both domestic and foreign actors in the country’s economy, influencing their investment and spending decisions. 

The European Commission expects the Spanish economy to contract by 12.4 percent in 2020, followed by a 5.4 percent expansion in 2021. This means that Spain’s overall economic growth is expected to remain below pre-pandemic levels throughout the next year.

Spain’s unemployment rate also reached 16.2 percent in the third quarter of 2020, up from 13.9 percent in the same quarter of 2019. Catalonia’s unemployment rate, meanwhile, reached 13.2 percent in the third quarter of 2020, up from 10.8 percent in the same quarter of 2019.
Spain’s sovereign debt is expected to reach around 120 percent of GDP in 2020, from 95 percent of GDP in 2019.

Uncertainty about Catalonia’s future appears to have also contributed to a decrease in foreign direct investment (FDI) in the region, which decreased by roughly 5 billion euros between 2016 and 2019, according to Catalonia’s Statistics Institute. During that same period, FDI in the community of Madrid increased by nearly 3 billion euros.

[Crafty_Dog]

The EU and U.K. Reach a Trade Deal, Ending Brexit. What Now?
Adriano Bosoni
Adriano Bosoni
Senior Europe Analyst, Stratfor
6 MINS READ
Dec 24, 2020 | 16:58 GMT

HIGHLIGHTS

Five years of economic uncertainty for households and companies that began with the Brexit referendum of 2016 have come to an end. The European Union and the United Kingdom have reached a free trade agreement that covers most goods, but only a limited number of services. This means that manufacturers in the European Union and the United Kingdom will be able to continue trading with each other from Jan. 1, 2021, without any quotas or tariffs, and the heavily disruptive scenario of trade under World Trade Organization tariffs has been avoided. On the contrary, the services sector (which represents around 80% of the British economy) will have limited access to the EU single market. ...

Five years of economic uncertainty for households and companies that began with the Brexit referendum of 2016 have come to an end. The European Union and the United Kingdom have reached a free trade agreement that covers most goods, but only a limited number of services. This means that manufacturers in the European Union and the United Kingdom will be able to continue trading with each other from Jan. 1, 2021, without any quotas or tariffs, and the heavily disruptive scenario of trade under World Trade Organization tariffs has been avoided. On the contrary, the services sector (which represents around 80% of the British economy) will have limited access to the EU single market. On Dec. 24, Brussels and London announced a free trade agreement after nine months of negotiations. The announcement came only a week before the scheduled British exit from the single market on Dec. 31. In addition to trade, the deal covers cooperation on areas including nuclear energy, energy interconnections, aviation, fishing, police and judicial affairs.

The deal includes the elimination of tariffs and quotas for EU and British goods. Customs controls, however, will be applied to ensure goods comply with the agreement. This will result in additional bureaucracy that did not exist when the United Kingdom was a part of the single market.

Starting Jan. 1, companies in the British financial services sector will lose their authorization to sell their products in the single market. The European Union grants so-called "passporting" and "equivalence" rights to third countries with similar regulatory environments, but no deal has been reached yet. This is a crucial issue for the United Kingdom, as financial services represent around 7% of the British economy. London is likely to try to reach an agreement with Brussels on this issue in 2021.

The agreement does not automatically recognize one another's professional qualifications. This means that lawyers, accountants, architects and other professionals in the European Union and the United Kingdom will not be able to automatically sell their services in each other's markets and may need to open offices in the European Union and the United Kingdom, respectively, to do so. This is another area of possible negotiation in 2021.

The deal does not include a so-called "mutual recognition of conformity assessment," which means that EU and British companies will have to certify their products in each other's markets, which will create extra costs.

The free movement of people between the European Union and the United Kingdom will end, which means that people will need visas to work in each other's territories.

The deal will now be put to a vote at the European Council, which represents the EU governments, and the British Parliament. The vote at the European Parliament will take place in January, which means that the trade deal will enter force only provisionally Jan. 1, pending full confirmation from EU lawmakers. The European Commission has been in permanent contact with EU governments during the negotiations, which means that the European Council will likely ratify the deal. In the United Kingdom, Prime Minister Boris Johnson's Conservative Party controls a comfortable majority of seats in Parliament, and some members of the opposition Labour Party may also vote for the deal. While some euroskeptic Conservative members of parliament may vote against the deal, the rebellion should not be strong enough to torpedo the deal. The provisional implementation of the deal will create some uncertainty about its future, but the European Parliament will probably ratify it considering the significant political capital that the European Commission has invested.

Nigel Farage, who leads the Brexit Party, and some hard-line Conservative members of parliament have already criticized the deal. But most Conservative members of parliament have said they will support it, which means it will probably be ratified.

The French government has been particularly loud in its claims that it would not support a "bad" trade agreement. But Paris is unlikely to veto the agreement after so many months of negotiation.

The European Parliament will not have the power to modify the terms of the deal in January; the vote will be on a "take it or leave it" basis.

In the short term, the United Kingdom's reduced access to the EU market is likely to negatively impact the British economy. In the long run, this trade deal gives London some degree of autonomy to develop its own regulations and standards and opens the door for it to negotiate free trade agreements with other countries. For the European Union, the deal preserves access to the British market for a sector where it has a trade surplus (goods) while reducing its exposure to a sector where it has a trade deficit (services). The deal also achieved the EU goal of keeping the Irish border open and preserving the integrity of the single market from external competition because it includes provisions to sanction the United Kingdom in the case of unfair competition.

The current British trade strategy started in 2019, when London chose to exit the EU single market and customs union and negotiate a basic free trade agreement with the European Union.

In a press statement on Dec. 24, the British government said that the deal guarantees "we are not bound by EU rules, there is no role for the European Court of Justice and all of our key red lines about returning sovereignty have been achieved."

The British government has expressed interest in signing multiple free trade agreements around the world with countries such as the United States and the members of the British Commonwealth; many of these countries were waiting for the EU-U.K. negotiations to end before proceeding with their own talks.
In recent years, firms in the British financial services sector have moved some of their staff and operations to the single market in order to continue to be able to sell their products in the European Union.

This agreement puts an end to the period of political and economic turbulence that began with the Brexit referendum of June 2016. The European Union and the United Kingdom will continue to negotiate aspects of the bilateral relationship that remain unaddressed as well as the bilateral disputes that may emerge during its implementation. But with a free trade agreement in place, Brexit will finally become a secondary issue in European politics. Since 2016, business groups, unions, farmers, consumers' associations and other groups have demanded clarity from the European Union and the United Kingdom about their future relationship. Brexit has also been a dominant factor of British politics and, to a much lesser extent, EU politics.

One of the more important long-term political consequences of Brexit for the United Kingdom will be the issue of Scottish independence. A majority of Scottish voters supported the "remain" side during the Brexit referendum, and the governing Scottish National Party wants another independence referendum in the country, something London opposes.

For the European Union, a key political goal was to send the message to domestic voters that exiting the bloc is not easy or painless. Nationalist and euroskeptic political parties in the bloc will now face the challenge of adapting their rhetoric to a post-Brexit Europe.

[Crafty_Dog]

https://worldview.stratfor.com/article/pro-secession-majority-catalonia-signals-uncertainty-spain?id=743c2bc617&e=de175618dc&uuid=94aad0cf-3e05-4e43-9d93-953d576335cc&mc_cid=b18f0255b5&mc_eid=de175618dc

[DougMacG]

I leave pop culture issues to our correspondent ccp, but if I am to understand this European crisis correctly, Meghan contends it was Kate who made her cry, not the other way around as reported in the press, and it is unforgivable that Kate did not correct the wrong reports.  Resultingly, Meghan felt suicidal until she scored this multimillion dollar revenge in an even larger false media report.

And what if the baby had looked black, OMG.  But if you speculate a baby might have red hair, be tall, thin or smart it's okay?
Is it bad to be black?  Everyone else is bragging about their non-white heritage, even if fictitious.

I didn't see the interview, just hoping Kate gets equal time.  A two hour apology?  But Meghan said she did apologize.

In the end, they all make up on a never seen before, never done before, four hour Oprah special.  Right?

[Crafty_Dog]

French protests. For the fourth consecutive week, protests against a COVID-19 health pass broke out in France over the weekend. According to the Interior Ministry, 237,000 people participated in the demonstrations, an increase of roughly 30,000 from the previous weekend. Similar protests were also held in Italy, though on a much smaller scale.

[DougMacG]

https://oilprice.com/Energy/Natural-Gas/Skyrocketing-Energy-Prices-Could-Cripple-Europes-Economy.html

[DougMacG]

https://www.19fortyfive.com/2021/09/how-a-rising-china-complicates-europes-future/


ByJames Jay Carafano Silviu Nate and Oana-Antonia ColibasanuPublished18 hours ago
China's Xi Jinping at BRICS SummitChina's Xi Jinping at BRICS Summit

Beijing’s relentless drive to transform itself into a global power places it in direct competition with the U.S. That has affected both nations’ relations with regional powers, such as Russia and Turkey, and those effects will continue to ripple across Europe. Along the borderlands, from the Baltics to the Balkans, friction with China will only increase.

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Definition
The China Problem

China’s economic diplomacy is the most astringent irritant in great power politics. Under the Belt and Road Initiative, Beijing established the 17+1 (now 16+1 since Lithuania pulled out in May) cooperation mechanism with Central and Eastern European countries stretching between the Baltic Sea, the Black Sea, and the Adriatic. Chinese investment has focused mainly on infrastructure such as the transportation, energy, and telecommunications sectors.

From 2009-2019, the arrangement has generated financial flows estimated at around $13.5 billion (two-thirds of this in the last five years). This figure includes not just foreign direct investment, but also development loans, grants, mergers, and acquisitions of local assets or through long-term concession agreements.

The flood of Chinese cash has done more to raise red flags than GDP. Most recently, Montenegro became a posterchild for the “debt-trap” problem a country can face after taking up a large loan from China without necessarily considering a cost-benefit analysis of holding massive, unsustainable public debt. Today, Montenegro owes Beijing over a $1 billion—a debt that is one-fifth the size of the nation’s economy. Other countries in the region, such as Bosnia Herzegovina, have also taken Chinese loans translating into significant national debt. These practices not only expand Chinese economic influence in Europe, they undermine fiscal prudence and good governance practices.
More at link.

[ccp]

likely due to that Merkel just got her butt beat:

https://www.cbsnews.com/news/germany-angela-merkel-election-2021-to-bring-shift-to-the-left/

https://www.dw.com/en/german-population-of-migrant-background-rises-to-21-million/a-54356773

Reminds me of the Bush stooges

welcome immigrants till they vote them out and those who lived here for all their lives

nothing stupid about that 

[DougMacG]

Worst inflation since 2008 led by 18% rise in energy costs.
https://apnews.com/article/business-europe-prices-inflation-european-union-9005439103bdb90fad2254ce5436246e

[Crafty_Dog]

https://www.macaubusiness.com/polish-court-rules-against-supremacy-of-eu-law/

[ccp]

https://www.breitbart.com/europe/2021/10/30/fishing-wars-france-says-britain-should-be-punished-brexit/

history repeats itself

[Crafty_Dog]

December 1, 2021
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Why the Poland-Belarus Border Crisis Won’t Last
It’s particularly bad for the Belarusian president.
By: Antonia Colibasanu

Images of migrants – many of them with children, coming mainly from the Middle East – camped at the border as they try to force their way into Poland from Belarus continue to litter the news. There are rumors that the situation is dying down, of course. On Nov. 18, it was reported that many of the migrants were being moved by Belarusian security forces back from the border into a government-run facility. There were also reports that at least a couple of flights traveled from Minsk to Iraq carrying migrants who had agreed to return to their homeland. But plenty of migrants remain, and it’s unclear what the long-term plan is for those who have no intention of leaving.

Though the current crisis will likely end, as most do, Belarusian political stability remains uncertain. That, in turn, opens the door for increased pressure from Russia – which needs to hold Minsk in its sphere of influence. Rumors of an alleged Russian invasion of Ukraine may dominate the headlines, but Belarus holds the key to regional instability in the months to come.

Vulnerability

But before we look east, let’s look to Belarus’ west. Last week, Belarusian President Alexander Lukashenko said the European Union should pay for the migrants to return home. The EU accused Belarus of “the instrumentalization of human beings” for political purposes. On Nov. 15, the European Council increased sanctions on Belarus by broadening the criteria on which specific designations can be based – the EU is now able to target individuals and entities helping illegal crossings of the EU's external borders. It also allocated about $850,000 in humanitarian assistance to support migrants stranded at the Belarusian border. (Notably, it is doing so through its non-governmental partner organizations, not through the government in Minsk.)

With the 2015 immigration crisis fresh on its mind, the EU sees migration like this as a threat to its own socio-economic security. Put simply, an influx of immigrants will make it more difficult for the EU to solve its pandemic-related economic problems. Poland and other Eastern European member states have said they would prefer not to accept migrants, especially since most are trying to go to Western European countries. But many in the West such as Germany and France are struggling to accommodate migrants and refugees too.

What complicates things is that because the crisis most immediately affects a NATO member and a pro-Russia government, this is now also a NATO issue. On Nov. 25, the alliance’s secretary-general said, “Allies have made clear that they strongly condemn the Lukashenko regime’s exploitation of vulnerable people to pressure neighboring countries.” He threw in a jab about Russia’s military buildup near Ukraine for good measure.

This comes ahead of a NATO foreign ministers meeting in Riga from Nov. 30 to Dec. 1 – a summit where NATO representatives will also meet the foreign ministers of Ukraine and Georgia. Given the context, it’s probably no coincidence that on Nov. 29 the deputy chairman of Russia's Security Council, Dmitry Medvedev, described the situation on the Belarus-Poland border as one of the gravest migration crises in Europe, one that may have delayed global effects. Meanwhile, Belarusian Defense Minister Viktor Khrenin announced on Nov. 29 that Belarus is planning military exercises with Russia to cover the southern borders at a yet unspecified date. In other words, the issue is not only about the migrants but also about the potential to draw opposing powers into conflict.

Russia is a vulnerable nation. It isn’t in its interest to start a fight, but it would welcome an opportunity to play the victim. Its core strategy is to maintain its buffer zone and prepare for any potential aggressive action from the West. It sees NATO’s enlargement as a threat to its interests, so having a NATO member launch a direct attack would certainly be a validation. It has, meanwhile, developed a soft approach to deal with the West, using political and economic problems to enhance its influence in its buffer zone. The current border crisis fits the mold. A mistake at the border that could be interpreted as an attack of the West against Belarus would give Russia a great excuse to complain about NATO and to play the hero in Belarus.

Lessons Learned

The current border crisis started in May, when migrations first tested the more vulnerable borders of Lithuania and Latvia. Both countries have since declared a state of emergency at the border with Belarus, indirectly channeling migrants to the Polish border.

For their part, Poland and Belarus see both challenges and opportunities in the current crisis. From the Polish perspective, Russia is clearly involved somehow. Warsaw argues that the situation closely resembles the Finland-Norway dispute of 2015-16 and is therefore orchestrated. (The Finnish border was attacked in early 2016 after Norway ceased to consider asylum applications from migrants with documents attesting to their legal residence in Russia.) The migration routes (Middle Eastern immigrants coming into Europe from the north) are similarly odd, and the attacks are likewise consistent: Basically, migrants attempting to cross the border alternate between small group attacks and massive attacks.

Back then, the EU had sanctions imposed on Russia, and Finland had curbed bilateral ties with Russia in response to the Russian intervention in Ukraine. Finding a solution to the dispute allowed Russia to finagle its way to foster cooperation between the Nordic states and Belarus. It’s not a stretch to think that both sides learned lessons from the Finland-Norway dispute.

The Polish government is in a tough spot, needing to live up to its tough-on-migration stance at home without going too far and provoking a crisis with Russia or losing the backing of the EU or NATO. In 2015, Brussels slammed ruling party leader and current Vice President Jaroslaw Kaczynski for saying Poland did not have a moral obligation to accept refugees. But Warsaw’s anti-immigration policy has continued, and today Poland has one of the lowest shares of foreign nationals in the EU. Pinning the blame for the current crisis on Russia is key for Poland’s strategy, because it portrays Poland as a defender against a Russian hybrid attack and pressures the EU to rally behind Warsaw. At the same time, Poland can’t allow the standoff to escalate too far and risk triggering a conflict that no one, save perhaps Russia, would welcome.

For its part, Belarus is also playing a high-stakes game. Lukashenko needs to prove that he is in control. Moreover, he is angry with the Baltic states and Poland for hosting Belarusian political figures who have led opposition to his regime. More than anything, Lukashenko wants the EU to recognize his leadership over the country. He hopes to force European leaders to talk with him and recognize him as one of their peers, something German Chancellor Angela Merkel explicitly tried to avoid during her phone conversations with Lukashenko, referring to him as “Herr (Mr.) Lukashenko” instead of “president.” He also wouldn’t mind some EU money, even if it’s only to send migrants back home. It’s worked for Belarus in similar situations in the past.

That said, Lukashenko also is feeling the heat at home, and he needs to maintain order and gain the public’s trust. Solving the humanitarian crisis on the border is one way he hopes to achieve that. It’s safe to say he no longer has the support of the majority of the population. According to a closed survey by the Russian Public Opinion Research Center that was leaked online in October, 59 percent of Belarusians want Lukashenko to be replaced. If Moscow wanted to replace him with another pro-Russian leader, it would not have to look too hard: Jailed leader Viktor Babariko, a bank chief with links to Russia, would be a prime candidate.

Growing Paranoia

Lukashenko says he is loyal to Moscow, but he has worked hard to keep Belarus engaged with the West to give himself leverage against the Kremlin and options in case of a Russian economic crisis. The Kremlin is certainly agitated that it has invested years in the idea of a military union with Belarus that still has not been achieved. It has had to use all sorts of tactics, including energy pressure, to stop Lukashenko from leaning too far toward the West. With Ukraine lost to the West, Russia has had to double down on Belarus.

At some recent webinars I participated in, even voices from Belarus confirmed that Russia may want to protect its influence in the country by getting rid of Lukashenko. After all, he is an authoritarian leader who believes he can defy Moscow when it suits him. There was speculation that Russian troop movements that the West fears are directed at Ukraine may in fact be a threat to Lukashenko’s regime. Lukashenko certainly worries about having Russian troops on Belarusian soil, even if they have a good excuse to be there, as they did a few months ago for the Zapad 2021 war games. If Belarusians are openly speculating on this, the Lukashenko regime must be at least as anxious.

The cold weather and the fact that Minsk has agreed to accommodate the migrants in government facilities suggest the border crisis will likely fade within weeks. But considering the growing isolation of Lukashenko, who leads a country that is both economically weak and mostly dependent on Russia, the potential for instability and even regime change in Belarus is rising. In the present circumstances, when most of the pro-Western opposition to Lukashenko has been exiled, unrest would likely lead to the installment of a new pro-Russian regime.

This may not be something that happens in the next few weeks or months, but Lukashenko is increasingly and legitimately worried about it. The Belarusian leader is trapped in a corner, and the danger is that he may take desperate measures to try to save himself. A slip-up that threatens Russian interests in Belarus or the region could turn Lukashenko’s fears into reality. This is probably the most important reason that Lukashenko hopes to end the border crisis quietly.

[Crafty_Dog]

January 28, 2022
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The German Question
Thoughts in and around geopolitics.
By: George Friedman

Regardless of how the Ukraine crisis ends, one thing present but often overlooked is the German question. It’s a question that has hounded Europe for centuries. After the Napoleonic Wars, the concern was whether Germany would unite into a single state. The Germans, especially the leaders of their fractious countryside, worried about this too, for in an age of monarchs and emperors, there can be only one ruler. But for the rest of Europe, the prospect of a revived Holy Roman Empire, a once-powerful entity even without the sense of unity or shared “German” identity, was frightening. The possibility that it might share Prussia’s militarism made their fears all the more acute.

The German question loomed large, but it wouldn’t be answered until 1871 when the fragments of Germany were cajoled by Prussia and Otto von Bismarck to at least partially unite. Germany was a weak experiment that nonetheless defeated France in a rapid war. This bought the southern Catholic part of Germany into the new nation-state. Germany was thus created, and France was defeated.

The next question was what the German state would be. In a Europe now constructed around the Industrial Revolution, the new Germany surpassed France and challenged the United Kingdom as an economic powerhouse. (Particularly frightening were German efforts to develop a navy.) The very existence of a united Germany undermined the balance of power in Europe that had been settled after the defeat of Napoleon.

Both world wars pivoted around the German question. After 1945, the issue seemed to have been settled, but alas, Germany was too strategically important to the U.S. and the Soviet Union. The Soviets' forward position was in East Germany. NATO was created to guard West Germany, and a West German military force was created to guard its eastern frontier. West Germany, rich in expertise if nothing else, executed an economic miracle that propelled Germany to the top of the European economic hierarchy.

The country became a front line in the Cold War. The Germans didn’t want this; they wanted a united Europe that would bury German nationalism under new institutions and create a framework for economic growth. The European Union was intended to achieve both but failed in a fundamental way. Germany emerged not only as the major economic power of the bloc but also as the de facto arbiter of European affairs. Obscured by the Cold War, the German question clarified itself again. Germany was the dominant force in Europe.

The genuine desire of most Germans was to not allow the country's economic power to overshadow its position as simply another European power. After the Cold War ended, Europe focused not on military force but on prosperity. But history took a turn. The prosperity of Europe was not uniform, and Germany itself was not safe from history. The interests of the EU’s members were profoundly different. Italy’s economy could not bear what Germany had to have. Eastern Europeans had values the Germans disliked. In other words, the reality was far more complex than what the Germans wanted.

And so, as the crisis plays out along Ukraine’s border, the German question has once again emerged. Russia has risen from the collapse of the Soviet Union as a military power insisting on reshaping Ukraine and Eastern Europe to its interests. Germany depends on Russia for energy, and it is horrified by even the possibility of armed conflict to its east. NATO is now a trap for Germany, compelling Germany to cooperate on the one thing it did not want to do: prepare for a potential war. It has refused to send weapons to Ukraine, putting it at odds with the U.S. and Britain. It cannot afford to risk its economic relationship with Russia. Every time Germany tries to escape history, history pulls it back in.

For Germany, life after World War II, but especially after the Cold War, was about economics. It achieved through the EU what it couldn’t achieve since 1871: domination of Europe. And it did so without the kind of violence that had ripped the Continent apart for centuries.

That may no longer be the case. Russia, less powerful than before but powerful still, is reclaiming lands in its supposed sphere of influence. The U.S. is once again on the defensive. NATO still exists, and Germany is part of it. Germany is thus essential in the Ukraine affair. Economic power, economic needs, fear of war and fear of what peace would look like tear at the Germans.

Germany had hoped that its past could be forgotten. But in this confrontation, the German question is vital. How Berlin answers that question – or how others try to answer it – will once again reshape Germany and Europe. Germany may not like it, but the question has been around since the Battle of the Teutoburg Forest. Nations don’t get to select what questions are put to them.

[G M]

NATO is a joke and has long outlived it’s usefulness.

January 28, 2022
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Open as PDF

    
The German Question
Thoughts in and around geopolitics.
By: George Friedman

Regardless of how the Ukraine crisis ends, one thing present but often overlooked is the German question. It’s a question that has hounded Europe for centuries. After the Napoleonic Wars, the concern was whether Germany would unite into a single state. The Germans, especially the leaders of their fractious countryside, worried about this too, for in an age of monarchs and emperors, there can be only one ruler. But for the rest of Europe, the prospect of a revived Holy Roman Empire, a once-powerful entity even without the sense of unity or shared “German” identity, was frightening. The possibility that it might share Prussia’s militarism made their fears all the more acute.

The German question loomed large, but it wouldn’t be answered until 1871 when the fragments of Germany were cajoled by Prussia and Otto von Bismarck to at least partially unite. Germany was a weak experiment that nonetheless defeated France in a rapid war. This bought the southern Catholic part of Germany into the new nation-state. Germany was thus created, and France was defeated.

The next question was what the German state would be. In a Europe now constructed around the Industrial Revolution, the new Germany surpassed France and challenged the United Kingdom as an economic powerhouse. (Particularly frightening were German efforts to develop a navy.) The very existence of a united Germany undermined the balance of power in Europe that had been settled after the defeat of Napoleon.

Both world wars pivoted around the German question. After 1945, the issue seemed to have been settled, but alas, Germany was too strategically important to the U.S. and the Soviet Union. The Soviets' forward position was in East Germany. NATO was created to guard West Germany, and a West German military force was created to guard its eastern frontier. West Germany, rich in expertise if nothing else, executed an economic miracle that propelled Germany to the top of the European economic hierarchy.

The country became a front line in the Cold War. The Germans didn’t want this; they wanted a united Europe that would bury German nationalism under new institutions and create a framework for economic growth. The European Union was intended to achieve both but failed in a fundamental way. Germany emerged not only as the major economic power of the bloc but also as the de facto arbiter of European affairs. Obscured by the Cold War, the German question clarified itself again. Germany was the dominant force in Europe.

The genuine desire of most Germans was to not allow the country's economic power to overshadow its position as simply another European power. After the Cold War ended, Europe focused not on military force but on prosperity. But history took a turn. The prosperity of Europe was not uniform, and Germany itself was not safe from history. The interests of the EU’s members were profoundly different. Italy’s economy could not bear what Germany had to have. Eastern Europeans had values the Germans disliked. In other words, the reality was far more complex than what the Germans wanted.

And so, as the crisis plays out along Ukraine’s border, the German question has once again emerged. Russia has risen from the collapse of the Soviet Union as a military power insisting on reshaping Ukraine and Eastern Europe to its interests. Germany depends on Russia for energy, and it is horrified by even the possibility of armed conflict to its east. NATO is now a trap for Germany, compelling Germany to cooperate on the one thing it did not want to do: prepare for a potential war. It has refused to send weapons to Ukraine, putting it at odds with the U.S. and Britain. It cannot afford to risk its economic relationship with Russia. Every time Germany tries to escape history, history pulls it back in.

For Germany, life after World War II, but especially after the Cold War, was about economics. It achieved through the EU what it couldn’t achieve since 1871: domination of Europe. And it did so without the kind of violence that had ripped the Continent apart for centuries.

That may no longer be the case. Russia, less powerful than before but powerful still, is reclaiming lands in its supposed sphere of influence. The U.S. is once again on the defensive. NATO still exists, and Germany is part of it. Germany is thus essential in the Ukraine affair. Economic power, economic needs, fear of war and fear of what peace would look like tear at the Germans.

Germany had hoped that its past could be forgotten. But in this confrontation, the German question is vital. How Berlin answers that question – or how others try to answer it – will once again reshape Germany and Europe. Germany may not like it, but the question has been around since the Battle of the Teutoburg Forest. Nations don’t get to select what questions are put to them.

[Crafty_Dog]

https://www.gatestoneinstitute.org/18202/eu-alliance-conservatives-populists

[ccp]

Polish Prime Minister Morawiecki said that Europe's future rests on sovereign states:

"We have shown that there is a different future for Europe, which is based on sovereign countries, not on any centralized structure that takes away powers from states.

"We showed each other that we think almost alike about such important issues as the Russian threats towards Ukraine, migratory pressures, energy issues, with very high gas prices being the result of manipulations on the part of Russia.

"The most important thing is to be united in our values ... and create a document presenting an alternative to the future of Europe. I hope that we are the alternative to the future of Europe."

[ccp]

like libs doing here

https://www.voanews.com/a/clouds-over-merkel-s-legacy-as-russian-invasion-lays-flaws-bare/6481942.html

forget globalism
the world, as has been obvious for decades, has been spitting into a few large groups

a real leader will
organize and fit the US into a new place
within these groups

I have zero confidence in the Democrats to do this
nor do I want them deciding for us little people

[G M]

https://jungefreiheit-de.translate.goog/kultur/gesellschaft/2022/ukrainerin-vergewaltigt/?_x_tr_sl=auto&_x_tr_tl=en&_x_tr_hl=en-US&_x_tr_pto=wapp

[Crafty_Dog]

https://www.zerohedge.com/geopolitical/48-hours-after-orbans-landslide-victory-eu-launches-punitive-rule-law-mechanism?utm_source=&utm_medium=email&utm_campaign=588

[G M]

https://www.zerohedge.com/geopolitical/48-hours-after-orbans-landslide-victory-eu-launches-punitive-rule-law-mechanism?utm_source=&utm_medium=email&utm_campaign=588

https://www.zerohedge.com/news/2022-04-06/why-liberal-west-hates-orbans-hungary

[Crafty_Dog]

Hungary Is No Model for Conservatives
Viktor Orbán is lauded for fighting liberal ‘tyranny,’ but he always takes money from Brussels in the end.

By Joseph C. SternbergFollow
April 7, 2022 11:43 am ET



One of the stranger phenomena of the age is that a certain kind of conservative now holds out Hungary as the model of Christian governance to which the West should aspire. This explains why this week you’ve read more than you ever wanted to about last Sunday’s re-election of Viktor Orbán as prime minister of the small and dysfunctional European state.

The case for Orbánism is that Mr. Orbán fights. His international reputation and some of his domestic success are built on a string of fierce political conflicts with European Union grandees in Brussels and across the bloc’s other member countries.

Mr. Orbán resisted the EU’s opening to mass migration from the Middle East in 2015. He has crossed swords with civil-society goo-goos over laws aimed at reducing the political influence of the likes of Hungarian-born left-wing billionaire George Soros (“the likes of” in Hungary comes tinged with anti-Semitism since Mr. Soros was born into a Jewish family). More recently Mr. Orbán has waded into sexual politics: Also on the ballot in Sunday’s election was a referendum to ratify a law resembling Florida’s restrictions on inappropriate sex ed in early grades.

All of this is deeply offensive to so-called good Europeans in politics, academia and the media. Some of it has proved effective at needling European institutions because Mr. Orbán has lit on issues where the EU leadership has drifted furthest from the electorate, most acutely on immigration.


The only problem for the credibility of Mr. Orbán’s fans is that he never actually fights all that hard. The tiltyard in which Mr. Orbán and his critics stage their jousts is the EU budget. Hungary is a net recipient of funds from the bloc. A pressing issue concerns up to €7.2 billion in pandemic aid that Brussels is stalling—Mr. Orbán says because he’s conservative, Brussels says because Budapest is corrupt.


For all the bellyaching about an overweening European bureaucracy, money is the only power Brussels has. That’s no small thing, but it’s something countries can accept or reject relatively freely. If Mr. Orbán really considers the EU’s demands on matters such as the organization of the judiciary to be intolerable affronts to Hungarian sovereignty, he could refuse Brussels’ handouts. He could even propose that Hungary leave the EU. Britain did, and the invading army staging a Reconquista from Belgium has yet to appear.

That Mr. Orbán never does either of those things should be more embarrassing to his boosters than it seems to be. One reason he doesn’t is that the EU remains popular in Hungary. Some 47% of Hungarian respondents had a positive view of the EU and only 13% had a negative view in the latest Eurobarometer poll, published this month—better than the 44% and 17% for the EU population as a whole. Last spring’s edition, for which more-complete breakdowns are available, found more Hungarians trust the EU (56%) than trust their own government (45%).

More embarrassing still should be the way Mr. Orbán’s claim on EU resources turns the sovereignty argument on its head. What’s at stake in Hungary isn’t the sovereignty of Hungarians to make decisions about immigration or social policy. No one is stopping them, provided they’re willing to fund their own government. What’s at stake is the sovereignty of taxpayers in socially liberal European states to decide on what sorts of neighbors they’d like to lavish their largess.

Those voters appear genuinely to believe some version of the left-liberalism asserted by the national politicians who are elected to represent them and who appoint the Brussels bureaucracy. Take the vexed question of sex as an example, since Mr. Orbán’s conservative defenders so often do. Some 49% of Hungarians told Pew pollsters in 2019 that “homosexuality should be accepted by society.” But 86% of Germans hold that view, and they’re the ones writing the checks.

The threat to the European Union has never been that charity cases such as Hungary will leave the bloc. The danger is that the large creditor states will give up if or when they conclude the EU no longer serves their values. Mr. Orbán’s genius is to find a way to profit politically from giving Brussels its own opportunity to virtue-signal. It feels like a piece of bad performance art, although to suggest either side planned it is to give them both too much credit.

As for the conservatives who keep buying tickets for this show, perhaps the reason they overlook Mr. Orbán’s embarrassing failure to put muscle behind his bluster is that they know his refusal spares them deeper blushes. All evidence suggests that if ever the form of Habsburg Restoration these national conservatives advocate ends up on a ballot, it will lose. Mr. Orbán’s great utility to them is to fight the good fight, but never hard enough to fail.

[Crafty_Dog]

https://michaelyon.locals.com/upost/2506766/serbia-and-kosovo-shooting-at-each-other

[Crafty_Dog]

The Risk of Another Balkans War, Part 1: Placing Recent Flashpoints in Context
undefined and Director of Analysis at RANE
Sam Lichtenstein
Director of Analysis at RANE, Stratfor
10 MIN READAug 15, 2022 | 19:38 GMT



Editor's Note: This column is the first of a two-part series that assesses the risk of another war breaking out in the Balkans amid renewed concerns over ethnic tensions, political unrest and competing external influence in the region.

Call it the ''license plate conflict'' — or maybe not. Two weeks ago, global media outlets intensely covered the short outbreak of protests in northern Kosovo. A recurring dispute over license plates led ethnic Serbs to block roads and forced Kosovar authorities to briefly close two border crossings into Serbia. Kosovar police also reported that unknown assailants fired shots at them, though there were no injuries, and some Serbian demonstrators reportedly beat up a few drivers who tried to bypass the roadblocks. The protests began July 31, but were over by Aug. 1.

Depending on your perspective and choice of media coverage, the incident was either much ado about nothing or a harbinger of a potential return to ethnic conflict. However, as is often the case in all-or-nothing framing of events, the flare-up should not be dismissed and deserves real attention, but it also does not suggest Kosovo, or the wider Balkans region, is in imminent danger of collapsing into widespread violence as it did in the 1990s. Instead, the license plate dispute is a symptom of a much larger challenge — unresolved ethnic identity politics — which makes it incumbent on us as analysts to consider the risks, but also the larger context in which they are present.

The Ghosts of Balkans Past
The July 31 protests were by no means unprecedented. The dispute has been simmering since September 2021, when Kosovar authorities first announced they would not renew a decade-old agreement with Serbia to recognize its license plates in Kosovo. Kosovar authorities played down the decision, saying the change would merely match the rules issued by Belgrade, which does not recognize osovo Unification Risks Destabilizing the Balkans. However, in a preview of the latest flare-up, ethnic Serbs in northern Kosovo temporarily blocked border crossings, with sporadic reports of low-level street violence, before Kosovar authorities withdrew the ban and the situation de-escalated.

While the row is ostensibly about license plates, it taps into much deeper divisions that explain why the measure has generated these flare-ups in unrest. Although various peace agreements ended the fighting that comprised the multiple conflicts that accompanied the breakup of Yugoslavia in the 1990s, they left many fundamental questions unsettled — most of which touch on questions of ethnic identity. As one of the largest regional flashpoints, the dispute between Kosovo and Serbia touches on two underlying challenges. First, there is the aforementioned question of the legitimacy of Kosovo's independence. The dispute is nominally a political one that could, in theory, reach some form of accommodation. But it also has an ethnic dimension because the vast majority of Kosovo's population is ethnically Albanian and Muslim, whereas Serbia's is largely ethnically Serbian and Christian. Adding to this division is the fact that more than half of Kosovo's Serbian minority is concentrated in the northernmost region of Mitrovica, bordering Serbia, making it ethnically distinct from the rest of Kosovo and helping explain why demonstrations over the license plate dispute have been concentrated there. Further complicating matters, however, is the fact that smaller groups of Serbian minorities are spread throughout pockets of the rest of Kosovo.

Many academic studies have dissected the question of whether ethnic conflicts are truly about competing identities or whether they're actually veiled disputes over other issues, such as political power and access to natural resources. However, the fact remains that such conflicts can cause serious divisions, especially when ethnic differences and material grievances overlap.

In the Balkans, this is partly because of its history. After all, Yugoslavia — be it as a kingdom prior to World War II or as a communist federation in its wake — was always held together by a strong central leader, not because of any logical unity among the varied peoples that inhabited the territory. Unsurprisingly, therefore, the wars (and war crimes) of the 1990s that comprised the dissolution of Yugoslavia were fought largely along ethnic lines, thus reinforcing the fundamental importance of cultural identities.

Since then, Balkan leaders across the political spectrum have frequently made appeals to ethnicities over nationalities, thus keeping personal identities at the center of society. This has meant that many aspects of daily life — everything from political debates to, yes, license plates — still have ethnic connotations. Even measures designed to assuage ethnic concerns, such as ethnic quotas for government positions in many countries, have kept identity politics front of mind and in some cases worsened tensions.

As a tragic demonstration of the salience of identity politics, even highly unlikely threats risk inflaming ethnic unrest in the Balkans. For instance, there has long been speculation over the creation of a ''Greater Albania'' that would incorporate Kosovo's majority-Albanian population into Albania itself. Politicians in both countries have spoken in favor of it and polls suggest citizens on both sides of the border would, in theory, be amenable to the idea. Nonetheless, the notion of a ''Greater Albania'' has largely been relegated to the periphery, as it is widely believed that creating such a state would run into potentially insurmountable legal challenges, practical objections over implementation and unpopular economic and political changes. But even so, the mere discussion of the idea has raised heckles from Serbia and prompted concerns of the knock-on effects in other Balkan countries with large Albanian minorities — all of which have kept ethnic divisions front and center.


To this end, while it was ethnically-tinged tensions between Kosovo and Serbia that most recently made the news, arguably the greater threat of unrest lies in Bosnia and Herzegovina — another Balkan country with a large, distressed Serbian minority. There, decentralized governance is effectively split into two largely autonomous entities: the mainly Bosniak-Croat Federation of Bosnia and Herzegovina and the Serb-dominated Republika Srpska. This unwieldy system — which also includes a tripartite presidency (one from each of the three main ethnic groups) at the national level — was established in the 1995 Dayton agreement that ended the Bosnian War. While the U.S.-brokered peace deal resolved the more than three-year war, it did so at the cost of creating an unsustainable governance structure that has effectively paralyzed the country and entrenched ethnic distinctions.

This has resulted in numerous flare-ups in Bosnia and Herzegovina, most recently caused by the country's top Bosnian Serb politician, Milorad Dodik. Dodik leads the Republika Srpska and often engages in cynical political appeals to ethnic divisions. Most concerningly, he has repeatedly threatened to remove the Republika Srpska from Bosnia and Herzegovina's national institutions — a move that would directly undermine the tenuous postwar peace. As a testament to this threat, earlier this year the United States and the United Kingdom each sanctioned Dodik for charges related to threatening the stability of both his country and the wider region.

Looking to the West
But for all the media headlines questioning whether the Balkans is barreling toward another war, these recent flashpoints have notably resulted in much more of a whimper than a bang. This is in large part because, for all their differences, the Balkan states share a desire to integrate deeper into Europe and in many respects depend on Western economic financing and in some cases security guarantees.

Most importantly, every country in the region is either already an EU member (Croatia and Slovenia), an official ''candidate country'' engaged in ongoing negotiations with Brussels (Albania, North Macedonia, Montenegro and Serbia), or a ''potential candidate country'' for EU membership (Bosnia and Herzegovina and Kosovo). All Balkan states are thus highly incentivized to keep the peace, as any return to violence would jeopardize their accession process and the many benefits they hope to accrue by joining the European Union.

The European Union is already the main economic partner for regional countries, with Brussels and individual EU countries accounting for the majority of trade and much of the financial aid that flows into the Balkans. Straining EU relations by engaging in conflict is thus not merely a notional, longer-term concern, but one that would have immediate consequences for Balkan economies as well.

Combined with historic U.S. political and economic influence (as evidenced by Washington's role in ending the Yugoslav Wars of the 1990s), the European Union's influence over the Balkans is crucial leverage that has time and again helped to calm tensions. Furthermore, the presence of EU and NATO peacekeepers, advisors and trainers on the ground in Kosovo and Bosnia and Herzegovina provides a tangible check on conflict in arguably the two largest potential powderkegs in the region, both by deterring violence and ensuring unrest remains minimal when flare-ups do occur.

Take the license plate dispute between Serbia and Kosovo, for example. It was EU and U.S. political intervention, backed by NATO peacekeepers on the ground, that de-escalated tensions last September, as well as two weeks ago. In fact, the European Union's foreign policy chief is scheduled to hold negotiations in Brussels on Aug. 18 between Kosovo and Serbia as part of an ongoing EU-facilitated dialogue (another restraint on armed conflict) between the two sides. While the territorial dispute at the root of the issue is unlikely to be resolved anytime soon, multinational pressure and historical precedent suggest that Kosovo will adjust the license plate measure or again delay its implementation beyond Sept. 1, when it is currently scheduled to take effect. This means the disagreement is likely to remain a stalemate, much more of a problem to be managed than a crisis to be countered. Indeed, for all their rhetorical bluster, neither Kosovar Prime Minister Albin Kurti nor Serbian President Aleksandar Vucic
has shown a serious appetite for actual armed conflict, which would bring significant costs for both of their countries with little benefit. Instead, both leaders appear to be using the appeals of ethnic identity more as a way to drum up domestic political support, establish strong negotiating positions and, in some cases, extract concessions from the West — before ultimately backing down.

Furthermore, consider that some Balkan states are taking steps to deepen regional integration. Indeed, ethnic and other disputes have not prevented Albania and Serbia (along with North Macedonia and potentially others one day) from making plans to create a single market to allow the free movement of people, goods, services and capital. While the process is admittedly slow-going and faces near-term challenges, it is hardly the sort of policymaking that suggests these countries are planning for major conflict.

Finally, what may seem like intractable problems need not be so. What is now North Macedonia had a nearly three-decade dispute over its former name, simply Macedonia, which is also a region in Greece. For years, the disagreement — which also featured arguments over ethnic identity — was a source of regional instability. Tensions with Greece over the name change also inhibited Macedonia's aspiration to join NATO and the European Union, as neither bloc wanted to admit a country that had such an ongoing dispute with an existing member. Ultimately, however, Athens and Skopje came to an agreement in 2018 in which Macedonia became North Macedonia, facilitating its entrance into NATO and becoming an official EU candidate in 2020 — a clear demonstration of the underlying drivers for peace over conflict even after years of rhetorical sniping and negotiations at loggerheads.

In the second part of this series, we'll explore China and Russia's increasing interest in the Balkans and what it may mean for the region's long-term stability.

[DougMacG]

Bernie Sanders and his ilk think "Scandinavian socialism" is the model, with open borders.  Swedes don't.

https://www.nytimes.com/2022/09/14/world/europe/sweden-election-result-right.amp.html#amp_tf=From%20%251%24s&aoh=16632448669233&referrer=https%3A%2F%2Fwww.google.com

[Crafty_Dog]

https://www.theamericanconservative.com/the-threat-of-civil-war-in-europe/

[G M]

https://www.theamericanconservative.com/the-threat-of-civil-war-in-europe/

https://archive.ph/YwGAK

Why is VodkaManBad starving europe?

[DougMacG]

Her party would not implement her policies.

I'm waiting for good analysis on this from closer to the scene, but

The newer members of her conservative coalition were/are anti-Thatcherites.  (per John Thielen, American Experiment)

The circumstances in Britain are a bit like here, perhaps worse, and from history it is a repeat of what we call the Jimmy Carter years, a stagnating economy and runaway inflation. 

The answer required was two-pronged, tight money combined with massive supply side stimulus through regulatory relief and tax burden relief in the productive sector.  What we call Reaganomics, they call Thatcher(ism?).

Without doing those, both of those, failure is imminent.  Tight money alone is the root canal policy, and the pain just gets worse and worse without addressing the productive side of the equation.

Biden is resigned to failure and Liz truss is not.  I take her to be saying, if you guys want failure, don't put my name on it.