Source: EuropeElects

With Germany’s political landscape in upheaval, observers of German politics may be excused for thinking that the world is caving in.

In late May, the troubled Social Democrats (SPD), one of the main political parties both in Germany and in Europe’s wider center-left, suffered a disastrous double blow that underscored the party’s existential crisis. The Social Democrats won only 15.8 percent of the vote in the European Parliament elections, down from 27.3 percent in 2014, finishing behind the Greens for the first time ever in a national election. On the same day, the SPD failed to top the poll in Bremen, coming second to Angela Merkel’s center-right Christian Democrats (CDU) in the northern state it has governed for more than seven decades. Shortly afterwards, party leader Andrea Nahles announced her resignation after just a year in office.

The SPD’s collapse has been accompanied by the rising fortunes of the German Greens, who won nearly 21 percent of the vote in the European elections—double their previous result. Crucially, the Greens won the youth vote. Among those under 25, the Greens attracted more voters than the combined tally for the SPD and the CDU, together with their Bavarian sister party the Christian Social Union (CSU). The success of the Greens and the losses of the governing parties were well predicted in the polls, but the results are still bewildering. Opinion polls conducted since have even seen the Greens pushing ahead of the CDU/CSU to 27 percent, making them the main center-left force and the most popular political party in Germany for the first time in history.

The “Greta Effect”

The crisis of the Social Democrats and the rise of the Greens are not unique to Germany, though both effects are particularly strong there. The overall European picture after the elections is marked by a curious divide: In several countries in the north and the center of Europe, the Greens have successfully taken votes away from Social Democratic parties; whereas in the southeast, the Social Democrats seem to be recovering, and the Greens have not done particularly well.

In a similar trend as in Germany, the British Labour Party, the Romanian PSD, and the Austrian SPÖ all suffered disappointing results. The French Socialists (PS), which secured 14 percent of the vote in the 2014 election, were nearly obliterated. In contrast, the French green party EELV surged to a surprising third place, scoring from 8.9 percent to 13.5 percent of the vote. The Greens also reached double figures in several other countries, coming in second in Finland and third in Luxembourg. In the United Kingdom, the Green Party finished ahead of the ruling Conservatives with a score of 11.8 percent. Ireland’s Green Party’s vote trebled in comparison with the 2014 elections, putting it in line to send representatives to the European Parliament for the first time in 20 years. Greens in Denmark, Belgium, and the Netherlands also did well in the wake of recent electoral successes in regional polls, as many young voters increasingly turn away from the center-left to vote for the environmentalist parties.

Only a couple of years back, opinion polls suggested that the Greens were going to see their support halved in the European Parliament. Instead, their total of seats has now gone from 52 to 75, pushing them into a position of influence. Analysts explain this “Green wave” with the “Greta effect,” referring to the teenage Swedish climate activist, Greta Thunberg. What is certain is that Green parties have benefited from the fact that it was climate change, rather than migration, that dominated the political agenda and the election campaign in many countries.

Europe’s Southeast is Different

Yet not all member states have been hit by the green wave. In fact, it was largely confined to countries in north-western Europe. The Greens’ gains there masked losses in Austria, Spain, and Sweden in the European elections, and the total wipeout of Green MEPs in Croatia, Estonia, Hungary, and Slovenia, leaving the Green group unrepresented in 12 out of 28 member states. Indeed, most Green parties across the EU failed to make significant gains compared with 2014.

With a few exceptions, Green parties have not been able to consolidate their presence in the south and east of the EU, “a political reality that even the latest wave of stunning European electoral success has not changed,” according to an analysis by the economic news service Eurointelligence. The Greens won no seats in Eastern Europe and only a handful in southern Europe, where a number of Social Democratic forces have co-opted environmental concerns into their platforms, and thus resisted the green trend, including the main center-left parties in Portugal, Spain, Malta, and Italy.

In Spain, a decisive win for the center-left PSOE, taking 33 percent of the vote, seems to provide evidence of a recovery. This result has made the PSOE the largest national delegation in the S&D group, with 20 MEPs, ahead of the Italian Democratic Party (PD), which is also starting to climb back up according to the latest polls. In Portugal and Malta, the governing parties of Prime Ministers António Costa and Joseph Muscat won by a landslide with 33.4 percent and 54.3 percent of the vote respectively. Polls predict an even bigger win for Portugal’s Costa when he stands for re-election in the fall. The Danish center-left Social Democrats also won the European elections and the subsequent general election held on June 5, though the party’s focus on a more restrictive immigration policy is probably not a model for Europe’s other Social Democrats in crisis. Nonetheless, their win is the third in less than a year for center-left parties in Nordic countries after successes in Sweden and Finland.

Environmentalism may primarily be a concern in north-western Europe, and the Social Democrats may yet experience a comeback in other countries and regions of the the EU. Nevertheless, it is likely that this moment will be remembered as a turning point for the Greens: for the first time, they have taken a place among the big players in the European Parliament.

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© REUTERS/Altaf Hussain

This May, incumbent Prime Minister Narendra Modi led his Bharatiya Janata Party (BJP) to a resounding victory in India’s national election. The fact that 600 million people successfully exercised their franchise should give pause to Westerners who portray Indian democracy as merely a little brother to its older Western counterpart. Modi and his Hindu nationalist party have a new mandate to reshape India.

The first promise Modi’s new government holds for European states is political stability, which makes it easier to build lasting diplomatic ties. Unlike the governments of the 1990s—when Indian politics was terribly unstable and coalitions were prone to fall apart, repeatedly requiring new diplomatic efforts from Europe—the BJP looks a safe bet to last the whole five-year term. Moreover, as of now, the party appears as the best contender for the 2024 polls. So it’s a good time for the EU and its member states to unveil medium-term strategies for their relations with India.

In the Company of Indian Companies

Within this political context, Modi’s second term promises economic openness. Yes, his 2014-2019 tenure did not lead to the privatization of any major public company. Yes, new data suggest an economic slowdown occurred in the second half of BJP’s recent rule, and economic growth is probably lower than the New Delhi government would like to admit. Yes, Modi’s flagship campaign, “Make in India,” aimed at attracting foreign investment and creating jobs, was less successful than expected. But one thing remains certain: Modi will use both hands to keep the doors of the Indian market open to foreign firms.

While corruption, poor infrastructure, and uneven levels of governance remain huge thorns in India’s side, the rankings given to the country for the ease of doing business have improved under the BJP. The “Make in India” campaign will continue as long as Modi is in office. The program’s revised list of industries open to FDI includes significant sectors such as automobile production, chemicals, pharmaceuticals, defense, railways, biotechnology, and renewables. Some of these hold great opportunities. India has, for instance, recently built an International Solar Alliance of countries that wish to enhance their use of solar power due to their geographical position. Some European nations, such as France, are visibly attempting to take advantage of this development.

One thing must be remembered, however: large Indian industrial houses remain one of the BJP’s main constituencies. They are among the Party’s main donors and the main beneficiaries of its rule. Modi’s rhetoric has often focused on India’s poor, whereas the BJP’s electoral manifestos keep promising easier ways of investing in India. So it appears that Modi supports both India’s poor and the world’s rich. But despite all of this, it is actually India’s rich―the large Indian companies―for whom Modi most often rolls out the red carpet.

While this approach may offer some opportunities for cooperation, it also reduces the chances for European companies. Two crucial recent policies regarding FDI in retail and the procurement of defense technologies serve as examples here. Despite his own earlier opposition to FDI in retail, Modi allowed it to continue after taking over power in New Delhi. This came as a boost to firms like H&M and IKEA. However, his government recently introduced a rule forcing retailers to source 30 percent of the value of the sold goods from India. As for defense procurement, India’s Ministry of Defense imposed the rule that any foreign company selling major, strategic defense technologies to India needs to have an Indian partner. The controversy around the Rafale jet signalizes the Indian government may in fact try to pick the company itself. In either case, the Indian government is making sure that the country’s companies cannot be thrown out of the race.

Intra-European Competition

Even with an Indian government focused on attracting foreign investment, smaller European nations don’t have much to cheer about. As evident from his foreign trips, Modi, like his predecessors, focuses on New Delhi’s main partners in Europe: Russia, Germany, France, and the United Kingdom. As far as his European policy is concerned, India’s prime minister has not ventured into uncharted territory by, for instance, visiting any smaller countries in central and eastern Europe.

Among European capitals, Paris was perhaps most successful in developing its ties with New Delhi, with the government providing a huge diplomatic push to the economic endeavors of its companies. Germany remains India’s top trading partner on the Old Continent, while United Kingdom was the biggest European source of FDI inflows to India over the last 18 years.

Smaller European nations have a much more difficult position with regard to India, as they are both less recognizable and have less to offer in terms of capital and produce. Therefore, they will have to look for niches in the vast Indian market. Modi’s policies do offer some opportunities, however. For instance, a Polish company is installing screens at bus stops as part of the New Delhi’s Smart City initiative.

In some areas, European nations and companies are bound to compete with each other elbow to elbow on their run to India. There is no telling when the India-EU Free Trade Agreement will finally be completed—negotiations began in 2007—but it may end up benefitting the better-positioned companies of western Europe rather than the firms of newer and poorer member states. Meanwhile, France is likely to expand its ambitious push into India’s defense market, which will upset Russia. And if and when Brexit is completed, some Indian companies may start to depart the United Kingdom, which will encourage the major cities on the European continent to compete in order to attract them.

On the Same Page, Sometimes

When it comes to the global world order, there are areas where European Unions and its members may hope to share sentiments with India, and ones which will remain thorny issues. Europe and India have similar attitudes toward the rise of China; that is one aspect of convergence. India’s and EU’s recent steps show that both are willing to accept Chinese investment in general but aqre wary of Beijing’s rising political clout. Indian ministers have expressed security concerns about the Chinese telecoms company Huawei, but the country has not yet taken a decision on barring Huawei from its upcoming 5G trials. Similarly, New Delhi took a firm position against China during the Doklam standoff in 2017, when Indian and Chinese forces squared off (without violence) across disputed territory. But it did not invite Australia to its navy exercises, apparently not wanting to appear too militaristic. India also did not take part in either of the Belt and Road Forums organized in Beijing—and yet is the biggest beneficiary of the China-created AIIB.

Both New Delhi and the major European nations are also keen to retain the JCPOA deal with Iran and unhappy that Washington and Teheran are again on a collision course. If the US and Iran step back from the brink, Brussels and New Delhi will be equally relieved.

India’s relations with Russia, however, will remain a diplomatic challenge for the EU. Moscow is a close political friend to New Delhi and a crucial provider of military technologies (alongside Washington). Even though New Delhi’s elites and experts believe that the US is a much more important global partner, India does not wish to be pushed into a single global alliance. It prefers to hedge its bets. Therefore New Delhi has not criticized Russia’s activities in either Ukraine or Syria. A solution to the Ukraine crisis is not on the horizon, and Europe should know that this is not an issue where it can hope for India’s support.

Don’t Preach

The European Union will probably not be happy with Modi’s policies toward refugees, either. BJP, a Hindu nationalist party, has proved time and again that it is unwilling to welcome Muslim refugees such as Rohingyas from nearby countries, even when it is under obligation to do so. After the persecution of Rohingyas started again in Myanmar, around 40,000 of them managed to flee to India. The BJP government refuses to treat them as refugees, however, and considers them illegal immigrants who must be deported. But while New Delhi and Brussels may not be on the same page, the geographical distance between them means they are not likely to face the same refugee crises.

A word of warning seems appropriate, too, where India’s attitude toward religious minorities is concerned which has undoubtedly hardened unter the Hindu nationalists of the BJP. While this is a matter of concern, the EU should not repeat its past mistakes of being too preachy.

Looking at things from a global and long-term perspective, one of the most important conclusions is that India’s ties with the US are bound to grow much faster than the ones with Russia. New Delhi and Washington broadly agree on the need to counterbalance Beijing, among many other things. This should eventually open new possibilities for cooperation between European countries and India, too. Such developments may extend well beyond Modi’s tenure and shape a part of the global order.

The post The Other Asian Power appeared first on Berlin Policy Journal - Blog.

© REUTERS/Dinuka Liyanawatte

Acting in concert with others where this helps the achievement of our national interests—and, indeed, to head off threats to this achievement—is a key weapon available to Australia. It magnifies the international weight Australia can bring to bear; and the rules-based multilateral system helps build the stability and prosperity Australia needs, in a global environment characterized by perpetual uncertainty.

And these are deeply uncertain times. The tectonic plates on which the post-World War II order was built, modified slightly after the end of the Cold War, are definitely in motion. The order which served us so well for nearly 75 years is under significant challenge from all directions. This is most notably because of: doubts about the US security guarantees that have underpinned global security; the US questioning of the institutions and rules created since 1945 and its unilateralist approach to pursuing its interests; managing the rise of China; disarray in Europe, including uncertainty about Brexit and the future shape of the EU; and a range of other major problems, for example, populism/nationalism, mass people movements, chaos in the Middle East and North Africa, Russian games, and so on.

Little wonder that, at the 2017 Munich Security Conference, Russian Foreign Minister Sergey Lavrov, admittedly partly for self-interested Russian reasons, foreshadowed a new, “post-West” world order!

“Acting With Others”

Against this background, the 2017 Australian White Paper—the most recent and comprehensive definition of Australia’s national interests, the values that underpin those interests, and the approaches that it will take in pursuing those interests—correctly notes that Australia has benefited greatly from the system of global (and, for that matter, regional and bilateral) institutions and rules set in place in the period since the end of World War II.

It clearly states that “Australia’s interests are strongly served by acting with others to support a rules-based international order,” that “Australia will encourage and tangibly support the leadership of the United States to this end,” that “we will work with new and emerging powers to increase their stake in the international system,” and that “we will support… well-designed proposals for new forms of global cooperation and reform of multilateral institutions.”

So, even though the Australian government has yet to comment publicly on the German/French proposal for an “Alliance for Multilateralism,” in broad terms it seems to be very compatible with the approach taken in the Foreign Policy White Paper. No doubt Australia will be represented when the “Alliance” is formally launched—“at Ministerial level”, according to French Foreign Minister Jean-Yves Le Drian—in the margins of the UN General Assembly in September this year. And Australian officials have also attended preliminary meetings in New York since German Foreign Minister Heiko Maas’ speech putting forward the proposal in July 2018 in Tokyo.

How? Why?

But there are some cautionary things that need to be said about the proposal.

The first and most obvious is that it is still very short on detail. Maas told his Tokyo audience that he envisaged it consisting of an “alliance of countries” that: defend and develop existing rules further; show solidarity when international law is broken or ignored; fill vacuums created by the withdrawal of others from the world stage; are strongly supportive of efforts to combat climate change; and which take common political and financial responsibility in international organizations.

That’s all very well and these are fine ideals, but how is it supposed to work? At their meeting in April, Maas and Le Drian mentioned several issues (disarmament, global imbalances, new technologies, human rights, the environment) that could be pursued by such an alliance, but how is that to happen?

Second, what is its fundamental purpose? Some of the objectives in Maas’ Tokyo speech sound suspiciously as though the alliance is essentially anti-US (“fill vacuums created by the withdrawal of others from the world stage…”, for example). And, when asked by the media in New York if the United States would be invited to join the alliance, Maas said he had yet to discuss this with the United States but “wouldn’t slam the door in anyone’s face”—the alliance was about strengthening multilateralism against attempts to hollow it out and “each must decide which side his country is on.”

Committed to the US Alliance

The implication is obvious. If so, why? The US remains a massively important player internationally, including as the EU’s largest trading partner. Marginalizing it and its concerns would be a fruitless exercise. And trying to use the alliance to take forward global issues of the order outlined by the two ministers in April over US objections and despite US caution also seems like a recipe for failure.

Is the aim to encourage the US to re-engage multilaterally? That also seems a dead end for now, given the attitude of the current administration, at least while it still perceives great weaknesses in parts of the multilateral institutions, especially as tools to pursue US interests successfully. As it stands, the alliance proposal is unlikely to persuade America that multilateralism is a better way to achieve the outcomes it wants than the use of bilateral muscle. Just reinforcing the commitment of Western partners outside the US to a multilateral system that the current US administration sees as deeply flawed won’t cut much ice.

And here is a possible difference of opinion between Australia and the alliance proposal’s authors. Although published in 2017, before Australia and others saw the full nature of the Trump administration’s “America first” approach, the Australian Foreign Policy White Paper notes that “Australia will encourage and tangibly support the leadership of the United States” to support the rules-based international order. Australia sees multilateral cooperation as an important tool to pursue its national interests but clearly recognizes the central position of the United States in addressing so many issues of great importance to us. And Australia’s close alliance with the US remains a fundamentally important plank of its security.

An Imperfect System

Third, we shouldn’t pretend that the system of rules and institutions we now have is perfect as it stands. Let’s be honest: it needs modernization and reform, not least to meet the challenges thrown up by current and emerging global problems. We shouldn’t just dismiss US concerns, some of which we definitely share, about how some of the multilateral institutions operate.

And might not President Trump be right when he complains that the United States’ Western partners have become complacent (or worse, lazy) and aren’t carrying as much of the international burden of ensuring global security and prosperity as they should, instead “freeloading” (as the president claims) off the United States? NATO and the (non-)achievement of its 2 percent of GDP defense expenditure target could be an example of this.
Fourth, although potentially valuable in strengthening and reforming the multilateral system, especially in the face of a resurgence of unilateralism, the Alliance for Multilateralism won’t go to the heart of current problems in the West, which aren’t all about multilateralism. There needs to be a much more robust defense of the values we share and our democracies, for example. And most Western countries are facing major realignments in their established political order.

Do Your Homework First

We also need more certainty about institutions that have been hugely important pillars of global security and stability. Sorting out the significant problems facing one of those pillars—the European Union—and achieving agreement among its members on the shape of the new, post-Brexit EU would make a significant contribution to this. All of this will require leadership and energy of the sort that seems, at least seen from this side of the world, somewhat lacking at present.

And, finally, like-minded countries from across the globe which share interests and values, such as Australia and Germany, need to strengthen their bilateral cooperation. A good start was made to this end through the work of the Australia-Germany Advisory Group a few years ago. That needs to be revived. The Group’s report also contains recommendations for joint action—such as in development projects in Indonesia—that would also contribute to the goal of strengthening global cooperation.

In short, the Alliance for Multilateralism proposal is likely to receive a positive response in Australia. But, in taking it forward, there are still some big issues that need to be considered carefully.

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© Sputnik/Alexei Druzhinin/Kremlin via REUTERS

With prominent Western attendees few and far between, the stage was set at the end of June for this year’s St. Petersburg International Economic Forum to become a Russian-Chinese affair. Russia’s President Vladimir Putin took his counterpart Xi Jinping, the guest of honor, on a tour of his home city, and the two leaders talked until midnight.

Bilateral Russian-Chinese relations have reached an “unprecedented level,” Putin declared. The previous year, Xi had called Putin his “best, most intimate friend” and awarded him China’s first-ever Friendship Medal. Without a doubt, Russia and China have come a long way since the open hostility between the People’s Republic and the Soviet Union in the 1960s. Today, both countries closely cooperate in the UN Security Council, carry out regular joint military exercises, and look to each other for trade and investment.

Enthusiastic Handshakes

Since Xi became China’s president in 2013, Russia-China relations have become much more personalized. The two presidents have lent each other symbolic support when it counted most. Putin was the key foreign guest at the Belt and Road Forums both in 2017 and 2019. Xi, on the other hand, was the only foreign head of state at Russia’s military parade in May 2015, when Russia, on the 70th anniversary of Victory Day, faced international isolation after the annexation of Crimea.

Although the connection between Putin and Xi often looks transactional, it facilitates the rapprochement between Russia and China. However, this high degree of personalization comes with its own risks: a change in leadership in one of the two countries could quickly change the dynamic in bilateral relations.

And while the two leaders are adept at creating the image of an inseparable Russian-Chinese friendship, their enthusiastic handshakes often do not translate into actual cooperation. It has become common practice for Russia and China to sign several dozens of bilateral agreements each time their presidents meet, but the significance of these contracts, which range from partnership agreements to business deals, to cooperation of regional governments, should not be exaggerated. More often than not, they do not have any material consequences. The businesspeople and bureaucrats involved know that the implementation of the contracts is secondary at best. They see the signing ceremonies as a valuable opportunity to get access to their respective president.

Gas, Naturally

As a general rule, economic cooperation between Russia and China is successful when it aligns well with elite interests and pays for itself. Unsurprisingly, the biggest progress of the last years has been made in the natural resources sector. The largest common projects are the construction of the Yamal LNG terminal and the Power of Siberia pipeline, which will pump Russian natural gas to China starting in late 2019. Both projects have given Putin’s business allies and their contractors the opportunity to make billions of rubles.

Other bilateral initiatives are failing, however, because neither Beijing nor Moscow is willing to foot the bill. The flagship project of Russia’s cooperation with Xi’s Belt and Road Initiative, a high-speed railway connecting Moscow and Kazan, has been postponed year after year because Moscow is unwilling to grant the state guarantees that Beijing’s banks demand. Another case of unsuccessful cooperation is the attempt to de-dollarize trade between the two countries, 75.8 percent of which was still settled in US dollars in 2018.

The volume of trade, in contrast, has been a bright spot in the Russian-Chinese relationship. Trade turnover has doubled over the last ten years and reached a new record of $108 billion in 2018, despite lower oil prices. As an individual country, China is Russia’s most important trading partner. As a trading bloc, the EU still far outweighs China, with a trade turnover of $279 billion in 2018. Of course, the increase of bilateral trade has less to do with Russia’s “pivot to the East” or a Putin-Xi friendship, but is mainly the consequence of Chinese economic growth. While China’s trade with the world has ballooned, Russia’s share has remained virtually unchanged at around 2 percent.

Still, the outlook for trade in goods and services is promising: China’s demand for natural resources and food is expected to further increase, while more affluent Chinese tourists will roam Russia’s far east, Siberia, and the rest of the country. Railway transit of Chinese goods through Russia is small but growing. And thanks to its increasing technological prowess—and, to some degree, Western sanctions—China is more and more able to compete with EU exporters in the Russian market for machinery and vehicles.

Disappointing Investments

While the Kremlin welcomes the uptick in trade, it also hoped that investors would drive the modernization of Russia’s economy. The progress here has been disappointing. According to Russia’s Central Bank, the stock of foreign direct investment from China and Hong Kong stood at just $3.6 billion, or 0.9 percent of Russia’s total incoming direct investment in January 2019. Pinpointing the precise amount of Chinese investments in Russia is notoriously difficult because, according to estimates, about half of the Chinese capital flows through offshore jurisdictions such as Cyprus before it enters Russia. But even if these masked transactions are taken into account, it is clear that Kazakhstan, for instance, and a range of other countries have been much more successful in attracting Chinese investors than Russia.

The main reason for the lack of Chinese investment is Russia’s generally unattractive investment environment. There are few lucrative opportunities in Russia’s stagnating economy, and Chinese businesspeople often lack the necessary experience and patience. A peculiar combination of highly regulated markets, pervasive bureaucracy, rampant corruption, and economic protectionism makes Russia less predictable for Chinese firms than some of the least developed African countries with their highly autocratic regimes.

Another complicating factor is the anti-Chinese sentiment still lingering in Russian society. A common narrative is that Chinese investors exploit the country’s sacred natural treasures with the help of unscrupulous and corrupt Russian elites. The most recent variation on this theme was the commotion around a new Chinese water bottling factory at the Lake Baikal.
After reports spread throughout Russian social media that the factory was an ecological threat, it sparked outrage not only in Siberia’s Irkutsk, but more importantly in Moscow. Eventually, the authorities suspended the Chinese project in March 2019. There are similar concerns over Chinese farmers spoiling Russian soil with inappropriate fertilizers or Chinese loggers cutting thousands of square kilometers of Siberian forests. While only some of these concerns stand up to closer scrutiny, this doesn’t change public perception:. When in doubt, the Russian authorities would rather terminate a Chinese investment project than risk public unrest.

Fear of Dependency

The already staggering asymmetry in Russian-Chinese economic relations will only increase in the coming years. Still, Moscow has avoided falling into a one-sided dependency to China. At the moment, Russia can still balance the relationship with legacy advantages it possesses. Especially in the military and aerospace industries, Moscow boasts technologies that China cannot replicate or buy anywhere else. However, as China is quickly developing its own capabilities, balancing the relationship will become more difficult for Moscow.

In the past, Russia’s answer to looming dependencies has been to stall cooperation and integration processes. For example, Moscow has blocked Beijing’s initiative to create a free trade zone within the Shanghai Cooperation Organization. The asymmetry in information technology between China and Russia could also raise concerns in Moscow for the future. As a consequence, it is unlikely that Russia will create its entire 5G network solely with Huawei technology. Although a new contract between Huawei and Russia’s Megafon on 5G was prominently advertised in early June, much less attention was paid to similar agreements that Nokia and Ericsson signed in St. Petersburg.

An Analytic Challenge for the EU

China initially benefitted from the worsening relations between Russia and the West. The Kremlin was urgently looking for new partners, offering access to natural resources and military tech in return. However, Russia’s erratic and aggressive foreign policy is also a cause for concern for Beijing. While Chinese state media have harshly criticized the West over its sanctions regime and double standards, Beijing has formally adopted a neutral position on the Ukraine crisis and does not recognize Crimea as Russian territory.

So far, Beijing has given no indication that it is prepared to spoil its relations with the EU by supporting Russia’s foreign policy adventures. It avoids siding with Moscow too explicitly. When Putin gave an interview in Beijing in late 2018, Chinese censors cut out his invitation for Chinese tourists to visit Crimea. Chinese banks also take great care to not breach US sanctions, and they have closed accounts and blocked transactions of Russian businesses and citizens, leading to frustration in Moscow.

There is little the EU can do to change the trajectory of Russian-Chinese relations. However, a sober assessment will be needed to determine where Russian-Chinese cooperation is threatening to EU interests, where it is benign, and most importantly, where it is more about words than deeds. Meanwhile, EU policymakers should avoid the temptation of lumping Russia and China together. Observers in Washington are currently inclined to treat Beijing and Moscow as an anti-Western alliance in the making, which they are not. The analytical challenge for Europeans will be to not let the Putin-Xi show deceive them, while taking the more fundamental developments seriously.

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Artwork © Dominik Herrmann

Just hours after the result of the United Kingdom’s June 2016 Brexit referendum had been confirmed, Nicola Sturgeon, Scotland’s first minister, declared that the differential result—in which Scotland voted Remain but the UK as a whole opted for Leave—meant all options were once again, as she put it, “on the table.” That included, predictably, independence for Scotland.

It has been the defining issue of Sturgeon’s life. Her politics and her being are inextricable. She joined the Scottish National Party when she was just 16 years old and first stood as a candidate for election when she was 22. She was elected to the first Scottish parliament upon its establishment in 1999 and has served in government ever since the SNP came to power in 2007. She is not yet 50—she turns 49 in July—but has been a fixture in Scottish public life for so long, she seems improbably young.

When she joined the party, activists were in the habit of celebrating opinion polls suggesting one in ten Scottish voters backed the SNP. The party, which exists to promote the cause of independence, celebrated occasional by-election victories but seemed an impossible distance from real power. Few careerists joined the SNP in the 1980s.

Thirty years later, the SNP is the dominant political power in Scotland. It has run Scotland’s devolved government for the last twelve years, and Sturgeon, having previously served as health minister and deputy to Alex Salmond, the party’s former leader, will in November celebrate the fifth anniversary of her becoming first minister. Since supplanting the Labour Party which had dominated Scottish politics for the previous half century, the SNP has become Scotland’s natural party of government: a social democratic party that recognizes few, if any, boundaries of class or geography.

“Normal” Nicola

Sturgeon herself is a figure with whom many Scots can identify. She is as “normal” as any leading politician is likely to be. A product of the aspirational working class, she was born in Ayrshire in 1970. Her parents were the first in her family to own their own house and she and her sister the first to attend university. Sturgeon read law at Glasgow University.

“I was quite an introverted child,” she told one interviewer, recalling that, “At my fifth birthday, I hid under the table reading a book while all the other kids played.” But she was always driven, always aware that she had “something” inside her that would commit her to a life in politics and a career of public service.

“[Margaret] Thatcher was the motivation for my entire political career,” she has said. “I hated everything she stood for. This was the genesis of my nationalism. I hated the fact she was able to do what she was doing and yet nobody I knew in my entire life had voted for her.” At a time when most politically-aware Scots her age joined Labour, Sturgeon opted for the SNP, determining that only independence could satisfy Scotland’s political and social aspirations.

A Return to the Family of Nation

At her selection as an SNP candidate in 1991, she was introduced as the lady who “will be the first female leader of the SNP one day,” a prediction which embarrassed Sturgeon at the time but proved unusually accurate. In the aftermath of the 1992 general election, Sturgeon reminded her compatriots of her party’s mission: “We will turn Scotland from the invisible nation of Europe into a nation which plays a full part in Europe and contributes to the great international issues.”

Some things in politics are constant, and this is one of them. Returning Scotland to the international “family of nations” remains Sturgeon’s ambition and the purpose of her political life. Brexit has convulsed British politics these last three years but, viewed from Scotland, it is part of a much larger question: should Scotland be an independent country or not?

When that question was asked in 2014, the answer was a clear, but hardly resounding “No”—with 55 percent of Scots opting to remain a part of the United Kingdom while 45 percent voted to leave. The issue remained unsettled, and there was, regardless of individual preference, an awareness of this being an argument only half-completed. The national question had been asked but not settled or answered in a decisive matter.

Even so, there seemed little plausible prospect of it being asked again any time soon. Sturgeon herself had argued the 2014 referendum was a “once in a generation” opportunity to strike out in a new direction. Outside events, determined elsewhere, would be required to revive the independence question.

Lifeboats for Scotland

Enter Brexit. Even if Sturgeon had wished to avoid reopening the national issue, there would have been no way of avoiding it. Even so, Sturgeon finds herself caught in a particular paradox: Brexit is a disaster for the UK, but an opportunity for Scotland. Leaving the EU—especially, as seems increasingly plausible, without an agreement that would pave the way for an orderly transition period—risks all but incalculable damage to the UK, and the Scottish, economy. It is, Sturgeon believes, an act of self-harm, promoted by “charlatans” whose chutzpah is as great as their lack of credibility.

But it is also an opportunity. Britain might be sinking, but there are still lifeboats available to Scotland. The fact that Scotland’s preference to Remain in the EU is trumped by the weight of numbers for Leaving elsewhere in the UK creates a powerful political narrative for Sturgeon: the only way to secure Scotland’s future is to put that future in Scotland’s hands. Time and again, she has despaired that Scotland faces “being dragged out” of the EU against its will, and this constitutes the “material change in circumstances” she believes justifies revisiting the independence question that was answered, but not settled, five years ago.

A new referendum, however, requires the agreement of the UK government in London, and hitherto that agreement has not been forthcoming. Sturgeon, as a consequence, is reduced to being a spectator as Britain’s great Brexit tragicomedy is played out. Suggestions for a “compromise” approach made by her government—which would, in essence, have seen the UK remain a member of the single market—were ignored in London. That in turn has prompted Sturgeon to harden her position: she now favors a second Brexit referendum that must include the option of remaining in, or rejoining, the EU.

The Paradox of Independence

Stubbornly, however, the opinion polls have barely shifted since 2014. Brexit may make the political argument for independence more intuitively plausible and even appealing, but it also complicates the practical meaning of independence. What currency would an independent Scotland use? (Sturgeon favors using sterling before moving to a distinct Scottish currency; the euro is not considered a viable option). How would the Anglo-Scottish frontier be managed? (A question which makes the arrangements reached between Northern Ireland and the Irish Republic a matter of singular, exemplary, concern for Scotland). Would Scotland enjoy an easy admission process to the EU, and if so, on what terms? (Probably, but not all the terms would be easily met.)

There is this, too: if, as Sturgeon insists, it is a ruinous mistake for the UK to leave a political union with its largest trading partner, how could it not be—as an economic matter—a self-inflicted error for Scotland to do likewise, given that 60 percent of all Scottish exports go to the rest of the UK (and just 18 percent to the rest of the EU). Moreover, if Brexit is difficult and complicated, how much more difficult and complex might negotiating the break-up of Britain be?

Those are hard—and live—concerns. The shape of independence cannot be ascertained until there is some clarity on the shape, and meaning, of Britain’s EU exit. It may simplify Sturgeon’s message but it unavoidably complicates the practicalities of independence. Which is one reason why Sturgeon sincerely wishes it had never happened. It also means that her demands for a second referendum now have been rebuffed by the UK government. No fresh plebiscite is likely until after the next Scottish parliament elections in 2021.

Trials and Tribulations

Another cloud looms, too. Later this year, Alex Salmond, Sturgeon’s predecessor as party leader and first minister, will appear in an Edinburgh court room to face more than a dozen charges of sexual assault, including two of attempted rape. It is difficult to estimate in advance the likely fallout but equally impossible to avoid the fact the trial will have major ramifications for Sturgeon, the SNP and, indeed, Scotland itself. Salmond was for years Sturgeon’s mentor; the figure to whom, more than any other, she owes her career. Unavoidably, his trial has the potential to more seriously threaten her political future than anything her opponents have hitherto been able to muster against her.

Such is the state of British politics at present, however—simultaneously in flux and stuck in the Brexit doldrums—that anything and everything seems possible. Brexit may yet be the end of the United Kingdom: the catalyst for a break-up that would once have seemed unthinkable and yet to many Scots now seems the most natural thing in the world.

Nicola Sturgeon has been waiting her whole life for that moment; if she needs to wait a little longer, past experience suggests she can.

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Artwork © Claude Cadi

The United Kingdom, Uruguay, Finland and the states of New York and California are among the polities seeking to achieve “net-zero” emissions by 2050. Going for “net-zero”, or “carbon neutrality”, recognizes that it is impossible for humans to cease emitting carbon altogether. Rather, we need to drastically reduce the amount of carbon we put in the air while canceling out the remaining emissions, those most difficult to eliminate, by using “negative emissions technologies.” These include both old methods such as planting trees and new ones such as capturing carbon from biomass energy plants and sequestering it underground.

What are these stubborn emissions that even optimistic climate scientists expect to be around in 2050? Shipping and agriculture are part of the picture, as is fossil-fuel electricity production for those regions where renewables will not yet supply all the power all of the time. Cement and steel production is another likely future culprit. Nothing, though, says more about the climate change challenge than aviation.

The Guilt of the Jet Set

Getting on a plane causes massive amounts of carbon to be released into the atmosphere. (Not to mention planes’ other climate impacts, such as releasing condensation trails that form into heat-trapping clouds.) The European Commission website says that someone flying round-trip from London to New York generates as many emissions as the average European does by heating their house for an entire year. Two researchers in Canada calculated that skipping one transatlantic flight prevents twice as many emissions as eating a plant-based diet.

While aviation is currently responsible for only 2.5 percent of global emissions, traffic is increasing fast: passenger numbers are expected to nearly double to 7 billion per year by 2035. With emissions in most other sectors projected to decrease, flying could consume a quarter of our remaining “carbon budget” by 2050.

It’s not just that flying is both carbon-intensive and difficult to decarbonize. It also brings up difficult questions about fairness. A 2014 German poll found that Green voters, who are mostly middle-class, fly more than supporters of other parties. British actress Emma Thompson was accused of hypocrisy for flying from Los Angeles to London to take part in a climate protest. Climate activist Greta Thunberg dodges such charges by taking trains across Europe, thereby helping to popularize the Swedish word flygskam, or “flight shame.”

That the rich fly most reflects the inequality or injustice of climate change on both a global and local scale. Less than 20 percent of the world’s population has ever been on a plane, Boeing’s CEO Dennis Muilenburg said in an interview back in 2017. Americans have emitted the most carbon, but they will suffer less in a warming world than Bangladeshis. And unless the proceeds are properly redistributed, a high tax on energy costs poor citizens an unacceptably high share of their income.

It makes sense to ask well-off Green voters or climate activists to put their money where their mouth is, to travel by train if possible. Alexander Carius, director of the climate-focused think tank adelphi, told Berlin Policy Journal that his company installed a high-end, company-wide videoconferencing system to minimize flights—but public sector clients in particular still request personal meetings. The New York Times has proposed some ways for its jet-set readership to make a difference: fly coach to reduce emissions per passenger; fly direct to minimize energy-intensive takeoffs and landings.

But that won’t be enough to get a grip on emissions. Is the situation so bleak that one must either give up flying altogether or despair at ever stopping climate breakdown?

Changing Habits

No, but our habits have to change, and government has to help people to enact that change. The German debate about Green member of parliament Dieter Janecek is illustrative in this regard. He recently caused a stir in Berlin by proposing a certificate scheme for German flyers: every citizen gets a certificate for three round-trip flights per year, and those who want to fly more have to buy additional certificates from other people. Yet Janecek himself spent the New Year’s period in far-flung Johannesburg, earning criticism in the media.

But the climate-conscious should not be held to standards dramatically higher than those they would impose on society. Intrusive as his scheme is, Janecek’s desire is not to end long-distance air travel but to ensure the true cost of flying is reflected in the price. It avoids banning anything and would reward non-flyers. Gradually increasing the price of plane tickets would create a world in which—shock, horror—only the wealthiest could afford to holiday on the other side of the world, at least until technology can reduce planes’ emissions further.

Moreover, society’s approaches to other pollutants or negative externalities are not as heavily reliant on individual restraint as we have come to expect from climate change mitigation. While those worried about the health effects of tobacco smoke were expected to exhibit some self-control and stop smoking at home, governments also taxed cigarettes and legislated for smoke-free schools, and yes, airplanes.

Higher Prices, Less Demand

So what will flying look like in 2050, assuming the world gets close to its climate targets?

“Flying will be one of the very last guilty pleasures remaining in 2050, at a high cost,” Arne Fellerman, head of transport policy at Friends of the Earth Germany, told Berlin Policy Journal. He expects that by then, new taxes will have increased the price of air travel and thus reduced demand.
Today, in 2019, air passengers enjoy several tax breaks in Europe. No member state taxes kerosene (jet fuel) for domestic aviation; unlike Japan or the US, the EU does not tax it either. All of those competing to be European Commission president, the so-called Spitzenkandidaten, expressed support for a kerosene tax ahead of the recent European Parliament elections.

Some member states, such as Sweden and Germany, levy a tax on flights departing their territory, though there is no European-level aviation tax. Many member states exempt domestic flights from VAT, and all of them exempt intra-EU and international ones.

The EU Emissions Trading Scheme (ETS), meanwhile, covers aviation only partially: airlines flying within the EU must buy permits to cover 15 percent of their emissions and are given the remaining permits for free. The ETS burden on intra-EU flights will increase from 2021, but in recent years the EU has exempted flights to and from its territory in order to give the airline industry time to come up with its own global plan rather than face a patchwork of regulation.

That plan is now here. From 2021, under a scheme called CORSIA, airlines will be required to buy carbon offsets—e.g. pay to install solar cookers—to cancel out all emissions above 2020 levels. While the world cannot rely on offsets in the long-term, they can play an important complementary role when emissions in certain sectors or countries are difficult to limit with technology.

However, CORSIA is only mandatory from 2027, and there are real concerns about the efficacy of existing offset programs. A 2016 study prepared for the EU’s Directorate-General for Climate Action found that “the large majority” of offset projects registered under the UN’s CDM mechanism “are not providing real, measurable, and additional emission reductions.” This is the case when, for example, a coal mine gets credit for paying a Brazilian landowner to not cut down some forest, but the landowner buys a neighbor’s plot to deforest that instead and then sells their “offset” land to a rancher a few years later. The Commission must now decide how and whether to incorporate CORSIA offsets into its own ETS. At least seven member states have recently threatened to pull out of CORSIA if its sustainability standards are made any more lenient.

The other side of the coin is to make green modes of transports cheaper and faster by 2050, so that taking trains from, say, Paris to Prague for a weekend trip is not a ludicrous proposition.

Reinventing the Airplane

It is notoriously hard to predict technological breakthroughs, but the aviation industry, having already significantly improved fuel efficiency, is starting to bet big on the planes of the future. “A new generation of decarbonized airplanes must be the target,” said Airbus CEO Guillaume Faury at the Paris Air Show on June 16.

Those planes are either completely electric or combine electricity with combustion engines or fuel cells. Faury’s company successfully tested an all-electric, four-seat air taxi in May; meanwhile, startups like Lilium hope to offer electric air taxis in cities as soon as 2025. Of course, a short-range plane nearly big enough for the whole family is not going to challenge EasyJet just yet. The technology for hybrid planes is somewhat more advanced, but these too face difficulties meeting aviation safety standards or fitting heavy batteries on board—solar power could play a role, but for reference, the first solar-powered plane to circumnavigate the globe took 505 days.

In any case, electric planes are a long way from being widely commercially available. Josef Kallo of the German Aerospace Center told Clean Energy Wire that “we will definitely need another 15 to 20 years” until bigger renewable-powered planes can be rolled out at large scale. For its part, the UK Climate Change Committee warns that “a fully zero-carbon plane is not expected to be available by 2050, particularly for long-haul flights.”
Flying Forever

Michael Müller-Görnert, transport policy spokesperson at the Traffic Club Germany (VCD), highlighted the potential of alternative fuels, especially for longer journeys. “Biofuels are no solution,” he told this columnist—growing biofuels often leads indirectly to deforestation—but “synthetic fuels generated with renewable energy have a lot going for them.”

The key one is synthetic kerosene, created by combining hydrogen with carbon dioxide captured from the air. It can already be produced today and used with existing engines, but it is significantly more expensive than normal kerosene. Taxing carbon would make clean fuels more commercially viable.

Here, then, is a short, necessarily speculative answer about what Berlin residents will do for their holidays in a net-zero emissions future. Going to Paris? High-speed train. Greece? Low-carbon flight(s). Johannesburg? Perhaps a mix of shorter carbon-free journeys and a longer, higher-carbon flight made more expensive by special taxes and the cost of synthetic kerosene. To get to this outcome, it helps to think about the stops in-between.

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© REUTERS/Ayman Al-Sahili

In early April, military commander Khalifa Haftar advanced on Tripoli, ordering a “victorious march” into the city. Three months later, with hundreds dead and almost one hundred thousand people displaced, UN Special Representative Ghassan Salame warned that this is ‘‘just the start of a long and bloody war.”

Indeed, the risk of even greater instability and suffering in Libya is very real, and the EU should be greatly concerned. From Libya, instability could spread, strengthening extremist groups across the Sahel, and leading to a new migration crisis. In short, Europe’s security is at stake, but the Europeans once again are uncoordinated, indecisive, and ambiguous.

The roots of the conflict lie in the fragmentation of Libya’s government and institutions in the years following the fall of Muammar Gaddafi in 2011. In December 2015, the UN brokered an agreement to set up a unity government, the Government of National Accord (GNA) in Tripoli, led by Faiez al-Serraj. However, the GNA never managed to assert its authority. It struggled to provide even basic services, existing side by side with numerous militias and a rival government in the east of the country, which was controlled by Haftar, who had returned from US exile.

On the Phone with Trump

International diplomacy continued to focus on crafting a unity government that would have included both Haftar and Serraj. A “national conference” was planned that was to forge a broad consensus. Negotiators were ready to give Haftar a dominant position as head of Libya’s armed forces on the condition that he place himself under civilian authority. Haftar engaged with these efforts while consolidating his power in the east by co-opting local actors and promising stability. He was backed by the UAE and Egypt, who supported him largely because of his strong opposition to the Muslim Brotherhood, and to a degree also by France and Russia.

On April 4, Haftar finally made it clear that he wasn’t interested in a compromise. He launched his offensive on Tripoli only two weeks before the national conference was supposed to convene—and while UN Secretary General António Guterres was in the city.

The fighting in Libya is unlikely to wind down quickly; there has been little movement on the front lines in recent weeks. External powers are increasing their support for both sides, giving them the means to continue fighting and strengthening their resolve. The UAE, Saudi Arabia, Egypt, and Jordan are supporting Haftar’s offensive with a mixture of cash and weapons. Meanwhile, there is evidence that Turkey and Qatar have been providing weapons to the GNA, both opportunistically and because many of its supporters are aligned with the Muslim Brotherhood.

The United States has taken an ambiguous stance. In mid-April President Donald Trump spoke to Haftar on the phone and expressed support for his efforts to tackle terrorism. The move appeared to reverse the US’s previous backing for the GNA and was interpreted as a green light for Haftar to go ahead.

Passive Europeans

Meanwhile, Europe has essentially limited itself to issuing statements. Its naval operation Sophia, mandated to counter trafficking and implement the UN arms embargo on Libya, no longer has any ships at its disposal after a spat between Italy and other member states. The EU has condemned the assault by Haftar’s forces, identifying it as the origin of the current bout of fighting, and called on “all parties to immediately implement a ceasefire.”

But it has has refrained from supporting the GNA or even identifying it as Libya’s legitimate government. France’s stance has been particularly ambiguous: in April, it stalled a UK-drafted UN resolution condemning Haftar’s offensive. Paris also blocked an EU statement which would have singled out Haftar’s offensive for criticism.

Europe can ill afford to take a backseat role in Libya. Halfhearted calls for a ceasefire won’t stop the fighting. There are few incentives for either side to lay down their weapons: the GNA fears that a ceasefire could strengthen Haftar by allowing him to maintain recent territorial gains. Meanwhile, the commander himself has gone for broke, destroying the peace process and alienating many who were previously open to accommodating him. Haftar appears to believe that accepting a ceasefire would be a sign of weakness that would harm his reputation.

Repercussions

Meanwhile, the conflict in Libya risks triggering a new migration crisis. Over the past years, the EU has managed to essentially halt migration flows from Libya by providing funding to Libya’s coastguard and assorted militias―despite their involvement in abusing migrants. It is not difficult to imagine migration flows to Europe increasing again if the fighting continues, both because militias will be less able to stop migrants from leaving and because more Libyans will try to flee the violence in their country. The conflict will also increase the very high risk of abuse for migrants currently mired in Libya.

The longer fighting goes on, the more destructive it is likely to be, and the harder it will be to achieve any kind of reconciliation between different factions. If Haftar prevails, many Libyans are likely to continue to oppose him, and he is unlikely to gain full control over the country. Moreover, Haftar is 75, so the problem of succession would soon present itself. Yet any fragmentation of Haftar’s forces would also lead to a power vacuum.
Either scenario spells further instability. The risk that extremists will take advantage will increase: despite its defeat in 2016, the so-called Islamic State is still active in Libya and has carried out attacks on government institutions. The situation in Libya will also further destabilize the Sahel region which would have major repercussions for Europe.

Europe Needs to Act

For years, behind a thin veneer of unity, Europeans have failed to agree a coordinated approach to Libya. France and Italy pursued competing and ultimately unsuccessful approaches to stabilizing the country. Tensions between French President Emmanuel Macron and Italy’s euroskeptic government have made it difficult for Paris and Rome to defuse their differences.

But now, with stakes so high, Europeans have a responsibility to halt the escalation of the conflict and prevent further suffering. At a minimum, they should provide Operation Sophia with sufficient assets to enforce the UN arms embargo on Libya. Ideally, they should persuade the US that its interest in a stable Libya is best served by getting Haftar to agree a ceasefire. Together, the EU and the US could enforce the arms embargo, perhaps through a NATO operation. This would prevent further escalation and push Haftar and the GNA towards an armistice. A stable and unified Libya would still be a distant prospect, but with a ceasefire in place, diplomacy could restart, giving Libyans a chance to finally build a consensus about the country’s future governance.

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© REUTERS/Wolfgang Rattay

It was the summer of 2015. Hundreds of thousands of refugees from Syria, Afghanistan, Ethiopia, and elsewhere were making their way to Germany, drawn by Chancellor Angela Merkel’s decision to keep the borders open and by crowds of welcoming Germans. The country was torn between an intense joy over being able to help and a deep fear of being overwhelmed.
At a press conference in Berlin on August 31, Merkel was asked about the immense challenges of this massive influx. “Wir schaffen das,” she said, meaning “We can do it.“ It was a slogan that became iconic. Supporters of a liberal refugee policy used it as a rallying shout; opponents repeated it with deep sarcasm.

Nearly four years later, normalcy has mostly returned to Germany. Tight patrols on the EU’s borders and a series of bilateral agreements with neighboring countries have sharply brought down the number of refugees newly arriving in Germany. Even so, the country is still home to 1.7 million asylum seekers and refugees, most of whom have arrived in 2015 and since.
Integration is happening—and even happening faster than in many other Western countries—but it continues to be a lengthy, difficult, and demanding process. Even now, only every third immigrant from war-torn countries like Syria, Iraq, Afghanistan, or Somalia has a job that gives him or her access to social security benefits, according to a discussion paper published in June by the Berlin Institute for Population and Development.

“There is no doubt that this is a success, but it is to be enjoyed with some caution,” said the institute’s director Reiner Klingholz. “Many of the refugees work in sectors where fluctuation is very high, and most of them have temporary or low-skilled jobs.” Even people who may have had their own business or who held management positions back home now work in restaurants, hotels, or cleaning services.

A Very Slow Process

Still, integration into the labor market is happening a little bit quicker now than in the 1990s, when Germany took in a million refugees from former Yugoslavia. Five years after arrival, the Berlin Institute for Population and Development said, just under half of those refugees had found jobs. After ten years, the percentage went up to 60 percent. It took 15 years for refugees from Yugoslavia to reach an employment share of 70 percent, which corresponds to other immigrant groups.

Germany has integrated the most recent wave of refugees faster than most other industrialized countries. According to a study published in January by the Organization for Economic Cooperation and Development (OECD), the average among its 33 member states was that five years after arrival, only one in five refugees was employed, with a particularly low percentage for women.

Low employment translates into lower well-being as measured by household income, housing conditions, life satisfaction, social support, and students’ skills, the OECD writes. Even in comparison to other migrant groups, refugees do badly. On average, it takes them 20 years to catch up even with other migrant groups.

Three main reasons stand out: first, refugees do not make a choice about leaving their country but are forced to do so; second, they are often less qualified than other migrant groups; and third, many are traumatized by persecution, war, and tragedy during their flight.

Hardships and Handicaps

The numbers are shocking. For Germany, the IAB-BAMF-SOEP Refugee Survey, a repeated survey among 5000 refugees, showed that one-quarter of respondents had survived shipwrecks. Two-fifths had been victims of physical assault; one-fifth had been robbed; more than half had fallen victim to fraud; more than one-quarter had been blackmailed; and 15 percent of female refugees reported having been sexually assaulted.
So what seems slow at first look—only one out of three Syrians, Afghans, or Eritreans in Germany holding down a job that gives access to social security—is actually a huge achievement. On arrival, according to the survey, fewer than one out of ten refugees spoke any German. Today, one third has good or excellent language skills, and another third has reasonable German.

Another issue that takes time to remedy is the lack of education and training: every fourth refugee who arrived in Germany between 2013 and 2016 had never gone to school or only attended elementary school, the Berlin Institute for Population and Development said. Three quarters had no professional education. To make things worse, new arrivals had little information about the German labor market and not much of a personal network to help them along.

“Getting qualifications takes a lot of time: maybe two years to learn the language and then another three years for professional training,” Klingholz said. Many refugees need to quickly earn money in order to support family members back home or in transit, or to pay back the traffickers who brought them to Germany. “Intellectually, these people know that they are getting themselves stuck in lower-paid and more precarious jobs, but this is overruled by their needs.”

A Thicket of Regulations

By now, however, most refugees have been in Germany long enough that individual issues have ceased to weigh so heavy, said Klingholz. Instead, it is institutional hurdles that keep them away from jobs and therefore integration. As a federal state, Germany has an enormously complex system of federal, regional, and local authorities, which all have a say in granting asylum, accepting qualifications, or providing access to the labor market, training opportunities, language courses, medical benefits, or housing.

The relevant sector of legislation is as extensive and complicated as tax law once was. For instance, there are many kinds of residence permits that all give access to different rights and benefits, creating enormous uncertainties for the refugees themselves, but also for companies considering training or hiring them. At Berlin’s Ausländerbehörde, the agency that deals with foreigners, procedural notes alone amount to some 800 pages.

“The law is like an overprotective mother,” said Engelhard Mazanke, the agency’s head. “Sometimes, it really strangles us. And the more complex it is, the more difficult it is to do justice to an individual case.” Analysts say that much of the bureaucratic tangle is due to contradictory objectives: trying to be discouraging to potential new asylum seekers (in a clear turn-around from 2015), yet accepting that those who already are in the country should be given help to integrate.

Germany, with its ageing population and lack of skilled workers, might do well to take a clearer and more generous line, Klingholz said, pointing to two demographic characteristics of the recently arrived refugees. First, there was the high number of children: more than half a million refugees were under 18 when they registered for asylum between 2015 and 2018, according to his institute’s data. By now, younger children have been integrated into the German school system, giving them native German and a perspective to acquire much better professional skills than the older generation.

The largest group among those asylum seekers, however, were young adults―again, half a million in the age group 18 to 29. More than two thirds of these are men. And while young men can certainly adapt more easily to life and work in Germany than older people, they also represent a higher risk to society if they cannot find jobs and set up families.

“We are running out of time,” said Eberhard Mazanke from the Berliner Ausländerbehörde. “We have many young men here, people in their 20s, and they want to start their lives.”

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Artwork © Dominik Herrmann

Zack, zack, zack—three short, harsh-sounding words that have suddenly taken on a completely new meaning in Austria. Usually, the three Z-words uttered together in quick succession would not have had any negative connotations. On the contrary, the expression described a particularly eager, speedy way of working. If you had done something zack, zack, zack then it meant that it had been achieved pretty easily, quickly, and without coercion.

But since May 17, 2019, this saying has gained an added layer of meaning. On that day, a secretly filmed video emerged in which Heinz-Christian Strache, Austria’s Vice-Chancellor and leader of the far-right Freedom Party of Austria (FPÖ), explained the power mechanisms in the country to a woman posing as the wealthy niece of a Russian oligarch.

In a duet with his party colleague Johann Gudenus, he boasted about how easy it was to buy influential newspapers in Austria and award highly valuable state contracts to large companies. If one could gain control the Kronen-Zeitung, the biggest tabloid newspaper in the country, then it would be easy to bring in new journalists—“zack, zack, zack,” Strache said, while lounging comfortably on the sofa of the Ibiza villa and wearing a tight-fitting T-shirt.

Throw out the unpleasant reporters and replace them with docile writers. Zack, zack, zack—that’s how quickly it could be done. The oligarch’s niece turned out to be a skillful actress, the night in the Ibiza villa a trap that had far-reaching consequences for the two right-wing populist politicians and for Austria itself.

A Symbol of Complacency

This triple zack has been on everyone’s lips ever since. It has become a linguistic memorial—a symbol of the complacent willingness of members of the government to abuse their power. The three words have been emblazoned on the front pages of newspapers, quoted in just about every comment online and used ironically by the Austrians to describe what has happened in Austria since “Ibizagate.”

First, the main protagonists in the video, Strache and Gudenus, resigned from their offices. On the same day, Austria’s Chancellor Sebastian Kurz, leader of the center-right Austrian People’s Party (ÖVP), ended the coalition government with the FPÖ and called new elections. Shortly afterwards, the opposition parties Liste Jetzt and the center-left Social Democratic Party of Austria (SPÖ) tabled a parliamentary motion of no confidence in Kurz, which was adopted by a majority with the votes of the FPÖ.

And so, for the first time in its history the Republic of Austria has a transitional government of experts appointed by the president, led by a new chancellor, Brigitte Bierlein, who was previously president of the Constitutional Court. New elections will be held at the end of September. All this happened in less than 14 days. Zack, zack, zack.

Events have moved so fast that by now, the Ibiza video has been pushed into the background. Now, only two years after the last general election in October 2017, all the parties are facing another summer of campaigning. The Greens, who lost all their seats last time round, have a good chance of reentering parliament; the Liste Jetzt, a spin-off of the Greens, will probably lose their seats.

Astonishingly Little Damage

The SPÖ is deeply divided and has been unable to react with enough skill to profit from the chaos caused by the outgoing ÖVP-FPÖ government. The New Austria and Liberal Forum (NEOS), which only entered parliament in 2013, is doing a bit better, thanks to its resolute party leader Beate Meinl-Reisinger, and is seriously considering entering government after the election. The FPÖ under its new leader Norbert Hofer, who was the party’s presidential candidate in 2016, is presenting itself as the real victim of “Ibizagate” and is trying to pretend that it is relaxed about the departure of its leading figure Heinz-Christian Strache. Internally, that is far from the case.

Nevertheless, it is astonishing how little damage the scandal seems to have inflicted on the FPÖ: only nine days after the video was released, the party still achieved 17.2 percent in the European elections—in 2014 it was 20.5 percent. And Sebastian Kurz? Having done even better in the European elections than at the last national poll in 2017, the head of the ÖVP is confident of victory and eager to take back the Chancellery. The forced end of his government after less than 17 months has hugely annoyed Kurz, the youngest ever head of government in Europe. He strictly rejects the argument, made by many commentators and the opposition parties, that he made the right-wing populists of the FPÖ acceptable and thus contributed to the current chaos.

Austria’s deeply divided parliament is currently and quickly overturning various laws that were passed under ÖVP-FPÖ. For instance, it reintroduced the total smoking ban in restaurants, which Kurz’ government had lifted in the spring of 2018 despite strong criticism by doctors, labor lawyers, and others. But the issues that were raised by the Ibiza video and that should urgently be addressed, such as illegal party financing, the fight against corruption, or the sometimes far too close relations between the media and politics, are being simply ignored.

On the contrary. Strache may have resigned from his party office, and he may have not accepted his mandate as an MEP, despite attracting 44,750 direct votes in the European elections. But his family still has a lot of influence. Zack, zack, zack, and his wife Philippa Strache will be running for the FPÖ in the September national election. Zack, zack, zack, and Strache himself plans to become the party’s top candidate in the Vienna local elections in 2020. It seems Austria won’t be rid of those three Zs any time soon.

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© REUTERS/Thomas Peter

In 1989, the global economy changed even more profoundly than global politics. While political rivalry actually never disappeared entirely, and nations like Russia never became liberal democracies, the “End of Economic History” could indeed be recorded, quite in the sense of Francis Fukuyama’s famous article.

1989 was not only the year that saw the Central European nations revolt against Communism, it was also the year that Japan suffered its biggest ever financial debacle, and the Soviet Union started its economic decline. Both developments deprived the world of two economic powerhouses. Scenarios of Japan becoming the world’s number one economy were quickly forgotten and gave way to the idea that the US would enter the era of “unlimited wealth,” as US economist Paul Pilzer wrote.

The major difference between the “post-historical” global economy that emerged in the 1990s and the traditional industrial economy of the 19th and 20th centuries was a new type of cooperation between major economic areas. Previously nations that tried to “catch up” actually used the same technologies as the others, but in a more effective way; this very fact explains why their economic rivalry only reinforced the political one. The fight for markets excluded compromises simply because it was a pure “zero-sum” game.

The post-industrial revolution of the 1970s and the 1980s changed all this. In the new globalized world, the US became the front runner in producing computers and semiconductors, in creating the operational systems these computers used, and in making the most effective economic use of new technologies. When selling software, the US and other Western powers didn’t sell the knowledge embodied in the original programs; they just sold copies, which could be reproduced in any quantity at zero cost. At the same time, the newly emerged economies in Asia used US technologies to create sophisticated hardware, producing these goods in increasing amounts.

This new configuration was perfectly “post-historical” in Francis Fukuyama’s sense. Both parts of the world’s economy became dependent on each other, and in this new order, there were no reasons for economic wars and quarrels. The United States was an absolute economic superpower. By 1992 it produced 26 percent of world’s gross product, according to IMF data, and controlled around half of the patents in force. But the economic policy it pursued vis-à-vis all potential rivals was super-friendly and extremely decent.

Benevolent Superpower

The US supported the economic reforms in Russia in the early 1990s; it bailed out Mexico from its debt crisis in 1994; it refrained from introducing any restrictions on cheap Asian imports after the 1997-98 financial crisis; and it advocated the accession of China to the WTO on conditions designed for a mid-sized developing economy rather than for a rising industrial powerhouse. During these decades, the peripheral economies grew fast, increasing the demand for US technologies and software, and supplying Western nations with affordable industrial goods, thus improving the quality of life in the global North. To my mind, this perfect interdependence was the essence of globalization. The globalized world was indeed a “post-historical” one.

The consequences of globalization are well known. Between 1991 and 2015, more than 1 billion people were brought out of extreme poverty, with “emerging Asia” accounting for roughly 75 percent of this number. China became the world’s largest exporter of goods in 2009, the largest industrial producer in 2010, and the world’s largest economy in 2016 (by GDP based on purchasing power parity). The “Asian century,” observers claimed, was set to begin.

The US share in the global GDP as measured by purchasing parity ratio decreased to 15.1 percent by 2018, and its trade deficit grew from $31 billion in 1991 to $622 billion in 2015. Asian nations turned into the largest holders of foreign currency reserves (China, Hong Kong, South Korea, Taiwan, Malaysia, and Thailand account for more than $4.65 trillion in combined international currency reserves), while the US is now the largest debtor nation in the world. It seemed that the newly industrialized world was successively challenging the post-industrial one, and the final outcome of this epic battle was far from predetermined. But while these numbers indeed appear to show that the gap between the leader and the follow-ups has narrowed dramatically, they do not reflect the whole situation. Look at the United States’ technological dominance instead―here, nothing much has changed.

Chips and Systems

As of early 2019, it’s true that more than a half of all desktop or notebook computers in the world were produced in China. But the country is able to furnish less than one-third of them with locally-produced microchips and remains highly dependent on imports. Meanwhile, up to 60 percent of all global makes rely on Intel microchips. In server processors, Intel’s domination is even greater―98 percent. Both Intel and AMD lead the development of new generations of chips, while mass manufacturing of the devices has been relocated to Asia. Companies like SK Hynix of South Korea or TSMC and UMC of Taiwan position themselves as American firms’ competitors, but continue to depend on them for the most vital technologies.

In 2018, more than 65 percent of all smartphones produced in the world were manufactured in China―and 78 percent of them were built by “genuine” Chinese brands, from Huawei and Xiaomi to OPPO and Vivo. But at the same time 97.98 percent of all the smartphones in the world run on either Windows, Android, or iOS operating systems. If all computers and computer-like devices are counted, the share of Microsoft, Google, and Apple software comes to an impressive 95.93 percent. As for the market for online searches, Google has a market share of 92.82 percent compared to 1.02 percent held by Baidu, the Chinese search engine, and 0.54 percent held by Yandex, which pretends to be the undisputed leader of the Russian high-tech sector. Among the 10 most popular social networks, US-based Facebook, YouTube, WhatsApp, and Instagram account for 8.12 billion users, while the Chinese or Chinese-oriented QQ, Douyin, and Sina Weibo only have 1.67 billion users. Of close to 300 billion e-mails exchanged in the world daily, up to 92 percent are received by inboxes registered with US-based companies. Apple and Google-built services are clearly in the lead with a 75 percent market share.

All the Big Players Are American

In 2007, PetroChina became the first trillion-dollar company by market value, and in 2008 Russia’s Gazprom advanced to the fourth position on the list of world’s most valuable companies. But as of March 2017, all the top 10 companies by market capitalization were once again American―for the first time since the 1970s! Therefore, the idea of a “US retreat from the world” looks a bit questionable. The same is true when looking at the financial side of things. As of April 2019, mainland China and Hong Kong together held around $1.33 trillion in US Treasury bonds. But even if they tried to sell them off, a “financial tsunami” would remain unlikely, since US banks can easily buy them out and get loans from the Federal Reserve using Treasury bonds as a perfect collateral. Just remember that between 2008 and 2011 the Federal Reserve’s balance sheet grew by $2.1 trillion. This could well be repeated if China engaged in full-scale financial confrontation.

In short, two decades into the 21st century, the US still appears the undisputed global leader in terms of technological domination and enjoys clear superiority in each and every domain of the information economy. If any other nation tried to wage “economic war” against the United States, it would be certainly defeated―and not so much by financial sanctions, asset freezes, or trade embargoes, but by denial of access to US-made or US-controlled technological and/or communication capabilities.

If all this is true, why do the other powers do nothing to counter this dominance? My answer is simple: because the American political leadership never used this component of US strategic power to subjugate any foreign government or foreign company―at least not until now. Since 1990, the US has waged many wars and boldly made use of its military power in Iraq (twice), Bosnia, Serbia, Kosovo, Afghanistan, Somalia, Libya, Syria, and many other corners of the globe. But it never relied on its technological superiority for promoting its political goals. As far as the information technology domain is concerned, the history of war and conflict seemed firmly over in all the years that have passed since Francis Fukuyama outlined his famous hypothesis.

Crossing the Red Line

But much of this has changed in recent years as President Donald Trump decided to “get tough” with China and launched a full-scale trade war against Beijing. Without any doubt, the US has good reasons, since China has for years imposed protective tariffs on US goods (in 2017, the US took $13.5 billion in custom duties from $506 billion Chinese imports, while the Chinese authorities levied $14.1 billion in duties on $127 billion worth of US imports). Chinese companies have also violated many US laws protecting intellectual property and forced foreign investors to share their technologies when outsourcing production facilities to China. More examples could be added.

The fundamental difference to all the previous economic tensions is that the US authorities have recently invoked sanctions against several Chinese high-tech companies―most notably Huawei and ZTE―actually accusing them of industrial espionage in the United States. And even this wouldn’t change the situation much if the restrictions imposed were aimed at curbing the companies’ imports from the US or their purchases of US-manufactured components. But as of June 1, 2019, several US companies, following the authorities’ orders, effectively banned Huawei from their services: Microsoft discontinued the supply of its Windows operating systems for Huawei laptops and other content-related services, and Google announced that it was blocking some elements of its Android operating system (GoogleMaps, YouTube, GooglePlay, Gmail) on Huawei smartphones.

Here, it seems to me, the US government crossed an important red line. It undermined the trust foreign hi-tech companies had in the technological platforms that for decades secured America’s dominance in the globalized world. Microsoft or Google don’t just produce American software―for a long time, they have been producing American soft power. It now appears that this soft power can easily be turned into a hard variety. The long-term consequences of such a change may be profound.

Chinese Retaliation

What will happen next? Of course, the affected Chinese corporations will suffer a major blow; Huawei and ZTE may well be stopped from their expected expansion―but I would be surprised if the Chinese government did not retaliate. Unlike the oil-producing countries or other commodity economies, China already produces billions of units of hi-tech products and will definitely continue its industrial expansion. Therefore it is crucial for Chinese companies to develop their own operating system (Huawei already announced it will have one available by the end of 2019)―and the Chinese government will do its best to help them achieve this end. At the same time, Chinese producers will want to devise their own microchips (today not a single Chinese company is listed among the top 25 semiconductor producers in the world), which will not be a huge problem since they have already acquired or stolen all the major technology from Western companies. So sooner or later, technological platforms will emerge that will be able to compete with the dominant American companies.

It should be noted that Chinese software and social networks are predominantly used either in China itself or by overseas Chinese. This hasn’t changed for years―while goods manufactured in China conquered the world, Chinese software has so far remained limited to the Chinese community. Now, however, the US would appear to be facilitating the internationalization of the Chinese hi-tech sector. This is helped by China’s incredible sway over the most important consumer markets in the world. In the case of Russia, for instance, consumer products account for less than 3.1 percent of overall exports; in the case of China, the figure exceeds 59 percent. The users of China-made computers and mobile devices abroad―serving around 2 billion people around the globe―are China’s main economic asset, which it will use with all possible ardor. As a result, a real alternative to the US technological platforms will emerge for the first time.

Of course, the US will not simply roll over. In recent years, it initiated at least two major economic shifts of global importance. First, the so-called Fourth Industrial Revolution introduced fully automated production techniques, thereby endangering the position of labor in the production chain. This undermines China’s and other rapidly developing countries’ main competitive advantage: the relatively low labor costs that propelled them toward global industrial leadership. In the future, US companies may be able to discard their overseas production capacities and bring not only their capital but also their industrial facilities back to the US, increasing their independence from China. Second, the US and Europe have embarked on a journey toward energy independence―focusing either on nonconventional extraction techniques (the US) or on developing renewable energy sources (Europe). Both trends will make the West far less dependent on commodity economies like OPEC or Russia.

The End of “Chimerica”

All this will definitely produce a kind of division in the current “post-historical” economic system. Both parts of what analysts had prematurely started to call “Chimerica” will increasingly rely on their strongholds. In the case of China, it’s the hardware produced on the mainland and supplied all over the world. In quite a short time, these devices will be furnished with Chinese operational systems and Chinese microchips―and the Chinese will do their best to make sure that their software cannot be uninstalled. I would also expect all Chinese smartphone manufacturers to replicate Apple’s system of free iMessages and FaceTime calls etc., which will lift overall demand for their products.

On the US side, there are many competitive advantages as well: first of all, the US will make full use of its total domination of the microchip market, which can hurt Chinese manufacturers dramatically; second, it may increase its pressure on Chinese consumers as an increasing number of software applications will not work on Chinese smartphones, and, last but not least, the West can use the global internet projects it is currently developing to increase its dominance. It can, for example, announce that China-produced devices will be barred from space-based internet providers. As the result, the global economic and informational realm that exists today will split apart, and countries and companies will lean to the one or the other dominant technological “core.” It’s difficult to say how far this division will go, but the general trend is easy to see.

Undoubtedly, the ongoing economic and technological split will be followed by the reinforcement of political contradictions between different blocs and alliances. Today, the US has by far the largest number of loyal supporters: in Europe, Latin America, and Japan, most will side with the Americans. The United States’ financial capabilities, its economic reach, and its long-term strategic alliances will contribute to creating a Western economic and technological space that cautiously opposes the one created by China. But the Chinese have made remarkable progress over the past two decades.

Between 2005 and 2018, China’s investments in Africa went from $23 to $352.7 billion; Chinese companies invested around $170 billion in Latin America; the government started the Belt and Road Initiative; and, of course, Beijing worked hard to turn Moscow into its economic vassal (all the leading Russian mobile communication companies opted for Huawei’s hardware to comply with a new law that obliges them to collect and keep all the customers records for at least a year). Both economic superpowers are likely to press their allies and economically dependent nations to adopt their technological and software standards.

How high is the probability of “Chimerica” being destroyed for good in the current economic showdown? It’s entirely possible. Even though China exported more than $539.5 billion worth of goods to the US in 2018, this accounted for only 4 percent of its nominal GDP. During the same year, Beijing increased the bank loans provided to local companies and households by more than 16.2 trillion renminbi ($2.4 trillion or 17.9 percent of country’s nominal GDP). The Chinese authorities seem oblivious to the danger of creating the greatest credit bubble in history as they seek to increase economic growth by boosting local demand.

Do Not Fear

So the preparations for a “decoupling” from the US are in full swing. Of course, if things take a turn for the worse, the world may face a full-scale economic recession. But it could well be the last recession of the globalized world. The political rhetoric that goes along with it―praise for protectionism, export substitution, and reliance on different nations’ own competitive advantages―may contribute to the creation of “multiple globalizations” centered around either the US or China.

Back in 2008, a young American strategist called Parag Khanna first described the model for this new era of economic and political competition. Khanna argued that the coming world will be led by three “empires”: the United States, China, and the European Union, which are capable of projecting their economic and societal models across the globe. All the other nations, Khanna argued, will be downgraded to either “second” or “third world countries;” the first group will at least be able to influence “imperial” competition, while the latter will no longer play any role in world affairs at all. This scenario looks more realistic as the technological showdown advances.

Should we fear the advance of this “post-globalized” world? I don’t think so. Economic progress is often uneven, fluctuating between cooperation and fierce competition between major rivals. As potential adversaries mature, the contradictions between them increase. But the most crucial point here is that since World War II, economic competition has played out increasingly peacefully. The 1989 economic revolution that left the US at the top of the economic hierarchy didn’t provoke any political quarrels―on the contrary, it caused a short “post-historical” era in world politics. In the economic and technological sphere, this “post-historical” age lasted even longer―and even now it seems that while economic tensions rise, the risk of political confrontation isn’t increasing. Francis Fukuyama, it would seem, had a point after all.

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