© picture alliance/ROPI

What went wrong? After months of discussions over the pros and cons of a constitutional change to make Italy’s political process more efficient – a change that had the business world’s seal of approval – voters said no. A heated national debate ended in a resounding defeat for Prime Minister Matteo Renzi on December 4 of last year, and three days later he was forced to resign. Once again, Italy was left with a new government  – the 66th since the end of World War II. But the failed proposal and the reasons it fell apart have been swiftly swept under the rug.

In fact, complete silence has settled over the country. Renzi’s aborted reform plans are no longer discussed at all, as though the referendum never even happened. The parties that once supported the reform plan have returned to their traditional infighting, and the word “reform” has been stricken from the political vocabulary. In the meantime, lawmakers have been consumed by a new voting law and potential dates for a new election.

The clear 59.1 percent majority against Renzi’s reform plans may have been influenced by the Brexit vote and the US election, but there was also a uniquely Italian dynamic at play: Renzi had lost sight of growing social inequality and failed to understand the degree to which young Italians reject his policies, especially those who had suffered the most under the ongoing financial crisis. For them, it wasn’t a matter of constitutional reform – their vote was meant as a wake-up call for Renzi.

Too Big to Fail

Italy has lost its chance at a new beginning and rejected a constitutional reform that was fundamental to the health of the economy.

The country is “too big to fail” – too large and important as the third-largest economy in the eurozone and ninth-largest industrial state in the world to be allowed to collapse. While Greece is responsible for two percent of the economic capacity of the eurozone, Italy contributes 16 percent. The reform aimed to make administrative structures more flexible, legislative processes faster, and the political world more stable; it would have made Italy’s economy more competitive on the international stage.

Instead, the economy is stagnating, the banking sector is in crisis and public debt is staggering. Yet the outbreak of the disease began long before Renzi entered office in February 2014; the country’s recent problems merely represent its recurring symptoms. In reality, Italy has been suffering from weak growth, antiquated structures, and pernicious corruption for a long time.

Italy’s recession lasted three years after the start of the financial crisis in 2008 and had disastrous consequences. GDP has plummeted by eight percent, per capita income has fallen ten percent since 2007, and productivity is a quarter of pre-crisis levels. At the same time, debt has increased and the unemployment rate has fallen only marginally. Youth unemployment was still 40 percent as of December.

The crisis decimated the once-strong middle class, and growth has stagnated. Renzi does not deserve the blame for these developments, but he did not manage to improve the situation either. Italy simply has not managed the transition into the modern era.

In fact, the economy has lacked dynamism for some thirty years now. Real growth sank from 2 percent in the 1980s to 1.5 percent in the 1990s and 0.6 percent in the first decade of the 21st century. The largest economic contraction came in 2012. Now, deflation and weak domestic demand continue to stifle growth even further.

It’s a vicious circle: Sinking productivity and competitiveness demand higher public debt, which increased to €2.21 trillion in 2016. The EU Commission has demanded sustainable budget consolidation and doubts Italy’s willingness to cut expenses. And it’s no wonder the Commission is worried – if Italy cannot get its debt under control, the existence of the euro itself is under threat.

The emotionally-charged word “flexibility” has dominated the headlines for months now. In 2016 the EU Commission granted Rome a few exceptions as a one-time measure. In its 2017 budget, Italy designated certain expenses – including the costs of the continuing refugee crisis and the 2016 earthquake – as special expenditures and raised its deficit repeatedly. A culture war broke out between Europe’s North and South. Rome blamed austerity policies for limiting its growth while Berlin and Brussels criticized Italy’s unwillingness to cut expenses and the government’s ad hoc approach to economic policy.

Too Many Banks, Too Little Efficiency

The problems with Italy’s ailing banks are especially troubling. It is a sector that has avoided modernization for years; Renzi summed it up when he said, “There are too many banks.” Too many banks, too many branches, too little efficiency – for every million inhabitants, there are 502 bank branches, well above the European average. The problem stems from Italian mentality. Particularly in smaller villages and rural areas, businesses rely on personal contact, but this can have negative consequences. When the credit unions were saved in 2015, small savers lost their money because they trusted their personal advisers without reading the fine print on their accounts.

There are many reasons why the banks find themselves in this state – the macroeconomic environment currently affecting all European banks, the negative interest rate limiting profitability, the 2016 earthquake – but there’s one problem unique to Italy: bad loans. In total, the banks have amassed a record €360 billion of them.

Italian bank supervisors blame the recession for exacerbating the situation. It has become difficult for many companies to pay back their loans, according to Ignazio Visco, governor of the Banca d’Italia, and banks have had to take necessary precautions to ward off further disaster. But the process of restoring the banks’ health has taken too long. Carmelo Barbagallo, head of the Banca d’Italia’s directorate general for financial supervision and regulation, says the number of bad loans is gradually sinking, but the IMF and the European Banking Authority have observed Italy’s attempt to work through its mountain of bad debt with growing concern.

The institution with perhaps the greatest problems is Banca Monte dei Paschi di Siena. Founded in 1472, it lost roughly 60 percent of its value on the Milan stock market in 2016. The Siena institution was the worst-performing in Europe in the ECB’s stress test and at €24.2 billion has the highest amount of non-performing loans on its books.

Key investors, such as the sovereign wealth fund of Qatar, have withdrawn their funds, and shortly after Renzi’s resignation the final taboo was broken: the state stepped in to rescue the bank. According to EU rules established in the beginning of 2016, this should no longer be possible. However, Rome invoked exception clauses and pointed at the bank’s systemic role. For weeks now, the rescue package of €20 billion has been ready and waiting in a drawer at the ministry of economy and finance. In retrospect, it is clear that Renzi spent far too long passively observing the disaster unfold. He sat on the sidelines until Monte dei Paschi was nearly insolvent in order to escape the anger of the small investors (and voters) who would be forced to shoulder the bailout.

Reaching Global Markets

Today, banks are working to modernize themselves – but as in other industries, that can mean the elimination of jobs. And different industries have experienced vastly different rates of success when entering the global market. Some, like companies that deliver cars for the automotive industry, have been overwhelmingly successful in carving out niches for themselves; others have had more difficulty, due to insufficient innovation, development, strategy, or simply foreign language capability. “Businesses need to be able to rely on a modern institutional order, otherwise investments won’t come in,” says Boccia. With the referendum, they would have had it.

In addition to a long tradition of clientelism, Italy has been plagued by corruption and mismanagement, tax dodging, and a significant shadow economy. Financial regulators are taking their work seriously; the new Italian National Anti-Corruption Authority (Autorità Nazionale AntiCorruzione, or ANAC) has so far been successful – and yet there are daily media reports of new cases of corruption or abuse of office. The “Tangentopoli” bribery scandal uncovered extensive corruption in Italy’s highest offices 25 years ago, yet today, according to a poll conducted by the institute Demos & Pi, 86 percent of Italians believe corruption to be as ubiquitous in politics now as it was then, especially when it comes to procurement.

And beyond corruption, the country’s bloated bureaucracy and outdated justice system practically demand that businesses flout the rules. The Renzi government attempted to reduce the role of public administration by reorganizing the provinces, but the task proved Sisyphean in a country that praises the clever hustler who clocks in every morning and then goes to take care of other business outside the office. Resistance against any sort of change to increase efficiency is substantial.
Business requires faster reform of the justice system, both in civil and criminal law. At the moment, a judgment is only valid after three instances and often takes over a year to reach. According to the EU Commission, since 2014 an average of 500 days pass between the beginning of a civil trial and a decision. In criminal cases, the statute of limitations often runs out before a judgment is handed down.

Scandal-prone former Prime Minister Silvio Berlusconi was one of the greatest beneficiaries of this system, escaping countless times from tax evasion, corruption, perjury, and abuse of office charges. He was only once convicted, and even then escaped with nothing more than house arrest and community service on account of his age. Faster legal proceedings would also be a draw for foreign investors. A new law extending the statute of limitations, however, is stuck in parliament – and the ongoing electoral campaign prevents any serious legislative work.

Other numbers speak for themselves. Tax evasion currently amounts to €109 billion per year, and the shadow economy is estimated to comprise around 12 percent of business. To change that will be a Herculean challenge for any government. Twenty years of Berlusconi did little to strengthen civic cooperation or confidence in state institutions. As Machiavelli wrote in The Prince in 1513, “For the innovator has for enemies all those who derived advantages from the old order of things, whilst those who expect to be benefited by the new institutions will be but lukewarm defenders.”

“Made in Italy”

Not everything is going wrong in Italy. Minister of Economic Development Carlo Calenda pointed out, “We are in fifth place globally in terms of trade surplus, and set an export record of €414 billion in 2015. Many of our businesses are integrated into the global supply chain.” When it comes to structure and competitiveness, the northern parts of the country are not so different from Germany’s most successful states, Bavaria and Baden-Württemberg.

“Made in Italy” is a sure-fire success – the luxury sector is booming, and not only major fashion brands, but also the leather, design, food, and wine industries are doing well. Even in metalworking and electronics there are countless small and medium-sized enterprises that are fast becoming global leaders. The shift of Italian industry over the past decade into machine construction, robotics, and pharmaceuticals has strengthened connection to Germany, the country’s most important trading partner. German companies have 2950 branches in Italy today.

Meanwhile, Calenda has been undeterred in his emphasis on Industry 4.0, and industrial leaders like Alberto Bombassei from Brembo, a manufacturer of brakes systems, consider him “the right man in the right position.” Italy will make further gains as business and consumer confidence grow.
Renzi was accused by his opponents of pursuing political rather than structural goals, but his reform report card – with the exception of the referendum – isn’t bad at all, especially his modernization of the labor market in the face of massive opposition. This reform is not yet finished, though; bankruptcy reform and a competition law are still pending in parliament.

Italy can count among its virtues creativity, a knack for innovation, and quick problem-solving abilities. The Italians are adaptable and flexible in crises, and they possess a great deal of individuality and loyalty to their local region, rather than to the state. Their private saving rates are high compared to the European average. These are all factors that could help Italy manage a new beginning. The country has gotten by so far, though it is losing time. Italy seems to be experiencing the bumblebee paradox: According to the laws of aerodynamics, a bumblebee should be too heavy and its wings too small to fly – nevertheless, the beating of its wings produces a large vortex that generates enough lift to keep the insect afloat.

Two possibilities still frighten investors. The first is a further advance of Beppe Grillo’s Five Star Movement. The euroskeptic party is nipping at the heels of the governing Partito Democratico (PD) in the polls. In 2016 local elections they took over city halls in Rome and Turin. But their victories are costing them, especially in the capital: the politically inexperienced and scandal-plagued mayor Virginia Raggi appears to be completely overwhelmed.

And then there’s the specter of an “Italexit”, or Italian exit from the eurozone. The American Nobel Prize-winning economist Joseph Stiglitz set the tone of the international discussion: “Italians are starting to realize that Italy doesn’t work in the euro.” And former Chief Economist of Deutsche Bank Thomas Mayer agrees. “Should Renzi lose on December 4, Italy may set a course for an exit from the currency union,” Mayer predicted.

That is not, however, the picture so far in 2017. Economic numbers are slowly beginning to improve, and Renzi’s temporary successor, Paolo Gentiloni, is concentrating on fighting poverty and creating social solidarity. As its first act in office, the government issued a decree to implement school reform and marriage equality, and negotiated an aid packet for southern Italy. Another earthquake in central Italy early this year, however, put the government back in crisis management mode.

Whether Grillo and his party manage to pull off an upset, or whether Renzi returns to implement further reforms, one thing is evident: the era of clear majorities is over. There will be long coalition negotiations, as no political party is currently capable of governing alone. Italy is suffering from a case of “vote-itis,” says Giuseppe Vita, president of Unicredit bank and chairman of the supervisory board of Axel Springer – all the more reason for electoral reform.

Still, the powers of change are at work. In Vita’s words, “The light at the end of the tunnel is daylight, not an oncoming train.”

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© Artwork: Dominik Herrmann

It started as a quiet night in early February, as hundreds of well-meaning protesters at the University of California, Berkeley, took to the streets. The students wanted to shut down an on-campus speech by Milo Yiannopoulos, then the darling of Breitbart News. The university is known as the birthplace of the Free Speech Movement, but on that night students were determined to muzzle it – and with good reason. Yiannopoulos is known as a leader of the white nationalist “alt-right” movement, author of articles with headlines like “Birth Control Makes Women Unattractive and Crazy,” and has been permanently banned from Twitter for online harassment.

The peaceful protest morphed into a small riot, and Yiannopoulos’s speech was quickly cancelled. But it wasn’t a victory. In fact, it backfired spectacularly.

The protest was, after all, exactly what a profes­sional provocateur like Yiannopoulos wanted. Critics on the right, including “Milo” himself, immediately called out the students, saying the incident proved they couldn’t deal with differing opinions. In other words, they were “snowflakes.”

Increasingly, conservatives are using the term to paint liberals as intolerant culture warriors hiding behind their trigger warnings and safe spaces – ever so precious and prone go into meltdown the moment they are faced with strongly-put opinions. According to the Collins English Dictionary, “snowflakes” are “the young adults of the 2010s, viewed as being less resilient and more prone to taking offense than previous generations.” Merriam-Webster (another dictionary clinging to 21st-century relevance with a new focus on social media buzzwords) tracked down the word’s origin to Chuck Palahniuk’s book Fight Club, published in 1996: “You are not a beautiful and unique snowflake. You are the same decaying organic matter as everyone, and we are all part of the same compost pile.”

Now, two decades later, “snowflake” has gone mainstream. And in the wake of the US presidential election, Donald Trump’s campaign manager Kellyanne Conway said millennial anti-Trump protesters were acting like “precious snowflakes.”

So what’s the big deal – can’t we all handle a little name-calling?

“Snowflake” is more than a social media meme, however. It represents a debate that has been raging for some time now: who decides when speech is socially acceptable? To many conservatives, the answer for too long has been: the liberals. They’ve grown tired of what they believe are leftist politically correct causes: gender neutral bathrooms, Black Lives Matter protests, and the growing string of letters after LGBT (it continues for another five: QIAPK – queer and questioning, intersexual, asexual, pansexual, polygamous, and kinkiness).

Donald Trump took advantage of this conservative frustration during his campaign, making it clear to his supporters that, unlike Hillary Clinton, he wouldn’t let political correctness stop him from building a wall to keep out Mexican “rapists” or ban Muslims from the US until he could “figure out what is going on.”

Similar frustration is boiling in Europe too. In the midst of the refugee crisis, some on the far-right in Germany created their own version of snowflake: “Gutmensch.” The word once simply meant do-gooder but it’s currently used as an insult for a person who blindly supports refugees.

It often seems there’s little common ground. Conservatives are called racists if they voted for Trump or Brexit, while liberals who fight for tolerance are labeled “snowflakes.” Where do we go from here?

One small step would be to bust out of our digital bubbles. After all, if we never encounter differing opinions online, we won’t know how to deal with them in the real world.

A project last summer helped demonstrate just how isolated liberals and conservatives are on the internet. The Wall Street Journal created a webpage with two different feeds side by side, a “red feed” and a “blue feed” consisting of news posts that a typical conservative or liberal would consume on Facebook. The page allowed users to choose a political topic like guns, immigration or abortion to see how the red and blue feeds framed the issue. Needless to say, each feed only served to reinforce preexisting notions.

Another step would be learning to listen. Hate speech should always be denounced, but liberals should scold less and listen more – if only because it’s more productive. In fact, Yiannopoulos eventually collapsed under the weight of his own words. After an online video surfaced in February in which he appeared to endorse sex between minors and adults, his book deal was canceled and he was forced to step down from his post at Breitbart.

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© REUTERS/Andrea Shalal

Germany held the OSCE presidency last year. How did Berlin perform? Performance is very dependent on structures – or rather some structural problems concerning the OSCE observer mission in Ukraine. It is one of the biggest missions, and it works on the principle of consensus. That, of course, is not very easy to find among so many members. There are also concerns over offending the Russians because that can make the institution unworkable, especially since the Russians are very sophisticated when it comes to creating bureaucratic and political obstacles. Let’s not forget that Russia is the aggressor and therefore part of the problem. When much of what the OSCE does is not based on a majority vote but rather on consensus, then Russia can block funding or prevent mandates from being renewed. There is – and that is important to understand – an institutional constraint on what the OSCE really can deliver.

Does “blocking” include preventing the proper attribution of actions by the parties involved in the OSCE reports? Yes. If you spend a lot of time reading those mission reports, you can figure out what happened. You won’t find a summary at the top, saying “there were fifty shells launched, or fifty ceasefire violations, and the analysis shows that 45 of them came from Russian-held territory.” In the reports we’d rather read that shells were coming from this side of the line, or a certain village. The evidence is there, if you are familiar with the territory and if you have a map. You would really have to go deep into the details for the reports to be usable. Most people, however, read the summary that counts the ceasefire violations without naming the violators. Very early on, it was mainly, but not only, the Russian members of the team blocking attempts at proper attribution – and that then became the norm. When Germany became chair, this practice was not changed. It was viewed as a sufficient practice because at least we had monitors on the ground.  But it becomes more problematic when we see an escalation like we have in recent weeks. We’d read in the reports that Ukrainian territory was hit …

… which would make pretty clear where the shelling came from. Indeed, because it would be hard to claim that Ukrainians would shell their own territory. However, the Russians have become so good at using the reports – and the lack of “official attribution” – to blame the Ukrainians. Not that they would fool the United States with that, or certain other states. This is meant for their own audience and increasingly also for European audiences, as part of a sophisticated “fake news” campaign. They’d use the OSCE reports to report that there was shelling; they’d claim that this shelling was done by Ukrainians – and after all, the report doesn’t say that it was the Russians, does it? And they’d feed their media outlets with it, including RT and Sputnik of course, but they’d also push it on German, French, and Italian media outlets to sway public opinion in Europe. When RT Germany then publishes a story like that, they’d channel it back into Russian TV, claiming that “even German TV reported on this” – even though RT certainly is not “German TV.” Russia puts much more effort into this propaganda war because the stakes are higher for them. They put a lot of resources into this. They have no independent media. If the United States did this, The New York Times would be on this in a second.

If this is a structural problem in the OSCE mission, giving advantage to the aggressor party, why don’t we see efforts to tackle the issues? A chairman could change the process, and we have seen diplomats who were relentless in pushing the matter of attribution. Ideally, it would be great to have an executive committee that could make decisions by simple majority instead of a consensus approach. But then, you would not want to be seen as a chair who was undermining the effectiveness of the organization. It is different, of course, when there is a chair who generally is a great believer in multilateral institutions and organizations. So the problem very often seems to be that procedure is more valuable than outcome. The feeling seems to be that we have to keep the process going, even if we are legitimizing Russia’s ceasefire violations – because we can’t lose the OSCE. The problem there is: Does the OSCE then still serve its purpose in this conflict?

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© REUTERS/Lutz Schmidt

Only thirty minutes from the center of the German capital, Marzahn-Hellersdorf presents an image of what East Berlin might look like today had Russian rule never ended. On one of its central squares, in the midst of a sea of gray, Soviet-style apartment blocks, a group of women eat ice cream bars, known as Eskimo ice cream in the former Soviet Union, that they bought in the giant Russian Mix Markt supermarket. Contemporary Russian pop music plays loudly in the background. The women are browsing through the window of a housewares shop, where a corpulent lady in a tiger-print vest is selling a variety of imported goods, from religious icons to a biography of Stalin in Russian.

Marzahn is the result of an ambitious construction project carried out by the East German government in the late 1970s and 1980s to solve Berlin’s housing shortage. Tens of thousands of flats were constructed from ready-made materials; the project attracted the East German establishment, its engineers and party people. After German reunification, its image changed; people with money moved westward, and several blocks were demolished.

In the public imagination, Marzahn slowly became a stereotypical East German ghetto, populated by poor, unemployed East Germans who lost out after reunification – in the 2000s a comedian calling herself “Cindy from Marzahn” joked about taking government handouts and waking up in the afternoon to watch TV. It also became known for its xenophobia. In the 1990s there were reports of violent attacks on foreigners in Marzahn, despite their representing only 5.2 percent of the district’s population at the time.

Between Russia and Germany

The neighborhood today is an undefined space somewhere between Russia and Germany, between East Germany’s past and its present, where you find everything you need to live what feels like a fully Russian life: a Russian school, a Russian church, a Russian jeweler, a Russian dance school, and a Russian bar. Russian-speakers can and do reside among themselves, indulging in a nostalgic vision of a motherland.

The Russian speakers who live in the district are mostly among the 25,000 so-called Russlanddeutsche (“Russian Germans”) in the area, descendants of Germans who immigrated to Russia in the 19th century to escape economic hardship in Germany. In the 1990s Germany established a program allowing ethnic Germans and their dependents to move to Germany and receive German citizenship. Since then, several million Russian Germans have migrated back to Germany from the former Soviet Union.

Until last year, the Russian German community had been mostly invisible. So invisible, in fact, that nobody knew how many Russian Germans there were: the number is estimated to be between 2.5 and 4 million nationwide. The biggest wave of immigration was at the start of the program, with the number of newcomers gradually decreasing since then. When the Russian Germans first arrived, it was thought that the community would be difficult to integrate: unemployment rates were high, especially among the elderly, and high crime rates followed. But that has changed over the past few decades. Today, Russian Germans are considered model immigrants. They generally speak better German and have lower rates of unemployment than others immigrant communities, even if they tend to work in more blue-collar sectors.

So why were they so nostalgic for Russia? Many in the community claim that they initially thought of themselves as German. In fact, they thought of their arrival not as immigration at all, but rather as a return. In Germany, however, they – like most immigrant populations here – still feel like foreigners. They feel that they suffered for their Germany identity: Stalin accused Russian Germans of collaborating with Nazi Germany and deported them to the Caucasus and Central Asia, and many were unable to return to their homes until the collapse of the Soviet Union. Now, they feel unwelcome in what should be their home.

The Russian government has been trying to manipulate these Russian Germans in order to further its own interest, says Walter Gauks, head of the youth organization of the Association of Germans from Russia (the Landsmannschaft der Deutschen aus Russland, or LMDR), the largest interest group for Russian Germans in Germany. “The Russian Germans have multiple identities, that’s why they are open to Russian perspectives,” Gauks adds. In his view, Russia has been trying to mobilize Russian Germans through its information campaigns. The far right also increasingly sees an opportunity as it gathers its strength throughout Europe.

No Place Like Home

Heinrich Zertik, a member of Chancellor Angela Merkel’s CDU party and the first Russian German deputy in the Bundestag, says this insecurity creates a desire for “recognition and a sense of home,” a desire that Russian media has been happy to fulfill.

Daria moved to Berlin from northern Russia in 1997 when she was ten years old. After spending time in emergency housing for migrants, her family was allowed to rent a flat. They moved to Marzahn to live closer to other Russian-speaking Berliners; Daria went to primary school in the area, where a majority of students were also Russian Germans. Today, her closest friends are Russian speakers because she feels closer to them than to native Germans. “I don’t really live in Germany, but in Russia somehow, in my Russian roots,” she says.

Although she speaks perfect German, Germany is not Daria’s home – she feels no loyalty to her adopted country. She and her husband are both proud Russians. “I love that country, that’s all.” Daria says that most of her Russian-German friends feel the same way; everyone is a Russian patriot.

And everyone trusts Russian media, too. Daria and her husband use the streaming service Kartina TV to access 150 Russian channels. They watch both Russian and German news, but for them only Russian sources are trustworthy. Daria and her husband are not alone: A recent study showed that while most in the community consume both German and Russian news, they trust Russian sources more.

Russian media present a German state on the brink of collapse. Over the last few months, the pursuit of terror networks was their top story in Germany, along with a mostly fictional account of Munich’s construction of a wall against refugees (in reality a sound barrier around a refugee home). The Christmas market attack in Berlin also featured prominently, presented as the result of the systematic failure of German police.  Russia, on the other hand, is consistently portrayed as a stable, righteous counterweight to the overwhelmed West, represented by Germany.

Local outlets like Russkaja Germanija and Berlin24.ru depict life in Germany as dangerous and unstable, and reproduce Russian state news with a slight German focus; “Cologne becoming capital of Morocco,” read a recent front-page headline on Russkaja Germanija, referring to a rash of sexual assaults allegedly perpetrated by men of North African descent on New Year’s Eve 2015. Daria tries to ignore bad news as much as possible, and instead focus on positive news about Russia. But others in Marzahn are less resilient.

“The refugee situation scares us,” says a young man named Sergei while strolling along the promenade with his wife and little son in a stroller. He and his wife came to Germany with the wave of Russian Germans when they were in their early twenties. They used to like it here, but news about refugees that they see on Russian TV has changed their opinion. He would never vote for the right-wing populist Alternative für Deutschland, but others among their friends do. “AfD promises security – that is attractive,” Sergei says.

In fact, the terms “Russian patriot,” “refugee,” and “scared” are becoming ever more common in Marzhan, and the media influence is taking hold. Last January, hundreds of Russian-speakers from Marzahn took to the streets to protest Merkel’s immigration policy after Russian media reported that a Russian girl had been raped by refugees, allegations that were later completely debunked by the German police and media.

A few months later, the district was once more in the headlines when it emerged that the AfD was canvassing voters among the Russian German community before the local Berlin elections. The party translated its electoral program into Cyrillic and distributed it in the area. Its efforts have met with a certain degree of success: The AfD’s direct candidate in Marzahn was elected and holds a seat in city parliament, and the party as a whole came in second. While the Left Party won the district with 26 percent of the vote, it is only three points ahead of the populists. And when it comes to sympathy for Putin’s government, the Left Party itself is not far behind AfD.

The Russian German community is not the largest immigrant community within Germany – and certainly not a fifth column – but it is one of several that feels excluded from mainstream German political discourse. And that renders it susceptible to outside influences, particularly from home.

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As the results of the US election sink in and Europe braces for key national votes in the Netherlands, France, and Germany – polls that could potentially end with Geert Wilders’ Party for Freedom and Marine Le Pen’s Front National victorious, and a reshuffling of the governing coalition in Berlin – liberals have been doing some deep soul searching. But it’s not their own souls they’re examining. In the hopes of stemming further losses, they’re trying to dissect the motivations of their opponents to see what, if anything, they could do to bring populist voters back into the fold. These barbarians at the gate – what do they want?

And therein lies the problem: They may not really want anything, at least not in terms of policy. Polls show that overwhelming numbers of right wing populist voters – whether they’re voting for Brexit, Trump, Alternative für Deutschland (AfD), or Marine Le Pen – are simply unhappy with the general direction their country is heading in in a variety of areas, and are wiling to vote for any leader who promises dramatic change.

Take Brexit voters in the United Kingdom. There were a host of reasons for Britons to vote to leave the European Union, from frustration with having to pay into the EU budget to the UK’s traditional ambivalence towards mainland Europe and a desire to regain regulatory sovereignty – not to mention David Cameron’s clumsy politicking in Brussels. But towards the end of the campaign, the defining issue became immigration. It has been, after all, the most visible sign of change in Europe and the US, and it seems that change itself has stirred up discontent.

As far back as late 2014, UKIP voters were already unhappy with the direction British society was taking. According to a poll from the survey institute YouGov, 61 percent of Tories felt positive about prospects for British people over the next few years, as did 55 percent of Liberal Democrats and 33 percent of Labor voters; among UKIP voters, only 19 were optimistic. Conversely, when asked if they would like to “turn the clock back to the way Britain was 20-30 years ago,” roughly a third of the Tories, Lib Dem, and Labor voters said yes – compared to 68 percent among UKIP.

The same year, the German Marshall Fund’s Transatlantic Trends survey asked Britons who thought EU membership was generally bad for their country why they felt that way. A 34 percent plurality said there was “too much authority in the European Union,” while 25 percent said it had “undermined British culture” – with both answers beating “the European Union has harmed our country’s economy” at 20 percent. In a survey published by Ipsos MORI this past January, 36 percent in Great Britain said they felt like strangers in their own country.

Brexit voters didn’t just want to go back to sovereignty – they wanted to go back in time.

The same pattern emerges among Trump voters in the United States. A Pew poll conducted just before the election showed a country sharply divided between optimists and pessimists. Two thirds of Clinton voters said the economy had gotten better over the past eight years, and 60 percent said the “job situation” has improved as well. Seven out of ten Trump voters, on the other hand, said both had gotten worse – and between 70 and 90 percent said the same of “security from terrorism,” crime, America’s standing in the world, immigration, and race relations. Many have ascribed Trump’s victory to working class economic woes, but Trump voters were just as likely to cite drug addition as one of the country’s biggest problems (62 percent), as well as “job opportunities for working-class Americans” (63 percent), and they were far more likely to be worried about illegal immigration and terrorism. They were not nearly as worried about income inequality either (33 percent). Seventy-two percent of Trump voters would describe themselves as “traditional”; the same percentage thought of themselves as “typical” Americans. In the same Ipsos poll, 45 percent of Americans feel like strangers in their own country.

So how does this bode for France? Well, not terribly well.

According to the Ipsos MORI survey, the French are more likely to say immigration should be stopped (40 percent) than are the Americans and British (38 percent and 31 percent, respectively). Forty percent feel like strangers in their own country; 77 percent had little confidence in their government, and 65 percent had little confidence in national institutions. The same survey showed that the French are open to some pretty alarming options: 59 percent would be willing to give up basic civil rights to stop terrorism.

With so much desire for change, it would be no wonder if the French wanted a strong leader to take charge – and sure enough, a poll released by Le Figaro on February 6 showed that 80 percent of French want a leader who “is ready to change the rules of the game,” twice as many as said the same in the United States.
To regain voters like these, mainstream politicians may be better off offering a time machine than a platform.

The post Europe by Numbers: Misery Loves Company appeared first on Berlin Policy Journal - Blog.

© REUTERS/Gleb Garanich

For three years now, the Organization for Security and Cooperation in Europe (OSCE) has deployed civilian observers in Ukraine. From a humble beginning in March 2014, when ten teams with ten members each were dispatched throughout the country, the Special Monitoring Mission (SMM) has grown to currently just over 700 international observers, with some 600, or 85 percent, in the conflict-ridden eastern Donetsk and Luhansk regions. With a total staff of more than 1100 (as of February 2017), it is the biggest field mission in the OSCE’s history – and among the most controversial.

Having said that, the mission’s achievements have been widely acknowledged by the OSCE’s 57 member governments, who voted unanimously to prolong the mission in 2015 and 2016.

First, the SMM daily reports, which are published in English and translated into Russian and Ukrainian, are a unique resource of objective information about a conflict in which local media – on both sides – tend to be biased and international media tend to be absent.

On the ground, the OSCE has become a vital international element, especially since foreign aid organizations like Doctors Without Borders and People in Need were kicked out of the separatist “People’s Republics.” It should not be overlooked that the mission’s two teams working in eastern Ukraine are both headquartered in the separatist “capitals” of Donetsk and Luhansk, and that its monitors cross the contact line between the hostile sides dozens of times every day.

Moreover, the mission’s mandate tasks observers with monitoring not only security issues but also human rights and fundamental freedoms. The OSCE may not be a humanitarian organization, but beyond recording ceasefire violations, its monitors pick up significant amounts of information about the lives of civilians on a daily basis. When they pass this information on to the right people, they can reduce human suffering, as when they reported on the removal of unexploded ordnance.

More fundamentally, the OSCE’s participation in the ongoing Minsk negotiations (the Trilateral Contact Group) and the fact that senior mission members regularly commute between Minsk, Donbass, and Kiev, give the SMM a key role in overseeing the Minsk agreement’s implementation.

Obligations like the withdrawal of heavy weapons, stipulated in the Minsk Protocol, and the so-called disengagement agreement signed last year hinge on the continuous verification by OSCE observers on the ground. It is not enough to state that an obligation has been fulfilled; it is vital that compliance (or the lack thereof) is monitored daily as long as an agreement lasts.

Despite this, the OSCE has come under criticism for its role in the restive region. And Ukrainians are not unanimously satisfied with the mission, even though it was their government that requested it.

A survey conducted by the Kiev-based Gorshenin Institute in February 2016 found that almost half of respondents (46.9 percent) do not approve of the mission’s work to support the Minsk agreement’s implementation, while more than a third (35.6 percent) approved. No comparable surveys have been conducted in Russia or in the separatist-controlled areas recently, but judging from the general tone in Russian state-run media, public opinion is unlikely to be much better. In a survey by the Moscow-based independent Levada Center in April 2014, 58 percent of respondents said that they believe that the OSCE mission was biased toward the Ukrainian government, while just 19 percent found the mission to be objective.

To a large extent, such numbers reflect the criticism of the mission among political and military leaders on both sides. After all, the conflict in Donbass lies at the heart of the split between Russia and the West, leaving the mission exposed not just to guns and artillery but also to the sort of information warfare that has become a hallmark of this conflict.

Cameras of Contention

A standard complaint is that the OSCE’s work in Ukraine lacks objectivity. Take the comments made by the leader of the Donetsk “People’s Republic,” Alexander Zakharchenko, in January. Speaking during a visit to Crimea, Zakharchenko claimed that the mission’s observation cameras were looking only in the separatists’ direction, and transmitting video footage straight to the Ukrainian Armed Forces. “Their soldiers are sitting at those cameras watching our movements,” he was quoted by Russian state news agency RIA Novosti.

Zakharchenko’s claims more or less mirror those voiced by the Ukrainian side when the mission set up its first observation camera one year ago outside Shyrokyne, a village close to the shore of the Sea of Azov. Back then, national television aired interviews with Ukrainian soldiers who said they suspected the signal would be transmitted to the other, i.e. separatist, side. That claim was later repeated by prominent Ukrainian television journalist Andriy Tsaplienko, who said that the camera only allowed the “Putinists” to watch the Ukrainians’ rear units.

The OSCE gave assurances that the camera transmission was encrypted so that it could only be seen by mission members, that its location allows for monitoring of both sides, and that it was chosen in agreement with both sides, including the Ukrainian Armed Forces. Vladislav Seleznyov, a spokesman for the Ukrainian General Staff, even pointed out that the number of shellings fell after the cameras were installed.

It is difficult to say if that message convinced more people than the criticism. What is clear, however, is that the mission’s communications efforts are complicated by persistent rumors that at least some of its monitors are not engaged in observing, but rather in spying. Allegations that Russian members use the OSCE to spy on Ukrainian forces have dogged the mission from its onset, as distrust against Russians runs deep among some Ukrainians, who see their neighbors as their enemy.

In late 2014 Ukrainian officials started to claim that up to eighty percent of the monitors were Russians, many of them with a background in the intelligence services. Following such disinformation, the mission began to publish its national composition in biweekly status reports. As of January 2017, Russian citizens made up 38 out of 709, or 5.3 percent of the SMM members. This did not prevent retired US General Wesley Clark from repeating such false claims during a talk in Washington, DC, after returning from a field trip to eastern Ukraine.

Ukrainian activists use Clark’s unfortunate remarks to this day to tarnish the mission. Rather tellingly, they serve as the introductory post for a nationalist Twitter account that has in the past specialized in exposing mission members’ lack of impartiality.

OSCE officials also point out that passing on sensitive information is strictly prohibited under the OSCE Code of Conduct. All monitors must sign the agreement, which obligates them to “refrain from any action that might cast doubt on their ability to act impartially.”

When in October 2015 a clearly intoxicated Russian mission member in the Luhansk region was shown on Ukrainian TV saying that he was an operative for his country’s military intelligence service, the man was immediately removed. No evidence was presented to prove his drunken claim, but reservations among Ukrainian officials clearly remain. Just this January, Ukrainian General Boris Kremenetskiy said in a widely quoted interview that all Russian OSCE mission members are intelligence officers.

Kremenetskiy, who until December served as the Ukrainian head of the Joint Center for Control and Coordination, a Russian-Ukrainian military observer mission overseeing the ceasefire, refrained from demanding the Russians’ removal from the mission. But such demands have been voiced in the past. It is highly unlikely they will be heeded, given that the OSCE’s strict consensus principle would require Moscow’s approval.

The Ukrainians are not alone in their criticism. Spying allegations are a common feature in the separatists’ military dispatches as well. In May 2016 the Donetsk “People’s Republic” even alleged that monitors were transporting ammunition – a claim that was never backed up by any evidence.

Observers Are No Peacekeepers

These political limitations also tend to frustrate local civilians, who often expect that an international mission will do something to stop the fighting around them. But the OSCE observers cannot act as peacekeepers. They have no executive powers, meaning they cannot even stop a soldier on the street and demand proof of his citizenship. This is why the mission does not report regularly about Russian soldiers in the rebel-held “republics,” even though fighters recently introduced themselves to the observers as Russian citizens.

The fact that the mission is unarmed and composed of civilians also means that, with the current level of violence, patrolling must be limited to daylight hours. As this is widely known to both sides of the conflict, major attacks often happen at night. This has in turn led to increasing demands that the OSCE institute night patrol. An article in The New York Times last year accused the mission of keeping “bankers’ hours” instead of helping to “end the only active war in Europe.”

It is doubtful, however, that sending monitors out in the dark would do anything to change that. Given the strict curfews and soldiers’ nervousness along the contact line, it is likely that any vehicle or person approaching military checkpoints in the dark would be fired upon. The mission is lucky that there have been no fatal casualties among its members so far. Should this change, it will certainly test the contributing countries’ commitment to the extreme.

Under these circumstances, the mission has to walk a fine line between its obligations and the security of its own staff. Becoming a buffer or shield between the opposing sides is not just too dangerous for the monitors, it would also clearly overstep their mandate.

Over the past 18 months, the OSCE has done a lot to expand its monitoring capacities. It has spread out to permanently manned forward patrol bases, meaning that there are now 14 locations from which monitors can operate along the contact line, thus reducing travel times. It has introduced night watches from hotels and installed 24-hour surveillance cameras at hotspots like Donetsk Airport and Shyrokyne.

It has also started using smaller and flexible unmanned aerial vehicles (UAVs) to monitor areas deemed too dangerous to enter. The mission used to employ long-range UAVs, but their flights were suspended last summer after a series of crashes believed to be the result of direct fire.

The new OSCE chairman in office, Austrian Foreign Minister Sebastian Kurz, has said that he wants to strengthen the mission. After talks with his Russian counterpart Sergei Lavrov on January 18, Kurz suggested both that monitoring would be extended into the night and that monitors should be better equipped. Lavrov said that the numbers of observers should be increased, and that they should be present around the clock.

However, this does not necessarily mean patrolling during the night. As in the past, the mission can use technical equipment like cameras and drones to carry out risky nighttime observations, and they can demonstrate 24-hour presence at weapons storage sites and the contact line by opening forward patrol bases there.

As Strong as Its Weakest Links

The OSCE mission’s limitations described here in many ways reflect what the West is ready to do collectively to restore Ukrainian sovereignty in the Donbass. While Kiev has long campaigned for an international peacekeeping presence, led by the UN, NATO, or even the OSCE, influential Western governments like Germany, France, and Italy agree that the conflict can only be solved if Russia is a party, rather than an adversary. In consequence, the OSCE, being the only regional security organization that includes Russia as a member, has become a keystone to a peaceful resolution of the conflict.

Its unarmed and civilian nature makes the observer mission acceptable to both parties and retains the spirit of the Minsk agreements, which call for the secessionist regions to be returned to Kiev’s administration by political compromise.

But with negotiations over the agreements’ implementation in a deadlock, Ukraine has over the past months stepped up its call for an armed mission, including the proposal to transform the current mission into an OSCE police mission.” The German Foreign Office, however, has argued that this would undermine the mission’s neutrality and unleash a host of new and more difficult problems.

The costs of an armed peacekeeping presence in Eastern Ukraine would also be massively higher than the current mission’s annual budget of just €100 million. For a robust peacekeeping mission in Eastern Ukraine to be effective, the international community would have to deploy around 50,000 troops, according to contemporary Russian and Ukrainian history expert Andreas Umland – more than seventy times as many as the current OSCE mission.

Most probably, Russia will be decisive for the future of the OSCE observers. Moscow itself has pushed for enlarging the mission – while at the same time turning a blind eye to the fact that the separatists restrict the mission’s work far more than government troops. It has also allowed campaigns in state-controlled media and protests against the SMM to go forward, as last happened on February 15 in Donetsk.

Put simply, improving the monitoring mission’s efficiency could be easy – if only there is political will.

N.B. The views expressed in this article are the author’s own and do not necessarily represent those of the chief monitor or the OSCE Special Monitoring Mission in Ukraine.

The post Mission Possible appeared first on Berlin Policy Journal - Blog.

© REUTERS/Yves Herman

The British government took seven months to present its strategy for Brexit after the United Kingdom’s historic decision on June 23, 2016, to leave the European Union. The strategy goes much further than many on the continent had expected. Prime Minister Theresa May announced her country’s intentions to pursue complete separation from the EU’s single market and customs union in a landmark speech she gave at Lancaster House to Europe’s assembled ambassadors on January 17, 2017.

A complete withdrawal did not necessarily have to follow the Brexit vote. Departure from the EU could have taken may forms. A soft Brexit, for example, was the preferred option even of some outspoken “Brexiteers” – an EU-UK relationship that would allow the retention of market access like Norway’s ties via the European Economic Area or Switzerland’s bilateral agreements that grant restricted market access. Such partial integration, however, requires the implementation and application of EU law, acceptance of binding judicial oversight, contributions to the EU budget, and free movement of persons – none of which May seemed ready to accept, though she indicated that some, limited financial contributions may be thinkable.

But even within this hard Brexit strategy, there are different ways to organize EU-UK cooperation. This spans from the complete absence of a formalized trade relationship – thus reverting to the WTO framework including tariffs – to a regular free trade agreement without tariffs, all the way to an expansive free trade regime (like the EU recently signed with Canada, known as CETA) or an association agreement (Ukraine).

The question now is for the EU-27 to define the bloc’s ties with the UK in the case of a hard Brexit. In a rare show of unanimity, they made clear in the wake of the referendum that partial participation in the single market without freedom of movement or the acceptance of EU regulations would not be tolerated. This still stands. But there are different options within the hard Brexit scenario, and that leaves many questions still to be decided in EU-UK negotiations. It is set to be a strong test of this unity among the 27.

Single Market through the Back Door?

Access to the single market remains the most important issue for EU-UK negotiations. Even in a hard Brexit, the UK continues to have great interest in minimally restricted access to the EU’s single market – it has been the project of all British EU policy heretofore. The UK exports 47 percent of its goods to the EU-27, making these partners far more important to the British economy than the United States. EU member Ireland alone receives nearly twice as many British exports as China.

The British government has two strategies for economically cushioning its hard Brexit strategy. First, it will attempt to reach an extensive free trade agreement with the EU before the two-year deadline for exit negotiations has expired. London wants this agreement to mirror the regulations of the single market – with regard to mutual recognition, the free movement of services, and access to EU financial markets – one-to-one, to the degree possible.

Such a single market membership through the back door would put the EU in a situation it has until now successfully thwarted: The UK would enjoy continued, unrestricted access to the world’s largest market without having to abide by its rules or perform its duties. This strategy has been fed by the belief in the UK that the EU – given the continuing crisis in certain eurozone countries and considering the importance of the city of London – would suffer more under a hard Brexit than vice versa. It also highlights just how starkly different the power balance and the relationship is perceived on the continent.

Second, London plans to replace the loss of its access to the EU’s other free trade agreements with the largest possible number of bilateral agreements with third countries. The UK received support from US President Donald Trump; the avowed Brexit supporter threw himself behind the speedy construction of a US-UK free trade agreement, as this also fits into his preference for bilateral rather than multilateral trade agreements. With such a transatlantic deal as an example, the British government wants to negotiate further free trade agreements before its exit, above all with long-time partners like Australia, New Zealand, and Canada, and perhaps with India and China as well.

Such a Global Britain strategy is constructed to link an EU exit with new possibilities rather than high costs. In the short term, this strategy appears to be working among the British public: According to a January survey from the polling institute YouGov, 57 percent support May’s plans, including full exit from the EU single market and customs union. Further, a majority are convinced that the EU will suffer more than the UK from a breakdown in negotiations. May has yet to prepare her population in any way for the real costs of the hard Brexit strategy.

Disconnect across the Channel

For the EU-27, such a strategy appears to be based in fantasy, given that it contains contradictory goals. Limiting access to one’s most important trade partner is a bad way to begin a global free trade initiative. The economic dependency is asymmetrical, after all: UK exports to the EU stand at 47 percent, while exports from other EU member states to the UK average well below 10 percent. Furthermore, it is hardly realistic to believe that the EU and the UK will manage to negotiate an extensive free trade agreement parallel to all exit formalities in the two-year timeframe, especially when a similar free trade agreement with Canada (CETA) has taken more than ten years and is still not completely ratified. Nor would the EU accept a free trade agreement that corresponded to single market access without its usual requirements. Basic principles for any deep free trade agreement would at minimum include implementation of EU regulations in areas with full market access and a dispute resolution mechanism tied to the European Court of Justice.

Similarly, the US requires on average more than four years to negotiate and ratify a free trade agreement. The only exceptions have been agreements in which Washington could dictate the terms entirely. The UK, under extreme time pressure and more dependent upon the resolution of a US-UK agreement than the US, would likely pay a high price for speed.

Negotiations between the EU and UK therefore start out heavily mortgaged. Even the hardest type of Brexit with a reintroduction of tariffs has entered the realm of possibility – whether through failed negotiations or British unwillingness to accept any basic mechanisms to retain privileged access to the single market. The danger is that the British government will blame any and all costs of their hard Brexit strategy on EU unwillingness to grant them a “fair deal.”

The UK as a Third Country

How does this all shape the EU’s position? First, the British tendency toward a hard Brexit also has benefits for the remaining 27 EU countries. The division between members and non-members remains untouched. It will be clear from the very start of negotiations: Brexit makes the UK a third country; partial integration like Norway or Switzerland is practically excluded. Conversely, this also means that the central aspects of the single market like mutual recognition or the free rendering of services cannot become part of the future EU-UK free trade agreement. Trade agreements similar to those with other third countries – regulating everything from tariff-free trade all the way to far deeper cooperation – are possible as long as the UK accepts the typical conditions, including conflict mediation.

Second, the EU-27 need to resolve their communication deficits. The EU stance of “no negotiation before notification,” whereby the EU has refused to start the process before the UK has invoked Article 50, has until now left all public communication on Brexit to the British. Given both the Europe-wide reach of the British media and the EU’s traditionally weak communication skills, the British government has a significant advantage in shaping public opinion on the matter. These negotiations will also influence the European conversation within individual EU states. Therefore, the EU-27 should create their own carefully constructed communications strategy.

Third, patience is an important element. As soon as the UK announces its intention to leave the EU (expected by the end of March, if the House of Lords plays ball), the clock starts ticking on the two-year deadline. This can only be extended by unanimous decision. If there is no resolution, the UK reverts to the status of any other WTO signatory. Therefore, it is above all the UK who is dependent upon an extensive free trade agreement, or at the very least an intermediary solution. The closer the deadline nears, the more the EU can pressure the UK into accepting European rules to retain a limited form of access to the single market.

Fourth, the EU remains interested in close cooperation with its British partner on issues unrelated to the single market, especially domestic and foreign security policy. This is another area where the Trump factor has altered the calculus of European interests. The more the new US administration seeks to distance itself from the EU (and NATO) and the more it breaks with traditional positions on foreign and security policy, the more important it will be to keep a united European position, including the UK. This affects, for example, sanctions against Russia and policy toward Ukraine, the Israeli-Palestinian conflict, Syria, and Iran. Cooperation on foreign and security policy must be kept separate from tough negotiations on economic affairs, in the interest of both parties.

Last but not least, it is the EU’s responsibility to protect the various special interests of individual states in Brexit negotiations. This includes the treatment of EU citizens in the UK or the status of Gibraltar. The border between the Republic of Ireland and Northern Ireland in particular will take on a special importance as it becomes an EU external border via Brexit. The openness of this border as it currently stands is decisive not only to Irish economic health overall, but also to the Northern Irish peace process. Twenty percent of Northern Ireland’s residents also have Irish and therefore EU citizenship. Notwithstanding May’s statements for maintaining an open Irish-British border, as soon as the UK exits the customs union and single market, it will be necessary to reinstitute some sort of border controls. Here the EU needs to insist on a solution that will allow the border to remain open in the future – thus demonstrating to individual member states the value that EU membership can have in representing their individual interests.

The post Breaking Good appeared first on Berlin Policy Journal - Blog.

© REUTERS/Nigel Roddis

The United Kingdom’s exit negotiations with the European Union have not yet officially begun, but it is already becoming clear that no policy area will remain unaffected by the breach between the EU and the UK – not even security and defense policy cooperation.

In fact, Prime Minister Theresa May considers British contributions to European security one of her strongest cards in the Brexit negotiations – but she is walking a tightrope between fostering goodwill in Europe and alienating Europeans by issuing hollow threats. For their part, many European governments are too quick to dismiss British security capabilities, prioritizing principles over pragmatism instead of looking for ways to keep Britain close.

The UK is one of only two credible military powers in Europe and has a permanent seat on the UN Security Council. London commands extremely effective intelligence services with substantial skill and know-how in the fight against terrorism and organized crime. And while the British military has been subjected to budget cuts in recent years, the global outlook of the British, their diplomatic network, and the professionalism and training of their military personnel all contribute to European security.

So how could the UK use its defense and security capabilities to win a favorable Brexit deal from the EU? Crude blackmail would not work and thankfully seems unlikely in any case. It is true that some Brexiteers are asking, in private and in public, why British troops should risk their lives for EU member states that want to impose a “punitive” Brexit deal.  But May knows that any open threat for example, to withdraw troops from NATO rotations in Central and Eastern Europe if the Baltics block a tariff-free trade agreement between Britain and the EU-27 would not just be unhelpful, but would also lack credibility.

The Trump Card

Britain, unlike newly elected US President Donald Trump, knows that the value of collective defense and security is greater than the sum of its parts. During the EU referendum campaign, Brexiteers and Remainers alike stressed the enduring value of NATO as the bedrock of British security. And the UK government has a continuing interest in investing time and resources in Europe’s defense, not only to protect its own national interests but also to generate goodwill abroad – especially as Brexit negotiations unfold and demonstrate to other allies (not least the US) Britain’s enduring or ambition to be a global player. Almost immediately after the Brexit vote, Britain signaled its continuing international engagement at the July Warsaw summit, when it announced the deployment of 650 British troops to Estonia and Poland as part of a new deterrent force on NATO’s eastern flank.

Still, the UK government is well aware of the value of its military capabilities.  In her Brexit speech at Lancaster House in January, May said she was optimistic that Britain and the EU would come to “the right agreement,” because the EU needed the UK as a partner in matters of security and defense. She stressed that Britain had led Europe “on the measures needed to keep our continent secure,” on implementing sanctions against Russia, working for peace and stability in the Balkans, and securing Europe’s external border. She reminded all EU countries that British intelligence services were “unique in Europe” and had saved countless lives, thwarting “very many terrorist plots” in countries across Europe.

May is right. The EU needs the UK’s capabilities – and Trump’s election has the potential to further strengthen the British negotiating position. Notwithstanding recent attempts by new US Secretary of Defense General James Mattis and others to reassure European allies, Trump’s “America First” nationalism and his skepticism of multilateral organizations calls into question the American security guarantees that Europe has been relying on for decades.

May wants to leverage the UK’s special relationship with the United States in conversations with other European leaders, by offering to act as a bridge between the US and the EU. On a visit to Washington, DC she managed to wrest a commitment to NATO from Trump, whereas in Brussels she conveyed Trump’s message that Europeans need to invest more in defense spending through NATO.

Most EU leaders agree with May’s message but disapprove of the messenger: They know that the Trump administration’s erratic approach to Europe and NATO is a real concern, but they find it difficult to accept May and her Brexit government’s help. They want to spend more money on defense for the EU’s sake, not because Trump or May request it. To make her offer more acceptable to Europeans, May should coordinate her next meeting with Trump and other EU leaders together.

Walking the Tightrope

With its embrace of the Trump administration, the UK government is attempting a difficult balancing act: Britain will appear more alien to the EU-27 the more it fails to criticize Trump on his most egregious policies. But if Britain uses its special relationship to promote European security and the crucial role the EU has played in consolidating a troublesome continent, it can earn European goodwill for the upcoming negotiations.

Trump’s election, and, more importantly, Europe’s unstable neighborhoods to the east and the south have spurred EU leaders to boost their support for European defense. France and Germany in particular have thrown their political weight behind a reform of the union’s Common Security and Defense Policy (CSDP). This presents a potential European vulnerability during Brexit negotiations: As long as the UK is still officially a member of the European Union, London also retains its veto on EU defense policy initiatives that require unanimity. For now, it seems unlikely that the UK would block the CSDP ambitions of the EU-27; the British government is well aware of how badly the EU would take such obstructionist behavior.

But many Britons are worried about the potential of EU defense policy duplicating and undermining NATO. In the months before the EU referendum, the old bogeyman of the EU army became a favored trope of Brexit campaigners. If the mood worsens significantly between the UK and the EU-27 over the course of Brexit negotiations, these concerns could take center stage once more, and May’s government could find itself pressured to disrupt EU defense initiatives.

Yet doing so would not be in Britain’s long-term interest. Once the UK’s exit has been negotiated, London will want to strike some form of association agreement on EU defense. The less obstructive Britain is now, the more it can ask for voting and operational planning privileges in the future.

Turning its contributions to the European security architecture into a bargaining chip, London risks undermining European goodwill. Playing the security card as an open threat would backfire, as it would be considered an assault on a core common interest and European values. Instead, London should make clearer how it aims to contribute to European security, prosperity, and stability once it has left the EU.

However, it is not just Britain that needs cordial post-Brexit relations. Some EU governments would be well-advised to take a more pragmatic stance on security and defense policy cooperation with the UK. The EU’s negotiating strategy is currently guided by one basic principle: Britain cannot be better off outside the EU than as a member. This is aimed at undermining euroskeptic movements in other member states. Following this rationale, many EU countries are quick to dismiss privileged association formats for the UK post-Brexit, for example on CSDP operational planning or European Defense Agency projects.

But Europe cannot afford to lose British capabilities at a time when the European security situation has deteriorated significantly. Close cooperation between Britain and the EU in the area of ​​security and defense, guided strictly by shared interests, would be a good thing for both sides.

N.B. This article draws on the findings of an extensive Center for European Reform (CER) study conducted
with Christian Odendahl: “Berlin to the Rescue – A Closer Look at Germany’s Position on Brexit”

The post A Quantum of Solace appeared first on Berlin Policy Journal - Blog.

© REUTERS/Jonathan Ernst

For decades, American leadership has been the most decisive force for the creation and maintenance of the liberal international order. After WW II, the US built an international system that worked to integrate individual states, in particular allies in Europe and Asia. Political and economic cooperation were supposed to replace the great power politics that had pushed the world to the brink of destruction. This postwar order is “liberal” in its very essence: It is based on the conviction that liberal democracy is the only legitimate and, in the long run, stable form of governance – grounded in individual self-determination, which it aspires to bring into a productive, constructive relationship with society. The liberal international order applies the same principle to states: Like individuals, states are seen as self-determined and equal stakeholders whose goals are protection of freedom and promotion of the common good.

At its core, this order depends upon America’s political will to use its immense power for the preservation and further development of the system. And while America has often violated the rules of that system, and its overwhelming power has at times undermined the self-determination it has sought to construct, its allies and partners have tacitly accepted this as the price for the US role as guarantor.

Turning against the Liberal Order

After 1989 it looked as if the liberal order would spread in a self-sustainable way – but the victory was only half complete. China and Russia have, to a large extent, integrated themselves into the US-led economic order, and the elites in both countries are dependent on economic interaction with Western liberal democracies. Yet politically, those same elites have successfully blocked the liberal model.

This puts them into a difficult position: As they oppose a globally accepted norm, they have to find other forms of legitimation. One method consists of control, coercion, and propaganda in an attempt to keep the ideas of liberal democracy at bay. The second approach is to generate prosperity. The Chinese elite has achieved this by betting on economic growth and integration into global value chains. The Russian elite had it easier, profiting from years of high oil and gas prices that supplied a steady income to redistribute, just as in wealthy oil states in the Middle East. A third strategy is aggressive foreign policy. Russian and Chinese leadership claim superiority not just over their own territory, but also over their regions. Both want to turn the concept of spheres of privileged influence into the cornerstone of a new multipolar order – an order in which a few superpowers control regional spaces and everyone else must accept their primacy. Both translate the principle of political order that applies in their states internally – autocracy – into the principle of an international order.

Despite having turned their countries into bulwarks against liberal order, they have failed to translate this rejection into a coherent, attractive alternative. Their growing aggression against neighbors has in many cases led not to the submission of other countries, but to these countries’ increased determination to resist. In both Russia and China’s neighborhoods, smaller, weaker countries have called on the US to provide security guarantees. The more Beijing has abandoned the strategy of “peaceful rise,” the more its neighbors have been alarmed and sought protection. And with the war in Ukraine, Russia has actually seen its influence wane. Resistance against Russia has strengthened Ukraine’s self-defense and given NATO a renewed purpose.

America First, the World Second

The liberal international order has survived until today because it has been supported by key states – and because the US has, since the end of the Cold War, decided to play the role of a guarantor. Yet the domestic arguments for such a far-reaching global role have lost strength over time. There is no clear and present danger to American security anymore. Neither China nor radical Islam has replaced the Soviet Union as a threat that would legitimize, in the eyes of American voters, America’s extensive and expensive commitment to global security.

Pressure on the American government to scale down global commitment has grown in recent years, and the wars in Afghanistan and Iraq have only fed this groundswell of discontent.

And yet America has until now hesitated to abandon its role as a guarantor of the liberal international order. The US has enjoyed plenty of comparative advantages as this order’s architect and central force, and it is far from clear what will happen if Washington retreats significantly. Will this order implode, with disastrous consequences for regions that the US considers to be strategically important?

Such considerations made Obama – who swept into power on the promise of reducing America’s role abroad – hesitate. He was pulled back and forth between those in his team who wanted to maintain the expansive global engagement and those who wanted a break with the status quo.

Unlike Obama, President Trump has displayed no understanding of America’s role abroad. Instead, he seems keen to strengthen borders and to limit exchange and global engagement. For him, America must be protected against immigrants from Mexico, against economic competition from China, against terrorists from Syria. Allies and partners are a costly burden, international institutions mostly useless; what matters are transactional deals. “Americanism, not globalism, is our credo,” he has said during the campaign.

The consequences of Trump’s rhetoric are still unclear: How much of it will translate into policy? How strong are the counterbalancing forces – in his own government, in Congress? In any case, by electing a president with an anti-internationalist agenda, American voters have given another indication that they feel increasingly uneasy about their role in the world. They refused a candidate, Hillary Clinton, who stood for continuity, and that includes America’s role as the guarantor of the liberal international order.

If Not America, Who?

The question of what follows the American-led order is becoming ever more pressing. If the US abandons its role as guarantor, is the current order going to disintegrate? Or are there other actors who could at least partially take over?

It has become increasingly clear that neither Russia nor China is a candidate for such a role. Quite the opposite: Ruling elites in both countries are hostile to key parts of the liberal international order because it threatens to undermine their autocratic power at home. Moscow and Beijing share a concept of international order that is based on dominance and submission, a multipolar world with a few great powers that divide and rule according to their needs. Both have an interest in keeping the international economic order at least partly intact, but both are hostile to the overall character of an order based on freedom, equality and rule of law.

Instead, the B team must step in: Those liberal democracies that have an existential interest in maintaining the liberal order and are able, given their economic power, to play in the top league, must rise to the challenge. There are quite a few candidates for such a role. Among the world’s economically strongest 15 countries, there are no less than twelve other liberal democracies besides the US – Japan, Germany, Britain, France, India, Italy, Brazil, Canada, Korea, Australia, Spain, and Mexico (in order of GDP, according to IMF, October 2016).

All twelve are allies and partners of the US, and all have profited massively from the US-guaranteed international order. Together they have a GDP of $25,739 trillion, more than the US ($18,561) and more than China ($11,391) and Russia ($1,267) combined ($12,658). Five of them are European: Germany, Britain, France, Italy, and Spain (a combined GDP of $11,735); four are Pacific countries: Japan, India, Korea, Australia ($9,640); two are Latin American: Brazil and Mexico ($2,832); and one is North American: Canada ($1,532).

In order to transform themselves collectively into guardians of the liberal international order, the twelve would have to do at least five things:

First, they would have to pursue far more active foreign policies, based on a self-understanding as an important global force. The twelve would have to see themselves as guarantors of the institutional framework and the material infrastructure of globalization. This would also have a military dimension. They should be able to largely guarantee their own security and to provide protection to smaller countries. To achieve these goals, existing alliances could serve as platforms.

Next, they would have to recognize that their interest does not lie in the multipolar order that Russia and China are trying to advance, and they would have to be ready to confront Russia and China whenever they threaten the liberal international order.

The twelve would also have to build more interconnectivity and networks; they should be able to pursue goals without Washington when needed. They should conclude true strategic partnerships among themselves, oriented toward joint regional and global strategies. An annual summit could provide one such format.

The twelve should also aim to provide more leadership in their respective regions and bring smaller, like-minded liberal democracies on board to stabilize the liberal international order as a way to gain more weight and critical mass. Regional organizations such as the EU or ASEAN could serve as vehicles.

Finally, the twelve would have to accept that their own long-term security, liberty, and prosperity depend on the fact that other countries are governed in a democratic way. The liberal international order is based on the preeminence of liberal democracy at the national level. Strengthening democracies and supporting countries in their transformation from autocracy to democracy are therefore key common interests of these twelve states; a liberal international order can only exist if there is a critical mass of powerful liberal democracies.

The US remains the “indispensable power” in many regards. But Washington might further retreat in the coming years from its role as a guarantor of the liberal international order. The countries that have in the past profited from this order are confronted with a tough choice: either engage massively on behalf of it and rise to the challenge as the B team, or accept its decline or implosion.

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© REUTERS/Fabrizio Bensch

They might not be running for office in Germany, but for France’s presidential candidates, a campaign stop on German soil has become par for the course. French politicians have often used their larger, more powerful neighbor as a platform to lay out their visions for France and Europe. It was little surprise therefore to see former Economy Minister Emmanuel Macron, who has built his own “En Marche!” movement, arguing for a more proactive France in front of a crowd at Berlin’s Humboldt University.

Conservative François Fillon, on the other hand, traveled to the German capital to meet with his fellow Christian Democrat, Chancellor Angela Merkel, at the start of the year; he also delivered a speech calling for a more streamlined Europe. As for the leader of the right-wing populist Front National, Marine Le Pen, she teamed up with the German populist Alternative für Deutschland (AfD) party at a gathering of far-right leaders in Koblenz in January, where she took aim at Berlin’s pro-European policies.

All three candidates have drastically different visions for France and its role in Europe, and this May’s presidential election will undoubtedly have a significant impact on Germany and France’s unique bilateral relationship – by far the closest within the EU. It still holds true that any European solution requires Berlin and Paris at the helm, whether it’s dealing with eurozone woes or the migration crisis. Yet in recent years, Europe’s two most powerful states have been increasingly limited in their ability to advance a common agenda.

Disappearing Power

The last few years have shown that Berlin and Paris are finding it ever more difficult to strike compromises and mobilize partners. Despite a series of crises within the EU and beyond, pressing questions remain unresolved. Joint efforts to deal with the refugee crisis in 2016 proved difficult. Merkel and President François Hollande met various times over many months in an effort to find a common solution, with little to show for it: the proposal that emerged from those hours of negotiations aimed to strengthen the EU’s external borders and reform the Dublin asylum regulation. But their in part quite far-reaching proposals met with opposition, and Berlin and Paris proved unable to convince their  European partners of the wisdom of their ideas.

Interests within the bloc have grown increasingly diverse, and European-level governance has become controversial, particularly with the wave of right-wing populism sweeping the continent. And in some policy areas, integration is already so advanced that any step forward threatens to tread upon national sovereignty.

It is precisely the question of integration and sovereignty that Germany and France have failed to address adequately; daily cooperation between the two governments has helped in times of crisis, but neither Merkel nor Hollande have succeeded in setting out a clear vision for Europe or taking responsibility of a fragile community. If the two leaders don’t present a series of goals and agree to compromise on European policy at the highest level, the vaunted French-German partnership could slowly grind to a halt. More importantly, both countries are facing key tests in national elections this year, and new faces could well reshape bilateral relations significantly, redefining a long-standing partnership.

A Fluid Balance

France and Germany’s relationship was long defined by a relatively fluid yet stable equilibrium: Germany was traditionally stronger economically, and France drew its influence from foreign policy and military prowess. But after the end of the Cold War, France’s traditional tools of power – its nuclear arsenal, its permanent seat on the UN Security Council, and its ties to the United States – started to lose their shine. At the same time, Germany discovered a newfound confidence on the world stage, building a mighty export-oriented economy and assuming a leading role in the EU. The scales began to tip decisively, and the chasm between the two countries sparked tensions.

In the back halls of the National Assembly in Paris, frustration brewed amid feelings that the French government had been relegated to second fiddle and no longer held the keys to its own future. Berlin, on the other hand, felt increasingly vulnerable to the mistakes and weaknesses of France and other European countries. These doubts and misunderstandings still plague their relationship today.

Some perceptions have improved: Gone are the days of 2012, when controversy over German dominance in the EU stirred hefty debates in France. Yet even if Germany is not explicitly mentioned in campaign rhetoric, Berlin’s relative strength has cast a shadow over growth, competitiveness, and economic reforms. For many French voters, Germany is clearly setting the course for the EU.

In a country where a sense of national pride and sovereignty run deep, it is not entirely surprising that German power has become a source of irritation among voters and lawmakers – particularly for those on the more extreme ends of the political spectrum. Marine Le Pen has accused Germany of enslaving “the peoples of Europe.” The far-left politician Jean-Luc Mélenchon, meanwhile, has demanded a showdown with the German government. Voices of discontent have even emerged from mainstream parties: the Socialists’ candidate, Benoît Hamon, is calling for an alliance of Europe’s left to counter Berlin’s policies, and Fillon aims to make France a solid counterweight to Germany. Until now, only Macron appears to see France and Germany bound by their commonalities rather than their differences.

Tensions between France and Germany are hardly new. The familiar power play between the two neighbors featured prominently in the 1970s after the oil crisis, during the ensuing economic crisis, and even in the early 1990s with the end of the Cold War and German reunification. At that time, French newspapers were awash with the question of whether a dominant Germany posed a threat to France because it wielded far more economic and political influence. These days, anti-German sentiment has returned.

Yet in these debates, it is often forgotten just how much Germany depends upon a politically and economically stable France. Germany has often been described as a reluctant hegemon, uncomfortable, self-conscious, and uncertain of its own power. In recent years in particular, Berlin has longed for a stronger, more robust partner in Paris willing and able to share the burden of responsibility. France’s weak points are seen as a liability, both politically and economically.

What’s more, fears abound in Berlin, too, where some lawmakers are increasingly concerned they are being hoodwinked, with suspicions that Paris is undermining the eurozone’s rules. In some circles in Berlin, there is the belief and expectation that France “must do its homework” before further steps can be taken. On both sides, mistrust and strained communication have hindered actual progress.

Reset Needed

The framework of France’s and Germany’s relationship has also faced significant structural changes that make it difficult to restore ties to what they once were.

First, Europe’s debt crisis has sharpened the lines of asymmetry between the two; while Germany was barely affected, France is still struggling with an unemployment rate of around ten percent, sluggish growth, and towering public debt. Meanwhile Germany is enjoying full employment, record surpluses, and a balanced budget; and the US has overtaken France to become its largest trading partner.

France has also seen the president’s authority suffer a blow in recent years, due to the governing Socialists’ internal squabbling on European and economic policy. The Front National, meanwhile, has pushed public discourse to the right and destabilized the political landscape. These developments have weakened France’s position in the EU as Paris has become a less reliable partner. Germany has witnessed a long period of stability, but the AfD is threatening to rattle the status quo. If the populists garner enough votes to enter parliament in September (which looks likely at this point), mainstream parties in government will be reluctant to pursue more integrationist policies.

Second, structural changes have reinforced the uneven distribution of power in the EU. A series of crises have tarnished the bloc’s image and made Germany’s disproportionate strength loom especially large. The 2007 Treaty of Lisbon shifted power in Brussels, enhancing the role of the European Council and weakening that of the European Commission. That has benefited large countries like Germany that could build coalitions and frame policy; France, meanwhile, has been facing domestic battles and has struggled to appear credible.

Third, skepticism and downright hostility toward the European project has grown significantly in France over the last decade. According to a study from the Pew Research Center in June 2016, 32 percent of those polled were in favor of the European Union, compared to 69 percent in 2004. It’s no wonder then that most of this year’s presidential candidates have curried voters’ favor by portraying the EU as the problem, rather than part of the solution.

For years, European integration was sold to French voters as a form of protection, especially from the powerful forces of globalization. But doggedly high unemployment and the rising number of people in precarious living conditions have seen trust in Europe dwindle. Germany is seen as the main architect behind the EU’s strict “austerity” rules as well. In short, many French believe they have been forced to implement policies that are directly responsible for their economic and social woes.
The EU enlargement in Eastern Europe of 2004 – bringing the bloc to 25 members – was regarded with skepticism, too, triggering feelings of uncertainty and alienation. A year later, those sentiments bubbled to the surface as a majority of French voters rejected the EU’s proposed constitutional treaty. The commitment to more fiscal discipline only fueled frustration further.

Germans, on the other hand, mostly saw the 2004 enlargement as an historic and strategic necessity and a further economic opportunity. Doubling down on fiscal discipline was considered a prerequisite for long-term sustainable growth, and financial solidarity was a key cornerstone of future success. Clearly, France and Germany were drifting apart.

Bringing Back Old Habits

In the past, Germany and France have countered mistrust and resentment with more cooperation: Helmut Schmidt and Valéry Giscard d’Estaing built the foundation for a common currency in the 1970s, for example. Some twenty years later, Helmut Kohl and François Mitterrand brought their governments together for a conference that paved the way for the Maastricht Treaty in 1992. Integration, it seemed, was a natural reflex to uncertainty. These days, that seems no longer the natural thing to do.

The task of keeping the EU together and preserving the single market in the face of Brexit and the Trump presidency has taken top priority, while the question of reforming treaties is no longer considered realistic. Yet it is time to return to the old reflex, with a new approach: fresh Franco-German initiatives could be effective if they are based on a deep understanding of the economic and social circumstances in both countries. The labor market is a prime example. German companies have complained time and again about a shortage of skilled labor; France, meanwhile, is struggling to combat high unemployment. French youth lack real prospects at home, and that threatens to destabilize social cohesion with serious consequences. Front National has scored well with young people by portraying itself as a champion of the weak. Together, Germany and France could bridge the labor gap.

This year is likely to be a decisive one for the EU and the French-German relationship. There is no denying that the two countries have the power to tackle crucial questions on integration and reform. It is equally clear, however, that competing interests and political polarization will threaten to drive a wedge between Berlin and Paris, particularly with elections drawing closer. Joint initiatives might fail to overcome anti-European sentiment; yet it is more likely that the EU itself will fail if these two countries do not forge a path ahead together.

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