Artwork © Dominik Herrmann

It could be the title of the latest blockbuster action movie, but instead it has become the rallying cry of Russia hawks across the West. What is the latest fiendishly complex, ruthlessly cunning threat we face from the Kremlin? Why, of course it’s the “Gerasimov Doctrine.”

Named for Russia’s Chief of the General Staff, General Valery Gerasimov, this is a supposed plan for combined psychological, political, subversive, and military operations to destabilize the West. Or perhaps just covert operations and disinformation, without the shooting. Or maybe the aim is to destroy the whole architecture of the global order. The very confusion about what exactly this “doctrine” entails betrays the basic point: it doesn’t exist.

A Foolish Indulgence

I really ought to know, as I was the one who incautiously and unintentionally launched the “Gerasimov Doctrine.” Back in 2013, a speech Gerasimov delivered to a Russian military conference was published in the obscure journal called the Military-Industrial Courier. It made some interesting points, and so I published a translation by Robert Coulson of RFE/RL on my blog, In Moscow’s Shadows, along with my own thoughts and annotations.

In a bid to make it eye-catching, I gave the article the tongue-in-cheek title “The ‘Gerasimov Doctrine’ and Russian Non-Linear War.” It was a mistake I will regret forevermore, because even though in the text I explicitly stated that it wasn’t a doctrine and wasn’t even necessarily Gerasimov’s thinking, it turned out that a snappy headline is much more influential that the actual detail written beneath it.

Before I knew it, the “Gerasimov Doctrine” was being hailed as the Russian blueprint for future war. For the Financial Times, Gerasimov was “the general with a doctrine for Russia,” while Politico warned that “Russia’s new chaos theory of political warfare” was “probably being used on you.” It was even cropping up in official Western military documents.

Yet the text was in no way framed as a new Russian war plan. Instead, when Gerasimov talked of a “blurring of the lines between the states of war and peace” in which “the role of non-military means of achieving political and strategic goals has grown, and, in many cases, exceeded the power of force of weapons in their effectiveness,” he was explicitly addressing what he felt was a new Western way of war. To the Russians, the risings of the Arab Spring and the post-Soviet Eurasia’s Color Revolutions were not simply popular responses to corrupt and authoritarian regimes, but the result of cunning Western—American—campaigns of covert destabilization.

A Tempting Meme

So why did an article in an obscure defense magazine shape Western perspectives on Russian military thinking and, by extension, political ambitions?

The first answer is Crimea. The seizure of the peninsula in February 2014 by the so-called “little green men” was efficient in its execution but not especially novel in its means. Deploying troops without clearly identifiable insignia? Breaking the enemy’s lines of command and communications? Lying about what you’re doing? None of these were really ground-breaking.

Nonetheless, coupled with the subsequent incursion into Ukraine’s Donbass region (a more plausible case of unusual, asymmetric tactics, with its reliance on thugs, gangsters, mercenaries, and nationalists as proxies), it crystallized the notion that somehow Moscow had imagined and adopted a brand-new style of warfare.

More than anything else, this mythical doctrine was the sum of all fears held in the West about a modern world that once had seemed so comfortable—history had ended, remember? —and now was chaotic and threatening. The transatlantic relationship was under pressure, first as Barack Obama “pivoted to Asia” and then when Trump introduced a confrontational new transactionalism. Challengers from Beijing to Tehran were questioning the international order. Even the foundations of Western democracy and the European project were coming under pressure.

Such Perfect Villains

In such a climate, how comforting to have someone to blame. From Trump to Brexit, the rise of ultra-right anti-migrant movements to ultra-left climate activists, the West could affect to spy the sinister hand of Moscow—or its trolls and tweets—at work. How convenient to be able to portray these processes as the products of foreign interference rather than of domestic shortcomings.

And the Russians made such good villains. Consider Putin’s triumphalism over his Crimean land-grab and the stone-faced and cold-hearted denials of any blame for the shooting down of the MH17 airliner over the Donbass by Russian-backed forces using a Russian-supplied missile. Consider the string of Russian-linked assassination plots. Gerasimov himself even looks like a stock figure from Hollywood, the habitually-impassive, slab-faced Russian heavy.

The irony is, that even while railing against the “Gerasimov Doctrine” meme, Moscow itself helped it spread. A second-rank power trying to present itself as a global player—and given that politics are about perceptions, this means scaring or seducing other countries to treat it as such—Putin’s Russia actively seeks to look more formidable and threatening than it is. Hence the bomber patrols willfully straying into NATO airspace, the inflammatory rhetoric, the adventures in Syria and Libya.

A Dangerous Myth

Gerasimov is a decorated tank commander and a tough and competent manager of the Russian high command. His career has shown no evidence that he is a ground-breaking military theorist—or even that interested in the scholarship of war. He probably didn’t even write that famous speech himself. Nor is what people claim to see a “doctrine” in the Russian sense, which is a foundational notion of the wars Russia expects to fight and how it plans to win, driving everything from what weapons to buy to how many soldiers to recruit.

So what, though? Given that it is hard to deny that Russia is deploying propaganda, covert influence operations, threats, and “black cash” (untraceable, corrupt money) to divide, distract, and demoralize the West, and given that it has shown a willingness to back its political ambitions with military force, what’s in a name?

The academic pedant in me replies that it matters in its own right. Yet from a wider policy perspective, this myth also has several serious dangers. First, it mistakenly makes Russian policy somehow new and distinctive, whereas actually it simply reflects how inter-state conflict is changing in a modern age characterized by deep interconnections of our economic, information, and cultural spaces—and by the increasingly prohibitive cost of military conflict.

Second, by allowing the West to blame Russia for everything from political disaffection to football hooliganism, we get distracted us from addressing their root causes. Groups and individuals who have their own motivations are disenfranchised. Labelling them Moscow’s “useful idiots” only pushes them further into opposition.

Third, it misrepresents Russia’s approach in such a way as to distort Western policy. Central to the “Gerasimov Doctrine” notion is that there is a single Russian strategy, and—as in Crimea and the Donbass—all the political and social disruption is simply a prelude to war. In fact, the Kremlin is fundamentally risk-averse, with no signs of further territorial ambition, and a keen awareness of its relative weaknesses compared with the West. A European focus on when and where the “little green men” will appear next is a distraction, at best.

More to the point, Moscow’s approach is opportunistic, fragmented, and often contradictory. There is a broad vision from the Kremlin, but most of its interference in the West is driven by the interests and imaginations of individual actors and agents. If we truly want to resist Putin’s “political war,” we need to address the weaknesses they exploit in Europe, not look for some sinister grand plan in Moscow.

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© REUTERS/Aly Song

The coronavirus pandemic is a perfect metaphor for the perils of hyper-connection. But it merely draws attention to the already existing retreat from full-on free trade that has been gaining in support and legitimacy in recent years.

Democratic politics and national social contracts are asserting themselves against the laws of comparative advantage—which in any case turn out not to be quite as benign as many economics professors claim. This was brought home to me a few weeks ago, in the very early stages of the crisis, when I heard a very senior member of the British Conservative Party say that he was until recently an orthodox free trader/free marketeer but now regarded himself as an economic nationalist.

As Dani Rodrik, the Harvard international political economy professor and hyper-globalization critic, wrote recently in Project Syndicate: “Rather than putting the world on a significantly different trajectory, the crisis is likely to intensify and entrench already-existing trends… Hyper-globalization will remain on the defensive as nation-states reclaim policy space.”

World trade fell last year by 0.4 per cent. There has been no multilateral trade agreement since 1993. US President Donald Trump wants to bring back some of the US supply chain from China. And this is not a Trumpian eccentricity, most of the US political class is behind him here. It acknowledges that allowing China entry to the global market economy in the belief that it would transform politically (and become less mercantilist economically) is a gamble that failed. There has been technological decoupling too, the world will not end up on single global platforms.

Stock-Up and Re-Shore

Anxieties about climate change have moved up domestic and international agendas. This has created a bias towards localism, reduced travel, and a degree of self-sufficiency especially in food production, making life uncomfortable for unfettered free trade. China’s air quality has improved dramatically in the past few weeks as a result of measures to contain the coronavirus. And more generically Greta is asking whether you really need to eat strawberries in January?

The debate in much of the Western world is not so much about whether the crisis will hasten the partial retreat from liberal globalization that is already taken for granted, but rather what form the retreat will take in different places. Even such an advocate for liberal globalization as France’s President Emmanuel Macron, in a well-received speech to the French public on April 13, talked about “rebuilding France’s agricultural, industrial and technological independence” in the light of the various supply crises the country has experienced.

The response is likely to take two forms. First a focus on the lack of supply in critical areas during the crisis—medical supplies of various kinds (PPE clothing, virus testing materials, pharmaceuticals) and some food and energy essentials—which requires better stock-piling and some reserve capacity in just-in-time supply chains. Second, there is a more radical conversation taking place about strategic industries and re-shoring and the permanent renationalization of some supply chains, especially those dependent on a single country like China.

Diversifying Suppliers

The first is relatively uncontroversial and just a matter of good logistics. Almost all rich countries have been caught with a shortage of supplies of vital protective clothing and equipment for front-line staff. In many cases, they have turned to their manufacturers to adapt production lines. The same is true for some of the materials required for virus testing.

Many countries had acquired a sense of invulnerability over the recent globalizing decades and had lost the folk memory left by two world wars of the need to have security of supply. In the UK, the No Deal Brexit preparations had exposed the British state’s cavalier neglect of prudential housekeeping. Senior civil servants were warning the government that trading on WTO terms was expected to cause a shortage of NHS clinical supplies due to a customs check disruption of a minor administrative kind. This is something that should never have been allowed to happen in the first place, and the coronavirus crisis will presumably ensure that it never happens again.

Governments in the future may require companies to maintain slack in their supply chains and to diversify suppliers. Companies are likely to want to do these things anyway, but governments might choose to provide guidelines for companies as is the case in Switzerland. In the UK there have been longstanding concerns about the lack of oil and natural gas storage. These might also be extended to include vital rare earth minerals.

Limiting Dependence on Trade

The second set of ideas on strategic industries is more controversial and would require abandoning or adapting some of the state aid and anti-protectionism rules of the EU and even the WTO. Of course, nobody in the mainstream is arguing against maintaining high levels of international trade or in favor of radical self-sufficiency. (And some degree of self-sufficiency has always been permitted in farming and the defense sector.)

But when whole industries grind to a halt because of the lack of parts from China or Vietnam, and when many rich countries suddenly discover that they no longer have the capacity for mass vaccine manufacture, more profound questions about acceptable levels of protection for domestic supply in key sectors need to be asked.

In a country like the UK that might include questions about whether we need to maintain at least one volume steel producer? The UK imports a bit less than half its food—is that too much? Modern agriculture now depends on an array of chemicals and fertilizers—should Britain’s last potash mine in North Yorkshire be supported by the Government? What about our dependence on Huawei post-coronavirus crisis?

What Price for Home-Grown?

These are all legitimate questions and they feed into a wider skepticism about free trade that has been growing in strength in recent years. The critics argue that for all of the benefits of international trade, the neat theories of free trade and comparative advantage have been oversold. And they have a point. Free trade, as the economist John Maynard Keynes pointed out, only works if the people displaced from good jobs by imports get equally good jobs elsewhere in the economy. The election of Donald Trump is one kind of proof that this has not been happening.

Hold on, say the free traders. Of course there will be downward pressure on wages and job losses in the short run, but in the long run, the additional purchasing power we acquire from cheaper imports means we can buy other goods and services that will create equally good jobs elsewhere in the economy. Moreover, they say, when given the choice between protecting the Mid-West manufacturing plant and enjoying good quality, cheaper stuff in Walmart, people have voted with their wallets for the cheaper stuff.

But they have not been given a proper choice. Of course, people will always prefer cheaper goods but not at any price. If the choice was between slightly more expensive goods and services and the preservation, or more gradual decline, of a certain agricultural or industrial way of life they might well support such a deal. Indeed, they do so in the EU through the Common Agricultural Policy.

Economics’ Blind Spot

People are well aware that they are both producers and consumers. The end of production is not just consumption, as Adam Smith asserted, it is also about what sort of life you might have as a producer. This is one of those places where economics reveals its blind spot for culture and human beings in the round.

Research also suggests that much trade doesn’t follow any discernible pattern of comparative advantage. The UK economist Graham Gudgin has shown that for countries in North America and Western Europe, joining free trade agreements has caused slower, not faster growth in recent decades. Unlike comparative advantage in natural resources, which is better described as absolute advantage, comparative advantage in manufacturing systems is usually quite marginal.

Much of the comparative advantage of recent decades has been simply taking advantage of lower labor costs in poorer countries. Apple makes iPhones in China which does benefit US consumers and to some extent Chinese workers, but the main beneficiaries are probably Apple executives and shareholders. Bringing some of that production back to the US, even at the cost of slightly higher prices, would not, I suspect, be unpopular.

More National Resilience

In the 19th century, Britain did completely embrace free trade. As the workshop of the world, it was enormously to the country’s advantage to do so, and the British imported most of their food by the end of the 19th century. The result was that they nearly starved in two world wars.

To repeat, nobody sensible is arguing for self-sufficiency or anything like it, but almost everyone is now talking about more national resilience in supply chains and less dependence on China, particularly in technology. And isn’t the logic of comparative advantage to produce specialist monocultures in a world that values diversity in all things?

Most of the economics profession is very uncomfortable with this drift in the argument, but there are some economists and political economists like Dani Rodrik, Ha-Joon Chang, Barry Eichengreen and Robert Skidelsky who have long argued for more democratic caveats to free trade. Rodrik argues that where there is a national consensus about preserving some aspect of an economy or culture, for example French restrictions on Hollywood film imports, these should be allowed and not attract sanctions from international trade regulators.

And a new UK government that is serious about regional and industrial policy, and about shifting more high value economic activity northwards, is implicitly protectionist. It is not going to promote high-tech export industries in Hartlepool and then allow them to be wiped out by imports. It will either protect with subsidies or tariffs. Free trade theory does allow some such protection under the title infant industry protection, which is far preferable to senile industry protection, but EU state aid policy is not friendly to either.

The unlikely bedfellows of populism, environmentalism and technology are all pointing in the same direction—reshoring of some forms of production, a bit more self-sufficiency, more teleconferencing with people in other countries rather than immigration, all in all a retreat from the hyper-globalization of recent decades.

Mitigating the Costs of Free Trade

Free traders will not unreasonably point to some costs. It could mean a bit less growth. Global supply chains are a force for peace, and breaking them up could bring back inflationary pressures. It could also mean that the dramatic fall in poverty in poorer countries will slow or stop. Why not just try to mitigate the costs of free trade better? Subsidize the losers more intelligently? Or, the free trade skeptic might reply, why not prevent there being so many losers in the first place?

As Barry Eichengreen says, the problem with the global economy is not a lack of openness but a sense that “the nation state has fundamentally lost control of its destiny, surrendering to anonymous global forces.” And as Hans Kundnani put it in a recent issue of The Observer newspaper, it is time the UK government adjusted its rhetoric and stopped its paens of praise to free trade. Part of the point of Brexit is to put politics before economics, democratic legitimacy before economic growth.

Of course, we still want lots of trade and sustainable growth but at less cost to other things that people hold dear. A new rhetoric is needed that combines an appropriate level of openness with a sense of national control. An economic nationalism that liberals can feel comfortable with.

N.B. A shorter version of this article was first published by UnHerd.com.

The post Trade, but Not so Free appeared first on Berlin Policy Journal - Blog.

© REUTERS/Amr Abdallah Dalsh

With so many cars trapped at home with their owners, oil prices have fallen to the lowest level in decades, triggering crisis meetings of OPEC plus. The price of oil has even dipped below zero at times—producers will rather pay someone to take the oil off their hands than pay someone to shut down their wells.

The problem of oil oversupply is about as old as the industry itself. Long before Saudi princes and Russian presidents were arguing over supply cuts, the free market-loving US state of Texas was limiting local production to support higher prices. Even today, the industry’s solutions are sometimes, well, crude. When shale drillers produce superfluous natural gas along with their oil, they simply burn it in the sky in a practice known as “flaring”.

In order to mitigate climate change, low-carbon sources of energy like solar power will have to supplant oil products as our most important source of energy. But new energy sources are no less vulnerable to the oversupply problem. In fact, the more renewable energy in an electricity system, the trickier things can get.

Brimming over with Sunlight

The coronavirus lockdowns are turning excess electricity into a real problem. Chinese coal miners are calling for production cuts, while the United Kingdom is preparing to pay windfarms to shut down on short notice to avoid congestion on the grid and blackouts. Electricity prices are down across the EU, too. The basic problem for electricity is the same as that for oil: lower demand means higher supply and falling prices.

But electricity, unlike oil, cannot sit in a tanker or pipeline until prices recover. In the words of Gretchen Bakke in her book The Grid, “the grid must be balanced; consumption must always match production… [Electricity] cannot be boxed or stored or shipped. It is always used the same instant it is made.”

Although it is possible to store electricity as energy that can generate electricity later, for example by pumping water from a low area to a high area and allowing it to rush through a turbine when needed, energy storage is very limited today: at any given moment the EU can generate 20 times more electricity than it has the capacity to store. The vast majority of that storage is in the aforementioned hydropower, not batteries.

Humans have traditionally worked around these limitations by storing fuel (coal, gas) and burning it to create electricity as needed. The problem is that producers have no control over the “fuel” for solar power, the sun’s rays. While the danger of solar undersupply is well known—how to store solar power to use it at night or in dark winters?—the reverse problem of oversupply can arise when solar is at its most effective, soaking up the noon sun while consumers are in the park.

Sometimes solar power is worth less than nothing. Germany occasionally exports small amounts of power at negative prices to neighboring countries; this is happening more and more frequently as renewable generation expands. In fact, due to the successful expansion of wind power in the North Sea, Germany has had to install devices called “phase shifters” at its borders to prevent electricity from spilling over into the Dutch or Polish grids, overwhelming them with cheap, clean power.

Too Much of a Good Thing?

Yet just as little oil is actually delivered for -$1, negative electricity prices don’t necessarily mean consumers get paid for turning on the toaster; rather, they are a signal to grid operators that they should shut down some electricity generation because there is nowhere to send the power. Coal or gas power plants are typically the first to go because they generally have higher operating costs than solar, where the fuel costs nothing. Having to turn these plants down or off and then on again (“cycling” in the jargon) is a huge pain for their owners, who lose out on revenue and sometimes damage their boilers and turbines in the process.

Sensible government policy to support the expansion of renewable power can further complicate things for grid operators and owners of other types of power plants. The foundational law of Germany’s Energiewende, the Erneuerbare-Energien-Gesetz (EEG), gives renewable power priority access to the grid and requires grid operators to pay a certain price for it regardless of demand. Many US states let owners of residential solar panels reduce their bills by the amount of energy they send to the grid, no matter how little it is worth at the time. US solar power producers whose income is protected by government regulation can sell their power for next to nothing and drive competitors out of business, whether their emissions are low (nuclear) or high (coal).

In fact, because the sun is so fickle, solar power imposes considerable costs on the whole system. The 2019 OECD report “The Costs of Decarbonization” compared a system with 50 percent renewable power to a base case system that runs entirely on fossil fuels and found that the renewable-heavy system increased total system-level costs by 42 percent. That’s because the renewable-heavy system needs to invest more to avoid both undersupply, e.g. by keeping some coal or gas plants on standby, and oversupply. (None of this is a reason to stick with fossil fuels, which impose much higher costs on society as a whole than do renewables.)

A Victim of Its Own Success

The public might have little sympathy for operators of coal-burning plants who are losing profits, but the oversupply problem is increasingly coming back to bite solar itself. The problem is “value deflation.” As Varun Sivaram explains in his book Taming the Sun, “even if the cost of solar falls as a result of increasing deployment, its value might fall even faster. That’s because the more solar is installed, the less the electricity it generates in the middle of the day is needed.” In other words, the first installed solar panel is very useful and easy to integrate into the system, but the latest one might only add electricity when the system needs it the least, when all of its predecessors are also generating.

The COVID-19 crisis has accelerated value deflation in markets with a high penetration of solar power. For example, in California, stay-at-home orders have depressed electricity demand from commercial and industrial users. As a result, the grid operator has been forced to curtail—or throw away—record quantities of solar and wind power that are worthless when generated in excess of sagging demand.

Welcome to OSEC

What to do about oversupply? There might not be an Organization of Solar-Exporting States to regulate production, but there are two approaches to keeping electricity supply and demand in balance.

The first is to improve energy storage so there is somewhere to put excess supply. The price of batteries is falling fast, and electric cars are essentially batteries on wheels. The more electric cars there are on the roads, the more storage there is for solar power. Another option is to use solar power to split water molecules and produce hydrogen, which, like oil, can be stored as a dense liquid fuel: in supertankers, in national strategic reverses, in pipelines, and in the hydrogen car in the garage. Finally, there are innovative possibilities for storing solar power as heat, like the concentrated solar plants that use mirrors to concentrate the sun’s rays on a giant tank of molten salt.

The second is to increase potential demand. Sivaram, until recently the Chief Technology Officer of ReNew Power, India’s largest renewable energy company, highlights in his book a number of clever ways to do so, like using excess solar power at desalination plants to turn ocean water into drinking water, or heating hot water tanks during the sunny afternoon so they are ready for evening showers. Major institutions are already trying to shift demand to match supply. The EU Clean Energy Package requires power companies to offer “dynamic pricing” tariffs, so that customers will be aware of the best time to charge their car or turn on the dryer. Google announced in late April that its data centers will work harder when the sun is shining.

It is also essential to increase the size of electricity grids by building interconnectors to allow the transfer of electricity from place to place. If the grid is large enough, there should always be a customer somewhere: solar farms in Spain could power dining room lights in Hungary, where the sun would already be going down.

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Artwork © Dominik Herrmann

The landslide victory that Greece’s conservatives under their new leader Kyriakos Mitsotakis won in July 2019 didn’t just mark their return to power. Greece, the European country hit hardest by the financial crisis of 2008, also voted in its first post-bailout government. The price for remaining in the eurozone had been high: Since 2008, Greece lost 25 percent of its GDP and saw its unemployment rate soar by 16 percentage points. After a decade of extreme austerity measures, Mitsotakis and his Nea Dimokratia (New Democracy) party represented the promise of recovery.

Mitsotakis, a 52-year-old Harvard-educated politician came to power promising a “return to normality” that many Greeks yearned for. This was particularly true for the middle classes, which had been hit hard by the taxes imposed by the previous left-wing government to meet the country’s fiscal targets. Mitsotakis’ name was already well-known on Greece’s political scene. His family is one of three that have dominated Greek politics for decades, together with the Karamanlis family (also Nea Dimokratia) and the Papandreou family (Socialist Party).

Mitsotakis’ father Konstantinos was a prominent, but also controversial political figure during the 1960s, before the military coup. He became prime minister in the early 1990s—a toxic period in Greek politics that was marked by scandals. Konstantinos’ oldest daughter Dora Bakoyannis was mayor of Athens when the city hosted the Olympic Games in 2004; she later served as foreign minister. Kyriakos Mitsotakis, however, remained in the shadow of his family for much of his career. He was an outsider of whom nobody ever believed that he would become the leader of Nea Dimokratia or prime minister.

A Liberal Centrist

Indeed, Mitsotakis has often been underestimated by his political opponents. He was first elected to parliament in 2004; between 2013 and 2015, he then served as minister of administrative reform in the last New Democracy-led government. Mitsotakis is still remembered as the minister who dismissed 5,000 civil servants to meet the strict conditions of Greece’s second bailout program. For that, he was criticized as a tough neoliberal, making many enemies in the public sector.

In fact, Mitsotakis is more of a liberal centrist within a conservative party that has moved toward the right. The people he has selected to form his government show his effort to unite different political traditions within his party, including nationalist, liberals, and non-political technocrats. However, Mitsotakis’ government is made up mainly of men, and the few women occupy junior roles.

Initially, Mitsotakis’ agenda was focused on cutting taxes and creating jobs by bringing domestic and foreign investment to the country. His well-publicized “strategic priority” was the reduction of the primary surplus targets that were imposed by the European institutions which still keep a close eye on the country’s finances. However, his plans for an economic resurgence have been overshadowed by three serious challenges: the refugee crisis, tensions with Turkey, and the coronavirus outbreak.

Dealing with the Refugee Crisis

Mitsotakis was also elected on the promise that he would handle the ongoing refugee crisis better, but his government is still struggling with the same issues that the previous government had to grapple with. During his first months in office, the flows of migrants were at their highest since the now-defunct EU-Turkey agreement was concluded in 2016, and the new government found itself in a very difficult position.

There are nearly 100,000 asylum seekers in Greece, most of them on the islands of Lesvos, Kos, Chios, and Samos. It is clear that local communities have reached their limits as far as taking in refugees and migrants are concerned. The United Nations High Commissioner for Refugees, Filippo Grandi, pointed out on a recent visit to Greece that “hospitality and patience are less visible than before.”

Mitsotakis’ government did take steps to speed up asylum application processes. Deportations were made easier, as were transfers of refugees from the islands to mainland Greece. However, it took Mitsotakis six months to realize that it had been a huge mistake to abolish the Migration Ministry and to set it up again.

The Trouble with Turkey

Greece’s refugee crisis is made more difficult by the second challenge facing its prime minister: Dealing with his country’s historically difficult neighbor, Turkey, and in particular the Turkish President Recep Tayyip Erdogan. Tensions between Turkey and Greece have been exacerbated by Erdogan’s threats and actions over migrants. Mitsotakis found himself in the middle of a new border crisis as Turkey’s president carried out his threat to open the gates to Europe for migrants and refugees. Overnight, thousands of people were brought to the north-western land border between Greece and Turkey.

Mitsotakis responded by mobilizing EU support, bringing European Commission President Ursula von der Leyen, European Council President Charles Michel, and the President of the European Parliament, David Sassoli, to the country in a highly symbolic move, stressing that not just Greece’s, but Europe’s frontiers were being threatened. He also reinforced Greece’s sea and land borders and extended a razor wire-topped fence along the Evros River.

The geopolitical crisis with Turkey, however, doesn’t stop there. Under Erdogan, Turkey has become more nationalist and more aggressive, seeking to expand its role in a new world marked by great power competition. Tensions between the two countries, which are NATO allies but also historically rivals, have also escalated over energy reserves in the Eastern Mediterranean.

Turkey was angered by gas and oil explorations planned off the coasts of Greece and Cyprus and moved ahead with its own drillings. Then Erdogan went further by signing a maritime boundaries agreement with the UN-backed Libyan government in a move to show to both Greece and Cyprus that Turkey cannot be ignored in the region.

Athens regards this as a direct challenge to its national sovereignty, as the Turkish-Libyan accord ignores the island of Crete and its Exclusive Economic Zone that is situated between Libya and Turkey. Like his predecessors, Mitsotakis is trying to strengthen strategic alliances to deal with this crisis, mainly with France, other EU member states, and the United States. But he has also made it clear that if there is no solution at a political or diplomatic level, then the dispute over maritime zones must go to the International Court of Justice in the Hague.

Fighting COVID-19

The war of words between Turkey and Greece was still ongoing, when the coronavirus outbreak took over the global agenda. The pandemic forced the Turkish president to suspend his “open gates” action.

The coronavirus outbreak in Greece could have been a disaster, as its health sector was significantly downsized and weakened during the financial crisis—today, it is nearly 40 percent smaller than in 2008. Nevertheless, Greece currently has one of the lowest number of cases and deaths in the EU.

The Greek prime minister has been praised for reacting to the crisis much faster than neighboring countries: he imposed a lockdown when there had not yet been a single death in the country. Trusting the experts and took that risk in order to protect citizens’ lives and shore up the health system as everybody knew that it wouldn’t be able to cope with a major outbreak.

Mitsotakis has also been winning the communication game by choosing two relatively unknown person to speak for the government during the crisis. Sotiris Tsiodras, a low-profile professor of infectious diseases, and Nokia Chardalias, the hard-hitting deputy minister for civic protection, have proven to be a perfect couple to address the public and explain the measures in daily briefings.

However, Mitsotakis’ next challenge is on the horizon. The latest IMF forecasts show that Greece could see a ten percent decline in GDP—the biggest in COVID-19-stricken Europe. Unemployment is likely to rise again sharply. Problems on the labor market had already started appearing before coronavirus hit, and the support the opposition is giving Mitsotakis him for the sake of public health is not going to last forever.

There is already some criticism over financial support to businesses and workers. And although ideologically Mitsotakis is a strong supporter of the private sector, he is obliged to invest more in the public health system in order to prepare the country for the months to come. Yet his popularity, which is still high, may well see him through.

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© REUTERS/Hannah McKay

Brexit was always an emotional rather than instrumental venture. It was based on a yearning for national sovereignty and a nostalgic view of the United Kingdom’s role in the world. Its biggest weakness, however, lies elsewhere.

Its architects could not make up their mind about which of two visions they were projecting. Was Britain going to become Singapore-on-the-Thames, a low-tax, low-regulation island of futuristic start-ups that was open to all-comers, as long as they had the skills and the thirst? Or, unshackled from the European Union, was it going to do more to protect its own, to give the state more of a say in determining and equalizing outcomes? The likes of Boris Johnson and Michael Gove—the leaders of the 2016 Leave campaign and presently prime minister and minister for the cabinet office respectively—never resolved this dilemma, because they knew they couldn’t, and because they wanted to have their cake and eat it.

June Is the Real Deadline

Now, with COVID-19 tearing apart lives and communities, exposing the lack of planning, strategy, and investment in the National Health Service and decimating the economy, logic might dictate that the government let up in its determination to meet the December 31 deadline for the transition period out of the EU. Not a bit of it, say ministers, displaying the same hubris that led them initially to dismiss the coronavirus as a serious threat to the UK.

According to one adviser, those around the prime minister believe they can still make the deadline—even though that deadline is not actually the end of the year, but the end of June. As the Withdrawal Treaty states, any request for a one- or two-year extension must be submitted by then.

With the two men at the heart of the negotiations, the EU’s Michel Barnier and the UK’s David Frost, having previously been struck down by the virus, and with discussions only now resuming by video link after a sizeable pause, the chances of any meaningful agreement in weeks are negligible at best.

The aim is a free-trade agreement, with a zero-quota, zero-tariff deal similar to the one the EU agreed with Canada (after years of talks). They also have to tackle aviation, nuclear energy, international security, and the small but politically vexed question of fisheries. Thus, the timetable was always going to be ambitious. When the first round of negotiations began, the two sides admitted that they faced “very serious divergences.”

Johnson’s Corona Setback

Bizarrely, given how much of a mess his government has made of its response to the pandemic, Johnson is politically unassailable. His 80-seat majority in the House of Commons gives him legislative carte blanche. His opinion poll ratings are sky high, boosted by a sympathy vote after he was admitted to hospital with the coronavirus. The Labour Party’s new leader, Keir Starmer, will provide a much more forensic opposition than Jeremy Corbyn ever did, but he will take some time to make a mark in this “wartime” setting.

Longer term, Johnson knows that COVID-19 has delivered a setback to his plans to remake Britain in his image. He knows that he cannot opt for a low-tax regime, such will be the UK’s indebtedness. He also knows that he will not be able to lavish money on his pet projects. Thus, there will be no Singapore-on-the-Thames nor will there be a great social transformation.

Yet, as one former aide to Theresa May points out, Johnson has nowhere else to go. “He has to make this new political geography work. He has to make this realignment permanent. They will be desperate for the budget not to be swept away.” The advisor was referring to the so-called Red Wall, the constituencies in the North of England and the Midlands that had been traditionally Labour, but were won over to the Conservatives in last December’s general election because of their twin pledge to “get Brexit done” and to invest more in their regions.

On his victory, Johnson thanked those voters for “lending” their support, knowing that they could easily transfer it back if they felt the promises had been broken. Hence his visceral reluctance to “do a May” on Brexit, to follow his predecessor in delaying the departure process, irrespective of the circumstances. In addition, if he is unable to make as much of a difference in domestic policy as he had hoped, then Brexit becomes even more talismanic for him.

Oven-Ready or Not

When Johnson declared during the election campaign that a deal “was oven-ready,” it seems he meant it. Or rather he meant that he believed the country was ready for either leaving without a deal or with the most minimalist of deals, both of which translated into the hardest of Brexit and future trading on World Trade Organization terms—plus a special protocol for Northern Ireland. He didn’t even see the point of an accord on security matters or on aviation.

The plan was, literally, to get it all done as soon as possible, both the January 31, 2020, departure and the December 31, 2020, end of transition. The idea was to absorb the economic shock early in the cycle of the parliament.

The British economy might have been just about robust enough in normal times, but now? The counterargument is that, given that a post-COVID-19 recession (or depression) will last years and not months, a short-term delay will not make much difference. That is a cavalier approach—but Johnson is a cavalier politician.

Downing Street has other rhetorical weaponry to deploy. First of all, it can argue that the UK will be saving money by not paying any more into Brussels’ coffers. That is correct, in a narrow sense. It can also point to the fact that the EU has hardly covered itself in glory during the pandemic, closing borders, slapping bans on the export of vital equipment even within Europe, fighting over coronabonds, and the richer North refusing to help out the poorer South, as happened during the eurozone debt crisis a decade ago.

At the same time, the UK cannot point to a single area where being outside of the EU’s institutional framework has helped it plan logistics and purchase equipment to tackle the virus.

U-Turn in the Offing?

Johnson, like Margaret Thatcher, manages the twin feat of sounding unyielding while being perfectly willing to compromise or make a U-turn. The easiest way for him to agree to a delay is if both sides agree to it jointly. This would require Barnier’s agreement as the current requirement is a request coming from London. Any joint agreement could be dressed up as technical and purely in light of the COVID-19 crisis.

Already ultra-Brexiteers are crying foul. They started to sense something was afoot when a former Tory MP, Nick de Bois, who had served as chief of staff to Dominic Raab, now the Foreign Secretary, penned an opinion piece in the Sunday Times newspaper in early April explicitly calling for a delay. “First, it would be incomprehensible to many members of the public if this government devoted time and energy on these talks until the pandemic was under control. The controversy over testing policy and logistics illustrates how intense government efforts must both be and seen to be,” he wrote. “Second, it will strike business, already on life support, as utterly illogical and inconsistent with the government’s efforts to support business, to impose the prospect of greater disruption by not extending the transition period.”

Nigel Farage, who since the December 2019 election has fallen off the political radar, sensed an opportunity when the question of a delay was first mooted. “We need to be free completely of the EU so that, as we emerge from the crisis, we are free to make all of our commercial and trade decisions,” he told his dwindling band of supporters. Tory MPs and former ministers are making similar noises.

The more “Remainers” or “soft Brexiteers” advocate a delay, the harder it will be for Johnson politically. In any case, the final decision will be guided by public opinion. Polls currently show a small majority supporting a delay, although that number drops sharply among ardent “Leavers”. Most floating voters were relieved to have forgotten about Brexit and have little desire or cause to think about it during the pandemic.

Stretching the Truth

Downing Street has already been stung by well-sourced media accounts of how Johnson paid little attention to the coronavirus outbreak during the crucial five weeks from the end of January (while the Germans and others were frantically trying to prepare themselves). He was too busy celebrating “Brexit day” and planning his assault on institutions from the BBC to the civil service. He knows the public will not tolerate another “distraction”.

In the end, if there is no trade deal, and if the UK leaves at the end of the year in the midst of post-corona economic carnage, Johnson will have made his decision on a precise calculation. One of his considerations will be this: voters, no matter how much they suffer, would not be able to disaggregate his move. He could say that Brexit had nothing to do with it. He could lay the blame entirely on the pandemic. It wouldn’t be the first time in his career he had—to put it ever so politely—stretched the truth.

The post Not for Turning appeared first on Berlin Policy Journal - Blog.

Artwork: Claude Cadi

France has a difficult relationship with capitalism. 69 percent of the French think markets do more harm than good (55 percent in Germany), according to polls. Believing in laissez-faire is considered naive, whether it’s about the economy or raising your kids.

But this does not preclude the country from having an affinity for finance. If you want to talk to a quantitative analyst in New York who creates esoteric financial products, you’ll likely be able to do so in French. And the French have a pragmatic relationship to debt. The average household holds debt worth 121 percent of net disposable income. Before having kids, couples typically get a flat and a 25-year mortgage—a knot much harder to untie than marriage!

So when President Emmanuel Macron proposes issuing European bonds to shoulder the cost of the COVID-19 crisis together, the French don’t worry much. Debt is part of life and contracting it together part of being a community. “Solidarity means common financial means,” French finance minister Bruno Le Maire said outright when detailing his proposal.

Siamo Tutti Italiani

Macron’s insistence on a European debt-instrument is primarily about Italy. Paris is seriously concerned about the economic and political dynamics across the Alps.

Lega’s Matteo Salvini and especially Giorgia Meloni from the post-fascist Brothers of Italy are not so different from Marine Le Pen. Salvini’s and Meloni’s parties together are polling above 40 percent, high enough to give them a parliamentary majority. With the Five Star Movement potentially splitting over whether to use the European Stability Mechanism (ESM), snap elections are not out of the question.

Beyond the short-term, Paris believes the EU’s fate will be decided in Rome, too. Italy, like the rest of Europe, will need to mobilize enormous funds to weather the crisis. But Italy’s debt stands at 135 percent of GDP. So far, the Italian government has only dared to disburse direct fiscal measures worth 1.5 percent of GDP to keep its business and citizens afloat. By comparison, Berlin’s measures amount to more than 4.5 percent of GDP, as research by the Jacques Delors Center shows.

No wonder Milan bankers worry about a wave of insolvencies crashing through the country’s economy. And how could the populists be kept at bay in such a scenario? For Europeans the motto is really “siamo tutti italiani” (“We are all Italians.”), as Le Maire declared. And for Paris in particular. French banks are by far Europe’s largest holders of Italian Treasuries.

Rendezvous with Reality

Even before the current crisis, it was clear to Paris that Europe had to become more of a transfer union—by borrowing together and increasing EU spending. There is simply no way around it in a currency union. That’s why most German economists initially opposed the euro, arguing in a famous 1992 manifesto that it would inevitably necessitate “high transfer payments as part of a fiscal equalization.”

Macron sees no value in moral hazard arguments. Rome has run a primary budget surplus since 2011. Once in the debt trap, no austerity diet can get you out of it. But demanding repentance without the promise of deliverance cannot work in the long-run. France’s moral hazard policy of drowning Germany in debt after World War I backfired. That’s why the allies cancelled Germany’s debt after World War II, Macron recently lectured the Financial Times.

For Paris the feeling is thus that the day where German politics finally has to bend to economic reality has come. In fact, in Macron’s eyes the negotiations are less about whether there will be some form of debt mutualization, but how it is done. Either one holds on to today’s method of the European Central Bank buying Italian Treasuries, or Europeans go for the “clean” and honest alternative: common debt.

Geopolitical Grants

Macron, of course, prefers the second option. There are four reasons why.

First, the current solution undermines the ECB’s monetary independence and comes with legal risks. The ECB’s decision to lift the limit on how many bonds from a eurozone member it can buy will almost certainly be challenged in German courts.

Second, if the ECB does the heavy-lifting, the EU does not get to claim credit for helping Rome. Macron understands that this crisis is also a battle of narratives. That’s why he  gives interviews in the Italian press defending the EU.

Third, European bonds are another facet of Macron’s “sovereign Europe” idea. Having a large euro-denominated sovereign debt market with an abundance of safe assets is a precondition for overcoming Europe’s dollar dependence. European bonds would be a first step toward countering Washington’s habit of weaponizing the dollar to override EU policy, for example on Iran.

And most importantly, only if the money is raised through a European bond can it be given to the worst-hit EU members via grants. Sure, European loans would yield some interest savings for Rome and Madrid. But that won’t be enough. As Macron said after the EU’s leaders videoconference on April 23, whether the EU or the ECB acts as creditor, the loans still end up worsening Italy’s debt-to-GDP ratio. Paris wants outright transfers, may be also for itself. The lockdowns are particularly costly for service-oriented economies such as France.

En Douceur

In order to get what he wants, Macron is dropping the bulldozer approach to EU politics that hasn’t served him well so far. When he came to office, Macron did not lose time to demanded a sizeable budget for the eurozone. He hardly took into account other countries sensibilities in his campaign and ended up with next to nothing: a budget without money.

For once, Macron is not moving alone; he has managed to build an alliance around his cause. It even includes low-debt countries like Luxembourg. This is no longer just a North-South debate.

For once, Macron is framing the problem rather than dictating what he thinks is the best solution, giving Paris more negotiation space. It doesn’t matter whether it is a separate vehicle or the European Commission that issues bonds and hands out grants, as long as it is done, Macron said after the inconclusive EU summit.

And for once, Macron isn’t asking for the impossible. He doesn’t campaign for a move to fiscal union all at once. Instead, he reassures Berlin that the debt-issuance and spending measures should be time-limited.

It appears to be working. Angela Merkel, for the first time, stated she can imagine the European Commission issuing more bonds to finance the recovery. And Merkel told the Bundestag she wants to massively increase the country’s contribution to the EU budget, which serves as the main tool of fiscal transfers within the union. Both would cross traditional German red lines. It is still early days, but Paris is more hopeful than it has been for a while.

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© REUTERS/Kevin Coombs

The Conference on the Future of Europe was supposed to kick off on Europe Day on May 9, 2020. It was French President Emmanuel Macron who first floated the idea to organize a conference to sketch out EU reform. Ursula von der Leyen picked up on this endeavor, in a move to appease a European Parliament critical of her nomination as Commission President. In her opening statement to the MEPs, she called for a “new push for democracy” and confirmed that the European institutions would organize the conference.

Recently, however, Dubravka Šuica, the European Commission Vice-President in charge of organizing the conference, announced in an interview with the Financial Times that the formal launch might be postponed at least until September due to the COVID-19 pandemic. This is understandable. For practical reasons it is difficult to imagine how such a two-year reflection process with comprehensive citizen involvement would work in times of social distancing and confinement measures. And European leaders’ political attention is currently rightly focused on managing the immediate crisis.

Open Process

Either way, beyond the kick-off date and the general commitment from all three institutions, it is still unclear what the conference will look like. Before the EU switched into crisis management mode in March, the European Parliament, the European Commission, and the member states had not been able to agree on the composition, process structure, and mandate of the conference. The European Parliament was the first institution to set out its ideas for the conference, backing a rather ambitious resolution which “commits itself to a genuine follow-up of the conference with legislative proposals and possibly treaty change.”

The proposal foresees a Conference Plenary with representatives of the European Parliament and national parliaments, Council ministers, Commission Vice-Presidents, and representatives of other EU institutions, bodies, and social partners meeting on a regular basis. In parallel, citizens from all member states would gather regularly in several Citizens’ Agoras in different cities around Europe. At least two Youth Agoras are planned, too, whose members would be invited to present their findings at the Conference Plenary. A Steering Committee and an Executive Board would ensure a smooth functioning of the Conference.

The Commission’s response was relatively timid. It did not go into the same detail regarding the EU’s governance structure, nor did it refer to the possibility of institutional reform. Since then, all eyes have been on the European Council, where member states have so far shown little enthusiasm to push the Conference forward and have not even formulated a common position.

Thus, there are more questions than answers. To what extent will European citizens really be able to co-create the process throughout the duration of Conference? How often will the Conference reach out to stakeholders on the local, regional, and national level to allow for the widest possible participation and inclusion of views? How will the outcome of the Conference be translated into concrete policy proposals including legislative initiatives? Will treaty changes be an option?

The fact that the interinstitutional bargaining to define the conference’s approach and scope has not even taken place yet has lowered expectations significantly in the past months—despite initial excitement and push from the European Parliament to get the ball rolling. Even before the COVID-19 crisis management absorbed all attention, the focus had diverted from the debate on the Conference to other pressing issues such as the European Green Deal and the Greek-Turkish border crisis. Even in the Brussels bubble, where interest in such exercises is usually much higher than in the member states, it was no longer a top priority on the political agenda.

New Impulses Needed

In principal, the Conference on the Future of Europe has great potential. It can serve as an important new impulse to European democracy and bring the EU closer to its citizens, while at the same time also aiming to make progress with respect to the implementation of the EU’s key policy priorities. Yet its mandate and objectives must be made clear. Otherwise, the good intentions will backfire, eroding citizens’ trust in such exercises and more generally in the EU. There have already been enough fruitless ad-hoc or on-again-off-again participatory processes, pretending to give European citizens a say in the debate on the future of Europe. This time, the European institutions should get it right. Proper preparation is key.

Now that the formal launch has been postponed, the unexpected timeout should be used to prepare the ground for what would otherwise have likely become a “going through the motions” exercise. The far-reaching economic, social, and political consequences of the COVID-19 crisis for the EU will make the conference even more pressing.

Lockdown measures throughout Europe have already led to a sharp spike of unemployment; a deep recession looms. Cross-border solidarity has been once again severely tested as the countries most affected by the health crisis initially could not count on the support of their European partners, who instead turned inward and closed their borders. In the eyes of too many citizens, the EU played too small a role, particularly when coordinating the necessary restrictive measures and distributing medical equipment. Old conflicts between the North and the South have resurfaced, with even more intensity and emotion. And in Hungary, Prime Minister Viktor Orbán has abused the COVID-19 crisis to undermine democracy, further strengthening his autocratic rule.

Push the Member States

The public health crisis has revealed the limitations of the EU’s capacity to act and has challenged the concept of European solidarity. At the same time, it has laid bare the already existing institutional shortcomings. The Conference on the Future of Europe will not only be an opportunity to jointly assess the EU’s crisis management and come to terms with the initial lack of European action as well as the reflex for national solutions. It will also allow to explore what should really be at the core of the EU, and which public goods it should deliver to European citizens. At the same time, it can serve as an important instrument to channel citizens’ feedback and to distill necessary reforms in order to strengthen the EU’s cohesion and capacity to act—on institutional reform as well as on political substance.

The first task is to ensure that the conference will take place at all. The delay could tempt member states to scrap it entirely from the political agenda. Most of them had been rather skeptical from the beginning anyway, having expressed doubts about how effective the exercise might be and fearing it could open the door to talk of changing the EU’s treaties. As member states will have to fight the fallout of the COVID-19 pandemic in the coming months, they might completely lose their appetite to engage in such an exercise.

Therefore, the European Parliament as well as civil society organizations across Europe should push the member states to ensure that the latter stick to their commitment of launching the conference once confinement and social-distancing measures are lifted. With its recent resolution on the subject, the European Parliament has already sent a gentle reminder for it to be convened as soon as possible. And the signs are encouraging: a group of five ministers of EU affairs from Austria, Ireland, Greece, Bulgaria, and Belgium followed the Parliament urging their colleagues to commit to the conference.

Furthermore, the Parliament and the Commission should find common ground for an ambitious mandate and process to be discussed with the member states in order for the conference to be ready in time. The upcoming German EU presidency could provide an important impulse to broker an agreement between member states and steer the way toward an interinstitutional agreement. Any compromise should address the following two aspects:

Strategic Priorities

First, the participatory dimension of the conference should build on similar experiences in the past, such as the European Citizens’ Consultations that took place last year. In fact, there is a long history of efforts by the European institutions aiming to better connect citizens with the EU, which offer valuable lessons that should be taken into consideration. Experiences from democratic innovations at the local, regional, and national level across Europe should also be harvested, such as the Irish citizens’ Constitutional Convention or the Ostbelgien Citizens’ Council in the German-speaking community in eastern Belgium. Success requires clarity and clear communication of the ultimate goal of the Conference in order to manage expectations, to enable citizen involvement at both the national and transnational level, and ideally a long-term participatory process that establishes a regular communication channel between citizens, civil society, and elected representatives that goes beyond a one-off exercise.

At the same time, all stakeholders should be aware of the risks that come with organizing such a participatory endeavor: euroskeptics will be keen to push forward their own agenda calling for returning competences back to the national level. Thus, pro-integrationists should be prepared to have a convincing communication strategy throughout all phases of the conference to counter misinformation and to deliver credible responses when being confronted with dissent regarding the European project.

Second, the point of departure should be an evaluation of the main consequences of the COVID-19 crisis for the EU and its member states. However, reducing the Conference to the health crisis debate would be shortsighted. It should also concentrate on strategic priorities such as the green transition, the digital agenda, the EU’s role in the world, and democracy and governance, based on the EU Strategic Agenda 2019-2024 defined by the European Council and the von der Leyen Commission. In addition, as the EU focuses solely on fighting the pandemic and its consequences, and certain policy fields face deadlock due to longstanding conflicts, the Conference could serve as an important tool to keep reform debates alive.

Debating the EU’s strategic priorities will also reveal the necessity of institutional reform, for instance the introduction of qualified majority voting in specific policy fields. Also, other roadblocks such as electoral reform or the Spitzenkandidaten process will need to be addressed. Thus, all institutions should clearly commit themselves to deliver concrete financial, legal, institutional, and policy reforms, and—if necessary—even treaty change.

In every crisis, there is an opportunity. Postponing the launch of the Conference buys time. In a post-COVID-19 period, the need for a comprehensive European soul-searching exercise will be greater than ever. European institutions should not waste the opportunity.

The post Extra Time appeared first on Berlin Policy Journal - Blog.

And there’s no doubt that the consequences of the coronavirus pandemic and the unprecedented lockdown of much of the world will be severe. The world will witness a global recession at least as deep as the financial crisis of 2008, possibly even worse than the Great Depression of 1929. When addressing the German public in March, German Chancellor Angela Merkel warned that the challenge was the country’s biggest since the end of World War II.

European countries—and hardest-hit Italy and Spain in particular—will need massive help to get their economies back on track. While vast amounts of money have been promised already by the European Commission and individual member states—€1 trillion plus and counting—, there is disunity regarding how precisely to finance a “European Recovery Fund,” whether the help should come in the shape of loans or grants, and whether “coronabonds,” or “eurobonds” in general, are the way forward.

The German government, while signaling willingness to help more, keeps saying nein to the idea of shared liability—so not quiet everything is changed, after all. (Indeed, there is some reason to suspect that Richard Haass, president of the Council on Foreign Relations, is right in arguing that the pandemic “will accelerate history rather than changing it.”)

In this issue, our contributors try to sketch out ways ahead. DGAP director Daniela Schwarzer warns that Europe needs to emerge strengthened from the crisis, and that Germany, taking over the EU presidency on July 1, has to play a special role in this: “Berlin cannot limit itself to the role of honest broker.” Daniel Twining and Jan Surotchak of the International Republican Institute call on the United States and Europe to defend democracy—and Western leadership— against the authoritarian advances of China and Russia (did US President Donald Trump get the memo, though?). British journalist David Goodhart argues for seizing this opportunity to retreat from hyper-globalization, and US sociologist Richard Sennett predicts that the crisis may well mark the end of the “cities of towers.”

Some change at least, it seems, is inevitable.

The post Editorial: World, Interrupted appeared first on Berlin Policy Journal - Blog.

© REUTERS/Fred Greaves

The coronavirus pandemic and its effects on politics, society, and the economy are a concrete example of what is meant by the still very abstract concept of disruption. In summary, “disruption” expresses the idea that the future will be completely different from the past. A radical break with everyday habits—as is the case with a pandemic—prevents an extrapolation of experiences from the past into the future.

“Disruption” in itself is not a new phenomenon. More than 100 years ago, the Austrian economist Alois Schumpeter identified “creative destruction” as the motor of economic growth. Now the coronavirus is destroying traditional business models and existing value chains. Suddenly, we can see how abruptly the old laws governing politics and society can be overridden.

Business has long been aware of the equally destructive and creative dynamics of disruptive processes. Long before the outbreak of the pandemic, digitalization and data, robots and algorithms, true auto mobility, and artificial intelligence had profoundly changed value-added processes.

A Hockey Stick Effect

Now, however, people are realizing how much can be achieved via distance learning, home office, online organization, video conferencing, and digital services. Emergency measure that prove to be a success in practice will be retained even after the pandemic. The coronavirus will accelerate digitalization across the economy, society, and politics.

New knowledge is being created in the search for effective responses to the coronavirus. This is not only useful in the fight against pandemics, epidemics, and diseases. Innovative findings from the battle against the coronavirus can be used later and elsewhere to save lives, prevent infection, and make people more active and productive.

It is therefore to be expected that there will be a hockey stick effect in this crisis, as in previous ones. At first, many things will get worse. The economy is collapsing, unemployment is rising. After a period of shock and suffering, however, there will be adjustments and counter-reactions. Innovations will lead to investments. New things will be created, the economy will recover, and society will enter a new phase of growth and prosperity at full swing. Things have always happened this way. There’s little reason not to assume it will happen again.

Viruses in Cyberspace

The pandemic has made globalized societies realize with horror how vulnerable they have become to unforeseeable, unpredictable shocks, against which they can do little, at least in the short term. The coronavirus has brutally demonstrated that the current economic and social model was geared far too much toward short-term success. By contrast, the long-term accumulation of resources for crises, disasters, or even pandemics has been massively neglected. There is a shortage of intensive care beds for the critically ill, of respiratory equipment and protective gear, as well as of medical and nursing staff.

This time—unlike with previous supply problems—globalization cannot help. In the event of a pandemic, similar shortages will become the rule worldwide. There aren’t any surpluses anywhere that could be quickly diverted, in part because in the coronavirus crisis, every national government is concerned most with its own people. Thus, national self-interest leads to the closure of borders, mothballing of airplanes, the halting of the global trade of goods, and the movement of people. Instead, digitalization is used wherever possible. Data transfer replaces the trade in goods. The home office replaces the business office. Video conferences make long-distance travel unnecessary.

Digitalization, which is now replacing globalization, also has its pitfalls. After all, the coronavirus is by no means the only—albeit frighteningly real and concretely visible—existential threat to the population and economy. There are also viruses in cyberspace that can cause immense damage and threaten human lives and societies. However, mischief and malpractice only become apparent when entire metropolitan regions are left without electricity, light or water, when the data centers of utilities, mobility, communication, or intensive care units in hospitals are no longer functioning because the Internet is paralyzed across the board, or when trade, stock exchanges and banks remain closed because online transactions cannot be verified.

An Agenda for Globalized Societies

Although not directly related, there are a number of other examples that illustrate how globalized societies have abandoned long-term protection for short-term benefits. The underspending in Europe on external security and counter-terrorism is one example. The long-standing failure to combat climate change is another. In the past, many costs that were incurred “externally”—either in other regions of the world or concerning the environment and climate—were not taken into account. However, disregarding the external costs at the expense of employees in low-wage countries, the extinction of species or global warming became impossible at last with the “Fridays for Future” movement. Even before the outbreak of the coronavirus, a rethink was underway.

The coronavirus only reinforces developments that were already evident. The perception, attention, and correction of these issues should have the highest priority on an “Agenda 2030” for globalized societies. Thus, after the end of the pandemic it will be neither desirable nor useful to return to business as usual. On the contrary, many things will have to change in order to hold on to the things that are truly indispensable. These include respecting individual fundamental rights and maximizing the chances of a long and healthy life and greater prosperity for all.

Spies and Criminals

Replacing global value chains with digital processes, online trading, data transfers, and local 3-D production on site at the customer’s premises creates completely new dependencies. Until now, individual links in global value chains were at risk of being abused. This could be individual governments threatening to impose punitive tariffs, trade restrictions, or even nationalization and expropriation in case of conflict. Another risk consisted of criminals disregarding property rights, violating patent protection, producing pirated copies, or carrying out brand piracy.

If digitalization is now changing the face of globalization, political dependencies and criminal activities will also change in character. The switch from the global trade in goods to virtual data transfer will be followed by an increase in cybercrime.

On the one side, there are private big data companies which more or less legally and openly collect company-specific data. They spy on interdependencies and networks as well as companies’ internal behavior patterns, decision-making structures, processes, and secrets. On the other hand, there are cyberattacks with the sole purpose of harming companies, personalities, government representatives, or politicians. There, the goal is to paralyze them for a while, destroy the trust that partners have in them, or undermine their public reputation.

Preventing a Virtual Pandemic

Whoever dominates cyberspace will dominate the world economy. Europe, given the absence of products and services of its own with an similar price-performance ratio, currently only has the choice who it wants to depend on: the United States or China. In the first case, “big business”—i.e. private monopolies with huge market power—threatens to collect every conceivable information about people in order to rake in “big profits” at their expense. In the second case, it is “big brother”—i.e. the monopoly of an authoritarian state capitalism—which, without hesitation or regard for privacy, pries into the most intimate corners of people’s lives.

Digitalization as a response to globalization becomes a social risk when “bot” networks manipulate populations and falsify parliamentary elections. Fake news can sow hatred and mistrust and destabilize societies. In the same way, huge dependencies arise from the use of private data clouds, online shopping, electronic data traffic with banks and insurance companies, or e-government.

We must prevent the biological pandemic from being followed by a virtual one. People should not be forced to disclose private data to combat the coronavirus if this means opening the gates to virtual viruses. Security in cyberspace is one of the central state functions in the age of digital globalization. Good protection against big data, big business, and big brother is expensive. Insufficient protection, however, is far more so. It can destroy livelihoods and, in the worst case, call into question the stability of Western societies.

The coronavirus—as all disruptive processes—is likely to be an eye-opener for Europeans. It reveals just how vulnerable liberal economic and social models have become. At the same time, the pandemic will give an enormous boost to digitalization and the data economy. This, however, will create new risks. They need to be neutralized just as resolutely and forcefully as the original pandemic.

The post The Pandemic Disruption appeared first on Berlin Policy Journal - Blog.

© China Daily via REUTERS

The coronavirus has caused a global health crisis that risks fueling a pandemic of authoritarianism, nationalism, economic autarky, and malign foreign influence of the kind that the United States and its European allies constructed alliances and institutions to guard against after 1945. This is a time for democracies across the Atlantic to help and support each other, but also to rally around protecting the free and open international order from authoritarian assault.

By virtue of their open societies, Western nations are more vulnerable to this pandemic; their governments are more limited in their ability to control citizens’ behavior than the dictatorships in China and Russia, which are not subject to the same legal constraints. At the same time, both the Chinese Communist Party and the Kremlin view the crisis now mostly playing out in the West as a strategic opportunity to extend their influence at the democracies’ expense. Meanwhile, strongmen are using the cover of the crisis to consolidate power in ways that threaten the democratic integrity of the European Union.

Four Threats to Democratic Systems

Both the US and Europe will emerge from the fog of the immediate crisis and face a new world order profoundly reshaped by COVID-19. Western democracies will grapple with a new balance between the state and the economy, new powers in the hands of governments to surveil their populations in order to manage public health, new pressures on established political parties from nationalists and autarkists on the left and the right, intensified migration pressures from nations in the Middle East and Africa unable to handle the epidemic, new forms of malign foreign influence associated with leveraged Chinese and Russian forms of health assistance, and revolutionary demands from citizens for health and welfare safety nets following the extraordinary insecurities produced the pandemic.

In this new world order, questions of democracy and governance will be more, rather than less, relevant as governmental and societal responses to the crisis expose fissures and vulnerabilities within democracies. Throughout Europe, we already see these cleavages being exploited by China and Russia. At the same time, competing narratives of unity in the face of the crisis—ranging from those who advocate a more robust response capacity at the EU level to those who emphasize national unity, sometimes with a decidedly anti-EU cast—will shape transatlantic politics for years to come. So, too, will the consequences of emergency measures and societal controls and various forms of state-driven surveillance and enforcement introduced in response to the pandemic.

Those who believe in the ultimate strength of democratic forms of government to deliver best for the people that they serve—in particular Europeans and Americans—must begin now to prepare and act to win the battle for the post-crisis narrative. Even in the midst of the crisis, at least four potential post-COVID-19 threats to the democratic systems that the US and Europe have worked so hard to build since the end of World War II are becoming evident. It is incumbent on those who believe that a strong transatlantic response to these challenges is necessary in the wake of the crisis to begin to plan now for how we will address them, together.

Freedom Takes a Back Seat

In the short term, of course, the virus is putting enormous strain on freedom of movement as most European nations have effectively closed their borders, thereby reversing one of the founding tenets of European integration: the free movement of people. At the same time, some leaders are using the opportunity presented by the pandemic to centralize control and weaken institutions that countervail executive power. In Hungary, parliament has passed State of Danger legislation allowing Prime Minister Viktor Orbán to rule by emergency decree. In both Serbia and Turkey, the governments have used the crisis to crack down even harder on the press and the capability of the opposition to function.

In the short term, democratic political and civil society leaders need to step in wherever necessary to stem moves to sidestep democratic processes, as illiberal politicians try to take advantage of the crisis to move their own political agenda forward. More broadly, in the aftermath of the crisis, democratic political leaders will need to address questions regarding how well democracies responded.

It is thus critically important that Europeans and Americans prepare for this eventuality by marshalling the resources to strengthen democratic institutions. European nation-states and the EU itself have an extensive infrastructure of such organizations at their disposal. So, too, does the US. Working together, we can effectively demonstrate what will be the real lesson of this crisis: that citizen-centered government that both communicates with and responds to the needs of the people it serves is best positioned to act effectively to meet the challenge—including supporting health and economic recovery over the long term. With a united response, we can help to build and rebuild trust between government and citizens, assist political leaders to respond in crisis situations, and amplify local, citizen-led responses.

The Temptation of Autarky

As the state takes more control over the economy in various countries in the transatlantic community, we must plan for calls for “industrial self-sufficiency” to grow louder in mainstream politics.

Few countries will want their pharmaceutical and broader medical supply chains dependent on China or other foreign countries. The question is whether this will simply be a readjustment to globalization, or whether there will be politically viable calls for each country to have its own production capacity for major products, in which case we risk reverting to a 1930s-like wave of introversion within European nations and in the US. Here, too, we risk losing a major accomplishment of the post-World War II era in Europe: the free movement of goods and services.

In fact, it is the private medical sector in the US and Europe that is most likely to come up with a vaccine for coronavirus. It is private markets on both sides of the Atlantic, not lumbering government bureaucracies, that will devise innovative health solutions to serve citizens who may expect too much from overextended governments. No amount of government spending will be capable of restoring nations to economic health should their large and small enterprises fail to lead their economies out of recession by re-hiring workers and restoring production and services. Furthermore, no nation will innovate its way out of this crisis on its own; institutionalized and multilateral forms of collaboration will be central to devising solutions to the pandemic’s fallout across so many national boundaries. Pulling up economic and political drawbridges would also only cede strategic space to Chinese and Russian efforts to build out new spheres of influence, including in eastern and southeastern Europe.

An Intergenerational Struggle?

It is now well-established that COVID-19 affects people very differently according to their age: while the elderly are especially vulnerable to succumbing not only to the virus but also to existing underlying conditions, younger people seem to have a much higher survival rate. This is a spectacular intergenerational change of fortunes in places like the south of Europe, where millennials and generation Z are the ones who have been the most socially and economically vulnerable recently—particularly in places like Italy or Spain. Now, it is the older members of society that are existentially vulnerable—and it is their turn to feel threatened by younger citizens’ visible unwillingness to change their lifestyles. This could have lasting consequences on intergenerational relations in the future and could lead to political tensions.

Additionally, data from studies we conducted in Europe indicate that the younger generations—even in advanced democracies—are much less prone to believe that democracy is the best possible form of government. Historical amnesia may be partly to blame—they don’t remember the police states that terrorized citizens behind the Iron Curtain, or the fight against fascism that occupied what Americans call the Greatest Generation. It is clear that we need a forward-looking transatlantic response to the concerns of younger generations that will have been shaped by the pressures of both the 2008 financial crisis and the coronavirus pandemic. This is a wholly different frame of reference than that of those who fought the Cold War and saw 1989 as a crowning achievement, and it will require both different forms of communication and engagement to ensure their commitment to the democratic process.

Propaganda Targets

As if the acute domestic pressures on democratic systems were not enough of a challenge, in the post-COVID-19 era, the transatlantic community will also have to contend with aggressive attempts by malign authoritarian powers to turn the crisis to their advantage.

In this regard, Europe’s southern peninsulas are the most economically vulnerable on the continent, and they are also the ones that are so far hardest hit by the virus. High levels of social contact in public spaces have contributed to the rapid spread of the virus in places like Italy and Spain, and since the confinement began, many citizens have expressed the opinion that they were left to fend for themselves by their purported friends and allies in the EU and the US—even though Western assistance to allied nations has in fact been higher (and of higher quality) than far-better-publicized Chinese and Russian forms of sometimes questionable medical support.

Chinese and Russian propagandists have picked up on this trend and launched operations to bolster their image at the expense of European governments. Chinese Communist Party propaganda is aggressively attempting to confuse people about the origins of the virus (contending that the US or even Italy were the source of the contagion), and is attempting to curry favor by sending masks and medical equipment to Italy, Serbia, and other places. Local politicians in these countries have praised the Chinese Communist Party for its generosity, and in Serbia, President Aleksandar Vucic said it most plainly on Serbian television: “European solidarity doesn’t exist—that was a fairy tale on paper,” contending that the Chinese “are the only ones who can save us.” Russia, for its part, has dispatched military medics and equipment to Italy and Greece to deal with the crisis—all while ignoring cases at home. The subtext of these efforts is that “we are all in this together,” so there’s no value any longer in continuing the EU’s sanctions on the Kremlin for its aggression in Ukraine.

In the propaganda narratives from Beijing and Moscow, there is also an obvious glorification of their respective regimes at the expense of democracies. In China, the focus is on the heroics of President Xi Jinping and the CCP, which they claim are doing what is needed to stop the spread of the virus, unlike ineffectual democracies—even though it was China’s authoritarian suppression of medical and media reporting on the virus at its inception, including the punishment of local officials who sought to sound the alarm, that helped turn COVID-19 into a global pandemic. Meanwhile, the Kremlin initially behaved as if COVID-19 had not reached the country at all and even sent scarce medical equipment abroad as part of its propaganda push. Indeed, the Kremlin seems to have devoted more resources to information warfare against the West than to protecting Russian citizens who will inevitably suffer from the pandemic.

It now seems that the tide of the narrative here may beginning to turn, as more and more stories of inter-European and US assistance efforts come to light. Similarly, it is increasingly clear that “assistance” from the CCP comes at a high price, as Chinese diplomats leverage assistance for political and economic concessions. Nonetheless, Chinese and Russian sharp-power influence in Europe was a significant and growing issue before the COVID-19 crisis broke, and there is every reason to assume it will continue afterward.

The Path Ahead

Europeans and Americans should understand clearly that both Beijing and Moscow define a strategic interest in weakening the cohesion of the Atlantic alliance in order to enhance Chinese and Russian influence in Europe at American expense. The Kremlin also defines an interest in weakening European unity, including by supporting political extremists, in various European countries in order to build out a Russian sphere of influence in the east at Brussels’ expense. Meanwhile, the Atlantic allies’ uneven and belated responses to the pandemic risk discrediting democratic systems in the eyes of fearful publics.

To meet these challenges, the transatlantic democracies must position themselves to shape the post-pandemic order. First, they must ensure that temporary measures limiting basic freedoms put in place to limit the spread of the virus remain just that: temporary. Emergency powers exercised by governments to beat back the pandemic by surveilling and controlling their citizens cannot become the norm. When the crisis is over, we are convinced that democracy will once again have proven itself vis-à-vis its authoritarian detractors to be the most effective—and certainly the most transparent and accountable—form of government in meeting the needs of the people. We must remain vigilant to push back against backsliding that undermines this basic truth: that sovereignty rests with the people and not a permanent class of political elites unwilling to yield power.

Second, democratic governments must resist the temptation to disengage their economies from one another, pursuing the fantasy that each one of them can build (or rebuild) an infrastructure making it fully self-sufficient. Economic globalization has helped produce a broadly middle-class world for the first time in human history. While countries will be more prudential about supply-chain security in the post-pandemic international economy, rebuilding prosperity will be impossible without an open international trade and investment regime. Europe and the US could even consider an economic version of NATO to protect intellectual property, consolidate free-world supply chains and innovation networks, and encourage a qualitatively superior form of market access than that accorded to imperialistic authoritarian powers outside the West.

Third, political parties, government leaders, and civil-society organizations must redouble their efforts to ensure engagement across generations in the political process to help minimize tensions between them driven by the different experiences they have suffered in the various crises that have buffeted the transatlantic space since 2008. The challenge for political parties will be giving young people a greater voice in politics so they do not become alienated and radicalized by disruptive economic conditions.

Fourth, democracies in Europe and America must further develop their capacities to push back against the malign forms of foreign authoritarian influence that risk undermining democratic institutions—and democratic unity among allies—in the West. This includes protecting their citizens from Russian and Chinese misinformation as well as piercing the information bubble that denies Russian and Chinese citizens objective news reporting and leads them to believe their governments’ self-serving and deeply anti-Western propaganda.

German Chancellor Angela Merkel, in her first national address on the pandemic, noted that the COVID-19 crisis presents the greatest challenge Germany has faced since the end of World War II. With old and new democracies working together, Europe and the United States overcame that challenge and built the most prosperous and free community of nations in the history of humanity.

Even as former enemies were able to put their immediate pasts behind them to rebuild Europe, today’s transatlantic democracies must do the same. Crises have a way of focusing the mind on what matters most. And what will matter most after the COVID-19 health crisis has passed is protecting the political liberties and democratic institutions that enable free nations to work together to serve their citizens, uphold their common security, and rebuild their prosperity.

Just as coronavirus presents a mortal threat to public health, so the aggressive authoritarianism of revanchist great powers presents a mortal threat to American and European leadership in the world. Building political resiliency to protect and sustain democracy through the pandemic will be as important as developing the medical antibodies against COVID-19 and restoring public health—and public trust in government—across the West and the world.

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