In the late 1990s, a prominent academic researcher joined our NATO policy planning and speechwriting team for a few months. His track record was stellar: he was a lecturer at prestigious universities in several countries, he had published numerous articles in well-known peer-reviewed journals, and he had edited several books on international security affairs.

When our new colleague looked for ways to apply his skills, however, he found it much harder than he had anticipated. He had to realize that a large, consensus-driven organization like NATO tends to be obsessed with process. Even on issues where substance seems paramount, our new colleague had to swallow his pride: our divisional leadership rejected an analysis he had produced on a specific regional issue, because his findings were considered politically and militarily infeasible. To be sure, no one took issue with the quality of his analysis. What mattered was that the conclusions were outside the political comfort zone.

In the end, the acclaimed academic did not really leave a lasting mark on NATO’s evolution. However, he learned a lot about the “real” NATO: a massive, risk-averse bureaucracy, where progress is hardly ever the result of radically new ideas but rather of persistent work in committees, occasionally augmented by offline discussions in cafeterias.

Does this depressing story mean that the security establishment, as epitomized in national ministries or major international institutions, is impenetrable to advice and inspiration from the academic strategic community? Are students of international security affairs, who hope to one day use their skills to make the world a safer place, better advised to become lawyers or businessmen? The answer to these questions is an unequivocal “no.” Academics can make their voice heard, provided they are willing to acknowledge that in the hectic world of practical policy-making, specific rules apply.

Less is More

The number one constraint for virtually all decision-makers and their staff is a lack of time. Any academic who wants to be heard needs to understand this—yet, sadly, all too many academics don’t. The fact that most decision-makers’ briefcases contain a ton of files but probably not the latest issue of Foreign Affairs (or, shock horror, not the Berlin Policy Journal either) does not imply that these people are intellectually weak or even just plain stupid. Rather, they simply cannot afford the time to plough through a 10,000-word article that may contain only one noteworthy idea. Hence their penchant for short, snappy reading, such as op-ed columns in prominent newspapers. Op-eds are not the forum for complex academic reasoning of pros and cons, but concentrate on one persuasive argument.

Some academics are horrified by the very idea of writing op-eds. But one of the counterproductive side-effects of mainstream academic education is the inability of many academics to be brief. All too often, they equate “brief” with “superficial.” Developing a good idea takes time, or so their thinking goes. One researcher, for example, delivered a briefing that featured close to a hundred Power Point slides. In addition, he also kept fifty backup slides in case his audience would ask for an encore (it didn’t!). While this case was probably unique, many researchers feel insulted when they are asked to present their thoughts in ten minutes or less. Yet those who demand such brevity are neither lazy nor do they suffer from attention deficit disorder.

They simply believe—usually based on years of experience—that they will be able to recognize a good idea when they see one, and that this process does not require an hour and a seemingly infinite number of slides.

If academics want to get their points across, they need to make some hard choices: which are the most important issues they want to make, and, conversely, which issues can safely be dropped. Many academics would rather get a root canal than make such choices. They are terrified that by leaving out important stuff, their audience will perceive them as shallow. They need not worry.

Simplicity Is Difficult

The worst mistake next to being too long is being needlessly complicated. As mentioned earlier, decision-makers are not stupid; many of them also went to university, even if their career path took them in a different direction. However, one cannot expect them to be pleased with long, theory-heavy and jargon-loaded presentations or articles that require a Rosetta Stone to translate them into normal language. Sometimes even the most prominent think tankers go down in flames due to their tendency to “show off.”

For example, at a meeting with NATO officials, two think tankers, by using jargon and overly complex graphs, managed to complicate their interesting findings so much that they lost their audience after a few minutes. In the same vein, an expert who presented several trends about the future development of the global energy landscape stubbornly refused to answer the question which of these scenarios he deemed the most likely. Quite obviously, he was terrified that he might be held accountable to a prediction that may turn out wrong.

Many “strategic foresight” experts do the same. They sketch several alternative futures, but avoid being pinned down on any of them. “Foresight,” they tell their baffled audience, is not the same as “prediction.” After all, the future evolves in a “cone of uncertainty.” Maybe so, but decision-makers who are told that a certain issue may potentially evolve in three different ways will be annoyed rather than enlightened. What they need is one plausibly argued case, not three alternatives, which only serve to put the burden back on them and off the researcher’s shoulders.

Originality vs. Realism

Many academics believe that the best way to catch decision-makers’ attention is by being original. Yet nothing could be further from the truth. Decision-makers are not looking for something that is totally out of the ordinary. Rather, they seek incremental ideas that move things forward and that are, above all, achievable. This is why an expert on the political situation in Kosovo, the evolution of Russia’s defense sector, or the strategic implications of China’s Foreign Direct Investment in Europe is more likely to be listened to than someone who pontificates about grander things, such as, for example, the future of NATO, the future of the liberal world order, or similar “big stuff.”

When, to give a particularly stark example, NATO diplomats are told by an academic that the Atlantic Alliance’s decision-making procedures should move from unanimity to majority voting, that NATO should establish a European caucus to better balance the United States, or to abolish NATO’s integrated military structure, these diplomats will be rolling their eyes in despair rather than appreciating these bold ideas. Decision-makers will filter everything they hear through the lens of political or military practicability. Alas, academic advice all too often fails that test. Before one starts thinking “out-of-the-box,” one first needs to know what’s in the box. An occasional provocation may enrich the debate, but academics who consistently go against the grain because they consider it “original” are not original at all. They are just clowns with a university degree.

The Importance of Timing

Academics have time to study an issue in much greater depth than a decision-maker or their staff. This is why bureaucrats, no matter how much they may scoff at the “naïve” eggheads inside the ivory tower, still reach out to academics. However, many academics squander this opportunity. Policy advice is demand-driven. The bureaucrat listens to the academic not for entertainment, but because they have a real-life problem to solve. Hence, timing is of the essence.

A think tanker who once tried to convince a defense minister that NATO’s latest arms control proposal (which had taken the allies ten months to agree on) should be completely revised, provoked only two unpleasant responses: first, he was asked by the minister why developing these great thoughts took him longer than it took almost 30 nations to develop their own proposal. And then the minister cut the meeting short, as he simply was not going to travel to Brussels to make himself a laughing stock in front of his colleagues.

The lesson from this episode is clear: no matter how thorough the academic’s analysis might have been, its bad timing made it utterly useless. The same holds true for ideas that come too early: The academic may come up with a brilliant idea about some future development, yet when decision-makers are busy focusing on other, more current issues, this idea will not have any traction. Even if events finally prove the academic’s predictions right, no one will care. In the noise of daily politics, an idea that is articulated too early is just as lost as the thought that comes too late.

Power Speaks to Power

Our Policy Planning Unit was once asked to examine an idea that the entire team considered utterly silly. We told our leadership that this idea was not worth wasting any time on, yet we were told that our dismissive views were irrelevant and that we should thoroughly look at the issue. The reason for the seriousness with which our superiors approached this task was easy to fathom. The idea in question had been put forward by a high-level official from a most important allied country in a meeting with our own leadership. The proposal made no sense whatsoever; we said so in our analysis, and our leadership quickly lost interest in it.

Yet the lesson was clear: if someone who is considered important and powerful utters an idea—no matter how stupid—it will be treated as an important contribution. Unfortunately, some powerful people tend to not listen to those who have less power, no matter how high their IQ. For example, if the staff makes a proposal for a new political or military initiative, the boss might reject it as too banal or infeasible. Yet if an op-ed by Henry Kissinger or Carl Bildt makes that exact same proposal just a few weeks later, the decision-maker will suddenly find it brilliant and advise his staff to give it further thought.

Let’s be honest: for most politicians and business leaders, a half-baked idea voiced by a VIP at a gala dinner carries more weight than 10 brilliant analytical papers written by their staff or by an academic researcher. In such cases, the academic and the average bureaucrat are in the same boat and have no choice but to accept this most inconvenient truth: when power speaks to power, all other voices fall silent.

Academic Humility

The real-life observations presented here should not lead to the belief that bureaucratic insiders would by definition fare better in getting the attention of key decision-makers than outside experts from academia. True, bureaucrats may have fewer inhibitions when it comes to writing short, un-academic papers, ignoring weighty theories, and offering at least a few recommendations for action. For the hardcore academic researcher this may sound boring, yet getting it right requires a degree of intellectual discipline (and academic humility) that many universities fail to prepare their students for.

Still, the bureaucrat needs the academic. Without academic research, policy-making would run the risk of become ever narrower intellectually. Without the academic’s more thorough inquiry into complex issues, real-life policy-making would become ever more self-absorbed, depriving itself of alternative courses of action, while political leaders would increasingly operate by mere “instinct” (which is mostly a euphemism for half-truths and personal prejudices).

It’s only by working together that they can safeguard the achievements of the Enlightenment that are currently in danger of getting lost: rational analysis and the facts-based search for sustainable solutions.

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Following the European Central Bank’s announcement in September that it will restart its bond-buying program, several national central bank governors voiced unprecedented public criticism of the decision. “In my view, [outgoing ECB president Mario Draghi] has gone too far,” Bundesbank chief Jens Weidmann told German tabloid BILD. A group of former central bankers quickly followed with similar complaints.

All this comes on the back of strong condemnation in recent years of the eurozone central bank’s monetary policy from parliamentarians and other officials, particularly in countries such as Germany and the Netherlands.

The issue is not just that this damages public trust in the independence of the ECB. Such objections also tend to ignore the source of the current low-rate environment. For example, the ECB is constantly under fire in Germany, even though the German government’s unwillingness to spend and invest more has played a role in forcing Europe’s central bank to intervene and in keeping interest rates low. Criticism of the ECB coming from those in charge of fiscal policy is particularly galling because, over the last decade, the eurozone has relied almost completely on support from the ECB to stimulate its economy.

Too Much Saving

The ECB’s critics complain that it keeps interest rates artificially low, causing savers to lose out, distorting markets, reducing pressure on governments to reform, and putting pressure on banks’ business models and on pension funds’ funding positions. However, they tend to ignore the causes of the low interest rate environment and overstate the power of the ECB to control financial conditions. This critique also disregards the fact that interest rates have been on a downward trend since the 1980s. In fact, this trend in rates continued largely unchanged after the start of the ECB’s bond-buying program in 2015. Nevertheless, critics tend to blame this practice, which they often incorrectly describe as “money printing,” for the current state of financial conditions.

The bottom line is that too many people, and countries, are trying to save more than they invest. And as the demand for borrowing is lower than the supply, the price of borrowing, i.e. the interest rate, is falling. This is clearly visible in the eurozone, which as a whole consumes and invests significantly less than it produces, with the gap at about 3 percent of its gross domestic product. Ageing populations are often assumed to be a driving factor of this; a relatively larger group has to save more for their retirement. The fact that so many investors are searching for safe assets, often government bonds, pushes up their prices and thereby reduces their yields. On top of these private sector savings, many European governments are now running fiscal surpluses, further decreasing the supply of safe assets and pushing up their prices.

Counterproductive Fiscal Policy

While the ECB will never acknowledge that it has run out of tools to stimulate the eurozone economy, its repeated calls for government spending highlight that it cannot do the job alone. For several years now the ECB has been pointing out to governments that it needs support from fiscal policy to boost economic growth in the eurozone. But many governments have responded by doing the opposite: tightening fiscal policy, and in many cases running large fiscal surpluses for several years, often by increasing tax burdens and cutting back on public investment.

In spite of repeated calls for Germany to loosen the purse strings, including from the IMF, both governing German parties remain committed to the so-called “schwarze Null policy” of making no new debt. Olaf Scholz, the finance minister, recently indicated that Germany would be willing to increase spending in the event of a crisis comparable to that in 2008, but this sets an absurdly high bar—that was, we hope, a once-in-a-generation global economic crisis.

Germany did engage in fiscal stimulus during the global financial crisis in 2009-10, but this turned out to be a short-lived experiment. By 2011, it was already tightening again. That fiscal stimulus helped the German industrial sector through the slump, and Berlin might repeat the trick now to cushion the impact of the current industrial downturn, for instance through state support for reduced working hours. This would be welcome in the short term, but it runs the risk of crowding out the types of spending and investment needed for the medium to long term. Under the schwarze Null, every euro spent paying factory workers to stay at home is a euro not spent renovating schools, or improving low-carbon transport.

How to Kick the ECB Habit

Unemployment may be approaching historically low levels in the eurozone, but the persistence of low inflation points to a continued demand deficit. The ECB under Draghi has responded to this, but governments have barely contributed to these efforts. Through increasing spending, particularly investment, they could help create the conditions that would allow interest rates to be increased. Instead, some are calling on the ECB to tighten policy now in the same disastrous way it did in the past, unnecessarily cutting short economic recoveries.

There have been some tentative calls even from influential voices within Germany to increase spending, with the idea usually being to invest more in areas such as green technology. While this would be a good step, Germany and other countries in comfortable fiscal positions need a change in thinking, need to increase investment on a wider scale. Due to the current healthy state of its public finances, for Germany this would not even necessarily mean going beyond the headline budget targets set out in the European rules or violating its constitutional debt brake, which—unlike the schwarze Null—allows limited debt spending.

Beyond the modest positive economic spillovers to the rest of the eurozone, doing so could also encourage the bloc to rethink its fiscal rules. These could be made more accommodating to public investment in order to avoid situations in which governments cut down on this to reach headline budget targets. Such a shift in attitudes towards fiscal policy would be difficult to achieve, not least because the opposition to spending is not just driven by ideological considerations but also simply resonates well with many electorates. However, taking a new approach could help ease relations between the member states and could be achieved without letting go of prudent fiscal management altogether.

Europe needs investment in infrastructure, education, digital technology, and research to get it ready for the future and to boost the competitiveness of some economies, particularly peripheral ones. Public investment fell from 3.3 percent of eurozone GDP in 2008 to 2.7 percent in 2018. This is partly the result of secular spending pressures, as ageing populations pushed up healthcare and pension spending, but also of deliberate prioritization by policymakers.

In pursuit of these targets, European governments ignored investment in the long-term strength of their economies. Now that government bonds carry negative interest rates, and governments are thus effectively being paid to borrow, there is no excuse to continue to do so. Only by letting go of the arbitrary fiscal targets and stimulating investment and consumption demand in the eurozone can governments get Europe’s economies to a position where the ECB is able to withdraw its monetary policy support over time.

The post Red Herring & Black Swan: Rally Behind the ECB appeared first on Berlin Policy Journal - Blog.

The German question seems to be back yet again. With speculation about the end of the Atlantic alliance and the liberal international order, there are renewed fears of German dominance at the heart of Europe.

German power now takes a different form than in the past. While before 1945, the German question was geopolitical, the current German question is geo-economic, as I outlined in my book The Paradox of German Power. But things have changed since it was published in 2015—in particular with the election of Donald Trump as president of the United States. In a recent thought-provoking essay in Foreign Affairs, Robert Kagan suggests that we should now be less certain that Germany will remain “benign” in geopolitical terms. In other words, for Kagan, the old German question is back.

However, this underestimates the deep cultural change in Germany since World War II. It’s hard to imagine any circumstances that would lead to the country reverting to an old-fashioned kind of German nationalism and militarism. The commitment of ordinary Germans to the idea of peace is simply too strong. For better or worse, this is the lesson that Germans have drawn from their experience in the 20th century.

Moreover, focusing on a remilitarization of Germany actually obscures a more likely—and interesting—possibility. If the United States were to actually withdraw its security guarantee to Europe, or if the liberal international order were to completely collapse, Germany might defy the expectations of realist international relations theorists and simply choose to be insecure rather than abandon its identity as a Friedensmacht, or “force for peace.” In other words, even in this worst-case scenario, Germany might in effect do nothing rather than either develop its own military capabilities, including nuclear weapons, or exchange dependence on the US for its security for a new dependence on France.

How Germany Harms the EU

Meanwhile, those, particularly Americans, who warn about the danger of the return of the old German question underestimate how problematic today’s Germany already is in the European context. Germany’s semi-hegemonic position within Europe is one of the main reasons why the EU has struggled to solve the series of crises that began with the euro crisis in 2010. On the one hand, Germany lacks the resources to solve problems in the way a hegemon would. On the other, it is powerful enough that it no longer feels the need to make concessions to other EU member states, and in particular to France. As a result, the EU has become dysfunctional.

It’s important not to idealize post-war Germany as acting selflessly. German politicians certainly look out for German interests in Europe. In fact, since the beginning of the euro crisis, much of the debate about Germany’s role in Europe has centered on exactly this question of the relationship between Germany’s national interest and the wider European interest. From economic policy and the management of the single currency itself to the refugee crisis and the Nord Stream 2 gas pipeline, Germany has again and again been accused of putting its own national interest ahead of the interests of Europe as a whole.

Nor has Germany exactly rejected nationalism altogether. Although—or perhaps because—Germans rejected militarism, they found new sources of national pride. In particular, a kind of economic nationalism developed in Germany and increasingly focused on Germany’s success as an exporter—what I have called “export nationalism.” During the Obama administration—long before Trump “targeted” Germany, as Kagan puts it, for its huge, persistent current account surplus—the US treasury had already put Germany on a currency-manipulation monitoring list.

Restoring the Franco-German Balance

Today, the dire state of trans-Atlantic relations and the threat of the withdrawal of the US security guarantee have raised concerns about how Germany might respond. Historically, American power has pacified Europe—that is, it “muted old conflicts in Europe and created the conditions for cooperation,” as Josef Joffe wrote in 1984. There are therefore good reasons to worry that a withdrawal of the security guarantee could lead to European disintegration and even the reactivation of security dilemmas. Yet a US withdrawal could also help to resolve the German question in its current, geoeconomic form—without necessarily re-opening the classical, geopolitical German question.

This is because Germany’s semi-hegemonic position in Europe is dependent on the configuration of the US-led liberal international order, and the particular form it took in Europe, that allowed Germany to “free ride.” In particular, the US security guarantee meant that Germany didn’t need France’s military capabilities and therefore had little incentive to make concessions to France on other issues like the euro. Whatever Trump’s intentions, his threat to withdraw the US security guarantee has given France greater leverage over Germany and thus gone some way to restoring what Harvard’s Stanley Hoffman called “the balance of imbalances” between the two countries. If the United States were actually to withdraw its security guarantee, it would further restore this balance and could mean the end of German semi-hegemony.

Power Politics Persists

In particular, increased German dependence on France for security might—and I emphasize might—force Germany to make concessions to France on other issues like economic policy and the euro, which would be good not just for France, but for Europe as a whole. In this way the removal of the US security guarantee could potentially enable Europe to finally deal with the crisis that began in 2010. The crucial question, however, is whether even this dramatic scenario would be enough to force Germany to rethink its approach to economic policy and the euro. It’s also perfectly possible that Germans would still not feel sufficiently threatened to make concessions to France on these issues as a quid pro quo for a more explicit or extensive French commitment to German or European security.

There is a tendency at the moment to view the world in extraordinarily binary terms. But the situation in Europe today is much more complex. While commentators like Kagan worry that a collapse of the current order would lead to a return of power politics within Europe, in reality power politics never really went away, even if it was no longer pursued using military tools. Within the peaceful, institutionalized context of the EU, member states continued to pursue their own national interests. In short, Europe may not have been quite the Kantian paradise that Kagan famously suggested it was in Of Paradise and Power.

Similarly, since the beginning of the euro crisis, it has become apparent that the Atlantic alliance and European integration did not resolve the German question quite as conclusively as was once thought. Given the ongoing reality of power politics within the EU, the unequal distribution of power among member states continued to matter, though that power was largely economic rather than military. After reunification and enlargement increased German power within Europe, a familiar dynamic emerged—though it only really became apparent after the beginning of the euro crisis. In other words, in resolving one version of the German question, the EU and the United States may have simply created another.

The post Red Herring & Black Swan: Is the German Question Back? appeared first on Berlin Policy Journal - Blog.

With the European Union facing an increasingly unstable world of hybrid threats, military interventions, terrorism, and organized crime, many politicians across Europe have repeatedly called for closer intelligence cooperation and even for the establishment of an EU intelligence service.
In fact, the EU Global Strategy in 2016 already emphasized the necessity of timely information sharing for security policy decisions being taken at the EU level: “European security hinges on better and shared assessments of internal and external threats,” it states. “This requires investing in intelligence… We must feed and coordinate intelligence extracted from European databases.”

Furthermore, the Implementation Plan on Security and Defense, which was published the same year, confirms that a “European hub for strategic information, early warning and comprehensive analysis” is a necessary security policy instrument. Yet with Britain leaving, the EU is losing a very powerful intelligence partner. As a result, the remaining member states should certainly think about cooperating even more closely.

The Limits of EU Law

So, why not shoot for the moon and establish an EU intelligence service? Since intelligence services are regarded as the heart of a nation state, the EU member states traditionally have been highly reluctant about institutionalized forms of cooperation and set themselves clear legal boundaries.

Article 4 of the Lisbon Treaty states that national security falls under the “sole responsibility of the individual member states.” The relevant regulatory areas “Area of Freedom, Security, and Justice” and “General Provisions on the Union’s External Action and Specific Provisions on the Common Foreign and Security Policy” do not refer to intelligence cooperation at all. However, Article 73 states that member states are free to set up—on their own responsibility—forms of individual cooperation and coordination between their national security authorities. That means that, while a European intelligence service is not an option right now, closer cooperation is legally possible, politically necessary, and practically useful.

In fact, within the clear limits of EU law, two different forms of intelligence cooperation at EU level have developed: on the one hand, there are rather informal bilateral and multilateral forms of cooperation. For instance, the Club de Berne is a forum between the domestic intelligence services of all member states (plus Switzerland and Norway), based on a voluntary exchange of information, experiences, and point of views. Given the high level of trust, flexibility, and independence, those informal intelligence coalitions are probably regarded as the most effective ones.

On the other hand, there are two important institutionalized forms of cooperation within the EU structures. First, the EU maintains a military intelligence unit with the Intelligence Directorate of the EU Military Staff (EUMS INT), which is part of the EU’s foreign and diplomatic body, the European External Action Service (EEAS). It provides military analysis/assessment for the decision making and planning of civilian missions and military operations under the Common Security and Defense Policy (CSDP). Second, there is the EU Intelligence and Analysis Centre (INTCEN), established in 1999 with the CSDP, and another intelligence body of the EEAS. Its mission is to provide intelligence analysis and “situational awareness” to the High Representative, to various EU decision making levels as well as to the EU member states. Neither EUMS INT nor INTCEN generate its own intelligence; rather, they are dependent on information delivered by national foreign and domestic services of the member states and by internal EU bodies.

INTCEN and EUMS INT are linked in the Single Intelligence Analysis Capacity (SIAC). This is a purely virtual hub within the EEAS but one that works very well. Its products provide significant added value to the member states and to the EU itself. The Implementation Plan on Security and Defense defined SIAC as a central hub for the generation of strategic information and threat assessments: “Improving CSDP responsiveness requires enhanced civil/military intelligence…, through the Single Intelligence Analysis Capacity (SIAC) as the main European hub for strategic information, early warning, and comprehensive analysis.”

Rocket-Fueling SIAC

By shooting for the moon, the EU will land among the stars. The establishment of a supranational intelligence service would require a substantial change of the EU treaties. Given the results of the European elections and the rising euroskepticism in some of the member states, this, however, seems light years away.

But with the EEAS and the integrated SIAC, the EU actually already has a strengthened role in the analysis of internal and external security threats. The SIAC could be used more efficiently by the member states and optimized by investing in a higher number of staff and in the quantity and quality standard of intelligence products delivered. That would eventually make its added value more visible and would further build trust among member states, encouraging them to cooperate even closer.

But that’s not all. In times of increased global insecurity, two members of the Five Eyes and the EU’s most trustworthy intelligence allies are going down an unforeseeable political path. Both the United States and United Kingdom will surely remain partners in security policy, but in the long term, their respective political isolation might also affect the sharing of confidential information with the EU member states.

What Germany Should Do

Altogether, it is an undeniable fact that in foreign and security terms, the EU will increasingly have to rely on itself. This has already triggered ambitious reactions from 25 member states that committed themselves to “permanent structured cooperation” (PESCO) in defense policy. PESCO could serve as a model for strengthening intelligence cooperation. Closer cooperation would continue to take place in coalitions of small numbers of those member states willing and, more importantly, able to share confidential information with selected partners. Although Article 42 of the EU treaties does not provide a legal basis for a permanent structured cooperation of the intelligence services, Articles 328/329 generally provide a legal basis for enhanced cooperation and maybe for the future creation of Five (preferably six, seven or even more) Eyes of the European Union.

As Germany is taking over the Presidency of the European Council in 2020, the government in Berlin should start focusing now on how flexible cooperative solutions between EU member states could be advanced, leading to deeper integration and toward a real Security Union. This is actually a unique chance for Germany to demonstrate its ability to put innovative policy priorities on the agenda—including a better exchange of intelligence information and coordination at the EU level.

In the end, that might also give a fresh impetus to the concept of a European intelligence service, and make it not quite so many light years away after all.

The post Red Herring & Black Swan: Five Eyes for Europe appeared first on Berlin Policy Journal - Blog.

Sixteen-year-old climate activist Greta Thunberg walked into the Houses of Parliament on April 23 with a clear message for Britain’s lawmakers: you need to do much more to prevent catastrophic climate change.

And, she added, almost as an aside: you’ve been counting wrong.

It’s worth reading her words in context. “Since 1990, the United Kingdom has achieved a 37-percent reduction of its territorial CO2 [carbon dioxide] emissions, according to the Global Carbon Project. And that does sound very impressive. But these numbers do not include emissions from aviation, shipping, and those associated with imports and exports. If these numbers are included the reduction is around 10 percent since 1990—or an average of 0.4 percent a year.”

Thunberg was citing numbers from a Manchester research institute. She might also have quoted the United Kingdom’s Office for National Statistics, whose provisional estimates “suggest that in 2018, total UK greenhouse gas emissions were 43.5 percent lower than in 1990.” This figure, too, ignores emissions from international shipping (2.6 percent of the global greenhouse gas emissions total, according to the OECD) and aviation (2.0 percent of global CO2 emissions according to the UN). And it leaves out the emissions embodied in imported goods—obviously, if a coal-powered factory shuts down in Britain and is replaced by a similar factory in China, it’s not doing the climate any good.

Cooking the Books?

What’s going on here? Are the British government and the Global Carbon Project, which Thunberg quotes, cooking the books?

No. National emissions inventories conducted under the UN Framework Convention on Climate Change only consider emissions that occur within the borders of a given country, leaving responsibility for trade-related emissions with the exporting nation.

In fact, the so-called emission outsourcing that Thunberg is referring to has been less of a problem in Britain over the last decade. Analysis by Zeke Hausfather for Carbon Brief shows that while “domestic emissions reductions were largely offset by increased CO2 embodied in imported goods until the mid-2000s, reductions since around 2007 have not been offset by CO2 in imported goods.”

Emission-counters simply have to make decisions: we need some sort of national figures as a way to understand the global figures. And sometimes numerical inconsistency is unavoidable. Sharp readers may have noticed that this article uses CO2 emissions for shipping and greenhouse gas emissions for aviation. That’s simply how the two most authoritative organizations track the damage caused by those sectors. (CO2 is the most common heat-trapping greenhouse gas, but others, such as the methane that comes from cow belches or the hydrofluorocarbons that come from refrigeration, are more potent.)

Missing the Forest

Nevertheless, intentionally or not, the 37 percent reduction figure is misleading, for two reasons. First, because it does not accurately measure the greenhouse gas emissions for which the UK’s inhabitants are ultimately responsible. Uncounted emissions are becoming more important in general. As a report by the German Öko Institut points out, transport demand in today’s globalized world is growing so fast that international aviation and maritime transport could account for almost 40 percent of global CO2 emissions by 2050 unless drastic action is taken.

That’s partly because the world is having more success plucking low-hanging fruit, such as promoting sales of hybrid cars, than improving already-efficient airplanes. That’s fine. It makes sense to begin with measures that interfere less with economic growth. But more disruptive regulation and behavioral changes are essential if the world is to have a chance of getting a grip on climate change.

The second reason the UK’s national emission figure is misleading is because, well, it’s national. The UK could stop burning fossil fuels tomorrow, and the rest of the world, barring a rapid energy transformation, would do more than enough to ensure that the British also suffered from heat waves, crop failures, rising sea levels, and the associated economic chaos and disaster-induced migration. The British government is committed to the Paris Agreement and spends £1 billion a year on foreign aid for combating climate change—a good start, with much more to be done.

Again, one need not single out the UK for special criticism. Unlike Vladimir Putin or Donald Trump, Theresa May at least acknowledges the science; British emissions have fallen as global emissions have risen, with particularly strong progress in the electricity sector. Yet this is still not enough for Britain to meet its own targets for the next decade.

Thunberg Goes Global

For some politicians, gloomy interventions like Thunberg’s are unwelcome—UK energy minister Claire Perry expressed skepticism about the Extinction Rebellion protests that have rocked London this spring, worrying they were leaving people “fearful for the future rather than hopeful.”

Debating activists’ tactics is all well and good, but it’s undeniably counter-productive to be too self-congratulatory about falling national emissions when tracking an existential threat that demands global cooperation.
Thunberg, then, is making a factually accurate and important point about the red herring that is national, production-based emission statistics. She also follows her own logic, speaking not only to Swedish schoolchildren or the UK parliament, but also to international organizations like the EU and the UN.

Her point is: however you’re counting, the numbers don’t add up.

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Big is beautiful—so goes the claim of many European business leaders and German Economy Minister Peter Altmaier, when they talk about Europe’s corporate position in the world. The European Commission’s controversial February 6 blocking of a planned merger between the rail businesses of Siemens and Alstom has brought the issue of size back into the headlines—with Altmaier and his French counterpart Bruno Le Maire arguing that the merger was necessary to compete with giant, state-supported Chinese companies.

It’s true that EU companies remain highly competitive globally and very successful exporters. It’s also true that the EU continues to be a very open economy with a trade surplus. Yet, despite this, there is a fear that European companies find it increasingly difficult to be on top of the global value chains—or, put differently, to be global leaders. And despite the successes of European companies in general, there are only nine firms from the EU in the top 50 of the Fortune 500, compared with 21 firms for the United States and twelve from China.

The picture among the top 100 Fortune 500 global companies is even more gloomy: 37 firms from the US, 23 from China and 22 from the EU. Moreover, not one of the world’s top 20 technology firms, covering sectors that are central to the success of whole economies, is from the EU, while there are eleven firms from the US and nine from China.

Europe clearly lags behind its global competitors in the platform business, and forecasts are no better: 70 percent of the global economic impact of AI is expected to be concentrated in North America and China. Many argue that EU-based firms simply lack the critical scale to compete.

Careful Thinking Needed

How can this problem be addressed? Some argue that the EU should change its competition policy. Merger control should become less strict, according to a recent study by the Federation of German Industries (BDI) on China. Moreover, merger control should become more “dynamic,” i.e. it should take account of possible future competition effects, and more “flexible,” to address concerns beyond potential anti-competitive effects, such as environmental, social, or other concerns.

Europe’s merger control laws may or may not need reform. But asking the Commission to so suddenly abandon its approach and to go against the letter of the Merger Control Regulation is certainly wrong. Moreover, careful thinking is needed as to avoid undesired effects of political intervention in specific cases.

European consumers still benefit from relatively low mark-ups thanks to high competition, but this could be easily squandered if merger control were relaxed. And one should also not be naïve about the benefits that larger companies would enjoy when entering a market like the Chinese one, where access is highly regulated and limited.

Sharpening State-Aid Control

Rather, European companies and consumers would benefit more from the following measures than from lax merger control.

First, applying a form of state-aid control to foreign companies needs to be made more effective, both in our markets as well as extraterritorially. EU competition law should be applied in a non-discriminatory way, regardless of the origin of the firm; if the market is distorted, the case should be pursued. The Commission could become more assertive in its enforcement, but for that to be possible the EU’s legal framework would have to evolve significantly, a point also recently made by BDI.

The EU cannot apply state-aid rules to foreign governments, and there is currently no systematic, effective, or well-founded way for the application of EU state rules to firms that operate in EU markets but receive state support in other jurisdictions. Yet it is possible to imagine an instrument that could be applied to foreign firms that benefit from state support in a way that creates an unfair competitive advantage that European companies cannot match. EU law should seek to ensure a level playing field for all companies.

The WTO agreement on subsidies and countervailing measures provides a platform for international collaboration that could help the EU address subsidies that distort international trade. However, it suffers from three main problems: the notification of subsidies is not fully transparent, and its efficacy is limited; the remedial action is slow and complex; and EU state-aid rules apply to both goods and services, whereas the WTO rules apply only to goods. In economies increasingly driven by services, networks, and data, focusing only on subsidies in the goods sector is insufficient.

Investment control regulation can be used to restrict the entry of foreign corporations that receive distortionary state support. But a transparent process is needed in order to avoid the misuse of instruments. Their existence, as such, can discourage unwarranted behavior. Yet, they must be clearly restricted to well-defined concerns, such as security concerns, with objective criteria, to prevent becoming just a simple tools for protectionism.

Toward a Proactive Investments

Second, Europe should go beyond defensive measures and more actively pursue a strategy that bolsters investment and innovation in Europe, while creating the conditions for firms to scale up in a well-integrated single market.

Europe needs a multidimensional mix of policies to strengthen and deepen the single market, which is still fragmented when it comes to services. Sufficient market financing should also be ensured so that firms can expand their operations and compete efficiently on a global scale—for which integrated and deep capital markets, including for venture capital, are needed. There is also a need for more risk-taking and for enhancing business and investment conditions in a number of countries.

The EU’s R&D spending is still at only 2 percent of GDP, compared with 2.8 percent overall in the US. Moreover, North America and Asia are the front-runners in private investments on Artificial Intelligence. This dark picture is a direct result of a lack of an effective strategy, not only for European investment but industrial policy as a whole. The EU’s global competitors long ago adopted ambitious AI plans, where industrial policies and public/private investments have a prominent role. And after Brexit, the state of AI in the EU will be worse, as London remains in the lead for AI companies. This makes a European strategy all the more important.

Strengthening Europe’s Universities

Finally, it should not come as a surprise that Europe is losing the technology race, given that its universities lag behind the top performers. For example, in mechanical engineering, the best German university, Aachen, ranks only in the group of 51–75-best worldwide, well behind twelve Chinese universities, according to the Shanghai ranking. Outside the United Kingdom, only Milan and Leuven rank ahead of Aachen among EU-based universities. Do Germany, France, or the EU have a strategy to address this problem?

Global competition is indeed becoming tougher, in particular with China increasingly leading in key technology sectors. And Europe needs to face that competition. Defensive instruments to address state-subsidy concerns are part of the solution; relaxing merger control is probably not the answer. But the real question is whether the EU will strengthen its single market, increase R&D spending, regain its leadership of universities and design a true and integrated AI strategy.

Big may be beautiful, but the strategic priority for the EU should be to become a front-runner in innovation and the adoption of new technologies. For that, it needs investment, research, and education rather than European champions.

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In May 2014, the European Parliament in Brussels was the scene of some must-see TV. The European Broadcasting Union, mostly known for organizing the Eurovision song contest, held a televised debate between the five people running to be the next European Commission president.

The parliament’s plenary chamber was turned into a dramatic TV set, complete with changing lighting and suspenseful music. The Brussels bubble was enthralled. But even though the debate aired on TV stations across Europe, the ratings were dismal. This led people to ask the fabled “tree in the forest” question—if a presidential election takes place, but nobody is there to hear it, does it make a sound?

The truth is that even among the EU politics wonks in the audience, there was skepticism about whether one of these people would actually become the next EU Commission president. That’s because the parliament’s political groups were essentially holding this contest without getting permission from the EU’s national leaders, who are the ones who appoint the head of the commission.

But in the end, one of those people did end up becoming president: Jean-Claude Juncker, the candidate of Angela Merkel’s center-right European People’s Party (EPP). This improbable outcome was the result of shrewd political manipulation by Juncker’s right-hand man, some might say puppet master, Martin Selmayr.

Five years on, here we go again. The contest is shaping up, and the parliament has sworn it will not confirm any candidate who was not put forward by one of the European parties. But many are skeptical that one of these so-called Spitzenkandidaten (“lead candidate”) will once again become president. Even though they were proved wrong last time, this time around the nay-sayers have more cause for their incredulity.

Spitzenkandidat’s Birth

The whole exercise has less to do with European democracy than it does with EU institutional power games.

The idea was first devised 15 years ago, by the people drafting the European Constitution. That charter eventually became the Lisbon Treaty, passed in 2009, and a nebulous phrase regarding the selection of Commission president survived: the 28 national leaders of the EU will select the Commission president by “taking into account” the result of the European elections.

The European Parliament insists this means that the leaders must select the candidate of the political group that won the most seats in the election, or the one that can get a majority vote in the parliament. Last time around, it was the EPP that received the most votes and so, under a procedure similar to national parliamentary democracies, its candidate, Juncker, got first crack at trying to form a majority. That he did, by getting the votes of MEPs from the other two main parties, the center-left Party of European Socialists (PES) and Alliance of Liberals and Democrats (ALDE).

The national EU leaders didn’t accept the legitimacy of what became known as the spitzenkandidat system, from the German word for top or lead candidate. But they never did anything early on to stop the process from going ahead, much to the annoyance of then-British Prime Minister David Cameron, who warned the leaders the process was going to become an unstoppable freight train unless they clearly rejected it early in 2014.

Cameron was right. By the time the election was over, Selmayr was able to convince his friends in the German media to launch a full-scale pressure campaign on Merkel to accept Juncker as the democratically-elected president of Europe. Never mind the fact that most voters had no idea the contest was even happening, and even political elites had laughed it off as a bizarre experiment. Merkel felt the pressure, and in turn strong-armed other EU leaders to accept the result. Only Cameron and Hungarian leader Viktor Orbán voted against confirming Juncker.

In February 2018, the EU’s national leaders again said they do not recognize the legitimacy of the spitzenkandidat system. Lithuanian President Dalia Grybauskaite, always good for a cryptic tweet, warned “don’t count your spitzens before they’re hatched”.

Lackluster Candidates

The parties have again chosen their candidates now. In 2014 they included two former prime ministers (Luxembourg’s Juncker and Belgium’s Guy Verhofstadt for the Liberals), one current prime minister (Greece’s Alexis Tsipras for far-left GUE), and a parliament president (Martin Schulz for the PES, who later went on to lead the SPD’s failed election campaign to be chancellor of Germany).

This time is quite different. The EPP was the only party to hold a primary campaign to select its nominee, and in what many considered a “backroom deal,” they rejected the dynamic former Finnish Prime minister Alex Stubb in favour of the mild-mannered EPP group leader Manfred Weber, largely unknown outside the Brussels bubble (and not very known within it either).

PES failed to hold a primary contest and anointed the only man interested in the job, the current Commission Vice President Frans Timmermans, who is relatively well-known on the European stage for taking on Hungary and Poland for their rule of law violations.

The Liberal ALDE group has so far refused to put forward any candidate at all. That’s because French President Emmanuel Macron has come out strongly against the spitzenkandidat system, and the Liberals are hoping to woo him into placing his En Marche party within their group. They are waiting to see what the lay of the land is in February before deciding whether to put forward a candidate.

The euroskeptic European Conservatives and Reformists (ECR) group, formed by Cameron in 2009 by uniting his Conservatives with the strongly nationalist Polish PiS party, refused to participate in the process in 2014 because they viewed it as a further attempt at forming an EU super-state. But with the Brits on the way out and the future of the group unclear, the Poles have chosen to put forward Czech MEP Jan Zahradil as the ECR’s candidate. The Greens have put forward two candidates, Dutch MEP Bas Eickhout and German MEP Ska Keller. GUE, the far-left political group that put forward Tsipras last time, has not yet decided whether to participate.

Watch Out for Barnier

Out of all the candidates, the only one with significant political stature is Timmermans, a prominent politician in the Netherlands who has some clout on the Europeans stage. But given the social democrats’ waning political fortunes, it is doubtful that a PES candidate could become Commission president. Right now it looks like the PES could come third or even fourth in May’s election. Given that there are currently only three center-left governments in Europe (in Spain, Portugal, and Slovakia, with Sweden’s government set to fall any moment), it would be bizarre for the EU Commission president to be from the center-left.

Indeed, the betting money in Brussels right now is on a man who is not one of the candidates—the EU’s chief Brexit negotiator Michel Barnier. He is center-right but was unable to enter the EPP nomination contest because his current job is not yet over. But don’t be surprised if he is put forward by EU leaders following the European election, if they choose to disregard the spitzenkandidat process. The big question will then be whether the European Parliament will carry through on its threat to reject any president who was not a candidate.

The underwhelming nature of the candidates so far could mean that ALDE has everything to play for when the liberals make their decision on a candidate in February. And much will depend on Macron’s political fortunes.

When he first came out against the process in early 2018, Macron’s voice carried some weight. His En Marche party, having just won a majority in the French parliament, was expected to win many seats in the European Parliament, too. But now, with the yellow vest movements having damaged his political power both domestically and internationally, Macron may not have the political capital to spend on a bareknuckle fight against the winning spitzenkandidat.

A Damp Squib in 2019

Macron’s big issue with the system is that he views it as an EPP-stitch up. The center-right was certain to win the largest number of seats in 2014, and the center-right designers of the system knew that. They are also almost certain to win the most seats this time, although by a less crushing margin than in 2014.

Macron has proposed that the European elections be fought on ideological grounds, with the centrist pro-EU parties rallying around a single platform against the anti-EU populists—to give European voters a clear choice. It is still possible that the ALDE candidate could emerge as such a de-facto pro-EU candidate, either before or after the election. One name that has been bandied about as someone who could deliver that message convincingly and engagingly to the public is Margrethe Vestager, the Danish EU Commissioner for competition.

Because it is not enshrined in law, the spitzenkandidat process is only as strong as the political groups make it. On the current path, the process is very likely to be a damp squib in 2019. Without Selmayr’s aggressive support, the second time around could also be the last for this democratic experiment.

That is, unless ALDE delivers a surprise in February.

The post Red Herring & Black Swan: Don’t Count Your Spitzens Before They Hatch appeared first on Berlin Policy Journal - Blog.

It had already been a tumultuous political summer for Germany when an article published in mid-August jumbled Berlin and Brussels: a well-known German political scientist, Christian Hacke, dropped something of a bomb, suggesting it was time for Germany to become a nuclear power. The United States under President Donald Trump was withdrawing from the global stage and could no longer be relied upon as the guarantor of European security, Hacke argued, so it was time for Europe—and in particular Germany—to take matters into its own hands.

That sparked heated discussions. “The German Bomb Debate Goes Nuclear,” ran a POLITICO headline, even though the desire of Germans to acquire a bomb of their own is practically nonexistent.

The debate as such is not new. In the past, however, such talk centered around a common point: a desire to avoid relying solely on the US nuclear deterrent to ensure Europe’s security. But this time, things are different. The brutality of President Donald Trump’s body language and policies is unprecedented in transatlantic relations; the European Union is taking major steps to bolster its conventional defense identity and autonomy; and Russia’s behavior adds urgency to the need for Europe to protect itself against strategic threats.

Still, there is a certain amount of intellectual and political confusion when one reads or hears about a “European deterrent.” So let’s be clear up front about what will and will not happen any time soon. It is completely unrealistic to discuss the idea of a single European nuclear force controlled by a supranational executive body. Whatever happens in the realm of nuclear deterrence will be nation-based, and it will depend a lot on US policies toward Europe. It is here that France can play a central role.

The French and British Deterrent

The idea of a European nuclear deterrent has a long history. After the aborted “FIG” (France-Italy-Germany) collective uranium enrichment plan of the 1950s, Germany and Italy both ratified the Nuclear Non-Proliferation Treaty (NPT) in 1975 with an important reservation: they should not preclude the possibility of a European nuclear force.

British and French nuclear deterrents were never designed to exclusively cover national vital interests and always had at least a de facto European dimension. Indeed, since the early 1960s, the UK force has been primarily at the service of the transatlantic alliance. It is less well known, however, that the French have always seen a European dimension to their nuclear deterrent.

For Charles de Gaulle, the fate of his country and that of the rest of Europe were closely linked. In instructions given to the armed forces in 1964, he specified that France should “feel threatened as soon as the territories of federal Germany and Benelux are violated.” That same year, Prime Minister Georges Pompidou made it clear publicly that the national deterrent amounted to a de facto European protection. With the Ottawa Declaration of 1974, NATO officially recognized the broader nuclear contribution of France and the UK to the security of the alliance.

With closer integration in Europe and the creation of the European Union in 1992, France began to stress more clearly the European dimension of deterrence. Several French statesmen mused publicly about the hypothetical transfer, one day, of nuclear weapons to a future common European political authority. President François Mitterrand the  also signaled his acceptance of the need for member-states to tackle the nuclear issue together when the time came: “Only two of the twelve possess an atomic force. For their national policies, they have a clear doctrine. Is it possible to devise a European doctrine? This question will very quickly become one of the major questions in the construction of a common European defense,” he said in a speech in January of 1992.

But just two years later, Mitterrand dialed back his rhetoric, stating: “There will be a European nuclear doctrine, a European deterrent, only when there are vital European interests, considered as such by the Europeans, and understood as such by others. As you can see, we are far away from there.”

The Defense White Paper adopted in the spring of that year unsurprisingly adopted the Mitterrand stance but made it a cornerstone of Europe’s future strategic autonomy as well: “With nuclear power, Europe’s autonomy in defense matters is possible. Without it, it is excluded.”

Jacques Chirac turned out to be more open-minded. As France embarked in a final nuclear testing campaign, Paris reaffirmed its European nuclear openings – eager as it was to show that it was not pursuing strictly national interests. French authorities confirmed that Paris was ready to raise issues related to nuclear deterrence with its European partners, and the 1995 UK-French Joint Statement on Nuclear Cooperation stated that French and British leaders reaffirmed that a threat to the vital interests of one country was a threat to both.

A year later, at a speech at the Ecole Militaire in Paris, Chirac underlined that UK-French nuclear cooperation was about “drawing all consequences of a community of destiny, of a growing intertwining of our vital interests.” He added “we do not propose a ready-made concept, but a gradual process open to those partners who wish to join.”

Cooperation with Germany budded as well. The decision to permanently retire the short-range Hades system in 1996 was taken after consultation with Germany. The Franco-German Common Concept on Security and Defense adopted in December of that same year stated: “Our countries are ready to engage in a dialogue on the function of nuclear deterrence in the context of European defense policy.”

Deterring Deterrence

However, more than twenty years later, this field remains largely fallow. There are several reasons for this, and the French are partly to blame. Their main drive for a European discussion of nuclear deterrence issues happened during their testing campaign of 1995-96, which was heavily criticized by several EU partners. Paris learned the lesson, and these reactions led France to abandon any appetite for major initiatives in this area.

French abstinence from the NATO Nuclear Planning Group has not helped either; EU members of the alliance have often seen it with suspicion. Whereas the French 2009 return to NATO’s military structure was sometimes seen—as Paris sought—as a gesture of goodwill showing that France did not seek to construct a competing European defense system, the same thing did not happen in the nuclear domain.

What’s more, as long as the NATO common deterrent appeared solid, no European country was really interested in discussing a common nuclear deterrent, and even less in rocking the boat by devising alternative nuclear arrangements. Finally, many in Europe (including in Paris) feared that a nuclear debate in the EU could complicate the task of building up common conventional capabilities.

This has not prevented France from making it increasingly clear that its deterrent plays a European role. Paris believes that French deterrence, by its very existence, contributes to Europe’s security and that a possible aggressor would do well to take this into account. Furthermore, an attack against a member country of the European Union could be considered by France as an attack against its own vital interests.

Scenarios for the Future

So how much has this debate revived in today’s context? If one describes the nuclear deterrence question as a matter of “supply” and “demand,” the European debate has evolved on both ends. On the demand side, Russia’s new assertiveness and territorial aggression have triggered a renewed interest in the means to guarantee territorial integrity. This is true in particular for countries that became members of NATO in the 2000s (Poland, the Baltic States, etc.) but also for EU members that are not members of NATO and thus do not rely on a formal US security guarantee. While this applies in particular to Finland and Sweden, it is important to note that after several rounds of enlargement, the number of such EU countries is much higher than was the case in the mid-1990s. On the supply side, doubts about the reliability of the US guarantee to Europe have rarely been as strong as under Donald Trump.

The time thus seems to be ripe for thinking about Europe’s nuclear role in securing the continent. Still, it is worth mentioning the several scenarios that will not happen any time soon, absent a dramatic and unexpected change in the European and transatlantic political landscape. There will be no “joint nuclear force” controlled by the European Union. There is near-zero interest today on the continent for a federal-type Union with a single executive, and there is equally near-zero appetite in France for transferring its nuclear assets to Europe.

Another unrealistic proposal is that European partners could partly fund the French force in return for a say in national policy. There is no political interest in Europe for such a scheme (including in Paris). Equally dubious is a pooling of UK and French assets. While it could have appeared attractive a few years ago, it is no longer a serious possibility. If Brexit happens, Britain will want to cling to its strategic assets.

Paris is also unlikely to join the NPG or assign part of its airborne component to the Atlantic Alliance. While there could be merit in doing so, French absence from the NPG and NATO nuclear arrangements is part of the country’s “strategic DNA.”

Furthermore, it is unlikely that any serious nuclear discussion will happen in the context of EU institutions. Diplomats know how difficult nuclear policy discussions can be in Brussels – as discussions on EU positions every five years for NPT conferences testify. The Nuclear Ban Treaty, on which several EU members have strong positive views, makes a nuclear deterrence debate in formal EU circles almost a non-starter at this point. Any productive discussion about scenarios and options to reinforce deterrence in Europe will have to be quiet and discreet, in bilateral formats or informal gatherings of officials and experts. In addition, any discussion in a strictly EU context would preclude UK presence or involvement.

NATO, the Deciding Factor

What are the realistic scenarios then? That heavily depends on one key variable: the continued existence of the current NATO nuclear arrangements. So the discussion needs to happen at two different levels – first within the existing context, second when taking into account a “what if?” hypothesis.

In the existing context, Paris can provide a complementary insurance to European NATO members and a nuclear reassurance to non-NATO EU members. It would be consistent with French views of the EU to state more clearly that the French force protects Europe as a whole. It seems to fit with the French view of the EU’s role that an aggression against Finnish, Estonian or Polish “vital” interests would jeopardize the very foundations of what our existence is about in the 21st century. Another way to put it would be to make it clear that Article 42.7 of the Lisbon Treaty—the mutual defense clause of the EU—could be exercised by any means. This would not be an “extended” deterrent in the traditional sense of the term: from the French standpoint, one cannot compare the protection conferred by a distant superpower to the recognition of a de facto reality.

This could possibly be supplemented by rotations of Rafale fighter-bombers (without their nuclear missiles) of the FAS to allied bases, including on the territory of the most eastern countries of the Alliance in order to demonstrate solidarity.

The range of possible scenarios would be different if there are dramatic changes in NATO. Think of a unilateral withdrawal of US nuclear weapons from Europe—an irrational decision for sure, but one which is not outside the bounds of the thinkable with the current US administration. Or an unraveling of the NATO nuclear basing and sharing mechanisms following a unilateral decision of a member country to cease being a part of it (think Turkey in particular).

In such scenarios, it is likely that France would be ready to consider playing a stronger and more visible role in ensuring that Europe feels protected by nuclear deterrence. France could base part of its airborne arsenal (say, of the order of ten missiles) in Germany or in Poland (“basing”) and/or agree that they could be carried by European fighter-bombers (“sharing”). For both political and technical reasons (the small size of the French arsenal), it is very unlikely that Paris and its European partners would seek to mirror the scope of current NATO arrangements, though.

A less ambitious option would be to mirror the NATO SNOWCAT (Support of NATO Operations With Conventional Air Tactics) procedure, where non-nuclear nations commit themselves to participate in a nuclear strike with non-nuclear assets. Another option, if and when France replaces its nuclear-powered carrier Charles-de-Gaulle and maintains its ability to embark nuclear missiles, would be to create the possibility of a European nuclear maritime task force, with accompanying European ships and, possibly, a European nuclear squadron.

If such decisions were made, they would need to be accompanied, just as is today the case in the NATO context, by an agreement on the conditions for their use. This would include legal and security arrangements (host nation support, etc.) but also, possibly, a common nuclear planning mechanism, based on a common conception of nuclear employment, which could coexist with national ones.

And then there is the question of the UK’s role. In the context of Brexit, London is eager to bolster its European security credentials. If we are correct to predict that the European deterrence question will not be treated within formal EU circles, it is conceivable that the United Kingdom could be part of such arrangements one way or the other.

Some would say that a France- and UK-based nuclear deterrent would not have the necessary credibility. This is not really a relevant argument in the debate, however. A smaller arsenal can deter a major power provided it has the ability to inflict unacceptable damage. And, most importantly, deterrence exercised by a European power might be seen as more credible than when it is exercised by a distant protector.

On all these questions, whatever happens to the transatlantic relationship, it is time to have a free and candid discussion.

The post Red Herring & Black Swan: A Bomb for Europe? appeared first on Berlin Policy Journal - Blog.

Much of the debate over drone use in combat has focused on the United States. It is true that the way Washington has employed its armed drones is controversial and, in parts, illegal, and that is something the international community, including Germany, should care about. It is also legitimate to mention the debate when discussing the procurement of drones. And yet.

For ten years, because of the controversy over US targeted killings with armed drones in countries such as Pakistan, Yemen, or Somalia, the German debate has been overly focused on US drone use and armed drones, while ignoring German drone use and surveillance drones.

This has been to the detriment of the Bundeswehr, which for years has not received the equipment it wants and arguably needs. Most importantly, it shows that the German public, and substantial parts of the media and German politics, are not ready for the kind of debates that we are set to have more and more often in the future as the world becomes an increasingly dangerous place.

German Drones

Unbeknownst to many, the Bundeswehr was an early adopter of drone technology, acquiring its first surveillance drones in 1972. This first Bundeswehr drone, the Canadian-built CL89, was never used outside of training, but its successor model, the CL289, was successfully deployed to Yugoslavia and Kosovo in the late 1990s. The positive experiences with drone use there led to investment in several development programs, including two armed drone systems.

All but one of these projects (the unarmed KZO), however, eventually fell victim to post-Cold War defense budget reductions or failed because of unrealistic technological expectations. Germany’s experiences in the ISAF mission in Afghanistan from January 2002 then revived the Bundeswehr’s interest in drones. Initially, the Bundeswehr did not deploy any drones to Afghanistan because it barely had any. The first surveillance drone to be used in the country was LUNA, Luftgestützte Unbemannte Nahaufklärungs-Ausstattung, or “Airborne unmanned close reconnaissance system.” At 1.4 meters long and 40 kilograms with a wingspan of four meters, LUNA became the unmanned workhorse of the Bundeswehr, flying over 6000 sorties between 2003 and 2014. It was followed by four other drone systems in 2005 (ALADIN), 2009 (KZO), 2010 (Heron I), and 2011 (MIKADO).

All of the drone systems used in Afghanistan were surveillance systems, meaning that their payload consists of video, infrared, or still image cameras used to gather information on anything from Taliban movements and IEDs to roadblocks and traffic jams. Also, all these systems were flown from within the Afghan theater—either directly by soldiers on the ground (such as MIKADO or ALADIN), or from encampments, as with the Heron I drones that were piloted from Camp Marmal in Mazar-e-Sharif.

So for German soldiers in Afghanistan, the debates about US “cubicle warriors” with a “playstation mentality” killing people at a distance had little bearing on reality and their daily experience.
Though not without problems, including crashes, the Bundeswehr drones proved their worth in Afghanistan, helping troops on the ground with intelligence-gathering and improving battlefield awareness. Today, many of the drones used in Afghanistan have been moved to Mali, now the Bundeswehr’s biggest mission.

But most Germans are unlikely to know much about this. When the comparatively intense debate about drones in Germany started in the early 2010s, it was simply not about German ones.

A Half-Billion Euro Disaster

Before 2010, there was no real talk about military drones in Germany, even though they had been in daily use in Afghanistan for years. By 2012/13, however, drones had become a topic of public interest. The media coverage increased notably as US targeted drone killings attracted international attention and condemnation, and as the Bundeswehr’s “EuroHawk” project failed spectacularly in 2013, after having cost around half a billion euros.

The language used to describe drones oscillated between hype and hysteria. On the one hand, there were technology-focused articles written in enthusiastic tones. Drones were portrayed as “superbirds” or “super drones;” SPIEGEL Online featured a 3D model of the US Reaper drone, detailing all its technical gadgets (including its armaments) as well as a list of the “most important drone types” with technical specifications. On the other hand, drones were also described as “robot killers” or “flying killers.” Indeed, the term “killer robot,” which until 2010 had been reserved for discussions about the Terminator movies, predominantly became used as a drone synonym.

Both the high-tech “superbird” and the “killer robot” narratives, however, referred almost exclusively to US developments. German unmanned technology was widely ignored. The “most important drone types” were all American. In fact, the press reported considerably less on actual German drone use than on potential future US drone plans. An avid news reader would have had no problem naming several US drones, but probably would not have known what kind of drones the Bundeswehr employed, or whether it did so at all.

Unfortunately, Germany’s politicians were little better. Between 2006 and 2014, drones were mentioned 102 times in the Bundestag (in the form of minor interpellations, written questions, or in debates). Almost half of these questions or debates were not about German drone use or procurement, but about American drone use (most notably about US targeted killings, with about a quarter pertaining to the stationing and testing of US drones on/over German territory).

Ask the Relevant Questions

When, on January 31, 2013, the Bundestag finally held question time on the government’s procurement plans for an armed drone for the Bundeswehr, the debate once again primarily centered on US drone use in Pakistan. Finally, a liberal MP asked somewhat desperately: “What does this have to do with our procurement plans, for God’s sake?” The impact of the US use of drones on the debate was so important that in the 2013 coalition agreement, CDU and SPD specifically underlined that they “categorically oppose extra-legal killings with drones,” distancing themselves from the (US) use of UAVs for targeted killings (without, however, explicitly naming the US).

Again, there is nothing wrong with discussing and criticizing the way the United States uses armed drones. It is rightfully controversial. But in Germany, the almost exclusive concentration on this has come to the detriment of the debate we should be having. The (understandably) emotional debates about civilian deaths caused by CIA drones in Pakistan have made it nearly impossible to have a rational discussion on German drone use. But there are many debates to be had on how the Bundeswehr should be using its drones, in particular the new weapons-capable drone systems whose procurement the Bundestag just authorized. Relevant questions include: what types of conflict is the Bundeswehr likely to face in the future, and what equipment will it need for that? How do drones feature in this equation? Does the Bundeswehr have sufficient drone reconnaissance, and how might it use its armed systems? Even doctrinal documents offer few answers to these questions.

Recently, there has been some change, with more discussion happening in the national media. But it is a case of too little, too late. It is important for us to get our act together on such debates. Because the next strategic debate is already beginning, this time on the use of artificial intelligence in warfare, in particular autonomous weapons. In this discussion, informed public engagement is more important than ever. In the drone debate, Germans would do well to be more rational, more informed, and to think more about the elements that are important for Germany.

The post Red Herring & Black Swan: Droned Out appeared first on Berlin Policy Journal - Blog.

From the campaign trail to the White House, US President Donald Trump has made it clear that he considers China to be the United States’ greatest geostrategic threat. But when it comes to America’s European allies, he sees them as lagging not too far behind the Chinese. But while a fledgling global trade war and a collapse of transatlantic relations are dominating headlines, what’s not making page one is the expansion of a China-led bank, and how its formation highlighted the first signs of the current breakdown in EU-US relations.

The Asia Infrastructure and Investment Bank (AIIB) opened on January 2016 with a near $100 billion capital base and European powerhouses Germany, France, Italy, and the United Kingdom among its founding members. The creation of the multilateral bank was fueled by China’s desire to lead a rival to the US-led World Bank and the Japan-led Asia Development Bank (ADB). All three seek to answer the nearly $8.3 trillion infrastructure demand in greater Asia.

From the outset, the US and Japan spurned China’s invitation to join the AIIB. But they were the only G7 nations to decline. Washington, under the leadership of Barack Obama, assumed its European allies, the UK in particular, would immediately follow suit. But the British government completely ignored the White House’s warning not to join, giving the US less than 24 hours’ notice before it became a member. Germany’s government, including then-Finance Minister Wolfgang Schäuble, met with France and Italy, and the three nations together decided to follow the UK’s lead and become founding members as well.

For the Trump administration, America’s $375 billion trade deficit with China is the biggest challenge to his country’s global standing. In reality, the US is hurt much more by its refusal to support the multilateral bodies it helped create in the post-war era, and new institutions like the AIIB.

The AIIB provides opportunities to nations that argue that current World Bank and IMF quotas do not accurately reflect the size and influence of their economies. Two years after its formation, the AIIB has expanded from 57 to 84 members, moving beyond Asia and Europe to include Latin American and African nations. This expansion is taking place at the same time that China is pushing its Belt and Road Initiative, a multi-trillion dollar trade and infrastructure project spanning seaports, waterways, roads, bridges, railways, and other brick and mortar projects in more than 80 countries.

Europe’s Stake

Although the bulk of AIIB’s infrastructure financing has been in Asia—there are already five projects in India, approximately $285 million in loans to the energy and power sector in Bangladesh, and a $100 million loan to a state-owned infrastructure firm in Indonesia—the bank has just announced it is including Kenya, and it has recently financed a project in Egypt. Ecuador, Peru, and Chile are among the Latin American nations looking to join. Many of the AIIB’s existing projects were implemented in collaboration with other multilateral banks, including the World Bank, ADB, the Inter-American Development Bank (IADB), and the European Bank for Reconstruction and Development (EBRD).

With the US absent, the AIIB’s largest non-regional shareholders are Germany (4.3 percent), France (3.2 percent), the UK (3 percent), and Italy (2.5 percent). Germany and the UK hold vice presidency seats, and from these positions, they can weigh in on human rights practices, an area of concern for the previous White House administration.

But not anymore—and with a US president taking the wrecking ball to the American-built world order, there has been a drastic shift for Europe in terms of priorities and alliances. With US sanctions looming over Europe’s existing business ties to Iran and over the Nord Stream 2 gas pipeline with Russia, not to mention tariffs and counter tariffs hitting industries from agriculture to automobiles, Europe’s recovering yet fragile economy will be ripe for Chinese money.

Although the AIIB’s mandate is currently focused on Asia, the Belt & Road Initiative snakes through Central and Eastern Europe as well, and Hungary, Poland, and Greece have already signed up to BRI projects. Although the AIIB’s capital base is only 30 percent of the European Investment Bank’s (EIB) capacity, it’s more than twice the size of the European Bank for Reconstruction and Development and could be used to supplement future projects.

A New Geostrategic Avenue

China’s large trade imbalance with Central and Eastern European countries has raised their demands for greater infrastructure financing. Greece, for example, is still reeling from the eurozone debt crisis and in need of both foreign and domestic investment. Meanwhile, major Chinese firms are already acquiring large stakes in Greek ports and industries as the EBRD is gearing up to finance the Trans Adriatic Pipeline project, which will run from Greece to Italy through Albania and the Adriatic Sea. As Athens pushes further for the privatization of critical assets, the AIIB could be in a prime position to provide additional capital after Chinese firms acquire these assets.

This is significant because it would crystalize a new geostrategic avenue between China and Europe through multilateral development financing, from an institution that is China-led and European-supported. Plus, with major EU countries very much involved in AIIB’s governance structure, the bank has more credibility in the global market place than its emerging market counterpart, the BRICS’ New Development Bank, created in 2014 by Brazil, Russia, India, China, and South Africa—at a time when the World Bank and IMF are more restrictive in their lending and more selective in the countries they choose as partners.

Joining the AIIB was one of the first signs that Europe was willing to break away from the US as a new global landscape is taking shape. The decision by key European states to align themselves with the AIIB will have an impact on the economic face of the world for decades to come.

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