ESADEgeo Daily Digest, 20/09/2018

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Politico – David M. Herszenhorn / At EU summit, upbeat mood music on tough issues

  • At a summit in Salzburg to discuss the EU’s two biggest, lingering crises, the leaders could not claim victory on either front. A Brexit deal is still not at hand. On migration policy, they are as divided as ever. Yet the mood is guardedly optimistic.
  • Despite continuing disagreements on Brexit, particularly over Ireland, the contours of a deal on a withdrawal treaty seem to be in sight. European Council President Donald Tusk said he would propose adding a leaders’ summit in mid-November to help clinch the Brexit deal.
  • Politico – Tom McTague / May to EU: No second vote and no Brexit extension
  • The leaders’ conversation on migration did not break any new ground. Most of the leaders weighed in, a senior EU official said, and there was general agreement to continue building partnerships with countries outside of Europe. On the EU’s own migration policy, including the asylum rules known as the Dublin regulation, the conversation only confirmed that sharp differences persist, according to a senior EU official.

Financial Times – Demetri Sevastopulo & Anjli Raval / Trump seeks to replace Iranian oil sources for allies

  • The Trump administration is working to provide alternative sources of oil to American allies that will be affected because of US sanctions on Iran, according to a senior administration official.
  • The US has demanded that all buyers of Iranian oil cut imports to zero. While countries such as South Korea and France have stopped purchases altogether, India and China are still importing Iranian crude at lower levels.
  • Iran’s exports have already fallen significantly, down at least 500,000 barrels a day since May to below 2m b/d, even before US sanctions against the country’s energy sector officially kick in from November. Brent crude is now close to $80 a barrel.
  • Saudi Arabia and Iraq have increased their output the most, to an extent that has forced some barrels into storage on vessels at sea. South Korea, for instance, has replaced Iranian crude with imports from Saudi Arabia and Iraq, but it is also talks with the US to get a waiver.

Euractiv / Russian oil firm seeks payments in euros amid US sanction threat

  • Surgutneftegaz (representing 11% of oil production in Russia) is pushing buyers to agree to pay for oil in euros instead of dollars if the need arises, apparently as insurance against possible tougher US sanctions, according to traders who deal with the firm.
  • Several other oil firms also already have clauses in their contracts allowing non-dollar payments under some circumstances, said four industry sources.
  • The prospect that causes most alarm for Russian firms is inclusion on a Treasury Department blacklist that effectively cuts them off from conducting transactions in dollars, the lifeblood of the global oil industry.
  • To date, Russia’s oil industry has been able to weather Western sanctions. In response to restricted access to Western finance and technology, firms have switched to borrowing from Russian state banks and developed their own technology.
  • In his State of the Union speech on 12 September, European Commission President Jean-Claude Juncker said it was “absurd” that Europe pays for 80% of its energy import bill – worth €300 billion euro a year – in US dollars, when only roughly 2% of the EU’s energy imports come from the US.

European Council on Foreign Relations – Pawel Zerka / Fort Trump, fortress Poland?

  • Across Europe, the impression is building that Poland’s latest moves will inevitably lead to a weakening of the country’s solidarity within the EU. But if the country effectively decides to pivot fully to the US, it would not be its fault alone: both sides would be to blame.
  • Polish president Andrzej Duda made an offer to President Trump; effectively packaged as a ‘deal’ perhaps to appeal to his well-known sensibilities. The US president would get a place named after him; a “Fort Trump” to host American troops in Poland on a permanent basis.
  • Both Trump and Duda repeated their strong criticism of the Nord-Stream 2 project, which Germany is still relentlessly pursuing, all while claiming it to be nothing but an economic venture.
  • France, for its part, failed to invite Poland to join the European Intervention Initiative. The French government’s well-known preference for PESCO involving only a small number of countries only added to Poland’s sense of exclusion.

The selected pieces do not necessarily reflect the views of Javier Solana and ESADEgeo. The summaries above may include word-for-word excerpts from their respective pieces. 

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ESADEgeo Daily Digest, 19/09/2018

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Haaretz – Amos Harel / Putin absolves Israel over Syria strike, but crisis with Moscow reaches all the way to Tehran

  • The incident in the Syrian skies on Monday night has now put Israel in an extremely difficult position with the Russians, and is liable to negatively influence the strategic freedom of action its air force had enjoyed on the northern front until now.
  • Russian President Vladimir Putin absolved Israel of  downing the aircraft, saying the incident was a result of a “tragic chain of circumstances.” However, the Russian Defense Ministry spoke of a “deliberate provocation” by Israel, to which Russia reserves the right to respond.
  • Israeli fighter jets attacked Iranian-related targets in Syria. Syrian aerial defenses tried to thwart the Israeli attack and accidently hit a Russian Air Force plane with a Russian-made missile.
  • The practical implications of Putin’s words will be seen over the next two days: Russia could, for example, demand from Israel an even earlier warning before it strikes; it could enforce a no-fly-zone for Israeli fighter jets near its bases in northern Syria; or it could supply Assad’s army with new aerial defense systems it has so far withheld.

South China Morning Post – Lee Jeong-Ho & agencies / Hopes for peace after North Korea’s Kim Jong-un agrees to shut missile site, visit Seoul

  • North Korea’s leader Kim Jong-un agreed to dismantle his main nuclear complex if the US takes “corresponding measures”, South Korean President Moon Jae-in said after a landmark meeting between the two leaders in Pyongyang.
  • Moon said Kim agreed to permanently dismantle a missile engine test site and a launch pad in Tongchang-ri in the presence of international experts as a specific step toward denuclearization.
  • The North Korean leader also to promised to visit Seoul “in the near future”, according to a joint statement. A Seoul visit by Kim would be the first by a North Korean leader since the peninsula was divided decades ago.
  • The joint statement also said the two Koreas agreed to seek to obtain the rights to co-host the 2032 Summer Olympics.

Politico – Joshua Posaner / 5 things to know about the European Commission’s German auto probe

  • The European Commissioner for Competition, Margrethe Vestager, slapped Germany’s big carmakers with an-depth emissions-related collusion probe. The investigation affects the three German auto giants Daimler, BMW and Volkswagen, along with VW subsidiaries Porsche and Audi.
  • Brussels alleges that these carmakers conspired to restrict the development of technology that would have reduced harmful emissions from gasoline and diesel engines in their cars.
  • While VW has posted record profits and sales over recent quarters, despite “Dieselgate”, the damage for politicians seen to be backing the industry is beginning to show, not least in the split over whether to push for software or hardware fixes.
  • The German transport ministry said it would not respond to the probe, but Transport Minister Andreas Scheuer tried to shift attention beyond Germany. “I don’t only see German diesel cars on German roads … That is why I call on foreign car manufacturers to make their contribution in the German diesel debate.”

Project Syndicate – Gordon Brown / Europe’s refugee scandal

  • When aid workers reported in April that children as young as ten were attempting suicide in the Moria camp on the Greek island of Lesbos, another tragic facet of the refugee crisis was highlighted: 30 million children around the world are currently displaced, many unaccompanied and in appalling conditions.
  • But the challenges these children face extend far beyond the short term. Even if refugee children eventually manage to get somewhere safe, their prospects are bleak, because most will never have a chance to go to school.
  • In Moria, the existing education centers can only cover 500 children per day – less than half the school-age population. And that number may be set to fall: the largest informal education center, run by UNICEF, is set to close in December due to lack of funding.
  • Fewer than half of school-age refugee children worldwide attend school; not even one in four make it to secondary school; and under 1% go on to pursue a higher education.
  • Financial Times – Chris Giles / The effects of EU migration on Britain in 5 charts

Bonus:

  • ABC – Matthew Carney / Leave no dark corner: China is building a digital dictatorship to exert control over its 1.4 billion citizens. For some, “social credit” will bring privileges — for others, punishment.
  • South China Morning Post / Topic: US-China trade war

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ESADEgeo Daily Digest, 18/09/2018

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South China Morning Post – Zhou Xi & Wendy Wu / Beijing likely to cancel trade war talks after Donald Trump ups the ante with tariffs on US$200 billion of goods

  • After US President Donald Trump announced new tariffs on US$200 billion worth of Chinese products, China is likely to cancel its tentative plans to send Xi Jinping’s top economic adviser to Washington, according to a Chinese government source.
  • Trump’s decision to impose fresh 10 per cent tariffs, starting from next Monday, before increasing them to 25 per cent on January 1, marked a significant escalation of the trade war between the world’s two largest economies.
  • The two sides have already imposed two previous rounds of 25 per cent tariffs on shipments worth US$50 billion a year.
  • Trump has threatened that if China retaliates to the latest measures, as it has promised to do, then the US will impose further tariffs on another US$267 billion worth of Chinese products – effectively covering almost all Chinese exports to the US.

The New York Times – Andrew Higgins & Rick Gladstone / Russia and Turkey announce demilitarized zone in last rebel-held part of Syria

  • Russia’s defense minister said on Monday that Syrian President Bashar al-Assad would refrain from launching an offensive on Idlib Province, the last major rebel stronghold, after the presidents of Russia and Turkey agreed to establish a “demilitarized zone” there by October 15.
  • Details of the agreement were not explained, and it was not immediately clear whether the Syrian government was willing to go along with their plan. But the statements by President Erdogan and President Putin raised hopes that Assad would step back.
  • In delaying an assault on Idlib, Russia could be looking ahead, to a time when it wants to present Assad to the world as the war’s winner who should be supported as he rebuilds the country. Such an argument might be less persuasive after a bloody campaign to subdue Idlib.
  • Putin added that all heavy weapons and “radical militants” must “be withdrawn” from the demilitarized area by October 10. By establishing this deadline, Russia may be seeking to demonstrate to the United Nations and others that the rebels do not want a peaceful settlement and must therefore be removed by force, as Syria has wanted to do all along.

Financial Times – Anne-Marie Slaughter / Transform UN entities from hierarchies into hubs

  • If the post-1945 world order is destined to decay, what will replace it? Trump and a host of like-minded leaders have an answer: tear it down and return to a world of unfettered national sovereignty. Holding to the status quo in the face of this challenge is not the answer.
  • The solution is to focus more on people than on states, by making the Sustainable Development Goals a reality. Governments alone cannot achieve them, but networks, coalitions and alliances of governmental and global actors can.
  • The UN can help, but only by transforming its conception and organization of itself. From the secretary-general down, through all its departments, agencies and permanent representatives, UN entities must transform themselves from hierarchies into hubs.
  • We must stop thinking of the UN as a global power centre, full of people who can order others to take action and solve problems. The power of the UN comes from the fact that its many constituent parts have the legitimacy and centrality to bring vast webs of global actors together, move them towards common goals and measure their progress.

Foreign Policy – Stephen M. Walt / Does it matter that Trump is a liar?

  • According to the Washington Post, as of August 1, Trump had made more than 4,000 false or misleading claims since becoming president, an average of roughly 7.6 per day.
  • But does this compulsive lying really undermine Trump’s ability to conduct foreign policy? According to John Mearsheimer, trust is scarce in foreign policy anyway, and therefore most leaders will check up on what a foreign counterpart is telling them before they accept and act upon it.
  • The bottom line is that leaders have little incentive to lie when dealing with foreign powers. However, they have a big incentive to lie when dealing with their own publics—if only to stay popular—and they are much more likely to get away with it, especially when the subject is foreign policy.
  • All in all, Trump’s lies do matter. First, they Americans look dumber in the eyes of the rest of the world, and lose the moral high ground. Second, bad behavior (to include lying) is no longer deterred by the fear of public shame and subsequent discredit. Lastly, other countries may end up resenting his lies, even if all states tend to view one another’s pledges with a certain skepticism anyway.

Brookings / Trans-Atlantic scorecard – September 2018

The selected pieces do not necessarily reflect the views of Javier Solana and ESADEgeo. The summaries above may include word-for-word excerpts from their respective pieces. 

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ESADEgeo Daily Digest, 17/09/2018

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The New York Times – Marc Santora & Julian E. Barnes / In the Balkans, Russia and the West fight a disinformation-age battle

  • A referendum, scheduled for September 30, will ask Macedonian voters whether to end a three-decadedispute with Greece by renaming their country North Macedonia.
  • Macedonian and Western officials say there is a flurry of disinformation activity on social media directed by Russian-backed groups trying to stoke fears and depress turnout in a vote that could put this Balkan nation on a path to join the EU and NATO.
  • Western diplomats say that 40 new websites are popping up each day on Facebook to encourage people to boycott the referendum.
  • NATO Secretary-General Jens Stoltenberg: “We see Russia is trying to meddle, to spread disinformation … But Russia is not winning.” Stoltenberg highlighted that opinion polls continue to show majority support for the country’s name change.
  • Meanwhile, US Defense Secretary James Mattis will visit Skopje today in order to show American resolve — even as some Republicans in Washington are increasingly resistant to expanding NATO.
  • Politico – Bruno Maçães / Let the Balkan Great Games begin
  • Euractiv — Hashim Thaçi / For a peaceful border correction between Kosovo and Serbia

The New York Times – Helene Cooper / Fraying ties with Trump put Jim Mattis’s fate in doubt

  • Interviews with current and former US officials over the past six weeks paint a portrait of a president who has soured on his defense secretary, weary of unfavorable comparisons to James Mattis as the adult in the room, and increasingly concerned that he is a Democrat at heart.
  • Over the last four months alone, Trump and Mattis have found themselves at odds over NATO policy, whether to resume large-scale military exercises with South Korea and, privately, whether Trump’s decision to cease implementation of the Iran nuclear deal has proved effective.
  • Trump, two aides said, wants Mattis to be more like Secretary of State Mike Pompeo, a political supporter of the president.
  • For Trump, getting rid of his popular defense secretary would carry a political cost. Mattis is revered by the men and women of the American military, while moderate Republicans — whom Trump will need in 2020 — appear to trust Mattis as well.

Brookings – David Dollar / US-China trade war has its seeds in the financial crisis

  • After the 2008 crisis, China restored its GDP growth rate very quickly. However, the crisis has had a lasting effect on the Chinese economy and on US-China relations.
  • In many ways, the seeds of the current trade war were sown in the financial crisis. It was always likely that a reforming China would gradually catch up with the United States, but the crisis greatly accelerated the process.
  • The problem for the United States is not that it used fiscal stimulus during the crisis, as China did, but rather that it has doubled down on fiscal stimulus at a time when the economy is running at full capacity. This will put the United States in a weaker position to deal with any new shocks.
  • Aside from the shock to the economy, the crisis was also a shock to faith in the market system. Up until then, China had been on a steady path of opening and reform. Since then, no further reforms of the Chinese financial system have taken place. China’s lost decade of reform is an irritant and an easy distraction from America’s real problems.

Euractiv – Benjamin Fox / The EU’s bank in Africa steps up the action

  • Whether or not Jean-Claude Juncker’s plans for a “partnership of equals” with Africa becomes reality any time soon, the Luxembourg-based European Investment Bank will have an ever-increasing role in the continent.
  • The EIB has been steadily expanding its operations in East Africa in recent years, opening a bureau in Ethiopia’s Addis Ababa alongside its long-standing office in Kenya.
  • The EIB operates with a network of IFIs/DFIs including the World Bank, African Development Bank, Japan’s JICA as well as European bilateral institutions such as the French AFD and Proparco and the German KfW and DEG.
  • The EU’s External Investment Plan (EIP) promises to leverage €44 billion of investment, predominantly in Africa, by 2020, commitments that may now be stepped up following Juncker’s State of the Union speech last week.

The selected pieces do not necessarily reflect the views of Javier Solana and ESADEgeo. The summaries above may include word-for-word excerpts from their respective pieces. 

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ESADEgeo Daily Digest, 14/09/2018

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The Guardian – Larry Elliott / ‘The world is sleepwalking into a financial crisis’ – Gordon Brown

  • Former UK Prime Minister Gordon Brown has warned that, after a decade of stagnation, the global economy is now moving into a decade of vulnerability, as the big problems of 2008-2009 remain unresolved.
  • “We are in danger of sleepwalking into a future crisis,” Brown said. According to him, the cooperation that helped avoid a second Great Depression had been replaced by a world in which countries had retreated into nationalist silos.
  • “In the next crisis a breakdown of trust in the financial sector would be mirrored by breakdown in trust between governments. There wouldn’t be the same willingness to cooperate but rather a tendency to blame each other for what’s gone wrong.”
  • Brown said there is less scope to reduce interest rates than a decade ago, no evidence that finance ministries would be allowed to cut taxes or increase public spending, and no guarantee that China would be as active in providing stimulus.

Financial Times – Edward Luce / America’s gaping McCain-shaped hole

  • Many of the world’s most pro-American populations are Russia’s neighbors. “[John McCain] represented something we idealized about America,” said Giorgi Margvelashvili, Georgia’s president. Now that McCain is gone, it is unclear which US public figure will champion their cause.
  • For Georgia, the dream of EU and NATO membership is as far away as ever. The country even appears to be sliding into oligarchy, as many of its neighbors are.
  • Across the region an ugly phrase is now heard: “Erdoganization”, referring to any country once in the west’s orbit but now taking steps to fend for itself.
  • Georgia is offering itself as a logistics hub for China’s Belt and Road Initiative linking Asia to Europe. Instead of being the west’s democratic gateway to Eurasia, Georgia threatens to become a vector in the opposite direction.

Foreign Policy – Salem Salomon & Casey Frechette / Corruption is wasting Chinese money in Africa

  • From the 1960s on, China supported anti-colonial and anti-apartheid movements across Africa. Today, some see China as a neocolonial power eager to plunge African nations into debt, stripping their resources and their sovereignty.
  • Others, especially African leaders, see China as a flexible partner willing to engage, with parity, where no one else will. Chinese loans for infrastructure projects come with interest rates far lower and repayment terms far more flexible than those offered by the IMF and other multilateral lenders.
  • China may have an overarching Africa policy. But on the ground, China is engaged in a diverse set of bilateral ties, with the benefits for African countries driven in large measure by how well their leaders defend national interests.
  • Chinese funders often seek out projects targeted at elite comfort instead of public good, perhaps in part because they fit a model of de facto bribery found in China’s local politics.
  • China’s presence in Africa could ultimately be a force for tremendous good, liberating nations through industrialization, but only if the opportunities it creates aren’t diverted by the greed of elites or the whims of corrupt leaders.

Euractiv – Tajana Štriga / Is Croatia ready to join the eurozone?

  • Croatia’s possible entry into the eurozone has become the subject of much talk among economic and political leaders over the past two years. In essence, Croatian citizens have already adopted the euro, as they have long decided to keep most of their savings in the single currency.
  • Most citizens still remember hyperinflation and trust the euro more than the domestic kuna currency, yet they fear a decline in living standards will be inevitable once Croatia formally adopts the single currency.
  • Numerous opponents of the euro like to use the argument of monetary sovereignty. Realistically, however, the option of weakening the kuna in times of recession has been extremely limited due to the high level of indebtedness in foreign currency.
  • The elimination of the foreign exchange risk associated with the kuna against the euro would be the main benefit of joining the eurozone. Furthermore, Croatian interest rates would approach the levels of those in the eurozone, which would mean lower loan interest rates.
  • In a report released in May, the European Commission concluded that Croatia has fulfilled almost all the criteria for entering the eurozone. Although the date of Croatia’s entry has not been determined yet, it is realistic to expect it within four years.

The selected pieces do not necessarily reflect the views of Javier Solana and ESADEgeo. The summaries above may include word-for-word excerpts from their respective pieces. 

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ESADEgeo Daily Digest, 13/09/2018

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BBC / Juncker: EU will send additional 10,000 guards to borders

Foreign Affairs – Khalil Shikaki / Do Palestinians still support the two-state solution?

  • Soon after the Oslo Accords were signed, on September 13, 1993, and for many years after that, Palestinian support for a two-state solution was very high, peaking at 80 percent. Twenty-five years later, all that has come undone. Support for the two-state solution is at its lowest level since Oslo, at only 43 percent.
  • More than half of the Palestinians view the Palestinian Authority (PA) as a burden, and a large majority, ranging from 60 to 70 percent in 2018, demand the resignation of PA President Mahmoud Abbas.
  • During this same period, Israeli settlement construction in occupied Palestine has continued unabated. The size of the settlement enterprise today is four times what it was when Oslo was signed: it has grown from around 100,000 settlements in 1993 to more than 400,000 (not including East Jerusalem or the Gaza Strip) today.
  • The decline in support for the two-state solution among Israeli Jews parallels that among Palestinians, and the level of public support for it—43 percent—is identical to that among Palestinians.
  • On top of all of this, US President Donald Trump has done more damage to the prospects of Israeli-Palestinian peace in the 20 months of his administration than any US president has done in the past 70 years.
  • But seen through the prism of public opinion, the two-state solution is clearly not dead. Jointly conducted Palestinian-Israeli survey research provides evidence that there is ample support for the two-state solution when the public sees it as feasible and when each side has reason to trust the other.

Foreign Policy – Tarah Wheeler / In cyberwar, there are no rules

  • The US government has fumbled on cybersecurity, outsourcing much of that area of conflict to the private sector in accordance with the Trump administration’s most recent National Security Strategy—leaving the country exposed to foreign attack.
  • The great challenge for military and cybersecurity professionals is that incoming attacks are not predictable, and current strategies for prevention tend to share the flawed assumption that the rules of conventional war extend to cyberspace as well.
  • Technology and cyberspace are changing faster than countries can legislate internally and negotiate externally. Part of the problem with defining and evaluating acts of cyberwarfare against the United States is that US law is unclear and unsettled when it comes to defining what constitutes an illegal cyberact.
  • It’s not surprising that the international community has a hard time agreeing on what constitutes a cyberattack deserving of reprisal—especially when countries can’t even settle on a definition for themselves.
  • Leaders must follow NATO’s tentative footsteps in Tallinn – which resulted in the 2013 “Tallinn Manual” – and convene digital Geneva Conventions that produce a few deep, well-enforced rules surrounding the conduct of war in cyberspace.

European Council on Foreign Relations – Ellie Geranmayeh / Trump’s Iran sanctions: an explainer on their impact for Europe

  • In recent months, the US has touted its unilateral sanctions as a powerful tool for forcing other countries to halt their business with Iran. So far, European firms have largely complied with US secondary sanctions.
  • The second wave of sanctions will come on 4 November, targeting Iran’s energy, financial, insurance, shipping, and port sectors, as well as non-US financial entities’ transactions with the Central Bank of Iran and other designated Iranian banks (whose identity remains unclear). It remains unclear whether the US will issue waivers and exemptions for specific countries to continue importing Iranian oil after November.
  • In August, the EU revived its Blocking Regulation, first introduced in 1996, to include US secondary sanctions targeting Iran. Designed to dissuade European companies from adhering to US extraterritorial sanctions, this measure allows EU entities to recover damages arising from US sanctions through civil legal claims. In theory, the Blocking Regulation forbids EU citizens and companies from complying with the US sanctions.
  • In practice, given European multinationals’ ongoing retreat from Iran, there is little to indicate that the measure will have much impact unless it is fully enforced. Moreover, the Blocking Regulation allows companies to apply for exemptions where they can show that ignoring US secondary sanctions would seriously damage their interests (as many could).
  • If it fails to devise a more effective response to US secondary sanctions, Europe will create a long-lasting precedent for successive US administrations to control European trade and foreign policy.
  • Bloomberg – Esteban Duarte / Iran deal advocate says EU will have to bend to US sanctions

The selected pieces do not necessarily reflect the views of Javier Solana and ESADEgeo. The summaries above may include word-for-word excerpts from their respective pieces. 

 

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ESADEgeo Daily Digest, 12/09/2018

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Politico – David M. Herszenhorn / Rumble with Hungary exposes EU divisions

  • Yesterday in Strasbourg, senior EU officials lambasted Hungarian Prime Minister Viktor Orbán for trampling democratic freedoms and undermining fundamental rights. Orbán fired back, accusing the guardians of the EU treaties of hypocrisy, abuse of power, and violating Hungary’s national sovereignty.
  • The debate in the European Parliament on Tuesday focused on whether to initiate Article 7 disciplinary proceedings against Hungary. The Parliament will vote on Wednesday, shortly after European Commission President Jean-Claude Juncker’s State of the Union speech.
  • Even some major leaders of Orbán’s political family, the center-right European People’s Party (EPP), said they would vote in favor of Article 7. Manfred Weber, the leader of the EPP group in Parliament, said he would vote in favor.
  • In reality, the Article 7 process — even if supported by the required two-thirds of Parliament — stands no chance of success. To suspend Hungary’s voting rights would require a unanimous vote by all other EU nations, and Poland – which is facing its own Article 7 proceeding – will stand in the way.

BBC / Russia launches biggest war games since Cold War

  • Russia has launched in Siberia “Vostok-2018”, its biggest military exercise since the Cold War, involving about 300,000 service personnel. The last Russian exercise of similar scale was in 1981. The scale of Vostok-2018 is equivalent to the forces deployed in one of the big World War Two battles.
  • China is sending 3,200 troops to take part in “Vostok-2018″, with many Chinese armoured vehicles and aircraft. Mongolia is also sending some units.
  • As Beijing has become embroiled in a tit-for-tat trade dispute with Washington this year, Russia has become an increasingly important trade partner and is now China’s ninth largest. President Putin and President Xi are said to get along – Xi has even called Putin his “best, most intimate friend”.
  • NATO Spokesman Dylan White: “Vostok demonstrates Russia’s focus on exercising large-scale conflict. It fits into a pattern we have seen over some time: a more assertive Russia, significantly increasing its defence budget and its military presence.”

Financial Times – Nouriel Roubini / Is the next financial crisis already brewing?

  • The global expansion is likely to continue this year and next because the US is running large fiscal deficits, China is continuing stimulative policies and Europe remains on a recovery path. Yet by 2020, there are several reasons why conditions for a global recession and financial crisis may emerge.
  • Not only will the current US economic stimulus have gone away by 2020, but a modest fiscal drag will push growth below 2 per cent. Other US policies, like restrictions to migration while the population is ageing, will also be detrimental.
  • Then there are trade frictions with China, Europe and Nafta countries, which will increase even if they fall short of a full-scale trade war. Their effect will be to slow growth and increase inflation.
  • What will Trump do in 2020, an election year, when growth stalls below 1 per cent and job losses start? The temptation will be to create a foreign policy crisis, and the only feasible target would be to provoke a military confrontation with Iran, which would trigger a stagflationary geopolitical shock.
  • Unlike a decade ago, once the next economic and financial downturn occurs the policy tools available to reverse it will probably be less effective.

Project Syndicate – Kemal Derviş / A fragmented multilateralism?

  • Trump’s attacks, coming after the failure of the Doha Round, may lead to the end of a functional World Trade Organization. But the debate about the WTO’s fate is part of a wider discussion concerning multilateralism, which includes the United Nations, the G20, and the IMF.
  • Three alternative “systems” appear to be possible. The first is a system dominated by bilateral deals, in which international rules and international law are absent. The second alternative is the current system, in which countries use global multilateralism to enforce common rules.
  • Finally, one can envision a system in which the attempt to establish global rules is abandoned, but regional or like-minded country groupings formulate their own sets of rules. This “fragmented multilateralism” would not leave much room for global institutions.
  • A strongly fragmented system would increase subsidiarity, but ultimately it would be unable to deliver the sought-after global public goods and benefits. In short, there is no substitute for global rules and standards that are required to confront the world’s existing and emerging challenges.

The selected pieces do not necessarily reflect the views of Javier Solana and ESADEgeo. The summaries above may include word-for-word excerpts from their respective pieces. 

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