Europe retaliates and the transatlantic split widens

US President Donald J. Trump meeting EU leaders
Source image via EPA

The European Union (EU) retaliatory tariffs on a series of American goods, including peanut butter, motorcycles, bourbon, orange juice, sweetcorn and others, kicked in on June 22. The imposed duties on American products are worth $3.3bn in a tit-for-tat response by Brussels to the Trump administration’s unilateral imposition of tariffs on aluminum (10%) and steel (25%) back on March 23.

The EU Trade Commissioner, Cecilia Malmstrom, said that “the rules of international trade, which we have developed over the years hand in hand with our American partners, cannot be violated without a reaction from our side.” She argued that the EU was “left with no other choice” to impose tariffs on US products. Jean-Claude Juncker, president of the European Commission, said that the decision by the US to impose tariffs “goes against all logic and history.” In addition to the immediate tariffs, the EU seized the World Trade Organization (WTO) to challenge the US measures.

The US under President Trump is not at its first spike of tariffs on targeted foreign goods based on national security ground. Aside from the steel and aluminum tariffs, the US imposed a 20-30% tariff on washing machines and solar panels last year. It is as well discussed to impose a 25% tariff on over 800 Chinese goods. Trump seems to believe that the world is taking advantage of the US and that free trade is not being fair to the US. His sole argument is based on the reading of the US trade balance. If there is a trade deficit, the US is losing; if there is a surplus, the US is winning. Trade policies are more complex than what it is being portrayed in a tweet. The world, in particular US allies, has already responded to US ensuing the tariffs on steel and aluminum as listed in the table below.

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Source: Amy Cheng, Humza Jilani, Keith Johnson, Amy Mackinnon. 2018. “State of the Trade Wars Tracking U.S. President Donald Trump’s tariffs — and the retaliatory measures other countries are taking.” Foreign Policy. June 21. (here)

Tariffs on auto imports?

In a very trumpian fashion, the American president went on on Friday by threatening to impose a 20% tariff on all U.S. imports of European Union-assembled cars. His message, via twitter, read “If these Tariffs and Barriers are not soon broken down and removed, we will be placing a 20% Tariff on all of their cars coming into the U.S. Build them here!” The threat of imposing tariffs on cars is not new as a month ago he instructed the Department of Commerce, led by Wilbur Ross, to launch a probe into whether auto imports pose a national security threat.

Trump and his associates have used overtime the Section 232 of the Trade Expansion Act of 1962 in order to increase tariffs on ground of national security. The same rationale will potentially be used for tariffs on auto imports. The justification and connection between national security and tariffs was made by Wilbur Ross during a recent interview, wherein he said “National security is broadly defined to include the economy, to include the impact on employment, to include a very big variety of things.” He continued claiming that “Economic security is military security. And without economic security, you can’t have military security.” However, most of the tariffs are affecting traditional US allies, which happen to be NATO members and closely working on defense and security cooperation. Mr. Ross’s justification does hold any serious ground and is simply trying to hide basic protectionist policies being national security.

Congress could regain the control of decision-making on tariffs if the Republican establishment, holding the majority in the House and Senate, were committed to free trade and sound economic and trade policies. Earlier in June, republican and democrat lawmakers mentioned a plan to introduce a legislation that would force President Donald Trump to obtain Congress’ approval before imposing tariffs on national security grounds. Until the midterm elections, it is difficult to imagine the approval of such legislation by the Congress.

The current rates of tariffs for imports between the US and the EU are divided into two categories: for cars, 2.5% US import tax compared to 10% EU import tax; and for light trucks and SUVs: 25% US import tax compared to 10% EU import tax. The American president always focuses on the tariffs for cars and never on light trucks. He has been picking on Germany and its successful automobile industry. But he has failed to recognize the investments made by the three leading german companies in building assembly plants in South Carolina (BMW and Daimler), Alabama (Daimler), and Tennessee (Volkswagen). In 2017, 38% of 854,000 cars build in the US were sold in the US and over 500,000 were exported. With regards to employment, 116,500 jobs in US were connected to german auto-makers: 36,500 working at auto-maker plants and 80,000 as suppliers.

What would the impacts be for the US if the US president were to impose such tariffs? The Peterson Institute recently released a report on the potential impacts of a 25% proposed tariffs in auto imports. The report argues that the production in the industry could drop by 1.5% and that it could cause 195,000 US workers to lose their jobs over a 1-to-3 year period. In case of retaliation in-kind with tariffs by foreign countries on the same products, production would fall 4%, 624,000 US jobs would be lost, and 5% of the workforce in the auto and parts industries would be displaced. The ripple effects of such tariffs could have disastrous consequences for states hosting assembly plants in the long-term. The latest risk assessment by Airbus addressed to the UK government regarding the uncertain future around Brexit should be carefully read by US lawmakers and Trump associates when deciding on imposing tariffs or not. Multinational corporations hold quite a strong leverage in the decision-making process of trade policies.

Rocky transatlantic relations

Again, as argued in previous analyses, the future of transatlantic relations appears unstable and rocky. Several points shall be addressed reflecting on US treatment of historical allies and the future of the liberal order. First, The Trump administration has demonstrated over and over its decision to split with and humiliate America’s traditional allies. The message addressed by the American president and members of his cabinet, in particular Peter Navarro, towards the Canadian prime minister post-G7 meeting as well as the continuous undermining of the German chancellor illustrate Trump’s modus operandi. Per Wess Mitchell, US Assistant Secretary of State for European and Eurasian affairs, the Trump administration is implementing a “strategic renovation” with traditional allies. President Trump has made a point to undermine his German counterpart, Angela Merkel. She was one of the closest partners of President Obama, is leading the most stable and largest European economy, and has not shied away to defend the liberal order. The appointment of Mr. Grenell as US Ambassador to Germany, who has broken protocol on two occasions, confirms it. Mr. Grenell in an interview with Breitbart said “I absolutely want to empower other conservatives throughout Europe, other leaders. I think there is a groundswell of conservative policies that are taking hold because of the failed policies of the left.” The Trump administration is seeking to undermine and destabilize the German chancellor.

http_com.ft.imagepublish.upp-prod-us.s3.amazonawsBy looking at the trends and rhetorics (which can shift very quickly as demonstrated by the change of position by Trump towards the North Korean dictator), a trade war is quite an eventuality. For the EU, trade has been the core dimension of its external policy and international presence. The EU sees multilateralism and free trade as one of its most successful policies. Furthermore, the EU is at a crossroad with the continuous rise of populist forces gaining traction in core EU countries, such as recently Italy. The EU ought to defend its interests and cannot cave in to foreign pressures, otherwise it would play in the hands of the Orban, Salvini and Le Pen of Europe. And last, the European market is one of the richest, largest, developed and influential in the world. By the weight of its market, the EU shall not shy away from direct confrontation with the US. As per Charlemagne of The Economist, the EU has three strategies in hand to chose from: capitulation, resilience, and containment. Resilience is the most likely strategy at this period of time.

Lastly, the main issue with regards to trade is China, and it has remains unaddressed. Both the US and the EU agree with the fact that China, since joining the WTO in 2002, has not played by the rules. The US could have worked with the EU and utilized the common procedures and processes, the international trading system. However, Trump said it on the campaign trail, and is now doing it while in office, the rules-based global trading system is being portrayed as the cause of American demise. Trump wants a trade approach based on bilateral deal-making, transactional relations and only fair for the US. Donald Tusk, the president of the European Council said in Canada, “the rules-based international order is being challenged, quite surprisingly… by its main architect and guarantor, the US.” For instance, Trump refused to sign the G-7 communiqué. For the EU, the liberal order and rules-based trading system are critical for its functioning. Cecilia Malmstrom said this clearly, “The E.U. has a responsibility to stand up for open global trade.”

The American president seems more at ease surrounded by dictators and authoritarian leaders than with traditional American allies. The affronts to the liberal order and America’s allies are beginning to add up considering his policy choice to leave the TPP, Paris deal, the Iran deal, relocate the US embassy in Jerusalem, and unilateral imposition of tariffs. Europe knows that Trump is temporary, but his continuous attacks on the liberal order will not only undermine the US position in the world but lead to a highly unstable multipolar order. “Trump’s preference for a divide-and-rule strategy produces a game” writes Javier Solana “that will create only losers.” Europe knows it, the US may have a serious headache post-Trump.

(COPYRIGHT 2018 BY POLITIPOND. ALL RIGHTS RESERVED. THIS MATERIAL MAY NOT BE PUBLISHED, BROADCAST, REWRITTEN OR REDISTRIBUTED WITHOUT PERMISSION).

 

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The unreliability of American foreign policy under the Trump administration

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PHOTO: MARTIN H. SIMON/ZUMA PRESS

On May 8, commonly known as Victory in Europe Day (V-E Day), the American President, Donald Trump announced his decision to leave the Joint Comprehensive Plan of Action (JCPOA), the Iran deal.  The US departure from the deal is a blow to the transatlantic community, multilateralism, and the non-nuclear proliferation regime. On V-E Day, the US president directly told his European counterparts that the word of the United States is unreliable, and that any commitment/deal made by the United States is effectively worthless. One caveat, in foreign policy, credibility is as important as interests.

Trump’s foreign policy has been in the making for now over a year. Early on, experts, including myself have framed Trump’s approach to world affairs as transactional. That was in the first 6-month of his presidency when he was still under tutelage of the traditional American foreign policy establishment. In year 2 of his mandate, Trump is now surrounded by his choosing, that includes John Bolton, as national security advisor, and Mike Pompeo, as US Secretary of State. Both opposed to the Iran deal. James Goldgeier is correct when emphasizing that “Bolton and Pompeo joining the team left [US Secretary of Defense] Mattis isolated in arguing the Iran deal was working.” Year 2 is about the implementation of the pledges made on the campaign trail. One major pledge and a driving force behind Trump’s foreign policy has been erasing Obama’s legacy.

President Obama understood that American foreign policy and interests can better be served via multilateralism and diplomacy. Obama had learnt the mistakes of foreign p071415ps-0184interventions made by his predecessor and favored in fact the used of targeted operations (for better or worst). Under his two mandates, President Obama managed to finalize the COP-21 agreement, the JCPOA, rebuild transatlantic relations (one attempt was the Transatlantic Trade and Investment Partnership) and solidifying the US position in Asia with the Trans-Pacific Partnership (TPP). President Obama’s accomplishments had united the right and the Republican party and fuelled the message of candidate Trump on the campaign trail based on some sort of anti-globalist and anti-foreign policy elite defending the liberal order.

Once elected, President Trump did not wait too long before leaving the Paris climate deal, retrieving the US seat from the negotiation of the TPP, putting tariffs and quotas on aluminum and steel, moving the US embassy in Israel to Jerusalem and finally leaving the Iran deal. On the climate deal, the international community responded by reaffirming its commitment to meeting the goals defined in Paris without the US, one of the largest polluters. It was a disappointment for European allies. But many were not surprised considering the perceptions and rhetoric on climate change in the American political debate. The US withdrawal from the Paris climate deal sent the initial signal to Europe and the world about US foreign policy under Trump. But the successions of policy rebuttals are now building up in increasing tensions and discomfort between the two sides of the Atlantic. On the Iran deal, both French President Emmanuel Macron and German Chancellor Angela Merkel had been intensively lobbying the US president to reconsider its decision.

President Trump’s argument was that the Iran deal was one of the worst deals ever and that it did not do enough to address Iran’s ballistic program and curb Iranian foreign policy in the region. The Wall Street Journal’s editorial sums up very well the voice of the anti-Iran deal advocates. The Trump administration expects that by re-implementing the sanctions it would put so much pressure on the regime that it will ultimately bring it to collapse. President Trump and national security advisor Bolton are in fact hoping for regime change. When President Macron prepared his visit to the US a couple weeks ago, he talked on Fox News about not having a Plan B with regards to the Iran deal. The US neither has a Plan B today, nor one for tomorrow if the Iranian regime further radicalizes or even collapses.

From Europe’s point of view, the exit of the US from the Iran deal implies several dimensions: first, it undermines European commitment to multilateralism and more importantly the rules-based order, the centerpiece of European foreign policy. The Iranian nuclear deal is a “key element of the global nuclear non-proliferation architecture.” It embodies a success for European diplomacy, which has been the main driver over 12 years of negotiations beginning with HR Javier Solana (E3+1). The Iran deal represents “the foremost proof of their [European] capacity to act coherently and effectively.”

Second, it creates a considerable financial and economic dilemma under the current circumstances. With the US departure and re-imposition of US sanctions, European companies could be in violation of such sanctions. It comes at the time when of the Trump administration unilaterally increased tariffs and quotas on aluminum and steel and the Europeans are currently receiving a temporary exemption. As mentioned by EU chief foreign policy Frederica Mogherini, “the European Union is determined to act in accordance with its security interests and to protect its economic investments.” French, British and German officials must now navigate some tricky waters as EU companies, such as Airbus, Danone, Renault, Total and Sanofi, could be facing penalties under US sanctions. The US ambassador to Germany, Richard Grenell, told “German companies doing business in Iran should wind down operation immediately.” The lack of understanding of diplomatic protocol by the American diplomat is quite telling.

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Third, there are considerable geopolitical ramifications in a highly volatile region. The nuclear deal has played a role in maintaining a certain level of stability (at least status-quo). The Europeans are seeking to maintain the deal and are committed to “work collectively on a broader framework” covering Iran’s nuclear activity, ballistic missile program and seeking for greater stability in the Middle East.

Fourth, it demonstrates one more time the lack of willingness by European powers to assume their European sovereignty in advancing and defending European interests. President Macron in his acceptance speech of the Prix Charlemagne, asked this criticalMacron-PrixCharlemagne question: “Are we accepting the rule of the other or the tyranny of the events or are we making a choice by ourselves of a deep autonomy and yes, of a European sovereignty?”  The US-EU relations are deep and have evolved over time. Since the 1950s, Washington has called on Europeans to build up their power and influence, and Europe has struggled with such task. Now with the current administration, the EU and Europeans are facing a complex conundrum: developing a tough and united position against the Trump administration without damaging its relationship with the United States.

On V-E day, a day of commorancy of transatlantic unity defeating Nazism and fascism, the American president made a case for an America first, America alone (at the exception of Israel and Saudi Arabia), and for undermining the interest of the international community. The case made by President Trump and some of his foreign policy allies, like Senator Marco Rubio, is that the Iran deal was a political agreement signed by President Obama and not by Congress (which is true). For instance, Senator Rubio emphasized in a tweet that the deal was “not a binding agreement under US law b/c never submitted for Senate approval. It is a political agreement made by the previous administration.” This is a dangerous game to start playing and to justify major diplomatic shifts.

Now the concept of ‘America First’ may play very well with a specific segment of the American electorate, however, it is not effective with the international community. Reciprocity is a core dimension of international relations. Under the liberal order, the US has certainly advanced its interests, while having positive and beneficial outcomes for American allies. In the case of the Iran deal, the Paris agreement, the tariffs/quotas, American allies are obvious losers. President Trump wants to keep his promises to his base, but what about his European counterparts? How can a European leader defend transatlantic cohesion under the terms and conditions advanced by this administration?France’s Finance Minister Bruno Le Maire said EU states would propose sanctions-blocking measures to the European Commission. He even asked “Do we accept the vassalization of Europe in commercial matters? The answer is no.”

President Trump mentioned in withdrawal speech that his action sends a critical message that “the United States no longer makes empty threats.” We will see on this point as so far US interventions abroad under President Trump have been so limited and frivolous. Trump is making unilateral decisions with lasting consequences without any grasp of the issues and policy outcomes. In year 2, President Trump is continuously isolating the US by proving that American commitments are in fact empty promises.

(COPYRIGHT 2018 BY POLITIPOND. ALL RIGHTS RESERVED. THIS MATERIAL MAY NOT BE PUBLISHED, BROADCAST, REWRITTEN OR REDISTRIBUTED WITHOUT PERMISSION).

The Iranian Dossier – France’s Position

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Shortly after the decision by the Trump administration to refuse to certify the Iran deal, and “instead tasked Congress with determining whether to take punitive action,” I was invited by the Program in Arms Control and Domestic and International Security (ACDIS) at the University of Illinois at Urbana-Champaign to provide an analysis on the French and European position regarding the Joint Comprehensive Plan fo Action (JCPOA).

Concerns that Iran may seek to develop its own nuclear arsenal once the Joint Comprehensive Plan of Action (JCPOA) expires in 2025 are legitimate. But how can one make an informed decision to decertify the deal when so far Iran has complied with the terms of the 2015 agreement signed under the UN auspice?

Politically speaking, Donald Trump, against the recommendations of his top advisors decertified the deal after having already recertified it at two previous occasions. While this decision may appeal a Trumpian base that perceives multilateral and diplomatic efforts as a form of weakness undermining American grandeur, a divide between the US and the Europeans is apparent regarding the survival of the Iranian nuclear deal. European counterparts, especially France, Germany, the United Kingdom and the European Union (known as the E3/EU), have not shied away from expressing their opposition to such unilateral decision by the White House.

To read the rest of the analysis, click here

(COPYRIGHT 2017 BY POLITIPOND. ALL RIGHTS RESERVED. THIS MATERIAL MAY NOT BE PUBLISHED, BROADCAST, REWRITTEN OR REDISTRIBUTED WITHOUT PERMISSION).

Rediscovering a Forgotten Past – State, Identities and Cohesion

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Credit Emilio Naranjo/European Pressphoto Agency

Politics in Europe are alive; Catalonia is the latest example. The financial crisis was the axiomatic moment in contemporary European politics fermenting domestic crises throughout and within the Union, occassionally bursting ever since. These crises have equally affected all EU Member States leading to the rise of nationalist forces (notably in France, the Netherlands, Austria, Germany, the UK, Poland, Czech Republic and so forth) shaping the national political rhetorics and policy-agenda.

The latest crisis is undeniably Sunday’s referendum in Catalonia, which exposes an absolute dilemma and threatens the integrity of Spain, one of the largest EU Member States and Eurozone members. In a European Union composed of 28 sovereign states wherein domestic politics remain in the realm of the sovereign states (unless under a policy-area of a European competence), one core commonality remains binding democratic values and principles. Catalonia is one of these cases wherein state sovereignty and regional call for self-dertmination meet and clash.

The Catalan Nightmare

The crisis in Catalonia has changed gear, and potentially seen a shift in legitimacy from Madrid to Barcelona, with the reprehensible response by the Mariano Rajoy’s government on October 1 ensuing the unilateral Catalan referendum. Prime Minister Rajoy had the law on his side as the Spanish constitutional courts have ruled on several occasions on the illegality of a referendum on the independence of Catalonia. But “Spanish Prime Minister Mariano Rajoy has transformed” argued Frederiga Bindi “what would have otherwise been a unilateral, unconstitutional, and useless referendum into a major victory for the separatists.”

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Cartoon: Chappatte

The legal baseline is Spain 1978’s constitution, which stipulates that Spain cannot be broken up as “the indissoluble unity of the Spanish nation” and “the common and indivisible homeland of all Spaniards.” Only the Spanish Parliament can changed the constitution.

Catalonia is a critical piece of Spain, which is the 14th largest world economy and the 4th largest in the EU (post-Brexit). Catalonia counts about 16 percent of Spain overall population Catalonia is one of the richest regions of Spain contributing almost 20 percent of the Spanish economy. One of the arguments in favor of the independence is the lack of proportionality between Catalan contributions to the overall budget and the return. From the 20 percent of contribution, Catalan residents receive 14 percent back for public expenses. Economically, Spain may certainly face serious internal trouble if Catalonia were to secede.

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Emilio Morenatti/Associated Press

Without going back to 16th century Spanish history, Catalonia has always considered itself unique and separate from Spain with its own history, language, culture and therefore nation. In contemporary Spanish history, 90 percent of Catalonia supported the 1978 constitution. But the separatist movement and feeling have always remained underneath. The recent financial crisis, shifting into the Eurozone crisis, leading to the near collapse of the PIIGS country counted Spain in the mix contributed to exacerbate the tensions between Madrid and Catalonia. Adding to the financial crisis, Spain’s constitutional court struck down parts of the new statue of autonomy for Catalonia in 2010. Since then, Madrid did not reach several opportunities in order to continue talks with the region.

Prior Sunday’s violence, polls were always consistent in proving that only 40-45 percent of Catalans have been in favour of independence. 2013 was the year with a peak in the support level at 49 percent. Prior the announced referendum on October 1, a majority of Catalans were in a difficult position between Catalan authorities to hold the referendum on independence and the strong-hold position by Madrid.

Mariano Rajoy of Spain called on the separatist leaders, behind Carles Puigdemont, President of the Generalitat of Catalonia, to stop the “disobedience” and the “escalation of radicalism.” In a rare televised speech on the evening of October 3, the King Felipe VI of Spain condemned the actions by the separatists framing them as illegal and infringing the legal structure of Spain. “They have tried to break the unity of Spain and national sovereignty” he went on to claim. Ensuing the banned referendum, Catalonia has announced that it will move forward and declare independence from Spain in the near future (after a parliamentary session on Monday). Legally, if a declaration of independence were to be made, the central government of Spain could suspend Catalan autonomy under Article 155 of the 1978 Constitution. Such option would bring the country in a major constitutional and political crisis.

And, the European project?

Where does the European Union fit in this complex political puzzle? The EU is indirectly the cause and the remedy. But it is as well, rightfully so, a reluctant actor. In the case of the Catalan crisis, the EU and its set of institutions have remained as distant as possible from this domestic crisis. For the EU, this is not only bad news, but a sign of major internal forces at play within Member States. “Separation and secession within a member state is very bad news for a block” argued Stephen Beard of Marketplace “that is striving to hold itself together and is currently doing its utmost to punish Britain for daring to break away from the EU.”

The Treaties of the EU are clear regarding the competencies of States and the EU. For instance, Article 4.2 of the TEU stipulates that, It [the Union] shall respect their essential State functions, including ensuring the territorial integrity of the State, maintaining law and order and safeguarding national security. In particular, national security remains the sole responsibility of each Member State.

Ensuing the use of force by Madrid on Sunday in Catalonia, the EU called out and condemned government violence against citizens. On October 2, the Commission released an official statement underlining the illegality of the referendum under Spanish law. Without directly targeting PM Rajoy, the Commission ended the statement by claiming that “Violence can never be an instrument in politics.” However, Spain may be one of the largest and Western EU Member State, the Commission must be as critical as it has been in Poland and Czech Republic. “It is the kind of violence the European Union” writes Steven Erlanger of the New York Times, “would ordinarily condemn in high moral terms and even consider punishing.”

On Wednesday, the Commission called for an open dialogue between the Catalan authorities and the Spanish government. Frans Timmermans, the Commission’s deputy head told before the European Parliament that “it’s time to talk.” Timmermans still maintained the official position of the Commission endorsing the legal position of Spanish Prime Minister Rajoy. During the European Parliament’s session, two leading MEPs, Bavarian Manfred Weber and Flemish Guy Verhofstadt emphasized on the fact “strong regional identity and autonomy did not mean breaking up existing nation states.” What is certain is that “if Catalonia were to leave Spain,” underlined Jonas Parello-Plesner of the Hudson Institute, “it would also leave the EU, only to start a cumbersome reentry process.”

EU Member States, all sovereign states, are not usually in favor of secessionist movements, especially within the Union. In the current context of the Brexit negotiation, the EU and the 27 Member States are quite reticent to see a region of a Member State calling for self-determination and seeking independence. “Throughout my life,” wrote Javier Solana, a former Spanish minister, former NATO Secretary General, and the first EU High Representative, prior the Sunday violence, “I have witnessed the fragmentation of many countries, and I cannot conceive of that happening in the European Union of today.” Despite the reprehensible past action and poor tactic by PM Rajoy, it is difficult at this time to foresee any support from the 27 European capitals for Catalonia’s independence.

Lastly, the Catalonia case brings home a reality, which seems to have been forgotten in 220px-2012_Catalan_independence_protest_1021.jpgone of the richest regions of the world: history tells us that states will use force to maintain their integrity and unity. In his address to the nation, King Felipe VI, “Today Catalan society is fractured and in conflict,” he said. “They (the Catalan leaders) have infringed the system of legally approved rules with their decisions, showing an unacceptable disloyalty towards the powers of the state.” The message is direct, the state shall remain and fight any types of fragmentation.

For decades, Europeans have watched separatist efforts in Iraq-Turkey (Kurdistan), Sudan (South and North), Serbia (Kosovo), Chechnya (Russia), Nepal (China) with a certain distance condemning state violence and believing in some sort of European exceptionalism, that it would not happen here inside the Union. Well Spain demonstrated a forgotten reality.

“As it forms the basis for an experience of freedom, the history of democracy,” Pierre Rosanvallon, Professor at the Collège de France noted, “is therefore not simply a history of frustrations or betrayed utopias: it has become a deeply intertwined history of disenchantment and indeterminacy.” The Catalan case opens the European Pandora box of a forgotten past forcing European citizens and leaders to reflect on the questions thought buried under the rumbles of World War two, but briefly emerging since with the reunification of Germany and the wars in the Balkans, of identity, democracy, power, oppression, nation-state, region-state and cohesion. The fraught between Madrid and Catalonia is serious and could have considerable ripple effects if a thoughtful and open dialogue is soon implemented.

(COPYRIGHT 2017 BY POLITIPOND. ALL RIGHTS RESERVED. THIS MATERIAL MAY NOT BE PUBLISHED, BROADCAST, REWRITTEN OR REDISTRIBUTED WITHOUT PERMISSION).

 

A Half-Tone Victory for Merkel

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Credit Hannibal Hanschke/Reuters

Angela Merkel won a fourth term at the helm of Germany ensuing the German federal parliamentary election. In postwar Germany, she is now one of the longest serving Chancellors after Konrad Adenauer and Helmut Kohl. Despite winning her fourth mandate and maintaining her status of most seasoned European politician, she is facing some serious challenges at home. Her conservative party, the CDU, scored one of the lowest results in recent memory and lost almost 1 million voters to the extreme-right anti-immigrant party, Alternative for Germany (AfD). Time will tell, but this general election sends a signal to Germany, Europe and the world: traditional postwar german politics appear to be changing. This election marks very well a substantial political shift.

Data and Political Landscape

The big story of this election is the rise of the AfD as the third largest bloc in the parliament with over 88 deputies, as it received 12.6% of the vote. As argued by Gideon Rachman of the Financial Times, “Germany now looks more like a ‘normal’ western country. And that, ironically, is not something to be welcomed.” The normality implies a Western country with a relatively strong presence by a extreme-right anti-immigrant party. Germany is not immune anymore.

The AfD was founded in 2013 in response to the bailout of the Eurozone economies. It was an eurosceptic party created by conservative intellectuals six months prior to the 2013 elections, led by a professor of economics at the University of Hamburg, Bernd Lucke, opposed to the bailouts by Germany of other eurozone economies. At that time, the party failed to make it into the Bundestag receiving only 4.6% of the vote, or 0.4 percentage points below the 5% cutoff. The 2015-16 refugee crisis leading to an open-door policy by Chancellor Merkel, welcoming over 1 million refugees, was used by the AfD leadership in order to shift the party ideology from eurosceptism to anti-immigration. The three figureheads of the party being Alexander Gauland, Alice Weidel, and Frauke Petry have used incendiary rhetorics and not shied away from addressing Germany’s nazi past.

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Source: The Guardian

With 32.9% of the vote, Merkel’s CDU won the night and a significant share of the Bundestag. However, it is a half-tone victory considering one of the worst results for the CDU losing over 8.6% of the votes compared with the 2013 general election. Furthermore, Merkel’s CDU saw the migration of roughly 1 million voters towards the AfD (see chart below). Merkel’s agenda throughout the campaign was mainly based on the concept of continuity. But the migration towards the AfD may not be only about immigration policies. Chancellor Merkel played a considerable role on making Germany one of the strongest world economies and the economic power of the European bloc. The reforms began in the 1990s, continued by Merkel, implementing neoliberal economic programs permitting to grow the economy, lower unemployment and averse the debt. For instance, four of the world largest companies are German and the country has one of the lowest unemployment level at 5.7%. But these policies came at a cost as the trade-off allowed a huge wealth to companies and low wages. Over the 12 years under Merkel, the disparity between the wealthy and the poor has widened and 16% of the population is at risk of poverty.

Arguable one of the major losers of the 2017 election is the SPD receiving its worst defeat since40674809_303 postwar with 20.5% of voters. In a four year period, the party led by Martin Schulz, the former President of the European Parliament, lost over 5% of voters. One of the major problems for Schulz, whom lacked strong domestic presence, was his inability to articulate a clear alternative to Merkel’s CDU. In addition, traditional SPD voters, its blue-collars base, is declining and represents roughly 19% of the electorate. This number almost mirrors the final results of the SPD at this election. In addition, almost half a million of SPD voters migrated towards the AfD during this election cycle. Schulz’s call to bring the party into the opposition, meaning it won’t join the coalition with the CDU, is no surprise. During his announcement, the SPD leader declared that “in a democracy the opposition is perhaps a more decisive force than the government.” The hope and strategy is to redefine the values, policies and ultimately ideology of the SPD for the next general election in order to attract more voters.

Voter Migration - 2017 German Elections
Source: Deutsche Welle

This illustration below provides a substantial and brief analysis of the Bundestag since the end of the World War two. As one can observe, the SPD-CDU have historically held a substantial majority until the 2017 elections. Last, as illustrated at the bottom of the illustration, a extreme-right party, the AfD, makes his first appearance in the Bundestag since postwar Germany.

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Source: Financial Times

Jamaica Coalition

In order to govern, Chancellor Merkel will need to form a coalition. The evening of results, SPD leader, Martin Schulz, called for the party to stand as the opposition and not forming a grand coalition with Merkel’s CDU. This leaves Merkel with the possibility to join forces with the pro-business Free-Democrats, or FDP, and Green party. This triumvirat is known as the Jamaica Coalition, considering that the colors of each party mirror the colors of the flag of the Caribbean island (Black, Green and Yellow).

The development of the coalition is a priority for Merkel, which will be a major challenge for the Chancellor. For starter, candidates of the FDP and Green party disagree on substantial issues and won’t be imageseasily brought together. A “deal to form a coalition” writes Stefan Wagstyl “could take months to put together, given stark policy differences between the parties on several issues including environmental protection.”

The Jamaica coalition will affect the ability of Merkel to work with French president, Emmanuel Macron. The FDP agenda, as advanced during the campaign, goes in opposition with Macron’s proposals, as it opposes the French proposition to reform the Eurozone (i.e. creation of a European budget). On this point, President Macron will be announcing his vision for the reform of the Eurozone on Tuesday, September 26, as he was waiting for the official results of the German election. Ensuing his speech, FDP reactions will be critical for Merkel in order to define the terms of the coalition and therefore her future line with regards to European reforms.

Finally, Chancellor Merkel will need to deal with a growing opposition within her own party. For instance, Merkel is starting to see some opposition coming from Klaus-Peter Willsch, a conservative CDU, opposed to Merkel’s immigration policy. The dealing with the FDP and Green party will be challenging, but keeping in check her own party will be major dilemma.

German Political Realities and Beyond

Despite winning a fourth term and a clear mandate, the outcomes of this election cycle respond to Merkel’s most critical policy-choices: the bailouts of some of Germany’s Eurozone partners and open-door policies vis-à-vis refugees. Both decisions taken by Chancellor Merkel were the right one at the time (for the bailouts avoiding a collapse of the Eurozone) and morally justified and politically courageous (welcoming over 1 millions refugees). Unfortunately, she is now confronting the reality of a changing German electorate.

The strong result by the AfD to the 2017 federal election sends a significant signal that German politics is changing. Populism, which has been present and rising all around Germany and across the pond, finally arrived in Germany. AfD will be a force to reckon with in the legislative process, but could be the necessary evil in order for mainstream parties to craft more substantial social and integration policies.

However, the day ensuing the results, co-chair of the AfD, Frauke Petry, surprised her colleagues by announcing that she will not be part of the AfD group, but will be present as an independent. This announcement illustrates a reality regarding extreme-right parties in Europe. Winning elections has become easier for these parties, like the Front National (FN) of France and even the UKIP party in the UK, able to attract a substantial

Frauke Petry flounces out
Credit: Reuters/Fabrizio Bensch

share of the electorate. But they are unable to maintain unity once elected and even less able to govern. The most striking case is exemplified by the FN arriving, as expected, to the second round of the French elections in front of two mainstream parties, Les Républicains (right) and the Socialist Party (left). Marine le Pen, president of the party and presidential candidate, was correct when claiming that the FN was the largest party of France. However, after losing the second round with a high percentage (33.6%), the party has been dealing with major internal crises and is now almost irrelevant in shaping the debate and agenda. Petry’s announcement seems to prove the point that extreme-right parties grow strong as an opposition force using identity politics and deeply inconsistent policies in order to get elected. But their lack of political consistency and leadership tension affect their abilities to survive, despite stronger results at elections, and therefor to govern.

This elections mark a turning point in German politics and may bode some major difficulties ahead for Merkel. Furthermore, ensuing the election of Macron in May and its legislative majority, the world expected France and Germany to be finally on the same political page in order to advance and reform the EU. Hopefully, Europe will not be the big looser of this election.

(COPYRIGHT 2017 BY POLITIPOND. ALL RIGHTS RESERVED. THIS MATERIAL MAY NOT BE PUBLISHED, BROADCAST, REWRITTEN OR REDISTRIBUTED WITHOUT PERMISSION).

Deep Transatlantic Commonalities under Attack?

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The transatlantic forces at play are under stress. The domestic forces in the United States (US), the United Kingdom (UK) and most part of Europe need to be reckoned with. The two players of the special relationship are embroiled in domestic turmoil between the Brexit negotiations and major rebuttal of long-standing policies in the US, which could have considerable impacts on the structure of Euro-Atlantic community.

The situation in France seems to be relatively stable since the election of President Macron and his victory in the ensuing legislative elections mid-June. If President Macron has demonstrated being a savvy political tactician, far from the neophyte status he received, he now needs to revitalize the French economy, reform the labor laws, reinvigorate the European agenda and integration process all under the threat of terrorism. But Macron’s election was framed as a blockade against the growth of populist forces in the Euro-Atlantic community. A return of France on the European and global stage certainly plays in favor of transatlantic relations. Now, the next chapter will certainly be the German elections in September.

So far, this year has been critical for transatlantic relations. A series of issues, from climate change to trade and defense, excluding the current Brexit negotiations, allow the world to reflect on the current challenges and potential ensuing consequences of such radical shift by Washington.

First, climate change is a priority considering global reach and impacts of a degrading environment. The US and its European partners are some of the largest emitters of greenhouse gases requiring them to lead the way in addressing environmental challenges. The 2015 Paris deal, formally known as the COP-21, sets out a global action place by limiting global warming to below 2°C and is the first legally binding climate deal. The agreement came into force on 4 November 2016 with at least 55 countries ratifying it. But on 1 June 2016, President Trump announced that the US would withdrawal from the agreement. In his address in the Rose Garden, he claimed that ‘the Paris Climate Accord is simply the latest example of Washington entering into an agreement that disadvantages the United States to the exclusive benefit of other countries.” The global reaction and especially from European counterparts was negative and critical. The issue of climate change will be back on the table for upcoming G-20 meeting.

Second, tree-trade has become a dirty word. In the European context, free and regulated trade among the 28 member states has permitted an unprecedented growth first contributing to the growth the 28 national economies. The world led by the US since the end of World War two was very much regulated around the notion that free-trade among states advantaged the US and the world, even though it certainly creates winners and losers. Aside from economic arguments, trade is one element of a state’s foreign policy arsenal, especially for an economic power like the US. The unplugging of the Trans-Pacific Partnership (TPP) with 12 pacific nations, which never counted China, in the very early days of the Trump administration is playing in favor of Beijing. By this decision, the US is playing in the hands of China. In a recent op-ed, Thomas Friedman wrote that “Beijing is now quietly encouraging everyone in the neighborhood to join the Regional Comprehensive Economic Partnership, China’s free-trade competitor to TPP, which, unlike TPP, lacks environmental or labor standards; China’s Asian Infrastructure Investment Bank; and its One Belt, One Road development project.” With regards to Europe, the future of the Transatlantic Trade and Investment Partnership (TTIP) is uncertain.

The last aspect to be highlighted is the question of defense and security. Historically the pillar of this realm at the transatlantic level has been the North Atlantic Treaty Organization (NATO). Again, the narratives on the campaign trail were that NATO was an ‘obsolete’ organization costing money to American taxpayers to finance the security and defense of free-riding European nations. Such narrative has remained in the US since Trump’s election. President Trump’s address at the NATO Summit in May, which was supposed to confirm his support and clarify his views of the alliance, failed to address the concerns of his European counterparts. The questions of free-riding and underspending by Europeans is not new and have been a frustration for past administrations. For instance, Secretary Gates’ comments in 2011 were deeply critical of the lack of political and financial willingness by his European partners.

These issues are central considering a series of factors. First, historically, the members of the Euro-Atlantic community, have agreed on shared values, institutions and norms making the liberal world order. A rebuttal of the Paris deal, the TPP (free-trade overall) and the defense alliance sends a message to the world that American longstanding commitment to global agreements is not reliable any longer. Second, the short-termism and transactional view of the foreign affairs demonstrate a total lack of overall strategy. The current administration seems to hide this lacuna by hiding behind the word of isolationism, which is not the case. Third, the Europeans, especially the Mercron couple (Merkel-Macron) between Berlin and Paris, ought to continue engaging Washington and pushing ahead long-established agenda and common policies. The responses in the US by major states, cities, universities and the public at large, regarding the withdrawal by the Trump administration from the Paris deal, illustrate deep transatlantic commonalities that need to be protected and deepened regardless of the rhetorics.

(Copyright 2017 by Politipond. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed without permission).

 

 

European Adventure – The Missing Variable

Cartoon: Jasper Rietman
Cartoon: Jasper Rietman – New York Times, Dec 18, 2013

The Europe we live in today is the worst possible Europe apart from all the other Europes that have been tried from time to time. No European alliance, empire, commonwealth or community has endured forever, but we should want this one to last as long as it can – Timothy Garton Ash 

Politically, the European endeavor appears as fragile as ever. Pockets of populism (extreme-right and extreme-left combined) have been popping out since the collapse of the financial markets in 2007. But the recent results of elections in Sweden, Poland, the United Kingdom, Greece, France, Spain, Denmark and so forth are demonstrating that the European electorate is increasingly voting more extreme than before. In the case of France, the Front National, which was historically a party of opposition has become the “first party of France” to take her President’s words. If populism is becoming attractive, it has created a complex national debate of incomprehension and anger between populist voters and the mainstream rest. National unity, in France, Europe and even in the US, is under attack.

Experts and political analysts have been identifying a series of variables in order to explain the rise of populism such as immigration, terrorism, economic stagnation, high level of unemployment, corruption, cronyism, globalization and Europe. Each variable is highly valid and can explain what motivate Europeans to seek for extreme alternatives. But one core dimension has been missing and is most likely the strongest component: an adventure, a story (for Europeans) and a dream (for Americans).

Loss of Memory/Direction in a Ever-More Globalized World

Globalization has been framed as the foundation of all national turmoils and traumas. For populist movements the word ‘globalization’ is a toolbox with no clear definition for obvious political reason. The concept of globalization should be understood as an acceleration in the degree of interaction and interconnection between humans, capital and goods. To some extent, the physical world is shrinking; the speed in interaction is accelerating [distance-time are disappearing]. A smaller shared space ultimately affects the understanding of one’ space and culture.  In her recent address about the reflection on a common strategy, HR Mogherini framed the question of globalization from a security angle, which contributes to the reflection on the definition of the globalization in this piece. She said that:

Everything that is important to our citizens is influenced by our international environment. And there is actually no distinction, no borders, no line between what happens far away, what happens at our borders, in our region, and what happens inside our European Union. Even these categories are now losing sense. 

‘Losing sense’ is quite a powerful part of her statement. Populist movements are directly responding to this sensation of physical, emotional and ideational feeling of dizziness. In addition, populist movements argue that the European Union is in fact a materialization of globalization and its global forces weakening national unity. Unfortunately, this is not true if one takes a historical look at globalization bringing us back to the 14th century with the Dutch empire. Globalization has roughly emerged at the end of the Dark Ages and pushed the economic and political transition of Europe and North America into the pre-industrial world. Arguing that globalization is the root cause of all national traumas is an absolute fantasy considering the longevity of such phenomenon.

However, one should talk about the speed of globalization and its acceleration in the last 20 years. “We live faster than ever before” writes Svetlana Alexievich “Content ruptures form. Breaks and changes it. There are no borders between fact and fabrication, one flows into the other.” Certainly globalization has become a powerful force highlighting serious limitations and weaknesses of European foundations. If capital and people can travel quicker than ever before [in roughly 12hours a human can be on the other side of the world], and in a less than a second billions of dollars/euros can be wired from one continent to another, such forces can undeniably create serious problems to the slow-moving entity of the nation-state and the EU. These realities of an ever-more globalized world is creating a distortion between immediacy and reflection. Immediacy could be embodied by the current economic model of casino capitalism; while, reflection is in fact the foundation of European political regimes, Democracy/Republic. If casino capitalism is based on economic gamble informed by pseudo-rational thinking as it is more a question of rumors and speculation, democracy is a slow process of introspection, discussion, collaboration and compromise. The discrepancy between casino capitalism and democracy is obvious and stretching the limits of European societies. Here lays the core of the problem in the globalized world of the early 21st century.

Ultimately, when a politician like Marine Le Pen, president of the extreme-right party le Front National, tells a story of national sovereignty, national control through the construction of physical barriers and implementation of protectionism, these narratives attract a confused audience. But the lie is obvious, the building of physical barriers to block invisible forces won’t do a thing in order to solidify national sovereignty and empower cultural exceptionalism. Building physical barriers in order to limit the flow of people is a myth. Millions of Europeans went through the Atlantic Ocean, an ocean, for a better future; are a series of walls around Europe be sufficient to stop refugees to come in. Not a chance.

European Adventure

The story of the European construction is a remarkable story and endeavor. In the rumbles of Europe, visionary leaders and thinkers drove European politicians to follow their visions

Europe
Cartoon: Paul Lachine

in order to avoid another war that could destroy the world. World War two was one of the most vicious global fights with genocides, mass-movement of troops and civilians, arms and technological race and so forth. Over 40 million individuals died in six years leaving Europe as a massive field of destruction. From the agreement of the Treaty of Paris in 1951 to the Treaty of Nice in 2001, the European construction was far from perfect but it was an adventure for greater political, economic, and institutional integration. It was an adventure in order to horizontally expand the Community/Union from six original members into a Union of 28. It was an adventure as European citizens saw the fall of physical borders, from the Berlin War to national borders under the Schengen Agreement. It was an adventure when on June 7 and 10, 1979, European citizens could vote for the first time at a European election for the European Parliament.

It was an adventure as Europeans could finally move within a wide group of states in order to start a career, to start a European life, to study. It was an adventure as the continent saw an unprecedented economic boost bringing struggling states – Germany as one of them – into highly sophisticated and developed economic and industrial levels. It was an adventure in the agreement to share a common currency, the Euro, in order to facilitate commercial and financial transactions at first, and then the flow of people. It was an adventure as the Community/Union demonstrated the world that cooperation at its extreme did not undermine national sovereignty, but rather empowered it.

The Quest for a European Life

Today, the European adventure has become a European set of technicalities. The European adventure, which was at first bold and big, has become a highly technocratic and reductive vision of politics, finance, economics, and culture. Emotionally, European citizens are not opposed to the European Union, but are thrown off by the appeared and perceived distance between them and “Brussels.”populism-400x300

Europeans are in fact in search of meaning, a raison d’être. Unfortunately, this quest for a raison d’être is being hijacked by populist movements selling a past that never was. Populism, either fascist or communist, is attracting audiences – from elder voters to first time voters – because they are selling a ‘mission,’ a purpose to reconstruct a past that never was. Unfortunately, these populisms have no serious political, foreign, economic, fiscal, educational agendas. These populisms are simply selling smoke.

Instead of talking of clash of civilization – in order to identify a mythical clash between Western societies and radical islamic movements, which do not speak for societies with a majority of muslim citizens – experts should be talking of a civilizational depression. Instead of seeking for external enemies, Europeans should be looking within, inside and reflect of this European state of confusion. Europe may be simply dealing with its mid-life crisis. Now it is a matter of avoiding a complete divorce with a supposedly dark and repressive past, the European integration process.

(Copyright 2015 by Politipond. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed without permission.)