Eastern Europe trying a ride – will America press the pedal?

Eastern and Central Europe is self-sufficient neither energetically, nor economically. Attempts are being made towards greater independence from Russian energy resources and increased regional cooperation. The Three Seas Summit, attended by President Trump last week was as a stepping stone in this direction.

The 2017 Three Seas Summit was the second round of an initiative launched in 2016 to increase energy cooperation among Eastern and Central European states. Countries in the region are wholly dependent for their survival on energy imports. In particular, imports from Russia account for more than half of gas consumption in the area. In 2016, Poland’s consumption of Russian gas was the largest, reaching 11.07 billion cubic meters. Because most Central and Eastern European governments view Russia as a threat, energy dependence on that same country appears to be a strategic vulnerability.

The Three Seas Summit focuses on developing the necessary regional partnerships and infrastructure to diversify energy sources. Progress has been made as Poland began to operate its own liquefied natural gas terminal in 2016, with a first shipment from the United States in June 2017. A sister project is under construction on the Croatian island of Krk. Efforts to decrease energy dependence on Russia are actively supported by European institutions. The European Commission, for example, will work with the Baltic states to link their electricity grids to the EU through Poland by 2025.

One of the main challenges that participants of the Three Seas Summit face is economic. Additionally, a lack of infrastructural capacity could severely impede on the ambitions to transform the two Liquified Natural Gas Terminals into regional energy hubs. A key reason why Donald Trump was invited to attend the 2017 Summit in Warsaw is because the United States could be a major partner to diversify the region’s energy sources. The US may find a vested interest in this project as a card played against Russia, for whom Eastern Europe represents a major energy market.

In addition, the US is the main security partner of Eastern and Central Europe, through NATO. During President Trump’s visit to Poland, he jointly signed a memorandum with Poland’s Defence Minister confirming the sales of a Patriot missile defence system to the host country. Poland’s leadership was anxious for the US to reaffirm its commitment to European security, in particular within the NATO framework. The Baltic states also rely on American military support, as does the current Ukrainian government.

Deeper foreign policy coordination in Central and Eastern Europe is on the agenda of certain Polish circles, inspired by Piłsudski’s idea of an ‘Intermarium’ region that, according to the Polish leader, would stabilise the European balance of power. Piłsudski argued that the ‘Intermarium’ would be a counter-weight to both German dominance and Russian expansionism. Leading Ukrainian nationalist organisations such as Freedom, the Convention of Ukrainian Nationalists and the Right Sector adopted an agenda in March which includes the creation of a Baltic-Black Sea Union. In geographic terms, these projects overlap. In political terms, they are unlikely to be feasible: in each case, the project’s architect aspires to dominate the integrated region. Both Poland and Ukraine, the largest states in the region, could not simultaneously take the lead. One issue is who drives, another is who gets in the car. Smaller neighbours are particularly reluctant to embrace any political project that bears an open relationship with Piłsudski’s ‘Intermarium’ because of the spectre of Polish imperialism. In addition, paucity in energy and economic resources provide a wobbly base for integration.

It is clear that from the Eastern and Central European point of view, the US is broadly considered as an a valuable ally. Switching perspectives, let us consider what concrete interests, if any, the Trump administration may have to support the region.

Central and Eastern Europe, in relative terms, is far from being prosperous. In terms of individual consumer products therefore, it is not a viable time investment for the US to develop links with the region. On national level consumption however, the picture changes. Aspirations to turn away from Russia consolidate this region as a market for American weapons and energy resources. Weapons sales to NATO countries are likely to increase as members strive to meet their defence spending commitment of 2 percent of GDP. Revenue from weapon sales will be one means to finance President Trump’s promise of a national Wirtschaftswunder.

From a geopolitical standpoint, the development of a closer bound Eastern European ‘cordon sanitaire’ also appears to be in America’s interests, at least for two reasons.

First, on the European continent, it may serve to entrench the current rift between Germany and Russia. Although much of the current German political elite is reluctant to move closer to Russia at the moment, a foreseeable deepening of the EU crisis may push German investors closer to Russian markets, thirsting for technological input in exchange for raw materials. A German-Russia economic block would be an additional challenge to America, faced on its other flank by South East Asia. The crystallisation of an anti-Russian buffer in Eastern Europe would impede plans to deepen German-Russian economic cooperation.

Poland and the Baltic states are already vocal today in warning against the threat of a Russian attack. Further security cooperation between these states would tighten a hostile belt along the Russian border, which would in turn increase the perception of threat from the Russian perspective and likely produce further signs of hostility on Russia’s behalf. Germany, a NATO member and the willing centre of a shaky EU will side with its weaker Eastern neighbours against Russia in such a scenario, as it does with sanctions today.

Second, a ‘cordon sanitaire’ hostile to Russia would not only impede a productive relation with Germany, but would also be a stumbling block to the ‘Greater Eurasia’ and ‘One Belt One Road’ projects. One of the principal ambitions of ‘One Belt One Road’ is to develop continental transit routes to comparatively wealthy Western European markets. The continental route, although dependent on Eurasian political stability, will diminish Chinese dependence on maritime trade routes, over which the Americans have military dominance. Increased political tensions between Eastern Europe and Russia will come at the detriment of collaboration on freight transit and infrastructural development essential for the new continental Silk Road.

There is a geostrategic rationale for America to support increased cooperation in Eastern and Central Europe on energy, security and possibly other realms of policy. The region may lack self-sufficient and be politically weak, but with the support of an external hegemon, it may well play a crucial role in the coming decade.

Brexit and the conceptual crisis of modern capitalism

Conference: Cambridge & Brexit: Mapping an Uncertain Future, Cambridge, 24 February 2017

Author: Nora Kalinskij

Abstract: This section of the The Cambridge Brexit Report discusses two political economic challenges that Britain faces today. First, it diagnoses a conceptual crisis of the contemporary economic system. Second, it addresses the strategic choice that Britain faces in the aftermath of Brexit between two economic models: a trading and industrial power or a financial power. The full report can be found at: https://issuu.com/cambridgebrexitreport/docs/00_the_cambridge_brexit_report_6352c4231b66f1
Brexit and the conceptual crisis of modern capitalism (PDF Download Available). Available from: https://www.researchgate.net/publication/316789149_Brexit_and_the_conceptual_crisis_of_modern_capitalism 

Syria: Reforms for Peace and Stable Government

Conference: UK Student Policy Forum 2017, 26 April 2017

Authors: Nora Kalinskij (head of project), Thomas Carlile, Dominic Bealby-Wright, Christian Wollny

Abstract: This paper presents a guideline for bringing peace and political stability back to Syria. The paper is divided into two sections. The first addresses the immediate cessation of hostilities. In order to achieve disarmament, we propose a framework of incentives, most importantly conditional amnesty, to those militiamen willing to give up arms. The second section focuses on the stabilisation and legitimisation of the Syrian government. We recommend that a strong government and unitary state is the best condition for bringing long-term peace and stability to Syria, where sectarianism will continue to be a significant destabilising feature of post-war governance. We propose that a body be established which represents different religious and cultural groups, and which may veto legislation in order to defend the interests of these minorities against sectarianism. We also recommend a ‘bottom-up’ approach to reconstruction: local government should initially take the lead in rebuilding infrastructure and providing aid. Our proposals seek to provide a starting-point for achieving stability and a long-term peace in Syria.
Syria: Reforms for Peace and Stable Government (PDF Download Available). Available from: https://www.researchgate.net/publication/316788622_Syria_Reforms_for_Peace_and_Stable_Government

Mr. Macron – a pyrrhic victory for the EU?

Mr. Macron is likely to push for the revival of the German-French axis inside the EU. One of the central aims of this dual leadership will be European security integration. Security is at least in this case a two-headed entity. On the one hand the challenge of uncontrolled refugee flows will be central to Mr. Macron’s agenda because of the high risk of terrorism in France. On the other hand, under his leadership, Russia will continue to be pointed to as a major threat for Europe. Sanctions will be maintained as a demonstration of political will, but also as a convenient policy for bringing EU states together against a common challenge. With the departure of Britain from the EU, France will remain the only state capable of building a basis for further military and intelligence integration. Yet success is far from guaranteed, as it requires deeper integration moving towards political union, which in itself is problematic, as explained below. 

Considering Mr. Macron’s pro-European positions, he will likely attempt to salvage the euro. This, however, is likely to prove a failed battle for the following reasons: 

  1. The current eurozone incrementally faces structural problems due to the diverging economic models of Northern economies, based on the export of high-added-value products and Southern economies, based on low-added-value products and tourism from the north. Southern economies, before their integration into the eurozone, were dependent on domestic demand stimulation through expansive welfare and subsidy programs. Since their accession to the eurozone, they have become increasingly dependent on cheap credit from Northern states to stimulate domestic demand, in a situation where devaluation was no longer an option. It is difficult to envisage how Southern countries in the eurozone such as Spain or Italy may move beyond this credit-based economic stimulation model, considering the type of goods and services that drive their economies. Though the the bulk of their debt was accumulated in the period between the collapse of Bretton Woods and the advent of the euro, today’s precarious sovereign debt situation in Southern countries and their dependence on Northern credit to keep their economy running, endanger the stability of the entire eurozone. These issues are unlikely to disappear in the foreseeable future. To them must be added Eastern members’ considerable dependency on EU structural funds. The structural divergences between states in the current eurozone architecture render the common currency unstable and unreliable to deal with economic crisis, as was demonstrated in 2008.  
  2. The structural problems of the eurozone crisis may be addressed through full economic union, which includes a fiscal union. This step would increase coherence of economic policies within the eurozone but is unlikely to be attained without a full political union. This, in turn, is highly unlikely considering that it would entail the de facto demise of most national elites in Europe, who cannot all simultaneously be integrated into a federal elite. In case of a full political union in the EU, most national elites will therefore lose power. Since full political union would dependent on the agency and willingness of these same elites, such an outcome is highly unlikely.

In the light of this analysis it is difficult to envisage any policies that Mr. Macron would adopt that would, indeed salvage the euro without running into unsurmountable challenges. 

Mr. Macron’s attempts at greater integration of the EU, and those to revive the German-French axis will only kindle support for anti-integrationist parties at home, even more so considering 1) the unlikely tangible improvement in the French economy over the next five years in relation to the eurozone crisis, 2) the feeble concrete success his European integration policies may achieve in the period of 5 years and 3) the continued inflow of refuges and economic migrants into France with little restriction. 

The election of Mme le Pen may actually have been a better outcome for supporters of EU integration, in the long-term perspective because 1) she would face a cordon républicain in the parliament which would considerably hamper her projects. 2) In order to implement policies, she would therefore have to water them down and compromise with the political establishment. 3) If she would refuse to do so, the government would face a deadlock. 4) In both cases, her voters would be gravely disappointed by her performance. 5) Support for a mainstream perceived as more ‘competent’ would actually be galvanised at the next election. 

As it now stands, support for Mme le Pen and Mr. Mélenchon is only likely to increase over the next five years as Mr. Macron struggles in a move towards European integration. 

The uncertainty of Mr. Macron’s position is further heightened by the possibility that he may not obtain a working majority in the parliamentary elections next month. If so, he will have to face challenges not only from the Mr. Mélenchon’s and Mme. le Pen’s parties, but also, importantly, from the Républicains. In order to retain voter support and win votes back from the National Front, the Républicains will have an electoral strategic interest in being a vocal opposition party in the next five year. Mr. Macron is in a difficult situation to negotiate the forming coalitions with his political rivals due to the apparent malleability of his program, which his benefited him electorally, but will probably be a challenge to gain the trust of other political factions. Because of the flexibility of his program, the latter are likely to doubt how closely he is likely to keep coalition commitments

Considering these challenges, it is highly uncertain whether the revival of the French-German axis will be lasting. With results slow to come, personal relations between the French President and the German Chancellor may well deteriorate. In addition, Mr. Macron is likely to advance the interest of French business, which are not necessarily aligned with those of German counterparts. 

Solving incoherence within EU integration by creating a multi-speed Europe is advanced by some as a solution but will unlikely be greeted well by states which will be cast out of the ‘core’. States classified in the ‘slower-speed’ categories are likely to be perceive this system as a challenge to the EU’s principle of equal cooperation. A multi-speed solution may also reinforce the idea of the EU as an empire, widespread among populists. In this line of thinking, the ‘fast lane’ states will be portrayed as a metropolis and the ‘slower-speed’ states as colonies. Though this comparison is unlikely to be adopted by the mainstream, it will certainly shape the political debate in numerous member states against the proposal of a multi-speed Europe. 

The victory of Mr. Macron in the French presidential elections is seen by many pro-Europeans as a sign of hope. Yet whether this hope will transform itself into concrete achievements is highly questionable. There appears to be a strong chance that the presidency of Mr. Macron will further empower forces of disintegration within the EU. 

Some thoughts: Where does this leave Britain?

A worsening situation in the EU may actually bring certain advantages to Britain. For example: 

  1. At home, it will dampen enthusiasm for the EU, and contribute to keeping at bay the looming threat of a successful Scottish referendum.
  2. Were the EU to break apart this will cause geopolitical chaos for a while on the continent. Yet it might be an opportunity to seize for divide et impera. For a political economy standpoint, though this may mean more treaties to negotiate in the absolute, Britain may achieve more advantageous free trade deals with closer political partners in northern Europe and with states in Eastern Europe, in particular with the Baltics, that strongly depend on British military support, than with the EU as a whole during the Brexit process.