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anonymous

United Kingdom Moves Away from the European Project - 0 views

  • Cameron has pledged to hold a referendum after 2015 on the United Kingdom's role in Europe. He has also said he would reclaim powers London surrendered to the European Union. While they no doubt reflect similar anxieties across the Continent, such statements are anathema to the European project, and by making them, Cameron could be setting a precedent that could further undermine the European Union.
  • According to various opinion polls, roughly 8-14 percent of the country supports the United Kingdom Independence Party, even though it received only 3.1 percent of the popular vote in the 2010 elections. These levels of support make the party a serious contender with the Liberal Democrats as the United Kingdom's third-largest party (after the Labour Party and the Conservative Party). Some polls show that the United Kingdom Independence Party already is the third-most popular party, while others suggest it has poached members from the Conservative Party, a worrying trend ahead of elections for the European Parliament in 2014 and general elections in 2015.
  • Despite his criticisms of the bloc, Cameron has said he does not want to leave the European Union outright; rather, he wants to repatriate from Brussels as many powers as possible.
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  • London also believes that the United Kingdom has surrendered too much of its national sovereignty to supranational EU institutions.
  • Yet the United Kingdom is a strong defender of the single market. Roughly half of its exports end up in the European Union, and half of its imports come from the European Union.
  • Some critics suggest that the United Kingdom could leave the European Union but remain a part of the European Economic Area, the trade agreement that includes non-EU members, such as Iceland and Norway. However, the country would still be required to make financial contributions to continental Europe and adapt its legal order to EU standards, but it would not have a vote in EU decisions. According to Cameron, the United Kingdom must be part of the common market and have a say in policymaking.
  • The issue points to the United Kingdom's grand strategy. Despite an alliance with the United States, the United Kingdom is essentially a European power, and it cannot afford to be excluded from Continental affairs.
  • However, this is the first time that London has openly demanded the return to a previous stage in the process of European integration. At no other time has a country tried to dissociate itself from the bloc in this way. The decision not only challenges the Franco-German view of the European Union but also makes a compromise extremely difficult and risky between France and Germany and the United Kingdom.
  • Cameron's rhetoric suggests that he is positioning the United Kingdom to be the leader of a counternarrative that opposes Germany's view of the crisis.
  • In recent years, the country's veto power in the European Union has been reduced substantially. With each reform of the European treaties, unanimous decisions were replaced by the use of qualified majority
  • London could try to become the leader of the non-eurozone countries, but these countries often have competing agendas, as evidenced by recent negotiations over the EU budget. In those negotiations, the United Kingdom was pushing for a smaller EU budget to ease its financial burden, but countries like Poland and Romania were interested in maintaining high agricultural subsidies and strong development aid.
  • The dilemma is best understood in the context of the United Kingdom's grand strategy. Unnecessary political isolation on the Continent is a real threat to London. The more the European Union focuses on the eurozone, the less influence the United Kingdom has on continental Europe
  • As long as London is the main military ally and a major economic partner of the world's only superpower, continental Europe cannot afford to ignore the United Kingdom.
  •  
    "British Prime Minister David Cameron will deliver a speech in London on Jan. 23, during which he will discuss the future of the United Kingdom's relationship with the European Union. Excerpts leaked to the media suggest that harsh EU criticism will figure prominently in the speech, a suggestion in keeping with Cameron's recent statements about the bloc. But more important, the excerpts signal an unprecedented policy departure: renegotiating the United Kingdom's role in the European Union. London has negotiated exemptions from some EU policies in the past, even gaining some concessions from Brussels in the process; this time, it is trying to become less integrated with the bloc altogether."
anonymous

Questions Surround the Netherlands' Future - 0 views

  • In light of its economic problems and its leadership's waning popularity, the Netherlands will likely soften austerity measures in the short- and medium-term. In May, the European Commission gave The Hague permission to miss its deficit target for 2013. The country will probably fail to meet the required EU deficit goals again in 2014 -- the Dutch government has become increasingly worried about the negative effects of expedited spending cuts. While the European Commission is likely to pressure The Netherlands to implement additional spending cuts, it probably will not punish the country when it does not comply with those demands.
  • This goes beyond austerity measures; the Dutch parliament is currently assessing its broader relationship with the European Union. In a document released in June, the Dutch Cabinet indicated that no additional concessions of sovereignty should be made to supranational institutions, and that The Hague should keep as many of its own prerogatives as possible.
  • Because of its physical location in Europe, the Netherlands keeps strong political and economic ties with France and Germany. The Dutch will avoid any meaningful policy decisions until after Germans elections, which are scheduled for late September. The Hague will not openly criticize Berlin or Brussels as Paris has, but it will pursue a more independent fiscal policy by relaxing austerity at home in order to avoid a further drop in popular support.
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  • Regardless of who governs Germany after September, in the short term Europeans will have to debate measures to reactivate financing for small- and medium-sized companies to try to stimulate economic growth and create new jobs.
  • In the long term, Germany and France will have to begin discussions for reforming European treaties. EU institutions and member states simply are reaching the limits of what they can do in the bloc's current institutional framework.
  • Both negotiations will force the Netherlands to define its position in Europe. As a country that traditionally relies on trade, the Netherlands will support any measure that protects the European free trade agreements -- which means that The Hague will not opt out of the European Union.
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    "In a new indication that the economic crisis has reached the eurozone's core countries, the Dutch statistics office announced today that seasonally adjusted unemployment reached 8.5 percent in June, up from 6.3 percent the previous year. Clearly the EU unemployment crisis is far from over, and the bloc's structural weaknesses continue to affect even Europe's politically and economically stable nations."
anonymous

Ireland Refuses EU Bailout - 0 views

  • where the Greeks begged for a bailout earlier this year and then railed (and continue to rail) against the budget cuts they are being forced to abide by to maintain the intravenous drip of euros, the Irish are already nearly two years into a self-imposed austerity, all without any serious protests or strikes. 

  • Few argue that Germany is the economic center weight of the union, with every significant member-state counting Germany as its single largest trading partner. But not Ireland. Ireland is dependent upon Germany for a smaller proportion of its economic well being than any other state in the union, trading about twice as much with the United States or the United Kingdom than it does with Germany.
  • Ireland has — twice — voted down EU treaties, and in the aftermath been immune to the political pressure emanating from Paris and Berlin.
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  • Berlin’s goal is pretty clear, so clear that a key architect of the Greek bailout — Christian Democratic Union lawmaker Michael Meister — has emphatically noted that not only is an Irish bailout inevitable, but one condition for it will be the alteration of Ireland’s corporate tax structure to something more in line with European norms.
  • What STRATFOR finds the most interesting about this is that Ireland is no longer alone in resisting Germany’s rising strength: There are now glimmers of recognition across Europe that the Germans are attempting to use their dominant economic position to rewire the European Union more to their liking.
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    "Financial markets roiled Tuesday on rumors - often reported as news - that the European Union (EU) was about to issue a second bailout, this time to Ireland. In a curious twist of events, the rumors of a bailout didn't start in Dublin, but in Berlin. And the denials of those rumors came from the Irish themselves. The Irish government went on to emphasize that Dublin had not only not asked for a bailout, but that Irish officials at Tuesday's meeting of EU finance ministers went with the explicit goal of convincing everyone that such a bailout was not needed. After several years of everyone from banks to airlines to construction firms to Greece asking for a bailout, it's a little odd to have a state refuse one so emphatically." At StratFor on November 17, 2010.
anonymous

Beyond the Post-Cold War World - 2 views

  • An era ended when the Soviet Union collapsed on Dec. 31, 1991. The confrontation between the United States and the Soviet Union defined the Cold War period. The collapse of Europe framed that confrontation.
  • Three things defined the post-Cold War world.
  • The first was U.S. power. The second was the rise of China as the center of global industrial growth based on low wages. The third was the re-emergence of Europe as a massive, integrated economic power.
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  • Meanwhile, Russia, the main remnant of the Soviet Union, reeled while Japan shifted to a dramatically different economic mode.
  • The post-Cold War world had two phases. The first lasted from Dec. 31, 1991, until Sept. 11, 2001. The second lasted from 9/11 until now.
  • The initial phase of the post-Cold War world was built on two assumptions.
  • The first assumption was that the United States was the dominant political and military power but that such power was less significant than before, since economics was the new focus. The second phase still revolved around the three Great Powers -- the United States, China and Europe -- but involved a major shift in the worldview of the United States, which then assumed that pre-eminence included the power to reshape the Islamic world through military action while China and Europe single-mindedly focused on economic matters. 
  • In this new era, Europe is reeling economically and is divided politically.
  • Nothing is as it was in 1991.
  • Europe primarily defined itself as an economic power, with sovereignty largely retained by its members but shaped by the rule of the European Union. Europe tried to have it all: economic integration and individual states. But now this untenable idea has reached its end and Europe is fragmenting.
  • Germany wants to retain the European Union to protect German trade interests and because Berlin properly fears the political consequences of a fragmented Europe.
  • But as the creditor of last resort, Germany also wants to control the economic behavior of the EU nation-states.
  • In the indebted peripheral region, Cyprus has been treated with particular economic savagery as part of the bailout process. Certainly, the Cypriots acted irresponsibly. But that label applies to all of the EU members, including Germany, who created an economic plant so vast that it could not begin to consume what it produces -- making the country utterly dependent on the willingness of others to buy German goods.
  • There are thus many kinds of irresponsibility.
  • Europe can no longer afford pride, and it is every nation for itself. Cyprus set the precedent that the weak will be crushed. It serves as a lesson to other weakening nations, a lesson that over time will transform the European idea of integration and sovereignty.
  • In such an environment, sovereignty becomes sanctuary.
  • Authoritarian nationalism is an old European cure-all, one that is re-emerging, since no one wants to be the next Cyprus.
  • Leaving aside all the specific arguments, extraordinarily rapid growth in an export-oriented economy requires economic health among its customers.
  • It is nice to imagine expanded domestic demand, but in a country as impoverished as China, increasing demand requires revolutionizing life in the interior. China has tried this many times. It has never worked, and in any case China certainly couldn't make it work in the time needed.
  • Instead, Beijing is maintaining growth by slashing profit margins on exports.
  • It is interesting to recall the extravagant claims about the future of Japan in the 1980s. Awestruck by growth rates, Westerners did not see the hollowing out of the financial system as growth rates were sustained by cutting prices and profits. Japan's miracle seemed to be eternal. It wasn't, and neither is China's. And China has a problem that Japan didn't: a billion impoverished people. Japan exists, but behaves differently than it did before; the same is happening to China.
  • Both Europe and China thought about the world in the post-Cold War period similarly. Each believed that geopolitical questions and even questions of domestic politics could be suppressed and sometimes even ignored.
  • They believed this because they both thought they had entered a period of permanent prosperity.
    • anonymous
       
      See also: All those 1990's op-eds about "the end of history" which now seem so completely ludicrious that it's hard for me to believe that so many Americans and Europeans ever bought it.
  • Periods of prosperity, of course, always alternate with periods of austerity, and now history has caught up with Europe and China.
  • And the United States has emerged from the post-Cold War period with one towering lesson: However attractive military intervention is, it always looks easier at the beginning than at the end.
    • anonymous
       
      You think?
  • The greatest military power in the world has the ability to defeat armies. But it is far more difficult to reshape societies in America's image.
  • A Great Power manages the routine matters of the world not through military intervention, but through manipulating the balance of power.
    • anonymous
       
      This is where I start to sound like a broken record: American civic perception is wildly at odds with MANY of the realities of international relations.
  • The United States has emerged into the new period with what is still the largest economy in the world with the fewest economic problems of the three pillars of the post-Cold War world. It has also emerged with the greatest military power.
  • But it has emerged far more mature and cautious than it entered the period. There are new phases in history, but not new world orders.
  • Eras unfold in strange ways until you suddenly realize they are over.
    • anonymous
       
      This is so curt and quotable and (I think) so true. Like John Green says, one non-revolution leads to another until... well, you realize you HAD a revolution. :)
  • Now, we are at a point where the post-Cold War model no longer explains the behavior of the world. We are thus entering a new era. I don't have a good buzzword for the phase we're entering, since most periods are given a label in hindsight.
  • But already there are several defining characteristics to this era we can identify.
  • First, the United States remains the world's dominant power in all dimensions. It will act with caution, however, recognizing the crucial difference between pre-eminence and omnipotence.
  • Second, Europe is returning to its normal condition of multiple competing nation-states. While Germany will dream of a Europe in which it can write the budgets of lesser states, the EU nation-states will look at Cyprus and choose default before losing sovereignty.
  • Third, Russia is re-emerging. As the European Peninsula fragments, the Russians will do what they always do: fish in muddy waters.
  • The deals they are making, of which this is a small sample, are not in their economic interests, but they increase Moscow's political influence substantially. 
  • Fourth, China is becoming self-absorbed in trying to manage its new economic realities.
  • And fifth, a host of new countries will emerge to supplement China as the world's low-wage, high-growth epicenter. Latin America, Africa and less-developed parts of Southeast Asia are all emerging as contenders
  • There is a paradox in all of this. While the United States has committed many errors, the fragmentation of Europe and the weakening of China mean the United States emerges more powerful, since power is relative.
  • It was said that the post-Cold War world was America's time of dominance. I would argue that it was the preface of U.S. dominance.
    • anonymous
       
      This is a hard sell to many Americans (and others) that don't have the benefit of hindsight to guide their judgements. Of course, I'm a bit of StratFor buff and so trust George & company on this, but there are plenty of aspects to explore and debate. I hope to do both with my readers in the coming years.
  • Its two great counterbalances are losing their ability to counter U.S. power because they mistakenly believed that real power was economic power. The United States had combined power -- economic, political and military -- and that allowed it to maintain its overall power when economic power faltered. 
  • A fragmented Europe has no chance at balancing the United States.
  • And while China is reaching for military power, it will take many years to produce the kind of power that is global, and it can do so only if its economy allows it to. The United States defeated the Soviet Union in the Cold War because of its balanced power. Europe and China defeated themselves because they placed all their chips on economics. And now we enter the new era.
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    "Many shifts in the international system accompanied the end of the Cold War. In fact, 1991 was an extraordinary and defining year. The Japanese economic miracle ended. China after Tiananmen Square inherited Japan's place as a rapidly growing, export-based economy, one defined by the continued pre-eminence of the Chinese Communist Party. The Maastricht Treaty was formulated, creating the structure of the subsequent European Union. A vast coalition dominated by the United States reversed the Iraqi invasion of Kuwait."
anonymous

The Crisis of the European Common Market | Stratfor - 0 views

  • The creation of a common market where people, goods, services and capital could move freely was one of the main goals of the Treaty of Rome
  • The free movement of people is the principle that allows EU citizens to travel to or live and work in any member country.
  • The creation of the eurozone put 17 countries with varying levels of economic development and competitiveness in a currency union. This has created significant trade imbalances between the less developed economies in the eurozone periphery and Germany, Europe's main exporter.
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  • The European Union is trying to address the problems of its banking sector through the creation of a banking union -- a mechanism that would put all the eurozone banks under the supervision of a single entity, provide joint funds to rescue banks in distress and provide all banks with the common deposit guarantee.
  • This idea has been controversial since the beginning.
  • First, there was a debate regarding which banks should be supervised. In December 2012, the European Union agreed that only the largest banks in the eurozone would be put under supervision.
  • Second, the idea of a joint insurance mechanism and bank resolution fund was highly controversial because countries with strong banking sectors refuse to take responsibility for failing banks.
  • As a result, EU leaders decided to postpone the insurance mechanism's implementation.
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    "The European Union was founded on the free movement of people, goods, services and capital. All of these basic freedoms are inextricably intertwined with the European crisis. The free movement of people is being questioned in numerous countries, while the free movement of goods and services is in part responsible for the current crisis. The free movement of capital has forced EU leaders to face the consequences of different national banking regulations that allow capital flight and tax evasion. While better oversight and collaboration make tax collection across borders easier, they do little to stem capital flight, which weakens banking sectors in already struggling economies."
anonymous

Sovereignty, Supranationality and the Future of EU Integration - 0 views

  • The European Union is an entity like no other in world history. After the end of World War II, the international system was configured around a series of multilateral organizations such as the United Nations, the International Monetary Fund and NATO. But the process of economic and political cooperation that West Germany, France, Italy, the Netherlands, Belgium and Luxembourg began in 1951 is fundamentally different from the rest of the post-war organizations.
  • The project was a direct challenge to the classical idea of ​​the nation-state and generated new forms of government and administration hitherto unknown.
  • Immanuel Kant believed that Europe would only overcome its constant state of war by achieving some form of political unity.
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  • From the Roman Empire to Nazi Germany, all the attempts to unify Europe meant war and conquest. It took World War II to convince the Europeans that the future of the Continent depended on overcoming age-old antagonisms and building a lasting political settlement to boost trade and prevent another war.
  • The central problem to be solved was the historical emnity between France and Germany
  • The French government understood that the only way to achieve lasting and sustainable economic growth in France was by ensuring a stable peace with Germany.
  • The European Economic Community, the institutional heart of the emerging continental unity, had three main objectives.
  • Its immediate goal was to create a customs union, which would eliminate trade restrictions between member states and establish a common external tariff for trade with the rest of the world.
  • It would also seek the consolidation of a common market, to allow the free movement of people, goods, capital and services.
  • Finally, it would seek the progressive coordination of social and fiscal policies among its members.
  • The rationale behind the European Communities was that if countries gave up sovereignty in specific areas, over time a greater amount of national prerogatives would be transferred to the supranational institutions.
  • Throughout the process, unanimity would be replaced by majority voting (so that the interest of the majority would overtake individual interests) and concessions of sovereignty would not be limited to economic issues, but also political and military affairs.
  • In other words, the process of European integration would progressively weaken the nation-state and its strategic interests.
  • Six decades later, many of these goals have been achieved.
  • The Commission, the Parliament and the Court of Justice today have powers that notably exceed those designed in the 1950s. More impressively, the European Union currently has 28 members, 17 of whom share the same currency. In 1945, with Europe in ashes and occupied by foreign powers, it was unimaginable to think that six decades later France and Germany would share the leadership of a continental alliance stretching from Portugal to Finland and Cyprus.
  • However, the remarkable growth of the European project did not bring about the abolishment of the nation-state that many analysts predicted.
  • EU institutions tend to generate their own agendas, which often go against the national strategies of some member states. As a result, the clash between national and supranational interests is often unavoidable.
  • This friction did not begin with the current economic crisis. In 1965, the French government withdrew its representation in the European Commission in protest of a plan that would give more power to Brussels in the management of the Common Agricultural Policy. To resolve the crisis, the Europeans reached an agreement under which a de facto veto power was given to member states on issues that were considered crucial to national interests. This agreement (commonly known as the Luxembourg Compromise) was designed to protect the intergovernmental nature of the European Communities and virtually froze the process of supranational integration in the 1970s and 1980s, until the Single European Act in 1986 introduced new mechanisms for qualified majority voting.
    • anonymous
       
      This paragraph is a good example of something I would never have known about otherwise. I wish I had been shown (much earlie) how history is shaped by the continuity and discontinuity of policies. Among, you know, an infinite soup of other variables. :)
  • On top of the traditional tensions between national governments and supranational institutions, in times of crisis member states also tend to distrust each other.
  • The creation of the euro has further complicated things. Seventeen countries with very different levels of economic development and competitiveness now share a common currency. This has particularly reduced Mediterranean Europe's room to maneuver, because it has deprived those countries of the possibility of applying independent monetary policy to tackle crises.
  • Governments must find a balance between their foreign policy objectives, pressure from the European Union and their desire to be re-elected -- which means decisions that may make sense for the future of the European Union (such as fiscal consolidation efforts) would probably not be made if governments consider them too unpopular among voters.
  • Other institutions, such as constitutional courts, often threaten to block decisions accepted by national parliaments. The recent investigation by the German constitutional court on the validity of the European Stability Mechanism and the decision by the Portuguese constitutional court to block some austerity measures promoted by Brussels and implemented by Lisbon are examples of this situation.
  • The deep unemployment crisis in the eurozone adds yet another complication to this problem. The European elites are still largely pro-European, and most of the voters in the eurozone want to keep the euro. But with the European Union's promise of economic prosperity weakening, its members have begun to rethink their strategies. Fidelity for the European project is not unbreakable. Nor is it strong enough to support an indefinite period of extremely high unemployment.
  • Despite its remarkable evolution, the European Union is still a contract. And contracts could be modified or even canceled if they stop being beneficial for their signatories.
  • Non-eurozone countries in Central and Eastern Europe have also begun to think of a more independent foreign policy. They remain formally aligned with the European Union and NATO, but the pursuit of closer ties with Russia is no longer taboo. And for most of them, joining the eurozone is no longer a priority.
  • Because of the pervasiveness of the nation-state, the future of the European Union will not be in the hands of the EU institutions, but in those of the same actors of 1951: France and Germany. Since the beginning of the economic crisis, Paris and Berlin have reiterated their commitment to the European Union, but as the economic downturn moves to the core of Europe, the differences between them become more obvious.
  • Like most economies in Mediterranean Europe, France's has lost competitiveness since the creation of the euro, and the common currency has led to a constant trade deficit with Germany. France will seek to change its relationship with Germany without breaking it (as Paris is still interested in containing Berlin), but Paris is increasingly aware that the European project should be remodeled.
  • In this context, Paris and Berlin will need to find a balance between their desire to preserve their alliance and the need to protect their national interests.
  • The Germans are interested in preserving their alliance with France and protecting the currency union because it benefits its exports to its neighbors and out of fear of the immeasurable financial consequences of a breakup of the eurozone.
  • Europe's main challenge will be to prevent these frictions from paralyzing the bloc. The European Union will also face the test of mitigating the alienation of its eastern members and closing the gap between eurozone and non-eurozone countries. In the meantime, Brussels and national governments will have to find ways to alleviate the bloc's corrosive unemployment crisis before it leads to dangerous levels of social unrest. In all these challenges, the European Union is running a race against time.
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    "Tensions between the European Commission and France have escalated in recent weeks. After Brussels suggested that Paris should apply structural reforms to reactivate the French economy, French President Francois Hollande said that the Commission cannot dictate policy to France. A few days later, the Commission's president, Jose Manuel Barroso, criticized the French pressure to exclude the audio-visual sector from the negotiations for a free trade agreement between the European Union and United States."
anonymous

The State of the World: Germany's Strategy - 0 views

  • In writing about German strategy, I am raising the possibility that the basic structure of Western Europe since World War II and of Europe as a whole since 1991 is coming to a close.
  • Before 1871, when Germany was fragmented into a large number of small states, it did not pose a challenge to Europe. Rather, it served as a buffer between France on one side and Russia and Austria on the other.
  • However, in the event that there was no alliance between France and Russia, Germany was always tempted to solve the problem in a more controlled and secure way, by defeating France and ending the threat of an alliance. This is the strategy Germany has chosen for most of its existence.
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  • Rather than split France and Russia, the threat of a united Germany drew them together. It was clear to France and Russia that without an alliance, Germany would pick them off individually.
  • The idea that economics rule the decisions of nations is insufficient for explaining their behavior.
  • Germany was confronted with a strategic problem. By the early 20th century the Triple Entente, signed in 1907, had allied Russia, France and the United Kingdom. If they attacked simultaneously at a time of their choosing, these countries could destroy Germany. Therefore, Germany's only defense was to launch a war at a time of its choosing, defeat one of these countries and deal with the others at its leisure.
  • During both World War I and World War II, Germany first struck at France and then turned to deal with Russia while keeping the United Kingdom at bay. In both wars, the strategy failed.
  • The issue was to prevent Germany from returning to the pursuit of an autonomous national strategy, both because it could not resist the Soviet forces to the east by itself and, more important, because the West could not tolerate the re-emergence of divisive and dangerous power politics in Europe.
  • The key was binding Germany to the rest of Europe militarily and economically.
  • After World War II, West Germany's strategy was threefold.
  • First, it had to defend itself against the Soviet Union in concert with an alliance that would effectively command its military through NATO.
  • Second, it would align its economy with that of the rest of Europe, pursuing prosperity without undermining the prosperity of other countries.
  • Third, it would exercise internal political sovereignty, reclaiming its rights as a nation without posing a geopolitical threat to Western Europe.
  • Russia, or what was left after the collapse of the Soviet Union, was relatively secure so long as Germany remained part of European structures. The historical strategic problem Germany had faced appeared solved.
  • The situation became more complex after 2008. Germany's formal relationship with NATO remained intact, but without the common threat of the Soviet Union, the alliance was fracturing over the divergent national interests of its members.
  • Germany is the second-largest exporter in the world. It exports to many countries, but Europe is a critical customer. The free-trade zone that was the foundation of the European Union was also one of the foundations of the German economy.
  • However, the European Union no longer functions as it once did.
  • There were two possible solutions in the broadest sense.
  • One was that the countries in crisis impose austerity in order to find the resources to solve their problem.
  • The other was that the prosperous part of Europe underwrites the debts, sparing these countries the burden of austerity.
  • the German price for underwriting part of the debt is that European bureaucrats, heavily oriented toward German policies, be effectively put in charge of the finances of countries receiving aid against default.
  • If you accept the German view, which is that the debt crisis was the result of reckless spending, then Germany's proposal is reasonable. If you accept the view of southern Europe, which is that the crisis was the result of the European Union's design, then what Germany is proposing is the imposition of German power via economics.
  • It is difficult to imagine a vast surrender of sovereignty to a German-dominated EU bureaucracy, whatever the economic cost. It is also difficult to imagine Germany underwriting the debt without some controls beyond promises
  • In short, there is substantial synergy between the Russian and German economies. Add to this that the Germans feel under heavy pressure from the United States to engage in actions the Germans want to be left out of, while the Russians see the Americans as a threat to their interests, and there are politico-military interests that Germany and Russia have in common.
  • NATO is badly frayed. The European Union is under tremendous pressure and national interests are now dominating European interests.
  • However, Germany's strategic interest is not necessarily a relationship with France but a relationship with either France or Russia to avoid being surrounded by hostile powers. For Germany, a relationship with Russia does as well as one with France.
  • An ideal situation for Germany would be a Franco-German-Russian entente. Such an alliance has been tried in the past, but its weakness is that it would provide too much security to Germany, allowing it to be more assertive.
  • Normally, France and Russia have opposed Germany, but in this case, it is certainly possible to have a continuation of the Franco-German alliance or a Russo-French alliance. Indeed, a three-way alliance might be possible as well.
  • If Germany faces an impossible situation with the European Union, the second strategic option would be a three-way alliance, with a modified European Union or perhaps outside of the EU structure.
  • Germany's strategy, therefore, is still locked in the EU paradigm. However, if the EU paradigm becomes unsupportable, then other strategies will have to be found.
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    The idea of Germany having an independent national strategy runs counter to everything that Germany has wanted to be since World War II and everything the world has wanted from Germany. In a way, the entire structure of modern Europe was created to take advantage of Germany's economic dynamism while avoiding the threat of German domination.
anonymous

Domestic Hurdles to European Integration - 0 views

  • Three developments from Europe brought a degree of optimism to the economically beleaguered Continent on Wednesday
  • First, Germany showed leadership in Europe’s ongoing efforts to reduce government budget deficits when Chancellor Angela Merkel’s Cabinet approved an 81.6 billion euro ($101 billion), four-year austerity package. Second, the EU Commission proposed synchronizing its rules on retirement age with life expectancy across the 27-member bloc: A legal mechanism would automatically increase retirement age as life expectancy increases. Third, the EU Commission said that Greece was “broadly on track” with its Herculean task of cutting its enormous budget deficit.
  • Europe’s recent history does not point to an optimistic answer. The euro — itself a product of European integration — arose from the geopolitical tensions of the Cold War’s end. Unified Germany needed to be restrained and committed to the EU, so its fellow member states decided to hand it the keys to European monetary policy while giving up their ability to undercut Germany’s exports with currency depreciation.
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  • But nobody — starting with Germany and France — stuck to the rules laid out by the Stability and Growth Pact
  • even at the height of the economic crisis, Europeans are thinking of a future when they will want to go back to less rigid interpretations of fiscal rules.
  • recent elections across the Continent have illustrated how politics — specifically getting elected — are still the most important motivating facto
  • If even one member state faces a domestic political calculus arrayed against integration, the entire effort could be thrown off course.
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    "Three developments from Europe brought a degree of optimism to the economically beleaguered Continent on Wednesday." By StratFor on July 8, 2010.
anonymous

France in Turmoil | STRATFOR - 0 views

  • The two groups have different economic and social interests, but they are coming together in their angst toward the government and in their anger toward President Nicolas Sarkozy. This presents a dangerous situation for Paris, as it has the potential to spark wider societal unrest unless the government moves to satisfy one of the groups.
  • The origins of the French welfare state go back to the 60-year period of nearly constant turmoil following the 1789 French Revolution. The revolution was followed by the 1793-94 Reign of Terror; the White Terror of 1794; Napoleon Bonaparte’s rule from 1804 to 1814, which included an almost uninterrupted period of pan-European warfare; another White Terror in 1815; and two more revolutions, in 1830 and 1848. The 1848 Revolution took on a particularly socialist tinge, as a nascent working class that was growing amid the country’s industrialization united with the peasantry in protest of their conditions.
  • Under Napoleon III, social order was largely restored for the next 20 years — to be disrupted by the war against Prussia in 1870 — but more importantly, the French social welfare state became a crucial part of the government’s social contract with its citizens. In order to pacify and unite its restive population, the state vowed that it would take care of its citizens from cradle to grave.
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  • The French, in other words, are neither lazy nor illogical. The protesters see the reforms as a threshold that, if crossed by the government, could undermine the foundation of the last 150 years of French society. Thus, while only 7-8 percent of the working population belongs to a labor union — the lowest percentage in the EU and even lower than that in the United States — nearly 70 percent of the population supports the ongoing strikes and believes they should continue if the proposed reforms pass, which they likely will by Oct. 23.
  • The context of the 2010 unrest is therefore not very different from 1995. The French budget deficit is forecast to hit 8.2 percent of GDP, and Paris is being forced by Germany to rein in spending to conform to the EU’s fiscal rules. Germany is making EU-wide fiscal discipline an essential condition of its continued support for EU institutions, a message that was elucidated during the Greek sovereign debt crisis but understood to apply to everyone.
  • In addition to protests from the French middle classes and workers demanding a continuation of the established social contract, there are protests from French citizens who feel they were never offered that social contract in the first place.
  • The protests of the last couple of days in France have seen both groups pour out onto the streets. The rioting and violence are still not in any way at a level that could be construed as threatening to the government; both the 2005 and 2007 riots were more intense. However, the protesters are using more strategic tactics, targeting the country’s energy infrastructure, and hence are less reliant on drawing out the masses to the streets.
  • The youth need a flexible labor market and thus would need substantial portions of the French welfare state to be eroded if their employment situation were to be remedied. Therefore, Paris will have a hard time satisfying both groups.
  • Ultimately, the commitments Paris has made to its people over the last 150 years are incompatible with the commitments it has made to Berlin in the last 20 years.
  • However, the French state has a very clear history of conceding to its population’s demands. At the very least, it is inevitable that Paris will have to give in to one of the groups, either by admitting that the social contract cannot be changed or by offering it in an amended form to the disaffected youth and citizens of immigrant descent.
  • It is likely that it will give in to the more established group — the workers and middle classes — since they have shown with their tactics that they have the ability to seriously threaten the French state’s efforts to function by targeting its energy infrastructure. Simply moving forward with a policy that three-quarters of the population rejects is unsustainable. At the point when Paris gives in to one side, however, France may cease to be at conflict with itself and instead come into conflict with Germany.
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    "Unrest in France sparked by protests against the government continued Oct. 21. The turmoil is ostensibly over proposed government pension reforms, but it is about much more than that. The protests themselves are a confrontation between the government and unionized labor - older generations that want to protect benefits hard won in the 19th century and enhanced in the 1970s and 1980s. At the same time, another group of French citizens - disaffected youths, many of immigrant Arab and African descent - are protesting not for employment benefits, but for employment itself." By StratFor on October 22, 2010.
anonymous

Europe Could Go 100% Renewable By 2050 - 0 views

  • Earlier this month, the European Commission reported that the EU was on track to get 20 percent of its electricity from renewable sources by 2020.
  • A "super-smart" grid powered by solar farms in North Africa, wind farms in northern Europe and the North Sea, hydro-electric from Scandinavia and the Alps and a complement of biomass and marine energy could render carbon-based fuels obsolete for electricity by 2050, said the report.
  • Under a variety of business-as-usual scenarios, the EU's projected to import about 70 percent of its energy by 2050, including loads of natural gas from Russia, which hasn't always been the most stable of suppliers. So the EU has plenty of reasons beyond climate change to want to decarbonize.
  •  
    From Bradford Plumer of The New Republic on March 30, 2010.
anonymous

Germany: Creating Economic Governance - 0 views

  • Berlin has written some very large checks to ameliorate the economic crisis — Germany’s combined contributions to the Greek bailout and the eurozone rescue fund are about 151 billion euros ($192 billion), not counting the German portions of the International Monetary Fund (IMF) contributions — but in return, Germany wants to redefine how the eurozone is run.
  • The EU project has its roots in the end of World War II and the beginning of the Cold War. As originally conceived it had two purposes. The first was to lock Germany into an economic alliance with its neighbors that would make future wars between Western Europeans not only politically unpalatable but also economically disastrous. The second was to provide a politico-economic foundation for a Western Europe already unified under NATO in a military/security alliance led by the United States against the Soviet Union. The memory of World War II provided the moral impetus for European integration, while the Cold War largely provided the geopolitical context.
  • As STRATFOR has said, the eurozone had a political logic but was economically flawed from the start.
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  • the eurozone has thus far been exceedingly economically beneficial to Germany. Berlin’s 151 billion euro contribution to the two bailout funds pales in comparison to the overall boost in exports that Berlin has received since forging the eurozone.
  • Furthermore, if the euro were to fragment or disintegrate, the EU would essentially end as a serious political force. Currencies are only as stable as the political systems that underpin them.
  • A collapse of a currency — such as those in Germany in 1923, Yugoslavia in 1994, and Zimbabwe in 2008 — is really just a symptom of the underlying deterioration of the political system and is usually followed closely by exactly such a political crisis.
  • The immediacy of the crisis is the impetus for such radical changes to Europe’s “economic governance.” French President Nicolas Sarkozy actually proposed something similar in the wake of the September 2008 crisis, but Berlin sternly rejected him at the time. The crisis that has followed, however, has changed Germany’s mind.
  • The bottom line is that Germany and other member states are shelling out cash and breaking EU treaties because it is in their national interests to do so at this particular moment. If they are to institutionalize such rules for the long term, it is inevitable that they will be broken once national interests revert back to the standard concerns of sovereignty over fiscal policy.
  • Once Germany has paid for its leadership of Europe, will it also be willing to enforce its leadership with direct punitive actions? And if it does, how will its neighbors react?
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    May 14, 2010
anonymous

Europe: The New Plan - 0 views

  • the euro, has suffered from two core problems
  • the lack of a parallel political union
  • the issue of debt
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  • Taxation and appropriation — who pays how much to whom — are essentially political acts. One cannot have a centralized fiscal authority without first having a centralized political/military authority capable of imposing and enforcing its will.
  • the checkbook is not the ultimate power in the galaxy. The ultimate power comes from the law backed by a gun.
  • Americans fought the bloodiest war in their history from 1861 to 1865 over the issue of central power versus local power.
  • Northern Europe is composed of advanced technocratic economies, made possible by the capital-generating capacity of the well-watered North European Plain and its many navigable rivers
  • a people that identifies with its brethren throughout the river valleys and in other areas linked by what is typically omnipresent infrastructure. This crafts a firm identity at the national level rather than local level and assists with mass-mobilization strategies.
  • Southern Europe, in comparison, suffers from an arid, rugged topography and lack of navigable rivers.
  • identity is more localized; southern Europeans tend to be more concerned with family and town than nation, since they do not benefit from easy transport options or the regular contact that northern Europeans take for granted.
  • southern European economies are highly dependent upon a weak currency
  • While states of this grouping often plan together for EU summits, in reality the only thing they have in common is a half-century of lost ground to recover, and they need as much capital as can be made available.
  • European Union is now made up of 27 different nationalities
  • With Europe having such varied geographies, economies and political systems, any political and fiscal union would be fraught with complications and policy mis-prescriptions from the start. In short, this is a defect of the euro that is not going to be corrected, and to be blunt, it isn’t one that the Europeans are trying to fix right now.
  • The ECB’s primary (and only partially stated) mission is to foster long-term stable growth in the eurozone’s largest economy — Germany — working from the theory that what is good for the continent’s economic engine is good for Europe.
  • Smaller, poorer economies are more volatile, since even tiny changes in the international environment can send them through either the floor or the roof.
  • The question is not “whither the euro” but how to provide a safety net for the euro’s less desirable, debt-related aftereffects.
  • When the not-so-desperate eurozone states step in with a few billion euros — 223 billion euros so far, to be exact — they want not only their money back but also some assurance that such overindulgences will not happen again.
  • The second is that the Dec. 16 agreement is only an agreement in principle.
  • Three complications exist,
  • First, when a bailout is required, it is clearly because something has gone terribly wrong.
  • The third complication is that the bailout mechanism is actually only half the plan. The other half is to allow states to at least partially default on their debt
  • tates that just squeaked by in 2010 must run a more difficult gauntlet in 2011 — particularly if they depend heavily on foreign investors for funding their budget deficits.
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    "Europe is on the cusp of change. An EU heads-of-state summit Dec. 16 launched a process aimed to save the common European currency. If successful, this process would be the most significant step toward creating a singular European power since the creation of the European Union itself in 1992 - that is, if it doesn't destroy the euro first."
anonymous

Europe: A Shifting Battleground, Part 2 | STRATFOR - 0 views

  • When Russian Defense Minister Anatoly Serdyukov meets with NATO’s defense ministers June 9, the main focus of their talks will be the ballistic missile defense (BMD) network set to be installed in Europe.
  • Moscow is primarily concerned with the U.S. presence in the region, which is seen as a tangible threat. (The Visegrad, or V4, Battlegroup and the Nordic-Baltic security relationship are budding alliances, but U.S. F-16s and BMD installations near Ukraine and Belarus are real.)
  • Therefore, Russia has shifted its tactics — while retaining the option of responding militarily — to facilitating the ongoing fragmentation of the NATO alliance. In Moscow, this strategy is called “the chaos tactic.” In other words, the Kremlin will sow chaos within Europe by cooperating with Western Europe on security issues. The offer of a joint NATO-Russian BMD system is an example of this tactic; it makes Moscow appear willing to cooperate on the BMD issue while painting the Intermarium countries as belligerent and uncompromising (“paranoid,” as the Kremlin often puts it) when they protest Russia’s participation. Two other specific examples involve the European Security Treaty and the EU-Russia Political and Security Committee.
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  • The specifics of the treaty are irrelevant; the important point is that Moscow is negotiating with Western European countries. The mere act of Moscow’s talking to Western Europe about a new security framework irks the Intermarium; such talks show just how shaky the NATO alliance has become.
  • The current geopolitical shift in Europe will engender a crisis by the middle of the decade.
  • The Intermarium countries do not want to take Germany’s Cold War-era role as the chessboard upon which Russia and the United States play. Instead, the Intermarium and the Nordic countries — led by Poland and Sweden — want to move the buffer between Europe and Russia to Belarus and Ukraine. If they can get those two countries to be at the very least neutral — not formally within Russia’s political, economic and military sphere of influence — then Central Europe can feel relatively safe. This explains the ongoing Polish-Swedish coordination on issues such as the EU Eastern Partnership program, which is designed to reverse Russia’s growing influence in the former Soviet sphere, and the opposition of Belarusian President Aleksandr Lukashenko.
  • Although Moscow is currently acting cooperatively — while concurrently creating chaos across the continent — it can easily resume using more aggressive tactics. Moscow has contingency plans, including moving troops against the Baltic and Polish borders in Belarus, potentially increasing its military presence in Ukraine and the Black Sea, and placing missiles in Kaliningrad and Belarus.
  • But the overall balance between the United States and Russia in Central Europe will depend on another country: Germany. The question at this point will be the extent to which Germany is willing to see the Intermarium draw in a U.S. military presence.
  • Like Russia, Germany does not want to see a U.S.-dominated continent, especially when Berlin is strong enough to command the region politically and economically. Nor does Germany want to see a more aggressive Russia in a few years. Berlin has limited options to prevent either scenario, but it could use NATO and EU structures to stall the process — though it would cause an identity crisis for both institutions. It will be important to watch how the United States and Russia use Germany against each other in the fight over Central Europe.
  • Unlike Cold War-era Germany, the Intermarium states will not quietly accept becoming the staging ground for a U.S.-Russian contest.
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    "As Central Europe works to counter Russia's resurgence in the region, Russia is responding with disruptive measures by cooperating with Western Europe on security issues, a tactic that both strengthens Moscow's ties with Western Europe (particularly Germany) and makes Central European countries look unreasonable. The growing rift between Western and Central Europe will eventually lead to a crisis as the Central European countries try to avoid serving as a buffer zone between Russia and the West."
anonymous

StratFor Annual Forecast 2013 - 0 views

  • Generational shifts take time to play out and often begin with a period of denial as the forces of the international system struggle to preserve the old order. In 2013, that state of denial will persist in many areas. But we are more than four years into this cyclical transformation, and change is becoming more palpable and much harder to deny with every passing month.
  • In Europe, short-term remedies that are so far preserving the integrity of the European Union are also papering over the deep, structural ailments of the bloc.
  • China is not so much in denial of its current predicament as it is constrained in its ability to cope with a dramatic shift from high export-oriented growth to more sustainable development of its interior.
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  • The emerging economies of the post-China world will take time to develop, but 2013 will be an important year in determining which are best positioned to fill the growing void left by China.
  • Change will be primarily violent in nature -- and thus harder to miss -- in the Middle East.
  • The United States is also not immune to change. In this generational shift, and all the tumult that comes with it, Washington will be forced to learn the value of restraint in balance-of-power politics, preferring to lean on regional partners and encourage strategic competition as a way of preserving its own power.
  • The Arab world is moving uncomfortably between two eras. The post-World War II era, in which Arab dictatorships and monarchies supplanted colonial rule, is now roughly blending with -- or in some cases outright colliding with -- a fractured landscape of long-repressed Islamist forces.
  • This dynamic will be particularly visible in the northern Levant region this year as Syria and Lebanon continue coming apart. From Stratfor's perspective, the regime in Syria has already fallen and is giving way to a familiar state of warlordism, where militias and clan interests reign supreme. There is no longer a political entity capable of wielding control over the entirety of Syrian territory, nor will there be for some time.
  • once Syrian President Bashar al Assad is removed from power, whether through a negotiated deal or by force, the Sunni forces will fragment along ideological, ethnic and geographic lines, with Salafist-jihadist forces battling against a more politically minded Muslim Brotherhood and secular Sunnis.
  • As their grip over Aleppo slips, Alawite forces will try to hold Damascus while preparing a mass retreat to their coastal enclave. The battle for Damascus could extend beyond the scope of this forecast.
  • The potential use of chemical weapons by Alawite forces in a state of desperation could accelerate the unraveling of the region; a U.S.-led coalition would have to assemble in haste to contain the chemical weapons threat.
  • To be clear, the United States is not looking for a pretext to intervene militarily in Syria. On the contrary, the United States will make every effort possible to avoid another military campaign in the Islamic world this year.
  • A military conflict between the United States and Iran remains unlikely in 2013.
  • The growing disparity in the U.S. and Iranian negotiating positions will largely relegate Iran to the role of regional spoiler. So long as Iran can create pain for its regional adversaries, it can slow its own descent.
  • Iraq remains Iran's primary regional imperative, however. The momentum building among Sunni forces in Syria will eventually spill into Iraq and challenge Shiite dominance.
  • Iran's presidential elections in June will reveal the declining relevancy of the clerical elite and the populist faction embodied by outgoing President Mahmoud Ahmadinejad. This creates a political void for the Revolutionary Guard to fill. The Supreme Leader Ayatollah Ali Khamenei will try to check the Corps' growing influence by bolstering rival military and security agencies and backing a less controversial and more politically malleable ally from the pragmatic conservative camp for the presidency.
  • In Egypt, the military will adapt to an emerging Islamist political order. The military will remain the ultimate arbiter of the state and will rely on a number of factors -- including a fragmented judiciary, the military's economic leverage, a divided Islamist political landscape and the military's foreign relationships -- to check the Muslim Brotherhood.
  • Egypt's consuming political transition will leave opportunities for flare-ups in the Sinai Peninsula and in Gaza, but we do not expect a significant breach between Israel and Egypt this year.
  • Jordan, the oft-overlooked casualty of the Arab Spring, will continue to destabilize quietly and slowly in 2013
  • Israel and Turkey are both greatly affected by the shifting political dynamics of the Arab world, but both have little means to influence the change. The two former allies will continue exploring ways to restore a quiet working relationship under these new regional stresses, but a public restoration of diplomatic ties is less likely.
  • Israel will struggle internally over how to adapt to a new regional framework in which the reliability of old working partners is called into question.
  • Turkey sees an opportunity in the rise of Islamist forces in the Arab world but Ankara's limited influences restrain its actions beyond Turkish borders.
  • A more aggressive Saudi role in Syria will aggravate the civil war and create competition with other regional stakeholders, including Turkey, Qatar and Jordan.
  • In 2012, the European Union took numerous steps to mitigate the financial impact of its ongoing crisis.
  •  These actions, which helped to keep the eurozone afloat in 2012, will remain effective in 2013, making it very likely that the eurozone will survive another year. But these tools do not solve three fundamental aspects of the European crisis. 
  • First, the European crisis is fundamentally a crisis of competitiveness.
  • Second, the crisis has a political aspect. The European Union is not a federation but a collection of nation-states bound together by international treaties.
  • Third, the European crisis is threatening the social stability in some countries, especially in the eurozone's periphery.
  • In 2013, the two largest economies of the eurozone (Germany and France) will face low growth or even stagnation. This will have negative effects across Europe.
  • In 2013, the crisis will keep damaging economic conditions in the eurozone periphery. Greece, Spain, Portugal and Italy will see their economies shrink and unemployment rates rise. In all these countries, the social unrest will grow and the year will be marked by permanent protests and strikes. 
  • The conspicuous divide between the ruling elite and the populations of the periphery will be a key element in 2013, and some governments could fall. But even if opposition parties take power, they will face the same constraints as the governments that preceded them. In other words, a change in politicians will not bring a substantial change in policies regarding the European Union.
  • The only country in the eurozone periphery that has scheduled elections is Italy (in February). If the next Italian government fails to achieve political stability and apply economic reforms, the increased market pressure on Italy will make Rome more likely to require financial assistance from Brussels.
  • Because of the fundamental contradictions in the national interests and foreign policy strategies of the EU member states, the European crisis will continue generating political and economic divisions in the Continent in 2013.
  • Outside the eurozone, the United Kingdom will seek to protect its sovereignty and renegotiate its status within the European Union. But London will not leave the European Union in 2013.
  • Domestic Issues After the political tumult of 2012, Russia will face another year of anti-Kremlin protests, tensions among various political factions and ethnic groups, crackdowns and government reshuffles. Overall, the political tensions will remain manageable and will not pose a serious challenge to Moscow's control.
  • Russia has made significant progress recently in re-establishing influence in its former Soviet periphery.
  • Russia's relationship with Ukraine could be its most important connection in the former Soviet Union in 2013. Russia has been pursuing integration with Ukraine, primarily by taking over its natural gas transit infrastructure and calling on Kiev to join the Customs Union.
  • Georgia will be Russia's main concern in the Caucasus in 2013. With the political emergence of billionaire tycoon Bidzina Ivanishvili and his Georgian Dream movement, Russia's position in the country strengthened at the expense of the anti-Russian camp of Georgian President Mikhail Saakashvili.
  • In the past year, Russia has changed its tactics toward Europe to preserve its presence and leverage for the future. Russia's primary link to Europe is the Europeans' dependence on Russia's large energy supplies, which Moscow knows will be threatened when more non-Russian supplies become available.
  • In 2012, Russia began shifting away from its aggressive stance on energy -- particularly its high prices -- to strike long-term deals that will maintain Russia's market share with its primary strategic customers, such as Germany, Italy and Turkey. Russia will continue this strategy in 2013 as it continues to build new infrastructure to directly link its supplies to Europe.
  • The United States and Russia will continue sparring over trade matters, negotiations for a new nuclear arms treaty and Russia's role in Iran and Syria. Stratfor does not expect major changes from Washington or Moscow that would break the gridlock in negotiations on these issues.
  • The low-level violence and instability that occurred throughout Central Asia in 2012 will continue in 2013.
  • Three things will shape events in East Asia in 2013: Beijing's struggle to maintain social and political stability amid lower economic growth rates; China's accelerating military modernization and increasingly aggressive moves to secure its territorial and economic interests in the region; and varied efforts by other regional players, including the United States, to adapt to China's changes. 
  • In 2013, the Chinese economy will continue the gradual, painful process of moving away from high export-driven growth and toward a model that is more sustainable in the long run.
  • But barring another global financial meltdown on the scale of 2008-2009, China's coastal manufacturing economy will not collapse outright. The decline will be gradual.
  • The ongoing, gradual eclipse of coastal China as a hub of global manufacturing over the next several years will lead to higher unemployment and social dislocation as more of China's 250 million-strong migrant labor force returns inland in search of work. 
  • Shadow banking is by no means new in China. But it has grown significantly in the past few years from the geographically isolated informal loan markets of coastal cities to a complex network of semi-legal entities that provides between 12 and 30 trillion yuan (between $1.9 trillion and $4.8 trillion) in credit -- at interest rates of 20-36 percent -- to thousands of struggling small businesses nationwide.
  • The Party's growing sense of insecurity -- both internally and with regard to the social consequences of China's economic transition -- likely will be reflected in continued censorship of online social platforms like Weibo, crackdowns on religious or other groups perceived as threatening, and the Chinese military's growing assertiveness over China's interests in the South and East China seas and Southeast Asia.
  • The decline of low-end coastal manufacturing in China will present enormous opportunities for Southeast Asian countries like Indonesia, Vietnam, the Philippines and potentially Myanmar -- all of whom will continue to push strongly for foreign investment not only into natural resources and raw materials industries but also into developing better urban, transport, power generation and materials processing infrastructure.
  • Meanwhile, Vietnam and the Philippines -- China's most vocal opponents in Southeast Asia -- will continue to push for greater integration among members of the Association of Southeast Asian Nations and for U.S. business and military engagement in the region.
  • The Coming U.S. Withdrawal from Afghanistan Ahead of the 2014 drawdown of U.S. troops from Afghanistan, efforts will intensify to negotiate a settlement that gives the Taliban a place in a new government.
  • The negotiations will face numerous obstacles this year. There will be an upsurge in violence -- both in terms of officially sanctioned attacks designed to gain advantage on the negotiating table and spoiler attacks by Taliban elements allied with al Qaeda on both sides of the Afghan-Pakistani border.
  • Washington's intention to reduce its presence in the region will spur regional actors to fill the void. Pakistan will increase its interactions with Russia, Central Asia and Iran to prepare for a post-U.S. Afghanistan.
  • India will also turn its attention eastward, where the United States is quietly trying to forge a coalition of regional partners to keep a check on China in the Indo-Pacific basin. Myanmar in particular will be an active battleground for influence this year.
  • Preparing for a Post-Chavez Venezuela After a year of successful campaigning for re-election, Venezuelan President Hugo Chavez is in questionable health. Although the ultimate outcome of December's medical treatment for the ailing leader is unpredictable, Chavez's decision to name Vice President Nicolas Maduro as a political successor at the end of 2012 indicates that there is significant concern for his ability to remain in power.
  • Although it remains possible that Chavez will stay in power through the year, for Maduro to capitalize on Chavez's recent political gains, elections may need to be called sooner rather than later, regardless of Chavez's immediate health status.
  • Throughout 2013, Colombia will continue the incremental process of negotiating an end to the conflict with the Revolutionary Armed Forces of Colombia, known by its Spanish acronym FARC.
  • This will be a year of significant transition for Mexico. Policy issues that were bottled up by intra-party competition in the waning years of the National Action Party's administration have begun coming to the fore and will dominate 2013. These include socio-political issues like education, tax and pension reform.
  • The most important issue facing Mexico in 2013 will be energy policy.
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    "At the beginning of 2012, we argued that the international system is undergoing a generational transformation -- the kind that occurs every 20 years or so. The cycle we are now in started in 2008-2009, when global financial contagion exposed the underlying weaknesses of Europe and eventually cracked China's export-oriented economic model. The Middle East then began to deviate from its post-World War II paradigm with an attempted resurgence by Iran, the regional rise of Islamists and the decline of age-old autocratic regimes in the Arab world."
anonymous

The Social Effects of the European Crisis - 0 views

  • Tens of thousands of protesters took to the streets in Lisbon and other Portuguese cities March 2 to demand an end to the government's austerity measures and, in some cases, to call for the resignation of Portuguese Prime Minister Pedro Passos Coelho. The European Union considers the Portuguese government a success story in implementing austerity measures after it received a bailout in 2011. However, unemployment doubled in Portugal between 2008 and 2012 and currently affects more than 16 percent of the country's workforce.
  • In Spain, the government announced March 4 that more than five million people in the country are unemployed -- the highest rate seen there in more than three decades -- and a series of suicides committed by people who were to be evicted from their homes has spurred widespread protests.
  • In Greece, reports suggest that the country is going through a shortage of medicines; hundreds of drugs, including antibiotics and anesthetics, are in short supply.
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  • In Portugal, the Secretary of State for Emigrant Communities recently said that up to 240,000 people (roughly 2 percent of the nation's population) have left the country since 2011, due in large part to unemployment and economic contraction.
  • As the recurrent protests in Spain, Greece and Portugal show, there is a growing dissatisfaction in many of the EU member states with the austerity measures proposed by the European Union and applied by national governments.
  • Independent of their ideological orientation, most EU governments have applied the austerity policies proposed by the European Union and the International Monetary Fund. The traditional parties' lack of alternatives to austerity has generated a growing unease among local populations.
  • Such crises of legitimacy are often accompanied by an increase in euroscepticism, since many of these new parties blend anti-establishment rhetoric with opposition to the European Union or Germany's leadership of the bloc.
  • The combination of economic, social and political crises growing in Europe concerns Brussels for a number of reasons.
  • First, political uncertainty often generates instability in the financial markets.
  • Second, and perhaps most important, the economic crisis creates an environment conducive to the growth of extremist political views, both from the left and from the right.
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    "In recent weeks, many European bureaucrats and national leaders have expressed optimism about the future of the economic situation in the European Union and have suggested that the worst of the crisis has passed. However, events over the past few days show that the crisis is not over and that it continues to have a deepening social impact on eurozone states."
anonymous

The Expensive, Diminishing Threat of Somali Piracy - 0 views

  • Many factors have contributed to the decrease in pirate hijackings in 2012.
  • One factor is that shipping companies have begun equipping their ships with more countermeasures, namely armed guards.
  • For several years, commercial ships sailing in the Indian Ocean have used other countermeasures, such as fences, water cannons and adjusted tactics like disabling the ship.
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  •  But the widespread deployment of armed guards beginning in 2011 (guards had been used sparingly as far back as 2008) has a very close correlation to the recent decrease in hijackings.
  • government officials also attribute the drop-off in attacks and hijackings to better coordination between foreign naval patrols, which have made the waters off the Somali coast a less permissive environment for pirate operations.
  • With several years of practice, sailors from international missions such as the U.S.-backed Combined Task Force 151 and the EU-backed Atalanta mission as well as from the unilateral missions of China, Russia, Iran and others have had time to study pirate activity and become more efficient at stopping attacks.
  • Effectively patrolling such a large area requires intelligence and the development of a counterpiracy doctrine that includes going after the larger pirate vessels, called mother ships, that extend pirates' range and allow them to operate in rougher seas during the monsoon.
  • Three years ago pirates were largely uncontested, but now they face a more coordinated defense.
  • The armed guards and naval patrols have not eliminated piracy, but they have increased the costs of attacking and seizing a commercial ship. Because pirates are motivated more by profit than by any ideology, a decrease in profitability will deter them from engaging in the practice.
  • The new Somali federal government still lacks the capability to control pirate towns such as Hobyo and Haradheere, and its officials do not appear to want a strong Puntland doing it for them. 
  • In essence, the commercial shippers and naval forces have adopted a siege strategy -- they hope to starve the pirates of resources, forcing them to give up. Somali pirates held about 20 ships at any given time in 2010; they currently hold 11. As the pirates hijack fewer ships, and as armed guards make piracy more dangerous, the entire enterprise is looking less lucrative and appealing.
  • The problem with the siege strategy is that as soon as shipping companies or foreign naval forces let up on the pirates, they will go back to hijacking ships.
  • That means that about 13,000-23,000 ships are paying for armed guards to accompany them through the vulnerable areas, a roughly 10-day trip, at a cost of approximately $60,000 each time. Based on those figures, the total annual cost for shipping companies merely to deploy armed guards on their ships through the Gulf of Aden is between about $800 million and $1.4 billion. The total cost of piracy to the world in 2011, according to the One Earth Future Foundation's estimates, was between $6.6 billion and $6.9 billion. This estimate included $160 million for ransom payments; other preventative measures, such as rerouting ships or using more fuel to maintain higher speeds, made up the rest of the costs. In other words, the cost of preventing piracy off the coast of Somalia is substantially higher than the costs piracy inflicts.
  • The key component of the siege strategy is that it weakens the pirates' control over their land-based sanctuaries. Their power is connected to their revenue, so the decrease in revenue will decrease their power. The shipping companies and foreign navies hope that some other, less disruptive enterprises will eventually take root along Somalia's pirate-heavy coast.
  • The only force that has significantly challenged the pirates on land is the Puntland Maritime Police Force. Located in northeast Somalia, Puntland is much more stable than the south and is virtually independent. The Puntland Maritime Police Force had success in capturing pirates, destroying their staging bases along the beach, cutting off their supply routes and even, supposedly, attempting to seize hijacked vessels from the pirates.
  • Although Mogadishu is unable to control much of its territory, the new government doesn't want regional governments accumulating too much strength. In the end, a strong Puntland may be more of a risk to Mogadishu than pirates. 
  •  
    "Piracy off the coast of Somalia has dropped off dramatically in 2012. Successful ship hijackings have decreased from 31 in 2011 (and 49 in 2010) to only four so far in 2012. Attacks against ships have also decreased, falling from 199 reported attacks in the first nine months of 2011 to 70 attacks over the same span in 2012 -- a 65 percent drop. However, diminished activity does not necessarily mean a decrease in the cost of sailing around the Horn of Africa. Somali pirates occupy a unique position, which is right along highly strategic global shipping lanes yet outside the reach of any national power. For international actors, it is politically and militarily easier to try to contain the Somali piracy threat than to eliminate it. But containment comes at a high cost."
anonymous

U.S.-Iran Negotiations Redux - 0 views

  • there are a couple of notable points to consider in analyzing the effectiveness of the U.S.-led pressure campaign against Iran
  • The most significant shift involves Russia, which has made a strategic decision to distance itself from Tehran in order to facilitate a broader understanding with the United States on respecting the boundaries of the former Soviet periphery
  • The United States also spent the summer revving up a sanctions campaign against Iran, this time going beyond weak sanctions in the U.N. Security Council and targeting Iran’s gasoline trade.
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  • If Iran is going to be compelled to negotiate seriously with the United States, it is likely going to take a lot more than the pressure tactics Washington has attempted thus far.
  • while the very visible and contentious nuclear issue takes center stage if and when this next round of U.S.-Iran negotiations takes place, the subtler question of Iraq and the wider region is where both Iran and the United States will remain fixated, if not gridlocked.
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    "Discussion is picking up again in Washington and Brussels over another round of nuclear negotiations with Iran. EU foreign policy chief Catherine Ashton has reportedly issued an invitation to the Iranians to meet in Vienna in mid-November to discuss a fresh proposal aimed at containing the Iranian nuclear program. This time, the offer is supposed to be harsher than the one offered to Iran late last year, now requiring Iran to cease enrichment to 20 percent and to send roughly 2,000 kilograms (4,400 pounds) of low-enriched uranium (compared to the 540 kilograms of low-enriched uranium previously required) out of the country to compensate for any uranium enriched over the past several months." At StratFor on October 29, 2010.
anonymous

Geopolitical Journey, Part 3: Romania - 0 views

  • In school, many of us learned the poem Invictus. It concludes with the line, “I am the master of my fate, I am the captain of my soul.” This is a line that a Victorian gentleman might bequeath to an American businessman. It is not a line that resonates in Romania.
  • empires collide where Romania is.
  • the great powers are sorting themselves out again and therefore Romania is becoming more important to others.
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  • The Carpathian Mountains define Romania, but in an odd way. Rather than serving as the border of the country, protecting it, the Carpathians are an arc that divides the country into three parts.
  • To the south of the mountains is the Wallachian Plain
  • To the northwest of the Carpathians is Transylvania, more rugged, hilly country.
  • In the east of the Carpathians is the Moldavian Plain.
  • Romania is one nation divided by its geography. None of the three parts is easy to defend.
  • About the only time before the late 19th century that Romania was united was when it was completely conquered.
  • Some of us experience geopolitics as an opportunity. Most of humanity experiences it as a catastrophe.
  • To understand Romania as an ally one must bear this in mind: When the Soviets began their great counterattack at Stalingrad, they launched it over Romanian (and Hungarian) troops. Romanians maneuvered themselves into the position of fighting and dying for the Germans, and then got their revenge on the Germans by being slaughtered by the Soviets.
  • The way the Romanians got the Soviets to tolerate this was by building a regime more rigid and oppressive than even that of the Soviet Union at the time.
  • Contemporary Romania cannot be understood without understanding Nicolae Ceausescu.
  • Stalin didn’t trust communists who stayed home and resisted. He preferred communists who had fled to Moscow in the 1930s and had proved themselves loyal to Stalin by their betrayal of others.
  • Ceausescu decided to pay off the national debt. His reason seemed to flow from his foreign policy — he didn’t want Romania to be trapped by any country because of its debt — and he repaid it by selling to other countries nearly everything that was produced in Romania.
  • One of her books, The Appointment, takes place in Romania under the communists.
  • When one reads this book, as I did in preparing for this trip, one understands the way in which the Securitate tore apart a citizen’s soul — and remembers that it was not a distant relic of the 1930s but was still in place and sustaining the Romanian regime in 1989.
  • Romania emerged from the previous 70 years of ongoing catastrophe by dreaming of simple things and having no illusions that these things were easy to come by or things Romanians could control.
  • Romanians yearned to become European simply because being Romanian was too dangerous.
  • For Romania, national sovereignty has always been experienced as the process of accommodating itself to more powerful nations and empires. So after 1991, Romania searched for the “someone else” to which it could subordinate itself. More to the point, Romania imbued these entities with extraordinary redemptive powers. Once in NATO and the European Union, all would be well.
  • Germany remains an exporting country exporting into Romania and leaving precious little room for Romania to develop its economy.
  • a good part of Romania’s exports to Germany are from German-owned firms operating in Romania.
  • During the period of relative prosperity in Europe from 1991 to 2008, the structural reality of the EU was hidden under a rising tide.
  • Romania is a developing country. Europe’s regulations are drawn with a focus on the highly developed countries. The laws on employment guarantees mean that Europeans don’t hire workers, they adopt them. That means that entrepreneurship is difficult. Being an entrepreneur, as I well know, means making mistakes and recovering from them fast. Given the guarantees that every worker has in Europe, an entrepreneur cannot quickly recover from his mistakes. In Romania, the agility needed for risk-taking is not readily available under EU rules drawn up for a mature economy.
  • There are regulations and there are relationships. The latter mitigate the former. In Germany this might be called corruption. In Romania it is survival.
  • First, there is no doubt that NATO and the European Union did not work in Romania’s favor at the moment. Second, there is no question of rethinking Romania’s commitment to either.
  • NATO and the European Union keep the anti-democratic demons of the Romanian soul at bay. Being part of Europe is not simply a matter of strategic or economic benefits. It represents a transitional point in Romanian history.
  • The Western Europeans are not about to be drawn into Eastern European paranoia fed by nostalgic American strategists wanting to relive the Cold War, as they think of it.
  • I raised two strategic alternatives with Romanian officials and the media.
  • One was the Intermarium — an alliance, perhaps in NATO, perhaps not — of Poland, Slovakia, Hungary, Romania and Bulgaria.
  • Turkey is Romania’s fourth-largest export target, and one of the few major trading partners that imports more from Romania than it exports.
  • In this region, the fear of the past dominates and oppresses while the confident, American-style military planning and economic restructuring I suggested is alien and frightening.
  • I had thought that Romania’s problem was that it was part of Europe, a weak power surrounded by stronger ones. They seem to believe that their solution is to be part of Europe, a weak power surrounded by stronger ones.
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    "This is the third installment in a series of special reports that Dr. Friedman will write over the next few weeks as he travels to Turkey, Moldova, Romania, Ukraine and Poland. In this series, he will share his observations of the geopolitical imperatives in each country and conclude with reflections on his journey as a whole and options for the United States. " By George Friedman at StratFor on November 16, 2010.
anonymous

Germany: Looking for Bismarck - 0 views

  • According to the draft circulated on Thursday at the two-day EU heads of government summit, Greece would indeed be offered a financial aid package of around 22 billion euro, but only after Athens was no longer able to raise funds by selling its bonds in the international markets, and even then at above-market rates, entirely obviating the point of the bailout. That is akin to offering a homeowner, who is about to default on a mortgage, a refinancing offer that equals or increases his mortgage rates above the rate he already cannot pay.
  • The proposal may very well push Athens to pursue an International Monetary Fund package independent of the eurozone, which could be the intention of Berlin perhaps looking to wash its hands of the entire problem.
  • Germany essentially has a limited window of opportunity in the next 10 years to make or break its leadership of the European Union and therefore its claim to global relevancy. Germany’s birth rate is lower than all of the major European powers that surround it (France, the United Kingdom, the Netherlands and Sweden), while its population is significantly older than that of Poland.
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  • The ultimate problem for Germany is that the moment the rest of Europe perceives that Berlin is looking out solely for its own national interests — such as when it refuses to put up money to save a eurozone member state — it ceases to be a viable European leader.
  • But the clock is ticking, and Europe’s demographic challenges are right around the corner. At that point, all of Europe will be so embroiled in domestic political, economic and social concerns that settling issues of leadership and power will be impossible, and that is if the EU even survives the coming crisis.
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    The Geopolitical Diary entry (at StratFor) for March 26, 2010.
anonymous

Visegrad: A New European Military Force | STRATFOR - 0 views

  • The Visegrad Group, or V4, consists of four countries — Poland, Slovakia, the Czech Republic and Hungary — and is named after two 14th century meetings held in Visegrad Castle in present-day Hungary of leaders of the medieval kingdoms of Poland, Hungary and Bohemia.
  • The group was reconstituted in 1991 in post-Cold War Europe as the Visegrad Three (at that time, Slovakia and the Czech Republic were one).
  • On May 12, the Visegrad Group announced the formation of a “battle group” under the command of Poland. The battle group would be in place by 2016 as an independent force and would not be part of NATO command.
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  • First, they felt that the Russian threat had declined if not dissipated following the fall of the Soviet Union.
  • Second, they felt that their economic future was with the European Union.
  • Third, they believed that membership in NATO, with strong U.S. involvement, would protect their strategic interests.
  • Of late, their analysis has clearly been shifting.
  • First, Russia has changed dramatically since the Yeltsin years. It has increased its power in the former Soviet sphere of influence substantially
  • Second, the infatuation with Europe, while not gone, has frayed. The ongoing economic crisis, now focused again on Greece, has raised two questions: whether Europe as an entity is viable and whether the reforms proposed to stabilize Europe represent a solution for them or primarily for the Germans.
  • Finally, there are severe questions as to whether NATO provides a genuine umbrella of security to the region and its members. The NATO strategic concept, which was drawn up in November 2010, generated substantial concern on two scores. First, there was the question of the degree of American commitment to the region, considering that the document sought to expand the alliance’s role in non-European theaters of operation.
  • Second, the general weakness of European militaries meant that, willingness aside, the ability of the Europeans to participate in defending the region was questionable.
  • Germany’s commitment to both NATO and the EU has been fraying. The Germans and the French split on the Libya question, with Germany finally conceding politically but unwilling to send forces. Libya might well be remembered less for the fate of Moammar Gadhafi than for the fact that this was the first significant strategic break between Germany and France in decades.
  • There are strong political forces in Germany questioning the value of the EU to Germany, and with every new wave of financial crises requiring German money, that sentiment becomes stronger.
  • For all of the Visegrad countries, any sense of a growing German alienation from Europe and of a growing German-Russian economic relationship generates warning bells.
  • The Nordic countries share the same concerns as the Visegrad countries — the future course of Russian power, the cohesiveness of Europe and the commitment of the United States.
  • In the past, the Visegrad countries would have been loath to undertake anything that felt like a unilateral defense policy. Therefore, the decision to do this is significant in and of itself.
  • Poland is the largest of these countries by far and in the least advantageous geographical position. The Poles are trapped between the Germans and the Russians. Historically, when Germany gets close to Russia, Poland tends to suffer. It is not at that extreme point yet, but the Poles do understand the possibilities.
  • Some will say this is over-reading on my part or an overreaction on the part of the V4, but it is neither. For the V4, the battle group is a modest response to emerging patterns in the region, which STRATFOR had outlined in its 2011 Annual Forecast. As for my reading, I regard the new patterns not as a minor diversion from the main pattern but as a definitive break in the patterns of the post-Cold War world
  • We are in a new era, as yet unnamed, and we are seeing the first breaks in the post-Cold War pattern.
  • For the countries on the periphery, there is a perpetual sense of insecurity, generated not only by Russian power compared to their own but also by uncertainty as to whether the rest of Europe would be prepared to defend them in the event of Russian actions. The V4 and the other countries south of them are not as sanguine about Russian intentions as others farther away are. Perhaps they should be, but geopolitical realities drive consciousness and insecurity and distrust defines this region.
  • Pilsudski proposed an alliance stretching from the Baltic Sea to the Black Sea and encompassing the countries to the west of the Carpathians — Czechoslovakia, Hungary, Romania and Bulgaria.
  • An alliance with Ukraine would provide significant strategic depth. It is unlikely to happen. That means that the alliance must stretch south, to include Romania and Bulgaria. The low-level tension between Hungary and Romania over the status of Hungarians in Romania makes that difficult, but if the Hungarians can live with the Slovaks, they can live with the Romanians. Ultimately, the interesting question is whether Turkey can be persuaded to participate in this, but that is a question far removed from Turkish thinking now. History will have to evolve quite a bit for this to take place. For now, the question is Romania and Bulgaria.
  • the decision of the V4 to even propose a battle group commanded by Poles is one of those small events that I think will be regarded as a significant turning point. However we might try to trivialize it and place it in a familiar context, it doesn’t fit. It represents a new level of concern over an evolving reality — the power of Russia, the weakness of Europe and the fragmentation of NATO. This is the last thing the Visegrad countries wanted to do, but they have now done the last thing they wanted to do. That is what is significant.
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    "With the Palestinians demonstrating and the International Monetary Fund in turmoil, it would seem odd to focus this week on something called the Visegrad Group. But this is not a frivolous choice. What the Visegrad Group decided to do last week will, I think, resonate for years, long after the alleged attempted rape by Dominique Strauss-Kahn is forgotten and long before the Israeli-Palestinian issue is resolved. The obscurity of the decision to most people outside the region should not be allowed to obscure its importance. "
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