Europe's World

At last: the international community, meeting in New York last month, finally acknowledged the need for coordinated action and an international agreement on how to handle the unprecedented wave of migration that has hit Europe and elsewhere.

A year ago, those countries most severely affected appealed for support. Now, the idea that this is an issue that affects everybody has caught on at the United Nations. But the end result of the Summit for Refugees and Migrants held on 19 September is, frankly, disappointing: in short, delegates decided to decide. They agreed to sign up to two global conventions – one on migrants and one on refugees – by 2018. Rather than a culmination, the meeting was a starting point; now it is up to all stakeholders, including those in civil society, to ensure that the journey towards these agreements continues until the goal is reached.

AVSI, a development NGO created in 1972, will keep up the pressure. We began our work in the fringes of the UN summit, drawing attention to our priorities and our practical experiences.

In the first instance, this means paying attention to people. Their personal experiences bring “good” and practical indications to the entire international community. For example, Cyprian Kaliunga comes from a Kenyan village affected by famine, cholera and malnutrition. He founded a school, formed a group of 700 families and started the largest dairy in the district thanks to AVSI’s Distance Support Programme. He has changed the face of his village and reduced or removed a ‘push’ factor for migration.

“The UN meeting was not a culmination, but a starting point; now it is up to all to continue the journey until the goal is reached”

Take Sultan Fawaz Jalloul, from Idlib, Syria. For five years, he has lived in a tent – with his wife and five sons – in an informal settlement in Lebanon. Thanks to a cash-for-work project, promoted by Italian development cooperation in collaboration with local authorities, Sultan has been able to work and to contribute to forest management in southern Lebanon. He has not (yet) been forced to cross the Mediterranean, risking his own life and those of his children.

What have we learnt from these experiences?

Migrants and refugees have special stories. They are not just numbers. And migration brings continents closer together, requiring them to work together at different stages of the migration journey.

In the countries of origin, we must promote business initiatives and local leadership, which ignites development in areas where poverty would otherwise force people to leave. Above all, we need to support education, which generates employment opportunities and helps to ensure peaceful coexistence.

In transit countries, we also need to focus on education for children and job opportunities for adults who still hope to go back home.

“Migrants and refugees have special stories. They are not just numbers. And migration brings continents closer together, requiring them to work together”

And in host countries, such as those in Europe, we must support projects for those who are arriving and those who are staying, helping people to become autonomous and to integrate. This means providing schooling, scholarships and training.

But the most important aspect is that these different interventions should be considered together. They support each other: if one falls, they all fall.

At the same time these experiences tell that no-one can even think of being able to face this challenge alone. It takes the involvement of all those affected by the migration phenomenon. A singular approach gets us nowhere. We also need a personal approach – “cultural work” based on personal relationships.

Through the reconstruction and care of those interpersonal ties, we can – we should – weave a new narrative on migration. We can rediscover the idea that the different, the other, is valuable and is good – something that risks being lost on many European institutions and citizens. The UN Summit is hopefully a first step on a better path.

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The ‘European project’ has weathered many storms. Confronted with a range of serious challenges, the EU has demonstrated what systems theorists describe as the “essential adaptive capacities” of complex self-regulating systems. Successive stages of political integration have helped to address legitimate sources of popular criticism that could otherwise have jeopardised the project’s future.

But this crisis is like no other. And to survive, the EU’s adaptations have to go beyond the gradual or incremental. The UK’s Brexit vote was a partly symptom of public concern about “liberal” EU migration policies. Illiberal and openly Eurosceptic governments have sprung up in many parts of Europe. Popular resentment over EU-led austerity policies continues. As a result, there is an increased possibility of the Union breaking up in the medium to long term.

So where does the EU look for inspiration?

One source could be the United Nations Agenda 2030 for Sustainable Development, signed a year ago by 193 UN member states. Agenda 2030 represents an important global paradigm around which the EU and its member states could mobilise, renew their political mission, and align their strategic positioning in a wider global context.

“By aligning its policies with Agenda 2030, the EU could renew its own mission and vision, and strengthen the case for political and economic cooperation”

Agenda 2030 addresses a wide range of issues – poverty, education, healthcare and gender equality; sustainable production and consumption, climate change and industrial development; peaceful societies, good governance and global partnership.

By aligning its policies with this new global framework, the EU could seize the opportunity to renew its own overarching mission and political vision and even strengthen the case for continued European political and economic cooperation. It could develop a new and compelling European narrative that may help citizens to engage more fully with the European project.

The implementation of this new global framework in Europe has the potential to kick-start a green industrial revolution across EU member states. The EU can position itself as a leader in many areas where its policy-making is more advanced than that of other regions: social policy, the environment and climate change, to give three examples.

Agenda 2030 also allows the EU to shift its focus from economic policy to a broader emphasis on promoting prosperity and well-being. There will be considerable opportunities for the EU to take a global lead in developing and legitimising alternative measures of economic progress when evaluating its implementation of Agenda 2030. These alternative measures of economic progress (such as the Human Development Index and the OECD Better Life Index) could serve as important benchmarks in an era when economic growth indicators are static or falling (and they could be very valuable in developing countries, where growth in GDP often masks a rise in inequality).

Implementation of Agenda 2030 is likely to promote and strengthen the EU’s external trade. Other countries and regions need the technical and industrial experience of the Union and its member states to guide them towards more sustainable development. There is a significant opportunity for private companies, professional bodies and non-governmental organisations in Europe to provide technical advice, policy support and training to their counterparts in other regions of the world. The prospects for maintaining free and open global trading systems between the EU and the rest of the world are greatly enhanced if all countries are collaborating technically and financially in the implementation of a comprehensive, measurable, sustainable development agenda such as Agenda 2030.

“International financial changes would not be risk-free, but the alternative – ignoring economic and political stability and the possible decline and eventual collapse of the EU – is riskier”

But this comprehensive and ambitious global agenda needs resources – both non-financial and financial. Deflationary trends are long-standing and could continue indefinitely. So now is a good opportunity for international political and economic leaders to convene a Bretton Woods II summit to agree levels of innovative, debt-free, public finance that are sufficient to implement Agenda 2030 globally. It would be an unprecedented but timely act; a judicious policy response in the face of continuing deflation in the global economy.

While such international action would not be risk-free, the alternative – continuing to ignore the threats to global economic and political stability, including the possible decline and eventual collapse of the EU – is riskier. And if future migratory flows to the EU and other parts of the Global North are to be mitigated, there must be a comprehensive development plan for poorer and more conflict-prone countries. Agenda 2030 is a key part of that plan.

Given the many daunting challenges that face the EU, the institutions and the member states need to take bold action. Full implementation of Agenda 2030 in the Union’s internal and external policies, with innovative financing agreed internationally, is the kind of action that is required. Otherwise, Europe is likely to continue the gradual political decline that may even lead to the demise of the European project.

IMAGE CREDIT: CC / FLICKR – United Nations Photo

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The world faces a stark and urgent choice between democracy and the lure of populist demagogues, xenophobia and division, Barack Obama told the United Nations General Assembly last month.

The American President is right. The world is divided. Times are rough for liberal democracies and for liberal democrats. Everywhere you look, tough-talking guys and girls are in the ascendant.

Once, the threat came from nasty authoritarian regimes in far-off lands. But those challenging liberal democracy today are no longer “out there”. They are entrenched deep inside “mature” Western democracies.

The Republican candidate in the United States presidential election, Donald Trump, is upending all norms of liberal political discourse. His Democratic opponent for the White House, Hillary Clinton, may have got a boost following last week’s television debate, but with two unpredictable TV debates and five volatile weeks ahead, Trump could soon be taking his explosive brand of xenophobia and isolationism into the Oval Office.

“Many young people seem to think it would be nice to have a “strong chief” or a “big man” with a simple message and easy solutions”

Here in Europe, Hungary’s Prime Minister, Viktor Orbán, leads his Visegrád bloc allies in proclaiming a belief in “illiberal democracy”. While many in the West may see the results of Sunday’s referendum on EU refugee quotas as a defeat for Orbán, the “strongman” himself has shrugged off the embarrassing outcome and vowed to insert the result into Hungary’s constitution.

Western Europe isn’t doing at all well either. The result of the Brexit referendum showed the power of a simple and powerful (but misleading) slogan. With elections coming up in many European countries next year, populists like France’s Marine Le Pen, Dutchman Geert Wilders and Germany’s AFD leader Frauke Petry are snapping at the heels of the political establishment.

Their xenophobic, anti-Muslim and anti-Europe message strikes a chord with angry men and women who feel uncertain and uneasy in the face of change. Le Pen is expected to do exceptionally well next year, and the AFD has already made massive gains in recent regional elections in Germany.

Unsurprisingly, liberal democrats are feeling depressed. At a recent symposium in the European Parliament to mark the “International Day of Democracy”, the mood was sober, self-critical and reflective. Gone were the self-congratulatory speeches and back-slapping that would have marked such occasions in the past.

There was consensus that almost three decades after Francis Fukuyama proclaimed the “End of History” and the victory of Western liberal democracy as the best form of government, liberal democracy, human rights and democratic values are increasingly being questioned and challenged.

In the West, surveys show a fall in the level of support for democracy among young people. Many seem to think it would be nice to have a “strong chief” or a “big man” with a simple message and easy solutions.

There is agreement that a toxic mix of slowing economies, austerity, inequality and unemployment is making people ever more suspicious of politicians. There is a widening gap between the political classes and the electorate. And as political parties lose credibility and relevance, populists step into their space to start spinning their tales of woe and hate.

Let’s worry – but not despair.

First, those who believe in liberal democracy need to be as stubborn as Angela Merkel and as persistent as Hillary Clinton. They must stand up and be counted and fight for what they believe in.

“The EU has to get serious about tackling the danger posed by Orbán and his band”

They must understand, connect and engage with those who disagree with them – but they also be proud of their message. Canada’s Prime Minister, Justin Trudeau, has shown that there is nothing wrong with being open and tolerant or spreading “soft” messages of peace, love and human rights.

Buying into the populists’ poisonous rhetoric – as many mainstream politicians, such as French presidential hopeful Nicolas Sarkozy, are doing across Europe – just amplifies their power, voice and attraction.

There is also a message in this for the European Union. The EU has to get serious about tackling the danger posed by Orbán and his band. It’s important not only for the state of democracy in Europe, but also for the EU’s standing in the world.

The EU can hardly criticise and sanction foreign autocrats if it remains unwilling or unable to take any real action against those posing a danger to democracy in Europe itself.

Finally, democracy is not for the faint-hearted. It does not stop unscrupulous politicians, liars and fear-mongers from winning elections. A government of the people, by the people, for the people requires strong democratic institutions, checks and balances, and the rule of law.

But above all, it needs politicians whose belief in liberal democracy is backed up with commitment, courage and conviction.

Related content

• Friends of Europe: ‘State of Europe’ high-level event: Disruption, Disorder and Division – Crunch Time for Europe – 13 October 2016
• Europe’s World: The dangers of ‘illiberal’ democracy
• Debating Europe:  If Trump wins, how should Europe react?

IMAGE CREDIT: Gino Santa Maria/Bigstock.com

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Jean-Claude Juncker’s 2016 State of the European Union address was clear in its analysis: the EU is at a critical juncture and has to become more effective to regain its credibility. But the solution needs more work. Crucially, it needs political will. And it needs an understanding of past failures – not least those that have inflicted harm on Cyprus since 2013.

The Commission President gave his address three months after the UK backed Brexit. Traditional British Euroscepticism and issues such as migration were big factors in the result, but so too were the structural weaknesses of the EU.

Problems abound. Terrorism haunts the EU. European citizens are paying the price of upheaval in the Middle East and North Africa and the lack of policies to enhance stability and development in those regions. The EU has failed to adopt policies to face the socioeconomic problems afflicting the Union. There is high unemployment, social exclusion, increasing inequality and a mood of uncertainty.

Addressing the chronic eurozone crisis is a key starting point in addressing the problems. Juncker said that the Commission ‘will address how to strengthen and reform our economic and monetary union’ and underlined ‘the need to implement the Stability and Growth Pact with common sense’.

“Uniform policies have limits; now, nation states need to be able to address their own challenges”

Implicitly, there is an admission of the huge mess created by austerity policies. These policies cannot be sustained without further strains in the eurozone and the EU as a whole. Participation in the eurozone makes it difficult for a country to pursue discretionary policies to address a serious recession, as it has to stick to a balanced budget. This deepens the crisis, with further spending cuts and increased taxes. In effect, we have a set of automatic destabilisers that, when taken in conjunction with a tight monetary policy, lead to a vicious deflationary cycle.  For the eurozone to function there must be a system of fiscal support from the centre, a philosophy that is currently missing.

This explains the Commission President’s wish to stress the importance of solidarity – ‘the glue that keeps our Union together’. But here too, the Union has failed. Italy has recently received support to address its banking crisis (about €400bn in non-performing loans), but no “bail-in” was required – as was the case, with devastating results, in Cyprus in March 2013. Obviously, this is a case of double standards. According to Spain’s former foreign minister of Spain, Miguel Ángel Moratinos, the EU acted myopically in not helping Cyprus address its crisis; on the contrary, the policies dictated by the EU deepened the crisis.

The decisions of the Eurogroup in March 2013 were influenced by other considerations as well: the timing of the German elections, containment of the Russian presence in Cyprus, and using the island as both a testing ground for future crises and an example to other, larger, more troublesome countries. Cyprus did not deserve this treatment, and the handling of the crisis caused other problems – for example, Germany is seen as hegemonic, and the Troika faces legitimacy problems as its economic philosophy (both in theory and practice) appears to lack reason and sensitivity.

Cyprus shares these problems with others, not least Greece, where socioeconomic conditions remain harsh. Unemployment approaches 30% despite the fact that thousands of Greeks have emigrated, there is a huge fiscal cliff, and deflation and decreasing salaries and pensions are creating suffocating conditions leading to unprecedented poverty levels. Greece is facing the depression of the century.

“The EU acted myopically in not helping Cyprus address its crisis; on the contrary, the policies dictated by the EU deepened the crisis.”

The experiences of Cyprus and Greece, especially given the endogenous structural problems of these two countries, highlight how the Troika’s recipes have worsened the situation, undermined social cohesion and jeopardised the geopolitical interests of the EU. Such attitudes and practices are related to the Union’s current malaise. There is a huge “solidarity deficit”, with deep institutional, structural and cultural differences between the member states. Equally, uniform policies have limits; now, nation states need to be able to address their own challenges.

Of course, Cyprus’s difficulties are not merely financial. In his speech, Juncker called for a solution to division of the island, offering the EU’s support. There is the “two communities” dimension to this problem, but the international and geostrategic aspects are even more important. Turkey’s role is overwhelming – and the EU has to acknowledge that Turkey occupies European territory. A solution of the Cyprus problem based on ethnocommunal pillars would probably lead to frustration and even destabilisation. Instead, Cyprus will have a better future with an integrationalist, federal model. The EU could encourage such an approach (even though this may entail evolutionary processes), and highlight that it maintains a substantive role in global affairs.

We should remember that when Cyprus embarked on accession negotiations it was the country with the highest levels of enthusiasm for the EU.  Obviously there were high expectations, generally linked to the stated “value system” of the EU. But more than 12 years after Cyprus’s accession to the Union and almost nine years after adoption of the euro, Cypriots are increasingly Eurosceptic. This is despite the efforts of the government and the Troika to describe Cyprus as a success story. The reality is that Cyprus is a success story only when compared to Greece.

Cyprus aside, we must also acknowledge that there is widespread uncertainly about the future of the EU.  Various leaders, technocrats, academics and analysts – as well as citizens – fear that the Union faces an existentialist dilemma. We need more than rhetoric to understand and address the EU’s problems. And we need both solidarity and flexibility.

IMAGE CREDIT: FomaA/Bigstock.com

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If the European Union’s intention is to show that UK voters were wise to vote for Brexit, then it’s certainly going the right way about it. Ill-considered and disastrous though voting to leave the EU will eventually prove to be, the bumbling disarray of the ‘27’ is making the Brexiteers appear far-sighted and united by a common purpose.

EU summits have a long history of confounding hopes and expectations. When announced with much fanfare, they inevitably disappoint; when little is expected, EU leaders often deliver results.

The EU’s recent Bratislava summit falls, needless to say, firmly into the former category. It failed to address Europe’s major challenges, and failed in such a comprehensive manner that it made the assembled summiteers appear a laughing-stock in the media.

Signals on the likely speed and shape of the UK’s exit negotiations were absent from the summit communiqué. So was the long list of unresolved crises ready to nudge Brexit aside as the EU’s headline problem – notably the far-from-finished migrant and refugee crisis that is certain to unleash uncontrollable tensions when it dominates both the French and German elections next year. No mention either of the sword of Damocles hanging over the unresolved eurozone crisis.

Bratislava ducked these issues (preferring to showcase defence cooperation and more infrastructure investment). Scarcely surprising, as the EU’s member governments are now deeply divided not just on the looming dangers but on the sort of Union they want.

This division is currently felt most keenly around the four EU central and eastern European countries known as the Visegrád group. Unless there’s a significant political shift, the group – composed of the Czech Republic, Hungary, Poland and Slovakia – look to be riding for a fall.

In some of these countries, threats to press freedom and the independence of the judiciary pose serious challenges to the EU’s values. These threats are compounded by calls for the powers of the EU institutions to be diluted. Robert Fico, Slovakia’s Prime Minister and host of the summit, did little to improve matters by stating that the Four would veto any Brexit deal that limited their job-seekers’ freedom of movement.

The key point is that no-one is knocking heads together to restore a sense of unity. Jean-Claude Juncker’s State of the European Union speech was workmanlike but uninspiring. And on the table in Bratislava the European Commission President found a rival roadmap from Donald Tusk, the European Council President. Such displays of rivalry within the Brussels bureaucracy gravely weaken the EU’s authority and credibility.

The squabbling and indecision must be stamped on – by Berlin and all other EU governments willing to stand up and be counted. Otherwise, the Union is at serious risk.

The EU won’t die with a bang, but with the poet T. S. Elliot’s proverbial whimper. And those Britons who voted for all the wrong reasons to leave Europe will be proved right: they will be better off going it alone than tied to a dysfunctional Union whose leaders lack the courage and imagination to arrest its slide.

Giles Merritt is Founder and Chairman of Friends of Europe, and the author of Slippery Slope – Europe’s Troubled Future (Oxford University Press) which is shortlisted for the 2016 European Book Prize.       

Related content

• Friends of Europe: ‘State of Europe’ high-level event: Disruption, Disorder and Division – Crunch Time for Europe – 13 October 2016
• Europe’s World: Beyond the Brexit blame game
• Debating Europe: Has the fall of Angela Merkel begun?

IMAGE CREDIT: grop/Bigstock.com

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It’s easy to be sucked into the prevailing pessimistic EU narrative. You know the one: the Union is falling apart; Brexit will prompt an exodus of others seeking to leave the bloc; and pure, white Christian Europe is being invaded by nasty foreigners, most of them Muslim.

So let’s close down the EU shop. Will the last one out please turn off the lights?

Of course, it is not really that bad. As a visiting Chinese scholar speculated last week, Europeans are suffering from a particularly bad case of the blues – and instead of doing everything to make them feel better, dysfunctional European leaders may be making things worse.

As she put it: “Why can’t European leaders get their act together and stop whining and whinging about their ‘first world problems’”?

That’s harsh. Europe faces a multitude of crises: the Brexit vote and the uncertainty it has triggered; the rise of dangerous populism; the continuing, unresolved financial crisis.

It’s bleak. And nobody seems to like anyone anymore.

But the recent epic bouts of whining by Europe’s great and good are becoming increasingly tedious.

First on the scene to highlight Europe’s grim reality was Jean-Claude Juncker. In his annual State of the European Union speech, the European Commission President told MEPs that the EU is in an existential crisis. It was stark stuff.

Not to be outdone, European Council President Donald Tusk gave his own equally downbeat assessment. Then 27 EU leaders (minus British Prime Minister Theresa May) turned their Bratislava gathering – intended to be a show of solidarity – into yet another much-publicised bout of chest-beating over the fate of sad, old Europe.

There were some ‘roadmaps’ put forward, but they bore an unfortunate ‘Fortress Europe’ watermark. The undercurrent was to put Europe back together by pulling up the drawbridge and talking tough on security, but to soften the impact with new initiatives designed to distract, deflect and dazzle. Free Wi-Fi in every European town by 2020, anyone?

This approach is wrong-headed. The more EU leaders talk down Europe – and bewilder already-puzzled Europeans with more incomprehensible and makeshift initiatives – the more they perpetuate the myth of a lost continent.

The truth is more complex. Yes, Europe faces many problems. Unemployment remains high. The European economy has been weakened by years of economic stagnation and budgetary austerity. The ‘Gang of Four’ leaders of Poland, Slovakia, Hungary and the Czech Republic want a closed-off, white and Christian Europe that has little truck with diversity and inclusiveness.

But despite policymakers’ moans and groans, the European story remains strong.

Europe has room for – and a need for – the refugees and migrants who have arrived on its shores. Europe also needs foreign tourists who will pump money into Europe’s service industry.

Europe’s intelligence agencies are getting better at working together, foiling plots and catching would-be terrorists who threaten Europe’s “way of life”.

The EU still has peace. It has reconciled enemies. It has created a hugely-successful frontier-free single market and the free movement of people.

The young people in Britain who voted Remain know the value of being part of the EU. Thousands of Europeans – individuals and companies – are working to welcome and integrate refugees and migrants.

But these truths are going unsaid.

By endlessly repeating, as Tusk did in Bratislava, that Europeans feel insecure in the face of migration and terrorism, EU leaders are amplifying the voice of populists and bolstering their power.

If they are really serious about winning Europeans’ trust and support, EU leaders must fight fire with fire. This means putting as much passion, energy and hard work into crafting a European narrative of peace and openness as the populists are investing in their nightmare version.

The populists already have their captive audience. With the battle over Brexit lost, EU leaders need to arm themselves with a vision of Europe that resonates with the aspirations of millions of Europeans who will not be voting for Marine Le Pen, Geert Wilders or the Alternative für Deutschland.

The 60th anniversary of the Treaty of Rome next March provides the ideal opportunity for such a reboot. Europe is far from being a lost continent. But EU leaders have certainly lost their way.

Related content

• Friends of Europe: ‘State of Europe’ high-level event: Disruption, Disorder and Division – Crunch Time for Europe – 13 October 2016
• Europe’s World: Brexit special section 
• Debating Europe: What would you like Europe to look like in 20 years?

IMAGE CREDIT: © European Union

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Well before the Brexit shock, the EU institutions in Brussels were being criticised for carrying on with ‘business as usual’ – for fiddling while Rome burned. But business as usual is nothing to be ashamed of. The strength of the EU is the wide range of business that it quietly and efficiently conducts whatever the headlines may be screaming about. Its weakness is that so much of that crucially important business goes unsung.

As the EU’s machinery gets back into high gear after the summer break, the focus of attention will be on looming catastrophes. The UK government’s Brexiteers will be causing political and economic uncertainty, and may be about to open the floodgates to ‘me too’ EU membership referendums elsewhere. Everyone knows the eurozone’s malaise is not cured, only in remission. Yet these difficulties need to be placed in perspective. Important though they are, they pale in comparison with the EU’s continuing achievements.

So Brussels must start to fight back. Faced with mounting Euroscepticism right around the EU, it needs to present the cold, hard facts about the benefits of Europeans working together. The European Commission contributed in no small way to the Brexit debacle by retreating behind the alibi of ‘not interfering in a member state’s domestic affairs’. It failed to arm the UK’s ‘Remain’ campaigners with independent statistics and examples to refute the nonsensical claims of the Brexiteers. It must not make that mistake again.

There’s a bland assumption within the Brussels ‘bubble’ that voters know about the contribution EU-level actions and agreements make to their own prosperity and security. That’s not remotely the case, of course. We all know that for national politicians, success is home-grown and failure is born in Brussels.

This sad fact of life is generally accepted by anyone whose work has a European dimension. But it hasn’t led the Commission to sing the EU’s own praises more forcefully. EU citizens may know about Brussels’ fight to ban mobile roaming charges (although even with this success story, the Commission has had a communications mis-step in recent days). But how many are aware of the EU’s contributions on issues ranging from, say, climate change to social protection to competition policy? You name it and the EU has done much to achieve it – yet now the EU is an endangered political experiment.

The Commission should draw the necessary conclusions from its silence during the UK’s Brexit debate. It must use its resources of manpower and money to prepare factsheets that Europhile politicians, journalists and corporate and NGO opinion-formers can use to counter-attack those seeking to exploit the EU’s growing credibility gap.

The ‘information’ churned out by Commission spokesmen and communications staff is largely incomprehensible to all but specialists. No one denies that these details are essential to the smooth running of the EU machinery, but they do little to regain popular support for Europe.

The European public needs the bigger picture. Information is a second-class activity within the Commission, often handled by junior officials. The painting of convincing ‘warts and all’ pictures of Europe’s response to its challenges is above their pay grade. That is because it demands frank and realistic assessments of member governments’ shortcomings and of the EU itself. The result is that the Commission’s communications material is at best bland, and at worst unreadable.

The answer is for the senior echelons of the Commission to wake up an uncomfortable truth: popular perceptions are political reality. The EU – for the first time – faces an existential threat.  So however pressing the policymaking priorities of commissioners and directors-general may be, explaining the EU’s more routine business is just as important, if not more so.

Giles Merritt is the Founder and Chairman of Friends of Europe. His book “Slippery Slope – Europe’s Troubled Future”(Oxford University Press, May 2016) is one of the three non-fiction essays shortlisted for this year’s European Book Prize.

IMAGE CREDIT: Bombaert Patrick/Bigstock.com

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In the Europe of 2016, an unlikely candidate for the most relevant political theorist is Lyndon B. Johnson. The late American President famously noted of a senior government official, J. Edgar Hoover, that “it is probably better to have him inside the tent pissing out than outside the tent pissing in”. The Johnson theorem largely explains why 27 government leaders went out of their way to compromise with David Cameron, and tried to keep the UK inside the EU.

The majority of them now have a different problem – and one that, alongside Brexit, they will have to confront at this Friday’s informal summit meeting in Bratislava. The Hungarian Prime Minister, Viktor Orbán, and the leader of Poland’s ruling Law and Justice party, Jarosław Kaczyński, are inside the tent, but keep pissing inwards, as they systematically break with European values and undermine EU cooperation and solidarity.

As Europe tries to come together after the British referendum, the four-country Visegrád group, and notably Orbán and Kaczyński, are in the vanguard of opposition to a deeper Europe. They are building their current populist campaign on an inverted interpretation of Brexit: it happened, they state, because Brussels ignored everyone – not just the British. They don’t want to exit the EU, but their desired form of integration would focus only on supporting the less-developed countries, not on common political norms and social standards.

“Orbán and Kaczyński are in the vanguard of opposition to a deeper Europe, building a populist campaign on an inverted interpretation of Brexit”

EU and NATO allies are worried. They have repeatedly warned the pair against turning their countries into illiberal rogue states. Orbán and Kaczyński, meanwhile, insist they are creating a model for others: ‘The European dream has moved East’, they say. But this is a nightmare rather than a dream.

You don’t need to be Jean Asselborn to realise that Hungary is ruled today without respect to European values. Orbán’s reforms have hollowed out democracy and the rule of law, and a Putin-esque war was launched against civil society. The abuse of EU funds has become a systemic problem.

Orbán’s inhuman treatment of refugees is particularly striking. It triggered an infringement procedure from the European Commission and a call from Viviane Reding, a leading light of the centre-right, to suspend or expel his Fidesz party from the European People’s Party.

But Orbán’s hatred of foreigners is not new. In Spring 2011, during the Hungarian presidency of the EU Council, he told a conference that he excludes only two solutions to the demographic crisis: immigration and cloning. He sells citizenship to rich immigrants who can buy government bonds wholesale but fights against poorer migrants and desperate refugees in a ruthless and unscrupulous manner.

For the time being, Kaczyński is a pale imitation of Orbán, who had a five-year head-start on launching his own country’s ‘counter-revolution’, having taken power in 2010. But he is catching up fast. If progressive and centre-right forces do not find ways to address popular concerns in the Eastern member states, and fail to organise against such tendencies of political degeneration, the integrity of the entire EU may be put in jeopardy.

“We are all responsible for Brexit… those who wanted to keep the UK in the EU, but chose the wrong tactics, are also culpable”

Addressing popular concerns requires learning the real lessons of Brexit.

We are all responsible for Brexit. The greater blame lies with those who campaigned for it, not only in the first half of 2016, but for about a quarter of a century. But those who wanted to keep the UK in the EU, but chose the wrong tactics, are also culpable.

Responsibility starts at the top. Conservative- and Labour-led governments were fairly successful in representing British interests in Brussels but collectively failed to ensure that all regions and social groups in the UK felt the benefit and the helping hand of the EU.

As a result, popular anger against Westminster was diverted and turned against Brussels, unencumbered by any real knowledge of how the EU functions. The tabloid press and the Boris Johnson school of EU reporting were their main sources of information, while the BBC favoured impartiality over objectivity.

On the continent, a post-referendum rise in support for the EU can be seen. However, this was certainly not proof of satisfaction with the status quo. It should be read an invitation for leaders, not least in the European Council, to improve the economic, social and security situation in all countries in the short term, as well as to improve the long-term resilience of the EU economy. Fail, and anti-EU parties will grow to a level at which they can paralyse the European Parliament post-2019.

“Indecision, inaction and hesitation, mixed with a confluence of crises, can destabilise the EU and push it towards disintegration”

Addressing popular concerns should have been the focus after the last European elections, which saw a surge of various populists and Eurosceptics. However, instead of focusing on better performance the institutions lightened the EU policy agenda, and especially legislation, believing that too much action at EU level irritates citizens and fuels disaffection. As Brexit and other developments show, this strategy does not impress people. Indecision, inaction and hesitation, mixed with a confluence of crises, can destabilise the EU and push it towards disintegration.

Addressing popular concerns means finding solutions to the key problems of today – which in today’s Europe is only possible through more cooperation. Germany cannot find a solution to the refugee crisis alone. France cannot enhance security in a national context. Italy cannot revive its economy purely through domestic reforms. With this symmetry of major problems, a grand bargain can emerge, and deepening of the EU can become a win-win game.

The EU’s post-referendum focus should be on the key reforms that are needed to reinforce the Union’s structures and improve their performance. This can succeed even if Orbán and Kaczyński remain inside the tent. In the longer run, however, the EU cannot remain credible if such pretenders are treated as respectable partners, whether they come from East or West.

IMAGE CREDIT: CC / FLICKR – European External Action Service

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Two friends have recently re-assured me that Britain will, in due course, end up remaining a full member of the European Union. Wishful thinking or prophecy?

After all, the referendum was not legally binding. Britain’s Parliament could ‘take back control’ and vote to Remain (a major plank of the Brexiteers’ argument was the restoration of parliamentary sovereignty). There could be a second referendum.

None of these proposals is politically feasible. And yet in politics – as in conflict resolution – ‘winner takes all’ is a bad approach. More than 48% of the electorate will effectively be disenfranchised.

This may explain why newly-appointed British Prime Minister Theresa May, keen to steer a middle course, summed up a 1 September meeting of the government with a sibylline statement that the UK would seek “controls on the numbers of people who come to Britain from Europe” but also “a positive outcome for those who wish to trade goods and services”.

These careful words may provoke confusion among the substantial number of British people who believe that their country has actually already left the European Union. They may also prompt anger among hardliners who want out now – even questioning the need for further negotiations with the ‘Europeans’.

“The French and German electoral timetables will not promote generosity towards Britain”

But disentanglement needs talks. The leaders of the ‘27’ will meet in Bratislava on Friday, and will start to sketch out their position in the absence of the UK. Institutional negotiating teams are in place. Europe is almost ready to hit the stage.

Britain, meanwhile, is still in the dressing room. May’s words – along with her enigmatic phrase ‘Brexit means Brexit’ – underscore the absence of any real idea about whether Britain adopts a Norwegian, Swiss or other model for relations with the EU.

Little clarity came in the first major speech by the ‘Brexit Secretary’, David Davis, on 5 September. He abused Parliament’s patience with a statement that was devoid of substance. Brexit, said Davis, “is about seizing the huge and exiting opportunities that will flow from a new place for Britain in the world. There will be new freedoms, new opportunities, new horizons for this great country”. But rhetoric is a poor substitute for policy.

Others are less vague. A group of analysts at economics think-tank Bruegel have come up with a paper entitled Europe after Brexit: a proposal for a new Continental Partnership. They seek to define what a two-speed or ‘concentric circles’ Europe could look like. The paper outlines the hypothesis of a “deeply integrated market” – in other words, you can’t have the benefits of the single market without its obligations and rules. The hard core of the EU will determine those rules, and the others will have to fall in line.

The paper suggests a likely policy for the 27. British policy – if there is one – appears to be to clarify, through informal talks, the negotiation issues before formally launching the Article 50 process. But this will not work, for several reasons.

“For those countries that may become part of an EU ‘hard-core’, the road towards a two-speed Europe will become increasingly attractive”

First, the French and German electoral timetables (and the political risks in Italy, Spain and the Netherlands) will not promote generosity towards Britain. The two major “continental” players face gruelling electoral contests over the coming year, leaving little spare time or energy to devote to Brexit. Only now does the inward-looking British establishment seem to be waking up to this rather obvious reality.

Second, continental leaders will be forgiven for doubting, on present performance, whether the present regime in London has much staying power.

Third, for those countries that may become part of an EU ‘hard-core’, the road towards a two-speed Europe will become increasingly attractive, despite the difficulties of implementation (especially when it comes to the eurozone). What time and energy France and Germany have for European affairs is likely to be devoted to the broader issue of where the EU goes next – a debate that will begin in Bratislava. Britain’s narrow Brexit bid will find itself cast to the margins of a wider European debate and receive appropriate attention.

Fourth, if the British wish to remain in the single market they will still face its obligations – the free movement of people; competition and state aid policy, regarded elsewhere as essential for the proper functioning of the single market; contributions to the EU budget. And they will not be allowed simply to walk away from obligations in foreign policy, security and even defence.

Divorce is always a messy business with unforeseen consequences. This one could be very messy – making some still wonder whether it will happen at all.

IMAGE CREDIT: melis/Bigstock.com

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As Europe gets back to serious work, there is much to discuss, and much to do. Problems abound. Europe faces a host of challenges – many internal, some external – and next year won’t be any easier. Brace yourselves for an autumn and winter of discontent.

The world kept turning as the EU took a summer break. The war in Syria continued to wreak havoc – children were killed or wounded, and refugees fled devastation. The earthquake in Italy killed and injured hundreds. There were more suicide bombs, in Yemen, Turkey and Afghanistan. Strongmen in Ankara and Moscow tightened their grips. And the American election thundered poison and venom.

There were points of light: the Olympics brought some relief and excitement in an increasingly angry, intolerant and difficult world. There was also a landmark peace deal in Colombia between the government and the main left-wing rebel group, the Revolutionary Armed Forces of Colombia (Farc), putting an end to one of the world’s longest-running insurgencies.

Europe reacted to the events of course – but internal difficulties took centre stage. Europe’s focus is on itself, its challenges and dilemmas. And rightly so. Global events matter, and the EU’s voice needs to be heard. But in these difficult times, Europe’s focus must be internal.

Even when it comes to taking a holiday. It is certainly good politics for European leaders to take their vacations in Europe. Brisk trekking in the Alps (rather than, say, in the Himalayas) shows that a European leader – like Britain’s new Prime Minister Theresa May – is careful with money and committed to Europe. German Chancellor Angela Merkel also played it safe in South Tyrol.

But staying close to home has its disadvantages. Staying inside the European cocoon may be cheap, comfortable and familiar. But it leads to complacency. If EU leaders had travelled a bit further – to Asia, for instance – they would know they need to take urgent action to restore the EU’s lustre.

Europe has certainly been in the global headlines over the summer. But the reports have been less than flattering. Media across the world has focused on three key questions which unfortunately appear to define Europe in 2016: burkinis, borders and Brexit.

Gone for now are the compliments and the glowing words, the soft focus on European cities, museums and food, abiding admiration for European integration efforts, the noble pledge to steer clear of war and turmoil.

It’s difficult to talk about “European values” when, for much of the summer, France grabbed the headlines with the bizarre decision of some local authorities to ban so-called “burkinis”. Images of Muslim women being ordered to undress on French beaches caught the global imagination, triggering animated debates on what had happened to a country known and admired for its commitment to “liberté, égalité et fraternité”.

The burkini debate is, of course, only the tip of the iceberg. As the country heads for presidential elections in 2017, the French debate on Islam is expected to become even fiercer – and coarser. Marine Le Pen, the leader of the xenophobic and anti-Muslim National Front, will call the shots – and other politicians will struggle frantically to keep up.

The game in France over the coming months will be simple: who can sound tougher on Islam and Muslims. Le Pen is unlikely to become French President. But she will set the political agenda for the country and dominate the political discourse for months to come.

Which brings us to borders, refugees and Europe’s struggle to deal with the large number of migrants and asylum seekers already here – as well as with those who keep knocking on its doors.

The EU once captured the headlines for its bold moves to eliminate borders and create a frontier-free single market. The image now is of an EU determined to protect itself with barbed wire fences, armed policemen and more. This is especially the case in many eastern European states, where restrictive new laws are in place for asylum seekers and refugees who are accused of being “intruders” and “potential terrorists”, bent on destroying Western civilisation and Christianity.

And then of course there is Brexit. The world can’t really believe that a country would willingly leave a much-coveted rich men’s club. And no-one seems as confused as Britain’s Prime Minister Theresa May and her disunited band of Brexiteers – Boris Johnson, David Davis and Liam Fox.

May’s mantra of “Brexit means Brexit” is beginning to ring hollow, not least because the government has yet to decide just when to invoke Article 50, which will kick-start negotiations on Britain’s withdrawal from the EU.

Europeans once stood out for their post-modern values and aspirations, their ability to make friends with former enemies, their commitment to inclusion, and their diversity. That’s no longer the case. Europe in the autumn of 2016 appears fragile, fraught and fearful – and very few EU watchers are celebrating.

Related Content:

• Friends of Europe: ‘State of Europe’ high-level roundtable “Disruption, Disorder and Division: Brexit’s impact on Europe” – 13 October 2016
• Europe’s World: Brexit special section 
• Debating Europe: Is Europe’s migrant crisis finally under control?

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It has become all too common for European policymakers and academics alike to obsess over the creation of norms in cyberspace. Especially the promotion of the due diligence principle, to regulate state behaviour in the fifth domain, is riddled with forlorn expectations and futile assumptions.

According to customary international law, due diligence stipulates that, “no State has the right to use or permit the use of its territory in such a manner as to cause injury […] to the territory of another or the properties or persons therein.”[1] Adapted to cyberspace, the Tallinn Manual notes that “a State shall not knowingly allow the cyber infrastructure located in its territory or under its exclusive governmental control to be used for acts that adversely and unlawfully affect other States.”[2]

Proponents of the due diligence principle naturally praise its anticipated positive impact, such as (1) helping to “protect and further an open, free, and secure global internet,” “(2) prevent regional fragmentation, (3) the threat of crime and (4) a militarization of cyberspace,” as well as (5) lowering global risks in the cyber domain to an acceptable level.[3] Cooperation rather than conflict is the overarching message.

In theory, due diligence would simply shift accountability to the nation state, thereby levelling the playing field between governments, and making already existing international law applicable to the cyber domain. In one swooping move, states could be held responsible for the actions of non-state actors, but would also gain a legal beachhead to exercises stronger regulatory control over privately held IT infrastructure on their territory.

From a legal perspective, such a move would solve a host of current problems. For example, the aperture for attribution would dumb down to the question of “who is to blame?” rather than necessitate a nuanced multi-layered-process determining “who did what, how, why, when, and where?” Expanded sovereignty would also introduce tangibility, by clearly delineating cyberspace along the geographic locations of its physical components. Even the utilization of offensive cyber capabilities could be consigned to the right of self-defence, and thereby help promote a deterrence-by resilience posture.[4]

In practice, however, the application of due diligence will most likely achieve none of its lofty goals.

First, given that cyber operations depend on identifying “specific vulnerabilities in specific systems that can be exploited in specific ways,”[5] they are by their very own nature “soaked in intelligence.”[6] Espionage however falls, apart from a few exceptions, outside the domain of jus ad bellum and jus in bello, and is woefully underdeveloped in international law.[7] The Tallinn Manual for example notes that “though highly invasive, cyber espionage does not rise to the level of a use of force due the absence of a direct prohibition in international law on espionage per se.”[8]

Consequentially, curbing cyber espionage can only occur in a domestic context, by creating prevalent civilian oversight mechanisms that will hold intelligence agencies responsible for any misconduct. However, the Snowden revelations have already shown that even a country like Germany, with all its attached history and oversight mechanisms, was unable to constrain the BND from “eavesdropp[ing] on various US government and diplomatic missions, on fellow EU members, on humanitarian nongovernmental organizations, and even on the Vatican’s mission in Berlin.”[9] There is simply no point in trying to regulate state behaviour in cyberspace without also constraining intelligence agencies from conducting the very missions they were designed to do.

Second, contrary to public perception the fifth domain is becoming more secure rather than less. According to PwC’s 2016 Global State of Information Security Survey of 10,000 IT and security practitioners, 91% now utilize a risk-based security framework within their organization, 69% leverage cloud-based security, 65% collaborate with others to improve cybersecurity, and 59% harness Big Data analytics. Overall, respondents boosted their IT security budgets by 24% in 2015.[10] Indeed, some, like Martin Casado, General Partner at Andreessen Horowitz, persuasively argue that “we have enough tools in place, if used properly, to make the weakest link me and you […].”[11] Therefore security is not necessary a technology problem but one that is user-centric.

Third, users are becoming increasingly aware that the market has failed to deliver on the promise of privacy and cybersecurity.[12]  While we have come a long way from the Crypto Wars in the 1990s, the quest for secure online communications is picking up steam again. As a result, the adoption of stronger encryption is becoming commonplace, log-free VPNs are proliferating, and the success of the Tor browser has spread across the globe. One visit to Blackhat or Defcon should make it abundantly clear that any attempt by Western governments to control internet traffic, regulate open-source software, or adopt any other bullying behaviour, will cause an immediate backlash from the community.

The whack-a-mole fight against online piracy is probably the most notable example that controlling cyberspace is futile.[13] Many have tried and many have failed, but governments rarely learn from their mistakes, as Britain’s current discussion on fighting online pornography vividly shows.[14] The bottom line is that cyberspace was not designed to be secure,[15] it was not envisioned to be controllable, and international norms will not dictate how intelligence agencies operate in the fifth domain.

Cybersecurity and norms in cyberspace will be further discussed on 14 September at the Friends of Europe event : ‘CYBERSECURITY AND FOREIGN POLICY – A new role for Europe?‘

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The construction of the Nord Stream 2 pipeline between Russia and Germany has become one of the most controversial topics in European energy policy. For a majority of European policymakers and analysts, it seems hard to understand how Angela Merkel’s government can back the creation of a more secure Energy Union and a seemingly contradictory German-Russian pipeline project at the same time.

In the interpretations of many, the latter shows a lack of solidarity with Central and Eastern European countries; some even draw a causal link to the resistance of those countries to show solidarity during the refugee crisis. The reality is of course much more complex, and requires a deeper look into Berlin’s dominant mindset. Two strategic motives in German politics and the clarification of a misunderstanding around the Energy Union could help explain Berlin’s point of view.

“Cooperation on Nord Stream 2 is seen as a means of keeping a window for political dialogue open with Russia’s government”

The first strategic motive is in foreign policy. The German government is following a tradition in the country’s foreign policy towards Russia that has often been vaguely described as ‘Ostpolitik’. From the early years of the Cold War until most recently, German governments saw a dual approach towards the regime in Moscow as most promising. This included a variation in political strategy between confrontation and rapprochement on the one side, while on the other side keeping channels for dialogue and economic cooperation open.

Since the annexation of Crimea and the war in eastern Ukraine, the German government adapted its strategy and supported the sanctions regime against Russia, but with clear limitations on a predefined set of economic sectors. Trade in natural gas was clearly exempt from the sanctions, following many decades of German foreign policy tradition. The cooperation between German and Russian companies on Nord Stream 2 is therefore seen as a means of keeping a window for political dialogue open and supporting future cooperation with Russia’s government. Behind closed doors, German politicians ask why this opportunity should be blocked if cooperation on natural gas survived the worst of Cold War confrontations.

The second aspect, although discussed even less openly, is strongly connected to Germany’s national energy sector transformation and its consequences. In the early days of Germany’s ‘Energiewende’ around 2007-2008, natural gas was perceived by many as the obvious partner of renewable energies in the future. The conviction that renewables and natural gas would dominate Germany’s electricity sector for some decades bought support for an energy sector transformation from the national gas industry. Reality, of course, has proven this assumption wrong. Quite to the contrary, natural gas has lost market shares in the electricity sector and suffers from decreasing demand. This is one among a whole set of factors that turned German energy companies from big incumbents to weak competitors in the market.

Besides its outspoken support for the further deployment of renewables and more ambitious climate policies, the second part of German energy policy concentrates on protecting its suffering energy industry. In the case of natural gas, this means supporting the German gas industry in its cooperation with Russian suppliers, strengthening the German natural gas market and improving framework conditions for exporting gas to other European markets. Germany’s natural gas export of 30 billion cubic metres in 2015 underlines the economic importance of this strategic move.

“The concept of the Energy Union remains widely open for controversies”

Finally, and probably most importantly, a clarification of the big misunderstanding around the Energy Union is needed. This has a great deal to do with the strategic ambiguity of the project itself. The concept of the Energy Union was mainly perceived by the German public as a project for further greening Europe’s energy system and better coordinating energy supply structures. The energy security dimension did not receive much attention among policymakers and in the media, unlike in many Central and Eastern European governments, where the European Commission’s proposal was interpreted as a step towards reducing the EU’s dependence on Russian supplies. In Germany, however, growing flexibility in open markets remained key for guaranteeing energy security. In the German understanding, additional import infrastructures such as Nord Stream 2 would contribute to a diversification of transit options. This difference of views has not been addressed so far, and remains widely open for controversies.

The combination of Germany’s foreign policy tradition vis-à-vis Russia, its support for the German gas industry and its different interpretation of the Energy Union project can serve to explain Berlin’s support for Nord Stream 2. As long as the regulatory framework of the Third Internal Energy Market Package will not prohibit the construction, policymakers in Germany will see no means or reasons to change their position on this controversial pipeline project.

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Iran is at an important juncture in its post-revolutionary development. The signing and implementation of the so-called Joint Comprehensive Plan of Action (JCPOA) signifies the consolidation of a new direction in Iran’s international positioning – an opportunity that should be seized by the European Union to forge a more constructive relationship through which a number of regional and international issues could be addressed.

Experts agree that post-revolutionary Iran has always been the scene for competition between two main schools of thought in foreign policy. The first, the confrontational approach, frames Iran’s relations with the West within an enmity in which the West opposes Iran’s progress, and Iran in turn ‘stands up’ to secure its rights and independence. This attitude has been consolidated through past actions, especially Western animosity and sanctions, to produce a security-minded and repressive domestic politics, which were witnessed clearly during the Ahmadinejad years.

The conciliatory approach, now sometimes referred to as the ‘positive-sum approach’, attaches importance to ‘easing tensions’ and finding ways for Iran to cooperate with the West, despite ongoing competition and disagreement over regional and international issues. This attitude prevailed in the reformist government of President Mohammad Khatami to produce a close collaboration with the US on Afghanistan in 2001 as well as a Grand Bargain proposal in 2003.

“Western animosity and sanctions produce a security-minded and repressive domestic politics”

There is no doubt that President Hassan Rouhani’s election in 2013, as well as the February 2016 twin polls that elected a new Majles and a new Assembly of Experts, moved the political pendulum back to the conciliatory approach – the 2015 nuclear agreement being perhaps the clearest consequence of its revival among Iran’s executive branch. But its sustainability will depend on the success of Iran’s moderate forces in showing the benefits of this policy orientation. A clear reason for the emergence of confrontation in 2005 through the election of Mahmoud Ahmadinejad was the failed US strategy under President George W Bush in the invasion of Iraq’s aftermath. As such, there is no doubt that external dynamics can influence the internal developments of Iran.

A high degree of distrust towards western countries, especially the United States, already prevails, as was showcased during the 20th March speech by Supreme Leader Ayatollah Khamenei, in which he accused the US of not respecting the nuclear deal. The allegation was linked to the fact that bank transactions haven’t yet normalised in the post-sanction era.

As such, at the core of the EU’s policy towards Iran should be a focus on regaining the confidence of the country’s political elite. To disprove the narrative that the West is against Iran’s progress, the EU needs to invest in what could be termed a new version of ‘Ostpolitik’ a la Willy Brandt – a policy designed to increase mutual understanding and  steer away from conflict. Key components of such a policy would include agreeing that the rapprochement with Iran be a long-term process rather than a short-term deal, and acknowledging that the Islamic Republic should be respected as a responsible regional power. Iran is in fact proactively participating in the Syria talks as well as in the fight against Daesh. This is also seen in the positive role Iranian culture can play in containing the jihadist views that have been promoted by the Wahhabi brand of Islamic extremism.

Beyond the political and cultural advantages of a closer relationship, the EU needs to pay greater attention to the socioeconomic dimensions of more intense ties with Iran. It would be a mistake to view Iran as a consumer market and try to promote European exports to Iran. The country needs to be seen as a partner on multiple levels, as a key player in the international energy market, as a source of economic and technological innovation and a potential partner for co-investments in the entire region. Top Iranian leaders have left no ambiguity that creating employment opportunities is their top priority. This means creating value in the Iranian economy, which can then be a backbone for the greater regional development that is so needed to induce a degree of stability into an otherwise challenging region.

“Iranian leaders have left no ambiguity that creating employment opportunities is their top priority”

The EU should therefore communicate to Iranian and international stakeholders that it is in favour of technological and economic progress in Iran. Such a step would also be in line with the stated goals of the so-called ‘20-Year Economic Perspective’ document, which calls for Iran to become the region’s top economic and technological power by 2025.

EU policies have to be designed and implemented in a way that doesn’t lead to additional tensions among key regional powers. The EU can achieve this by connecting to a discourse that the current Iranian administration uses extensively: the belief in developing win-win formulas, and the understanding that no country will benefit from causing insecurity in another country. This guiding theory contributed strongly to the success of the nuclear negotiations, and could also be the formula for resolving the Syria crisis. The EU will have to look proactively for scenarios that will create win-win solutions for regional players, and by extending the benefits to the EU, one can even achieve win-win-win scenarios. These could emerge in creative regional investment schemes, platforms for security cooperation, promoting a Middle East free of weapons of mass destruction, investing in regional energy interconnectivity, and so on.

The EU should look at Iran as a regional partner for peace. This doesn’t mean that the EU and Iran will see eye-to-eye on all key issues, but it would mean a more respectful strategy underpinning dialogue and engagement, and one in which both sides won’t allow areas of disagreement such as human rights to dominate the debate. These themes can be included in a comprehensive relationship, but the first goal is for both sides to regain a certain degree of confidence in the value of future cooperation.

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The Fourth Industrial Revolution is rapidly changing our society and our economy. No sector is exempt from the disruption driven by increased connectivity and ‘networkisation’. For Europe to lead in this new era, it needs to foster innovations and investments by creating an open, flexible and digital single market with a regulatory framework reflecting the dynamics of the digital economy. Let me put forward four necessary building blocks for Europe’s leadership in the Fourth Industrial Revolution: strong and solid networks, a true digital single market that boosts the digital economy for businesses and consumers, the promotion of digital skills and jobs and, finally, the importance of data-driven innovation.

The ‘Internet of Things’ will soon be the ‘Internet of Everything’, connecting all humans and things. Smart refrigerators or connected supply chains are just early examples. In the years to come, we will see innovative breakthroughs in a number of areas that have a direct and important impact on people’s lives such as cars, health, education and energy. Without state-of-the-art broadband networks capable of transferring huge amounts of data in no time, Europe will be unfit to unleash the full potential of the Fourth Industrial Revolution. An estimated €80bn of private-sector investments will be needed to make sure these networks reach everywhere in Europe. The EU should stimulate this process by stepping up efforts for a single market that encourages investments, competition and innovation in the fields of infrastructure and service delivery. In this regard, an in-depth review of the European framework for electronic communication and audio-visual media services should be undertaken.

“It’s unfair and absurd to have price discrimination for parcel deliveries based on country of origin or destination within the EU”

For Europe to lead rather than simply participate in the new era, it will also need to boost the digital economy for businesses and consumers. One of our main ambitions should be to facilitate the emergence and growth of innovative start-ups, both creative SMEs and global digital players, through R&D policies favouring differentiated European project development processes and disruptive innovations. The EU should also unlock the potential of e-commerce by facilitating electronic and mobile payments, promoting online dispute resolution, and removing barriers to cross-border business for instance through a single system for VAT payments. In today’s world of e-commerce, it’s unfair and absurd to have price discrimination for parcel deliveries based on country of origin or destination within the European Union. Cross-border prices are currently an average of four-times more expensive than domestic prices. This is a major problem for European companies, in particular for SMEs and start-ups. The example of roaming charges has shown that, when inclined, the EU can tear down useless and counterproductive borders.

Online platforms are another area that will be critical for the future of Europe’s digital economy. According to the current definition from the European Commission, ‘online platforms’ comprise everything from e-commerce websites to search engines, sharing sites, social media and Internet-based payment systems. Their progressive impact on the economy shouldn’t be underestimated.

Lower prices, improved use of resources and greater access to information benefit all consumers and citizens, especially those with lower incomes or at the margins of society. The prominence of large international – mostly US-based – platforms in the EU has led to calls for specific regulation. Europe’s focus should be on fostering a stimulating environment in which European entrepreneurs can create and grow their own platforms, rather than restricting what non-European ones can do. Europe shouldn’t waste its energy on fixing things that aren’t broken; it should focus on discussions and actions that are constructive.

By 2020, nine out of ten jobs will require basic digital skills, and it’s expected there will be 825,000 unfilled positions for digital jobs. Our start-ups, small companies and large players will all need thousands of front-end and back-end developers, data analysts and web marketers. Hence, leadership in the Fourth Industrial Revolution will require a massive upgrade of Europe’s current workforce. Every European citizen, regardless of age and background, should be able to take advantage of all the digital opportunities that lie ahead.

“By 2020, it’s expected there will be 825,000 unfilled positions for digital jobs”

The EU should take a leading role in making sure all its citizens are schooled in the digitals skills critical to harnessing the digital economy and knowledge society. It must invest massively in education, particularly digital skills. The European Commission has announced that €315bn will be mobilised for strategic investments as part of the so-called ‘Juncker Plan’. These investments should not only concern tangible infrastructure such as airports, broadband connections and wind turbines, but also skills. Education is infrastructure, the most important infrastructure of the future. The EIB and the Commission should therefore consider large-scale digital skills programmes within the plan’s framework.

Data has become a key infrastructure for the Fourth Industrial Revolution; and here, big is beautiful. The world’s production of data grew 2,000-fold between 2000-2012, and 90% of all data circulating on the Internet today was created less than 2 years ago. The EU has recently invested its time in lengthy debates on data privacy and security. These are important issues, but Europe should urgently start to explore the question of how these large amounts of data gathered by the ‘Internet of Things’ could boost competiveness and innovation. The big data revolution requires that we deeply rethink our approach to privacy and data protection in order to keep up with the evolution of technology. We should focus more on the actual use of big data rather than on its collection and analysis. Policies limiting collection and retention are increasingly unlikely to be enforceable by anything other than severe and economically-damaging measures. Rather than privacy authorities, it makes sense to establish data management authorities, which could audit the actual use of data by companies. This would stimulate legal certainty and innovation.

Moreover, data should flow freely within the European Union; data localisation provisions in national legislations have to be removed. We need a coherent governance framework for this new infrastructure and the EU has an important role to play. The risk of underinvesting in data-driven innovation and focusing too heavily on regulation is simply too high. The discussion on data needs a shift from risks to innovation.

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It took a while for policymakers in Europe to appreciate that the financial crisis, while it was triggered by a collapse in the US sub-prime mortgage market, was not just ‘Made in America’. The balance sheets of European banks had been expanding even more rapidly than those of their American counterparts, and on average their leverage ratios were higher.

Some economists have ascribed Europe’s difficulty in escaping from the recession and achieving sustained growth principally to its over-reliance on bank finance. In Europe, banks supply over two-thirds of the external financing needs of non-financial companies – the comparable figure in the United States is nearer 20%. The US stock and bond markets are able to step in to fill the gap left by retrenching banks. But when EU banks catch a cold, and are obliged to rein in their lending, the real economy unavoidably contracts. Strengthening European banks has therefore been a very high priority for policymakers in the last eight years, but how far have they succeeded?

To assess the state of Europe’s banks today, it is useful to consider three different yet interacting elements: institutional reform, reform of the rules and standards imposed on banks, and the practical achievements in terms of the measurable strength of banks’ balance sheets.

“Severe stress tests assuming a domestic UK recession and a severe slowdown in China have shown that British banks could now survive”

On the institutional front, it became clear as the reasons behind the crisis were examined that the EU’s regulatory architecture was in need of attention, in the single financial market as a whole, but particularly in the eurozone. The De Larosière report of 2009 made an initial attempt at a solution, proposing three new Authorities, for banking, securities and insurance, to replace the existing network of committees. In the absence of a new treaty, these authorities – one of which being the European Banking Authority in London – were endowed with only modest powers. But despite that, the EBA was charged with working towards a single rulebook for the EU, and with setting the terms of pan-European stress tests to determine just how robust banks would be in the event of a new recession or market disruptions.

The stress tests did identify some weak institutions in need of more capital, but they largely failed to restore confidence, as many market participants believed that national supervisors lacked the will to highlight domestic vulnerabilities. The problem was particularly acute in the single currency area, as the European Central Bank (ECB) was the only institution capable of supplying euros to illiquid banks, but had no direct oversight of them. The Single Supervisory Mechanism has in less than 18 months injected new discipline into bank governance, and has scrupulously rooted out supervision inconsistencies across the continent.

But what matters more than the institutional arrangements is the nature and rigour of the capital rules that supervisors police. Most of the new capital rules have been developed on a global basis in the Basel Committee, but they are implemented in Europe by means of directives, which ought to ensure thorough and even implementation. The EU’s fourth Capital Requirement Directive in fact goes further than Basel requires, and was complemented by a new Banking Recovery and Resolution Directive, which harmonises the rules and procedures for dealing with a banking crisis.

I have little doubt that the regulatory environment is far tougher now than it was before the crisis, but it would be wrong to think that all its imperfections have been ironed out. Speaking to the European Parliament in February, Daniele Nouy, the Chair of the ECB’s supervisory board, acknowledged that many national discretions and much of the implementation inconsistencies remain, even in the eurozone. As she put it, ‘these divergences distort the level playing field and make our lives as supervisors more complicated.’ Some may feel that complicating supervisors’ lives is a small price to pay for the justified application of the subsidiarity principle, but it presents a real problem for the banking industry as a whole if the system lacks full credibility. Legislative action is urgently needed to end these divergences, which often go to the heart of the viability of a bank – differing treatment of tax assets or loan impairments, for example. But the most important point has to be whether there is solid evidence that European banks are indeed adequately robust with reserves to carry them through the next real-life stress test. The market disruption at the beginning of this year, and its severe impact on European banks’ share prices, put that question into sharp relief. The data suggest that, in aggregate, EU banks are indeed stronger. The Common Equity Tier I ratios of systemically significant companies have increased from 9% in 2012 to 13% since the latest EBA stress test, and are set to rise further. But there are still weak outliers, especially in southern Europe.

“Individual banks will need to be strengthened, but instigating an aggressive approach across the board would be dangerously destabilising”

Loud voices in academia are arguing that the improvements so far made are not enough. Sir John Vickers, author of a report for the British government on banking reform, argued in February that the volatility in bank stocks shows that even more reserves are needed, and that the Bank of England has diluted the reforms he proposed in 2011. He claimed the Bank ‘is proposing a substantially milder equity requirement for British banks’ than he believes necessary. The Bank of England, though, firmly rejected the criticism, maintaining that severe stress tests assuming a domestic UK recession and a severe slowdown in China have shown that British banks could now survive in very challenging economic conditions. Both the Bank of England and the ECB have reached the view that the reforms already implemented should be allowed time to bed in.

That seems a wise conclusion, at least for the time being. There is certainly a theoretical case for banks to hold much higher equity capital; but to do so, a bank would either have to raise new equity or cut back on lending. In a heavily bank-based economy, doing the latter will have important implications for growth. The long-term answer is to develop stronger alternative sources of finance, and the Capital Markets Union is designed to achieve that, but it will take a long time to change the habits of European banks and, more importantly, of their clients. The right priority for now is to ensure that all the changes made to date are fully implemented, and are consistent between countries. There are individual banks that will need to be strengthened and perhaps restructured, but instigating an even more aggressive approach across the board would be dangerously destabilising.

IMAGE CREDIT: landio/Bigstock.com

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The shockwaves of the UK’s Brexit referendum resemble those of an ocean-depths earthquake, creating tsunamis that grow and accelerate as they spread outwards. Nobody can yet tell the damage they will do to the 60-year project of European integration or to the global economy, but their effects will be felt for years to come.

It will no doubt be to David Cameron’s eternal regret that as Britain’s prime minister he paid no heed to the warning that earlier referendums on EU-related issues had come to grief in France, the Netherlands, Ireland and Denmark.

The UK’s outlook is for internecine political strife and longer-term economic decline, but it’s the wider European picture that is the more important. The UK’s bitter membership debate and the vote to leave by a substantial majority of over a million people has greatly exacerbated popular discontent around the EU, and notably in France and Germany.

Both have elections next year, and the triumph of eurosceptics in the UK may well trigger similar protest votes.  Germany’s chancellor Angela Merkel and French president François Hollande need to react with a credible plan of action that can allay voters’ doubts and discontent.

“Unless ideas for reforming the EU are bold and eye-catching, voters across Europe will dismiss them”

What, then, might a credible plan look like? It would not only have to be acceptable to EU governments that in many cases have resisted genuine EU reform for 20 years, but also convincing to public opinion in Europe that is increasingly impatient with the EU’s shortcomings. Unless ideas for reforming the EU are bold and eye-catching, voters across Europe will dismiss them, boosting the popularity of eurosceptic political parties.

Sitting tight and hoping for the best is no longer an option for Europe’s mainstream parties. In Germany, the eurosceptic AfD has been gnawing away at the traditional support base of Merkel’s centre-right CDU party. In France, the fear is that even if the Front National’s Marine Le Pen doesn’t make it into the presidency next Spring her party will nevertheless be a dominant force.

There’s no shortage of ideas for tackling the EU’s creaking and overly-secretive decision-making arrangements. Political scientists have been putting them forward for many years. A credible reform agenda for EU leaders could begin with a pledge to lift the veil of secrecy around Council of Ministers meetings that are in effect the EU’s legislature. Incredible though it must seem, there is no public record of their deliberations, and of who said what or how they voted.

A next step would be to bring national parliamentarians into the process of EU-level decision-taking. Until 1979, double mandates enabled some national MPs to sit in the delegated European Parliament, and that’s worth re-considering.

Other possible reforms include the creation of an EU Senate to make the European Parliament bi-cameral. Its members could include nationally-elected EU Commissioners, headed by a Commission president universally elected in EU-wide polling.

There are endless possibilities for shaking up the EU, but the key question is the future nature of the EU itself. Britain’s decision to leave opens the way to a very different and far more flexible European Union.

“Countries where freedom of expression is endangered and political pluralism threatened could be ‘re-classified’ as a signal to their electorates”

It is conceivable that today’s EU of 28, or rather tomorrow’s of 27, will consist of concentric circles and an abandonment of the founding fathers’ vision of perfect equality between member states regardless of their size or clout.

The inner core would of course be the eurozone’s strongest members; many of these have been urging new governance rules introducing checks to prevent countries from irresponsibly taking on debt.

This would add up to some form of ‘political union’ as these rules, and their enforcement, would override sovereignty. It is something Berlin has long urged and Paris has resisted because it would spell the end of the sweeping presidential powers with which Charles de Gaulle endowed the Fifth Republic.

Beyond this core, there would be an outer ring of eurozone countries with weaker economies – Greece, Portugal and perhaps Spain. This ring might also include in some manner economically-stronger non-eurozone Scandinavian countries.

The next concentric ring might consist of EU countries whose governments pose political rather than economic challenges. Poland, Hungary and increasingly the Czech Republic have been flouting the norms of liberal democracies that are the cornerstones of European integration. Countries where freedom of expression is endangered and political pluralism threatened could be ‘re-classified’ as a signal to their electorates.

That leaves the outer ring. This would be made up of a single country no longer in the EU – the United Kingdom. Limiting the impact of Brexit is in the common interest, and some sort of special association status – membership-plus of the European Economic Area – might be a halfway house. It would keep the UK within the single market, maintain the EU’s four freedoms, including movement of people, and require budget contributions. And like any fair compromise, it would be unpalatable for all concerned.

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On a visit to the US last month, Ukraine’s prime minister Volodymyr Hroysman said the country’s three main ‘enemies’ are populism, corruption and Russia. As Hroysman is a member of Petro Poroshenko’s team, it is worth analysing how his mentor is coping as President and Commander-in-Chief with these ‘enemies’.

The first, populism, is an abused term used everywhere to negatively denigrate one’s opponents, and most people, including Ukrainian politicians, use it without understanding what it means. It was always ridiculous for Viktor Yanukovych and the Party of Regions to accuse the opposition of being ‘populists’ when they themselves (oligarchs) were the biggest populists (towards working-class voters) in Ukraine. It was also a sign of the term being politicised when it was primarily used against Yulia Tymoshenko – if she is a populist then so is every other Ukrainian politician.

Poroshenko, who has routinely derided Tymoshenko for populism, has never undertaken any steps to deal with the issue. He has never invested in Ukraine’s political party system, and the absence of parties is a major problem; after all, parliamentary democracy cannot function without political parties. Poroshenko has always had close relations with oligarchs, who are the main funders of populist political projects. His failure to reduce their influence is something commonly accepted by experts all over, and it is almost universally thought that the next three years will see no change. Oligarchs are as bad for the development of European-style political parties as they are good for populism, as they often create election projects that use populist rhetoric. Their monopolisation of the economy prevents the growth of small and medium-sized businesses, which produce less than 20% of Ukraine’s GDP and are often forced to operate in the shadow economy – where half of Ukraine’s GDP has come from for the last two decades, double the size of Italy’s underground economy.

“Poroshenko is building a hybrid Ukraine that inherently generates political instability”

The ‘enemy’ of corruption has never been tackled by Poroshenko; and when the New York Times criticised him for this, he described it as part of the ‘hybrid war’ being conducted against Ukraine. Not a single member of Yanukovych’s mafia cabal has been brought to justice. As journalist and MP Serhiy Leshchenko wrote, ‘nowhere is the rottenness of Ukrainian politics more evident than in the prosecutor’s office’. It seemed, after the deaths under Viktor Yanukovych of people wanting a fair and democratic Ukraine, that punishments of corrupt officials should have been a matter of honour for the new government. But instead, Berkut snipers who murdered protesters have been allowed to flee Ukraine, others (such as Party of Regions MP Yuriy Ivanyushchenko) have been removed from Interpol lists of wanted Ukrainians and a third group (such as gas lobby leaders Yuriy Boyko, Dmytro Firtash and Serhiy Lyovochkin) have been given immunity from prosecution. President Poroshenko’s four prosecutor-generals have shown no commitment to fighting high-level corruption.

Leshchenko and other journalists and politicians from Tymoshenko’s Batkivshchina (Fatherland) party have repeatedly raised the president’s failure to combat corruption, but to no avail. Ukraine is in the midst of a battle between genuine pro-European political forces including Batkivshchina and civil society who are psychologically in Europe confronting Poroshenko’s faction that wants Ukraine to remain in the twilight zone between the Soviet past and European future. In other words, Poroshenko is building a hybrid Ukraine that inherently generates political instability as it fails to fulfil people’s expectations for justice.

“Poroshenko’s four prosecutor-generals have shown no commitment to fighting high-level corruption”

The third ‘enemy’ is Russia. This is an area in which Poroshenko has failed in four ways. First, he has been unwilling to reform Ukraine’s intelligence services and clean out Russia’s spies. The intelligence services are not only important for the ongoing war against Russia but also for the fight against high-level corruption. Ukraine has a Security Service (SBU), but is it Ukrainian? When one intelligence officer is caught spying in the West, it is a major scandal; but in Ukraine, there have been thousands found since 2014. The SBU recently published a list of 1,397 of its own officers who betrayed Ukraine in the Crimea. Even the Deputy Commander of the Anti-Terrorist Operation (ATO) – Ukraine’s official name for military operations in the Donbass – was a Russian spy.

The second was the signing of the Minsk accords, which benefitted Russian President Vladimir Putin’s transformation of the separatists into a large and well-equipped army and placement of the economy and finances of the DNR and LNR under the control of a Russian shadow government. Instead of dismantling the separatist institutions, as the Minsk accords outlined, they were consolidated. European leaders on the other hand were able to wash their hands of Ukraine by claiming Minsk had brought peace to Europe.

The third area is Western military support for Ukraine.  A lack of reforms in the SBU and its continued infiltration by Russia makes it problematical for it to run the ATO, as NATO and the West more generally are concerned that weapons sent to Ukraine would be stolen (through high-level corruption) or even sold to Russia. If Ukraine declared the Donbass conflict to be a war, not a terrorist threat, its commanders would be the military rather than the clearly unreliable SBU.

“Even the Deputy Commander of Ukraine’s military operations in the Donbass was a Russian spy”

Additionally, in providing immunity from prosecution for the gas lobby, Poroshenko is failing to assist the US in the pursuit of criminal charges against Firtash, who is waiting in Vienna for a response to American demands for his deportation to stand trial in the US. It is in Ukraine’s interests to do everything it can to please American politicians (who are influential in NATO) in order to receive political support, military equipment and training. By instead supporting the old boys’ network and putting personal gain first, the president is damaging Ukraine’s national security.

The last factor is the vast unpopularity of the commander-in-chief among Ukrainian soldiers. During my two visits to the front line in March and May of this year, I heard not a single soldier voice support for Poroshenko. Most soldiers said their enemies are Russia, politicians and incompetent and corrupt generals in Kiev. I mentioned this to the US government’s representatives at a seminar I gave last month in Washington DC, and they were genuinely shocked, indeed no one could imagine hearing such negative and at times threatening views of their commander-in-chief on an American or British military base, particularly during wartime.

Prime minister Hroysman pointed to Ukraine’s three ‘enemies’ of populism, corruption and Russia. What a pity that his mentor President Poroshenko is failing or unwilling to deal adequately with any of them.

IMAGE CREDIT: CC / FLICKR – Petro Poroshenko

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Europe is facing its worst security crises in living memory. To its south, Daesh has filled the Middle East’s power vacuums, driving a refugee crisis that threatens to tear the European Union apart as each nation reacts on its own rather than in the collective interest. To the east, Russia’s flagrant disregard for international norms with its continued actions in Ukraine and recent aggression in Syria further undermine the allusion of a Europe ‘whole and free’. The case for Europe’s once-vaunted ‘soft power’ seems broken by these ‘hard power’ realities collapsing on it. Adding insult to injury, the US presidential election has only reinforced how alone Europe is on these issues, as Americans deal with fierce internal divisions and a populist extremism unlike anything seen in over a century. Against this pessimistic backdrop, there is room for optimism in one of the most unlikely places for Europe: Asia.

Europeans, consumed by their own problems, aren’t thinking as strategically about Asia as Asians are about Europe. Russia’s unchecked actions in Ukraine are being carefully watched as a potential blueprint for China on its own challenge to international rules in the South China Sea. Today, maritime rule of law is the most contentious soft power issue in the Asia-Pacific, and Europe has one of the most under-appreciated roles to play in it. While it’s unrealistic to expect European ships to move beyond the Horn of Africa in significant numbers, the symbolism of having a European contingency, whether through NATO or not, as part of existing operations and planning won’t be lost on Beijing. Unlike Moscow, which seems immune to international opinion or sanctions, Beijing depends very much on remaining part of the international community for sustaining its single-party rule predicated on continued economic growth. China nonetheless seeks to revise international norms according to its authoritarian values by threatening neighbours while flouting international law.

“Europeans aren’t thinking as strategically about Asia as Asians are about Europe”

Given this reality, Europe mustn’t lose sight of the importance of common values and rule of law originating from the region. European nations pioneered the freedom of navigation that now account for just over 98% of all global trade flows. Europe gave birth to maritime rule of law in 1618 when Hugo Grotius conceived of ‘freedom of the seas’ to ensure the world’s oceans remained open and accessible to all for international trade. The 1648 Treaty of Westphalia organised Grotius’s argument, and modern maritime trade officially started. The International Tribunal for the Law of the Sea is located in Germany, and Europe has considerable stakes in preserving the rule of law in Asian seas. Without US participation, the EU is the default vanguard of the United Nations Convention on Law of the Seas (UNCLOS). There is also geopolitical logic to Europe defending maritime rule of law. Late Yale University professor Nicholas Spykman argued in 1942 that controlling ‘marginal seas’ in coastal areas in Europe and Asia would be prerequisite for sustaining access to Eurasia’s peripheral lands. In post-war Europe, US naval power led NATO in accomplishing this task by controlling the Mediterranean, facilitating the alliance’s focus on deterring Russian land power while successfully implementing the EU’s inception. Today, the Indo-Pacific region has the potential to become a marginal sea embracing the chain of burgeoning liberalism stretching from India to Japan. Spykman foresaw this region emerging as ‘the Asiatic Mediterranean’, a term that is now back in fashion. At a time when China threatens this potential, Europe finds itself in a strong position not only to protect its regional stakes, but also to guide Asia’s liberal stride by leveraging its own experience and values.

Europe’s soft power strategy in the Asiatic Mediterranean should begin by boosting relations with its regional liberal partners Australia, India, South Korea and most importantly Japan, its Asian anchor. Europe already has a military partnership with Japan in the form of the NATO-Japan partnership, and Tokyo’s contributions to NATO include various operational activities ranging from logistical supplies in the Indian Ocean for operations in Afghanistan to joint counter-piracy operations in the Gulf of Aden. In 2014, Japanese Prime Minister Shinzō Abe called his country ‘a natural partner for NATO’ that shares common ‘responsibility for advancing rule of law in the world’s oceans’.

“Europe gave birth to maritime rule of law, and without the US is the default vanguard of the United Nations Convention on Law of the Seas”

This stands to be fortuitous year for elevating NATO-Japan relations. For one thing, Japan is increasingly keen on demonstrating its global leadership, as it did in May as host country for this year’s G7 summit. As China’s provocations continue to add volatility to the Asiatic Mediterranean, European G7 members and Japan should use this opportune time to inaugurate a joint regional security initiative, such as a European or NATO Maritime Security Conference in Asia. Such a conference would serve as a ministerial-level dialogue with membership consisting of NATO, Japan, South Korea, India, Australia, ASEAN, and eventually China if international norms and rules are accepted. Building a multilateral process with like-minded nations will present a united alternative to China’s unilateralism in the South China Sea, and will make it much more likely that Beijing will choose to be a part of the system than continue its current path. Indeed, because China could significantly benefit from participating in the Trans-Pacific Partnership (TPP), Beijing’s compliance with maritime rule of law would be the first step toward the inclusion of the second-largest economy in the emerging multilateral free trade agreement.

There is of course no panacea, and China’s maritime behaviour does not pose physical threats to European or US national security interests as much as Russia or the refugee crisis. Nonetheless, China is ‘eating sticky candy bit by bit’ as Mao Zedong might describe Beijing’s attritional strategy. The invisible casualty is the very existence of maritime rule of law, and 2016 appears to be make-or-break for Europe to preserve and protect international rule of law with its soft power by collaborating with its increasingly willing, proactive Japanese partner and coming together to weather the collective storm.

IMAGE CREDIT: CC / FLICKR – U.S. Pacific Fleet

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Asian security is being threatened at a multitude of flashpoints. In the northeast, North Korea under Kim Jong-un has launched long-range ballistic missiles after beginning the year by carrying out its fourth nuclear test, and it was announced in early March that Pyongyang now possesses nuclear warheads that fit to its ballistic missiles. Given that these weapons can be expected to reach US territory, Washington announced the dispatch of three nuclear-armed stealth bombers to east Asia while it carried out a large-scale military exercise with South Korea. In the southeast, tensions in the South China Sea have heightened as the US Navy sent several ships under the banner of ‘freedom of navigation operations’ to the disputed Spratly Islands, where China has escalated militarisation by deploying surface-to-air missiles and constructing runways.

As security becomes more fragile in both the north and southeast of Asia, should the EU become more clearly engaged? My answer is conditionally yes. These Asian flashpoints are not directly impacting the daily lives of European citizens, like the refugee crisis or Russian antagonism, but I believe the EU needs to be engaged in Asian security for the sake of its economic and business stability.

 “The EU needs to be engaged in Asian security for the sake of its economic and business stability”

The economy has played a key role in contemporary international relations, especially in east Asia. According to the World Bank, the region’s estimated growth for last year was 6.5%, while the European Commission estimated a figure of 1.6% for the EU. Japanese Prime Minister Shinzō Abe has named the 10-member Association of Southeast Asian Nations (ASEAN) as a ‘growth centre of the world’, and this view was actively reflected in the increase in Japan’s share of foreign direct investment in ASEAN from 3% in 2012 to 17% in 2013. A chief reason behind the US push for the Trans-Pacific Partnership (TPP) was similarly to access Asian growth and put the American economy back on track by establishing common trade and investment rules with the Asia-Pacific region. With its successful launch, the TPP is expected to promote structural reforms in member economies, sustaining the region’s continued growth. Thailand, the Philippines and Indonesia have each expressed interest in joining, and the US has welcomed the move. The US-ASEAN Special Leaders’ Summit, held this February, was partly designed to bolster US endeavours to urge those and other ASEAN members to join the TPP in the near future.

A unique feature of the TPP is that political leaders tend to view the agreement not only with domestic political economy considerations, but also strategic and military perspectives. Akira Amari, formerly Japan’s Economic Revitalisation Minister in charge of the TPP, often told his US counterpart Michael Froman that ‘we come to negotiate despite opposition back home because we think US involvement is crucial for the stability of east Asia.‘ East Asia’s general acceptance, with the notable exceptions of China and North Korea, of the American commitment to the creation of a free economic zone with its preferred rules and standards is attributed to their reassurance from continued US military and strategic presence. This means the TPP is perceived, at least partly, as the foundation for regional security.

The EU has also shown an interest in capitalising on east Asian growth for its economic and business interests. After signing an FTA with South Korea, which became effective on 1st July 2011, the EU has now chosen potential FTA partners from those that participated in the TPP talks, such as Japan, Singapore, Malaysia and Vietnam, or that have signed an FTA with the United States. The EU’s FTA strategy in east Asia thus has the characteristic of ‘chasing the US’, and this reactive approach is now mixing with east Asia’s general view of the EU as being heavily obsessed with its own intra-regional problems and conflicts, including the Brexit issue, and as not being sincerely interested in east Asian affairs. But the EU isn’t the US, and so it should engage in its own way.

“Once the TPP becomes effective, European businesses in Asia will be substantially disadvantaged”

The EU inevitably needs to accelerate the speed of its FTA negotiations. Once the TPP becomes effective, European businesses in Asia will be substantially disadvantaged, especially because their American rivals will enjoy preferential market access. This is an urgent matter, given that ASEAN is the EU’s third-largest trading partner after the US and China. If the EU, like the US, decides to play a more constructive role in east Asian security, it will more easily gain concessions in its FTA talks since the agreements could act to reassure regional countries of stability. This is very much is Europe’s interest. Once east Asia, the globe’s growth centre, becomes unstable, Europe’s Asian linkages and economic benefits would soon feel the hurt, and the fate of European business people living in the region would be thrown into jeopardy.

One area in which the EU can play a uniquely constructive role is human security, which transcends national borders in the form of trans-national criminal networks or environmental degradation. Collective actions taken by regional countries sharing human insecurity threats can be more effective than actions taken individually. It’s thus no wonder that the EU has promoted human security cooperation. ASEAN likewise in the 2004 Vientiane Action Plan prioritised institutional coordination between relevant ASEAN bodies to promote cooperation on non-traditional security issues including trans-national crime. Those issues are now seen as important policy ingredients in the formation of the ASEAN Political and Security Community. While the EU and ASEAN have displayed different priorities and approaches in promoting human security, recent improvements in human rights and democratisation in some ASEAN members, especially Myanmar, may expand the EU’s scope for cooperation with ASEAN.

While economic interdependence in east Asia has been increasing, there are growing political tensions, a lack of partnerships between key regional states and little in the way of shared vision amongst struggles for power that have hampered the sound development of regional integration. The US has challenged this ‘Asian Paradox’ through its rebalancing strategy and push for the TPP. China has also defied it by establishing the Asian Infrastructure Investment Bank (AIIB), which with $100bn in capital has become pivotal in China’s version of a ‘rebalance Asia’ strategy, especially toward central and southern Asia. I believe the EU should also engage in east Asian stability in its own way and for its own interests.

IMAGE CREDIT: CC / FLICKR – U.S. Pacific Fleet

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In recent years, Europe has become involved the South China Sea issue. In the name of defending multilateralism and international law and order, it has repeatedly expressed concern. It admittedly has the right. But are these concerns based on fact?

I’d like to stress that the root cause of the South China Sea issue is the invasion and illegal occupation by certain countries of some of China’s islands and reefs. The Nansha Islands (often named the Spratlys) have been China’s territory for centuries. The Chinese people were the first to discover, name and develop them, and successive Chinese governments exercised sovereignty until 1939, when Japan invaded and occupied the Nansha and Xisha Islands (the Paracels). After the Second World War, these stolen territories along with Taiwan and the Penghu Islands were restored to China in accordance with the Cairo Declaration of 1943, and the Potsdam Proclamation of 1945.

“China is not going to undermine international law or reshape the regional order”

No one challenged that the Nansha Islands belonged to China until a 1968 survey conducted by an affiliate of the UN Economic Commission for Asia and the Far East (ECAFE) indicated the presence of rich oil and gas reserves. From the 1970s, the Philippines, Vietnam and Malaysia began to occupy China’s islands and reefs. They attempted to deny China’s sovereignty, arguing they had maritime jurisdiction because the islands were within 200 nautical miles of their coast. By doing so, they deliberately misled the international community. China is therefore the victim in the South China Sea issue. Nonetheless, in order to uphold regional peace and stability, the Chinese side has all along exercised restraint, handled the issue in a responsible and constructive manner, and committed itself to negotiation and consultation.

Another concern is the arbitration between China and the Philippines. On 23rd January 2013, the Philippines unilaterally initiated the arbitration, which is in violation of its agreement with China and goes against international law. The two countries agreed to seek a solution to disputes through negotiation and consultation. And according to its provision, the UN Convention on the Law of the Sea (UNCLOS) has no jurisdiction to interfere in sovereign issues without bilateral agreement. The unilateral initiation is a violation of the Convention (Article 280, 281, 283) and an abuse of arbitrary procedures. Chinese insistence against accepting or participating in the arbitration proceedings is an observance, not of a violation, of the law. No one should be criticised for taking lawful action.

As east Asia is becoming the centre of the global economy, the EU naturally has increasing political and economic interests in the region. There are voices demanding the EU be present in the South China Sea issue and ensure its security in the region if it’s to be an influential actor in east Asia. Thus it acted on 11th March by issuing a statement saying it does ‘not take a position on claims’ and also mentioned issues like regional militarisation, and the use or threat of force. The statement, between the lines, indicated China is the one disrupting regional security and threatening the freedom of navigation and overflight (FNO), but China and other coastal states are all committed to safeguarding such freedom through cooperation. Indeed, there has never been an FNO incident in the South China Sea. China itself relies heavily on these maritime routes to transport energy and goods. 80% of its energy imports and 40% of its goods are traded through the South China Sea. You could say quite fairly that no country needs the freedom of navigation more than China. ASEAN member states and China have agreed to work together to push forward the implementation of the ‘Declaration on the Conduct of Parties in the South China Sea’ (DoC), and the Code of Conduct (CoC) consultation is the right way to properly manage disputes and promote practical cooperation.

“No country needs the freedom of navigation more than China”

China is committed to peace and stability, and is not going to undermine international law or reshape the regional order. If Europe wants a China that clearly contributes to regional stability and development, it need look no further than the Asian Infrastructure Investment Bank (AIIB).

The EU champions itself as a fair and square mediator. But without looking into the historical narrative and basic facts of the South China Sea issue, how could it live up to being a responsible and impartial global actor? I should also note the fact that, as the most dynamic economic locomotive in east Asia, China is the EU’s indispensable friend and trading partner. EU interests lie in strengthening its Comprehensive Strategic Partnership with China, not taking a side on the South China Sea issue. All the facts told, the EU needs to decide for itself what choice to make.

IMAGE CREDIT: CC / FLICKR – U.S. Pacific Fleet

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