Tag Archive for: EU

Truce for now: the EU and US embrace trade

The import and export of goods and services between the European Union and the United States forms the ‘largest bilateral trade and investment relationship’ on the planet. According to the European Commission, the US invests three times more in the EU than it does in Asia, and the EU’s investment across the Atlantic is eight times what it spends in India and China combined. As close as the two are, the size of the relationship hasn’t provided immunity from a White House that has been picking fights with, and imposing tariffs on, many of its economic partners.

Last Wednesday, European Commission President Jean-Claude Juncker arrived at the White House to try and strike a deal with Donald Trump on trade to prevent tit-for-tat tariff escalations by the US and China. Following the meeting, the leaders announced the beginning of ‘a new phase in the relationship between the United States and the European Union’.

The joint statement declared that both sides want to ‘resolve’ reciprocally applied tariffs—though they remain in place for now. In June, the US applied tariffs on steel and aluminium imported from the EU (and other countries), and in retaliation Brussels raised barriers for American exports to the continent (especially motorcycles, selected food and beverages, cigarettes and clothing).

The agreement has been dubbed by some as a breakthrough after weeks of negative comments from Trump towards the EU. He (falsely) claimed that the EU was founded to ‘take advantage of’ the US, and declared the EU to be a ‘foe’ on trade.  Others have pointed to the vagueness of the agreement and Trump’s perceived unreliability, shown by the failed deal with the Chinese in May. Prior to meeting Juncker, Trump tweeted that countries that weren’t interested in ‘fair’ trade deals would be hit with tariffs. After the meeting, Trump took to his favourite social media channel and shared a picture of Juncker embracing him, claiming that both sides obviously ‘love each other’.

The winners of the talks and agreements look to be European car manufacturers. Shares of Volkswagen, BMW, Renault and others took a leap immediately after the meeting’s agreements were announced, with some stocks gaining up to 5% in Europe. German politicians expressed relief, and Economics Minister Peter Altmaier said the deal could avoid a trade war and save millions of jobs.

Despite the buoyant stock market, the statement lacks detail. It’s unclear whether Trump will refrain from applying 25% tariffs on European-produced cars entering the American market, and the steel and aluminium tariffs are still in place.

German industry representatives greeted the news with caution. Dieter Kempf, the president of BDI (a German industry association), underlined that the agreements in the joint statement must be followed with concrete action.

There are also questions over different interpretations of the substance of the US–EU deal on both sides of the Atlantic. Straight after the meeting with Juncker, Trump claimed that the EU had agreed to ‘start buying soybeans … immediately’ and to buy ‘vast amounts’ of liquefied natural gas. However, the statement actually says:

We will also work to reduce barriers and increase trade in services, chemicals, pharmaceuticals, medical products, as well as soybeans … The European Union wants to import more liquefied natural gas (LNG) from the United States to diversify its energy supply.

Shortly after Trump’s tweet, the EU Commission felt compelled to clarify that the EU actually agreed to look into building more LNG terminals, not purchasing more LNG, and a senior commission diplomat told Der Spiegel that the EU ‘will not turn into a Soviet economy’ and import more than it needs. French Finance Minister Bruno Le Maire said agricultural products would not be part of any deal as food imports are subject to strict standards (for example, not being genetically modified).

So it seems that a US–EU trade war is on ice for now. But with Trump’s Twitter tirades and backpedalling from other recent agreements, America’s European partners are understandably cautious. A return to fierce words fired between Washington and Brussels and other capitals across the continent could quickly lead to the erection of new trade barriers. The Europeans saw what happened with China—a truce was followed by Washington applying tariffs in June. It remains to be seen whether the protectionist occupant of the White House will decide to use that approach with the EU.

The Austrian threat to EU unity

The divisions in the EU are likely to be exacerbated by the outcome of the Austrian election in October. The probable result will add to current tensions over illegal immigrants and provide more encouragement to Austrian nativists and nationalists. Moreover, the election could provide a further opportunity for Russia to sow discord in Europe.

A shift to the right in Austria would add to the disharmony generated by Poland and Hungary. After a change of leadership, the conservative Austrian People’s Party (OVP) assumed a dominant position in pre-election polling—primarily at the expense of the far-right Freedom Party of Austria (FPO)—and it has maintained its poll lead since the election was called. The elevation of its young leader, Sebastian Kurz, to chancellor would deepen the EU’s woes.

Kurz, currently foreign minister, has successfully encroached on the FPO vote by shifting his party to the right. In particular, he’s playing to fears of unrestrained illegal immigration, promoting the need for the complete integration of Muslims, and promising to stop migration from Africa and the Middle East. The domestic symbolism of a troop deployment to the Italian border should be seen in this context.

Even prior to the Trump administration, Austria stood out in Europe in terms of its alignment. The 2016 US-Global Leadership report, What people worldwide think of US leadership, revealed that in 2015 only 34% of Austrians approved of the ‘performance of the leadership of the United States’, while 60% disapproved. This is unlikely to have improved under the Trump administration.

A strong strain of Euroscepticism exists in Austria, and ‘anti-Western ideologies are deeply rooted in the political system’. While the FPO is the most overtly pro-Russian party and is an anti-sanctions political voice, anti-Americanism is ‘visible across all parties in Austria’. There’s widespread ‘sympathy for Russia, particularly on security issues’. Pro-Kremlin, anti-sanctions sentiment in Austria can be found ‘far into the political centre’.

While it’s a regular participant in UN peacekeeping missions and NATO-led actions, Austria has often defied US and EU wishes and pursued an independent approach to relations with Russia. In June 2014, it was the first EU member state to welcome Vladimir Putin for an official visit following Russia’s annexation of Crimea. More recently, Austria has been at the forefront of European criticism of the sanctions on Russia, and vociferous against the imposition of new ones.

With a modest population of 8.6 million in an area of 84,000 square kilometres, contemporary Austria faces a particular challenge in large-scale uncontrolled illegal migration. Austrians took 180,000 refugees after the Hungarian Uprising in 1956, a further 162,000 in 1968 following the end of the Prague Spring, and then 150,000 Poles following the 1981–82 suppression of the Solidarity movement. After that, 86,500 refugees arrived in Austria between 1992 and 1995 from the Bosnian War. Contemporary anxiety over uncontrolled migration through the Western Balkans route and across the Mediterranean is therefore understandable.

In the past, Austria has been held up as a model for European nations for its approach to Muslim migrants. As a result of the Muslim refugees and guest workers who came to Austria over the years and then remained, the status of Muslims and the organisations that represent them has constantly evolved. In 2015, the key 1912 law relating to Muslim relations with the Austrian state was revised under pressure from right-wing groups, and greater constraints were imposed on Islam than on any other religion in Austria.

The prospect of a coalition government involving the FPO is especially disturbing. The FPO leader, Norbert Hofer, gained 47% of the popular vote in Austria’s last presidential election, and the FPO still retains a solid 23% support among Austrian voters. The party considers ‘Russia to be the most important partner for Europe and Austria’.

There’s extensive evidence of close and active cooperation between Russia and the FPO. A study by Political Capital has documented the growing influence of Russia on Austrian right-wing parties, particularly the FPO. The study details an ‘unprecedented’ and pervasive web of strategic connections and relationships with Russia across the Austrian right-wing political spectrum. The FPO and Putin’s United Russia Party have an ‘official contract and agreement on future cooperation on a vast array of topics’.

The Visegrad countries—Poland, Hungary, the Czech Republic and Slovakia—will find in an Austrian OVP and FPO coalition government a strong ally in their push to have the EU migrant quota system reviewed and abolished. In line with opinion in the Visegrad countries, and the Balkan states, Eurobarometer found that support for a two-speed EU—favoured by Junker, Merkel and Macron—was falling in Austria. The growing split on significant policy issues and matters of sovereignty between Eastern Europe and the rest is only going to widen.

The surge of optimism that accompanied Macron’s election in some pro-EU quarters may turn out to be premature. Under a coalition government that includes the FPO, Austria may become a convenient vehicle for progressing Russia’s objectives of undermining US leadership in Europe, diminishing European unity and challenging the neoliberal order. At a minimum, the Austrian election could bring an increase in abrasive relations in the EU and see Austria align with other members seeking to weaken the centralised power of Brussels.

ASEAN at 50: a view from Singapore

We live in troubled times, with pessimism clouding even the most prosperous parts of the planet. Many are convinced that the international order is falling apart. Some fear that a clash of civilizations is imminent, if it has not already begun.

Yet, amid the gloom, Southeast Asia offers an unexpected glimmer of hope. The region has made extraordinary progress in recent decades, achieving a level of peace and prosperity that was previously unimaginable. And it owes much of this success to the Association of Southeast Asian Nations (ASEAN), which marks its 50th anniversary this month.

Southeast Asia is one of the world’s most diverse regions. Its 640 million people include 240 million Muslims, 120 million Christians, 150 million Buddhists, and millions of Hindus, Taoists, Confucianists, and Communists. Its most populous country, Indonesia, is home to 261 million people, while Brunei has just 450,000. Singapore’s per capita income of $52,960 per annum is 22.5 times that of Laos ($2,353).

This diversity puts Southeast Asia at a distinct disadvantage in terms of fostering regional cooperation. When ASEAN was founded in 1967, most experts expected it to die within a few years.

At the time, Southeast Asia was a poor and deeply troubled region, which the British historian C.A. Fisher had described as the Balkans of Asia. The Vietnam War was underway, and the Sino-Vietnamese War was yet to be fought. Many viewed the five non-Communist states that founded ASEAN—Indonesia, Malaysia, the Philippines, Singapore, and Thailand—as dominoes, set to be tipped over by a neighbour’s fall to communism or descent into civil strife.

But ASEAN defied expectations, becoming the world’s second most successful regional organisation, after the European Union. Some 1,000 ASEAN meetings are held each year to deepen cooperation in areas such as education, health, and diplomacy. ASEAN has signed free-trade agreements with China, Japan, India, South Korea, Australia, and New Zealand, and established an ASEAN economic community. Today, ASEAN comprises the world’s seventh-largest economy, on track to become the fourth largest by 2050.

As I explain in my book The ASEAN miracle, several factors have underpinned the bloc’s success. At first, anti-communism provided a powerful incentive to collaborate. Strong leaders, like Indonesia’s Suharto, former Malaysian Prime Minister Mahathir Mohammed, and Singapore’s founding father Lee Kuan Yew, held the group together.

It helped that as ASEAN was getting off the ground in the late 1960s and early 1970s, the strategic interests of America, China, and the bloc’s members converged. But even when the Cold War ended, the region did not erupt into conflict, as the real Balkans did. ASEAN countries maintained the cooperative habits that had become established in Southeast Asia in the 1970s and 1980s.

In fact, ASEAN’s erstwhile communist enemies—Cambodia, Laos, and Vietnam—decided to join the bloc. So, too, did Myanmar, ending decades of isolation. ASEAN’s policy of engaging Myanmar attracted criticism from the West, but it helped lay the groundwork for a peaceful transition from military rule. (Compare this to the West’s policy of isolation towards, say, Syria, which certainly won’t lead to a similar outcome.)

To be sure, ASEAN is far from perfect. Over the short term, it seems to move like a crab—two steps forward, one step back, and one step sideways.

Yet ASEAN’s long-term progress is undeniable. Its combined GDP has grown from US$95 billion in 1970 to US$2.5 trillion in 2014. And it is the only reliable platform for geopolitical engagement in the Asia–Pacific region, unique in its ability to convene meetings attended by all of the world’s great powers, from the United States and the European Union to China and Russia.

ASEAN continues to face serious challenges. Territorial disputes in the South China Sea have created deep divisions, and the intensifying geopolitical rivalry between the US and China poses a further threat to cohesion. And domestic politics in several member states, including Malaysia and Thailand, are becoming increasingly chaotic.

But ASEAN’s history suggests that the bloc can weather these storms. Its impressive resilience is rooted in the culture of musyawarah and mufakat (consultation and consensus) championed by Indonesia. Imagine how other regional organisations, such as the Gulf Cooperation Council or the South Asian Association of Regional Cooperation, could benefit from adherence to such norms.

The EU once amounted to the gold standard for regional cooperation. But it continues to struggle with a seemingly never-ending series of crises and weak economic growth. Add to that the impending departure of the United Kingdom, and it seems only prudent to seek other models of cooperation. ASEAN, however imperfect, provides an attractive one.

The EU was awarded the Nobel Peace Prize in 2012. But ASEAN’s approach may turn out to be the way of the future, enabling other fractious regions to develop sturdy bonds of cooperation, too.

The Anglosphere illusion


One of the most bizarre arguments made by the people who support Britain’s exit from the European Union is the notion that a self-exiled UK will find a new global relevance, and indeed leadership role, as the center of the ‘Anglosphere.’

The idea is that there are a group of countries—with the ‘Five Eyes’ intelligence-sharing community of the US, UK, Australia, Canada and New Zealand at its core—who share so much of a common heritage in language, history, law, democratic institutions and human-rights-respecting values, that they can be a new, united force for global peace and prosperity.

Britain’s capacity to energize and become the heart of this group will, it is said, more than make up for its exclusion from the sclerotic, culturally and linguistically divided, and increasingly marginalized EU.

Perhaps I am just a jaundiced colonial, but let me count the ways this all seems to me to be a fantasy. The basic problem for Anglosphere advocates is that none of the candidates for membership of this new club are likely to have the slightest interest—geostrategic, economic or political—in joining it.

Geostrategically, the main game is, as it has been for most of recorded time, geography rather than history, and the biggest game of all for the foreseeable future is the emerging contest for global supremacy between the US and China. The US certainly wants allies and partners to help it stare down any overreach by China in East Asia, and Anglophone Australia, Singapore, New Zealand, and especially India are part of its thinking as it implements its ‘pivot’ to the region.

But even more important, collectively, for the US are Japan, South Korea, and the very non-Anglo Southeast Asian countries, especially Indonesia, Vietnam and Thailand, whom President Barack Obama just hosted at an unprecedented US-ASEAN summit in California. Closer or more formal association with the UK would bring absolutely nothing to this table.

The US does value highly its relationship with NATO members Britain and Canada, particularly in its renewed tussle with Russia. But what Australia, New Zealand, and a bunch of other far-flung Anglos could usefully bring to that particular table is not self-evident.

It is equally hard to see US leaders devoting time and energy to attending Commonwealth Heads of Government meetings, which is essentially what any formal Anglosphere structure would amount to, not least given that the Commonwealth last had any discernible impact on any major international issue decades ago, in the fight against apartheid. Anglosphere advocates might also ponder the fact that, if there are any US voices supporting ‘Brexit,’ they bear an uncanny resemblance to the tribe of neo-conservative pundits who primed Britain for entry into the Iraq war.

Australia, for its part, sees its security future as wholly bound up in the Indo-Pacific region. While we value continuing remnants of our Anglo past—including Britain’s participation in the Five Eyes group, and our Five Power Defense Arrangements with Malaysia, Singapore, the UK, and New Zealand—the truth of the matter is that the UK has brought nothing of significance to the region’s defense since the fall of Singapore in 1942.

Economically, the story is the same. Anglosphere connections mattered a lot for Australians and others in the days before the UK joined the European Common Market. The severance of those ties was painful for our dairy and other industries, but for Britain hard-headed self-interest understandably prevailed. Self-interest now prevails for the rest of us.

In Australia’s case, our trade future is bound up either with all-embracing global agreements, or at least substantial regional ones like the Trans-Pacific Partnership, with the US the key player, or the Regional Comprehensive Economic Partnership now being negotiated between ASEAN and Australia, China, India, Japan, South Korea and New Zealand. It’s hard to see any value in adding to the mix another spaghetti bowl of Anglos.

The US manifestly feels the same way. It is investing energy in other regionally focused FTAs like the Transatlantic Trade and Investment Partnership with the EU. Moreover, Trade Representative Michael Froman made it clear last October that the US was not interested in negotiating a free trade deal with Britain if it pulled out of Europe.

Probably the hardest truth that Britain’s Anglosphere dreamers must confront is that there is just no mood politically, in any of the candidate countries of which I’m aware, to build some new global association of the linguistically and culturally righteous. We just don’t particularly think of ourselves as Anglo any more.

Things might have seemed different when Stephen Harper and our even more cringe-inducing Tony Abbott were prime ministers of Canada and Australia. But with Justin Trudeau’s election the Canadians have gone back to sounding and acting like Canadians, and with the Abbott government’s mercifully early demise, any talk of the Anglosphere here has been banished to the far-right fringe.

The writing was on the wall with the hugely negative reaction last year to Abbott’s reintroduction of ‘knights’ and ‘dames’ to the national honors list, and even more with his elevation of the Queen’s consort, Prince Philip, to a local knighthood. To Australians, 28% of whom were born overseas (only a sixth of these in Britain) and a quarter of whom speak a language other than English at home, this all seemed like preposterous yearning for a lost imperial age.

True, many of us living in the so-called Anglosphere remain nostalgic about Britain. I, for one, yield only to the travel writer Bill Bryson in my passion for English country walks and pubs. But as the saying goes, nostalgia isn’t what it used to be. The truth of the matter is that if Britain steps away from Europe, thinking it can compensate by creating an influential new international grouping of its own, it will find itself very lonely indeed.

Retrovision, 2014

Looking back on 2014

Humorists often say that hindsight is 20/20 vision. Not so. Historians will tell you that we often don’t see things clearly even in the rear-view mirror. As ASPI begins its shutdown for the Christmas–New Year break, it’s a good time to reflect on where we are at the end of 2014.

Let’s start with the great powers. The US remains hesitant, its leader a Jeffersonian, its middle class sucked down by lack of employment opportunities and a declining share of the national cake. In his first term, President Obama used to talk about the recovery of the US middle class as the path to US leadership in the 21st century. That recovery hasn’t happened. The US remains the world’s dominant power, but there’s an uneasiness about its leadership. In Asia, allies and partners remain anxious about the US rebalance—which is happening, but not at a pace sufficient to satisfy their need for instant gratification and not to an extent that restores the US position in the region to what it was in earlier decades. Read more