Tag Archive for: Europe

An outstretched hand for the Balkans

The European Union (EU) hasn’t had a great track record on enlargement recently. Some countries have felt that as soon as Brussels announced a tentative timetable for accession—what the EU calls a ‘membership perspective’—the initiative has been quickly and quietly forgotten.

The Balkans are no exception. Therefore, the comprehensiveness of the EU’s strategy for the Western Balkans published in early February came as somewhat of a surprise. Nevertheless, the EU has a major strategic interest in creating stability, security and prosperity in its immediate neighbourhood. No one wants to repeat the bloody Balkan wars of the 1990s or the migration crisis of the last two years. That means giving serious consideration to the western Balkans nations eventually joining the EU.

The EU strategy identifies specific initiatives ‘to support the transformation of the Western Balkans’. These focus on the rule of law, migration and security, socio-economic development, infrastructure, digitalisation and regional reconciliation. All aim to help Serbia, Bosnia and Herzegovina, Kosovo, Montenegro, Macedonia, and Albania in their reform processes. If successful, candidate countries could join the EU by 2025.

The EU’s commitment shows that its current member states support the Balkan countries’ eventual accession and are prepared to assist organisationally and financially during the region’s transformation. That will particularly allow for the monitoring of the quality of reforms. It also binds the EU to ‘welcome new members once they have met the criteria’—in order to avoid empty promises and to maintain the EU’s credibility.

One of the candidate countries’ most important steps is to fulfil Article 49 of the Lisbon Treaty, including the Copenhagen Criteria—institutional stability that guarantees democracy, a market economy, and the ability and willingness to take on the obligations of EU membership. According to the European Commission: ‘Joining the EU is far more than a technical process. It is a generational choice, based on fundamental values, which each country must embrace more actively …’

Montenegro and Serbia are the only two of the six candidates that have begun official membership talks. The EU strategy outlines specific steps for both countries that could lead to EU membership in 2025. That attention caused joy in Belgrade and Podgorica. The other four states were less cheerful because they received only renewed encouragement to reform.

Nevertheless, the document is an invitation to board the EU ship. European Commission President Jean-Claude Juncker repeated this message constantly during his tour of the region at the end of February.

While all six candidates share similar challenges—corruption, sovereignty and autonomy disputes, and weak rule of law, to name just a few—every country has unique issues. For example, Serbia can’t join unless it normalises relations with Kosovo because the EU won’t ‘import’ situations that could destabilise the union.

Albania is experiencing internal struggles over its judicial reforms. Opposition MPs released smoke bombs in parliament last year to protest the government’s appointment of an interim general prosecutor. Establishing the office of the prosecutor is a required reform step. However, the opposition wanted the prosecutor to be appointed by an independent commission rather than by the ruling party, in part because the prosecutor will be charged with cracking down on corruption, including among politicians.

The Balkan economies aren’t yet competitive enough to survive the EU single market. For example, Bosnia and Herzegovina is experiencing its highest youth unemployment rate for years (54.3% in 2016), a level surpassed recently by Kosovo (57.6%).

Bosnia and Herzegovina isn’t struggling only economically. The internationally brokered Dayton Agreement of 1995 was the best solution at the time to end the war and to provide a pathway for peaceful state building. However, more than 20 years later the agreement’s rules have cemented ethnic frictions.

Political candidates must identify with one of the three societal and ethnic groups. Candidates who decline to identify as either Bosnian-Serb, Bosnian-Croat or Bosniak, can’t participate in elections. Despite a common flag, common anthem and common sports teams, a national identity for Bosnia and Herzegovina remains far from reality. Becoming a member of the EU would allow its citizens to identify as European—perhaps bridging rifts in society and developing a common view of the future, particularly for the younger generations.

All six western Balkan states should grasp the EU’s outstretched hand. Russia monitors closely what’s going on in the Balkans—as Russian Foreign Minister Sergei Lavrov’s recent visit to Belgrade shows—especially activities associated with EU or NATO membership. It cracks the whip when it feels it’s necessary. But Moscow’s behaviour shouldn’t intimidate the western Balkan states—witness Montenegro’s recent accession to NATO.

It’s in Europe’s long-term strategic interest that the western Balkan countries meet the EU’s criteria and initiatives for membership. And the six candidates shouldn’t see the accession process as a competition to be the first to join. It’s in their collective interest to face current and future challenges together.

Achieving membership for the six would also send a strong message to Russia that the Balkan countries aren’t just a part of Europe geographically, but part of a wider EU family sharing common values.

Can Europe sustain the Macron moment?

At the start of 2017, many feared that the European project would experience a near-breakdown within the next year. The United Kingdom had decided to leave the European Union, the United States had elected a president who cheered the Brexiteers on, and populists running in the French and German elections posed a clear danger to European integration.

As we approach the start of 2018, the picture is very different. The European project has not only survived, but may be gaining new momentum. At least within the bubble of EU institutions in Brussels, one senses a newfound confidence.

More than anyone else, French President Emmanuel Macron is at the centre of this turnaround. His post-election victory speech in May was accompanied by the EU anthem, Beethoven’s ‘Ode to Joy’—a strong symbolic gesture. Since then, Macron has launched or proposed one initiative after another to strengthen EU institutions, while taking a lead in European foreign policy. With German Chancellor Angela Merkel struggling to form a government after September’s general election, all eyes are now on Macron.

The changing mood in Europe over the past year has been influenced by three factors in particular. The first is Brexit, which is undeniably causing problems for the British—and in turn causing most Europeans to begin to understand the extent to which their economies and societies are intertwined. The once-glorious country of Great Britain is now in a state of political agony as it tries to sort out the politics, economics and logistics of leaving the bloc. It is unlikely that voters in any other member state will envy the British experience.

The second factor is Donald Trump, whose US administration has a lower standing in Europe than any other in recorded history. According to one recent poll, Germans now regard Trump as a greater threat to their country’s interests abroad than Russian President Vladimir Putin or North Korean dictator Kim Jong-un. In a true race to the bottom, Trump is ahead.

Over the past year, European leaders have accepted that Europe will have to take more responsibility for its own affairs. After a vexing encounter with Trump at the G7 summit in Italy in May, Merkel summed up a sentiment that most other European leaders now share. ‘We Europeans must fight for our own future and destiny’, she said in an unscripted outburst at a campaign stop. ‘We Europeans truly have to take our fate into our own hands.’

The third factor is Putin’s Russia, which has continued to meddle in Western elections and act aggressively in Ukraine. All told, the ‘BTP effect’—Brexit, Trump, Putin—has convinced even skeptical Europeans that EU-level cooperation is necessary.

But, in addition to the impetus of the BTP effect, Europe is being propelled by stronger economic growth. The dark days of the euro crisis have begun to fade into memory, as has the refugee crisis of late 2015, which had a profound political effect on Germany, Sweden and other countries. Although the huge task of deepening EU integration remains unfinished, the political and economic conditions for seeing that process through have improved.

At the same time, the EU has suddenly emerged as the preserver of the liberal world order. In September, the Comprehensive Economic and Trade Agreement (CETA) between the EU and Canada entered into force. And, since then, the EU has moved closer to finalising an even more important trade agreement with Japan, and, separately, with the founding countries of Mercosur—Argentina, Brazil, Paraguay and Uruguay. Britain may be leaving, but the rest of the world seems to be lining up to make deals with the EU.

Still, there is no room for complacency. Despite many positive developments, governance is becoming more complicated within certain European countries, owing to an increasingly fractured political landscape. In Germany, forming a new government after an election used to be a straightforward affair. But now the country could be under a caretaker government until March, with little clarity about what sort of government will emerge. In the meantime, Germany can hardly play its customary role as Europe’s anchor of stability.

In the Danubian lands of Hungary, Austria and Bavaria, nationalism is on the rise. And in Italy, few would dare to offer any solid predictions of what will happen in the next general election, which must be held before 20 May 2018.

Moreover, Europeans cannot rely indefinitely on the low interest rates that have contributed to the current recovery. EU leaders will need to push much harder for structural reforms than they have so far. Although Spain has revived its economy with important reforms, and Macron has tackled France’s notoriously Byzantine labour code, the EU is still struggling on many fronts. For example, despite Estonia’s heroic efforts to create a digital-reform agenda during its presidency of the Council of the EU, far more needs to be done in that area.

Next year will be the last chance to pursue EU-level reforms before a fateful year of reckoning begins. In March 2019, Britain will leave the EU, with or without a divorce agreement. Then, in May, come elections to the European Parliament, and new leaders will be appointed for the EU’s core institutions. Before we know it, Jean-Claude Juncker’s presidency of the European Commission will be over.

Macron is anxiously awaiting a new government in Berlin. As things stand, it is far from clear that the next German coalition will support his EU-reform agenda. And, with each passing day, the European Commission will be running out of time to pursue any new initiatives that could realistically be finalised before 2019.

So, while the gloom and doom of 2016 may have receded, it could all too easily return. Sustaining the momentum generated by Macron’s election in France and realising the promise that it holds will require decisive action in the months ahead.

Redefining Europe, and Europeans

Traveling through Germany in the run-up to its federal election on 24 September, one cannot help but be struck by the lingering signs of profound trauma from the 2015 refugee crisis.

Suddenly and virtually without warning, nearly a million desperate people—mostly Syrians fleeing the carnage in their homeland—flocked to Germany. And while Germany may be Europe’s most bureaucratically well-managed country, even it was overwhelmed.

German Chancellor Angela Merkel’s response to the crisis two years ago was to throw out the rulebook and open her country’s borders. She famously told the German people, ‘Wir schaffen das’ (We can do it).

But German public opinion today suggests that the country has become warier of such bold gestures. Yes, Germany did it, because there was no alternative; and many Germans are proud of their country for rising to the occasion. But most hope that such a crisis never happens again.

Although many Germans have come to terms with what happened two years ago, a small minority still feels betrayed. They have responded with anger and xenophobic nationalism, and these sentiments will undoubtedly be reflected in how they vote.

But Germany’s trauma from the refugee crisis should be put in perspective. Far more refugees have sought and found protection in countries such as Lebanon and Turkey than in Germany. In relative terms, Germany would have had to take in 20 million refugees to match Lebanon in 2015. In Turkey, Istanbul alone is now hosting more refugees than all of Germany.

Of course, Germany is not the only European country that remains unsettled from the refugee crisis. In my own country, Sweden, a political party that wants to shut us off from the rest of the world will most likely make strong gains in next year’s general election. And in many Central European countries that only recently regained their sense of sovereignty, refugees are widely viewed as posing a threat to national identity.

One way or another, these issues will dominate European politics in the years ahead. Europe is slowly trying to build up resilience to the kind of trauma it experienced in 2015. It is a continent that once exported war and turmoil, but that now wants to protect itself from its neighbours’ problems.

One of the lessons from 2015 is that the European Union will need to develop a far stronger common foreign and security policy. The EU must replace lofty rhetoric with concrete action, while also accepting its regional and global responsibilities. Barbed wire fencing between Hungary and Serbia will not shield Europe from the effects of war in Ukraine, putsches and terrorism in Anatolia, or violent conflagrations in the Levant and Mesopotamia. And it will not help Europe manage the dramatic shift now underway in Africa, which will be home to 40% of the world’s working-age population in a few decades.

Another lesson from 2015 is that European countries must learn to redefine their national identities. The United States, Australia and Canada have all been built on immigration, and most of us are the progeny of people from somewhere else. Indeed, there is not much left of the ‘first nations’ in these countries. It is now entirely possible for there to be more people of Swedish descent in Chicago than in Stockholm.

To be sure, Europe is different from its Western counterparts. Its tribes have been fighting one another for millennia. And for the past two centuries, Europeans have been building ever-stronger nation-states and national identities on the basis of long, complicated historical experiences.

The EU itself was of course built by nation-states. But their citizens wanted to overcome their long legacy of tribalism and war. Judged by that objective, the EU’s first half-century has been a tremendous success. And yet the strains are there for anyone to see. Whether justified or not, when people perceive a threat to their national identity, their tribal instincts kick in. And for a truly frightened few, Brussels and Mecca have both come to be seen as mortal threats.

For Europe to find its place in a rapidly changing world, its citizens will have to learn to tap multiple identities. One can be a proud Swede and a proud European at the same time; one can also be both German and Turkish, and derive strength from that duality. It is not disloyal to see oneself as a citizen of the world. On the contrary, it is honourable.

Such a shift in attitudes would make for a very different Europe. We would have finally moved on from ancient tribal conflicts and fears, and embraced a networked, digital future. Merkel, who will likely be elected to another four-year term as chancellor on 24 September, told Germans that they ‘can do it’. But whether Germany and the rest of Europe will do it remains to be seen. We have our work cut out for us.

Beast of burden

Image courtesy of Pixabay user geralt.

If Hawaiian-born Obama had done it, people would have said he had kahunas. But we’re talking about New York native Donald Trump, so the word is chutzpa. According to Fox News, Trump handed German Chancellor Angela Merkel a bill for US$374 billion in unpaid NATO contributions. And while the US and German governments deny that it’s the case, there’s no erasing Trump’s tweet from after the meeting:

‘…Germany owes vast sums of money to NATO & the United States must be paid more for the powerful, and very expensive, defense it provides to Germany!’

Perhaps the hand-delivered note would have been preferable.

But how much of the burden does the United States really shoulder on behalf of its allies? And are Trump’s indignant protests making a difference to what its European allies spend?

According to the latest official NATO reporting, only four of 26 European countries managed to meet the 2% of GDP NATO benchmark; Greece, Estonia, Poland and the United Kingdom. However, that might be an overestimate. The International Institute of Strategic Studies (IISS) only credits two countries—Estonia and Greece—with making it across the line. As for the big economies of France, Germany, Holland, Italy and Spain, they all fell below the benchmark with GDP shares of 1.8%, 1.2%, 1.2%, 1.1% and 0.9% respectively per NATO reporting.

In reality, the situation may be worse. IISS uses the NATO definition of defence spending inclusive of pensions, which can be a substantial share of the overall budget for some countries. As examples, they note that pensions account for 33% of Belgium’s defence spending, 24% of France’s and 17% of Germany’s. But including pensions is questionable. Not only do military pensions not produce any combat capability, they’re often just routine social security payments relabeled (as is largely the case with Australia’s means-tested Service Pension). Note that Australia and the United States separate the bulk of their veterans’ programs from their defence budgets.

With or without pensions, it’s clear that none of NATO’s European members come close to the 3.6% of GDP spent on defence by the United States. I’ve heard Europeans say that’s okay because the United States has security responsibilities in both Europe and Asia, so it makes sense for Europe to spend a lower share of GDP on defence. Of course, that’s just an admission that Europe is free-riding on US efforts in Asia, where Europe’s economic interests are vitally engaged. To be clear, EU exports to China, Japan and South Korea amounted to $290 billion in 2016, whereas the corresponding figure for the United States was only $221 billion.

Trump’s demands and Russian troublemaking have led to predictions of a ‘$50 billion Defence Boost for Western Europe through 2019’. That sounds impressive—until you crunch the numbers. Assuming the extra $50 billion is used to ramp up spending linearly over the three years to 2019, the result is an extra $25 billion in 2019. That’s roughly a 10% increase to the $254 billion non-US NATO defence expenditure in 2016. However, the IMF projects that real GDP for the European Union (a reasonable proxy for European NATO) will grow by 5.3% over the same period and inflation will compound to 4.7%.

So, all else being equal, the additional $50 billion will simply allow European NATO to tread water at their present level of 1.46% of GDP.

Some countries are making a visible effort to boost capability—Sweden, for example, is reintroducing conscription. But it remains to be seen if the Europeans will make the sacrifices necessary to significantly boost defence spending. Germany makes for an interesting case study.

Following her meeting with President Trump, Chancellor Merkel said that Germany had a plan in place to reach 2% of GDP by 2024, consistent with the 2014 NATO agreement for all members to reach 2% of GDP within a decade. Once again, however, the numbers don’t add up. Germany increased defence spending from €34.9 billion in 2016 to €36.6 billion in 2017 and has just announced plans to reach €38.5 billion in 2018. But, using IMF estimates of German GDP, it turns out that the resulting share of GDP only changes in the second decimal place, from 1.11% in 2016 to 1.17% in 2018. Even the target of €42.3 billion for 2021 will only result in a GDP share of 1.18%.

Reaching 2% of GDP by 2024 would require unfeasibly large hikes over the period 2021–2024. And the German Foreign Minister, Sigmar Gabriel, agrees. Speaking at the end of March, he said ‘It’s totally unrealistic to believe that Germany would increase its defence spending from €35bn now to €70bn.’ He added ‘I know no politician in Germany who thinks that this is something you can reach or that it even would be desirable to do so.’

Elsewhere in the larger economies of Europe, the picture’s mixed. The Italian and Spanish economies continues to struggle, with those countries’ defence spending tending downwards for the better part of a decade. As The Economist observed, they ‘would struggle to satisfy NATO while observing restrictive European Union budget rules’. Great Britain is keeping its head above the 2% line for now (but only by including military pensions). But budget pressures mean it may have to cut the size of its defence force to live within a constrained budget. France’s plans are unclear, but the head of their defence force has called for spending to grow from €32.7 billion in 2017 to €43.5 billion in 2022—which would result in the calculated GDP share increasing from 1.5% to 1.6% (or from 1.8% and 2.0% if the numbers are adjusted to include pensions).

So, despite earnest undertakings to the contrary, there’s no sign yet that the European members of NATO are going to make President Trump happy. Perhaps they think he’s bluffing. I’m not so sure.

This is the first of a series of extracts from the forthcoming 2017 ASPI Defence Budget Brief.

Russia’s Trump dividend in Europe

Image courtesy of Flickr user Bonnie Natko.

We’ll have to wait to see what Donald Trump’s election means for Europe. Immediate responses have predicted a boost for right wing populist political parties in Europe. The presence and popularity of Eurosceptic and nationalist parties has been growing in Europe for some years. Like Trump, they’re also seen to be drawing on public resentment towards a remote political class that failed to resolve the economic consequences of the financial crisis, the challenge of immigration, or prevent the dilution of national culture from the EU’s freedom of movement policies. The impacts of the US election will be varied in nature and scope, but Russia is best placed to gain the biggest strategic dividend.

Europe’s political environment and institutions are very different from the US and its geopolitical situation is far more complex. Trump’s victory doesn’t mean a wave of far-right regimes will pop up across Europe. However, the most significant impacts of rising populism can already be seen among the traditional centre-right and left parties as they move to the right to deflect the populist challenge now newly energized by Trump’s victory.

Trade is emblematic of fissiparous forces at work in the EU. Already national governments have been moving to distance themselves from the EU’s negotiation of the Transatlantic Trade and Investment Partnership (TTIP). In part that’s an attempt to parry the political capital being made by a collection of far right groups, environmentalists and social activists. The concerns of those groups include consequences for employment, maintenance of European standards, and the further undermining of national sovereignty and independence.

Although serious doubts already existed about success of the trade agreement, the anti-free trade thrust in Trump’s campaign means the TTIP will now be almost impossible to resurrect. Inevitably, Eurosceptic and xenophobic parties will claim this as a victory but worryingly major European parties, including in Germany and France, have will also seek to claim credit.

Even if they’re successful in blunting the electoral appeal of the Eurosceptic and xenophobic parties by adopting some of their policies, mainstream European parties will have irreversibly changed the political landscape. Support for a supra-national arrangement like the EU can probably only come out of a catastrophic event such as the Second World War and once that support’s lost, it’s inevitable that the process of greater integration and expansion will be reversed.

Russia may be the primary beneficiary of Europe’s reaction to Trump’s victory. Russia’s recent actions in the Ukraine and Syria have been described as part of a geopolitical project to undo the ‘post–Cold War Euro-Atlantic security order.’ Russia has already made progress on this score. If the Trump presidency now contributes to the unravelling or weakening of the unity of the EU, as well as  unsettling NATO, it would represent a significant strategic gain for Russia.

The European Council on Foreign Relations warns that, ‘Moscow’s “special services” conduct active measures aimed at subverting and destabilizing European governments’. One means employed by Russia has been to clandestinely support European Eurosceptic and xenophobic parties. Early this year Congress tasked the US intelligence community to investigate Russia’s infiltration and ties with the right wing parties in Europe as a result of growing concern about, ‘Moscow’s determination to exploit European disunity to undermine NATO, block US missile defence programs and revoke punitive economic sanctions imposed after the annexation of Crimea’.

However many observers already see the evidence of the connections and ideological synergy between Putin’s Russia and the right wing parties in Europe and proof of Russian financial support. Were the success of the Trump campaign to presage a similar upsurge of electoral success for anti-EU or nationalist parties in the upcoming European elections only Russia could gain from the consequential pressure on European unity.

Whether Russia’s geopolitical maneuvering is labelled ‘hybrid war’ or seen as a revival of Soviet Cold War tactics, Moscow has plenty of scope to apply increased pressure to the EU and NATO as the supranational bonds begin to soften. Signs of a warming of Russia–US relations coupled with a follow through by the new US administration’s demands for European NATO members to meet agreed funding levels or to subsidizing US troop presence will provide fertile ground for Russian adventurism—in the Baltics, the Balkans and the Caucasus, and through political proxies in Europe.

The EU was already under strain prior to Trump’s election. The anti-EU forces, with ongoing support from Russia, will undoubtedly adopt and adapt the formula that brought Trump electoral success. That will force the traditional political parties across Europe to shift further from the liberal centre towards the nationalistic right. In turn that will further weaken the EU, and eventually NATO, relative to Russia.

The consequences will go beyond the EU. It will become harder to maintain the Western consensus over sanctions on Russia for the Ukraine and reduce the capacity of the US and its allies to exercise strategic influence in many places around the world.

A Brexit nightmare

Image courtesy of Flickr user duncan c

The prospect of huge financial and currency collapses inevitably dominated initial concerns over Britain’s decision to leave the EU. But greater stability now seems likely as world markets adjust to the changed circumstances.

More worrying are emerging geo-political uncertainties now posing potentially nightmarish threats to European political stability and to global peace and security.

Brexit underscores increasing voter rejection of the globalising neo-liberal economic and social policies that have shaped world affairs since the 1970s. British voters have signalled a decisive preference for nationalistic populist solutionsfocussed on real or imagined concerns over immigration and the loss of sovereignty to bureaucrats in Brussels.

Many working-class people across Western Europe and elsewhere no longer see their lives improving: jobs are insecure, wages aren’t rising, economies are sluggish, and social benefits are being eroded by immigrant arrivals and by governments pursuing austerity policies. So much for the blessings of free-markets and fundamentalist capitalism.

The Brexit vote reflected a spreading mood of alienation, defiance, anger, and rejection of the political establishment’s economic and political views: leaders may be losing the masses in part to toxic and vengeful sentiments.

So far, of course, only the British have taken this road, but the word ‘contagion’ is increasingly appearing in global political analysis. France, the Netherlands, Germany, Hungary, Poland, Austria and others have all spawned their own Nigel Farages and Boris Johnsons with similar siren songs of liberation and ‘taking back our country’, ‘reasserting our sovereignty’ and expelling immigrants.

The same phenomenon has emerged in the US with the rise and rise of Donald Trump, defying the Republican Party establishment and urging Americans to embrace the politics of exclusion, even hatred. The family resemblances between Trump and the Euro-haters are striking.

The chaotic political aftermath of the Brexit vote leaves little room for doubt that establishments across Europe and economic bureaucrats haven’t a clue about what they need to do to bring traditional supporters back to the rational pragmatic political and pragmatic centre.

They’re flopping about helplessly while defiant agitators campaign for the downfall of the EU. Bonds of solidarity, respect and unity are breaking down between impotent leaders and rampaging followers everywhere in Europe. The mass resignations in the British Labour Party perfectly illustrate the crisis.

Who gains geo-politically from this political and bureaucratic disarray and confusion? Above all, Vladimir Putin, the authoritarian Russian leader who still harbors Marxian dreams of burying the West. He’s delighted by Brexit and its aftermath. With Europe divided and directionless, Putin knows that it will be increasingly difficult for the EU to impose and maintain effective sanctions on Russia over its brutal actions in the Ukraine and Crimea.

It’s not in the Western interest to do anything to encourage the emergence of a more assertive and aggressive Russia. Yet that’s precisely what the Brexit vote and agitation in other Western European countries is encouraging.

Ironically, the Brexit agitators march under the democratic banner:  they promise to put power back in the hands of the people, to usher in the dawn of a new independence day, to return freedom to masses much put upon by Brussels. They give voice and substance to political desires, dreams and neuroses.

This is debauched democracy. It’s not tolerant; it’s not inclusive; it targets difference and singles out minorities for persecution. It gives life and purpose to the activities of Islamist and other species of fascist and strengthens the arm of Putin’s aggressive regime.

The governments of Western Europe and the EU may yet be able to manage and surmount this crisis. It’s not, for example, clear how far and how fast other populist groups will move to exploit the referendum process to impose more nationalistic and populist politics on Europe.

But here’s the nightmare: in 1933 Hitler came to power after winning 33%of the votes in 1932 elections. It was entirely legal, with the Prussian political elite convinced it could manage the upstart Bavarian guttersnipe who boasted he would restore Germany’s greatness. Gallows, gas chambers and total war were just over the horizon.

We’re not there yet, but it’s not hard to imagine that there could be embryonic Fuhrers among the populist agitators now offering to restore national greatness and to oust unwanted newcomers. The EU has kept the peace in Europe since 1945. Only fools and madmen would tear it down.

Britain at sea

Image courtesy of Flickr user frankieleon

In the early 1960s, former US Secretary of State Dean Acheson famously quipped that the United Kingdom had lost an empire, and not yet found a role. Afterwards, successive British leaders tried to change that, by forging a new role for Britain in Europe. The country’s just-concluded ‘Brexit’ referendum, in which a majority of voters expressed their desire to leave the European Union, represents the spectacular failure of that effortand the end of an era.

Britain’s journey toward Europe began in the early 1970s, when the firmly pro-European Prime Minister Edward Heath took the country into the European Economic Community, the EU’s forerunner. His successor, Harold Wilson, secured the membership with a 1975 referendum.

And Margaret Thatcher signed the Single European Act, which created the single marketone of the most important steps in European integration, and one that owed much to British inspiration. Her successor, John Major, who campaigned actively for Britain to remain in the EU prior to the recent referendum, was instrumental in forging the Maastricht Treaty. While Tony Blair was in power, he spoke eloquently about Britain’s European mission.

Then came David Cameron, who wavered in his attempt to keep the Conservative Party united, and ended up with losing both Europe and the party.

To be sure, Cameron wasn’t necessarily pitching Europe to an agreeable audience. Many Britons retain a certain nostalgia about the past, which they recall as more familiar, controlled, and safe.

That nostalgia was constantly reinforced by a vitriolic anti-Europeanand, in particular, anti-Germancampaign spearheaded by some of the country’s leading media. To read the Daily Mail or the Sun in the last few years was to encounter a kind of atavistic nationalismoften backed by blatant lieson a scale rarely seen in other European countries.

But there was also a problem with the pitch. Fearing political fallout, even leaders who genuinely supported European integration hesitated to defend the EU in a bold or inspiring manner to their constituents. For their part, the leaders who opposed the EU, such as former London Mayor Boris Johnson, who led the ‘Leave’ campaign, simply continued to apply a tried and true formula: stoking the fires of fear-based nationalism.

When British leaders crossed the English Channel to Europe, however, everything changed. Leaving their Euroskepticism behind, they continued to deepen the UK’s role in Europe. When I was Sweden’s foreign minister, I attended more than 130 meetings of the EU’s various ministerial councils, and I can honestly attest that the UK’s voice was among the most prominent in every one.

The truth is that the EU that has emerged over the last decade has been shaped in no small part by the UK. Progress on the single market has helped to boost competitiveness. New free-trade agreements are giving European economies access to major markets around the world. The achievement of a global climate agreement promises not just to protect the environment, but also to cement Europe’s role as a leader in sustainability. And enlargement has enhanced Europe’s security substantially.

These are, by all reasonable standards, remarkable UK-led achievements. But this was mostly a well-guarded secret back home. And that is the failure that lies at the root of the calamity that is Brexit.

The UK has now officially lost its chance at securing, once and for all, the leading role in Europe that was there for the taking. What is more, the UK’s national political landscape is in ruins. The Conservative Party is deeply split; the Labour Party is inert under a nostalgic leftist leadership; and the Liberal Democrats have more or less left the scene.

And the UK may be headed toward further ruptures. Nicola Sturgeon, the first minister of Scotland, which overwhelmingly voted to remain in the EU, has said that another referendum on Scottish independence is ‘highly likely’, calling the removal of Scotland from the EU ‘democratically unacceptable’.

While the likelihood of a breakup remains impossible to predict, the virus of political divorce has certainly proved contagiousand a more fragmented Europe is undoubtedly a less safe one.

In answering one question, elderly English votersthe core of the ‘Leave’ electoratehave raised a bevy of new ones. Will the UK settle for a satellite-type relationship with the EU? Will it become little more than the rural hinterland of an offshore financial center on the Thames? Will its leaders find yet another role for it to play in the world, or allow their country to fade slowly into irrelevance?

Only time will tell. In the meantime, the UK is set to endure substantial political and economic pain.

The EU, trade and the breakdown of unity

Major geopolitical shifts can be unexpected, such as the once unthinkable situation of European unity crumbling. This prospect may have delighted some observers, but it’s worrying for many others.

The European Union (EU) has been indispensible to US management of the post-Cold War international security environment as a partnership based on democratic values, human rights and shared international norms and a commitment to collective security through NATO. While the European refugee crisis—now exacerbated by the EU quota proposal—has emboldened the growing populist anti-EU forces, the debate over the Transatlantic Trade and Investment Partnership (TTIP) also has the potential to add to the growing breakdown of European unity.

With the rise of anti-immigration sentiment, resurgent nationalism and disenchantment with EU governance—and particularly the impacts of economic austerity—economic reform and free trade policies like the TTIP are exposing serious fault lines in Europe. The EU object of ever-greater integration is now an anathema to many Europeans.

Increasingly the usually dominant parties in Europe have had to modify their policies to accommodate attacks from populist parties that cater to general discontent and disillusionment with the European Project. The contest over the TTIP therefore presents an unprecedented opportunity for opponents of the EU, especially given the major elections in France, Germany, Luxemburg, and the Netherlands due to take place in 2017.

Last year only a tactical maneuvere by the major parties kept France’s National Front (FN)—which opposes globalization, is Eurosceptic and anti-immigration—from winning two regional presidencies. Marine Le Pen, leader of the FN, is regarded as having a real chance in France’s 2017 presidential race. Last month’s leak of EU TTIP negotiating documents by Greenpeace has forced France’s socialist President Hollande to take a strong negative position on the TTIP—more consistent with the FN’s stance.

Just this week, the Austrian presidential election saw a very narrow loss by ultra-conservative Freedom party of Austria (FPoA) candidate. The FPoA opposes ‘further European integration and the Islamisation of Austria’. Earlier this year the nationalist anti-Muslim Alternative for Germany (AfD) won representation in all three German state parliaments. A common feature of both the Austrian and German polls was the dismal showing of the liberal-centrist pro-EU parties.

Across Europe, illiberal nationalists, anti-Muslim/anti-immigration and Eurosceptic parties are increasing their influence—Poland and Hungary are governed by illiberal parties, and the Eurosceptic nationalist Finns Party is the second largest in Finland. Geert Wilders’ Party for Freedom only holds 15 of the 150 parliamentary seats in the Netherlands, although polls show support rising from 15 to 38 percent. And in the UK, while only finishing distant third in last year’s British General election with 12.7 percent, UKIP’s policies have influenced the Tory government to hold a referendum on EU membership.

Meanwhile the Podemos Party in Spain and Syriza in Greece, while nominally leftwing and pro-immigration, have in common with the rightist parties a strong opposition to neoliberal austerity policies and trade liberalization. They also advocate reform of the EU and devolution of power back to member states.

We’re likely to see the emergence of several ultra-nationalist Eurosceptic governments in the coming year. This is an important moment for Europe, as ratification of the TTIP will be required at three levels—the European Parliament (EP), the European Council and by the parliaments of the member states.

Following the 2009 Treaty of Lisbon, the EP has a veto over EU trade agreements and it has already demonstrated some independence on the issue. Currently more than half the European population supports the TTIP, but the notable exceptions are Austria, Germany and Luxembourg.

In the prevailing mood in Europe and given the pressure for mainstream parties to make concessions to the disillusioned and disgruntled voters who support the Eurosceptic parties, the passage of the TTIP through national parliaments will likely be disruptive and not necessarily successful everywhere. It still seems unthinkable that the EU will unravel and it would be alarmist to suggest a breakdown is imminent. Yet it remains unclear how Europe will pass through this period.

The debate over the TTIP will not just exacerbate the existing obstacles to greater EU integration; it will invigorate the campaign for greater political devolution and meaningful national sovereignty in Europe.

If the consensus on Europe breaks down and the coordination of policy—including security policy—becomes harder to achieve, it would flow over to NATO decision-making. The US is already showing concern. A weakening of the EU could create opportunities for Russian and Turkish adventurism in Eastern Europe and the Balkans, and make dealing with the Middle East and the sub-Saharan Africa more difficult. A reawakening of radical ethnic nationalism across Europe would be the worst outcome. In times of growing security and strategic challenges, the world needs a strong EU.

Schengen’s lessons for ASEAN

Grenctale-Saločiai Border, Latvia/Lithuania

Several weeks ago, at a border security conference in London, I thought I was going to see something akin to the recent Ukrainian parliament brawl. A British MP and a Migration Watch representative separately declared the Schengen Agreement to be ‘dead’, which on both occasions was met with passionate jeers and cheers from the audience.

Speakers from the European Union later argued in response that the Schengen Agreement is alive, sick or immortal. Passionate discussions concerning the Schengen Agreement’s future continued across the two-day program.

Freedom of movement was a central tenant of both the Treaty of Rome and the European Economic Community that it formed. But neither instrument provided a sufficiently strong enough argument to compel all European Community members to abolish their border control measures with other members.

It was the failure of the European Economic Community to negotiate open borders between member states in the early 80s that led the initial five nations to sign the Schengen Agreement on 14 June 1985.

At 30, the Schengen Agreement is neither young nor old. Despite current criticism, it hasn’t been without economic successes. It has survived a number of crises, including the fall of eastern European communism.

A number of vocal UK commentators have recently criticised the Schengen Agreement’s performance in the face of this year’s irregular migration crisis. Since January 2015, there have been an unprecedented 1.2 million illegal border crossings into the Schengen Area: and unfortunately well over 3,700 drowning deaths associated with the Syrian crisis.

UK Border Force operations in Calais provide visible evidence of the British government’s dissatisfaction with the Schengen Area’s border controls. One could be forgiven for characterising those operations as being akin to the construction of ‘fortress UK’.

Much of the current criticism of the Schengen Area and Agreement is related to their perceived failures in stemming irregular migration flows and the uneven application of external Schengen border controls in Italy and Greece. From a non-European observer’s perspective, it appears that arguments about the Schengen’s Agreement’s future are close to boiling point.

But such criticisms are predicated on assumptions that the flow of refugees could have actually been stopped. I’m not convinced that’s the case.

The Schengen Agreement has provisions within its framework to prevent states from introducing customs and tax measures as quasi visa controls. But the agreement doesn’t prohibit states from reinstating border controls to meet extraordinary national threats for short periods. That has occurred on at least four occasions in different member states prior to the 2015 irregular migration crisis.

In 2010 Malta introduced temporary checks for a papal visit. In 2011, France closed its border to trains carrying Tunisian refugees. That same year, Denmark tightened borders in response to illegal immigration and organised crime. And Estonia introduced temporary checks due to a 2014 US presidential visit.

As such, border closures by France, Belgium, Hungary and Slovenia in response to the 2015 irregular migration crisis and recent terror attacks aren’t unprecedented. And as such, they don’t, on their own, spell the end of Schengen Agreement.

The spirit of the Schengen Agreement is immortal, if for no other reason than the economics of the alternatives. The private and public sectors across the Schengen Area are now reliant on the cost and time savings provided by open internal borders. And during a time of austerity the permanent reinstatement of border functions doesn’t appear affordable for many member states.

For those reasons, I believe that the Schengen Agreement will survive this current crisis: albeit possibly a little smaller should Greece and Italy be expelled. And I suspect that Turkey’s admission to Schengen Agreement will be delayed further as the member states become more risk adverse.

The experiences of the Schengen Area in 2015 have real implications for ASEAN leaders considering an integrated community with labour mobility.

In its time as chair, Malaysia has championed an integrated ASEAN community where goods, services, investment, capital and skilled labour flow freely across physical borders.

ASEAN’s pursuit of consensus may be the factor that contributes to the future proofing of this integrated community. In contrast with the ‘all-in’ Schengen Agreement model, the ASEAN approach will be cautious and focused on consensus. That approach will allow integration to be evolutionary in nature, and reversible if necessary: sovereignty will always reign supreme.

ASEAN’s approach to free flowing skilled labour illustrates that cautious approach. To date, much of ASEAN’s efforts towards the creation of free flowing skilled labour has been focused on the accreditation of mutual recognition arrangements for professions. Actual movement of skilled labour will be strictly controlled by individual member states. In parallel, ASEAN member states are developing policy arrangements to protect domestic labour forces.

Over the next 10 years, ASEAN’s member states are likely to derive significant benefits from their proposed economic and labour force integration. The diverse levels of economic development in ASEAN’s member states make integration a much more difficult prospect than that experienced in the Schengen area.

The Schengen Agreement’s current trials should however illustrate to ASEAN member states that future border arrangements must be robust enough to deal with extraordinary challenges, if they are to stand the test of time.

ASEAN’s member states should consider and balance both the economic and security dimensions of any future border arrangements. And they should maintain the frameworks and capacity to implement extraordinary border controls for short periods of time in the face of future risks and threats.

The Schengen Agreements recent experiences also illustrates that many of the integration decisions that are now being considered may be unable to be reversed. In this context, ASEAN’s cautious approach may prevent it from sleepwalking into problems further down the track.

Managing monopolies or confecting competition?

Eurofighter Typhoon - RIAT 2014

In a rare moment of not talking about submarines or frigates at the recent PAC2015 meeting, we sat down for a talk with the good folk from MDBA, a multinational company that does a lot of work for European armed forces. They’re also part of the UK Ministry of Defence’s Complex Weapons consortium, a partnership between the MoD and a number of companies which was set up in 2008.

The approach behind Complex Weapons is interesting, as it reflects one possible response to the increasing difficulty in maintaining a vibrant ecosystem of companies competing to provide state of the art weapons. Given exponentially increasing unit prices and increasingly long development times, it’s hard for companies to stay afloat if they miss out on major contracts. Even the largest contractors in the US feel that pressure; there are concerns that Boeing will withdraw from the fighter aircraft business after production of the Super Hornet runs down. And depending on how the contract for the USAF’s new Long Range Strike Bomber goes, it could cause further consolidation of ownership in America’s defence industry.

The British approach of partnering with industry to manage the development of new weapon systems collectively is effectively running up the white flag on competition. And it’s not just that domestic competition is deemed infeasible for complex weapons systems within the UK; a multi-national approach has long been adopted to try and recover economies of scale in the face of dwindling demand. Multi-national development of combat aircraft such as the Eurofighter Typhoon is now the norm, a model that goes back as far as the 1970s tri-national Panavia program that produced the Multi-Role Combat Aircraft (later Tornado). If you include the 1960s Concorde program, the same pressures have been driving would-be commercial rivals together for half a century now.

It’s a similar story with British shipbuilding. The MoD signed a Terms of Business Agreement in 2009 with an industry consortium that later became BAE Systems Marine – Naval Ships, which was based around industry consolidation and included a long-term assured minimum workload to sustain naval construction in the UK. The agreement has seen an Offshore Patrol Vessel program initiated to ensure shipyard continuity pending the commencement of the Type 26 global combat ship program.

Australia isn’t immune from the pressures driving consolidation and monopoly supply arrangements in Europe. In August, the Abbott government announced that production of the Future Frigate and OPV programs would be brought forward to 2020 and 2018 respectively. Having decided (rightly or wrongly) that the problems with the AWD program are largely due to the boom and bust cycle of naval production, the government probably saw itself with only two viable options; underwrite what’s effectively an open ended commitment to buy from monopoly suppliers, or let the shipbuilding industry go altogether.

The latter would force Australian shipbuilders to close, find export markets (as Austal has done with great success), or carve out niche roles as suppliers in global supply chains. The Australian military aviation industry reached that point long ago; the last Australian produced fast jet came off the production line in the 1960s and the last Australian assembled F/A-18 Hornet was delivered 25 years ago.

But shipbuilding is different, or to be more accurate, the politics of shipbuilding is different, and there’s a bipartisan agreement that lots of welding must occur in South Australia. So purchasing frigates or OPVs from overseas is a non-starter, notwithstanding that there are plenty of suppliers ready to compete and—unlike submarines—some pretty good fits to our requirements. Accepting that political constraint, and the attendant promise of rolling production lines for both, we’re going to have a number of monopoly suppliers of naval vessels. We’ve written before about the challenge of managing a monopoly supplier. It’s tricky, but not impossible.

And we need to keep in mind that there are also costs and risks in running competitive processes. We haven’t done that with fast jets or airlifters, instead preferring to buy them through the US Foreign Military Sales program. As a result, the RAAF is now sitting pretty, with state-of-the-art aircraft arriving from the US on time and on budget. But when we ran a competition for the replacement for the Army’s Black Hawk helicopters, we managed to pick a solution that would take over a decade to get up to speed—and we’re still not there with the Tiger armed reconnaissance helicopter, despite it winning out from several other credible contenders.

Don’t get us wrong; we haven’t had a roadside conversion to a defence industry model where local suppliers are protected from the cold winds of competition come what may. But given trends in the global defence marketplace and the inevitability of political factors in defence acquisition, sometimes a carefully managed monopoly is a lesser evil than a confected competition.