The struggle to keep the Eurozone intact threatens the future of a united Europe. It is not, however, the only threat the EU faces, and perhaps not even the primary one. Robert Kaplan, in a new essay (“Europe’s New Map” for The American Interest) gives proponents of a robust EU additional reasons to worry. Many of Kaplan’s concerns center on Russia as a resurgent energy power, and its attempts to leverage the energy dependence of some former Warsaw Pact nations now in the EU (such as Poland) in an attempt to re-create its Soviet-era sphere of influence. Empowered by its energy dominance, Russia will pull at the EU’s seams in the near term. Central European nations will seek to align with it, rather than a financially weakened EU, and these “subtle” (Kaplan’s word) strategic realignments will pose a long-term threat to Europe’s union. Current attempts to weigh the EU’s longevity only through the lens of the current debates over the Eurozone are “parochial,” Kaplan says. Rather than a united Europe, he predicts that over the coming decades “Several Europes will emerge, intertwined and overlapping, that will recall former empires but will not really fit within any particular set of fixed borders.”

Kaplan is perhaps best known for his book Balkan Ghosts, which examined the ethnic and strategic roots of the conflict that absorbed Southeastern Europe in the mid-to-late 1990s. Many inhabitants of the former Yugoslavia looked back centuries to inform their national identity and present-day worldview. U.S. readers may have wondered how the Battle of Kosovo, fought in the Fourteenth Century, could be so resonant with citizens of the former Yugoslavia. As an American author examining the relationships between European nations, Kaplan reminded readers of the degree to which the U.S. operates from a shorter historical timeline than any other major power. European powers operate from a different historical base than does the U.S. Containing inflation is a constitutional prerogative in Germany; a fact that has impacted the course of Europe’s austerity debate. Russia’s desire to secure a sphere of influence was a historical trend that George Kennan articulated in his famous “Long Telegram.” Kaplan has demonstrated the pertinence of historical context in prior work, and he is right to expand the conversation about Europe’s future to contain more of it.

His assumptions about Russian power and intentions leave more room for debate. Kaplan discusses the significance of Ukraine to Russia as its traditional territory, and to Europe as a “buffer” against Russian encroachment. What exactly Ukraine would “buffer” against is left unexplained and is less clear. Similarly, Kaplan discusses Russian desires to undermine the “sovereignty” of the Baltic states, former annexed territories of the Soviet Union. But it is also unclear, particularly given its energy leverage, what modern-day Russia would stand to gain by trying to exert control over the territories of these now-sovereign nations. It seems unlikely that Russia would want to re-draw the borders of some greater empire simply for the sake of regaining past territory. Further, as Kaplan explains, new energy developments in neighboring Poland and other countries may undermine the energy leverage Russia currently enjoys, and the influence that comes with it.

Kaplan also risks under-emphasizing the difficulty in predicting the “influence” of powerful nations accurately over the long term. Russia’s recent history provides a good example. Its own emergence from a 1998 debt default to the current strength of its energy-driven economy demonstrates the potential for underestimating change in a nation’s economic outlook over the course of a decade. Japan provides another case of failed “groupthink” about rising national power: its regress from widespread predictions of its global dominance in the 1980s to its recession and underperformance through the 1990s were another about-face in consensus about the future of the global economy. Turkey’s trajectory has undergone a similar re-assessment. As a stable democracy in the turbulent Middle East, its strategic role there is growing. Its economic growth is far more robust than the average in an EU that has long fought to deny it membership. Finally, as Kaplan mentions, the year-to-year volatility of global energy markets challenges attempts to assess the long-term health of nations, like Russia, that depend on them.

Kaplan concedes that a U.S.-EU Free Trade Agreement would be a “game changer.” It is certainly aimed at bolstering EU growth, and recovering some of the influence that, as Kaplan notes, has waned in the face of the Eurozone debt crisis. This hints at a perspective that Kaplan leaves under-explored. To what degree is Europe’s inability to project power a question of a perpetually weak economy or historical influences, and how much is it a question of political will? Europe opted for union. Its creation and expansion resulted from political consensus. Current EU leaders have fostered a series of hard-fought consensus decisions in response to the current crisis that suggest a commitment to union. It also suggests that a strengthening or weakening of the EU will not be the passive result of external pressures.

Cover Credit: BORIS CHALIAPIN / Time

Even though we are still commemorating great political, social and military achievements, their meanings and symbolisms are fading away. History is all around us, is present and shapes our lives everyday, but remains unknown and too often misunderstood. History should be learned not because it fits a cause, a policy, a vision, but rather because it tells us our true origins, obscure and brights, and give us our humanity. The manipulation of history is not a new phenomenon, but the romanticism emerging for historical assumptions and misreadings are a plague to our future.

Yesterday, May 8, was the occasion to remember the horrors of World War II. Today, May 9, we shall reflect on the first stage of the creation of the EU. Despite the many criticisms and the perpetual rise of euroskepticism, the EU remains a novel idea. The EU through its perpetual evolutions, reforms, transformations materializes a moving/evolving world, which goes against the traditional and stable universe of the European Westphalian state. Such perpetual evolution may be the cause of its misunderstanding and fear. 61 years ago, the French foreign minister Robert Schuman made what is known today as the Schuman Declaration. The Declaration took place on 9 May 1950, which proposed the creation of the European Coal and Steel Community (ECSC).

His Declaration can be read below:

World peace cannot be safeguarded without the making of creative efforts proportionate to the dangers which threaten it.

The contribution which an organized and living Europe can bring to civilization is indispensable to the maintenance of peaceful relations. In taking upon herself for more than 20 years the role of champion of a united Europe, France has always had as her essential aim the service of peace. A united Europe was not achieved and we had war.

Europe will not be made all at once, or according to a single plan. It will be built through concrete achievements which first create a de facto solidarity. The coming together of the nations of Europe requires the elimination of the age-old opposition of France and Germany. Any action taken must in the first place concern these two countries.

With this aim in view, the French Government proposes that action be taken immediately on one limited but decisive point.

It proposes that Franco-German production of coal and steel as a whole be placed under a common High Authority, within the framework of an organization open to the participation of the other countries of Europe. The pooling of coal and steel production should immediately provide for the setting up of common foundations for economic development as a first step in the federation of Europe, and will change the destinies of those regions which have long been devoted to the manufacture of munitions of war, of which they have been the most constant victims.

The solidarity in production thus established will make it plain that any war between France and Germany becomes not merely unthinkable, but materially impossible. The setting up of this powerful productive unit, open to all countries willing to take part and bound ultimately to provide all the member countries with the basic elements of industrial production on the same terms, will lay a true foundation for their economic unification.

This production will be offered to the world as a whole without distinction or exception, with the aim of contributing to raising living standards and to promoting peaceful achievements. With increased resources Europe will be able to pursue the achievement of one of its essential tasks, namely, the development of the African continent. In this way, there will be realised simply and speedily that fusion of interest which is indispensable to the establishment of a common economic system; it may be the leaven from which may grow a wider and deeper community between countries long opposed to one another by sanguinary divisions.

By pooling basic production and by instituting a new High Authority, whose decisions will bind France, Germany and other member countries, this proposal will lead to the realization of the first concrete foundation of a European federation indispensable to the preservation of peace.

To promote the realization of the objectives defined, the French Government is ready to open negotiations on the following bases.

The task with which this common High Authority will be charged will be that of securing in the shortest possible time the modernization of production and the improvement of its quality; the supply of coal and steel on identical terms to the French and German markets, as well as to the markets of other member countries; the development in common of exports to other countries; the equalization and improvement of the living conditions of workers in these industries.

To achieve these objectives, starting from the very different conditions in which the production of member countries is at present situated, it is proposed that certain transitional measures should be instituted, such as the application of a production and investment plan, the establishment of compensating machinery for equating prices, and the creation of a restructuring fund to facilitate the rationalization of production. The movement of coal and steel between member countries will immediately be freed from all customs duty, and will not be affected by differential transport rates. Conditions will gradually be created which will spontaneously provide for the more rational distribution of production at the highest level of productivity.

In contrast to international cartels, which tend to impose restrictive practices on distribution and the exploitation of national markets, and to maintain high profits, the organization will ensure the fusion of markets and the expansion of production.

The essential principles and undertakings defined above will be the subject of a treaty signed between the States and submitted for the ratification of their parliaments. The negotiations required to settle details of applications will be undertaken with the help of an arbitrator appointed by common agreement. He will be entrusted with the task of seeing that the agreements reached conform with the principles laid down, and, in the event of a deadlock, he will decide what solution is to be adopted.

The common High Authority entrusted with the management of the scheme will be composed of independent persons appointed by the governments, giving equal representation. A chairman will be chosen by common agreement between the governments. The Authority’s decisions will be enforceable in France, Germany and other member countries. Appropriate measures will be provided for means of appeal against the decisions of the Authority.

A representative of the United Nations will be accredited to the Authority, and will be instructed to make a public report to the United Nations twice yearly, giving an account of the working of the new organization, particularly as concerns the safeguarding of its objectives.

The institution of the High Authority will in no way prejudge the methods of ownership of enterprises. In the exercise of its functions, the common High Authority will take into account the powers conferred upon the International Ruhr Authority and the obligations of all kinds imposed upon Germany, so long as these remain in force.

This short documentary — in French — gives an outstanding background on the creation of the EU. Happy Europe day to all of us!

Keystone/Getty Images

Margaret Thatcher, also known as the Iron Lady, has died on April 8^th. The media and think tank planets have not missed the occasion to discuss her policies, attitudes and legacies. I will neither write an obituary nor a commentary on Ms. Thatcher, but rather list below the most outstanding coverage on the question. As general as it sounds, no need to underline that she was a controversial political figure marking not only her generation but the ones to come.

The starting point for any person with limited knowledge on Ms. Thatcher ought to start with the outstanding reflections on Ms. Thatcher’s life as a woman and Prime Minister offered to us by the BBC Global News. This is a magnificent piece of journalism and history. Here is the link below:

http://downloads.bbc.co.uk/podcasts/worldservice/globalnews/globalnews_20130409-1104b.mp3

Lionel Barber of the Financial Times reflects in a short video of the impacts of the Iron Lady on England and the UK

The Financial Times ran several fantastic stories on the edition of April 9^th, 2013, such as

Sue Cameron and Joe Rogaly, “Margaret Thatcher 1925-2013″

Gideon Rachman, “Iron Lady’s decisions on free trade and nation-state still echo worldwide”

Martin Wolf, “Thatcher: the great transformer”

The slideshow produced by the New York Times illustrates quite well in 15 pictures the turning point of her life.

The New York Times published on its site an interview with Former Secretary of State Henry A. Kissinger reflecting on Thatcher

For the sake of it, it is important to remember her position on the EU as her ghost over the debate on Europe is still floating over Britain. Prime Minister Cameron is walking directly in her footsteps as his recent speech on the British vision of the EU reopened the Pandora box of British euro-skepticism. She was axiomatic on the development of the Common Market and worked closely with Jacques Delors, President of the Commission, in order to launch the single market. However, her speech at the College of Europe in 1988 certainly did not fit very well with the direction of the European construction at the time as she emphasized the need to protect the state of Britain against the EU. She understood the need of European integration for only ‘economic liberty.’ She was deeply opposed to the idea of a European superstate. Here is her influential speech:

One can realize that most of the abstracts and videos come from the anglo-saxons press. The French press has been much more critical – see Liberation and Humanity - on reflecting on her legacy. This cartoon produced in 1987 by famous and influential French cartoonist, Plantu, illustrates very well the tension between Western European states in the 1980s. President Hollande reactions after her death is in the continuity of the coldness from the Socialist political class toward the Iron Laby as he declared: “She maintained a relationship with France that was Franck and honest… She forged a constructive and fruitful dialogue with Francois Mitterrand. Together they worked to reinforce the links between our countries.” Hollande’ speech says it all about the French perceptions of Ms. Thatcher.

Plantu. Dessin publié dans Le Monde en décembre 1987

You can either love her or hate her, but the only point of agreement on her legacy is that her presence in our political life and ideology will remain for quite some times. Farewell My Lady.

Photograph: Georges Gobet/AFP/Getty Images

Several weeks ago, HR Ashton, EU foreign policy chief, announced that she will be done at the end of her mandate in 2014. In an interview – posted below – orchestrated by Steven Erlanger, Paris Bureau Chief of the New York Times, and organized by the German Marshall Fund, Cathy Ashton finally opened up and talked about her job and its challenges. She even reflected on her legacy. This interview touches on very important issues such as the creation of the position of HR after the Treaty of Lisbon; intervention in Libya; lifting the arm embargo to Syria; Iran talks; the EU relative failures in Libya and Mali; and the context of the creation of EEAS. This discussion is a must-see as it is in some degree an intimate discussion with a misunderstood, unknown, and too some extent controversial European leader.

Her predecessor, Javier Solana, was a master at shaping a narrative through its heavy presence in the press, conferences

Council of the EU

and so on. Prior to his appointment at the head of NATO, Javier Solana served in the Spanish government of Felipe González from 1982 to 1995. His last mandate as the Minister of Foreign Affairs of Spain from 1992 to 1995 exposed him on the international arena, which contributed to his appointment at the head of NATO from 1995 to 1999. Many argue that Solana was a diplomatic and strategic politician allowing to become the only remaining politician from the original cabinet of González after 13 years. His presence at the forefront of international affairs was central in shaping a European narrative. His main theme developed and promoted throughout his two mandates was to create a multi-dimensional global Europe with a diplomatic, military, political and institutional dimension.

Under HR Ashton, her approach and strategy have been very discret and even reserved. She has been avoiding talking to the press directly after closed- and open- doors meetings. However, this type of interview with the GMF is very positive and plays in favor of Ashton as she can finally formulate her vision of ‘her’ global Europe. She has been criticized for not playing the media game. Solana was excellent at promoting his global Europe; Ashton has failed short of it. Too some extent, HR Ashton has never taken full possession of her position, which was not the case of Solana.

Back to the interview – below – the moderator asked a key question reflecting on the last two engagements in Libya and Mali: “In Mali, even the French has given up on using EU ressources for their military goals. What is left, how can the EU have  a serious pretention to play a role in international security, when even its key members are not using it?” The question is legitimate; her answer was too technocratic. She argues, not surprisingly, that the EU is already very involved in the region of the Sahel with missions in Niger, EUTM, and has even drafted a strategy for the region. Unfortunately, she never tried to tackle the problem of a weaker EU in terms of defense.

Another interesting question raised by Erlanger was: “Some people would have said that your job is impossible, and it takes a lot of patience obviously. What would you say are the biggest constraints you being able to do the job you really would like to do.” Ashton’s reply was right on again, as she underlined the financial crisis – austerity measures across Europe – as a major limitation to the development of the EEAS to its full potential. Not only the EU budget is tighter and Europe’s neighborhoods are so volatile. She describes her job as “trying to fly a plane while building the wings at the same time.” This may be the major difference between Solana and Ashton. Solana took the lead of the EU foreign policy in times of growth and stability and supports by the EU Member States. Ashton, instead, is facing a vicious crisis and strong domestic oppositions to fostering the integration of the Union.

During the Q&A, a member of the audience asked HR Ashton to reflect on her legacy. She replied without any doubt that her “legacy would be the foundation of the External Action Service and the beginning of what its role can be.” Many experts have certainly argued that HR Ashton has proven to be more of an administration than a diplomat.

This video is very positive as it finally shows the face of European foreign policy to wider audience. Part of the job of a politician ought to be half policy-making and half marketing. Ashton has not done enough of marketing. Even though she did a convincing job of public relations, there is a sense that she is rather uncomfortable seating down and discussing about her job. In concluding the interview, Steven Erlanger, asked her “you seem shy of the press. You don’t give briefings, you don’t give off the record briefings. Why? What constrains you from being more of an advocate?” To be honest, HR Ashton dodged the bullet once again. As it was the case for Solana or even Cooper, the press always played an important role in order to construct a narrative around their policies and even their diplomacy. This has certainly been missing from Ashton’s arsenal.

Photo Credit: REUTERS/Yorgos Karahalis

Writing in 1931, Aldous Huxley used Cyprus as the setting for a social experiment gone wrong in his dystopian novel “Brave New World.” The failed experiment sent a warning to future generations regarding the perils of excessive social tampering. Fast-forward nearly a century and Cyprus is yet again the setting, but this time for a struggling European and economic experiment led by the troika of the European Union (EU), European Central Bank (ECB), and the International Monetary Fund (IMF).

Asked to accept a “voluntary haircut” of 75 percent of Greek bonds held by Cypriot banks in 2011 as part of the initial experiment of the Greek bailout, Cyprus did so hesitantly in a show of European solidarity and faith in the ongoing integrationist project. The amount came to between €4.5-5 billion, roughly 22 percent of an economy that is estimated at €18 billion. When the impact on Cypriot banks, coupled with the disastrous policies of the communist party AKEL and their President, Dimitris Christofias, led to Cyprus becoming the most recent of five European Union countries to ask the EU for a bailout, it became clear this bailout would be quite different from the rest. All this despite Cyprus being a net contributor to the EU budget and never running a deficit until the economic crisis began.

Cyprus, with it’s small population of roughly 1.1 million and low contribution to the EU economy, at 0.2 percent, seemed like the ideal setting to experiment with a message to countries that would require a future bailout, while also measuring the reaction of markets to a possible exit of a EU country from the Eurozone. It would also not be called a bailout, but rather a “bail-in.”

Unlike his predecessor, the newly elected Cypriot government of Nicos Anastasiades, that came to power on February 17, 2013, ran on a successful platform of greater EU cooperation, assembled a Euro-friendly cabinet, employed a Noble Prize winning economist on its advisory board and was support by European leaders (including Angela Merkel).

By Saturday, March 16, this same government was forced to present its populace with an experimental and unprecedented, one-time, 9.9 percent levy – a.k.a. “bail-in” – on uninsured bank deposits over €100,000 and 6.75 percent on insured deposits under that. The EU hoped Cyprus would implement the levy to come up with €5.8 billion, similar to the “haircut” Cyprus sustained for Greek bonds, so the EU could loan its banks €10 billion to keep them afloat. The deal was rejected by the Cypriot parliament to the stunned amazement of international governments and press. But with no alternative methodology to offer, Plan B would look much the same.

The plan that was eventually agreed would lead to the breaking up of Laiki, the island’s second biggest bank, into “good” bank and “bad” bank. The Bank of Cyprus, the island’s biggest bank, would absorb the deposits of the “good bank” under €100,000 and its nearly €9 billion in Emergency Liquid Assistance (ELA); the “bad bank” would be dissolved. Capital controls, a limit on amounts that could be withdrawn from banks, were imposed at an initial €300 a day. The Cypriot corporate tax rate was also increased to 12.5 percent, up from a EU low 10 percent. Deposits over  €100,000 in Laiki and Bank of Cyprus are to receive an estimated 40 percent haircut.

Seeing this grim situation, Anastasiades personally took a pay cut of 25 percent, with his staff following at a 20 percent cut. Electricity companies have vowed not cut power if bills are late, or paid at all. The islands main telecommunications company is also allowing free calls within Cyprus. Memories of the 1974 invasion and subsequent ongoing occupation of the island has stirred a collective response and social cohesion that has been unique to Cyprus and stunned observers.

For its part, the “bail-in” was targeted at Cypriot banks, estimated at eight times GDP, with the aim of reducing their size to sustainable levels. Despite parliament rejecting the Plan A proposal, the mere fact it was a real possibility effectively destroyed the island’s status as a banking hub, which, combined with tourism contributes to 75 percent of Cypriot GDP. While the beaches aren’t going anywhere, the islands reputation as a reliable place to park money in a notoriously unreliable region is finished. This has also sent a worrying signal to other Euro members with large banks, like Malta (seven times GDP) and Luxembourg (22 times GDP).

What isn’t often mentioned is that these are loans, not gifts; interest is charged, at often-favorable rates, and they must be repaid. The high cost of bailouts on domestic politics seems to have taken their toll and with elections, specifically in Germany, on the horizon there seems to have been a push to assuage respective domestic EU voters that bailout money would not go to prop up banks bloated on Russian deposits in Cypriot banks.

Heavy Russian investment in Cypriot banks was the clear variable to the bailout experiment. Claims that Russian money was laundered through Cypriot banks had become a claim cited, with little proof, in popular media. It’s true that Cyprus has a favorable double-taxation treaty with Russia and had a EU-low 10 percent corporate tax rate. But Cyprus is also ranked 29th on the Transparency International 2012 ranking and is a member of MONEYVAL. If laundering was a concern, it would be listed in the report and legal recourse could and should have also been sought in concert with a shrinking of the banking sector over time, as opposed to the irreparable damage to Cypriot banks and the economy that has occurred instead. This has led many to questions if this was a consideration of the experiment at all.

Whatever the case may be, Cyprus stands poised to confront serious economic questions in its short, medium and long terms, just as the EU faces serious questions about its solidarity and future. The preliminary results of the experiment are in and its outcomes have left a lot to be desired.

Meanwhile, other countries are contemplating an experiment of their own.

Gus Constantinou is a commentator on U.N., EU and international affairs. You can follow him at @gus_c13

To American policymakers working through the sequester, Cyprus’ 10 billion euro bailout must sound like a rounding error. Context is key: the amount equals nearly half of Cyprus’ annual GDP. Euro-watchers first warned that the disjointed political path to the bailout agreement  – including a proposed tax on all Cyprus bank deposits – adds to the potential market uncertainty likely to greet future crises. A second warning holds that the EU may overcorrect in its stance towards moral hazard in its banking system; after tolerating too much for too long, it might allow too little. True as these arguments are, they risk obscuring other important messages in the crisis. Two key ones are getting buried in the post-crises analyses: First, the persistent threat posed by banks and national financial services sectors that grow larger than the GDPs of their countries – and therefore grow “too big to fail”; second, the cumulative stress of national debt and banking crises on the EU’s identity.

Deposits in Cypriot banks involved in the crisis totaled $87 billion — over three times the country’s annual GDP. As Sony Kapoor wrote in the Guardian, Cyprus, like Ireland and Iceland before it, had a disproportionately large banking system in relation to its overall economy. Individual banking institutions with assets that are overly large relative to national GDP, and national banking sectors that comprise an overly large portion of a national economy, both pose risks. Cyprus has relied on its banking sector to drive economic growth; the crisis leaves it looking for alternatives. In their book 13 Bankers, Simon Johnson and James Kwak noted that one result of the U.S. response to its recent financial crisis — that “our big banks have only gotten bigger” — increases the likelihood of a future financial crisis requiring substantial government intervention. The U.S. financial sector is a large component of the economy, but there area other major sectors to spur its recovery. Cyprus specialized in financial services, and apart from tourism, has no other bedrock sectors on which to build an economic recovery.

Also writing in the Guardian, historian Timothy Garton Ash examined the impact of the crisis for those who would, or would not, like to see a more “federal” Europe. Events within Europe’s national economies are demanding “European” responses. Ash argues that the Cyprus crisis is the latest reminder that the EU, despite broadening the reach of its collective policies,  still operates as a collection of 27 national economies and political systems. “Every one of the Eurozone’s 17 and the EU’s 27 national leaders thinks first of their national politics, media and opinion polls. Tempting though it is to say: ‘We have made Europe, now we must make Europeans’, the truth is that in this respect we have not made Europe.”

The assumption of state debts was a key step in the creation of U.S. federal governance. One key lingering question is the role that addressing the debts of its member nations may play in “making Europe.”

Yiannis Kourtoglou, Getty

On March 22, 2013, WVUM, the student radio of the University of Miami, invited me into its station in order to discuss the mess taking place in Cyprus. Despite talking for almost 15 minutes on the roots of the crisis in Cyprus and the ECB’s ultimatum, I could not resist continuing the discussion on Iran, Syria, and President Obama’s trip to Israel.

Here is the summary of the edited show:

• Cyprus is a mess; the bailout is only the beginning of the end as austerity measures will be implemented at some point and Cyprus’ banking model will have to be reformed
• Syria has been the victim of vicious bloody war waged by President Bashar Al-Assad against its people;
• Iran is a rational actor and it does make sense for Tehran to develop nuclear weapons;
• President Obama’s decision in attempting to solve the Israelo-Palestinian crisis is just part of the game of any US President.

Here is the discussion:

Georges Gobet/AFP/Getty Images

Catherine Ashton, High Representative of the Union for Foreign Affairs and Security Policy, and Herman Van Rompuy, President of the European Council, called it quite. They both announced in a matter of days that they would retire from their respective positions at the end of their mandates. Based on the Treaties, both positions are renewable. In the case of President Van Rompuy, his mandate of two and half years had already been renewed in May 2012 until December 2014. EU foreign policy chief will retire in 2014 with the current Commission at the end of her 5 years mandate

The game of thrones is officially open with each EU member state thinking about their next heirs. Naturally the big three, France, Germany and the U.K., will have more power than the other EU member states. However, new players like Poland and Czech Republic could have an increasing say on the selection of the next chiefs.

AFP

As argued by Judy Dempsey, Berlin and Paris are the key to the thrones. “The way Berlin and Paris acted [in 2009] was shameful for two reasons. First, Merkel did not want the European institutions to have strong leaders. Second, it undermined Europe’s credibility.” Berlin, London and Paris have made sure to balance more powerful institutions with less charismatic leaders. A Solana would not have been the desire candidate for the job of HR under the Treaty of Lisbon.

President Van Rompuy has certainly demonstrated his political skills and has mastered his way through the complex European roads. His prior experience as Prime Minister of Belgium played a considerable role in making him an astute politician. In the case of the HR Ashton, her legacy will be the design of the European External Action Service (EEAS). She has excelled in her job of administrator rather than foreign policy chief. Her absences following the crises in Haiti, Libya, Mali and others will certainly be remembered as a failure to lead the CSDP. During a recent event, Ashton declared: “There’s no possibility of having a second term and it needs to go to someone else next … In any event, you lay the foundations but there are people who can do things with this that probably I couldn’t do, so it’ll be good to hand it over.”

It is way too early to speculate on the next chiefs. However, based on the precedents established with the 2009 appointments, here are the job descriptions and qualifications soon to be posted on the EPSO website:

Job descriptions:

• Fix the EU institutional problems between the Commission, Council and Parliament;
• Unified the EU global voice without stepping over Berlin, London and Paris’ feet;
• Save the EU from its confusion;
• Create a European narrative without undermining the nation-states.

Qualifications:

• Quiet administrator;
• Non-charismatic personalities;
• Insomniac;
• Savvy politician;
• Prior experience in foreign policy not necessary;
• A Ph.D. in patience.

Judy Dempsey certainly ends her article on a positive and wishful note when she wrote, “But they [Merkel and Hollande] can make a big difference when they choose the EU’s top leaders next year. They can nominate candidates who are not afraid of speaking their minds about Europe and who will have the confidence not to be intimidated by the member states. That is a tall order. But if Merkel and Hollande seriously want Europe to have ambitions and a strong voice, it is time to put aside their own short-term interests.”

Season two of “Game of Thrones” may be over, but the battles are only starting following lengthy diplomatic rounds in the imaginary lands of George R.R. Martin; there will be no exception for the EU – minus the dragons.

Les Echos

The press and the European public opinions are not impressed by the latest agreement made behind closed doors between the recently elected president of Cyprus, Nicos Anastasiades, and the EU in order to assure a €10 billion bailout for Cyprus. According to the agreement on the bailout, all Cypriots will have to chip in. As per the Financial Times, “under a controversial deal struck with international bailout lenders in the early hours on Saturday, a 6.75 percent levy would be imposed on all deposits under €100,000 while accounts over that threshold would be hit with 9.9  per cent levy.” Such rates are currently being discussed in Brussels and could be lowered. The Cypriot President declared that he was facing a “blackmail“ from the eurogroup and was left facing a dilemma in choosing between either a default and the exit of the euro or taxation on all bank deposits.

One of the rationales for such approach is because Cyprus has been a money heaven. Cyprus banking sector is considerably oversized, like Iceland, proportionally to its GDP. Krugman demonstrated that the three Islands – Iceland, Ireland and Cyprus – have had banks with assets that were around 800 percent of Cyprus’ GDP, 980 of Iceland’s GPD, and 440 of Ireland’s GDP. However, “The Cyprus bailout deal forcing losses on all bank customers – from pensioners to Russian oligarchs – is leading to bank run which sets a dangerous precedent for other troubled eurozone countries.” Such move is a direct attack by Cypriot leaders on their banking model developed these last decades. Furthermore, this could only be the opening act, as austerity measures designed by the troika – IMF, ECB, and Commission – may very well follow. These

afp.com/Christos Avraamides

measures have had disastrous consequences in the PIGS countries and would have similar effects in Cyprus. As argued by Krugman, targeting the Russians may be one thing, but the haircut will be felt as well on Cypriots.

Two years ago, I interviewed an expert, Dr. Maria Lorca-Susino, on the possible default of Greece. Dr. Lorca-Susino argued that it was all about politics. The Cyprus move certainly looks like it as it has no economic rational. Experts like Munchau of the FT and other economists such as Paul Krugman are worried of a possible bank run. Removing liquidity from the banks is a path to disaster and could lead to a bank run. Reuters recently announced that Cypriot banks will remain close on Tuesday and Wednesday pending on the decision of the Parliament. Felix Salmon of Reuters wrote on the bailout deal: “Don’t for a minute believe that this decision is part of some deeply-considered long-term strategy which was worked out in constructive consultations between the EU, the IMF and the new Cypriot government. Instead, it’s a last-resort desperation move, born of an unholy combination of procrastination, blackmail, and sleep-deprived gamesmanship.”

This latest agreement underlines several aspects: first, what were the policy-makers thinking? As argued in the FT op-ed of March 18, “the biggest risk is political. The prescription of universal austerity combined with kid-gloves treatment of big investors in banks is increasingly toxic to European voters. Leaders have just added fuel to the fire.” Such political move will contribute to sending a message across Europe in favor of nationalist parties promoting a return to fully independent and sovereign nation-state and a return to national currencies. Second, the EU is already not well perceived in Southern Europe, so this may very well

REUTERS/Yorgos Karahalis

contribute to increasing of the gap between Brussels and European capitals. The EU and the euro are not at their highest approval rating in the PIGS countries and the rest of Europe. This will affect the credibility of the common currency and the narrative for deepening the Union. Third, where is the demos once again? The gap between Brussels and the European demos is widening. This latest accord certainly did not include Cypriots in the equation as they are the big losers. The eurozone has always been the epitome of European democratic deficit where European technocrats rules behind closed doors without any democratic supervisions. In my recent review of the excellent documentary by “Great Decisions in Foreign Policy” on the eurozone, I concluded on the importance of increasing the democratic representation in Brussels. Habermas has been calling for the EU to make a choice in becoming either a transnational democracy or a post-democratic executive federalism. Once again, the case of Cyprus is a reminder of the democratic dilemma facing the EU. Neither the banking or fiscal union would solve this problem. Fourth, this could be the beginning of the end for the creation of a banking union. If the EU has the power to force countries to implement such radical policies on a country, it is not difficult to imagine the voices of populist and nationalist movements across Europe using this case in order to block any types of further integration. The EU was a model for fostering peace and stability, it seems to have lost its mind and mission in the middle of this crisis.

Photo Credit: EU/AFP/ ANATOLY USTINENKO

The questions on the functioning and success of EU Foreign Policy are back at the forefront of the debate. Three years after the implementation of the Treaty of Lisbon leading to the establishment the European External Action Service (EEAS), the excellent ECFR and CEPS, two leading think tanks on European politics, have both published insightful reports on the state of the EU foreign policy.

The ECFR partnering with the Center on Europe and the U.S. at the Brookings Institute published its annual “European Foreign Policy Scorecard.” It is a very empirical and practical report looking at the different domains of EU foreign policy and grading them. The second report published by CEPS is a more academic type of report, “The New EU Foreign Policy Architecture. Reviewing the First two years of the EEAS,” but a must read in order to understand the complex institutional and cultural problems at the higher spheres of European politics.

Despite considerable differences both reports should be read altogether: The CEPS offers the institutional background of the EEAS and its latest developments, while the ECFR’s puts European foreign policy in practice. No need to underline that the European Union is a unique political entity, best described by Jacques Delors as a UPO – Unidentified Political Object. Its institutional complexity must be understood first in order to explain why in some instances the EU can be active or in other absent from the international arena.

As an institution, it took over eight years for the creation of the EEAS. The discussion started back in 2002 and ended with the council’s decision in 2010. Each actor – commission, parliament, member states – took a shot at the compromise on the development of a EU foreign minister, named the EEAS. For many, the EEAS remains a very obscure institution as it is neither a supranational not intergovernmental by nature. “The EEAS has to navigate,” argue Helwig et al., “between the ‘community’ and the intergovernmental decision-making methods with the mission to support the EU member states, while maintaining complex relations with the Commission and the European Parliament.” This combination of community and intergovernmental powers makes the EEAS unique and complex. Its structure is multifaceted and is divided into severalpolicy areas and geographical divisions.

Source: EEAS

Furthermore, the CEPS report looks at the development of the EU architecture in foreign policy by focusing on four types of relationship: EEAS and member states; EEAS and commission; EEAS and the parliament; EEAS and the delegations. Each relationship is clearly developed and offers a simple understanding of the bureaucratic tension between each institution. The chapter, “The interplay between the EEAS and the European Commission,” is fascinating in demonstrating the complexity of the relationship between the two institutions despite their shared link embodied by Catherine Ashton, the High Representative and Vice President of the Commission. It is not only an institutional fight, but as well an ideological one between “power” and “community,” meaning the Member States versus the EU.

The second report by ECFR/Brookings grades the successes and failures of EU foreign policy in five regional relationship – China, Russia, the U.S., wider Europe and MENA – as well in the sector of multilateral and crisis management issues – such as peacekeeping, climate change, international organizations, humanitarian and so on. The beauty of this report is that we – researchers – can now compare the evolution of EU foreign policy as it is the third year in the row that the scoreboard has been published. Here are four charts summarizing the results of the 2013 report:

Source: ECFR, p.10

Source: ECFR, p. 14

Source: ECFR, p. 15

Source: ECFR, p. 16

These charts are fascinating to dissect. My biggest surprise concerns the Security Sector Reform (figure 3). Several experts including myself have written extensively on the topic of SSR. The fact that the EU does not perform well in this sector is worrisome as the EU is supposed to be the leader in this area. This area demonstrates the gap between expectation and reality of the EU in the realm of security.

Reflections on Foreign policy

Since the financial crisis, foreign policy has been one of the main victims in Europe and the US. Foreign policy debates are barely tackled in public, and when it is the case it has become very polarized. Despite fast changing regional and international systems with many cross-cutting issues necessitating multilateral cooperation, EU Member States and European citizens do not see foreign policy as a priority.

Reuters/Yves Herman

Considering the role of the High Representative, the EU foreign minister, both reports do put more light over this unique position of HR/VP. Certainly, voices have been very critical over the lack of knowledge of Lady Ashton on foreign policy matters; for such reasons, she has been compared to “accidental diplomat.” Many have compared her with her predecessor Javier Solana, a savvy politician and excellent foreign policy leader. Such academic exercise of comparison of Solana with Ashton should not be made – an error that I have often made. The position of HR prior the Treaty of Lisbon was very different to the current one. Solana is undeniably a true politician, whom skills were facilitated thanks to the looseness of the HR position post-Lisbon. Today, Lady Ashton’s role is much more of a bureaucrat/administrator, with a double-hatted position of HR and VP of the Commission, than a politician. She has completed the first part of her mission, designing and creating the EEAS. Now HR Ashton has been working on increasing the EU voice internationally, which has oftentimes been stolen by either the President of the Commission, President of the European Council, or even the Member State holding the presidency. These last couple years, EU foreign policy and the EEAS have been sidelined on important matters like: Libya, Mali (in the early round of the French intervention) and others.

Both reports produced by the CEPS and the ECFR with the Brookings have offered fascinating analyses on the topic of EU foreign policy. The CEPS report is a fantastic tool in order to understand the EEAS and realize the complexity of the task. Kissinger was right when asking “what is the telephone number of Europe?” Such question has become the baseline for any skeptics of the foreign policy experiment of the EU. Overall both reports argue that the EU is not bad in foreign policy. Helwig et al. wrote that “‘teething problems’ should not come as a surprise to anyone, given the complexity of setting up a new institution of this kind.” The teething problem is also linked to the young age of the EEAS.

2013 will not only be a year of review of the EEAS and EU foreign policy, but it should as well be a year of reflection on the global role of the EU. The 2003 European Security Strategy was published a decade ago under Solana. Since the appointment of Ashton, the EU has not produced any global strategy. HR/VP Ashton has had a lot on her plate, but the EU cannot afford to keep advancing in the dark without a clear global strategy. The institution of EEAS exists and functions, now it is time to give it a vision. This vision may come with the deliverance on the European Global Strategy in May 2013.

“You cannot be happy over there” tells Barbara to what seems to be her boyfriend. Barbara, a German doctor, sent in an somewhere in East Germany in 1980 as a punishment for undisclosed reasons tries to escape from the reality of an underdeveloped and oppressive East Germany under Soviet ruling. The movie, Barbara, directed by Christian Petzold and starring Nina Hoss, offers us a beautiful but harsh voyage into the heavy past of the Cold War and the Soviet Union. It is a human regard of the soviet oppression.

The current political evolution taking place in Europe with the rise of the extremes, the increase of nationalism, the retour and acceptability of neo-Nazism, and the massive waves of ignorant politicians serve as a direct reminder that peace and stability on the European continent should not be taken for granted. The European Union, far from being perfect, has offered the instruments and institutions needed in order to strengthen democracy and cohesion on a troublesome continent. The picture Barbara shows that these values and political system were not accessible to most European citizens in a very recent past. 

Cause by the 2008 financial crisis leading to the Eurocrisis, massive waves of austerity measures have taken place in Southern and Western Europe leading to the demise of the welfare state and opening the gate to massive deregulation and privatization. As demonstrated throughout the history of the 20^th century, economic crises lead to radicalism, extremism and nationalism – and all other types of –ism – all undermining the fragility of democracy. The rise of nationalism in countries like Italy, Spain, Portugal, France, Greece, Britain and others is worrisome. European citizens have been taken for granted stability and democracy, and would – to a certain extent – trade-off economic growth for less freedom. What is it the message sent by David Cameron less than a month ago? Barbara reminds us what it means to live under an oppressive regime where freedom can only be a dream.

Watching Barbara felt like reading a novel written by Hemingway; very few words but powerful emotions. The simplicity of the narratives and the beauty of the country-side raising a certain degree of nostalgia create a complex dilemma for the viewer. The simplicity of life in East Germany balanced with the darkness of the oppressive force of a greater invisible political system represented by what seems to be a member of the Stasi police force monitoring all the movements of Barbara. Certainly connecting the EU to Barbara may seem some sort of a far stretch, however the EU is the only political-system that has been developed and worked in strengthening peace and stability in recent times on the European continent. The EU is certainly not an end in itself, but a mean to a greater goal. Watching – as one can do with other movies like Goodbye Lenin, The Lives of Others, the Wave – the destructive power of a coercive political system as was the Soviet Union through its networks of prisons, camps and one of its greatest instruments the Stasi, is a good reminder of the complex and ephemeral beauty of democracy. Barbara is not only a must-see for any movie aficionados, but as well a hymn to freedom.

Great Decisions 2013 – FPA

“Right now all of the European Union is in distress.” This opening statement sets the tone in the Great Decisions’ documentary, “Imperfect Union: The Eurozone in Crisis,” produced by Foreign Policy Association. The documentary revolves around the following questions: What would a failed euro mean for the EU? Or for its largest partner the U.S.? And can the EU become the United States of Europe? “Imperfect Union” demonstrates subtly in 26 minutes a problem shift resulting from the eurocrisis: from first being a question of survival to now becoming an existentialist crisis for the Union. Angela Merkel, German Chancellor, along with her French counterpart claimed that they were committed to saving the euro in order to protect the EU. Now that the politics have expressed their commitments to the protection of the euro and the European integration project, the long road of substantial reforms can begin. The documentary is composed of four chapters: first, the history of the Union; second, the origins of the crisis; third, the recovery; fourth, policy options.

Roots of the crisis

In the documentary, Nouriel Roubini claims that the origins of the European debt crisis are multiple: the main causes are that many countries had run large debt deficit with public debts at unsustainable levels; for some others EU member states, it was due to bad fiscal behaviors – too much spending and too little taxation like in Greece – and, in others countries of the eurozone like in Spain and Ireland, it was caused by a housing bubble. With the burst of the bubble, the recession engendered an increase of the deficit, leading to the bailout of banking institutions, which were then socialized precipitated a surge of public debts.

Ye Pingfan / Xinhua-Corbis

In the case of Greece, the debt was caused by over-borrowing at a cheap rate because of its status of eurozone member. On one side, Greece was spending beyond its ability to repay its debts, while on the other, international banks were continuing to lend to Greece despite knowing its difficulties in repaying its loans. With the worsening of the crisis, the rate of repayment changed and considerably increased for many eurozone countries making them unable to refinance their debts and ultimately making them insolvent.

On the broader picture, a crisis had to arise considering the lack of institutional structure supervising the Euro. With the 1986 Single European Act laying out the foundations of the Euro, no major harmonization of fiscal policies at the European level ever took place. As opposed to having one system, as it is the case in the U.S., Europe has many sub-systems making harmonization of fiscal policies difficult and making the system seriously opaque and of multilayers.

Germany was the only eurozone state to avoid the crisis as it had undergone in the 1990s a series of reforms holding wages relative to productivity, argued Alan Blinder of Princeton University, ultimately making German goods competitive on the world market. Germany was the only eurozone member to do so.

A stronger Union for a better recovery?

With the crisis worsening, eurozone members have tried to solve it by discussing on the eventuality of either a fiscal and/or banking union. However, the discussions have just been lengthy and complex. It needs time in order to develop a “roadmap for why kind of regulatory and constitutional changes that you would need to get to the point that you actually have greater integration of European economic governance” argued Ian Bremmer of Eurasia Group. The argument of time is central in order to understand the EU and the complexity of a multilevel governance system as the EU. Angela Merkel, German Chancellor, talked several years ago about the difficulty of ruling, governing and reforming in an era of short-term gains and

Libération, 27 October 2011 – Presseurop

immediacy. The EU is such a complex and slow moving institutional body, creating history each new day of its existence, that it cannot confront the reality of immediacy of global economic and financial forces. The documentary did not touch on the issue, but it appears that the EU Member States are willing to create a banking union revolving around the European Central Bank. The negotiations are still ongoing. The theme of the eurobond was addressed, but has been a real dilemma during European negotiation, as it would lead to the creation of new institutional framework in order to avoid that only one country, in this case Germany, pays the bill.

Matina Stevis of the Wall Street Journal raised important questions: “can we [the EU] become the United States of Europe? Can we have the more powerful members foot the bill and share risks?” One of the problems is that the eurozone is composed of 17 members accountable to their own constituencies. The domestic constrains are great on governments and limiting them to foster the integration process. According to Matina Stevis, the best-case scenario is the survival of the Euro but with fundamental change. The euro needs to be redesigned, as she calls it the “Euro 2.0.” However a euro 2.0 could not function without the creation of at EU 2.0.

Culture and politics?

Matina Stevis argues that we have seen a “return to second world war system of stereotypes and clichés and national hatred.” She goes further by claiming that the eurozone crisis has undone so much of the European project that may be its saddest legacy. The documentary spends a necessary amount of time discussing the human consequences of government policies of austerity causing massive civil unrest throughout Europe, and especially in peripheral member states. The flow of images of violence, tension, and despair is certainly haunting and put a human face to the consequences of the financial crisis oftentimes ignore. This side of the story has certainly been lost in translation in the U.S.

A collapse of the Euro?

A collapse of the Euro would take with it the U.S., China and global stability. A euro-breakup would undeniably affect global markets, still waiting for a solution of the Eurocrisis either as a smooth breakup or as a complex reform of the entire eurozone system and ultimately the EU. Ms. Stevis argues that one of the worst case scenarios would be the departure of one EU member states followed by others leading to a lost of confidence into the euro and ultimately in the European project.

The Telegraph

What can the U.S. do in order to avoid a EU breakup? The U.S. is interested in keeping the EU and the euro going considering their degree of complex interdependence. A euro breakup would affect American companies and American export-imports. Anne-Marie Slaughter claims that the U.S. needs to be more vocal in its investment and interests in the European project.

European Democracy?

This documentary is certainly one of the most comprehensives on the eurozone crisis. The lineup of political and economic experts from the private, public and academic worlds offers us an understanding of the problem at 360 degree. For students, faculty, and curious citizens, this documentary is a must-see in order to understand the fascinating topic of the eurocrisis. However, it felt that one issue was not directly tackled and certainly needs greater attention when reflecting on the eurocrisis: The impact of the eurozone crisis on the quality of European democracy and governance. Since the beginning of the crisis, countries like Greece and Italy have certainly felt under greater supervision by international market and institutions and their qualities of democracy have suffered from it. In Greece, the austerity measures have wiped out the welfare state leading to massive deregulations and privatizations. In Italy, the current Prime Minister, Mario Monti, despite his high degree of respectability, is unelected as he was appointed in order to straight up and rescue the Italian economy. One of the direct consequences of his appointment is the obvious demise of democracy. The signal and precedent sent around is that appointed technocrats unaccountable to citizens are the way to go in the future in order to readjust an economy. Part of the domestic anger against the EU and the Euro is directly fueled by the lack of representation of European citizens, the demos, at the highest spheres of the decision-making process. As developed in one of the latest books by Jürgen Habermas, “The Crisis of the European Union. A response,” – by the way one of the must read for this year – the EU is at a crossroad between either reforming into a transnational democracy or becoming a post-democratic executive federalism. The first road would put the demos at the heart of the EU governance, while the later would lead to the exclusion of the demos and the development of a closed doors EU governance process, already in place. Solving the eurocrisis is a necessity, but designing a functioning and more democratic EU is the long-term project forgotten in the process. The eurocrisis should be understood as the mid-life crisis of the EU raising one existential question: what is its role in the 21^st? It may be time to launch the EU 2.0.

Just prior to the inauguration, The Brookings Institution released a briefing book, “Big Bets and Black Swans,” examining the key foreign policy challenges President Obama faces as he begins his second term. The section on the Eurozone, written by Justin Vaiesse  and Thomas Wright — identifies a potential euro failure as a “black swan” — a low probability, high-risk event that could divert the president’s attention and political capital from other priorities. The recommendations outlined by its authors identify two opposing dynamics that have defined the U.S.-EU relationship in recent years. First, a prosperous eurozone is crucial to the health of the global economy, and impacts U.S. interests directly. Second, U.S. ability to influence eurozone developments directly is very limited. The memorandum addresses possible U.S. policy towards the eurozone crisis but its authors recognize that its causes can be traced to the last round of EU institution building, which brought about monetary union without fiscal union. The future health of the eurozone is therefore tied to the effectiveness of the current, post-crisis, round of EU institution-building. What can President Obama do to help? Speak softly to both Brussels and Britain, in effort to keep both talking to each other, and hope for the best.

The EU and U.S. rank first and second in GDP, respectively, and the Brookings authors note how strong the Foreign Direct Investment (FDI) link is between the two (“50 percent of U.S. FDI abroad goes to the European Union, while 62 percent of FDI in the United States originates in the European Union.”) And yet, “The United States can neither compel the Eurozone to adopt particular structures nor do much to protect the Eurozone from a political backlash” related to responses to the crisis. Happily, the authors note, EU leaders have already made a round of decisions aimed at preserving a Euro inclusive both of Europe’s “core” (Germany, France, and Northern Europe) and its troubled periphery (Greece, Ireland, Portugal and Spain), including the adoption of a Single Supervisory Mechanism (SSM) for Europe’s banks late last year (discussed previously on this blog). No institutions are crisis-proof, but the initially positive reaction to the adoption of the SSM signals the desire among EU policymakers to correct the deficits in Europe’s regulatory institutions that contributed to the onset of the crisis. This forward motion on regulatory reform, as well as German Chancellor Angela Merkel’s motive to keep eurozone matters from derailing her own re-election this year, provide some reason for tempered optimism that the eurozone should not devolve into the “black swan” the Obama Administration fears in the near term.

In addition to the renewal of EU institutions, the authors plead for the U.S. to work to keep Britain engaged in the Eurozone with the threat looming that a possible referendum offered by the Cameron government might sever the U.K.’s connection with Europe entirely. The U.K. is a net contributor to the EU budget, and this has proven to be politically problematic for its governments in the past. Last month, John Cassidy of The New Yorker concluded that whispers from the Cameron government about a possible referendum on Britain’s withdrawal from the EU were tied to the state of British conservatism – an acknowledgment of growing influence of the U.K. Independence Party, which campaigns for withdrawal from the EU, during the recession. It is a bet on Cameron’s part to cultivate the Independence Party eurosceptics on the U.K. right while their popularity surges and he faces re-election, while allowing for the chance that an economic rebound might siphon their popularity surge more quickly than it emerged. On January 23, UK Prime Minister David Cameron confirmed the rumors, pledging a national referendum on EU membership would be held within five years. Cameron’s speech drew criticism from several EU foreign ministers and general concern that it badly undercuts the EU efforts to emerge from the current crisis a stronger union. It has certainly produced fresh punditry on the question of the EU’s future; The New York Times “Room for Debate” this week asked “Should the EU Stick Together?”

The U.S. and U.K. have their own historic “special relationship.” For the U.S., however, the U.K.’s connection with the eurozone is a curious policy concern. The U.K., never a participant in the common currency, has gone to lengths to keep a distance from the EU’s financial union throughout its history. Further, the U.S.-U.K. “special relationship” has centered on global security issues — from the Atlantic Charter to the recent Iraq War — and not economic policy. The U.S.-U.K. partnership predates the EU and stands outside of either side’s relationship to the rest of Europe. The authors argue that the Obama Administration must use whatever sway this special relationship holds to help the Cameron government resist calls for withdrawal from the extreme eurosceptics of his party. The U.S. must work to preserve the U.K.’s role in Europe as a means of preserving its own. By promising an EU referendum, the Cameron government has transformed this from a less theoretical U.S. diplomatic goal to a more concrete one.

“Quiet diplomacy and support has been your hallmark and it has been reasonably effective,” Vaisse and Wright advise Obama, “You should not radically depart from this path.” It is telling, however, that as invested as the U.S. is in the Eurozone, there appears to be little the U.S. can do to influence Eurozone outcomes beyond quite diplomacy. On Europe, Obama must “speak softly,” because there is no “big stick.”

European Union, 2013

The threats to the EU come from inside and outside: outside, as proven by the instabilities in Northern Africa and the Sahel; and inside, with the latest speech by British Prime Minister Cameron fitting within the euroskeptic narratives. The French intervention in Mali should concern all EU Member States and make them realize that the threats of terrorism causing political and economic instabilities in neighboring regions endanger the stability of the Union for several reasons: increase of mass illegal immigration, which Southern EU Member States like Greece and Italy, have been unable to contain and protect the European borders; and increase of regional instabilities causing a regional power vacuum and safe heavens to international criminal and terrorist groups. The lack of willingness demonstrated by the EU Member States to launch a credible Common Security and Defense Policy (CSDP) mission in Mali is worrisome, but not surprising. The design of the CSDP mission in Mali, EUTM Mali, will solely focus on the training the Malian army, under a civilian authority, and will not include any fighting and/or direct assistance to the French army. The gap between the ideas/expectations behind the creation of the CSDP during the Saint Malo declaration in 1998 and what it has become 15 years later has certainly widened and undermined the credibility of the EU as a global security actor. The lack of capabilities – which should have been dealt with with the creation of the EDA and the development of the approach of pooling and sharing – added to limited political willingness of European heads of states and governments have contributed to the decline of the CSDP. The CSDP was designed for missions like the ones in Libya in 2011 and in Mali in 2013.

Inside, the threat to the EU is real and comes from the powerful euroskeptic narratives. The speech given by British PM on January 23, 2013 should be perceived as a real

Matt Dunham/AP

threat to the unity of the Union and the narrative created by the European founding fathers. What has been lacking in the analyses and comments in the press following the speech is the assumption made by Cameron that Europe will be stable and peaceful forever. Without being defeatist, any historians can argue that 60 years of peace on a continent devastated by wars, famines, and violence for several millenniums do not validate Cameron’s assumption. PM Cameron figures as a new type of European leader, spoiled by stability, peace, growth and relative cohesion, whom do not fully grasp the realities of European history and human nature.

The use of institutions was axiomatic in the fostering of cooperation and ultimately leading to complex interdependence. European institutions, especially the supranational ones, do matter in fostering cohesion and cooperation. PM Cameron is correct in his speech when calling for further transparency and increasing the efficiencies of the institutions; but they should be reformed in favor of more Europe rather than less. One way to deepen the integration process will be to increase democratic representation at the European level, such as the empowering of the European Parliament. However, PM Cameron’s plan of ‘cherry picking’ is ill-advised. How can Cameron believe that pro-EU countries will allow the inclusion of an exceptional clause, ‘Britain-only,’ without disrupting the unity of the Union? When reading his speech, one cannot stop wondering: Has Britain lost that much of its sovereignty since joining the Union in 1973? His call for an in/out referendum scheduled for 2017 is showing the limits of British compromise. Below is a selected segment of his speech:

With courage and conviction I believe we can achieve a new settlement in which Britain can be comfortable and all our countries can thrive.

And when the referendum comes let me say now that if we can negotiate such an arrangement, I will campaign for it with all my heart and soul.

Because I believe something very deeply. That Britain’s national interest is best served in a flexible, adaptable and open European Union and that such a European Union is best with Britain in it.

As explained in his speech, Cameron sees the future of the EU built around five principles:

• competitiveness, “At the core of the European Union must be, as it is now, the single market. Britain is at the heart of that Single Market, and must remain so.
• flexibility, “we need a structure that can accommodate the diversity of its members – North, South, East, West, large, small, old and new. Some of whom are contemplating much closer economic and political integration. And many others, including Britain, who would never embrace that goal”
• power back to the Member States
• democratic accountability, “we need to have a bigger and more significant role for national parliaments”
• fairness, whatever new arrangements are enacted for the Eurozone, they must work fairly for those inside it and out.”

In fact Cameron just wants to transform the EU into a simple common market without any types of commitments and responsibilities for its members. The reactions throughout Europe, especially in Paris and Berlin, have not been positives as one could imagine.

Ultimately Cameron’s message was: What can the EU do for Britain? When it should in fact be: What could Britain do for the EU? I would certainly argue that PM Cameron is one of the most dangerous European leaders not because of its conservative policies, but by letting his ideologies and party lines shaping his European strategy and by misunderstanding European history.

Time Cover – Aug. 17, 1992

The wars of the 1990s in the Balkans and the continuous violence in this region of Europe should be a simple and powerful reminder that war is never far away. Unfortunately a majority of European citizens tend to take for granted the luxury of peace; here lays the threat to the Union. This speech should be seen as an important wake-up call in order to address the shortfalls of the EU and strive towards a deeper union.

EU High Representative Catherine Ashton speaks during her visit to Kenya © European External Action Service (EEAS)

As the EU is dragged into coping with the ongoing financial crisis, there has been a lively discussion what will be the consequences on the EU’s foreign policy in the long-term forecast. Most of the arguments deal with a question of how the nature of the EU Crisis Management will change in the upcoming years, as EU Member States are less and less willing to contribute to the EU’s activities under an umbrella of Common Foreign and Security Policy (CFSP). However, as it turns out, one of the instruments in the EU’s foreign policy tool-box, which has been so far overlooked in the last years, seems to swiftly evolve into a prominent tool filling the raising gap.

Indeed, in respect to implementation of sanctions as a ‘default’ response to human rights violations, political turmoil, democratic backsliding or security threats beyond EU borders, sanctions have been enormously gaining more prominent place in the EU’s foreign policy and developed as the EU’s widely used instrument. A look at the last 3 previous years give us a picture of a sharp increase in use of sanctions. While in 2010 EU implemented 22 decisions in this respect, a year later it was already 69. That means a use of sanctions more than tripled in one single year.

Yet never before sanctions reached high numbers like this. A year 2012, accordingly, introduced many policy analysis trying to figure out what does the rising number of sanctions tell us about direction of the EU’s foreign policy. Two larger analysis, notably, stand at the forefront of the whole debate. The first one is the recently published Policy Brief ‘Shooting in the Dark? EU Sanctions Policies’ by Konstanty Gebert, European Council on Foreign Relations (ECFR). A credit for the later one goes to Stephan Lehne, Visiting Scholar at the Brussels office of the Carnegie Endowment for International Peace, for his analysis ‘The Role of Sanctions in the EU Foreign Policy’.

Both authors agree, that sanctions “becoming one of the European Union’s favorite foreign-policy tools” and that “sanctions seem to have become the EU’s new default response to international challenges”. However, as both authors continue in the same breath, there seems to be a negative side of the rapidly expanding numbers of sanctions. In particular, whether sanctions have really the effect for which they are usually praised for and whether they can push states effectively to the wall, does not seem to be so clear yet.

What are the roots of the recent boom?

Firstly, the EU is obviously more than well positioned to use sanctions as its core foreign-policy tool. Latest statistics show, that only with 7% of the world’s population, the EU counts for 25,8 % of world GDP, and its trade with the rest of the world accounts for around 20% of global exports and imports (excluding intra EU trade). This clearly makes the EU not only the biggest trade player in the world, but also the biggest importer, the biggest exporter and the biggest investor. That said, given these advantages placing the EU at the core of the international trade system, one might wonder why it has taken so long for the EU to pull the sanctions out of its foreign-policy tool-box and place them at the forefront of its foreign policy actions.

Surprisingly, while 1980s saw a limited number of sanctions, the main trigger can be identified in the Balkan Crisis, which lifted up the number and the EU rapidly started to use sanction more systematically. Following decade witnessed steadily growth of a use of sanction. However, even though growth was slow but persistent, it was in the beginning of 2010, when the number of sanctions literally took off. As is already mentioned in the first lines, while in 2010 EU implemented 22 decisions in this respect, a year later it was already 69 (needless to say, that a big portion targeted Iran, Syria and Libya). Why has the EU, then, discovered the use of sanctions so late and has been massively expanding its use only in the recent years?

S. Lehne identifies in his analysis these factors standing behind the increase: Firstly, it is rather easy to adapt sanctions, even though once they are under way, it is more difficult to jump off. Freezing of assets, banning oil imports and adapting travel restrictions on regime officials has the advantage, that used sanctions do not target the population as a whole, at least not primarily. Besides, there are virtually no cost in sanctioning individuals from states with massive human rights violations or presenting security threats to the International order (especially in a form of travel restrictions). Secondly, one can agree that austerity measures and overall financial crisis at the European continent favors using sanctions. With the ongoing austerity measures less and less states are willing to contribute to Crisis Management operations under CFSP/CSDP. A use of sanctions, arguably, presents a way of limiting impact of the adopted policies on the budget itself, but also is not demanding in terms of ‘political energy’. Last but not least, as he continues, sanctions adopted by the UN has also influenced the EU’s view on this particular area. Specifically, it was the Obama’s sanctions against the Iranian regime from 2009, which were based on UN Security Council Resolution and which took on board not only the main EU Member States, but also those European states being so far reluctant to this foreign policy tool.

Making the ‘sanctions machine’ more effective?

While all aforementioned factors mutually contributed to the current state of play, it does not offer an answer on whether the ‘sanctions machine’, as The Economist quipped one of the European ministers, is at the end effective. Although to measure overall effectiveness in terms or reaching desired goals is far from being easy, as both authors agree. K. Gebert points out in his Policy Brief few particular adjustments the EU has to take into account if the sanctions ought to me more effective.

Firstly, as there is no procedure on the EU level to verify the implementation of sanctions, there is a pressing need to develop a better monitoring system. Secondly, in certain cases less can be more. Extensive sanction targeting various actors and level in the targeted regime will hardly achieve, that the regime will be willing to accept them. Consequently, a way forward might be when sanctions are used in a smaller scale (starting with releasing political prisoners, for instance). Thirdly, regimes should be ‘rewarded’ for good behaving. If the regime faces a ‘domino effect’ of escalating sanction from the EU, it is hard to expect some political changes or at least stepping out of the internally set up political directions. If the EU would communicate more precisely what is the desired goals of the EU and International community in general, and under what circumstances sanctions can be lifted, the effectiveness, according to K. Gebert, would be higher.

Sanctions…but what next?

As one proverb goes, ‘There’s more than one way to skin a cat’. And indeed, as it seems, not even a greater effectiveness might put sanctions at the pedestal of the EU’s foreign policy tool-box in the future. S. Lehne hits the point in his analysis by giving assumption of what could happen, if sanctions start overshadowing the EU’s in parallel existing instruments at its disposal: „The EU is still a relatively weak international actor. If current trends continue, it risks turning itself into a ‘sanctions machine’. And while it uses its energy and resources to build complex sanctions regimes, it will leave diplomatic initiatives and political crisis management to others, including at times to some of its own member states. The idea of the EU as a toolbox rather than as an international actor might appeal to some, but it certainly does not do justice to the objectives of the EU treaty and the ambitions of many member states.“ Indeed, there are reasonable doubts that the EU’s Foreign Policy tool-box overflowing with sanctions as a ‘default response’ to ‘not-so-well-behaved regimes’ could potentially undermine effectiveness and credibility of the Common Foreign and Security Policy as such. Also The Economist is aware of the consequences: “Europe needs to do more than respond to every problem with fresh sanctions (…) just thinking up new sanctions every month does not amount to a strategy.”

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S. Lehne, The Role of Sanctions in EU Foreign Policy, Carnegie Endowment for International Peace, 14 December 2012 (http://carnegieendowment.org/2012/12/14/role-of-sanctions-in-eu-foreign-policy/etnv).

Tough Talk, No Strategy? The Economist, 3 March 2012. (http://www.economist.com/node/21548952).

K. Gebert, Shooting in the Dark? EU Sanctions Policies, European Council on Foreign Relations, Policy Brief, 11 January 2013 (http://ecfr.eu/content/entry/shooting_in_the_dark_eu_sanctions_policies).