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      The Risk of a No-Deal Brexit Remains

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      The risk that we will wake up on May 1 to find we have a no-deal Brexit after all has not disappeared. The deadline for the ratification by the European Parliament of the trade deal between the European Union and the United Kingdom was due to be February 28. But Parliament postponed the deadline to April 30. It did this because it felt it could not trust the UK to implement the Trade and Cooperation Agreement (TCA) — as the deal is formally known as — properly and as agreed and ratified. 

      This distrust arose because the implementation of the Ireland and Northern Ireland Protocol of the withdrawal agreement — the treaty that took the UK out of the EU — had been unilaterally changed by the British government. If a party to an international agreement takes it upon itself to unilaterally alter a deal, the whole basis of international agreements with that party disappears.

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      The matters in dispute between the UK and the EU — the protocol and COVID-19 vaccines — remain unresolved. The European Union is taking the United Kingdom to court over the protocol, but the court is unlikely to decide anything before the new deadline of April 30.

      In the normal course of events, the TCA between the UK and the EU would be discussed in the relevant committee of the European Parliament, before coming to the plenary session of Parliament for ratification. The next meeting of the Committee on International Trade is due to take place on April 14-15, and the agenda for the meeting has been published. It includes a discussion on the enforcement of trade agreements, the general system of preferences and, significantly, trade-related aspects of the COVID-19 pandemic. It makes no mention of the TCA with the UK.

      Trade-related aspects of the pandemic will inevitably include a discussion on vaccine protectionism, which is a highly contentious issue between the EU and the UK that has poisoned relations and led to bitter commentary in the media. The fact that the committee has not included a discussion of the TCA with the UK on its agenda for what may well be the only meeting it will have before the April deadline is potentially very significant.

      Ratifying the Trade Deal

      The TCA is a 1,246-page document, and its contents, if ratified, will take precedence over EU law. To ratify such an agreement without proper scrutiny in the relevant committees could be seen as a dereliction of the European Parliament’s responsibility of scrutiny. We should not forget the scrutiny that was applied to the much more modest EU trade agreement with Canada. The same goes for the deal with Mercosur states (Argentina, Brazil, Paraguay and Uruguay).

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      Furthermore, the TCA would, if ratified, set up a network of committees to oversee its implementation. These will meet in private and their work will diminish the ongoing oversight by the European Parliament of a host of issues affecting all 27 EU member states. The TCA also contains a system of dispute-resolution mechanisms that will quickly be overwhelmed by work. The TCA has many items of unfinished business, on which the European Parliament will want to express a view. It is hard to see how any of this can be done before the end of April.

      The UK government led by Prime Minister Boris Johnson has adopted a deliberately confrontational style in its negotiations with the European Union. The more rows there are, the happier the support base that Johnson is seeking to rally for his Conservative Party. Johnson’s European strategy has always been about electoral politics, not economic performance. This has led to almost complete confusion between the British government and the EU.

      If the European Parliament ratifies the TCA without there having been seen to be a satisfactory outcome to the EU-UK negotiations about the Ireland and Northern Ireland Protocol and over the export of vaccines, it will be a political setback for Parliament and a source of immense satisfaction for Johnson.

      Yet one should never underestimate the role emotion can play in politics. The entire Brexit saga is a story of repeated triumphs of emotion over reason — and the European Parliament is not immune to this ailment. Boris Johnson could be pushing his luck a bit far this time.

      *[A version of this article was posted on John Bruton’s blog.]

      The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy. More

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      in World Politics

      What Lies Behind Turkey’s Withdrawal From the Istanbul Convention?

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      Turkish President Recep Tayyip Erdogan issued a decree in the early hours of March 20 withdrawing Turkey from the Council of Europe treaty — dubbed the Istanbul Convention — on preventing and combating violence against women and domestic violence. The convention sets comprehensive standards for protecting women against all forms of violence.

      The withdrawal prompted widespread protests from women’s groups and an uproar on social media, criticizing that it signals a huge setback for women’s rights in a country with high rates of gender-based violence and femicides. Just in 2020, at least 300 women were murdered in Turkey.

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      Following the public outrage over the withdrawal, government representatives unconvincingly responded that women’s rights are guaranteed in national laws and that there is no need for international laws. The Directorate of Communications defended the decision with the claim that the convention was “hijacked by a group of people attempting to normalize homosexuality,” and that this is incompatible with the country’s social and family values.

      Turkey was the first state to ratify the Istanbul Convention and became the first to pull out. What lies behind the withdrawal?

      Erdogan’s Rationale: To Remain in Power at All Costs

      In August 2020, officials in the Justice and Development Party (AKP) signaled that Turkey was considering withdrawing from the Istanbul Convention after religious conservatives began an intense lobbying effort against the convention, lambasting it for damaging “traditional Turkish family values.” Although they claimed that the treaty destroys families and promotes homosexuality, conservative women’s groups supporting the AKP defended it. The row even reached Erdogan’s own family, with two of his children becoming involved in groups on either side of the debate. Due to these internal tensions within the AKP and the symbolic achievement with the reconversion of the Hagia Sophia into a mosque in 2020, the debate was postponed.

      Although opinion polls had shown that 84% of Turks opposed withdrawing from the Istanbul Convention and a majority of conservative women were in favor of it, Erdogan decided to pull out of the treaty, thereby disregarding not only the international law anchored in the constitution, but also the legislative power of parliament. This move comes amid significantly eroding support for the president and his informal alliance with the ultra-nationalist Nationalist Action Party (MHP). The withdrawal from the convention gives Erdogan three political advantages that will help him retain power.

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      First, Erdogan and his AKP aim to reenergize their conservative voter base, which has been dissatisfied with the economic downturn — a reality that has only been exacerbated by the coronavirus pandemic. The ruling AKP government cannot curb the high level of inflation, and unemployment and poverty rates remain high. Leaving the convention is a symbolic gesture to his base, but it will bring short-term relief, as did the reconversion of the Hagia Sophia.

      Second, with a potential electoral defeat in mind, Erdogan is looking for new allies. He thus made an overture in January to the Islamist Felicity Party (SP), which is in an oppositional alliance with secularist, nationalist and conservative parties. With its 2.5% of the vote in the 2018 parliamentary elections, the SP shares the same Islamist roots as the AKP and is popular among ultraconservative voters, who enthusiastically back the withdrawal from the Istanbul Convention.

      In his meeting with the SP, Erdogan used the withdrawal as a bargaining chip for a possible electoral alliance in the future. He is not only aiming to strengthen his own voting bloc, but also to break the oppositional alliance, which has increasingly gained confidence since its success in the 2019 local elections and been effective in challenging Erdogan’s increasingly authoritarian rule.

      Third, to bolster his image as a willful leader, the Turkish president has intensified the level of repression by suppressing democratic civil society organizations that dare to challenge his rule. This time, he has targeted women’s rights advocates, who frequently criticize the government for not strictly implementing the protective measures of the Istanbul Convention.

      Political Conditionality as a Necessary European Reaction

      While increasing the level of repression in domestic politics, Turkey intensified its diplomatic charm offensive to reset Turkish relations with the European Union. Against this background, Brussels should not only condemn the decision, but also revise its EU-Turkey agenda by imposing political conditions regarding human rights and the rule of law, which have once again been breached with Ankara’s withdrawal from the convention.

      This approach is necessary for two reasons. First, the EU can send a motivating message to democratic segments of civil society and the opposition by underlining that the Istanbul Convention is an issue of human rights and that its sole purpose is protecting women from violence rather than undermining Turkey’s national values and traditions. Second, calling Ankara out is also in Europe’s own interest. The withdrawal can have spillover effects on other member states of the Council of Europe.

      Considering the latest attempts by the Polish government to replace the Istanbul Convention with an alternative “family-based” treaty that also finds support in other Central European governments, the backlash against women’s rights in Europe is not a myth, but rather a reality.

      *[This article was originally published by the German Institute for International and Security Affairs (SWP), which advises the German government and Bundestag on all questions related to foreign and security policy.]

      The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy. More

    • 88 Shares179 Views

      in World Politics

      A New European Financial Landscape Is Emerging

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      The United Kingdom’s exit from the European single market on January 1 has sent trade in goods plummeting amid much confusion. By contrast, Brexit was carried out in an orderly manner in the financial sector, despite significant movement of trading in shares and derivatives away from the City of London.

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      After five years of radical uncertainty, it has become clear that the European Union and the United Kingdom will be taking separate paths on financial regulations — a financial “decoupling” that means a significant loss of business for the City. Whether the EU financial sector can gain much of what London loses will depend on the EU’s willingness to embrace further financial market integration.

      Smart Sequencing Ensured an Orderly Brexit

      As with the Y2K problem, the Brexit transition could have gone worse. It took more than luck to avoid financial instability along the way.

      First, financial firms on both sides of the English Channel (and of the Irish Sea) worked hard and were able to preempt most of the operational challenges.

      Embed from Getty Images

      Second, despite all the recurring high-stakes drama between the UK government and the European Commission, the technical cooperation between the authorities actually in charge of financial stability, primarily the Bank of England and the European Central Bank (ECB), appears to have run smoothly.

      Third, the negotiators phased the process in a smart way. The Brexit Withdrawal Agreement of January 2020 helped reduce uncertainty by ensuring that the UK government would meet its financial obligations to the EU, avoiding what would have been akin to selective default. That agreement kept the United Kingdom in the single market during the transition period beyond the country’s formal exit from the European Union on January 31, 2020. It also set a late-June deadline for the British government to extend the transition period beyond December 31, 2020. As London decided not to do so, that left six months of effective preparation.

      To be sure, whether an EU-UK Trade and Cooperation Agreement (TCA) would be concluded remained unknown until late December. But that mattered comparatively little for financial services, since trade agreements typically do not cover them much. By one count, the 1,259-page TCA (which is still unratified by the European Union) contains only six pages relevant for the financial sector.

      The resulting legal environment for financial services between the European Union and the United Kingdom is unlikely to change much any time soon. Contrary to occasional portrayals in the United Kingdom, no bilateral negotiations on financial services are going on, except for a memorandum of understanding expected this month that is not expected to bind the parties on substance.

      From the EU perspective, the United Kingdom is now a “third country,” in other words an offshore financial center, following decades of onshore status. UK-registered financial firms have lost the right, or “passport,” to offer their services seamlessly anywhere in the EU single market. From a regulatory standpoint, they have no better access to that market than their peers in other third nations such as Japan, Singapore or the United States.

      Equivalence Status for UK Financial Market Segments

      Some segments of the financial sector in these other third countries actually have better single market access than British ones, because they are covered by a category in EU law allowing direct service provision by firms under a regulatory framework deemed “equivalent” to that in the European Union. The equivalence decision is at the European Commission’s discretion, even though it is based on a technical assessment. As a privilege and not a right, equivalence can be revoked on short notice.

      So far, the European Commission has not granted the UK any such segment-specific equivalence, except in a time-limited manner for securities depositories until mid-2021 and clearing services until mid-2022. For the moment, the commission appears to be leaning against making the latter permanent. In most other market segments, the commission will not likely grant equivalence to the United Kingdom in the foreseeable future. This may appear inconsistent with the fact that almost all current UK regulations stem from the existing EU body of law. But the UK authorities (including the Bank of England) have declined to commit to keeping that alignment intact.

      Embed from Getty Images

      The commission’s inclination to reduce EU dependence on the City of London is understandable. No comparable dependence on an offshore financial center has existed anywhere in recent financial history. Such dependence entails financial stability risk. In a crisis, UK authorities would not necessarily respond in a way that preserves vital EU interests. Think of the Icelandic crisis of 2008, when Reykjavik protected the failing banks’ domestic depositors but not foreign ones. It is hardly absurd for the European Union to try to reduce such a risk, even if — as appears to happen with derivatives — some of the activity migrates from the United Kingdom to the United States or other third countries as a consequence, and not to the European Union.

      At the same time, the argument that keeping EU liquidity pooled in London is more efficient than any alternative is unpersuasive given the European Union’s own vast size. In addition, the European Commission also follows mercantilist impulses to lure activity away from London, even though these generally do not make economic sense. Added up, these factors provide little incentive for the commission to grant equivalence status to more UK financial market segments, unless some other high-level political motives come into play. None are apparent right now.

      The UK Is Unlikely to Regain Lost Advantage

      How the European Union and the United Kingdom will decouple will not be uniform across all parts of the financial system. Regulatory competition between them may become a “race to the bottom” or “to the top,” depending on market segments and the circumstances of the moment, without a uniform pattern. In any case, such labels are more a matter of judgment in financial regulation than in, say, tax competition.

      In some areas, the European Union will be laxer, while in others, it will be the United Kingdom, as is presently the case between the EU and the US. For example, the European Union is more demanding than the United States on curbing bankers’ compensation but easier when it comes to enforcing securities laws or setting capital requirements for banks. At least some forthcoming UK financial regulatory decisions may be aimed at keeping or attracting financial institutions in London, but they are still not likely to offset the loss of passport to the EU single market.

      All these permutations suggest that the medium-term outlook for the City of London is unpromising, although the COVID-19 situation makes all quantitative observations more difficult to interpret. Once an onshore financial center for the entire EU single market, and a competitive offshore center for the rest of the world, the City has been reduced to an onshore center for the United Kingdom only and has become offshore for the European Union. That implies a different, in all likelihood less powerful, set of synergies across the City of London’s financial activities.

      The few relevant quantitative data points available reinforce this bleak view. Job offerings in British finance, as tracked by consultancy Morgan McKinley, have declined alarmingly since the 2016 Brexit referendum. The ECB (as bank supervisor) and national securities regulators coordinated by the European Securities and Markets Authority are tightening requirements for key personnel to reside mainly on EU territory rather than in the United Kingdom.

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      As noted by Financial Times columnist Simon Kuper, many financial firms’ Brexit policy until this year had been to “sit tight and do nothing until post-Brexit arrangements for finance forced [their] hand.” That phase has ended. Firms that drag their feet face regulatory disruption, as happened to broker TP ICAP in late January. Tussles between regulators and regulated entities, rather than between the European Commission and the UK government, are where most of the financial-sector Brexit action is likely to be in 2021. These disputes typically happen behind closed doors, and the regulators typically hold most of the cards.

      For all the optimistic talk in London of “Big Bang 2.0 or whatever,” the United Kingdom’s comparative advantage as the best location for financial business in the European time zone is unlikely to recover to its pre-Brexit level. The macroeconomic losses could be moderated or offset by cheaper currency and less expensive real estate in London, making the city a more attractive place to do nonfinancial business. Even so, a gap will likely remain for the UK government, which has for years depended heavily on financial sector–related tax revenue.

      The European Union stands to gain financial activity as a consequence of Brexit. How much and where is not clear yet. As some analysts had predicted, Amsterdam, Dublin, Frankfurt, Luxembourg and Paris are the leaders for the relocation of international (non-EU) firms. Dublin and Luxembourg specialize in asset management, Frankfurt in investment banking and Amsterdam in trading. But EU success in terms of financial services competitiveness and stability will depend on further market integration, the pace of which remains hard to predict.

      The European banking union is still only half-built because it lacks a consistent framework for bank crisis management and deposit insurance. The grand EU rhetoric on “capital markets union” has yielded little actual reform since its start in 2014. Events like the still-unfolding Wirecard saga may force additional steps toward market integration, even though a proactive approach would be preferable.

      The one near certainty is that London’s position in the European financial sector will be less than it used to be.

      *[This article was originally published by Bruegel and the Peterson Institute.]

      The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy. More

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      in World Politics

      Will Multilateralism Be Great Again?

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      A few weeks ago, six eminent world leaders — including UN Secretary-General Antonio Guterres, European Commission President Ursula von der Leyen and German Chancellor Angela Merkel — called for the revitalization of multilateral cooperation. They reminded us of the UN Millennium Declaration, which was signed by 189 countries in 2000. The declaration expressed the confidence of the international community that multilateral policies could defeat global challenges such as “hunger and extreme poverty, environmental degradation, diseases, economic shocks, and the prevention of conflicts.”

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      The declaration marked the heyday of multilateral optimism. But contrary to the millennial vision of global governance, international affairs today are dominated by entrenched mistrust between governments.

      Sadly, the above-mentioned article by the six world leaders does not explain what went wrong in the 21st century. Without such an analysis, however, appeals for changing course risk being little more than aspirational talk. To really make multilateralism great again, we have to ask: Why did things go astray?

      The Adverse Effects of Nasty Surprises

      Harold Macmillan, the British prime minister between 1957 and 1963, is frequently quoted as having said that what he feared most in politics were “Events, dear boy, events.” This catchy phrase points to the proverbial overlooked elephant that has rampaged through international affairs in the last two decades. Apparently, unexpected events, escalating into major crises and global disruptions, have driven the international community apart and contributed decisively to the demise of multilateralism.

      To their credit, the world leaders are aware of this. They accurately state that major crises remind us of how interdependent we are, referencing the global financial crisis of 2008 and the current COVID-19 pandemic. However, there have been far more important disruptions in the past two decades: the 9/11 attacks in 2001; the popular revolts in the Middle East in 2011, which escalated into civil wars in Libya, Syria and Yemen; the eurozone crisis; Russia’s annexation of Crimea in 2014; the 2016 Brexit referendum in the United Kingdom; and the presidency of Donald Trump in the United States. More could easily be added to the list.

      These disruptions shattered international cooperation. Economic crises intensified cleavages within as well as between societies. Austerity and social inequality championed populist and anti-liberal sentiments that were expressed through battle cries of “take back control” and “America First.” Following 9/11, the 2003 war in Iraq split the West, whereas the military confrontations in Libya and Syria continue to divide the international community. Russia was suspended from the G8 after its territorial aggression against Ukraine, closing an important channel of communication with the Kremlin.

      The cumulative effect of these disruptions has been a significant decline in the willingness of governments to collaborate. International organizations and multilateral agreements have become political battlegrounds. Many administrations, including those in the United States, China, Russia, India, the United Kingdom and the European Union, prioritize policies such as decoupling, self-sufficiency and strategic autonomy. Consequently, the COVID-19 pandemic is unfolding as a dual crisis of global connectivity and global governance.

      Credible Foresight Creates Trust in Multilateral Cooperation

      In their article, the world leaders shied away from the conclusion that global disruptions are not only a result of, but also an important catalyst for many governments retreating from multilateralism. That is why they are missing the low-hanging fruit for policy innovation: Avoiding nasty surprises by cultivating anticipatory governance — for instance, by investing in multilateral foresight and forecasting capabilities.

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      Hardly any of the major disruptions in international affairs have come as a surprise. Genuine “black swans” are very rare: The 9/11 Commission Report pointed out that several American agencies had been collecting evidence that al-Qaeda was planning attacks; there were plenty of reports from the Middle East and North Africa region analyzing the widespread dissatisfaction with repressive governments and bad governance; experts had frequently warned about the global financial crisis, the eurozone and the pandemic; and the referendum in the United Kingdom and the elections in the United States could only have had one of two outcomes. So, the lack of preparations for the unexpected results had more to do with wishful thinking than surprise.

      The exception to the rule is the annexation of Crimea. That the Kremlin would drastically change course instead of waiting out the developments in Kiev, which had proved a winning strategy for Moscow after 2004, came as a real surprise. But in all other cases, plenty of unheeded warnings lined the road to the tragedy of multilateralism.

      Of course, governments’ reluctance to trust forewarnings is understandable. The track record of expert predictions is not that impressive. Quite often, they turn out to be wrong. And crying wolf has consequences: Policymakers might be criticized by their opponents, the media, courts of auditors or the public when they order, for example, vaccines but a pandemic does not materialize as expected. This happened in 2009 with the swine flu scare, when policymakers in Europe and the United States learned a lesson that partly explains the inadequate preparations for COVID-19.

      But some predictions are better than others. Research has shown that the best forecasters achieve up to 30% higher prediction accuracy than analysts with access to classified material. Diversity and multi-perspectivity are important criteria for the success of forecasting teams that consistently outperform their competitors. Policymakers should harvest this knowledge. Investing in multilateral foresight and forecasting capabilities promises not only to increase timely awareness of future events. Collectively anticipating risks and opportunities could also stimulate international cooperation and joint policymaking.

      *[This article was originally published by the German Institute for International and Security Affairs (SWP), which advises the German government and Bundestag on all questions related to foreign and security policy.]

      The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy. More

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      in US Politics

      The Guardian view on China, Xinjiang and sanctions: the gloves are off | Editorial

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      China’s response to criticisms of horrifying human rights violations in Xinjiang is clear and calculated. Its aims are threefold. First, the sanctions imposed upon individuals and institutions in the EU and UK are direct retaliation for those imposed upon China over its treatment of Uighurs. That does not mean they are like-for-like: the EU and UK measures targeted officials responsible for human rights abuses, while these target non-state actors – elected politicians, thinktanks, lawyers and academics – simply for criticising those abuses.Second, they seek more broadly to deter any criticism over Xinjiang, where Beijing denies any rights violations. Third, they appear to be intended to send a message to the EU, UK and others not to fall in line with the harsher US approach towards China generally. Beijing sees human rights concerns as a pretext for defending western hegemony, pointing to historic and current abuses committed by its critics. But mostly it believes it no longer needs to tolerate challenges.Alongside the sanctions, not coincidentally, has come a social media storm and consumer boycott targeting the Swedish clothing chain H&M and other fashion firms over concerns they voiced about reports of forced labour in cotton production in Xinjiang. Nationalism is a real and potent force in China (though not universal), but this outburst does not appear spontaneous: it began when the Communist Youth League picked up on an eight-month-old statement, and is being egged on by state media.China has used its economic might to punish critics before – Norway’s salmon exports slumped after dissident Liu Xiaobo won the Nobel peace prize – and often with the desired results. But this time, it is acting far more overtly, and it is fighting on multiple fronts. Some clothing companies are already falling into line. Overall, the results are more complex. The sanctions have drastically lowered the odds of the European parliament approving the investment deal which China and the EU agreed in December, to US annoyance. Beijing may think the agreement less useful to China than it is to the EU (though many in Europe disagree). But the measures have done more to push Europe towards alignment with the US than anything Joe Biden could have offered, at a time when China is also alienating other players, notably Australia. Foreigners – who in many cases have offered more nuanced voices to counter outright China hawks – are already becoming wary of travelling there, following the detention and trial of two Canadians, essentially taken hostage following their country’s arrest (on a US extradition request) of a top Huawei executive. The sanctioning of scholars and thinktanks is likely to make them more so. Businesses, though still counting on the vast Chinese market, are very belatedly realising the risks attached to it. Those include not only the difficulty of reconciling their positions for consumers inside and outside China, but the challenges they face as the US seeks to pass legislation cracking down on goods made with forced labour, and the potential to be caught up in political skirmishes by virtue of nationality. For those beginning to have second thoughts, rethinking investments or disentangling supply chains will be the work of years or decades. But while we will continue to live in a globalised economy, there is likely to be more decoupling than people foresaw.The pandemic has solidified a growing Chinese confidence that the west is in decline, but has also shown how closely our fates are tied. There can be no solutions on the climate emergency without Beijing, and cooperation on other issues will be both possible and necessary – but extraordinarily difficult.Beijing’s delayed response to the UK sanctions suggests it did not anticipate them, perhaps unsurprising when the integrated review suggested we should somehow court trade and investment while also taking a tougher line. But the prime minister and foreign secretary have, rightly, made their support for sanctioned individuals and their concerns about gross human rights violations in Xinjiang clear. Academics and politicians, universities and other institutions, should follow their lead in backing targeted colleagues and bodies. China has made its position plain. So should democratic societies. More

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      in Elections

      A Pro-Europe, Anti-Populist Youth Party Scored Surprising Gains in the Dutch Elections

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      For years, right-wing populists have been a driving force in the Netherlands. But this week a pan-European party called Volt shook things up.Lost among the mostly humdrum national elections in the Netherlands this week was the emergence of Volt, an anti-populist, pro-Europe party made up of students and young professionals that snatched three seats in the Dutch Parliament — the first national electoral success in its five years of existence.Volt wasn’t the only outsider group to win a seat or two in the elections. One politician arrived at Parliament driving a tractor with flashing lights to claim her newly won seat for a farmer’s party. Sylvana Simons, a former TV presenter, won a seat for “Bij1,” an anticapitalist party. A new far right, anti-immigrant party won four seats.Over the last two decades, however, it was populists and far right parties that played the insurgent role in Dutch politics, promoting anti-immigrant, anti-establishment and anti-European policies. While never a serious threat to seize power, in 2016 representatives of these parties initiated and won a referendum in the Netherlands on an E.U. trade treaty with Ukraine, temporarily halting the deal.This makes this week’s victory of newcomer Volt all the more remarkable. The party is staunchly pro-Europe, something that most traditional parties had thought was a complete turnoff for voters.“Most people of my generation grew up paying in euros and never having to think about crossing borders,” said Laurens Dassen, 35, the party’s Dutch leader. “For us, Europe is a fact of life.”Prime Minister Mark Rutte, whose center-right Party for Freedom and Democracy comfortably won the greatest number of seats for the fourth time since 2010, has had a tense relationship with Europe. Last year, for example, he upset Southern European countries when he refused to discuss financial support during the pandemic, and brought a biography of Chopin to the meetings because he wasn’t planning on talking anyway.The success of Volt in the Netherlands is all the more remarkable in that it isn’t even a Dutch party but an offshoot of a European movement, with 9,000 members scattered across Europe, and a few more in Switzerland and Albania. The main party was established in 2016 by Andrea Venzon, 29, an Italian living in London, and has a presence in every one of the 27 member states of the European Union.Caroline van der Plas, the leader of the BoerBurgerBeweging party, speaking with journalists from the booth of her tractor.Remko De Waal/Agence France-Presse, via Getty ImagesMr. Dassen, who was raised in Knegsel, a village near Eindhoven, played in the local youth orchestra and, after studying business management, went to work at ABN Amro bank checking processes for transactions in money laundering.But he was worried about the rise of populism and far-right parties, he said, and “in 2018 I read an article about Volt, decided to join and gave up my job some months later to really try to get the party started.”In the Dutch elections Volt piled up heavy vote totals in several Dutch student cities like Delft and Leiden, powered in part by a social media campaign and a broad network of volunteers.Another pro-European party, the D66, won an extra four seats this week, making it the second largest party in the parliament. Its leader, Sigrid Kaag, is a former United Nations special envoy for Syria and the outgoing foreign minister of trade and development.Because no party in the Dutch Parliament commands a majority, analysts said the idiosyncrasies of coalition building could bring Volt into the governing bloc along with Mr. Rutte and Ms. Kaag. Whatever the outcome of that horse trading, analysts think Volt’s future is bright in the Netherlands.“They could be big here and double their seats if they manage to go even stronger on the climate,” said Felix Rotterberg, a campaign strategist long affiliated with the social-democratic party PvdA. “Volt has the youth, and there will only be more of those in the future.”The party is on a winning streak in other parts of Europe, though nothing else is as high-profile as its victories in the Netherlands. Volt now has over 30 elected representatives across Europe, mainly in municipalities in Germany and Italy. But it has also won its first seat in the European Parliament, in the person of Damian Boeselager, 33.In coming months, Volt will be running candidates in national elections in Bulgaria and Germany, in a regional vote in Spain and in local elections in Italy. Following Brexit this year, its British members are starting a rejoin Europe campaign. Its leaders emphasize Volt’s pan-European character, which they say differentiates it from any other party in Europe.“Every one of our members, has direct voting rights at the European level, they are able to choose our board and influence our policies directly,” said Valerie Sternberg, 30, the party’s Germany-based co-president. “No matter where you live in Europe, even in Britain.” The party doesn’t have a youth organization. “Most of us are young ourselves,” she said.Ms. Sternberg said she cried “tears of joy,” when she learned about the success of Volt’s Dutch chapter, and said the party is now setting its sights on Germany, which is having national elections in the fall.“Our weak point is in rural areas across Europe, we need to get our message there, now populists are winning there,” she said. “We hope that Covid is showing people that isolation makes us weak and cooperation makes us stronger.” More

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      in US Politics

      The Guardian view on defence and foreign policy: an old-fashioned look at the future | Editorial

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      The integrated review offers a nostalgic – at times, even anachronistic – response to the challenges of the 21st century. Its intent is laudable: acknowledging that attempting to defend the status quo is not enough, and seeking to carve out a path ahead. It recognises the multiple threats that the UK faces – from future pandemics to cyber-attacks – and the need for serious investment in science and technology. But overall, “global Britain” offers a hazy vision of a country that is looking east of Suez once more, wedded to the symbolic power of aircraft carriers, and contemplating a nuclear response to cyberthreats.The policy paper is in essence a response to three big shifts: the rise of China, the related but broader decline of the existing global order, and Brexit. Two of these confront democracies around the world. But the last is a self-inflicted wound, which the government appears determined to deepen. And the need to deal with the first two is not in itself a solution to the third, as this policy paper sometimes seems to imagine.The plan essentially recognises the move that is already taking place towards a warier, more critical approach to China, away from the woefully misjudged “golden era” spearheaded by George Osborne, and the fact that parameters will be set for us by the tougher approach of the US, in particular. It accepts that we must engage on issues such as climate change, and that we are not in a new cold war – we live in a globalised economy – albeit that there is likely to be more decoupling than many anticipated.But it does not try to explain how the UK can square the circle of courting investment while shielding itself from undue Chinese influence and expanding regional alliances. Australia is currently finding out what happens when Beijing is angered by a strategic shift.The tilt to the Indo-Pacific may – like Barack Obama’s “pivot to Asia” – fail to live up to its advertising. But it is true that Britain has paid insufficient attention to Asia, and is wise to pursue stronger ties with Five Eyes nations and other democracies in the region. These relationships will sometimes be problematic; India is the world’s largest democracy, but under Narendra Modi is looking ever less democratic. The pursuit of new partnerships could have been “in addition to” rather than “instead of”. Yet Britain is snubbing old, reliable, largely like-minded friends with clear common interests. The review is written almost as if the EU did not exist, preferring to mention individual member states. That seems especially childish when it also identifies Russia as an “active threat”. Nor is it likely – even if the UK joins the Trans-Pacific free-trade pact – that countries thousands of miles away can fully compensate for the collapse in trade with the EU that saw Britain record a £5.6bn slump in exports to the bloc in January. Geography matters.Behind the rhetoric of the review is a country that has failed to match its words and ambitions to its actions. Britain boasts of its soft power and talks of upholding the rule of law internationally – yet has declared itself happy to break international law when it considers it convenient. Though the paper promises to restore the commitment to spending 0.7% of GDP on aid “when the fiscal situation allows”, slashing the budget is not only undermining the UK’s standing, but global security and stability too.Most strikingly, after 30 years of gradual disarmament since the end of the Soviet Union, and despite its obligations under the non-proliferation treaty, Britain is raising the cap on its nuclear warheads – a decision met with dismay by the UN Elders and others, and bafflement by analysts. Mr Johnson has not deigned to explain why.The review has rightly asked difficult questions. While Joe Biden has brought the US back to multilateralism, his predecessor has shown that the longer-term parameters of US policy may not be as predictable as Britain once believed. Old certainties have gone. But the new challenges cannot be met by turning back to nukes and aircraft carriers. The government should have looked closer to home and been bolder in addressing the future. More

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      in World Politics

      The Italian Job: Can Mario Draghi Master It?

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      A political crisis was the last thing Italy needed during the COVID-19 pandemic. Yet a personal conflict between the leader of Italia Viva, Matteo Renzi, and the previous prime minister, Giuseppe Conte, led to the collapse of the coalition in mid-January. President Sergio Mattarella then commissioned 73-year-old Mario Draghi, the former head of the European Central Bank (ECB), to form a technocratic government, which he will preside over as prime minister.

      According to Mattarella, it would have been risky to organize early elections during the pandemic. Indeed, new elections would have delayed the fight against the pandemic. In addition, the prospect of a right-wing populist government would also probably have had a negative impact on the financial markets — a risk that had to be avoided in an already challenging situation.

      Will Britain Become Scot-Free?

      READ MORE

      Draghi is inheriting a difficult situation. In Italy, the health, economic and social crises triggered by the pandemic have exacerbated the country’s enormous structural problems. Italy’s “seven deadly sins” — as Italian economist Carlo Cottarelli called them — are tax evasion, corruption, excessive bureaucracy, an inefficient judicial system, demographic problems, the north-south divide and difficulty in functioning within the eurozone. As a result of the pandemic, gross domestic product (GDP) fell by almost 9% in 2020, public debt rose to around 160% of GDP and more than 400,000 jobs were lost. The inability of the traditional parties to find solutions for the economic problems keeps support for the right-wing populist coalition (Lega, Fratelli d’Italia, Forza Italia) at almost 50%.

      Even though almost all major political forces have declared their intent to cooperate with the Draghi government, the framework of a technocratic government offers the right-wing populists a target. It is quite conceivable that they will accuse Draghi of lacking democratic legitimacy. It will also be a challenge for the new head of government to govern without his own parliamentary majority.

      Managing the Health Crisis Without Austerity

      The top priority of the new leadership will be to manage the health crisis. This includes speeding up vaccinations and supporting schools and the labor market. This means applying for — and successfully using — funds from the financial assistance plan of the European Union to mitigate the economic and social consequences of the COVID-19 pandemic. The expected €200 billion ($243 billion) or so from this fund could benefit the economic recovery as well as the planned structural reforms in public administration, taxation and the judiciary, which will give the new government more room for maneuver in economic policy.

      Unlike the last technocratic government under Mario Monti between 2011 and 2013, the fact that Draghi will not have to enact politically-costly fiscal consolidation with possible negative effects on GDP growth can also be seen as an opportunity. This is mainly due to broad market confidence in Draghi and the fact that his government is operating from the outset under the protective umbrella of the ECB, which will not allow the cost for servicing public debt to rise excessively. The eurozone’s fiscal rules have also been temporarily suspended; this makes it possible to support the economy through fiscal policy measures.

      Finally, it should not be forgotten that, despite the structural problems, the Italian economy has many strengths: Italy is one of the most industrialized countries in Europe and the second-largest exporter after Germany. If some obstacles to growth are removed and, for example, credit is released by the Italian banking sector, the pace of recovery could pick up significantly. Draghi’s experience from the finance ministry and in central banking could help him set a decisive course.

      Who Will Succeed Mario Draghi?

      Nevertheless, given the major challenges facing Draghi’s technocratic government, one should be cautious about expectations. The next general election is less than two and a half years away, and it cannot be ruled out that it will be brought forward. That is very little time to address structural problems that have existed for decades.

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      To avert a victory for the right-wing populists, the new head of government will do everything he can to prevent early parliamentary elections until the current moderate majority in parliament has elected President Mattarella’s successor. The latter’s term ends in February 2022, and it cannot be ruled out that Draghi himself will succeed Mattarella. He could use his authority and power as president to stabilize politics, as is the traditional role of the Italian president.

      In 2012, Draghi saved the eurozone as head of Europe’s most important financial institution. In the current crisis, even if supported by figures from across a broad political spectrum, he will act as head of one of Europe’s most politically-fragile governments — an incomparably less favorable starting position.

      Draghi will make the best possible use of his time as head of government. That much is certain. However, given the massive level of support for the populists, the most important question is: After Draghi, will someone take the helm who will continue his reforms or reverse them? Not only Italy’s future but also that of the entire eurozone depends on it.

      *[This article was originally published by the German Institute for International and Security Affairs (SWP), which advises the German government and Bundestag on all questions relating to foreign and security policy.]

      The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy. More