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      in World Politics

      With the BRI, China Still Has a Long Road Ahead

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      To determine whether China can deliver a better Belt and Road Initiative (BRI), we must first ask whether Beijing is first of all capable of delivering a better BRI? Accusations of practicing debt-trap diplomacy and new forms of colonialism have had some impact on Beijing’s thinking, resulting in its pivot in 2018 to commit to a new, greener BRI, but the foundation of its “grand plan” for implementing the BRI basically remains similar to when it started in 2013.

      Beijing’s BRI Hubris Comes at a Price

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      President Xi Jinping and the Communist Party of China (CCP) have put some good-looking window dressing on the basic package, but so far, many BRI host country governments would say not all that much has changed since 2018, when Xi announced a pivot. Beijing is very good at saying one thing and doing another, as numerous governments around the world have learned. As a result, BRI host nations will inevitably believe that Beijing has had a real change of heart when they see it.

      Deaf Ear

      Part of Beijing’s problem is that it does not appear to be attuned to what the world is thinking. Perhaps it does not care. Reading Chinese media reports on the subject leaves one with the impression that the world is in unison and harmony with Beijing, its vision for the world and its performance thus far with the BRI. For example, according to  the CCP’s primary media outlet, the China Daily, a 2018 survey of 8,500 people in 17 BRI countries determined that “more than 70% agreed with the concepts of the “Chinese Dream,” the Belt and Road and “a community with a shared future for mankind.” But even this Chinese government-sponsored survey admitted that 64% of respondents believed that the BRI will confront many difficulties and challenges in the future.

      That concern was echoed by a 2019 survey by Singapore’s ISEAS-Yusof Ishak Institute, which polled more than 1,000 respondents in the government sector, the business community, civil society, academia and the media from across all 10 member states of the Association of Southeast Asian Nations. It found that fewer than 10% of respondents viewed China as “a benign and benevolent power,” 64% had little or no confidence that Beijing’s revised approach to the BRI will result in a fairer deal for their respective countries, and nearly 50% responded that they believed that Beijing possessed an intent to turn Southeast Asia into its own sphere of influence. That does not sound like a particularly inspiring foundation from which to try to turn things around.

      Beijing knows it has a long road ahead. To its credit, it has issued regulations intended to better monitor the conduct of state-owned enterprises and private Chinese businesses, mandating that they should pay more attention to environmental, social, integrity, financial and other risk factors. If a particular host nation’s laws are weak, these entities have been advised to ensure compliance with Chinese law, international treaties and conventions, and industry best practices. Reporting requirements, capital controls, and the regulation of overseas finance and investment have been tightened, which has contributed to the notable decline in new Chinese overseas loans and investments since 2017.

      Outside the Norm

      That said, Beijing has generally been reluctant to apply its laws to the activities of its entities overseas. In fact, State Council guidance requiring extensive disclosure of contracts for major construction projects expressly exempts overseas investment and foreign aid projects. Laws criminalizing the bribery of foreign officials have never been enforced. Although Chinese courts have heard cases related specifically to the BRI, unless a project contract contains explicit obligations for which performance is sought, enforcement of Chinese laws for overseas actions almost never occurs. Beijing appears to be banking on the fact that a great many of the BRI’s host governments have worse transparency and corruption ratings than China, which presumably makes their willingness to pursue Chinese entities engaged in corruption less likely in the first place.

      As long as Beijing continues to insist that only Chinese entities will provide financing for BRI projects, there is no way for external organizations to monitor transparency, corruption or adherence to international standards. That will, by itself, ensure that tension remains between Beijing, BRI host nations and the West, and signals to the world that Beijing is not in fact serious about reforming fundamental aspects of the initiative. Greater emphasis can be placed on taking some care not to blatantly violate national laws and international norms, allowing Beijing to proclaim that progress is being made, but that will continue to be on a relative scale.

      If practices were previously wholly outside the norm of internationally acceptable behavior but they are improved, they can remain outside the norm of acceptable behavior even though they have improved. More than minor tweaks are required to demonstrate that a true pivot has occurred. Beijing certainly has the ability to implement meaningful wholesale change to the BRI if it chooses to, but it has yet to do so. Based on its prior history of performance regarding its flagship initiative, such changes stand little chance of being implemented.

      *[Daniel Wagner is the author of “The Chinese Vortex: The Belt and Road Initiative and its Impact on the World.”]

      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

      Russia Has Planted Seeds of the EU’s Demise in the Balkans

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      Earlier this year, Kosovo elected Albin Kurti as prime minister. Progressive, pro-American, pro-justice and anti-corruption, Kurti was precisely the kind of politician Americans would ordinarily wish to see in power in the region. And yet the US has orchestrated what Kurti has called “a parliamentary coup d’etat” to replace him with Avdullah Hoti, who, as soon as he was installed, reversed the measures Kurti had taken to promote reciprocal sovereign relations between Serbia and Kosovo.

      Emerging out of the protests in Kosovo against the failures by the EU and the UN to address the massive corruption and pro-Serbian bias undermining peace negotiations between Belgrade and Pristina, Kurti had staunchly refused American requests that Kosovo remove the import tariffs it had imposed on Serbia’s goods for its refusal to recognize Kosovo as an independent state. But if Kurti wanted to garner the same respect for Kosovo that Serbia was getting from the West, and the Trump administration in particular, his recalcitrance soon proved costly.

      Will Bosnia and Herzegovina Ever Rise Above Its Ethnic Divisions?

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      Congressional Republicans, with Trump’s blessing, threatened Kosovo with the loss of $49 million in US support, along with US peacekeepers still deployed in the country. And so, after less than two months in power, Kurti was labeled anti-American and swiftly ousted in a vote of no confidence. Unsurprisingly, Hoti, as Kosovo’s new prime minister, made immediate concessions to Serbia under the guise of aiding peace negotiations.

      Ad Hoc Border Redrawing

      A few weeks ago, an ad hoc White House summit between Serbia and Kosovo intended to promote the idea of land swaps within the region was abruptly canceled after a special prosecutor in The Hague hijacked the US plan with a surprising move by indicting, on June 24, Kosovo’s president, Hashim Thaci, for war crimes in the Kosovo Specialist Chambers and Specialist Prosecutor’s Office even before the pre-trial judge’s confirmation of the charges. This indictment may or may not prove legitimate according to due process, but it did achieve the immediate result of removing the one remaining obstacle to a rushed peace treaty from which Kosovo was unlikely to benefit.

      Thaci’s role as president is largely ceremonial, but his early leadership of Kosovo’s liberation from Serbia and his standing as one of the country’s most prominent politicians of the last 20 years would have made him a formidable peace negotiator.  

      Embed from Getty Images

      The conspicuous timing of this indictment, then, was entirely to the advantage of Serbia and, by extension, Russia. The peace negotiations will go on with Kosovo’s delegation being limited to Hoti, a bit player likely to agree to whatever is put on the table. Serbia, on the other hand, is led by a rising authoritarian, Aleksandar Vucic, whose party has just won a parliamentary majority in an election the integrity of which has been broadly questioned by the country’s opposition.

      Serbia’s minister of information in the late 1990s, Vucic, is credited with banning foreign media and any criticism of the government. Equally sacrosanct is his relationship with Russia. Vucic recently hosted Russian President Vladimir Putin in Belgrade, gifting him, perhaps symbolically, with yet another puppy. In return for this kind of clearly demonstrated loyalty, Putin has been good to Serbia, delivering anti-aircraft weapons but also actively arming Bosnian Serb police and training paramilitary units to strengthen the voices of separatists in the region.

      Putin has similarly turned Milorad Dodik, the current representative of Serbs in Bosnia and Herzegovina’s (Bosnia) tripartite presidency, into a political puppet. Emboldened by Trump’s deference to Putin, Dodik has undermined all of Bosnia’s efforts to join the NATO alliance. He has even promised to Bosnian Serbs that he would break up Bosnia and annex nearly half of its land to Serbia, which Serbia — along with Bosnian Serbs — has already ethnically cleansed of Bosniaks (Bosnian Muslims) during the 1990s genocide. Dodik’s continued destabilization of his own country reflects the extent to which Putin dominates the region. To bolster Dodik’s power, in April of this year, Putin stunned Bosnia and Herzegovina’s government by sending Russia’s military units into the country, uninvited.

      If it was not already clear enough, it is now: Putin has successfully enlisted Donald Trump as a pawn in Russia’s long-term geopolitical game in Europe. And with an unfettered Russia free to make such moves as Putin chooses, we may soon be witnessing another round of serious bloodshed in the Balkans. The threat has not gone unnoticed.

      European Concerns

      Europe saw Thaci’s indictment as an opening to inject itself into the peace talks between Kosovo and Serbia. Only a day later, the president of the European Council met with Kosovo’s prime minister; the “1st physical visit since coronavirus” by the president of the European Commission was also with Hoti. Having now been summoned by the EU and perhaps overwhelmed by the pressure brought to bear by his western neighbors, Hoti agreed to participate in new Europe-led peace talks with Vucic that would take the place of that canceled White House summit. 

      The EU was rightly concerned with the direction of the peace talks led by Trump’s envoy, Richard Grenell, and the consequent violence that might have ensued had the peace agreement legitimized the idea of land swaps, as Trump’s former national security adviser, John Bolton, has now confirmed were being discussed. As far as Bolton is concerned, “This happens in history, that’s just something you have to live with.”

      But Europe is far less indifferent to the kind of bloodshed such land swaps might trigger in the Balkans. The EU, after all, now includes Croatia, a country bordering Serbia, which, if drawn into a conflict, would undermine the long-term viability of the already weakened transnational organization. In short, a peace treaty endorsing the land swaps would open a Pandora’s Box of tensions reigniting Serbs’ old claims over territories in Croatia, Bosnia and Herzegovina, and beyond. Violence of this kind in the Balkans will assure Putin’s ultimate goal of destabilizing Europe. Once again, Russia will have a point of reentry into Eastern Europe, through its own backdoor — the Balkans.

      Under the malign neglect of Trump’s presidency, Vladimir Putin has crafted for himself a unique window of opportunity within which to instigate violence in the Balkans, capitalizing on likely Serb secession from the handful of nations born out of the fall of Yugoslavia. Serbs in Montenegro, Serbs in Bosnia and Herzegovina, Serbs in Croatia and Serbs in Kosovo have long hoped to join into a Greater Serbia, an ethnically cleansed and imagined nation void of religious diversity. It was this same Serb ambition of ethnic purity that led to several wars and the unforgettable genocide against Bosnian Muslims in the 1990s.

      The Bells of Hate

      Today, the bells of hate chime more widely yet, drawing upon white supremacy throughout the West. Aided by Russia and a half-witting Trump, an authoritarian-led Serbia is entirely capable of initiating bloodshed as relentlessly and dangerously as it did in the 1990s — perhaps even more so.

      Setting aside Trump’s own race and religion-based sympathies for Serbian nationalism, American national interests in no way align with Serbia’s agenda of redrawing borders in the Balkans. But with Putin pushing for it, Trump has been in a hurry to help out however he can. And why wouldn’t he be, just ahead of a November election in which his Russian friend may once more be able to play a critical role?

      So while Europe and the US continue to trip over each other, this is the perfect opportunity for Putin to legitimize the idea of redrawn borders. Serbia and Kosovo are one thing, after all, but validating the concept for implementation elsewhere? This would really be something, taking geopolitics back to a mode in which military conquest and ethnic cleansing, rather than aspirations to democracy, human rights and social justice, are what shape the fortunes of nations.

      Putin is a long-term strategist who, while no one was watching, has actively planted the seeds of the EU’s demise in the Balkans. And make no mistake: Neither a canceled meeting in the White House nor another summit hosted by Europeans this summer is going to stop him. In the wake of Richard Grenell’s White House summit debacle and the EU leaders’ evident panic for what comes next, the only thing meaningfully standing in Putin’s way is the tiny NATO-protected country of Montenegro. Last year, Russian military intelligence agents were convicted for their role in a 2016 coup d’état aimed at thwarting Montenegro’s attempt to join NATO. Though the attempt failed, Putin didn’t stop there.  

      In 2018, only three days after the infamous off-the-record meeting between Trump and Putin in Helsinki that shocked the world, President Trump stunned us all yet again when he proclaimed that NATO’s insistence on protecting this newly admitted member, Montenegro, would trigger a war of global proportions. Few were inclined to take this seriously at the time, but watching Trump’s hastened interest in appeasing Russia with the peace treaty between Kosovo and Serbia, America’s indifference toward the rise of Putin’s control over Bosnia and Herzegovina, and the recently announced costly withdrawal of American troops from Germany in the midst of America’s own national crisis shines a light not only on Washington’s shifting alliances but also new dangers on the horizon.

      While the US president insists on enabling serious mischief in the Balkans, Europe can only watch in fear, too weak to stop what may be coming next. Bearing in mind the fact that it was Franz Ferdinand’s assassination by a secret Serb military organization that triggered the First World War, we would do well right now not to look the other way.

      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

      Think 'sanctions' will trouble China? Then you're stuck in the politics of the past | Ai Weiwei

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      The Trump administration has floated the idea of sanctioning Chinese officials and members of the Communist party of China. Before we ask whether this is a good idea, let’s ask how Sino-US relations got to this stage.The US cold war with the Soviet Union was over ideology, but today’s standoff with China is different. The Chinese state has no ideology, no religion, no moral agenda. It continues wearing socialist garb but only as a face-saving pretence. It has, in fact, become a state-capitalist dictatorship. What the world sees today is a contest between the US system of free-market capitalism and Chinese state capitalism. How should we read this chessboard?The post-Mao dictatorship in China has lived by the principle of “repress at home and be open to the world”. It has imported knowhow from abroad. There are an estimated 360,000 Chinese students currently enrolled who have come through America’s open door. Over 40 years, at least a million have returned to China and fed their new technical knowledge into the existing authoritarian structures that have built the dictatorship. It might be the most momentous personnel transfer in history. When I applied to study in the US in the 1980s, I filled out a questionnaire that asked if I had ever been a member of the Communist party. The point of the question was presumably to avoid ideological risks. But it is beyond doubt that the Chinese students coming in with me included many party members who were headed to some of the US’s finest schools, often with scholarships. Americans generally assumed that these students would feel the appeal of liberal values, which they would then take back to China. What happened more often, though, was that Chinese students were quick to see the cultural differences between the two countries, and to draw the very logical conclusion that American values are fine for America but would never work in the Chinese system.If those US hopes for the exportation of values had panned out, much of China would have been won over by now. But what has actually happened? Returnees are now leaders in much of Chinese business and industry, but anti-American expression in China is as strong today as it has been since the Mao era.Washington bears much of the responsibility for what has happened. In the years after the Tiananmen Square massacre in 1989, administrations of both parties touted the absurd theory that the best plan was to let China get rich and then watch as freedom and democracy evolved as byproducts of capitalist development.But did capitalist competition, that ravenous machine that can chew up anything, change China? The regime’s politics did not change a whit. What did change was the US, whose business leaders now approached the Chinese dictatorship with obsequious smiles. Here, after all, was an exciting new business partner: master of a realm in which there were virtually no labour rights or health and safety regulations, no frustrating delays because of squabbles between political parties, no criticism from free media, and no danger of judgment by independent courts. For European and US companies doing manufacture for export, it was a dream come true.Money rained down on parts of China, it is true. But the price was to mortgage the country’s future. Society fell into a moral swamp, devoid of humanity and difficult to escape. Meanwhile, the west made their adjustments. They stopped talking about liberal values and gave a pass to the dictatorship, in which Deng Xiaoping’s advice of “don’t confront” and Jiang Zemin’s of “lie low and make big bucks” made fast economic growth possible.European and American business thrived in the early stages of the China boom. They sat in a sedan chair carried up the mountain by their Chinese partners. And a fine journey it was – crisp air, bright sun – as they reached the mountain’s midpoint. But then the chair-carriers laid down their poles and began demanding a shift. They, too, sought the top position. The signal from the political centre in China changed from “don’t pick fights” to “go for it”. Now what could the western capitalists do? Walk back down the mountain? They hardly knew the way.Covid-19 has jolted the US into semi-awareness of the crisis it faces. The disease has become a political issue for its two major political parties to tussle over, but the real crisis is that the western system itself has been challenged. The US model appears to others as a bureaucratic jumble of competing interests that lacks long-term vision and historical aspiration, that omits ideals, that runs on short-term pragmatism, and that in the end is hostage to corporate capital.Are sanctions the way to go? A foreign ministry spokesperson in Beijing recently remarked words to the effect that the US and China are so economically interlocked that they would amount to self-sanctions. The US, moreover, would be no match for China in its ability to endure suffering. And there he was correct: in dictatorships, sacrifices are not borne by the rulers. In the 1960s Mao said: “Cut us off? Go ahead – eight years, 10 years, China has everything.” A few years later Mao had nuclear weapons and was not afraid of anyone.The west needs to reconsider its systems, its political and cultural prospects, and rediscover its humanitarianism. These challenges are not only political, they are intellectual. It is time to abandon the old thinking and the vocabulary that controls it. Without new vocabulary, new thinking cannot be born. In the current struggle in Hong Kong, for example, the theory is simple and the faith is pure. The new political generation in Hong Kong deserves careful respect from the west, and new vocabulary to talk about it.“Sanctions” is a cold war term that names an old policy. If the US can’t think beyond them, the primacy of its position in this changing world will disappear. More

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      in World Politics

      Houthi Rebels Gain Momentum in Yemen

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      Early on July 13, the Houthi rebels launched their second coordinated attack on Saudi Arabia in 20 days. The Saudi-led coalition said it intercepted and destroyed four ballistic missiles and six explosive drones that had been launched from the Houthi-controlled Yemeni capital Sanaa. While the Saudis did not inform the location of the missile and drone attacks, a Houthi military spokesperson stated they were directed at “military aircraft, pilot accommodation and Patriot systems in Khamis Mushait, and other military targets at Abha, Jizan and Najran airports” and destroyed a number of those targets. He added that “the giant oil facility in the Jizan industrial zone” was also targeted, and that the “strike was accurate.” Additionally, the rebels claimed to have killed and injured dozens of Saudi military officers. 

      The new coordinated attack, which followed the airstrikes against targets that included the Saudi defense and intelligence headquarters and King Salman air base on June 23, aiming for military sites and equipment with the addition of an oil facility, shows that the Houthis are stepping up their offensives against the Saudi-led coalition. The rebels claimed the attack was a retaliation against Saudi aggression, the latest of which was an airstrike on the Hajjah governorate that killed seven children and two women on July 12.

      Is Saudi Arabia Looking for an Exit from Yemen?

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      Although the Saudi airstrike indeed provoked Houthi retaliation, another large-scale attack of that sort was already expected, and more are likely to come. With these two attacks, the Houthis have gained momentum based on their alleged ability to hit targets with high precision deep within Saudi Arabia, namely in Riyadh, and strike multiple targets in different cities at the same time. The Iran-backed group likely intends to push the Saudi-led coalition to approach ceasefire talks more seriously and consider concessions that the Saudis have so far deemed unnegotiable, such as the lifting of the sea, land and air blockade of Yemen.

      The Push for Marib City

      Tied to the Houthis’ intention to force the Saudi-led coalition to agree to better terms for a ceasefire is the rebels’ continuing push to capture Marib city, the Yemeni government’s last stronghold in the north of the country. On June 29, Houthis and pro-government fighters clashed in the Hashia district of Marib province, and on July 1, the Saudi-led coalition carried out airstrikes on the governorate, which is mostly controlled by the Houthis, except for parts that include its capital of the same name. Following the initial session (on July 7) of the trial of Houthi leaders accused of orchestrating the takeover of the Yemeni government, the Iran-backed group launched a ballistic missile that reportedly landed in a civilian area of Marib city on July 8, followed by another strike on July 14.

      The Saudis have been wanting to withdraw from the Yemeni conflict for quite some time now. But they cannot allow a complete Houthi takeover of the northwest and, without Saudi presence, possibly even further, as this would give the rebels more bargaining power ahead of eventual direct negotiations. After Houthi forces captured the city of al-Hazm, in al-Jawf province, in March, the rebels gained access to a pathway through the al-Ruwaik desert where they would be able to send fighters directly to Marib and/or carry out additional airstrikes on the city.

      Embed from Getty Images

      Considering the danger of that threat, army troops announced in late June that they had surrounded al-Hazm, and on July 15, the coalition allegedly carried out air raids on the city that killed several civilians, increasing pressure as it is aware of the strategic importance of the city in a potential Houthi takeover of Marib.

      It is highly unlikely that either of the two warring parties will achieve a complete military victory in Yemen. The Houthis will likely continue with their escalation approach hoping to capture Marib city so that they can increase their leverage ahead of eventual direct negotiations with the Saudi-led coalition, which are being pursued by the UN envoy for Yemen, Martin Griffiths. The coalition, in turn, will likely continue striking Houthi-controlled areas responding to the rebels’ attacks and keep on defending its last stronghold in the north, but, at some point, it will need to address ceasefire talks for the sake of the internationally recognized Yemeni government.

      Should the coalition decide to wait and see if the tables are turned in the conflict, in which at the moment Houthi forces enjoy the upper hand militarily, and continue to refuse to grant Houthis legitimacy, the Saudi-backed government might be perceived by the international community as one of the pieces hindering a successful political process in Yemen. That is not to say that the Houthis are facilitating the process, but the Yemeni government has more to lose in terms of legitimacy simply because it is the governing entity recognized worldwide.

      Endless fighting, with constant accusations of violations of international humanitarian law against the Saudi-led coalition, which currently amount to over 500 since 2015 according to the UK government, could eventually wear out the support for the government and its international legitimacy — the only thing knowingly corrupt President Abd-Rabbu Mansour Hadi still holds onto — might start to fade.

      Undivided Attention

      In the south, the latest developments involving the Abu Dhabi-backed Southern Transitional Council (STC) may affect the landscape of the war. The STC has been involved in on-and-off fights with the Saudi-led coalition for control of the south even after the power-sharing Riyadh Agreement the two parties signed in November 2019 and the announcement of a ceasefire in June. On July 26, however, the STC and the Yemeni government agreed on another attempt for the implementation of the Riyadh Agreement following a Saudi proposal to “accelerate” its fulfillment. 

      According to Yemeni media, the new deal brings similar points, such as the appointment of a governor and security director for Aden and the formation of a new cabinet with equal representation from both the north and the south, with new conditions, like the return of the governor of Socotra to the island and the revocation by the STC of its declaration of self-rule.

      The alleged adaptation of the Riyadh Agreement, the materialization of which is still to be seen, and the consequent reduction of tensions between the two parties would ultimately damage Houthi plans, since the Iran-backed group was likely taking advantage of the fragmented attention given by the coalition to the fight against the STC in the south and the Houthis themselves in the north. The question that remains is whether the now undivided coalition’s attention to the fight against the Houthis in the north, provided the new conditions with the STC bring stability to the south, will enable it to turn the table in the conflict.

      Looking ahead, there is a big chance the Houthis will continue to pressure the coalition, especially with offensives in and around Marib city and potentially in Saudi Arabia. Previous experiences show Houthi attacks are likely to continue even after the reported understanding between the coalition and the STC based on the fact that the June 23, Houthi-coordinated attacks on Saudi Arabia came a day after the coalition and the STC had announced a ceasefire. Meanwhile, if focused on the fight against the Houthis, the coalition might be able to respond to attacks with more vigor and prevent the rebels from increasing their leverage ahead of eventual direct negotiations.

      *[Gulf State Analytics is a partner organization of Fair Observer.]

      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

      Is Europe More United Than the US?

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      During the Trump era, America increasingly seems like a motley collection of states brought together for reasons of territorial contiguity and little else. The conservative South is ravaged by a pandemic. The liberal Northeast waits patiently for elections in November to oust a tyrant. A rebellious Pacific Northwest faces off against federal troops sent to “restore order.” The Farm Belt, the Rust Belt and the Sun Belt are like three nations divided by a common language.

      The European Union, on the other hand, really does consist of separate countries: 27 of them. The economic gap between Luxembourg and Latvia is huge, the difference in median household income even larger than that between America’s richest and poorest states (Maryland and West Virginia).

      Was the First Gulf War the Last Triumph of Multilateralism?

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      European countries have gone to war with each other more recently than the American states (a mere 25 years ago in the case of former Yugoslavia). All EU members are democracies, but the practice of politics varies wildly from perpetually fragmented Italy to stolid Germany to ever-more illiberal Hungary.

      Despite these economic and political differences, the EU recently managed to perform a miracle of consensus. After 90 hours of discussion, EU leaders hammered out a unified approach to rebuilding the region’s post-pandemic economy.

      The EU is looking at an 8.7% economic contraction for 2020. But the coronavirus pandemic clearly hit some parts of the EU worse than others, with Italy and Spain suffering disproportionately. Greece remains heavily indebted from the 2008-09 financial crisis. Most of Eastern Europe has yet to catch up to the rest of the EU. If left to themselves, EU members would recover from the current pandemic at very different rates and several might not recover at all.

      Embed from Getty Images

      That’s why the deal is so important. The EU could have helped out its struggling members by extending more loans, which was basically the approach after 2009. This time around, however, the EU is providing almost half of the money in the new recovery fund — $446 billion — in grants, not loans. The $1.3-trillion budget that European leaders negotiated for the next seven years will keep all critical EU programs afloat (like the European structural and investment funds that help bridge the gap between the wealthier and the less wealthy members).

      Sure, there were plenty of disagreements. The “frugal four” of the Netherlands, Denmark, Austria and Sweden argued down the amount of money allocated to the grant program and the budget numbers overall. Germany has often sided with the frugal faction in the past, but this time Chancellor Angela Merkel played a key role in negotiating the compromise. She also managed to bribe Hungary and Poland to support the deal by taking “rule-of-law” conditionality off the table. Both countries have run afoul of the EU by violating various rule-of-law norms with respect to media, judiciary and immigration. Yet both countries will still be able to access billions of dollars from the recovery fund and the overall budget.

      Until recently, the EU seemed to be on the brink of dissolution. The United Kingdom had bailed, Eastern Europe was increasingly authoritarian, the southern tier remained heavily in debt, and the pandemic was accelerating these centrifugal forces. But now it looks as the EU will spin together, not spin apart.

      The United States, on the other hand, looks ever more in disarray. As Lucrezia Reichlin, professor of economics at the London Business School, put it, “Despite being one country, the U.S. is coming out much more fragmented than Europe.”

      The Coming Storm

      The Trump administration has been all about restarting the US economy. President Donald Trump was reluctant to encourage states to lock down in the first place. He supported governors and even armed protesters demanding that states reopen prematurely.

      And now that the pandemic has returned even more dramatically than the first time around, the president is pretending as though the country isn’t registering over 60,000 new infections and over a thousand deaths every day. Trump was willing to cancel the Florida portion of the Republican Party convention for fear of infection, but he has no problem insisting that children hold the equivalent of thousands of mini-conventions when they return to school.

      Europe, which was much more stringent about prioritizing health over the economy, is now pretty much open for business.

      The challenge has been summer tourism. Vacationers hanging out on beaches and in bars are at heightened risk of catching the COVID-19 disease — which is caused by the novel coronavirus — and bringing it home with them. There have been some new outbreaks of the disease in Catalonia, an uptick in cases in Belgium and the Netherlands, and a significant increase in infections in Romania. Belgium is already re-instituting restrictions on social contacts. Sensibly, a number of European governments are setting up testing sites for returning tourists.

      The EU is determined not to repeat what’s going on in Florida, Texas and California. It is responding in a more deliberate and unified way to outbreaks leading to an average of 81 deaths a day than the United States is responding as a whole to a very nearly out-of-control situation producing more than 900 deaths a day.

      The US isn’t just facing a deadly resurgence of the pandemic. Various economic signals indicate that the so-called “V-shaped recovery” — much hyped by the Trump administration — is just not happening. More people are again filing for unemployment benefits. People are reluctant to go back to restaurants and hang out in hotels. The business sector in general is faring poorly.

      “The sugar rush from re-openings has now faded and a resurgence of domestic coronavirus cases, alongside very weak demand, supply chain disruptions, historically low oil prices, and high levels of uncertainty will weigh heavily on business investment,” according to Oren Klachkin, lead US economist at Oxford Economics in New York.

      The Organization of Economic Cooperation and Development (OECD) released a report in July that offered two potential scenarios for the US economy through the end of the year. Neither looks good. The “optimistic scenario” puts the unemployment rate at the end of 2020 at 11.3% (more or less what it is right now) and an overall economic contraction of 7.3%. According to the pessimistic scenario, the unemployment rate would be nearer to 13% and the economic contraction at 8.5%.

      Much depends on what Congress does. The package that Senate Republicans unveiled last week is $2 trillion less than what the Democrats have proposed. It offers more individual stimulus checks, but nothing for states and municipalities and no hazard pay for essential workers.

      Unemployment benefits expired a few weeks ago, and Republicans would only extend them at a much-decreased level. Although Congress will likely renew the eviction moratorium, some landlords are already trying to kick out renters during the gap. The student loan moratorium affecting 40 million Americans runs out at the end of September.

      The only sign of economic resurgence is the stock market, which seems to be running entirely on hope (of a vaccine or a tech-led economic revival). At some point, this irrational exuberance will meet its evil twin, grim reality. On the other side of the Atlantic, the Europeans are preparing the foundation for precisely the V-shaped recovery that the United States, at the moment, can only dream about.

      The Transatlantic Future

      What does a world with a stronger Europe and a weaker America look like? A stronger Europe will no longer have to kowtow to America’s mercurial foreign policy. Take the example of the Iran nuclear deal, which the Obama administration took the lead in negotiating. Trump not only canceled US participation, but he also threatened to sanction any actors that continued to do business with Iran. Europe protested and even set up its own mechanisms to maintain economic ties with Tehran. But it wasn’t enough. Soon enough, however, the United States won’t have the economic muscle to blackmail its allies.

      Embed from Getty Images

      The EU has certainly taken a tougher stance toward China over the last couple years, particularly on economic issues. But in its negotiations with Beijing, the EU has also put far greater emphasis on cooperation around common interests. As such, expect the European Union to take full advantage of the US decline to solidify its position in an East Asian regional economy that recovers far more quickly from the pandemic than pretty much anywhere in the world.

      Europe is also well-positioned to take the lead on climate change issues, which the United States has forfeited in its four years of catastrophic backsliding under Trump. As part of its new climate pact, the EU has pledged to become carbon-neutral by 2050. The European Commission is also considering a radical new idea: a carbon tax on imports. In the future, if you want to be competitive in selling your products in the European market, you’ll have to consider the carbon footprint of your operation.

      Of course, the EU could do better. But compared to the US, Russia or China, it’s way out in front. The European Union is not a demilitarized space. It has a very mixed record on human rights conditionality. And its attitudes toward immigration range from half-welcoming to downright xenophobic.

      But let’s say that Europe emerges from this pandemic with greater global authority, much as the US did after World War II. A lot of Americans, and most American politicians, will bemoan this loss of status. But a world led by a unified Europe would be a significantly better place than one mismanaged by a fragmented United States.

      *[This article was originally published by FPIF.]

      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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      Was the First Gulf War the Last Triumph of Multilateralism?

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      This week marks the 30th anniversary of Iraq’s invasion and occupation of Kuwait. Desperate to pay off his nation’s seemingly insurmountable debt, acquired as a result of his invasion of and the futile 8-year war with Iran that had just ended, Saddam Hussein saw oil-rich Kuwait as the solution. Iraq had never recognized Kuwait’s sovereignty, claiming it had been hived off by the British during its occupation of Iraq in the early 20th century. Moreover, as he and many Iraqis asserted, it really was Iraq’s “19th province.”

      The World Without American Leadership

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      Saddam deployed Iraqi troops to the border in July of 1990, prompting concern among neighboring Arab countries and the United States. In a much-reported meeting with then-US Ambassador April Glaspie late in July, he was asked about his intentions. Glaspie took pains to explain that the US had “no opinion” on Arab-Arab disputes, further expressing the US hope that the Iraqi-Kuwait border question might be resolved soon and without the use of force. (Egypt has been trying to mediate the dispute.) Saddam interpreted her response as an American green light to invade, as egregious a misinterpretation of a diplomatic communication as there ever was.

      A Multilateral Approach

      Within hours of the August 2 invasion, the UN Security Council convened and ordered Iraq’s immediate withdrawal. It was ignored by Saddam, as were multiple subsequent UNSC resolutions. Saddam did not believe that the US or any other nation would take action to defend the small patch of desert at the end of the Persian Gulf, despite its outsize oil wealth and massive reserves.

      He was wrong. Under the leadership of President George H. W. Bush and his able secretary of state, James Baker, the US organized a 34-nation coalition, including many Arab states and NATO allies. Armed with a UNSC resolution authorizing “all necessary means” if Saddam did not withdraw his forces by the January 15 deadline, the US and other coalition forces began assembling in Saudi Arabia, which many feared would be the next target of Saddam’s ambitions. Facing more than 650,000 troops and a massive US, British and French air assault, Iraqi forces were driven out of Kuwait. The three-day campaign cost coalition forces some 300 deaths, including 146 Americans. Iraqi casualties were never officially ascertained, but estimates range from 20,000 to 26,000 killed and 75,000 injured. Over 1,000 Kuwaitis also died, mostly civilians.

      The Kuwait incursion proved even more humiliating and costly than Iraq’s ill-fated invasion of Iran. Numerous and increasingly costly sanctions (including on critical oil exports), intrusive UN weapons inspectors and expansive no-fly zones in the country’s north and south decisively placed Iraq in pariah-nation status in the world. Ultimately, it set the stage for the American invasion and occupation of Iraq and Saddam’s removal in 2003.

      Leadership When It Counted

      The First Gulf War marked a significant achievement for American diplomacy, one that would be difficult to replicate today. Though Saddam remained unmoved by American warnings and UNSC resolutions and sanctions, the international community proceeded deliberately but measuredly before employing force. The UNSC’s approval of Resolution 678, which authorized the use of force, obtained 12 affirmative votes, including from four of the five permanent members (China abstained) and only two negatives (Cuba and Yemen).

      Deft diplomacy on the part of Bush and Baker attracted 33 other nations to the coalition that expelled Saddam’s forces. Secretary of Baker met on several occasions with Saddam’s foreign minister, Tariq Aziz, to resolve the crisis. This was a marked contrast to George W. Bush’s approach to, and eventual invasion of, Iraq in 2003, which failed to secure UNSC approval and incurred considerable worldwide condemnation.

      Importantly, despite a virtually open road to Baghdad and against the urgings of some in the US at the time, in 1991 President Bush withdrew all US forces from Iraq and did not seek to remove Saddam. This proved to be critical in maintaining the unprecedented coalition he had organized to address a Middle East crisis. Bush Sr. was able to capitalize on that achievement by assembling world leaders in Spain later that fall for the Madrid Conference, which brought together many of the same Arab countries from the coalition, plus Israel and the Palestinian Authority, and co-sponsor the Soviet Union to address the Arab-Israeli conflict. The conference became a stepping stone for increased action on the part of many Arab countries, the Palestinians and Israel, and the progress that followed.

      The Era of Great Power Rivalry

      The First Gulf War itself and what followed demonstrated what principled, deft and concerted diplomacy on the part of the US can achieve. Clearly, the task remains significantly short of its ultimate goal. But the hope of that seems all the more distant as the US under President Donald Trump eschews the Bush/Baker approach to multilateral diplomacy in favor of narrow, one-sided bilateral diplomacy. The latter has proven to be a contributing factor in the region’s — and perhaps the world’s — decided move toward “great power” competition.

      Embed from Getty Images

      Nations as diverse as Russia, China, Turkey, Iran, Saudi Arabia, the UAE and others now vie for increased influence and even dominance in the Middle East and elsewhere. Never a partisan in great power competition, the US now stands strangely quiet on the sidelines as these nations attempt to carve out spheres of influence, from the Crimea and Ukraine, to South and Central Asia, the Far East and the Middle East. For some of the peoples of the Middle East — Syria, Yemen and Libya — this has meant misery and devastation, and for the rest of the region, instability, uncertainty and fear. US-led multilateralism at a time when it stood unparalleled in military, political and economic power in the world helped address a genuine Middle East crisis 30 years ago. In that sense, America’s and the world’s actions in Iraq may very well have been the mythical “good” war in the Middle East, as much an oxymoron as that may sound.

      In an era of great-power maneuvering, it would be inconceivable to imagine now a similar response in the event of another crisis between nations of the region, say Iran and Saudi Arabia. With rival major powers choosing sides, one could more easily envision competing alliances being drawn up, culminating in the sort of conflict the world saw in Europe in World War I.

      Great-power competition seldom, if ever, leads to stability or peace. World War I amply proved that. The example of the First Gulf War, however, proved that multilateralism, especially when led by a powerful but principled nation, can diffuse escalating tensions, avert greater disaster and provide at least the prospect and a framework for peace and stability.

      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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      How Will the UAE Cope With Growing Environmental Insecurity?

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      Amid the COVID-19 pandemic, the world is “living through an unrivalled drop in carbon output.” According to the International Energy Agency, global use of energy will drop 6% in 2020, an amount that equals India’s total energy demand. Worldwide demand for electricity has already fallen 5%, which is the largest amount since the Great Depression of the 1930s. The dramatic decline in pollution resulting from economic lockdowns was apparently visible and recorded by numerous satellites. However, it will take a decade of this kind of economic lockdown to make a significant impact on global warming and truly curb carbon emissions.

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      Environmental pollutants are indifferent to national boundaries. Addressing climate change requires long-term international cooperation. All countries must make serious and collective efforts to stop irreversible damage caused by climate change.

      The Environment-Security Nexus

      The United Arab Emirates is among the world’s biggest per capita emitters of greenhouse gases. In fact, the World Wide Fund for Nature has ranked the UAE as having the world’s highest per capita environmental footprint, which largely has to do with the unsustainable megaprojects that began in the Emirates amid the oil boom of the 1970s.

      Other factors such as the desert country’s climatic conditions are in the picture too. There are also the popular modes of transportation within the Emirates: According to a survey conducted by the Department of Transport in 2014, “60 per cent of Abu Dhabi and Dubai residents who owned a car said they never used public transport. Only two to three percent use public transport frequently.” This is in part due to the long-standing car culture in the Emirates and relatively cheap fuel as well as car prices, but also because of connectivity problems to certain destinations.

      As outlined by Jon Barnett in his 2013 essay “Environmental Security,” environmental problems pose threats to the national well-being as well as the quality of life of the inhabitants of any state. Analysts and scholars refer to environmental security when discussing the threats and dangers emanating from the environment. The principal source that threatens ecological security is human activity. The environment is one of the seven sectors outlined in the United Nations Development Program’s early definition of human security, and environmental change has long been identified as a human security issue.

      The Emiratis have been struggling with a number of environmental threats for decades. Today, numerous environmental issues — including pollution, waste, land degradation, desertification, biodiversity loss, etc. — all impact the UAE. Waste and air pollution constitute major challenges, in particular outdoor air pollution. The UAE ranks in the bottom fourth globally in exposure to particulate matter — tiny particles of sand, dust or chemicals registered at elevated levels that are highly dangerous and associated with risks of numerous diseases such as cancer, as well as respiratory and heart diseases. In 2017, the Environment Agency of Abu Dhabi considered poor air quality to be a “primary environmental threat to public health.”

      In terms of water, the UAE continues to have highly unsustainable groundwater extraction rates. Being largely a desert country, the contamination of its fresh groundwater reserves and seawater endangers the UAE’s future. Some experts have warned of the imminent depletion of groundwater sources by 2030.

      In the area of biodiversity conservation, the UAE boasts a number of protected areas both on land and in the sea. But its fish stocks are in a critical state. Overfishing and heavy commercial maritime shipping across the Persian Gulf have also contributed to a potentially irreversible decline in the health of fragile coral reefs off the coast. Silt from shoreline construction has had a negative impact on coral.

      “Greening” the Emirati Economy

      The UAE has long acknowledged climate change as a serious threat multiplier to the country and is ahead of the curve when compared to other countries that are still debating the seriousness of the issue or even outright denying its reality. Recognizing these environmental threats, the UAE has been in the process of “greening” its economy by developing a solar energy sector along with a nuclear energy sector and managing its scarce water resources with an emphasis on conservation and efficiency. It has been at the forefront of the renewables revolution with its solar farms while very slowly transforming its thermal desalination plants into reverse osmosis desalination facilities that produce far fewer greenhouse gas emissions.

      The UAE Vision 2021 document contains as one of its wide-reaching goals a “well-preserved natural environment” and seeks to address various environmental threats to the country. The Emirate of Abu Dhabi has put in place its Environment Vision 2030 strategy, which lists five priority areas, namely climate change impacts, air and noise pollution, water resources, biodiversity and waste. The UAE government has set up various institutions and initiatives to address environmental issues in the previous decades such as the Environment Agency — Abu Dhabi, the Abu Dhabi Global Environmental Data Initiative and the Arab Water Academy, and has signed and ratified numerous international and regional environmental conventions. The government has launched a variety of awareness campaigns pertaining to environmental issues in order to educate different sectors of society.  

      According to Dr. Taoufik Ksiksi, a plant biologist and climate change researcher at the United Arab Emirates University at Al Ain, these awareness campaigns were not quite sufficient: “More needs to be done to raise the awareness levels, especially at the lower levels, in schools with young people, and there have to be substantial changes to the curriculum to incorporate courses on environmental sciences, native ecology and conservation in general,” he said in a phone interview. In addition, Ksiksi suggests that “more robust climate modeling approaches that focus primarily on the region need to be developed with increased processing power that take into account regional circumstances and are not geared towards climate conditions prevalent in Europe.”

      Embed from Getty Images

      Dr. Ksiksi thinks that UAE’s advantage is that it enjoys “the benefit of resources than can fund technology and new initiatives.” Yet the lack of synergy in terms of regional cooperation in the area of green economy building in the Arabian Peninsula somewhat hampers such efforts.    

      The UAE has for some time now incorporated narratives of sustainable development into the country’s national policy aims. Masdar City, described as a city of the future, is perhaps the best known and most ambitious example of an avowedly green megaproject. Other projects such as Sustainable City and Desert Rose City are additional examples of green cities that emphasize technological innovation in Masdar City’s manner.

      The greening of the Emirates takes on a central aspect of the modernization narrative. The main gist is that the existing ecological challenges can be measured, and existing institutions and policies find solutions to the problems. According to Dr. Gökçe Günel, the UAE is making a serious effort to maintain its status quo while offering up “technical adjustments” to environmental challenges. Sustainable development juxtaposes intense economic development along with high consumerism coexisting with an environmentally friendly and responsible society. This reveals a paradox in the greening process currently in place.

      These projects are small in scale and only take on a tiny space in the overall urbanity of the country. They take place in a bounded environment and constitute living laboratories that pioneer green technology. But they cannot be replicated on a larger scale or implemented and applied across the whole territory.

      Inevitably, rapid urban growth and transnational migration flows have massively enlarged the ecological footprints of countries such as the UAE. It will be very difficult to achieve sustainable development while Arab Gulf states subsidize massive energy consumption, continue to expand urban sprawl and expansion, and allow for traffic congestion while remaining careless about water and electricity consumption.

      *[Gulf State Analytics is a partner organization of Fair Observer.]

      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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      Beijing’s BRI Hubris Comes at a Price

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      Despite more than 3,000 years of Chinese history, many of the world’s countries had little to no direct experience with China or Chinese investment prior to the launch of the Belt and Road Initiative (BRI). There was a presumption on the part of many governments that international best practices were well established and that China would be in compliance with those standards as it rolled out the initiative. As they now know, that often turned out not to be the case, but the fact that the Chinese business model is a mix of public and private sector participation, rules and regulations that are not necessarily logical or coherent and are often misunderstood has complicated matters.

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      For all concerned, the BRI has in many ways been a leap in the dark, since such an ambitious undertaking had never before been attempted. The Chinese government, and many of the nation’s companies active in the initiative, were, and remain, on a learning curve. The enforceability of Chinese regulations on private sector Chinese companies operating overseas can be inconsistent, and Chinese-built infrastructure has, at times, been found to be substandard. Regulations governing the practices of Chinese firms are frequently revised, leaving many organizations scrambling to keep up in the public and private sectors. It then takes a while for new guidelines to translate into practice abroad.

      BRI Financing

      BRI financing is highly dependent on loans from the China Development Bank, China Export-Import Bank and other state-owned commercial banks. China’s foreign exchange reserves are important sources of capital for these institutions. Although Beijing maintains the world’s largest aggregation of foreign currency, its foreign reserves have declined in recent years, which, when combined with its dramatically slowing economy, raises questions about the sustainability of BRI financing in the medium term.

      Under the presumption that foreign capital and support from multilateral financial institutions will be required to sustain BRI projects in the future, China’s Ministry of Finance established the Multilateral Cooperation Center for Development Financing with eight multilateral development banks and financial institutions. The center is expected to enhance the project financing process through a combination of better information sharing, improved project preparation and capacity building. The ministry has also developed the Debt Sustainability Framework for Participating Countries (DSF) of the BRI, collaborating with its counterparts from 28 partner countries. China’s DSF is virtually identical to the World Bank-International Monetary Fund DSF, which governs lending operations for the multilateral institutions and many bilateral lenders. That should increase its prospects for success.

      China’s effort is a significant step forward in guarding against the debt challenges associated with the BRI. Debt sustainability can only grow in importance for Beijing. As the BRI progresses, China will have no choice but to take steps to improve reporting transparency vis-à-vis financing, transaction structures and debt repayment. As for host governments that have become saddled with tens of billions of dollars of debt as a result of debt-trap diplomacy, their concerns have been widely shared with Beijing. Many of these nations have already become more discriminating BRI consumers. Although the trail of debt-related issues will certainly not diminish going forward, they will hopefully become less severe in time.

      The Chinese government has sought to integrate the BRI with its green growth agenda in an attempt to address criticism of its continued reliance on coal power and the lack of environmental oversight on Chinese infrastructure projects. Although Beijing has made great strides toward improving environmental and resource productivity, greater efficiency gains are vital to achieving a shift toward low-carbon, resource-efficient, competitive economies. Future progress will largely depend on the country’s capacity to integrate environmental aspects into the decision-making process for all its domestic and foreign policies to ensure that industrial and environmental policy objectives and measures are well aligned and mutually supportive.

      Reputational Risk

      At ongoing risk also is China’s reputation. The blowback it has experienced as a result of its rollout of the BRI from countries around the world has been unprecedented. The same may be said about its trade practices with the US and its response to COVID-19. Many of the world’s governments and people have simply lost confidence in Beijing, to the extent that they had confidence to begin with. The ball is squarely in Beijing’s court to raise the level of confidence the world may have in the future regarding what it says versus what it actually does. There is no better proving ground on that score than the BRI.

      A combination of hubris, a bulldozer approach to getting things done and a complete lack of sensitivity had worked well for the Communist Party of China at home for 70 years, and Beijing apparently believed that doing the same would work well overseas. While some aspects of Beijing’s original approach ended up yielding some positive results, President Xi Jinping’s move toward “BRI lite” in 2018 had to be taken with a grain of salt. He deserves credit for acknowledging some of the initiative’s pitfalls, but the Chinese government’s pivot must ultimately be considered too little and too late.

      If it wanted to more fully acknowledge the error of its ways, it would have offered to renegotiate every BRI contract that was clearly skewed in its favor rather than waiting to be asked to do so, award debt forgiveness on a broader basis and stop in its tracks any project under construction that is inconsistent with best environmental practices. That is clearly not going to happen.

      *[Daniel Wagner is the author of “The Chinese Vortex: The Belt and Road Initiative and its Impact on the World.”]

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