Year LXIV, 2022, Single Issue, Page 64
EUROPE’S THIRD CRISIS OF THE SECOND MILLENNIUM:
FROM THE “PARALLEL WAR”
TO THE EXISTENTIAL CHALLENGE FACING
THE EUROPEAN ECONOMY
Introduction.
There can be no denying that the globalised world that took shape from the 1980s onwards has found itself sorely tested in the first twenty or so years of the new millennium.
We are all part of a global village in which the financial, economic and health crises of one country have rapid and irreversible knock-on effects on the others; it should therefore come as no surprise that recent years have seen the development of serious crises, three to be precise, which have affected all the various continents, Europe in particular.
The first was the financial and then economic and social crisis that exploded in the USA in 2007-8 and lasted, in Europe, until 2014, seriously hitting Portugal, Ireland, Italy, Greece and Spain, to the point of putting these countries at risk of default.
The second was the Covid-19 pandemic, which saw the outbreak of the disease rapidly and dramatically spreading from the initial epicentre of the pandemic in Wuhan to become, throughout 2020 and 2021, a dramatic global problem. It was a shock that quickly turned from a health emergency into an economic crisis (with various supply chain economies paralysed by lockdowns), and also a social one (with the emergence of large swathes of unemployment and new poverty).
The third crisis, of course, is the war triggered by the Kremlin’s despicable armed attempt to take control of the whole of Ukrainian territory and thus reach the borders of the European Union.
2020-2021: Crisis and Recovery.
The Covid-19 pandemic has left our continent deeply scarred, primarily because Europe had the highest infection rates, but also because of its severe economic and commercial repercussions, linked to the weakening and even suspension of international manufacturing supply chains. In 2020, both the euro area and the EU recorded dips in GDP: -6.4 per cent and -5.9 per cent, respectively. In the EU, unemployment topped 16 million, mainly affecting women and young people.
In the same year, Italy’s GDP plummeted (-8.9 per cent) and its production and employment system was shaken to its foundations, with 45 per cent of companies facing structural risk and 800,000 fewer on the payroll compared with pre-Covid.
It is thanks to the suspension of the rules of the Stability and Growth Pact and above all to the solidarity between European countries, as well as the huge financial resources mobilised by the ECB and the European Commission (through the Pan-European Guarantee Fund, ESM, SURE programme, Next Generation EU instrument, and so on) that Italy, too, managed to address the health-economic-social crisis and embark on the path of recovery.
And this recovery proved so resilient that, at the end of 2021, Italy saw its GDP recording an increase of 6.3 per cent (versus +5.3 per cent for the rest of the eurozone), and the OECD even picked it out as the new economic “driving force” of Europe. The Economist named Italy its “country of the year” for 2021, a recognition awarded “not for the prowess of its footballers, who won Europe’s big trophy, nor its pop stars, who won the Eurovision Song Contest,” but for the fact that its economy was faring better than those of France and Germany. The prime minister at the time was Mario Draghi.
2022: the Outbreak of the Third Crisis.
On 24 February 2022 there began, in Europe, a crisis the like of which had not been seen for around 80 years: a “humanitarian, security, energy [and] economic crisis” right at the heart of the continent. Against the backdrop of the Russia-Ukraine armed conflict, the words uttered by prime minister Draghi shortly after its start (“we are definitely not in a wartime economy, but we have to prepare”) have quickly turned into a stark reality.[1]
Alongside the war on the ground there has unfolded a “parallel war” involving “economic deterrence” in the form of financial, economic and individual sanctions imposed on Russia by the EU and other countries (as a reaction to its aggression against a sovereign and democratic country, and also as a means of hastening an end to the conflict by weakening Russia’s war machine) and “economic resistance”, as the EU countries face (among other measures) energy shortages imposed in retaliation by the Kremlin.
The words of the President of the European Commission, Ursula von der Leyen, are very significant in this regard: “Putin has mobilised his armed forces to wipe out Ukraine from the map. We have mobilised our unique economic power to protect Ukraine. This is also a new chapter in our Union’s history — a new way of putting economic power to counter military power and military aggression, and to defend our most cherished European values.”[2]
It must be borne in mind that this war is not the only factor behind the current economic crisis; in fact, the conflict has turned out to be — together with its consequences — a powerful accelerator of a world economic situation that was already in the making even before it broke out, as some commentators noted as early as 2017.[3]
Essentially, this acceleration of the crisis is due to the energy war that the Kremlin started, in retaliation, against Western Europe, well aware of the latter’s dependence on Russian oil (for 27 per cent of its supplies) and, above all, Russian gas (for about 40 per cent); this dependence is particularly great in the cases of Italy and Germany, which prior to the energy war obtained nearly half of their gas from Gazprom, and Slovakia, Latvia and the Czech Republic, which depended entirely on this source. During the first nine months of 2022, the EU’s deficit in energy trade with Russia amounted to 491.4 billion euros compared with 179.6 billion the previous year.
The predicament of Germany, Europe’s leading economy, which, having tied itself to Russia for its energy supplies, finds itself hugely exposed and vulnerable to threats, provides a striking illustration of the gravity of the crisis in which EU countries find themselves. German Chancellor Olaf Scholz admitted as much, warning that a gas embargo leading to “the loss of millions of jobs and of factories that would never open again (…) would have major consequences for our country (…) We cannot allow that to happen.”[4] His words were echoed by German industrialists and trade unions: an oil and gas embargo could push inflation into double figures, which would be a nightmare scenario for the Germans, as it would be the first time since the Second World War.
Europe, much more than the other countries active on the “economic deterrence” front, is in the midst of its third crisis of this new millennium, a completely different shock from the previous two because it constitutes a historic watershed, with political, economic and strategic implications that, for the sake of Europe’s very future, demand a change in perspective.
Russia’s retaliation — its progressive reduction of oil and gas supplies, and threat to cut them off altogether as winter approaches, as well as its exponentially rising energy prices — will clearly impact the countries of the EU in various ways, pushing up production costs for businesses, further slowing down production chains, causing inflation to soar and consumption to contract, and leading to more widespread social distress and greater recourse to public spending. This, with the situation likely to gather pace, could jeopardise the stability of the European economy and the social sustainability of European countries.
Economic data from Italy can be taken as an example to illustrate this point: in October 2022 inflation stood at +11.8 per cent (the highest level since 1984; moreover, in 2019 it had been just +0.6 per cent, leading to talk of “deflation” and falling prices), while the cost of groceries had risen to +13.1 per cent. In Italy, the resources set aside for dealing with rising energy prices in 2022 stand at around 60 billion, almost double what Spain has allocated.
And while the data for the third quarter of 2022 offer some comfort, showing the Italian economy recording a 0.5 per cent increase and thus its seventh consecutive quarter with positive GDP growth, a trend attributable to the recovery of tourism (+75 per cent), the industrial and agricultural sectors, both down on the second quarter, continue to require careful monitoring. That fears are centred above all on 2023 was borne out by Bank of Italy governor Ignazio Visco’s talk of “great uncertainty” and a need for caution dictated by “the danger that the deterioration in the economic outlook may prove worse than expected”. This “uncertainty” is reflected in Confindustria’s Congiuntura flash bulletin of 6 November: “in the 4th quarter there is the risk of a decline: the qualitative indicators, overall, are negative; the price of gas has remained high, for too many months; the resulting inflation (+11.8 per cent annually) is eroding household incomes and savings and will have a negative impact on consumption; and the rise in interest rates is becoming more pronounced, further increasing business costs.”[5]
The Energy War: an Existential Threat for European Industry.
At the 23 October meeting of the European Round Table of Industrialists (ERT), there was clearly great concern about high energy prices and about the weakening, and even reduction, of raw material supply chains, factors that are eating away the foundations of European industry’s global competitiveness and undermining its ability to achieve bold decarbonisation goals.
European industries are being so badly hit by soaring energy costs that they are cutting or shutting down production and losing global market shares, with the risk of permanent damage to the EU’s competitiveness. What is more, with manufacturers scaling back, shutting down or relocating production, there is also a risk that they may never reopen in Europe, even in sectors crucial to the energy transition such as metals.
According to a recent analysis by the Economist Intelligence Unit, “Demand reduction is forcing industry across Europe to idle, and will raise input costs to levels that make European industry uncompetitive. This may persist for several years, causing global supply chains to move away from Europe.”[6]
Particularly indicative, in this regard, is the joint statement by Confindustria (the General Confederation of Italian Industry) and its French counterpart Medef pointing out that production costs in industry increased by 28 per cent in France, 40 pe cent in Italy, and 33per cent in the EU between August 2021 and August 2022, and that European producers of fertilisers and aluminium have reduced their production by 70 per cent and 50 per cent respectively. These figures show that the coming winter will see a very high risk of falling production capacity, with the closure of thousands of companies, and of declining competitiveness and job losses, as well as relocations by energy-intensive industrial concerns.[7]
Belgian Prime Minister Alexander De Croo has spoken explicitly of the risk of a “deindustrialisation” of Europe, warning that the energy crisis is the greatest threat hanging over Europe since the end of the Second World War, on an economic level, primarily, but also on a political and social one (10 October 2022).
Focus on Industrial Enterprises: is Italian Industry at Risk?
As previously noted, the Italian production system proved particularly reactive and dynamic during 2021 and also much of 2022, even though in the course of the latter considerable concern was raised about the effects, especially starting from the first months of 2023, of the “energy war”.
As reported on 27 April 2022 by Cerved Business Information, which keeps an Italian chambers of commerce database, there are a number of factors that could potentially block production in numerous sectors in 2023: the volatile international situation, the substantial increases in raw material prices, as well as the uncontrolled increase in energy costs and unavailability of materials, leading to higher purchase prices. Italy’s industrial production system risks losing as much as 218 billion euros in revenues, as the country’s economy minister, Giancarlo Giorgetti, was well aware when, addressing a joint meeting of the Budget Committees of the Chamber of Deputies and the Senate of the Republic on the proposed budget law, he remarked: “Our economy is slowing down and we are seeing a sharp rise in inflation. The soaring cost of energy is threatening the survival of our businesses, and not just the energy ones.”[8]
Businesses Appeal to the European Union.
At this point, let it immediately be said that, while the EU has done an admirable amount on the “economic deterrence” front, with the aim of weakening Russia’s war machine and creating the conditions for delegitimising the autarch Putin, the support it has lent to “economic resistance” efforts has not, so far, been as satisfactory. That said, on a more positive note, we should recall the financial aid that the Commission has put in place within the sphere of its competences, specifically:
– the REPowerEU plan (based on “energy savings, diversification of energy supplies, and accelerated roll-out of renewable energy”).[9] Designed to help the 27 member countries phase out, as quickly as possible, their dependence on Russian fossil fuels, this plan is worth 300 billion euros, which includes 225 billion of unused loans from the bloc’s Recovery and Resilience Facility, with the rest coming from new subsidies, and sums transferred from the cohesion funds (26.9 billion) and CAP funds (7.5 billion);
–the fact that governments have been given the option of reallocating unused cohesion funds (40 billion) from the 2014-2020 budget period, in order to help vulnerable companies and families pay their energy bills.
We have to feel some disappointment, on the other hand, at the lack of a ready common political will and unified strategy among the EU member states. Everything continues to be complicated and slow, frustrated by protracted negotiations conditioned by divergent national interests.
To make this point, there is no need to list single circumstances and facts; one need only consider the frustration of Mario Draghi’s, who apparently claimed that: “We have been discussing gas for seven months. We have spent tens of billions of European taxpayers’ money, used to finance Russia’s war, and we have not solved anything yet. If we hadn’t wasted so much time, we wouldn’t now be on the brink of a recession.”[10]
Given the common reaction of the European countries in the face of the pandemic, and then the solidarity concretely manifested between them, not to mention the proactive role played by the ECB and the European Commission in that “annus horribilis”, we might have been forgiven for believing that the “lesson” had finally been learned, and assimilated as a common value. Unfortunately, this is not the case.
With difficulty and some effort, the Italian premier Draghi, thanks to his authoritativeness, managed to get some European countries, including France, Spain and Poland, to converge on the need to adopt a “package” of measures, and above all introduce a (lower) maximum gas price as a means of supporting businesses and the economy.
In the same vein, Confindustria and Medef recently issued a joint appeal to the European Council, saying that Italian and French companies wished to raise the alarm about the escalation of the energy crisis and underline the urgency of intervening at European level, with immediate effect, to curb prices and avoid further damage to the economy. In their view, urgent European intervention should take the form of temporary measures setting a cap on the price of gas. The appeal ends by warning that there is no time to lose, the survival of European industry is at stake.[11]
Meanwhile, in a press release, the European business confederation BusinessEurope said that “all-sized companies across the continent have already reduced their output or even shut down their production completely. There is a real danger that energy-intensive businesses [will] relocate outside of Europe where energy prices are much lower, which would have dramatic consequences on our competitiveness and jobs”.[12]
These concerns are shared by the President of the European Commission, Ursula von der Leyen, as shown by her words at the European Parliament Plenary in Strasbourg: “High gas prices are driving electricity prices. We have to limit this inflationary impact of gas on electricity — everywhere in Europe. This is why we are ready to discuss a cap on the price of gas that is used to generate electricity (…) Such a cap on gas prices must be designed properly (…) And it is a temporary solution”.[13] On the same occasion, von der Leyen explained that the Commission was also working to obtain the go-ahead to define a process that could be used, in emergency situations, to establish, using a precise criterion, the shares of available gas that the single member states would be entitled to purchase, at a controlled price to avoid bidding between EU countries — an instrument similar to the one used for the distribution of vaccines.
On the eve of the October European Council, the Commission finalised a package of measures to tackle the energy crisis. First of all, the obligation to meet at least 15 per cent of storage-filling requirements through joint gas purchases and higher thresholds for state aid. Second, the possibility of using up to 10 per cent of the cohesion funds in the EU budget for the energy emergency. And finally, a new LNG pricing benchmark. However, since this will not be ready until early 2023, it was proposed to use, in the short term, a price correction mechanism to limit prices on the TTF gas exchange, to be activated as needed.
The European Council, which met on 20-21 October 2022, gave the green light to the agreement on the package, before instructing the energy ministers to draw up the technical details of a road map for its application.
Pending a more precise technical proposal from the Commission, to be submitted to the Council of Energy Ministers for approval, there was general political agreement on the price cap issue. On 22 November, 2022, EU Commissioner for Energy, Kadri Simson, announced that the EU was proposing a gas price cap, on the Amsterdam-based TTF, of 275 euros per megawatt hour. However, this was a proposal that reflected mainly the position of countries, Germany and others, concerned more about maintaining the flow of supplies from Russia than about pushing down the price. After all, it should be considered that the price of gas, even at its peak, has never reached the 275-euro mark, and that at the time the cap was actually formulated, futures for the month of December were trading at less than 120 euros.
The EU energy ministers, meeting on Thursday 24 November, reached an agreement on the substance of the new measures on joint purchases of gas and on a solidarity mechanism. But not on the 275-euro price cap, given that the energy ministers of fifteen countries, including Italy, Spain and France, had decided not to adhere to the European Commission’s proposal. Meanwhile, new warnings arrived from Russia, which threatened to cut gas and oil supplies to any country capping the price of these two raw materials, and the price of gas fluctuated sharply due to the uncertainty surrounding the price cap.
While the countries of the European Union were struggling to agree on what price to pay Russia for gas, and on a common policy for managing the energy crisis, on 25 November in Berlin, France and Germany signed an energy “mutual support” agreement — a move that risks rekindling controversy over the risk of divisions within Europe, given the possible implications for the level playing field.
The French prime minister Elisabeth Borne, in a tweet at the time of the agreement, wrote: “France and Germany need each other to overcome energy tensions. This is the meaning of the solidarity agreement that we have just concluded to implement exchanges of gas and electricity between our two countries and to act within the framework of the EU.”
This situation inevitably begs the question, what about the other 25 EU countries? The difficulties in finding an agreement between the member states are deeply worrying, as indeed is this kind of acceleration on the part of just a small number of countries.
On 2 December 2022, on the basis of a previous G7 decision, the rotating Presidency of the Council of the European Union announced that a 60-dollar-per-barrel price cap on Russian oil had been agreed and would be implemented as from 5 December 2022; however, no cap on the price of Russian gas had been agreed. A group of seven European Union countries, including Italy, proposed setting one of 160 euros per megawatt hour, far lower than the ceiling proposed by the European Commission (275 euros) and the compromise proposed by the Czech presidency of the Union (264 euros). The turning point came when the European Council, meeting on 15 December, “call[ed] on the Council to finalise on 19 December 2022 its work on the proposals for a Council Regulation enhancing solidarity through better coordination of gas purchases, notably through the EU Energy Platform, exchanges of gas across borders and reliable price benchmarks”.[14] And indeed, the following Monday, Europe’s energy ministers agreed, with a qualified majority — Hungary voted against and Austria and the Netherlands abstained —, to set a gas price cap of 180 euros per megawatt hour, which will kick in on 15 February 2023.
The president of the Lombardy industrialists’ association Assolombarda, Alessandro Spada, cautiously welcomed the agreement: “It is positive that the EU has reached an agreement on the gas price cap, although the price remains very high for businesses. The good news is that the Europeans managed to negotiate an agreement, moreover for a price cap lower than that the Commission had envisaged”.
Is European Industry Headed for the States?
In addition to all that has been outlined thus far, it is necessary to consider what Thierry Breton, EU Commissioner for the Internal Market, has called an “existential challenge to the EU economy”, namely, the Inflation Reduction Act (IRA) approved in August by the Biden administration as a means of accelerating American industry’s green transition.
This measure has put 369 billion dollars in subsidies and tax breaks on the table. And although it will not come into force until in 2023, it is already leading some European companies to divert investments away from the Old Continent in favour of the USA. Thanks to the IRA, for example, the construction of a new electric battery factory in the States is subsidised by up to 800 million dollars. The same factory in Europe would receive “only” 155 million euros. In the hydrogen sector, too, US subsidies are now five times those available in Europe. Added to this disparity, there is also the difference in energy costs. Natural gas currently costs six times more in Europe than it does in the USA. Due to this asymmetry, the annual increase in production prices is much more marked for European than US companies: +42 per cent vs +8.5per cent. As a result, in the first ten months of 2022, EU industry was forced to ration its use of gas (-13 per cent on the average for the previous three years) and therefore reduce its production. American industry, on the other hand, increased its gas consumption (+5 per cent).
According to a survey by the German Chamber of Commerce, 8 per cent of the German companies interviewed are considering moving part of their production outside the EU, precisely because of the high energy prices in Europe. This is an industrial haemorrhage that Europe simply cannot afford.
The Inflation Reduction Act: the Reactions of and Differences Between EU Member States.
Paris and Berlin are stepping up their pressure on the Commission for a response along the lines of the US subsidy plan.
According to Bloomberg, which cites sources close to the German Chancellery, Olaf Scholz, supporting requests from Germany’s social democrats (SPD), seems to be inclined to urge the European Union to respond to the US subsidy plan with new common financial instruments.[15]
The French government has circulated a detailed document, suggesting the adoption of a four-pillar strategy called “Made in Europe” that highlights, above all, the importance of responding to the need to urgently support and finance the sectors susceptible to relocation, and of defending the solidity of the European economy, its sovereignty, and the green transition. France is asking the EU to present, in the very short term, a credible and ambitious financing instrument to be built in two stages: an emergency fund that would be created by reallocating existing funding, and subsequently (by the end of 2023) supported through an instrument similar to SURE (i.e., financed through common debt). In this way, the industrial crisis would result in the breaking of another taboo.
The Danish politician Margrethe Vestager, Executive Vice-President of the European Commission, in a letter on an “urgent matter”, sent to all the governments on 13 January 2023, highlights a number of challenges, particularly “high energy prices, the need to re-skill and up-skill workers, and the US Inflation Reduction Act, which risks luring some of our EU businesses into moving investments to the US”, that together demand “a strong European response”.[16] In the letter she goes on to propose the setting up of a “collective European fund to support countries in a fair and equal way”, while also underlining the importance of relaxing the state aid rules and boosting the REPowerEU plan.
Ursula von der Leyen’s position appears, at present, more cautious; she would like to avoid a transatlantic confrontation, and favours “dialogue” with the Biden administration.
And then there are those that say “no”.
The Confederation of Swedish Enterprise, in its response to the consultation launched by the Commission before Christmas, argued that further changes to state aid rules due to the IRA cannot be deemed justified, given that EU member states already provide substantial amounts of state aid and it in any case remains unclear how the IRA will be implemented.[17]
The Spanish government has also come out against upping state aid, arguing that it would constitute “a threat to the level playing field”.
Looking ahead to the European Council meeting of 9 and 10 February, the European Commission, on 1 February, unveiled its “Green Deal Industrial Plan”, a series of proposals and initiatives designed to support and protect the green industry in the EU. It is, in fact, a response to the USA’s IRA and China’s multi-million-dollar energy transition programmes. The new plan aims to relax the state aid rules in order to favour the introduction of renewable energy and the decarbonisation of industrial processes. “We know that in the next years the shape of the net-zero economy and where it is located will be decided, and we want to be an important part of this net-zero industry that we need globally”, said the President of the European Commission, Ursula von der Leyen in a statement.[18] But, as we have seen, the plan has not met with the unanimous approval of the member states and industry leaders.
Final Considerations.
Despite the experience of the pandemic and now the current crisis, the EU remains slow to boost its strength and cohesion and become more supportive and ready to actually assume a role of power, notwithstanding the many appeals it has received, from authoritative sources, to do just that. It is therefore hard not to agree with the president of Confindustria, Carlo Bonomi, who says that in the energy field “we in Europe need to pool our efforts and measures, exactly as we have managed to do with sanctions. We cannot be united on sanctions, but leave everyone to go it alone when it comes to energy, (…) solidarity cannot exist for one issue but not the other.”[19]
One thing is for sure: today’s Union is struggling and proving slow to rise to the challenges it faces. Proof of this can be found on the “economic resistance” front of the current war, in the context of which “decisions” that are not taken jointly, or that are drawn out or simply ineffective, risk irreparably undermining the competitiveness of European supply chains and businesses, putting our continent at very real risk of industrial decline.
What is equally certain is the fact that the national governments are failing to exploit the thrust of this further emergency in order to take steps towards the true political unity that would allow Europe, by giving itself the ability, authority and strength necessary to act both internally and on the world stage, to rise to the status of a continental power. It should be clear that Europe, to survive as a Union, has no choice but to take the political-institutional steps that, as confirmed by the Conference on the Future of Europe, have to be taken in order to give the European institutions the competences, resources and effective powers necessary to act in crucial fields — those in which adequate governance is possible only at the European level. And so, we as federalist militants, drawing motivation from the stimulating and impassioned words of David Sassoli at the opening of the Conference on the Future of Europe on 9 May, must, with absolute commitment, “work (…) so that [Europe] functions more coherently; so that Europe has clear competences in the many fields in which our countries, alone, would be marginalised and simply struggle. We see that there are geopolitical actors in the world that attack us and [seek to] take advantage of our divisions to undermine our strength — our great strength that is founded on law, democracy and our values. So, let’s make Europe even stronger, more resilient, more democratic and more united.”
Or as we would put it: let’s create a federal Europe!
Piero Angelo Lazzari
[1] Draghi: “Non siamo in economia di guerra, ma dobbiamo prepararci”, https://video.repubblica.it/dossier/crisi_in_ucraina_la_russia_il_donbass_i_video/draghi-non-siamo-in-economia-di-guerra-ma-dobbiamo-prepararci/410411/411118.
[2] Speech by President von der Leyen on the occasion of the II Cercle d’Economia Award for the European Construction, Barcelona, 6 May 2022, https://ec.europa.eu/commission/presscorner/detail/en/SPEECH_22_2878.
[3] F. Martìn, Perché la crescita continua a rallentare? Il Sole 24 ore - Econopoly, 15 February 2017, https://www.econopoly.ilsole24ore.com/2017/02/15/perche-la-crescita-continua-a-rallentare/?refresh_ce=1; F. Daveri, Economia mondiale: torna lo spettro della crisi? ISPI, 27 December 2018: “Per il 2019 il Fondo Monetario si attende un rallentamento: Ma la domanda che si pongono tutti gli osservatori è se il ‘rallentamento’ assumerà lo sgradevole aspetto di una crisi mondiale” (“The Monetary Fund is expecting a slowdown on 2019: but the question on all observers’ lips is whether this ‘slowdown’ will start looking unpleasantly like a global crisis”), ISPI, 27 November 2018, https://www.ispionline.it/it/pubblicazione/economia-mondiale-torna-lo-spettro-della-crisi-21869; C. Natoli, Outlook OCSE: economia mondiale in rallentamento anche nel 2020 – I rischi per Germania e Italia, https://www.pricepedia.it/it/magazine/article/2019/11/25/outlook-ocse-economia-mondiale-in-rallentamento-anche-nel-2020-i-rischi-per-germania-e-italia/, 25 November 2019); G. Santevecchi, Pil Cina, così Xi Jinping ha fatto rallentare l’economia – E’ un rallentamento annunciato, ma ancor più pronunciato del previsto, quello dell’economia cinese. Rallentamento delle logistiche, Corriere della Sera, 18 October 2021, https://www.corriere.it/economia/finanza/21_ottobre_18/cosi-xi-jinping-ha-fatto-rallentare-l-economia-cinese-26c93746-2fed-11ec-9d51-3a373555935d.shtml.
[4] M. Amman and M. Knobbe, An interview with German Chancellor Olaf Scholz, “There Cannot Be a Nuclear War”, Spiegel International, 22 aprile 2022, https://www.spiegel.de/international/germany/interview-with-german-chancellor-olaf-scholz-there-cannot-be-a-nuclear-war-a-d9705006-23c9-4ecc-9268-ded40edf90f9.
[5] Centro Studi Confindustria, Caro energia persistente, inflazione record e rialzo dei tassi, frenano l’economia a fine 2022, November 2022, https://www.confindustriasr.it/comunicazione.asp?id=89&id_news=1478&anno=2022.
[6] Energy crisis will erode Europe’s competitiveness in 2023, 13 October 2022, https://www.eiu.com/n/energy-crisis-will-erode-europe-competitiveness-in-2023/.
[7] Confindustria, Medef e Bdi: subito misure condivise su energia, Energiaoltre, 20 December 2022, https://energiaoltre.it/confindustria-medef-e-bdi-subito-misure-condivise-su-energia/?v=163a1b9b5c5312.
[8] Audizione del ministro Giorgetti sul disegno di legge di bilancio per il triennio 2023-2025 [Commissioni bilancio di Camera e Senato] - ... (mef.gov.it).
[9] European Commission, REPowerEU: A plan to rapidly reduce dependence on Russian fossil fuels and fast forward the green transition, https://ec.europa.eu/commission/presscorner/detail/en/ip_22_3131.
[10] L'Ue ferma l’Italia sul gas, Draghi furioso: “Colpa vostra se siamo in recessione”, Business.it.
[11] Confindustria, Medef e Bdi…, op. cit..
[12] BusinessEurope, Energy crisis: European business calls for new EU-wide measures (press release), https://www.businesseurope.eu/publications/energy-crisis-european-business-calls-new-eu-wide-measures.
[13] U. van der Leyen, Speech by President von der Leyen at the European Parliament Plenary on Russia's escalation of its war of aggression against Ukraine, Strasbourg, 5 October 2022, https://ec.europa.eu/commission/presscorner/detail/en/SPEECH_22_5964.
[14] General Secretariat of the Council, European Consilium meeting (15 December 2022) – Conclusions,https://www.consilium.europa.eu/media/60872/2022-12-15-euco-conclusions-en.pdf.
[15] MilanoFinanza News 12.1.2023.
[16] https://www.politico.eu/wp-content/uploads/2023/01/16/Letter_EVP_Vestager_to_Ministers__Economic_and_Financial_Affairs_Council__Competitiveness_Council_aressv398731.pdf.
[17] S. Disegni, Francia e Germania vogliono un nuovo piano Ue di aiuti all’industria. Ma nel 2022 l’80% delle risorse è finito proprio a loro, Open, 13 January 2023, https://www.open.online/2023/01/13/ue-francia-germania-nuovo-piano-aiuti-industria/.
[18] European Commission, Statement by President von der Leyen on the Green Deal Industrial Plan, https://ec.europa.eu/commission/presscorner/detail/en/statement_23_521.
[19] Caro energia, Bonomi: “Da soli non ce la possiamo fare, serve l'Ue” - Adnkronos.com, 5 October 2022.
Year LXIV, 2022, Single Issue, Page 51
RUSSIA FROM GORBACHEV TO PUTIN
When Mikhail Gorbachev became president of the USSR in 1985, the world began observing the policy of the new Soviet leader with great curiosity but, at the same time, with some mistrust. Had the USSR really changed? Was this really the start of a new political phase that would bring the Cold War years to an end? Gorbachev’s assumption of the leadership of the Communist Party and the country, which constituted a real turning point, was the culmination of a profound crisis that Russia had been going through both internally and abroad. The arms race imposed by the US presidency under Ronald Reagan — the US president had even gone so far as to talk of a possible space shield to counter any aggression — was bleeding Russia’s depleted finances dry, while its continued occupation of Afghanistan was proving to be a disaster, both military and political. The number of war dead and the high number of those wounded (about half a million) plunged the regime into a crisis of credibility, and triggered protests in the streets by the families of the victims. All this explains the decision, an epochal turning point, to elect a relatively young man, by Soviet standards, to lead the country.
Gorbachev embarked on the campaign of renewal that gave rise to what is known as the era of perestroika (restructuring) and glasnost (transparency). Although it turned out to be a very brief era, lasting just six years, it nevertheless completely upset the world balance, culminating in the dissolution of the USSR. Gorbachev's policy had contrasting effects: although met with wide acclaim in the international arena, it failed to eliminate the persistent shadow of fear and suspicion in the West; internally, the desired renewal led to the country’s fragmentation, and failed to overcome the endemic problems linked to corruption, and to the serious backwardness, in both the economic and industrial fields, that was responsible for widespread poverty in the country. In a bold move, Gorbachev, in 1988, ended the occupation of Afghanistan, thus interrupting the sanctions that the West had used against the USSR ever since its 1979 invasion of the country. Moreover, he chose not to intervene to counter the popular protests against the communist regimes that were taking place in Poland and Romania, and effectively took the pressure off Russia’s neighbouring allies. He did not oppose the first US-led Gulf War in 1991, and indeed launched himself into a series of bilateral meetings with the US president Reagan (Geneva, November 1985, and Reykjavík, October 1986) and then with his successor Bush (Malta, December 1989). He also visited the United States (November 1987) to support an arms reduction campaign[1] and demonstrate a readiness to start new peaceful relations with his country’s old antagonist. There were also numerous meetings with European leaders, organised with the aim of encouraging a rapprochement of the then European Community with the new USSR. All this explains his Common European Home vision, which he set out on several occasions until the drafting of the Charter of Paris for a New Europe in November 1990. These efforts to bring about a rapprochement with the West were received with great interest, but a shadow nevertheless persisted. In other words, there remained some doubt as to whether the USSR really was capable of putting an end to the political and military confrontation. This difficult dialogue with Western institutions and governments is recalled by Gorbachev’s economic adviser and close collaborator Ivan Ivanov,[2] who well describes how difficult it was communicating with the European and international institutions and getting them to understand the considerable endeavour involved in pursuing perestroika. This incomprehension is further illustrated by Gorbachev’s failure to get the USSR granted entry into the IMF in 1986. The West resorted to technicalities to justify this decision, but it was really attributable to residual political hostility.[3] Paradoxically, in 1998, when the USSR no longer existed, Yeltsin’s Russia was accepted into the IMF, even though by that time the country was on the brink of default.
The Common European Home.
The Western world greeted Gorbachev with great enthusiasm when, in July 1987, he addressed a meeting of the Council of Europe in Strasbourg, which for the occasion was exceptionally attended by the MEPs. In his speech he recalled an important principle regarding respect for national sovereignty, repeatedly violated in the past by the USSR,[4] stating that: “The idea of European unification should be collectively thought over once again (…) any attempts to limit the sovereignty of states — whether of friends and allies or anybody else — are inadmissible”.[5] It was a new doctrine that favoured openness to political compromises, and even to forms of liberalisation, and was therefore in complete contrast to the traditional Soviet theories that has been espoused by Mikhail Suslov, who had advocated for armed intervention should any of Moscow’s allies move away from its political leadership. Gorbachev’s Strasbourg speech was undoubtedly important, but the one he gave on August 1, before the Supreme Soviet, was even more significant. By indicating a turning point and throwing down a challenge to his opponents within the Party before the body most representative of Soviet identity, Gorbachev showed immense courage. On the subject of world politics, he talked of the inadmissibility and absurdity of settling problems and conflicts between states through war; the priority of universal values; freedom of choice; the reduction of armaments and the overcoming of military confrontation; the need for economic cooperation between East and West and the internationalisation of ecological efforts; and the correlation between politics and ethics. He went on to point out that each people autonomously decides the fate of its own country and chooses the system and regime it prefers and no one can, under any pretext, interfere from outside and impose their conceptions on another country.[6]
His opponents criticised him for these overtures, convinced that they would lead to the USSR’s dissolution. For them, making concessions to allies, opening up to dialogue with the USA and the West, favouring forms of liberalisation, and ending the centralism of Moscow meant throwing the regime into crisis.[7] Nevertheless, in line with these new choices, the USSR opted not to intervene to repress anti-communist protests in the various Warsaw Pact countries, and went so far as to accept the demolition of the Berlin Wall in November 1989, thus initiating German reunification. These choices earned Gorbachev the 1990 Nobel Peace Prize. This was the height of perestroika, but it was also the start of Gorbachev’s downward spiral. His reformism pleased neither Party conservatives nor radical progressives, and his idea that reform could be brought about without dismantling the apparatus of state came up against harsh reality. The reformist effort that was proving so successful in other countries did not find, in Russia, valid support from the Western world, which failed to guarantee the country the political, economic and financial support it needed, choosing instead to stand by and watch, somewhat complacently, the disintegration of the USSR, without ever considering its possible consequences. In May 1990, Yeltsin, in the speech marking his election as Chairman of the Supreme Soviet of the Russian Republic, called for full sovereignty of the Russian Republic vis-à-vis the other 14 republics that together formed the USSR. This move was made possible by the Soviet constitution itself, which recognised the Soviet republics as sovereign states with the right to separate from the Union, despite the strongly centralised powers that Moscow had wielded up until that point. Perestroika, as Gorbachev himself wrote, was aimed at making the individual republics autonomous, thus creating a true federation.[8] It was around this time that Yeltsin resigned from the CPSU, declaring that the old system had collapsed before the new one had started to work, making the social crisis even more acute, but at the same time adding that radical changes in such a vast country could never be painless, or free of difficulties and upheavals. The challenge to Gorbachev, who advocated “reform without destruction” was thus launched. Gorbachev’s weakness was even more evident following his kidnapping in August 1991 by a military group nostalgic for the old order.[9] The coup failed miserably: Yeltsin, by mobilising popular support, managed to secure the release of Gorbachev, who from that moment on was a largely marginalised figure. Yeltsin’s success against the coup won him the full support of Western leaders, and Gorbachev became yesterday’s news.
So Little Road Travelled, so Many Mistakes Made.[10]
Yeltsin’s rise marked a turning point that would ultimately change the face of Russia and beyond. In the space of just a few months in 1991, the USSR dissolved and 14 republics, following the example of Yeltsin in the Russian Republic, declared their independence and sovereignty. At the same time, Yeltsin announced the dissolution of the Warsaw Pact that had bound, to each other and to the USSR, the Eastern European countries that had been liberated by the Red Army during the Second World War. These acts marked the fall of the communist regimes in those countries. The final act sanctioning the end of the USSR took place on the night of December 25 when Gorbachev resigned and transferred his powers to Yeltsin. On live TV the red hammer and sickle flag was lowered by the Kremlin and the Russian tricolour dating back to the Tsarist era was hoisted in its place. Russia thus entered a period of political turmoil, in which its foreign policy was abandoned due to internal conflicts that forced it to turn in on itself; the same applied to the new republics, too, which found themselves grappling with the drafting of new constitutions, the definition of borders, the division of the Treasury of the Central Bank, and the even more dramatic division of the Soviet armaments, nuclear ones included. It took many years to draw the new face of Russia which, under Yeltsin, embraced the free market for which, after more than seventy years with a state-controlled economy, it was actually totally unprepared.
The dissolution of the Soviet empire broke the fragile global balance, leaving the USA as the only remaining superpower. And from that moment on, the USA, in its bid, often unsuccessful, to police the international order, began intervening in numerous hotbeds of war and tension. Those years saw two other important developments: China’s rise as an economic power, which would soon see it also assuming a political leadership role, and the entry into force of the Maastricht Treaty, which transformed the European Community into a Union. This reference to Maastricht is important, because for Europe this event marked an epochal transition. However, as Europe’s relations with Russia demonstrated, the Treaty was somehow incomplete, failing for example to assign the Union competences in the fields of foreign policy, defence and industrial policy, and the effects of this are still being felt today. As Russia, in passing from a state economy to a free market one, went through a profound institutional and political upheaval, the European Union failed to step in and develop and propose the common economic and financial policy that would have lent the new Russia indispensable support. Any initiatives taken were in fact left to the individual EU member states, with Germany leading the way. This weakness on the part of the EU was exposed during the dramatic crisis in Yugoslavia whose dissolution, in 1991, was another consequence of the collapse of the USSR; as, indeed, it was when the EU claimed to be in a position to play a role in the crisis in Libya. In reality, it was in no such position and, as had already occurred in Yugoslavia, the USA had to be asked to intervene. This intervention, too, was unsuccessful, and the Libyan question remains unresolved to this day. In short, the EU relied on the USA to manage international crises (for example in Iraq and Afghanistan), and supported and even encouraged the eastward enlargement of NATO to the old Soviet satellite states (Poland was the first to join), before expanding in this same direction itself.[11] The failure to involve Russia in the EU and NATO’s eastward enlargement generated a series of misunderstandings that, over time, favoured a growing rapprochement between Moscow and Beijing, as well as a strengthening, in nationalist and extremist circles in Russia, of the idea that the country was being progressively surrounded by the West. Gorbachev himself, while critical of the leaderships that followed him, was also highly critical of the USA for its conviction that only domination and a unilateral approach could guarantee America a leading role in world politics.[12] While Americans regarded Russia’s fragility in the 1990s as confirmation of the success of US foreign policy, and the weak EU meekly supported US choices, China became the first country to show political openness towards Moscow: the old rivalry over whether Russia or China should be considered the legitimate leader of communism in the world had by now been consigned to the past. In making its overtures to Russia, China was certainly not disinterested, of course; it was seeking, rather, to exploit the EU’s lack of substance, and the USA’s determination to keep its giant adversary of the past, for as long as possible, in a position of weakness.
This explains how it came about that, in 1996, Beijing promoted the creation of the Shanghai Five group (now the Shanghai Cooperation Organisation, SCO), with the aim of involving Russia and some Asian republics of the former USSR. The idea was that the organisation should foster cooperation in the economic and military fields to counter the separatism and terrorism that was dogging Central Asia in those years. It was the first step in a rapprochement that subsequently led to a strengthening of relations in the economic and military fields between Beijing and Moscow. The initiative had a clear purpose: to favour China’s role in Asia at the expense of the USA and a weakened Russia. In view of what was happening in the Caucasian region with the war in Chechnya, it was also a means of guaranteeing territorial unity on China’s borders, so as to prevent the emergence there of separatist pressures of a political, ethnic and religious nature.[13]
In August 1998, as a consequence of the war in Chechnya and the dire financial situation linked to Russia’s struggle to manage the transition to a free market economy, the country’s Central Bank was forced to declare the country bankrupt; in a scenario reminiscent of the Weimar economic crisis, the rouble had lost all its value and prices were changing by the hour, leaving the people having to resort to bartering.
At that point, with Yeltsin seriously ill, the reins of government passed, the following year, to his heir apparent: Vladimir Putin. That same year, Russia became a full member of the IMF. The USA and the EU had stood by and watched Russia’s complete meltdown without ever intervening, and this fact would not be forgotten.
Refusal to Forget.
Because of the events and circumstances surrounding the dissolution of the USSR, Putin, in public speeches, repeatedly said that he could not forget what he saw as the West’s outrageous and provocative attitude in recent years.[14] Nevertheless, as president, he focused initially on restoring order internally, immediately showing that he was prepared to harshly repel possible opponents. He resumed the war in Chechnya, which he brought to a bloody end in 2009. His actions reinforced his image as a hard man, although this image was cemented only after a number of attacks that shocked Russian public opinion.[15] There grew up around him a circle of so-called oligarchs, who were none other than the former officials who had previously controlled state-owned companies on behalf of the Communist Party. Following the collapse of the Soviet Union, these individuals, men with no particular talent or managerial ability, found themselves directly in charge of the various industries, able to assume control of them purely because they had been part of the old state apparatus. Loyalty to the new president helped these “oligarchs” to accumulate vast wealth; anyone who did not support the new regime that was taking shape risked their lives, or prison, and this is a situation that persists to this day.
If Putin’s first objective was to restore order internally and start new relations with the ex-Soviet republics, now independent nations, his second was to bring Russia back into the international arena. Even though this would take time, his intentions were already perfectly clear when he addressed the Munich Security Conference in February 2007.[16] Putin’s argument at that time was that the world had changed, making the criteria established after the Second World War inapplicable, even in relations with allies. With the birth of new centres of power, new dangers were appearing in the world, making it necessary to create a new situation. Otherwise, new conflicts would undoubtedly emerge.
Expressed at a time when Russia was still waging the war in Chechnya, this was a strong position, and one that indicated a readiness to return to the role of a superpower. Putin was also scathing towards Europe’s foreign ministers, whom he bluntly accused of subservience to the decisions of NATO and the United States.
The period between 1985 and the start of the new millennium must therefore go down as that in which the Europeans wasted the chance to mount a common political and industrial action in support of Russia — a wounded “bear” that was crying out for help, and a country that, given its continental dimensions, enormous natural riches, and almost 150 million-strong population, was always destined, before long, to return to the fore and resume its role on the international stage.[17] Russia’s full return to international politics came with the Ukrainian crisis at the end of 2013 when the Ukrainian government led by President Yanukovych refused to sign an association agreement with the EU, preferring instead an economic agreement proposed by Putin, which provided USD 300 billion in financial aid. Such provision of aid was not contemplated by the EU, even though it was known that Ukraine was on the brink of default, with its Central Bank clearly unable to meet an IMF repayment due in the spring of 2014. We are all familiar with the events that unfolded in Ukraine after that. Under the pressure of popular protests, in which the majority were calling for the start of association with the EU and accusing the government of selling out to Russia, the incumbent government was forced to flee. During the demonstrations there were multiple clashes and attacks resulting in numerous victims; meanwhile, with Russian support, part of the Donbass region proclaimed its independence from Kyiv and created the People’s Republics of Lugansk and Donetsk. Putin milked this crisis: he accused the West of instigating the fall of the regional government, and ensured that the secessionists of Donbass, the country’s richest region, were kept supplied with financial and military aid. In 2014, Putin, emboldened by his strong position, backed the secessionist referendum in Crimea, which resulted in that country becoming a member of the Russian Federation once more. At this point, there began a silent war between the new and generally pro-Western government in Kyiv and the pro-Russian secessionist region of Ukraine. The West responded to these developments by issuing its first sanctions against Russia. Subsequently, in February 2022, the situation in the region precipitated with the start of Russia’s “special operation”, desired and launched by Putin as a means of preventing Ukraine from joining the EU or NATO, which at the time was also considering granting entry to Georgia and Moldova, two other nations that were once part of the USSR.
The war in Ukraine raises numerous considerations that deserve to be explored in depth, because the ongoing conflict changes the whole world balance. Basically, this is no longer just a matter of Russia demanding to play a key role on the world stage, and of Ukraine striving to defend its sovereignty. It is about much more than that. What has become clear, once again, is that global politics knows no boundaries. And just as Gorbachev predicted in a 2019 book, in which he asks how all this could possibly have come about,[18] Europe has clearly become a global political hotspot.
Gorbachev answers his own question, arguing that the events rocking Ukraine can be traced back to the choices made by the Europeans during the 1990s. As the present essay has sought to underline, the eastward enlargements of the EU and NATO have certainly succeeded in strengthening the West and weakening Russia, but unfortunately, alongside this, no policy has ever been activated to give Moscow guarantees, and above all tangible aid. While, on the one hand, the USA’s attitude was and remains understandable, its ultimate aim, always and in any case, being to weaken Russia, the EU on the other hand is guilty of failing to play any kind of mediatory role, even though there has seemed, and still seems to be, room for action of this kind, which has now become more necessary than ever, both politically and economically. The ability to act, however, depends on the existence of a political authority offering direction. It is therefore no coincidence that the current war in Ukraine is completely laying bare the delays that the EU has accumulated over time. Europe, with no government, and faced with a war on its doorstep, now finds itself forced to confront its powerlessness in strategic sectors such as foreign and defence policy, energy and industrial policy. The EU is indeed fragile and, in many ways, impotent. But, at the same time, the war is also exposing the fragility of Putin’s Russia, which, in spite of all the bombastic and bellicose utterances, is undoubtedly weak. The war is showing how a superpower, when its mighty army is badly led and its level of technological capability is inferior to that of an opponent that is supplied with arms from the West, can see its credibility crumble in a matter of weeks. In short, while Russia can certainly be considered a superpower in terms of the extent of its manpower and means, it is weak in terms of intelligence and new technologies. Without pausing here to analyse the course of the war or dwell on the unquestionably despicable nature of the aggression launched by Putin, the succession of six different army commanders-in-chief in the space of a few months, and the need to forcibly recruit over 300,000 young people to fight, are clearly signs of the difficulties thrown up by what had had been meant to be a lightning war, but is actually proving to be a far more protracted struggle. Here is not the place to evaluate the course of the war from a military perspective, also because the scenarios could change rapidly should the conflict extend to Belarus, or should the internal political situation in Russia or Ukraine somehow precipitate. Generally speaking, there is only one thing we can say for sure: that the war will eventually come to an end, even though it is impossible to say how, and how long it will be before this moment comes. But when the end does come, it will mark the start of a new phase in which the EU will be called upon to help ensure that Ukraine goes on receiving material aid in order to rebuild following the destruction it has suffered, and in which a new political collaboration will have to be started with Russia. Russia is an integral part of European history and it is unthinkable that it can be isolated forever. The EU needs Russia, and not only because of its vast natural wealth; equally, Russia needs the EU, for two reasons: first it cannot afford to succumb to Chinese flattery as a long-term solution, and second because the beating heart of Russia lies in Europe, not in Asia.
“We Tried”.[19]
Here, we have briefly run though the mistakes, due to political limitations and an inability to act, made by the Western world and in particular by the Europeans in the years leading up to the turn of the century. The point now is to ensure that those mistakes are never repeated, and in order to do this the EU needs to intervene where Russia is most fragile and needy. The market economy, industrial policy, agricultural sector and average quality of life in Russia can all be taken as indicators of the country’s fragility. Despite the efforts made since the 1990s to open up to the free market, Russia is not a leading industrial nation.
In the manufacturing industry, Russia depends heavily on imports which, because of the war, are forecast to collapse throughout 2023, impoverishing the country.[20] An indication of the level of poverty in the country was provided by former prime minister Medvedev no less, who, in 2019, declared that 19 million Russians (14 per cent of the population) live below the poverty line.[21] The importance of the energy and mining sector in Russia is well known, and accounts for its largest share of exports. The second leading source of exports is the agricultural sector which employs a workforce of 14 million, but impacts the lives of around 60 million citizens who live in rural areas that only have dirt roads. 45 per cent of these citizens have no drinking water, and 5 per cent no access to a sewerage network. These data are the same today as they were in 1990.[22] The yield per hectare of agricultural land is 10 per cent lower than it is in the EU, a sign of slowness to adopt new scientific discoveries in a sector that is vital not only to Russia. Furthermore, while the quality of life of the Russian citizen today has certainly improved compared with Soviet times, this improvement does not extend to greater health protection. Life expectancy is an indication of a nation’s level of development: the longer people live, the higher the country’s development. The average lifespan of a man in Russia is 66 years. In the EU it is 20 years longer. Accordingly, in 2018, the Duma’s proposal to raise the retirement age from 55 (where it had been stuck since the days of the USSR) to 66 met with violent street protests, which forced Putin to have the bill withdrawn.
In addition to addressing the various economic aspects that impact social ones, Russia will need to find a new role for itself among its neighbouring countries, which were once an integral part of its territory. The initial aggression and the way the Ukraine war has unfolded have weakened the solidarity (sometimes imposed) of the Asian republics with which Russia maintains special economic and military relations. During the first votes in the UN condemning the aggression against Ukraine, these Republics abstained or did not participate,[23] thereby showing solidarity with Putin. Instead, during the meeting between Russia and the Asian republics held in Astana in October 2022, some of the presidents distanced themselves. The President of Tajikistan expressly asked Putin to “show respect” to the former Soviet republics, while the Presidents of Uzbekistan and Kazakhstan expressed their concern that the war was leading to the appearance of a new iron curtain, and called for Ukraine’s territorial integrity to be respected.[24] These stances, unthinkable until a few months earlier, are a sign of the difficulties that Putin is having: internally, he is coming under pressure both from the most extremist wing and, at the same time, from the faction more open to compromise,[25] as well as, externally, from Asian countries that are showing signs of distancing themselves from Moscow in its moment of weakness. Added to all this, China and India are pressing for an end to the conflict. All this adds up to a highly complex setting in which the EU could play a hugely important role. Were Europe, through specific agreements, to put its industrial capabilities and technological know-how in the agricultural and manufacturing sectors at Russia’s disposal, this would mark an epochal turning point in its relations with the country. However, it is clear that two conditions must first be met. Putin or his successor will have to show that they are willing to reopen a dialogue with the European countries, while the EU will have to initiate the reforms that will allow it to speak with a single voice. Indeed, without a common foreign and industrial policy, the Union would just run into the old problems once again. It will, of course, be a lengthy process, as the war will leave a lasting trail of resentment and lack of trust. As Europeans, our task in this period is to initiate the EU reforms that will finally give us the political authority whose absence has favoured the mistakes of the past. For a long time, we Europeans have preferred to leave fundamental strategic choices to the USA, choices for which, to a large extent, we are still paying the price. What is more, should the hawks continue to prevail in Russia, preventing a return to reasonableness at the level of the Russian leadership, it would be all the more necessary to address problem of strengthening the government of the European Union. The time has come to make the radical choices that will at least allow us to tell the world: “we tried”. Ultimately, this was, and is, the objective indicated by the citizens who took part in the Conference on the Future of Europe.
Stefano Spoltore
[1] START 1 (Strategic Arms Reduction Treaty), and Intermediate-Range Nuclear Forces (INF) Treaty.
[2] I. Ivanov, Perestrojka e mercato globale, Milan, IPSOA Scuola d’impresa, 1989, pp. 33-76.
[3] M. Ruffolo, L’URSS vuole entrare nel FMI, La Repubblica, 17 August 1986.
[4] One need only think of the Soviet interventions in Hungary (1956), Czechoslovakia (1968) and Afghanistan (1979).
[5] Speech by Mikhail Gorbachev to the Council of Europe in Strasbourg, "Europe as a Common Home", July 6, 1989, Wilson Center, Digital Archive, https://digitalarchive.wilsoncenter.org/document/speech-mikhail-gorbachev-council-europe-strasbourg-europe-common-home.
[6] M. Gorbachev, La Casa Comune Europea, Milan, Mondadori, 1989, p. 193.
[7] C. De Carlo, Le riforme in un regime sono i primi sintomi di un imminente crollo, QN, 6 December 2022.
[8] M. Gorbachev, What Is at Stake Now: My Appeal for Peace and Freedom, Jessica Spengler (Translator), Oboken, N.J., Wiley, 2020. The fact that Gorbachev continued to experience difficulties in his home country even in recent years is shown by the fact that this book was not published in Russia. Instead, it was first published in German in 2019, entitled Was jetzt auf dem Spiel steht.
[9] It is worth remembering how one of the insurrectionists, then an army major, suffered no consequences for his insubordination. He continued his military career and Putin, in the summer of 2022, appointed him Commander in Chief of the Russian army in the so-called special operation against Ukraine: General Surovikin.
[10] S.A. Esenin, Russian poet, quoted in V. Salamov (2018), Kolyma Stories. New York: New York Review Books; V. Shalamov (2020). Sketches of the Criminal World: Further Kolyma Stories. New York: New York Review Books. Salamov’s work describes his experience in the gulags in the 1950s and anticipates by a few years the better-known work by A. Solzhenitsyn, The Gulag Archipelago.
[11] NATO’s expansion to the East began in 1999, and in 2004 all the former Warsaw Pact countries joined the organisation. The EU, on the other hand, began expanding towards the East in 2004 and in 2007 all former satellite countries of the USSR became full members of the Union. This enlargement to the East undoubtedly favoured the consolidation of democracy in those countries.
[12] M. Gorbachev, What Is at Stake Now..., op. cit..
[13] Cf. S. Spoltore, Russia and China United in Pursuit of a New World Order, The Federalist, 63, (2021), p. 48.
[14] For example: Askanews, Putin: io non dimentico, 3 December 2015. More recently: Lettera di Putin ai russi, intopic.it, 19 June 2020.
[15] The most shocking case was the action ordered to break the siege by a Chechen commando at the Dubrovka Theatre (October 26, 2002). The resulting operation led to the elimination of the 39-strong commando, but also saw 129 hostages killed in the clash by special units sent from Moscow on Putin’s orders.
[16] http://en.kremlin.ru/events/president/transcripts/copy/24034.
[17] Cf. F. Rossolillo, The Ukraine and the Global Equilibrium, The Federalist, 57, n.1 (2005), p. 31.
[18] M. Gorbachev, What Is at Stake Now..., op. cit..
[19] This was Gorbachev’s reply when filmmaker W. Herzog asked him what he would like written on his tombstone. Interview documentary, December 2019.
[20] European Council forecasts indicate a total of €248bn in 2021, dropping to €133bn in 2022 and to €94bn in 2023.
[21] M. Gorbachev, What Is at Stake Now..., op. cit..
[22] F. Scaglione, Agricoltura russa, dall’izba alla holding, Lettera da Mosca, 5 December 2020.
[23] Kazakhstan and Tajikistan abstained while Uzbekistan and Turkmenistan did not participate in the vote.
[24] Cf. D. Cancarini, Ora che l’Asia Centrale sfida la Russia, Il Fatto, 22 October 2022; D. Cancarini, Guerra Russia Ucraina dipendenza da Mosca, Il Fatto, 13 April 2022.
[25] G. Savino, Cosa sta succedendo dentro il sistema di potere di Putin, www.valigiablu.it, 17 December 2022.
Year LXIV, 2022, Single Issue, Page 47
THE RETURN OF THE TRAGIC SIDE OF HISTORY
À ce retour brutal du tragique dans l’Histoire,
nous nous devons de répondre
par des décisions historiques.[1]
With Russia’s invasion of Ukraine, the world has been plunged back into a reality shaped by a very precise concept of international relations: that of power politics, which holds that the national interest is not just paramount, but indeed so overwhelmingly important that protecting it can and must entail threats and reactions, economic if not necessarily bellicose. This is what immediately transpires, in the direst form imaginable, from recent declarations by the President of the Russian Federation: “Whoever tries to hinder us, and even more so to create threats for our country, for our people, should know that Russia's response will be immediate and will lead you to such consequences that you have never experienced in your history.”[2]
While the invasion of Ukraine has undoubtedly led to an exacerbation of this concept, it has to be acknowledged that this mindset, albeit manifested in different ways, is now spreading to leaders across the entire spectrum of political players involved in the resulting scenario. We need only consider, for example, some of President Biden’s remarks in response to the situation: “He thought [Putin] the West and NATO wouldn’t respond. And he thought he could divide us at home. Putin was wrong. We were ready. […] Let me be clear, our forces are not engaged and will not engage in conflict with Russian forces in Ukraine. Our forces are not going to Europe to fight in Ukraine, but to defend our NATO Allies – in the event that Putin decides to keep moving west. For that purpose, we’ve mobilised American ground forces, air squadrons, and ship deployments to protect NATO countries including Poland, Romania, Latvia, Lithuania, and Estonia.”[3]
This claim is further supported by the speech given by President von der Leyen before the European Parliament plenary on 1 March, 2022: “This is a moment of truth for Europe. Let me quote the editorial of one Ukrainian newspaper, the Kyiv Independent, published just hours before the invasion began: ‘This is not just about Ukraine. It is a clash of two worlds, two polar sets of values.’ They are so right. This is a clash between the rule of law and the rule of the gun; between democracies and autocracies; between a rules-based order and a world of naked aggression. How we respond today to what Russia is doing will determine the future of the international system. The destiny of Ukraine is at stake, but our own fate also lies in the balance. We must show the power that lies in our democracies; we must show the power of people that choose their independent paths, freely and democratically. This is our show of force.”[4]
Obviously, the declarations made by these leaders and the concrete measures taken in response to Russia’s aggression differ from and cannot be compared, in either a political or a moral sense, to the ideological positions and the military decisions adopted by the Kremlin. This, however, does not prevent them from falling into the trap of power politics, meaning a mechanism that, once triggered, inevitably sees all the players involved reacting to events with aggressive measures and issuing threats in response to those received.
The resurgence of power politics is closely linked to a strong revival of nationalist rhetoric. Nowhere is this more dramatically manifested than in the ideological motivations driving Russia’s aggression, which amount to a violent manipulation of historical facts and historical memory; and yet, from this perspective, too, we have to expect to see its influences spreading spontaneously across borders and contaminating not only the country that has been directly attacked, but also its allies, not to mention the world’s horrified onlookers. The neoliberal post-Cold War model seems to have been swept away, and with it the principle of deterrence: in the past, the nuclear threat served, paradoxically, for moderating international conflicts; now, however, this terrifying sword of Damocles, recognised as a means of preventing escalations (military at least), is instead being used as an actual instrument of war. To be precise, what we are witnessing is not the return of history tout court, but the return, to continental Europe, of the tragic side of history.
If one can manage to see things from broader, long-term perspective, looking beyond the acts of war that, as I write, are continuing to shock the world, it becomes apparent that a pernicious process is under way that is redefining the balance and rearranging the distribution of power among the world’s various political actors. That said, a clear understanding of the causes of this process and its possible outcomes can really only be reached through in-depth analysis and expensive, interdisciplinary research, as well as longer observation of the unfolding of the phenomenon itself.
Nevertheless, in my view, three key aspects can already be identified: i) the gradual erosion, as a result of endogenous and exogenous crisis factors, of the USA’s ability to be keepers of the international order; ii) the progressive growth of political and/or economic influence exerted by powers that are not de facto aligned with the West (e.g. China and Russia); iii) the impasse that is preventing the process of European integration from culminating in the formation of a fully political union able to fill an increasingly evident power vacuum.
In the face of disorder, power vacuums and changing international balances, and therefore of new threats and opportunities (depending on one’s perspective), divergent ambitions emerge and the logic of division and of power politics increasingly finds fertile ground. And it is important to view the war that is currently shaking the world in the light of this profound process. Putin’s appalling audacity is not born from a sense of duty to pursue the goal of national reunification; nor do his actions really stem from the absurd and deplorable idea of “de-nazifying” the Ukrainian government, or the desire to counter the pro-Western tendency that has emerged in recent years in a region that has traditionally fallen within the Russian sphere of influence. The Russian president’s brazen actions stem, rather, from the fact that he recognises the precariousness of the old order, led by NATO, and grasps, quite correctly, the existence of a huge political weakness at the heart of Europe.
This is an unfolding scenario. It is impossible to predict the effects of the turbulence that is currently manifesting itself in such a tragic way in Ukraine, and could have terrible repercussions elsewhere. Even so, I would argue that an understanding, albeit partial and transitory, of the situation can nevertheless be built on the basis of awareness and acceptance of two facts. The first is the erosion of the US-led unipolar world. The second is the fact that the West’s capacity to influence the defining of a new stable (inevitably multipolar) world balance, and promote peaceful international relations, will depend, to a large extent, on Europe’s readiness to make the decisive federal leap. This means its readiness to establish itself as a power for peace, using its political and diplomatic weight, which is of course also directly proportional to its military capacity, to establish, together with the other global players, a new equilibrium. In so doing they will be able, together, to resume the long and non-linear process of building a world that, in the face of ever greater material interdependence, recognises the need to impose more stringent rules, in order to avoid tipping into chaos once again.
Opportunely, the Conference on the Future of Europe has anticipated this need. This ground-breaking exercise in supranational participatory democracy has resulted in clear calls, further legitimised by the dramatic developments of recent weeks, for more European democracy, democratic mechanisms for defining EU policy, and more effective European institutions with a greater capacity to act.
In the present deeply tragic and crucial historical phase, these calls simply cannot be allowed to go unheeded. Instead, these demands must be embraced and realised through concrete reforms that will lead to the birth of a true democratic and sovereign Europe, for the sake of Europe’s future, and that of the world!
8 April 2022
Andrea Apollonio
[1] Emmanuel Macron, Address to the Nation, 2/03/2022, https://www.elysee.fr/emmanuel-macron/2022/03/02/adresse-aux-francais-ukraine.
[2] Full text: Putin’s declaration of war on Ukraine, The Spectator, 24/02/2022, https://www.spectator.co.uk/article/full-text-putin-s-declaration-of-war-on-ukraine.
[3] Remarks of President Joe Biden – State of the Union Address as Prepared for Delivery, 1/03/2022, https://www.whitehouse.gov/briefing-room/speeches-remarks/2022/03/01/remarks-of-president-joe-biden-state-of-the-union-address-as-delivered.
[4] Speech by President von der Leyen at the European Parliament Plenary on the Russian aggression against Ukraine, 1/03/2022, https://ec.europa.eu/commission/presscorner/detail/en/SPEECH_22_1483.
Year LXIII, 2021, Single Issue, Page 48
RUSSIA AND CHINA UNITED IN PURSUIT OF A
NEW WORLD ORDER
In the winter of 2013-14, the Ukrainian president refused to sign an Association Agreement with the EU, his government preferring, instead, to begin negotiating what was seen as a more attractive economic and financial agreement with Moscow. That decision opened up a split in the country between those in support of association with the EU and those in favour of an agreement with Russia. At that point, the rich Donbas region, which has a largely Russian ethnic population, declared its independence, with Russia’s full support. This marked the start of a war, never openly declared, between the regular Ukrainian army and the country’s separatist forces — a war that, over the past eight years, has killed over 14,000 people, mainly civilians, and led over 1,500,000 citizens to flee the region, around 900,000 making for Russia. Moscow’s subsequent decision, in 2014, to “take back” Crimea, absorbing it into the Russian Federation through a referendum, further exacerbated the tensions with Ukraine and the Western world. On that occasion, Russia was targeted by a series of economic and financial sanctions proposed by the US government (under Obama) and supported by the EU.
In January 2022, the crisis in Ukraine flared up again dramatically as a result of Russia’s determination to prevent Ukraine from joining NATO, with Moscow prepared to resort to whatever means necessary in order to achieve this end. Indeed, Russia considers it absolutely vital to oppose the enlargement of NATO to countries that were once allies or satellites of the USSR.[1] In recent years, the USA has invited the governments of Moldova and Georgia to apply for membership of NATO, while other nations, most recently Ukraine, have submitted requests directly. All these are nations that were formerly an integral part of the territory of the USSR. Moreover, it is worth remembering that Finland (a nation that has always declared itself neutral) is now also considering applying to the US government[2] to become a member. Were these countries indeed to become members of the alliance, Russia would find itself with NATO troops and bases situated right on its borders; in this scenario, it would no longer be able to count on the presence of the buffer states that have represented, since the end of WWII (or the Great Patriotic War to use the Russian, and previously Soviet, term), a boundary that, in Moscow’s thinking, must remain an insurmountable limit. In actual fact, this limit has already been violated, when Estonia and Latvia joined NATO in 2004, but back then, Putin was still defining the new order of his country; also, in the wake of more than a decade of deep internal crises, Russia was weak in terms of its foreign policy capabilities.
The years immediately following the collapse of the Soviet Union were the most agonising for Russia; during that period the need to define a new order based on a new internal balance of power took precedence over all other issues. It took more than a decade to redefine the borders of the new Russia after the breakup of the USSR, which had resulted in the birth of thirteen new independent republics whose borders needed to be established and among which the treasury of Soviet Union’s central bank, as well as its nuclear and traditional arsenals, had to be divided. This is a period that saw Russia, in the wake of secessionist struggles in Ossetia and Chechnya, also engaged in thwarting attempted coups and bloodily quelling new secessionist conflicts in the Caucasus. All these issues overlapped with the internal power struggle in Moscow that, after the departure of Gorbachev and Yeltsin’s rise and fall, finally culminated in the rise of Vladimir Putin.
By the outbreak of the Ukrainian crisis of 2013-14, Russia’s internal situation had stabilised. It now had a clearly defined power structure and Moscow was able to exercise its foreign policy with newfound authoritativeness. The Russian government’s response to the sanctions imposed by the West was to initiate increasingly close and binding agreements with China in the economic, energy and military fields, something that a few years earlier would have been quite unthinkable.
The international situation, too, had changed dramatically. Russia’s difficult years coincided with China’s evolution into a major economic power able to wield — then, and even more so today — huge political and military influence in vast regions of Asia and Africa. Furthermore, the West’s widespread practice of relocating industrial activities to China has, over time, given China the power to control the manufacture of entire product lines, used the world over. Thus, in addition to the military strength at its disposal, China can also leverage its considerable industrial strength; it can even go so far as to wage economic wars by reducing (or increasing, in line with its own interests) the sale and export of certain goods, in the automotive and IT sectors for example, on which European industry depends.
The Movement Towards a New Balance of Power: Russia and China as Foreign Policy Allies.
Political instability in the 1990s, resulting from the dissolution of the USSR, led China to set up, in 1996, the Shanghai Five, an organisation comprising, in addition to China, the Russian Federation and three young ex-Soviet republics with which China borders: Kazakhstan, Tajikistan and Kyrgyzstan. Its main objective was to foster cooperation in the economic, political and military fields in order to counter separatism and terrorism in Central Asia. Over the years, the organisation grew — in 2001 it was re-founded as the Shanghai Cooperation Organisation (SCO) whose members also include Uzbekistan, India and Pakistan —, and today it also seeks to mediate in disputes between its members states.[3]
This organisation created a new and direct channel of communication between Beijing and Moscow. Mindful of Russia’s experiences, China’s main desire was to ensure territorial unity at its borders, in order to avoid the emergence of separatist pressures of various sources: political, ethnic or religious (in addition to historical in the case of Tibet).
These same years saw the Americans assuming a leadership role at world level, even though this often left them in real difficulty, given that they found themselves having to operate, militarily, from the Middle East to Africa, and even in Europe (in the former Yugoslavia). This is not the place to list the world’s various hot spots and crises in the years leading up to and immediately after the turn of the century; what should be noted, however, is that while the USA was trying to act on all the various fronts, in some cases with the Europeans in tow, Russia was in the process of achieving internal stability and China was growing as an economic power, securing membership of the WTO in 2001 and at the same time embarking on a major modernisation of its armed forces.
At this point, Putin’s Russia and China were ready to pursue, in concert, the objective of opposing the United States as the world’s only superpower. And in this general context, the European Union played a mere spectator role, at most lending passive support to American policies or to NATO military decisions.
The crisis in Ukraine had the effect of strengthening the agreement between Moscow and Beijing, which, without ever requiring a formal ad hoc treaty, has expanded into the military field over the years. China has guaranteed Russia help in all international fora, by supporting Russia’s arguments over Ukraine; echoing Russia, it has also recently argued that talk of NATO enlargement to Ukraine amounts to a provocation by the West that only creates new tensions. Such help has been readily reciprocated: Moscow for its part defends China’s right to control atolls in the waters of the South China Sea;[4] moreover — and this is seen as even more important by Beijing —, the Russian government supports China’s claim to sovereignty over Taiwan, and also agrees that China has the right to impose its laws on Hong Kong.
Beijing and Moscow’s common views and mutual support in the field of foreign policy have been more evident than ever in these first months of 2022, giving rise to a situation, characterised by acutely challenging fronts (Ukraine and Taiwan) and the presence of two major powers ready to support each other, that is creating grave problems for the Western world, the USA in particular. The United States’ difficulties, which had already emerged during the Obama presidency and became worse under Trump, are aggravated by the European Union’s inability to act. The EU is indeed a victim of its own weaknesses: it depends heavily on Russia for energy supplies and on China for high-tech industrial products. Furthermore, having no European power able to pursue a single foreign and defence policy, and no European energy and industrial policy, the EU has to face the fact that it is too weak and insubstantial to be a credible force.
This lack of substance puts the European Union in the position of having to support the political choices of the USA, albeit passively and often in a confused and contradictory way.[5]
The US and the EU thus find themselves struggling with their difficulties in the face of a Russia and China increasingly bound together by coinciding interests. If the EU, on the one hand, has proved unable to independently manage, at its own borders, the conflict that has been going on in Ukraine for the last nine years, having to rely on NATO for support, the United States, on the other, seems to be in increasing difficulty in the Pacific area, the South China Sea in particular. Whereas diplomatic channels are open in Europe, in an effort to prevent the Ukrainian crisis from degenerating into open warfare, in the Pacific area Beijing has issued a very specific and definite challenge: Taiwan must be back under Chinese sovereignty by 2050.[6]
Ever since the start of the Ukrainian crisis, Russia and China have been conducting joint military and naval exercises in waters around the world. The first was in 2015, in the Mediterranean, followed by others in the Baltic Sea, the Sea of Japan and the South China Sea (in this latter case, also involving marines to simulate an island conquest). Finally, in January this year, ships from the Russian and Chinese fleets were joined by Iranian ships off the Gulf of Oman,[7] giving rise to alarm in the entire Arab world, and beyond, given the possible implications of this military collaboration in the context of the already difficult Middle Eastern situation.
What is more, Russia is granting Chinese military and civil engineers use of its bases in the Arctic area with a view to the construction of common ports and the joint drilling of possible new oil or gas wells.[8] Forecasts suggest that by 2050, as an effect of the melting of sea ice, merchant ships sailing from the Pacific to Northern Europe will be able to use the Arctic shipping route for six months a year as opposed to the current three. This route will thus become increasingly strategic for commercial shipping, being less expensive and quicker than those that pass through the Panama Canal. For these two countries, having control of the Arctic region, and friendly ports along its coasts, will be of great strategic value, allowing them not only to exploit the area’s natural wealth, but also to control its traffic, commercial and otherwise.[9] This situation provides a further illustration of the ability of these two powers to develop long-term strategies. And their sharing of interests is a cause for great concern in the USA; after all, were the crises in Europe and in the Pacific to explode simultaneously, as the result of a clear agreement in this sense between Moscow and Beijing, America would not be able to manage the two fronts at the same time. In particular, even with the possible support of military aid under recent international agreements, namely the QUAD alliance of the USA, Japan, Australia and India, and the AUKUS one between the USA, the UK and Australia, a crisis in the Pacific, specifically in the waters of the South China Sea, would very likely see the USA roundly defeated.
Such an outcome, which would naturally entail the annexation of Taiwan to China, was even envisaged by the head of U.S. Strategic Command, speaking a US congressional hearing in April 2021.[10]
Taiwan can be considered the false conscience of the world: only 14 states recognise it as a sovereign state, while all the rest merely have commercial dealings with it.[11] This is the result of a veto imposed by Beijing, which will not engage in diplomatic relations with any state that refuses to recognise the People’s Republic of China as one and indivisible, and that Taiwan is just a rebel province. The world, fearful of the consequences of breaking off relations with China, lacks the courage to acknowledge Taiwan’s right to exist as an independent state. The United States, having decided, in 1972, in response to a request from the Chinese government, to accept the “one China” principle (Nixon was US president at the time), bears particular responsibility in this regard.
In Ukraine and along the coasts of Taiwan we are now witnessing continuous tests of strength by Russia and China, as they jointly attempt to test the reactions of the West and verify its ability to respond. There can be no other explanation for the continual joint naval exercises or the repeated violations of Taiwanese airspace by Chinese fighters.[12] The situation in the Pacific is further complicated by instability in the waters of the Yellow Sea and the Sea of Japan that, linked to repeated threats from North Korea, has prompted Japan, a close ally of the USA, to modify its constitutional charter to allow an increase in military spending and provision for the construction of aircraft carriers.[13] These are waters overseen by important Russian and Chinese military ports.
Conclusion.
The collapse of the USSR left entire continents destabilised, and in the face of this global reality, the United States proved unable, by itself, to guarantee a new order that would ensure peace and stability. Some of the blame for this lies, very clearly, with Europe, which failed to initiate a different policy, a policy of proximity, towards the new Russia. Thus, the United States, with Europe’s acquiescence, continued to see Russia as a potential enemy needing to be opposed. In short, instead of grasping the nature of the new circumstances created by the collapse of the Soviet system, the West, by strengthening NATO’s presence in Eastern Europe, continued to work to undermine Russia. In this way, and also as a result of Europe’s expansion towards countries formerly in the Soviet orbit of influence, a great opportunity to foster new relations between the European Union and Russia was wasted. But, how could a European Union without a government and foreign policy of its own possibly have acted otherwise? The EU’s eastwards expansion reflected the fear of Russia harboured by countries that had long been subjugated by their powerful neighbour. For these countries, EU membership was a guarantee that they would get help in developing their economies and establishing their young democracies, while NATO membership gave them guarantees in terms of military security.
While this scenario was taking shape in Europe, in the Far East, China was emerging as a new power — economic initially, but now also military. All the contradictions and weaknesses of the EU in the economic sphere are reflected in the absence of a European industrial and energy policy. The relocation of many production activities to China has enabled the Chinese to use the economy as a fully fledged political tool, as the European Commission itself, underlining Europe’s dependence on China in strategic sectors, has admitted.[14] The European governments, which should be stung into action by awareness of their weakness, need to seek forward-looking solutions, so as not to have to witness, as we are doing, European industry struggling to procure both finished products and raw materials. In fact, were confirmation needed that international trade has shifted away from the Atlantic to the Pacific area, one need only consider that most raw materials currently go to China and the other countries of the Far East that, today, together constitute the industrial powerhouse of the world.
As the USA, Russia and China remind us every day, the real problem for today’s world, desperately in need of a balance able to overcome hegemonic ambitions, is the open confrontation between three major continental powers. Equally clear is the absence, or marginality, in this situation of a fourth continental player, as has been underlined by the European Commission itself, as well as by President Macron and Chancellor Scholz in recent public declarations. At this point, what remains to be done, as an ancient Latin saying goes, is turn words into deeds, by making the radical choices that will give the European Union the federal structure it needs in order to exercise its sovereignty.
The next few months will therefore be decisive, depending on the decisions that will be reached by the European Council on the basis of the proposals advanced by European citizens through the Conference on the Future of Europe. These proposals include clear ideas aimed at abolishing the right of veto, granting the EU fiscal and budgetary powers, and giving the European Parliament greater powers to define foreign policy objectives. All are vital issues for the future of the European Union and for ensuring greater balance in the management of the problems faced by the world as a whole.
February 2022
Stefano Spoltore
[1] On the crisis in Ukraine and the politics of Putin, cf.: S. Spoltore, Ukraine Caught Between East and West, The Federalist, 56 (2014), p. 55, https://www.thefederalist.eu/site/index.php/en/essays/2041-ukraine-caught-between-east-and-west, and Id., La sfida della Russia, Il Federalista, 60 n. 1 (2018), p. 35, https://www.thefederalist.eu/site/index.php/it/note/2370-la-sfida-della-russia.
[2] Requests to join NATO must be submitted to the government of the USA, which subsequently forwards them to the NATO in Brussels for approval by all the member states (this approval must be unanimous). On Finland’s possible accession to NATO cf.: A. Lombardi, La Finlandia sfida Putin: “Pronti a valutare l’adesione alla NATO”, La Repubblica, 2 January 2022.
[3] Cf. P. Pizzolo, Il Kazakistan, la Russia e il nuovo grande gioco in Asia centrale, Affari Internazionali, 14 January 2022, https://www.affarinternazionali.it/kazakistan-grande-gioco-russia/.
[4] Cf. S. Spoltore, L’Oceano della discordia, Il Federalista, 57 n. 3 (2015), p. 204, https://www.thefederalist.eu/site/index.php/it/note/1476-loceano-della-discordia.
[5] D. Teurtrie, Gli europei fuori gioco, Le Monde diplomatique Il Manifesto, February 2022.
[6] Declaration by Xi Jinping, addressing the National People’s Congress, Agenzia AGI, 9 October 2021; L’ascia di Xi Jinping su Taiwan: la Cina realizzerà la riunificazione, chiunque cerchi di dividere il paese non farà una bella fine, La Stampa, 9 October 2021.
[7] Golfo Persico. Mosca si addestra con Teheran e Pechino nell’antipirateria, https://www.agcnews.eu/golfo-persico-mosca-si-addestra-con-teheran-e-pechino-nellantipirateria/, 29 August 2021. Furthermore, last summer, the Chinese foreign minister Wang Yi visited Tehran and subsequently Ankara to make deals in the energy and military fields.
[8] E. Comelli, Patto Russia-Cina nel nome del gas: alle olimpiadi di Pechino nasce l’asse contro la NATO, Quotidiano Nazionale, 5 February 2022, https://www.quotidiano.net/esteri/patto-russia-cina-nel-nome-del-gas-a-pechino-nasce-lasse-contro-la-nato-1.7328041. The economic partnership agreed on the occasion of the opening of the Olympic Games in Beijing, in addition to renewing these countries’ alliance in the Arctic region, valid for 25 years, also saw the signing of a supply agreement that saw Russia undertaking to supply, over 10 years, 100 million tons of oil to China through Kazakhstan, where in January 2022, Russian troops intervened to restore order after popular protests threatened to topple the pro-Russian government.
[9] L. Rossi, Russia e Cina nell’Artico: una relazione ambigua, Affari Internazionali, October 2020, https://www.affarinternazionali.it/archivio-affarinternazionali/2020/10/russia-e-cina-nellartico-una-relazione-ambigua, and R. Tani, La Russia si mostra sempre più assertiva nel teatro artico, Panorama Difesa, n. 397, June 2020.
[10] Admiral Charles Richard, head of U.S. Strategic Command, answered questions in the course of the hearing. Cf.: E’ di nuovo tempo di “pensare all’impensabile”, Panorama Difesa, n. 414, January 2022, http://www.edaiperiodici.it/panorama-difesa/numeri/dettaglio/pd-gennaio-2022.
[11] The countries that recognize Taiwan as a state are: Belize, Vatican City, Guatemala, Haiti, Honduras, Marshall Islands, Nauru, Palau, Paraguay, Saint Kitts and Nevis, Saint Lucia, Saint Vincent and the Grenadines, Eswatini and Tuvalu.
[12] Incursions by Chinese fighters numbered 380 in 2020, rising to over 600 in 2021.
[13] C. Martorello, Il rinnovato concetto di potere navale in Asia, Panorama Difesa, n. 400, October 2020, p. 54.
[14] J. Oertel, J. Tollmann, B. Tsang, Climate superpowers: how EU and China can compete and cooperate for a green future, Policy brief of the European Council on Foreign Relations, 3 December 2020, https://ecfr.eu/publication/climate-superpowers-how-the-eu-and-china-can-compete-and-cooperate-for-a-green-future/.
Year LXIII, 2021, Single Issue, Page 43
EUROPE AND AFRICA IN THE FACE OF CHANGE
The world, as part of a radical process of change and redefinition, is currently undergoing a rapid and profound structural transformation that is altering both the distribution of political power and international balances.
The phenomena responsible for triggering this change, or which characterise it, fall into three main categories: i) social and demographic; ii) economic; iii) political and institutional. Of course, the value of categorising processes of change in this way is purely analytical, as doing so can help us to understand the issues at hand. In reality, however, these three categories are not just strictly interdependent, but also closely intertwined.
The World Population Prospects 2019 research report, prepared by the Population Division of the Department of Economic and Social Affairs of the United Nations Secretariat, contains estimates and projections useful for evaluating the social and demographic trends that will characterise the evolution of the world over the coming decades. It highlights dynamics that need to be taken into account in order to allow responsible political planning within a broad and comprehensive framework.[1]
According to the report, several general global population trends can be identified. First of all, the world’s population is continuing to grow, albeit at a declining pace; second, it is growing older, partly due to increased longevity. These general trends generate crucial effects and challenges that differ depending on the context. In some countries, sustained low fertility or emigration is leading to decreasing population sizes. In others, declining fertility “is creating demographic conditions favourable for accelerated economic growth”. Finally, the report confirms the ongoing global increase in longevity and the narrowing gap between rich and poor countries, while also pointing to significant disparities in survival that persist across countries and regions”.[2]
My aim here is to examine some of the data contained in the report in relation to: three important indices, two time points (2020 and 2050), and two macro-regions whose destinies are conditioned by their close interdependence, i.e., Europe and Africa. What changes will these three decades bring? What processes do we need to identify, understand and then govern?
The first index to be evaluated is the total fertility rate, which is the average number of births per woman.
For the period 2020–2025, the report gives this as 1.62 in Europe, as opposed to an average of 4.16 births per woman in Africa. For the period 2045–2050, the European figure remains substantially unchanged (1.72), whereas for Africa it shows a significant reduction (3.07).
The second index to consider is the potential support ratio, which is the number of people aged 25–64 years for every person aged 65 or older; in other words, the number of working age people potentially supporting each non-working individual. In Europe, this ratio was 2.9:1 in 2020, whereas Africa had 10.5 working-age people per individual over 65. Thirty years on, in 2050, the European ratio is expected to fall to 1.7:1; the African one, too, is expected to decline, while nevertheless remaining high: an average of 7.6 people of working age for every person aged 65 or over. The third important index that can help to give us an idea of these two continents’ prospects for social and demographic change is the percentage of the total population aged 65 or over. In 2020, it was 19.1 per cent in Europe, but is projected to rise to a mean of 28.1 per cent by 2050, while the corresponding percentages for sub-Saharan Africa are 3.5 per cent and 5.7 per cent respectively.
What outlook emerges from consideration of the data offered by these indices and from diachronic comparison of these two regions?
What the data tell us is that Europe, over the three decades in question, will see an increase in the elderly, non-productive, dependent section of the population. There will be a drop in the potential support ratio, in other words, a fall in the ratio of working-age to retirement-age people; birth rates, on the other hand, will remain stable. All this translates into an increasing dependent population and a shrinking productive one.
The picture is radically different in Africa, where fertility rates in particular, currently very high, are destined to decrease. Accordingly, African society, especially in the sub-Saharan part of the region, looks set to become characterised by a largely working-age population with a smaller proportion of children. As the document explains: “In most of sub-Saharan Africa, (…) recent reductions in fertility mean that the population at working ages (25 to 64 years) is growing faster than in other age groups, providing an opportunity for accelerated economic growth known as the ‘demographic dividend’.”2 This term refers to the potential economic growth that can derive from changes in a country’s population structure: when fertility rates decline, the working-age population increases in proportion to the young, dependent segment. With more members of the workforce and fewer dependent minors, a political community finds itself with a window of opportunity for stimulating and possibly achieving rapid economic growth.[3]
As a first consideration, it can be noted that, against a backdrop of several general trends (global ageing, slowing global population growth, falling fertility rates), different regional patterns emerge.
A second consideration concerns the interdependence between the processes of change mentioned at the start of this piece. Africa, more specifically sub-Saharan Africa, has a demographic dividend that harbours the potential for economic growth. As such, it provides an example of how processes of social and demographic change can stimulate processes of economic change. However, the link between these processes is neither certain nor definitive. The latter can follow the former if — and only if — trends of social change are adequately governed, in other words, only if the right investments are made and strategic social and economic policies are implemented. And this brings us on to the third category of phenomena and processes of change, namely those of an institutional and political nature.
When reflecting upon the question of social and economic potential, there is, in fact, also a political aspect that needs to be considered. Many African states are fragile structures: regimes with low governance capacity, sometimes flanked by non-institutional power structures that wield considerable influence (economic, social and organisational). African society has a problematic relationship with the state, and unless steps are taken to resolve this, it will remain complicated, if not impossible, to invest in the continent’s economic and production potential.
This consideration is a premise for solving a second problem: Africa’s fragmentation. At present, the continent’s states show very little political convergence in terms of social and economic development, and the various political regimes often have very different structures. How can a politically fragmented continent with fragile structures of state possibly govern and positively express the development potential inherent in the demographic dividend?
The aim of these general remarks has been to pave the way for the presentation of an idea, namely that two political leaps will have to be made before this continent’s potential can be realised: there will need to be a quality leap in terms of state structures, and this will have to be followed by a transition to a supranational political system, because the African countries’ currently low level of interdependence leaves scope for interference by third countries, ready to exploit the continent’s differences to their own advantage.
At this point, I believe it is easy to see why the destinies of Europe and Africa can be considered intertwined: Europe is a politically stable and, it is to be hoped, an increasingly integrated continent, yet it is old in demographic terms and harbours no unexpressed economic potential. Africa, on the other hand, is a young continent with enormous latent economic potential; however, it lacks a strong political structure and a homogeneous and resilient social fabric.
It is, I believe, in the face of three specific challenges that these two continents (on account of the complementarity of their strengths and weaknesses, as well as their geographical proximity) find their destinies intertwined. The first is a social challenge, today primarily consisting of the migration crisis. The second is economic: the challenge of promoting the realisation of Africa’s economic potential, while helping it to pursue conscious resource management. The third and final challenge is political, and it concerns the African Union, an international organisation that recently took a hugely important step, adopting the treaty establishing the African Continental Free Trade Area (AfCFTA), which is the largest such area in the world, including 54 of Africa’s 55 states. Inspired by the European Union, this organisation is following in the EU’s footsteps and replicating its institutional framework. The European Union is the most advanced attempt to bring about a profound process of transformation of the global political structure, and thus to address the inability of the nation-state model to withstand the challenges of global interdependence. It is the highest expression of a process of integration that is also being pursued in other parts of the world: we need only think of the of the aforementioned African Union, of Mercosur, and of ASEAN. Arguably, were Europe to completely abandon the objective of political integration, leaving the European project confined to the narrower framework of economic integration, it is likely that Africa would follow suit.
Africa’s capacity to govern these processes of change and to express its economic and social potential therefore depends, in part, on Europe’s ability to be a stimulating partner, able to show how to establish a federal political union. And the route it maps out cannot fail to include the crucial matter of creating a European fiscal capacity, meaning the power to collect resources and spend them in the general interest of the political community. Because this is the only route that can lead to an embryonic form of shared sovereignty at European level, whose realisation will require strong democratic control exercised by an institution representing the citizens of Europe: the federal parliament. For all this to materialise, the European Union must strive to overcome the impasse that sometimes seems to force regional integration processes to remain within a purely economic framework, never allowing them to enter a fully political dimension. Alone, the economic solution is a mere palliative, which will cease to be effective as the interdependencies between social change, economic evolution and politics begin throwing up critical problems that can no longer be resolved.
Andrea Apollonio
[1] Department of Economic and Social Affairs of the United Nations, 2019 Revision of World Population Prospects, https://population.un.org/wpp/.
[2] Department of Economic and Social Affairs of the United Nations, World Population Prospects 2019, Highlights, https://population.un.org/wpp/Publications/Files/WPP2019_Highlights.pdf.
[3] For a more detailed explanation of the “demographic dividend” concept, see the Demographic dividend section of the United Nations Population Fund (UNFPA), website: https://www.unfpa.org/demographic-dividend.
The Federalist / Le Fédéraliste / Il Federalista
Via Villa Glori, 8
I-27100 Pavia |