Massenbach-Letter: NEWS 15.04.16

Massenbach-Letter. News

· George Friedman: France Confronts Germany on Defense * GMF:How to Shape an EU Defense Strategy

· Panama-Papers around the world

· Flüchtlingspakt: Der Geheimplan zwischen der EU und der Türkei * Greek Bailout Talks Stall Over Demands for Reform

· Offener Brief Mathias Döpfner (Springer Konzern): Solidarität mit Jan Böhmermann!

· Papal visits to Armenia, then Georgia and Azerbaijan * Pope Francis to visit the Greek island of Lesbos.

· Russian futures: horizon 2025

· STRATFOR: Factoring U.S. Strategy Into China’s Future * Chindia in Africa

· Cheap oil is blunting drive for fuel efficiency: Kemp – Reuters News

Massenbach* George Friedman: France Confronts Germany on Defense.

Geopolitical Futures logoApril 8, 2016 The two countries have diverging views on boosting their military efforts.

Summary France and Germany are growing further apart. When it comes to their approach to security threats, military operations and spending priorities, the two countries increasingly diverge. The differences between Paris and Berlin underline Europe’s fragmentation.

One day before a joint meeting of French and German officials on April 7, French President François Hollande said in an interview with the German newspaper Bild, “Our two countries must agree to a budgetary effort on defense. And to act outside Europe. Let’s not rely on another power, even a friendly one, to do away with terrorism.” This is a statement that requires serious consideration.

The European Union was built on a core concept. The origin of European conflict, going back to 1871, has been the divergent interests of France and Germany. The post-World War II solution was to integrate the French and German economies so deeply that political divergence became impossible. The European Union has lost its cohesion, and the alignment between France and Germany is holding it together. The union is not what it once was, but so long as these two countries retain a fundamental alignment, it is reasonable to say that all is not lost. However, relations between the two countries have come under strain, and anything that adds to the existing tension raises red flags. The statement made by the French president on the eve of a meeting with the Germans to showcase harmony is a red flag.

The attacks in Parisand Brussels have posed a fundamental question for France. It cannot simply accept this threat, but must do something about it. There are two parts to dealing with this threat. First, the conflicts that are raging in the Middle East must be brought under some control. Second, the issue of radicalization in Muslim communities must in some way be addressed. In the Bild interview, Hollande made the latter clear, although how he will respond to this issue is uncertain. But for the French, building a European military force around France and Germany is the necessary precondition for any solution to Europe’s growing challenges.

This goes counter Germany’s fundamental sense of self and its interests. For Germany, building a military force after World War II has been problematic. It had one during the Cold War, but in many ways it was not under Germany’s command but NATO’s. It did not have the feel of a resurgent European military because it was, in the end, the junior partner of the United States.

Hollande specifically said that France and Germany could not depend on a third power, no matter how friendly, to fight their battles. He clearly was referring to the United States. Collaborating on defense budgets, with each nation contributing based on economic size, would mean that Germany would be both the leading economic and military power in Europe. Within the EU, Germany is first among equals. Creating a substantial military force would cement that. And that raises for Germans the specter of a return to what must never be again.

There is another reason for the divergence between the two countries, which explains why the French are not more frightened of this proposal than they should be. The French want an expansionary budgetary policy, while the Germans want to restrain spending. Defense spending would generate budget deficits, but this would also stimulate Europe’s economy. German unemployment at the moment is 4.5 percent, while France’s is much higher. Germany, at full employment, fears inflation, but France fears stagnation.

There is a psychological divergence as well. The French are responding to terror attacks with a sense of helplessness. The Germans have not been attacked in the same way and are more sanguine. This reminds me of the U.S. response to 9/11 and the European sense at the time that the U.S. was overreacting. The schism between those who have been victimized and those who have not is profound. One must act, while the other sees no urgency and cautions prudence.

The implicit reference to the United States is also important here. France is acknowledging that Europe cannot simply rely on the U.S. to fight wars with the jihadists. Indeed, the U.S. has shifted away from multidivisional ground combat. We can see that in Syria. The Americans have learned that it is easy to defeat a conventional military force, as it did in Iraq. However, the Iraqi military fragmented and evolved into a resistance that would require massive force to even attempt suppressing. The United States simply does not have a force of that size. It will not engage on the ground in Syria, confining itself to special operations and airstrikes. In a way, the Americans have learned the lesson the French have been trying to teach them since 2003. But on the other hand, the French have now learned the reality the Americans have lived with since 2001.

In addition, Donald Trump is far from the only American who thinks NATO, in its current form, doesn’t work. The population of the European Union is just 500 million, nearly 200 million more than the United States. The EU’s GDP is larger than the American GDP. There is no reason why Europe’s defense capability should not at least be the equal of the United States. It was a given in the 1950s or 1960s that Europe’s contribution should be a small fraction of the United States’ contribution. In 2016, there is no justification for the disparity.

The disparity exists because the Europeans have not seen themselves as having major strategic threats or interests that the United States would not deal with. Whether it was the Middle East or Ukraine, the Europeans made the assumption that the United States would accept the risk and the burden of dealing with the threat and permit the Europeans to contribute what they were comfortable with. It is simply not clear that the United States will continue in this role. It may, but the time it would take for the U.S. to create an enhanced military force is substantial. U.S. policy, like all countries’ policies, is changeable and shows signs of changing. Hence Hollande’s warning.

There are two Europes speaking here. One, the Europe that needs stimulus, is frightened by the jihadist threat and views the Middle East as an arena where it might have to fight – and might not be able to count on the United States. The other Europe fears stimulus, is not nearly as frightened by the jihadist threat and can’t imagine fighting on a large scale in the Middle East.

That these two Europes are represented by France and Germany indicates the depth of Europe’s fragmentation. Embedded in Hollande’s statement is the distance that separates these two nations. Any challenges to the EU from Britain or Poland or Greece are trivial matters compared to the differences building up between France and Germany.

https://geopoliticalfutures.com/france-confronts-germany-on-defense/

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GMF:How to Shape an EU Defense Strategy

For a “New Realism” in European Defense: The Five Key Challenges an EU Defense Strategy Should Address

The idea that a defense strategic document should follow the EU’s new “Global Strategy” is gaining significant traction. If such a blueprint is to make a serious contribution to the EU as a credible defense actor and to a stronger defense of Europe a sense of “New Realism” should drive it.

In this new GMF Europe Policy Brief, Claudia Major and Christian Mölling argue that the document would have to accommodate contrasting realities and effectively address them: while the need for military power is growing, the current state of Europe’s defense is deplorable and it is not supported by a proper defense industrial base. Moreover, political unity, conditio sine qua non for a genuine European approach to security and defense through the EU has weakened – consensus on priorities is rare. Leadership of important member states for the former flagship project, the EU Common Foreign and Security Policy, has vanished. In this vacuum of political direction, political actors have resorted to trench wars, blocking the use of existing instruments as well as any attempts to achieve more unity and efficiency in defense.

To deal with with these realities the EU’s approach to defense has to undergo a phase of recovery and restraint in the coming years: becoming more capable as a Union means still being guided by a global assessment, yet, it also requires the EU to become more selective in its engagement to reach sustainable results and thus power and influence. Enacting the “New Realism” demands determination and resources, not elusive ambitions that overstretch expectation a priori. Therefore, the initial step is to draw a baseline and assess where Europe’s defense stands today, where it will stand in 2030 in terms of capabilities and political commitment, and which improvements are still possible. Making these improvements possible would have to build on the available minimal consensus on European defense, that is that all governments want to stay militarily capable. A recovery of the EU as a framework for defense can start in those areas where member states have in principle shown political leadership: cooperation on capabilities and support for the defense industrial base. Solutions, however, will rarely be delivered by all 28 governments. Thus the political – institutional key to deliver more defense for Europe is to develop flexible geometries for political coalitions.

Claudia Major and Christian Mölling. For a "New Realism" in European Defense: The Five Key Challenges an EU Defense Strategy Should Address. GMF Europe Policy Brief. April 7, 2016.

Dr. Christian Mölling is a senior resident fellow for security policy based in GMF’s Berlin office.

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From our Russian news desk:see attachments.

– The Armenia-Azerbaijan Conflict

– Moscow needs to consider new alternatives in Nagorno-Karabakh

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Papal visits to Armenia, then Georgia and Azerbaijan.

(Vatican Radio) The Holy See Press Office has announced that Pope Francis will visit Armenia in June of 2016, accepting the invitation of His Holiness, Karekin II, Supreme Patriarch and Catholicos of All Armenia; of the civil authorities; and of the Catholic Church in Armenia. The visit is scheduled for 24-26 of June.

At the same time, the Press Office announced that Pope Francis has accepted an invitation from His Holiness and Beatitude Ilia II, Catholicos-Patriarch of All Georgia; and from the civil and religious authorities of Georgia and Azerbaijan, and will make an Apostolic Voyage in the Caucasus, visiting these two countries from 30 September to 2 October 2016.

http://en.radiovaticana.va/news/2016/04/09/papal_visits_to_armenia,_then_georgia_and_azerbaijan/1221485

Pope Francis to visit the Greek island of Lesbos.

….Saying that though the Pope’s actions are not “directly political,” Fr. Lombardi affirmed they are “extremely significant” and are “humane, moral and religious” in nature. “This is of course an invitation to responsibility and commitment for everyone” to act “according to their place or position in society and in their relationships with others.” The Vatican spokesman said it is “also a call to politicians to take action in the search for more humane solutions” that are “respectful and supportive towards people who are suffering in these large problematic movements [of migrants] in the world today.”

http://en.radiovaticana.va/news/2016/04/07/pope_francis_to_visit_the_greek_island_of_lesbos/1220958

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Policy= res publica

Freudenberg-Pilster* Panama-Papers around the world.

http://panamapapers.sueddeutsche.de/articles/56d6c8af595105a203b58bb3/?utm_source=Maileon&utm_medium=email&utm_campaign=SZ+Espresso+am+Morgen+9.+April+2016&utm_content=http%3A%2F%2Fpanamapapers.sueddeutsche.de%2Farticles%2F56d6c8af595105a203b58bb3%2F&utm_term=html

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Meinung 10.04.16

Kritik an Erdogan-

Solidarität mit Jan Böhmermann!

Der Satiriker Jan Böhmermann wird angegriffen, weil er ein Schmähgedicht auf den türkischen Präsidenten verfasst hat. Peinlich, dass er dafür nun attackiert wird. Ein Offener Brief. Von Mathias Döpfner

Lieber Herr Böhmermann,

wir kennen uns nicht, und ich habe leider auch bisher Ihre Sendungen nicht sehen können. Dennoch wende ich mich in einem offenen Brief an Sie, denn es ist aufschlussreich, welche Reaktionen Ihre Satire ausgelöst hat. Ein Kristallisations- und Wendepunkt.

Vorneweg möchte ich sagen: Ich finde Ihr Gedicht gelungen. Ich habe laut gelacht. Das zu sagen ist mir deshalb wichtig, weil man in den vergangenen Tagen ja keinen einzigen Beitrag – egal ob anklagend oder für Sie parteiergreifend – über Ihren Text gelesen hat, der nicht erst mal, gleichsam als Captatio benevolentiae, betonte, wie geschmacklos und primitiv und beleidigend Ihre Satire über Erdoğan sei.

Das ist ungefähr so originell und aussagekräftig, als wenn man einem Formel-1-Autobauer vorwirft, seine Autos seien aber schnell. Dass Ihr Gedicht geschmacklos, primitiv und beleidigend war, war ja – wenn ich es richtig verstanden habe – der Sinn der Sache. Sie haben doch einfach alle beleidigenden, insbesondere alle in der muslimischen Welt beleidigenden Stereotype zusammengerafft, um in grotesker Übertreibung eine Satire über den Umgang mit geschmackloser Satire zu machen.

Kunst- und Satirefreiheit

Sie wollten nach dem ziemlich lendenlahmen Erdoğan-Veräppelungs-Song in der ARD die illiberale Reaktion des türkischen Staatspräsidenten ironisieren und durch Maximalprovokation die Leute verstören, um sie darüber nachdenken zu lassen, wie eine Gesellschaft mit Satire und – noch viel wichtiger – mit der Satire-Intoleranz von Nichtdemokraten umgeht. Ein Kunstwerk. Wie jede große Satire. Und als solches: frei. Oder doch nicht?

Ich verstehe die Aufregung über Ihren Text (Link: http://www.welt.de/153910094 ) nicht ganz. Gibt es doch in Deutschland eine gute von Tucholsky geprägte, von Hitler ex negativo gehärtete Tradition der Meinungs-, Kunst- und Satirefreiheit.

Vor allem wenn es um Provokationen religiöser, genauer: christlicher Gefühle geht, geht in Deutschland alles. Mich erinnert Ihr Auftritt im Zweiten Deutschen Fernsehen ein wenig an die vermutlich berühmteste Arbeit des Künstlers Martin Kippenberger. Sie zeigt, in verschiedenen Versionen in Holz geschnitzt, einen ans Kreuz genagelten lächelnden Frosch. Ganz im ästhetischen Duktus süddeutscher Herrgottsschnitzerei.

Und der Titel einer dieser Frosch-Kreuzigungen (die heute auf dem internationalen Auktionsmarkt für hohe sechsstellige Summen gehandelt werden) lautet: "Was ist der Unterschied zwischen Casanova und Jesus: Der Gesichtsausdruck beim Nageln". Kippenberger, der Punk-Maler und Gesamtkunstwerk-Provokateur, ist große Kunst, bei Sotheby’s und Christie’s bringen die wichtigen Gemälde Millionen. Wer da zuckt, gilt als Spießer.

Ähnlich, wenn die "Titanic" den Papst in einem Ganzkörper-Kondom oder mit einem Urinfleck auf dem Gewand zeigt. Sobald es gegen die katholische Kirche geht, ist das Lachen des Justemilieu programmiert. Es kann gar nicht respektlos und verletzend genug sein.

Sie, lieber Herr Böhmermann, mussten nun lernen, dass andere Maßstäbe gelten (Link: http://www.welt.de/154168823 ) , wenn es um türkische Spitzenpolitiker geht. In Deutschland brach eine Art Staatskrise aus, nur weil Sie Herrn Erdoğan als "Ziegenficker" bezeichnet haben. Apropos Ficken. Wenn das ZDF – seinem gebührenfinanzierten Bildungsauftrag feinsinnig verpflichtet – einen Hashtag "Fick dich, Bild-Zeitung" ins Leben ruft und sich dazu die Domain "fickdichbildzeitung.com" sichert, die bis heute auf einen Spot des ZDF verlinkt, dann klopft sich die deutsche Intelligenz vor freudiger Erregung prustend auf die Schenkel. "Fick dich, Bild", und das vom Zweiten Deutschen Fernsehen in Auftrag gegeben und zur besten Sendezeit gesendet und dann multimedial online vermarktet – ho, ho, ho, ganz schön kühn. "Bild" hat’s verdient. Die sind ja selbst nicht besser.

Die Leisetreterei der Bundesregierung

Beim türkischen Präsidenten ist das anders. Erdoğan kontrolliert in seinem Land etwa 90 Prozent der Zeitungsauflage und lässt Demonstranten, die anderer Meinung sind, gewaltsam von öffentlichen Plätzen entfernen. Oppositionelle bezeichnet er als "Atheisten und Terroristen". Studenten, die demonstrieren, riskieren Exmatrikulation. Universitätsprofessoren, Journalisten oder Blogger, die Kritik äußern, werden willkürlich verhaftet, teils gefoltert, Redaktionen werden durchkämmt. Eine friedliche Kundgebung für die Rechte Homosexueller wird mit Wasserwerfern und Tränengas niedergeschmettert.

Die Gleichstellung von Männern und Frauen lehnt der türkische Präsident ab: Der Islam lehre, dass Frauen vor allem Mütter seien. Und auch gegenüber den Kurden ist exzessive und rücksichtslose Gewalt der türkischen Armee an der Tagesordnung, sagt Amnesty International. Die Gewalt gegen Kurden habe allein seit dem vergangenen Sommer Hunderte Todesopfer gefordert.

Wichtiger aber ist: Für die kleine Entschädigung von drei Milliarden Euro regelt Erdoğan die Flüchtlingsströme so, dass in Deutschland die Verhältnisse nicht aus dem Ruder geraten. Da müssen Sie verstehen, Herr Böhmermann, dass die deutsche Bundesregierung sich bei der türkischen Regierung für Ihre unsensiblen Bemerkungen entschuldigt. Diese sind – Kunstfreiheit hin oder her – in der gegenwärtigen Lage schlicht "nicht hilfreich".

Man könnte das Ganze auch einfach Kotau nennen. Oder wie Michel Houellebecq (Link: http://www.welt.de/135972657 ) es in seinem Meisterwerk über die Selbstaufgabe des demokratischen Abendlandes im Titel formuliert hat: die Unterwerfung.

Ihr Mathias Döpfner

P.S. Ich möchte mich, Herr Böhmermann, vorsichtshalber allen Ihren Formulierungen und Schmähungen inhaltlich voll und ganz anschließen und sie mir in jeder juristischen Form zu eigen machen. Vielleicht lernen wir uns auf diese Weise vor Gericht (Link: http://www.welt.de/154082885 ) kennen. Mit Präsident Erdogan als Fachgutachter für die Grenzen satirischer Geschmacklosigkeit.

http://www.welt.de/debatte/kommentare/article154171281/Solidaritaet-mit-Jan-Boehmermann.html

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Flüchtlingspakt: Der Geheimplan zwischen der EU und der Türkei.

32 Flüchtlinge hat Deutschland bisher legal aus der Türkei einfliegen lassen. Das entlastet Ankara kaum. Es verlässt sich auf einen Plan B mit der EU, der nicht so gern öffentlich diskutiert wird.

Der Flüchtlingspakt zwischen der EU und der Türkei birgt offenbar eine inoffizielle Absprache zur Übernahme großer Flüchtlingskontingente. "Die türkische Seite erwartet, dass die Europäer in wenigen Wochen damit beginnen, jährlich etwa 250.000 Syrer aus der Türkei aufzunehmen", sagte Gerald Knaus von der Denkfabrik European Stability Initiative (ESI) der "Welt am Sonntag". Das hätten die Europäer in dieser Größenordnung auch prinzipiell zugesagt.

Die Übernahme solcher Kontingente war offenbar eine Bedingung Ankaras. Es gab darüber keine offiziellen Verträge, aber mündliche Zusagen. Knaus bestätigte, dass die Europäer zuerst sehen wollen, ob der Flüchtlingsstrom über die Ägäis wirklich versiegt, bevor sie sich zusätzlich "Kontingente" aufbürden.

Der Plan sei, zu einer "europäischen Lösung" zu kommen – alle EU-Mitglieder müssten Kosten und Mühen der Umsiedlung tragen. Tatsächlich aber gäbe es bisher nur eine kleine "Koalition der Willigen". Die EU hatte im vergangenen Jahr die Umverteilung von 160.000 Flüchtlingen aus Italien und Griechenland angekündigt, dazu ist es aber bislang nur in Ansätzen gekommen.

EU-weite Verteilung derzeit nicht umsetzbar

"Unverständlich" nannte Knaus vor dem Hintergrund der massiven Umsetzungsprobleme geltender Absprachen die neuesten Vorschläge der EU-Kommission für eine Neuregelung des Asylrechts. Auch das jetzige Abkommen mit der Türkei kranke daran, dass im Vorfeld keinerlei Vorbereitungen zur Umsetzung getroffen worden seien. Es sei daher besser, die Kommission würde "erst einmal die aktuellen Probleme lösen", statt mit großen Entwürfen zu kommen. Das sei so, als wolle man "einen Marathon laufen, bevor man überhaupt gehen kann".

Eine EU-weite automatische Verteilung von Flüchtlingen sei zudem "politisch nicht durchsetzbar und auch relativ sinnlos, weil die Betroffenen nicht in Ländern bleiben werden, in denen sie nicht leben wollen". Das sei "Schaumschlägerei".

Seit knapp drei Wochen gilt ein Abkommen mit Ankara. Jeder Flüchtling, der illegal in Griechenland einreist, soll zurück in die Türkei geschickt werden. Im Gegenzug ermöglicht die Europäische Union für jeden der abgeschobenen Flüchtlinge einem anderen die Einreise in ein EU-Land. Doch noch zeitigt die Regelung keinen durchschlagenden Erfolg: Lediglich 32 syrische Flüchtlinge gelangten diese Woche aus Istanbul nach Deutschland.

10.04.2016 | 07:24 Uhr

http://www.n24.de/n24/Nachrichten/Politik/d/8348276/der-geheimplan-zwischen-der-eu-und-der-tuerkei.html

****************************************************************************************************************** Politics: From Vision to Action

Barandat* Remarks on "America’s Growing Security Network in the Asia-Pacific" (Council on Foreign Relations)

04/09/2016 06:59 AM CDT

http://www.defense.gov/News/News-Transcripts/Transcript-View/Article/717107/remarks-on-americas-growing-security-network-in-the-asia-pacific-council-on-for?source=GovDelivery

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STRATFOR: Factoring U.S. Strategy Into China’s Future

Analysis

Editor’s Note: This is the next installment of an occasional series on China’s transformation.

Stratfor recently wrote that China’s economic rise has created for it an imperative to secure key trade routes and to protect its overseas resources and markets from foreign interdiction. This adds to the three imperatives that have historically defined the country’s geopolitics: the maintenance of a united Han China, control of the country’s buffer regions and the protection of its coastline. Although this new imperative does not dictate China’s attitude toward its neighbors or the United States, it introduces an underlying compulsion that in the years to come will reshape the costs and benefits of different courses of action.

Because this imperative compels China to be more proactive, and in particular to expand its maritime capabilities and reach, it necessarily creates conflict with the United States, whose own imperatives compel it to contain China’s rise. The United States must respond to China’s rise because of its need to control the world’s oceans and to prevent the emergence of another regional hegemon, even if this need does not determine the precise nature and timing of that response.

Tension between the two is inevitable. How this tension plays out, however, is beyond the scope of what could be called fundamental geopolitical analysis, which is concerned with "first principles," the hardwired structural constraints and imperatives that shape the direction of international politics. First principles tell us, for instance, that Europe in 1900 was bound for war. They do not explain why war came in 1914 rather than in 1905 or 1920; or why Germany conducted war the way it did in both world wars; or why Britain, France, Russia and the United States responded to Germany’s rise as they did and when they did. Likewise, first principles tell us that so long as China’s wealth and power continues to grow, its relationship with the United States will be marked by competition and conflict. But they do not predict whether China will go to war with the United States, or whether one will ultimately accommodate the other, or whether the two will find some other form of agreement.

Grand Strategy

To understand these matters, it is necessary to look beyond the fundamental constraints and imperatives of the first principles to the process by which states evaluate their environments and formulate policies. In other words, it is necessary to consider grand strategy — in particular that adopted by the United States.

We focus on U.S. strategy because the United States‘ overwhelming military power, economic heft and political influence mean that its decisions, more than any other external variable, will determine the course of Chinese action in the long run. This is not to suggest that China is unconcerned by countries such as Russia, Japan and India, but insofar as the fundamental geographic, historical and economic realities that shape China’s behavior leave its leaders room to maneuver, the most important factor in determining which strategy they choose will be the United States. Moreover, as both the most powerful state in the international system and the most secure great power in history, the United States has greater freedom than any other country to determine its desired strategy. To understand the future of East Asian security, it is necessary to outline the strategic options available to the United States and to assess their likely consequences for China’s rise.

Four Core Strategies

The United States today can choose from four basic grand strategic postures: isolationism, offshore balancing, selective intervention and extraregional dominance.

Isolationism entails complete disengagement from security affairs beyond the borders of the United States and its immediate neighbors. Isolationism is hardly viable for the United States because, as the sole world power, the country is responsible for protecting the sea lines of communication on which it and the international economic order depend. Still, the concept is popular among the American public, so it could factor into future U.S. foreign policy. Isolationism’s continued influence is largely a consequence of the power of its logic: Because the United States is protected by two oceans and overwhelming military (including nuclear) power, isolationists ask, what good does it do the United States to divert precious resources away from the home economy and toward maintaining peace in distant regions?

The second potential grand strategy, which international relations scholars commonly refer to as offshore balancing, advocates that the United States disengage militarily from other regions except in the unlikely event that a potential hegemon emerges in one of the world’s three most geopolitically significant spheres: Europe, East Asia or the Middle East. Advocates of offshore balancing believe the United States should intervene only to the extent that secondary powers in other regions are unable to balance against a rising regional hegemon themselves.

The third basic strategic approach is commonly referred to as selective engagement. According to this strategy, the United States should move proactively to maintain peace and to prevent the rise of potential hegemons in Europe, East Asia and the Middle East but should largely eschew direct intervention in other, less geopolitically significant regions. Unlike offshore balancing, a strategy of selective engagement requires that the United States maintain a robust and active security presence beyond its own backyard, rather than merely count on regional partners to balance against and constrain the rise of potential hegemons in other parts of the world.

The final strategy is what has been called global dominance, extraregional hegemony or offensive containment. The core of this strategy is that the United States, as the "indispensable nation," has both a right and responsibility to intervene and to assert its interests around the globe, including in regions or in conflicts that do not present serious threats to U.S. national security. In recent decades, this strategy has been evident in U.S. foreign policy approaches as diverse as neoconservatism and liberal internationalism, which differ in their relative emphases on international institutions and on the uses of American military power but which otherwise share a basic commitment to global peacekeeping and to the active use of U.S. power to reshape the international system in its image.

Since the end of the Cold War, the final approach has, with minor fluctuations, formed the backbone of U.S. foreign policy. But it is important to recognize that each of these approaches is, at least in theory or in part, viable. The geopolitics of the United States is such that it, unlike its rivals, has comparatively wide room to choose how to behave because it is less geographically, economically or militarily constrained than others. There is no structural barrier to the United States adopting a relatively more accommodative military and economic posture toward potential rivals, especially if the benefits of doing so outweigh the costs. By the same token, so long as the United States largely maintains its economic and military preponderance, it will remain capable of moving offensively — whether militarily or through political-economic means, or both — to assert its interests globally. What motivates the United States to adopt one strategy over another is a separate question. The point here is simply to note that many more strategic postures are available to the United States than to any of its rivals, including China.

The Implications for China

It is impossible to anticipate precisely how the U.S. approach to China will evolve over the next decade, much less how U.S. behavior toward China will interact with and influence the decisions and actions of the Chinese. But a number of baseline scenarios can be considered.

A U.S. grand strategy that erred on the side of isolationism or offshore balancing would likely create a more relaxed and accommodative strategic environment for China. Such an environment would not only give China greater flexibility as it struggles to manage internal social and economic problems, but it would also lower the risk that China will adopt a more assertive regional security posture in the short term. Meanwhile, such a U.S. strategy might temper China’s feelings of insecurity, which largely originate from the threat posed by U.S. naval power. This would reduce its incentive to behave assertively and to risk reaction by regional rivals such as Japan and Vietnam. In sum, by reducing the size of U.S. power in the region, a U.S. strategy of isolationism or offshore balancing would increase the likelihood of a stronger, more assertive China five or 10 years from now. In the short run, though, it could ease China’s security concerns, reducing the likelihood of regional conflict.

By contrast, a strategy of selective engagement or extraregional dominance, both of which would call for an active and robust U.S. military presence in the region and would likely entail containing or constraining China economically and strategically, would make it more difficult for China to achieve its domestic economic and political imperatives as well as to emerge as a true peer competitor to the United States. At the same time, such a strategy would raise the risk that tension with China evolves into open conflict, whether directly between the United States and China or between proxies such as North Korea and countries in Southeast and Central Asia.

Given the United States‘ basic grand strategic posture since the end of the Cold War (a posture that is, no less, intimately tied to deeply held beliefs across the U.S. political establishment regarding the nature and uses of U.S. power), a strategy more in line with selective engagement or extraregional dominance appears more likely than one of offshore balancing or isolationism, at least for now. Grand strategic postures — especially those that entail substantial preliminary costs, as the current U.S. global military presence does — are often enormous commitments that are difficult for countries to break from and that become even harder to break over time. Even so, though the United States will inevitably seek to constrain China to the extent that China represents a potential regional hegemon, how the United States does so — and thus when and how the interaction plays out — is far from decided.

Perhaps most important, whatever strategy the United States adopts toward China, the effects are bound to be mixed and even contradictory. A less aggressive United States may generate room for a more assertive China (depending, for example, on how Japan acts), or it may have the opposite effect, easing China’s external security concerns at a time when the Chinese government would prefer to focus its energies inward on its multiplying domestic economic and social fissures. A more aggressive U.S. posture could have similarly mixed effects. The bottom line is that considering the basic geopolitical relationship between the United States and China today, a variety of outcomes is equally plausible. Determining which outcome is most likely, and how it is most likely to unfold, requires constant and careful attention not to what policymakers say they want or intend to do, but to how the material and strategic environments in which they operate evolve.

https://www.stratfor.com/analysis/factoring-us-strategy-chinas-future?id=be1ddd5371&uuid=5aa00f12-7912-48b4-a30a-b76d55935618

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Chindia in Africa.

01 April 2016 The progressive eastward shift of the world economy’s centre of gravity has largely been driven by the global (re)emergence of the Asian giants, China and India. One of the direct consequences of their unparalleled thirst for energy resources has been Africa’s growing (albeit still modest) heft in the global supply chain.

This has sparked a fledging trans-regional interdependence that has begun to consolidate beyond the exchange of raw materials for manufactured goods – especially as Beijing and New Delhi are tapping the continent’s expanding consumer markets and political capital to fuel their economic and diplomatic engines on a global scale.

Although China has begun to show signs of an economic slowdown, India remains buoyant and recently overtook its Asian peer as the world’s fastest-growing emerging economy.

With the slump in African exports to China, India is seemingly stepping in to fill the void – even if it continues to be dwarfed by Beijing’s extensive footprint on the continent … Although raw materials constitute the lion’s share of China’s and India’s African imports, the Asian giants are making modest headway in aiding African countries to bolster their human capital, as well as their infrastructure … efforts are being steered by the Chinese government to garner African votes and adopt common positions vis-à-vis global trade and development agendas at the World Trade Organisation (WTO) or the World Bank.

Tellingly, African countries that align with China’s voting at the UN General Assembly tend to receive more development assistance from Beijing. Africa’s geopolitical importance for China and India will no doubt guarantee that partnering with the region will remain crucial for New Delhi’s and Beijing’s economic and foreign policy strategy at a time when other emerging powers are competing to capitalise on Africa’s ‘untapped potential’.

But African countries will have to strike a balance in maintaining their ties with more traditional partners that do not view the continent overwhelmingly through the prism of its natural resources … Grafik S.3: IND + CHN, Trade with Africa

http://www.iss.europa.eu/publications/detail/article/chindia-in-africa/

Russian futures: horizon 2025.

07 April 2016 … At the moment the danger of getting things wrong is perhaps particularly high since quite a number of short-term uncertainties with long-term consequences for the European continent – in both Russia and the EU – could make the next few years, let alone the next decade, radically different … the strategic environment is not simply unpredictable, but dangerously volatile … planning for the future is more needed than ever … experts are making considered judgements as to where Russia will stand a decade from now …

Introduction: Russian futures

… While a direct aggression against NATO is not on the cards, escalatory dynamics from other crises are very likely to affect Western-Russian relations in the years to come … Ultimately, the Europe of 2025 will not correspond to the aspirations of either Russia or the EU. Europe will not be an undivided continent of prosperity and peace, nor will it be a continent separated by two geopolitical poles – one centred around Moscow and the other around Brussels. Ultimately, there is little scope for an EU-Russia ‘reset’. The domestic and foreign policy imperatives espoused by Russia (and the EU) in the decade ahead cannot be entirely bridged by diplomacy, no matter how skilful. These differences need to be assumed and managed. Although the EU and Russia are mutually distrustful of one another, they are not bent on destroying each other.

They will neither engage in a strategic partnership, nor a fullblown strategic rivalry, but rather an uneasy combination of the two … Section 1: The domestic foundations of Russian power.

– The future of domestic politics

– The future of the economy and the energy sector

– The future of the military

Section 2: The drivers of Russian foreign policy

– Future approaches to the US

– Future approaches to China

– Future approaches to the Greater Middle East Section 3: Russia as a European power

– Future approaches to the shared neighbourhood

– The future of EU-Russia relations

http://www.iss.europa.eu/publications/detail/article/russian-futures-horizon-2025/

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Middle East

Brookings

Get ready: Syria will need peacekeepers.

April 11, 2016 … One key to a serious Syria strategy is recognizing that an international peacekeeping force will almost surely be needed someday, in order to uphold any peace deal that eventually emerges.

A demonstration of willingness to deploy such a force may, in fact, improve the chances of peace, while making the international community and the parties to the conflict more realistic about what kind of peace is possible—and what kinds of other steps … will also be needed to effect peace …

Wars with high casualties, ethnic or sectarian components, and multiple actors are particularly hard to stop. Syria, of course, suffers from all three afflictions.

Tactical and very often short-term alliances between and among rival warring factions can contribute to failed peace efforts and occasion war’s relapse; Syria, again, includes such shape-shifting coalitions.

Peacekeeping or peace enforcement tends to improve the odds that any agreement ending a war will survive … peacekeeping reduces the risk of countries backsliding into violence in post-conflict settings … not every successful peace operation need have a huge force.

The U.S. military favors muscular missions as a matter of doctrine, as attested by its counterinsurgency and stabilization manuals, written late in the Bush presidency. To be sure, there are good arguments in favor of raw strength.

But the preferred U.S. method … is not essential in all cases and may not be politically practical for Syria … The writing is on the wall: we will almost surely need a peace operation, under the auspices either of the U.N.or NATO and the Arab League, if any ultimate deal is to succeed …

Syria need not be America’s third big war of the twenty-first century in the Middle East; indeed, it should not be. But to have a chance of solving that acute threat to regional security … America needs a new strategy that includes willingness to contribute … to a substantial postwar military operation to stabilize the country.

The sooner the United States says so, the sooner it can get serious about a broader strategy, and the sooner others will realize it and shape their own actions accordingly.

http://www.brookings.edu/blogs/order-from-chaos/posts/2016/04/11-syria-peacekeeping-force-ohanlon-ziegler

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COLUMN-Cheap oil is blunting drive for fuel efficiency: Kemp – Reuters News

12-Apr-2016 15:29:37

(John Kemp is a Reuters market analyst. The views expressed are his own)

à * OECD oil consumption: http://tmsnrt.rs/1qNdWQ7 <–

By John Kemp

LONDON, April 12 (Reuters) – Fuel consumption is not very sensitive to a small change in prices in the short run, but if

the price change is large enough and lasts long enough the amount used can change significantly.

The 60 percent decline in oil prices over the last two years has now been large enough and lasted long enough that it is

starting to have a significant impact on the medium-term outlook for oil demand.

Most crude oil is used as a transportation fuel in aircraft, ships, trains, trucks and cars, which is where the biggest

impact of lower prices on consumption is being felt (“Essentialsof petroleum”, Frankel, 1946).

Between 2004 and 2014, the apparently relentless surge in oil prices resulted in a sharp focus on improving fuel efficiency.

Container ships and oil tankers switched to slower speeds to reduce fuel consumption, a practice known in the industry as “slow steaming”.

Fuel consumption rises with the third power of speed so even a relatively modest reduction in speed results in a big saving on fuel.

Slower speeds result in longer journey times and need more ships to move the same volume of freight but shipping lines were

prepared to absorb higher capital costs in order to save on the running cost of fuel.

Even airlines instructed aircraft to fly slightly slower to save on fuel (“Airlines fly slower to cut fuel bill”, Reuters, Sept. 2014).

More importantly, airlines cut weight and fuel consumption by reducing the amount of unnecessary fuel, water and other

items carried on board.

In another economy measure, airlines reduced ultra-long non-stop routes, which force aircraft to carry more fuel on

board (fuel weight is a substantial source of energy consumption).

And on land, trucking firms and logistics operators focused on optimising route networks to save on fuel bills while

consumers opted for smaller and more fuel-efficient vehicles.

The entire transportation system became significantly more efficient, which is a major reason fuel consumption consistently

declined in the advanced economies between 2005 and 2014 (http://tmsnrt.rs/1qNdWQ7).

But now the cost of fuel has fallen sharply and seems set to remain low for the next several years, the focus has shifted

from fuel efficiency to speed, power and convenience.

The impact remains patchy and hard to quantify, but there are plenty of signs that cheaper fuel prices are reversing or at

least blunting the former trend towards increased fuel efficiency.

SPEEDING UP

Fuel economy standards in the United States are improving the fuel efficiency of both cars and light trucks such as

crossover utility vehicles.

However, the fuel economy regulations specify separate standards for cars and light trucks (stricter standards for cars

and more generous ones for trucks).

Consumers have responded to the drop in prices by opting to buy more trucks and fewer cars, lowering the economy-wide fuel

savings compared with the original projections.

The fuel economy regulations assumed consumer vehicle purchases would split roughly 60:40 between cars and trucks by

2016 but instead the split is almost 40:60.

As a result, the fuel economy standards are on track to deliver only half to two-thirds of the anticipated reduction in

fuel consumption (“Low gas prices expose flaw in U.S. fueleconomy standards”, Forbes, April 11).

The relaxation of fuel economy is evident in the air where airlines have been adding more ultra-long flights and seat

utilisation has edged down (“Long-haul flights get longer”, Wall Street Journal, April 10).

Cheap fuel is also helping stimulate a surge in delivery services and has made possible the focus on super-fast home

deliveries being pioneered by Amazon’s Prime service.

Delivery services are the fastest growing part of the freight network at the moment and expected to provide most of

the demand growth over the next decade (“DOT releases 30-yearfreight projections”, BT, March 3).

Amazon is investing heavily in building up its own air freight capacity to meet surging demand for deliveries within 24

to 48 hours (“Amazon’s airfreight move raises hopes in cargobusiness”, Wall Street Journal, April 7).

The emphasis within the entire transport system is shifting from minimising (fuel) cost to maximising speed and convenience.

Trucking companies are increasing competing to offer faster delivery service to customers willing to pay a premium

(“Trucking company’s new sales pitch: speed”, Wall Street Journal, April 11).

The emphasis on speed at the expense of efficiency is even evident in the growth of rail services between Asia and Europe

seeking to win volume from maritime routes (“China-Europecontainerized rail shipments gain momentum”, Journal of

Commerce, 2015).

AROUND AFRICA

In the maritime sector, the reversal of the earlier efficiency drive is more ambiguous. The major container shipping

companies invested heavily in a new generation of megacarriers designed to travel slowly with high fuel efficiency.

The sector is now struggling with a large overhang of surplus capacity thanks to the investment boom and sluggish

growth in world trade (“Megaships are worsening overcapacity inthe container market”, Reuters, Sept. 2015).

In theory, lower fuel prices should allow shipping lines to speed up sailing times and reduce the number of ships employed.

But having spent so much on megacarriers designed to travel slowly and efficiently, shipping lines are struggling to keep

them filled and have few incentives to increase speed.

Maersk, one of the largest container lines, has indicated it has no intention to reverse the slow steaming policy.

Maersk points out that ending the slow steaming policy would require major re-planning of its entire network (“Reports of the

death of slow-steaming by box carriers are greatly exaggerated”, The Load Star, 2015).

But some smaller shipping lines have ended slow steaming and are promising faster sailing times in a bid to win business

(“Demand for faster transit times could signal an end to era of_slow-steaming”, The Load Star, 2015).

Away from the container sector, crude oil tankers are now travelling faster thanks to a combination of higher freight

rates on the main Middle East to Asia routes and cheaper fuel.

Cheaper fuel costs are also making themselves felt in other ways. More tankers and container ships are taking the long way

round Africa via the Cape rather than transiting the Suez Canal to save on canal fees.

An unusually large number of ships elected to travel via the Cape rather than the canal during the final three months of

2015, according to shipping analysts (“Cheap oil is taking shipping routes back to the 1800s”, BBC, March 4).

EMBEDDED EXPECTATIONS

Current and expected fuel prices influence millions of decisions about transport equipment purchases and operations

from cars and trucks to ships and aircraft (“Lower oil prices will blunt drive for fuel efficiency”, Reuters, Jan. 2015).

Individually, none of these decisions is large enough to affect the oil market, but collectively they have a big impact

on oil demand over time.

High and rising oil prices between 2004 and 2014 compelled an increase in fuel efficiency and restrained fuel demand even

though the full impact did not filter through until 2010-2014.

Lower oil prices are now shifting the balance once again in the direction of bigger cars, faster freight deliveries and more

routes, in a replay of the late 1980s and 1990s.

The full impact of the new equipment purchasing and operational decisions may not be evident for some time but it is

already helping support faster growth in oil demand in 2015/16.

Capital expenditure and operating decisions will continue to raise demand for oil in the medium term unless and until prices

rise again.

John Kemp

Senior Market Analyst

Reuters

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*Massenbach’s

Recommendation*

Panama Papers: Act now. Don’t wait for another crisis.

Thomas Piketty

Financial secrecy represents a huge threat to the fragile global system, and we won’t solve the problem by politely asking tax havens to stop behaving badly.

The question of tax havens and financial opacity has been headline news for years now. Unfortunately, in this area there is a huge gap between the triumphant declarations of governments and the reality of what they actually do.

In 2014, the LuxLeaks investigation revealed that multinationals paid almost no tax in Europe, thanks to their subsidiaries in Luxembourg. In 2016, the Panama Papers have shown the extent to which financial and political elites in the north and the south conceal their assets. We can be glad to see that the journalists are doing their job. The problem is that the governments are not doing theirs. The truth is that almost nothing has been done since the crisis in 2008. In some ways, things have even got worse.

Let’s take each topic in turn. Exacerbated fiscal competition on the taxing of profits of big companies has reached new heights in Europe. The United Kingdom is going to reduce its rate to 17%, something unheard of for a major country, while continuing to protect the predatory practices of the Virgin Islands and other offshore centres under the British Crown. If nothing is done, we will all ultimately align ourselves on the 12% of Ireland, or possibly on 0%, or even on grants to investments, as is already sometimes the case. In the meantime, in the United States where there is a federal tax on profits, that rate is 35% (not including the taxes levelled by states, ranging between 5% and 10%).

It is the political fragmentation of Europe and the lack of a strong public authority which puts us at the mercy of private interests. The good news is that there is a way out of the current political impasse. If four countries, France, Germany, Italy and Spain, who together account for over 75% of the GDP and the population in the eurozone put forward a new treaty based on democracy and fiscal justice, with as a strong measure the adoption of a common tax system for large corporations, then the other countries would be forced to follow them. If they did not do so they would not be in compliance with the improvement in transparency which public opinions have been demanding for years and would be open to sanctions.

There is still a complete lack of transparency as far as private assets held in tax havens are concerned. In many areas of the world, the biggest fortunes have continued to grow since 2008 much more quickly than the size of the economy, partly because they pay less tax than the others. In France in 2013 a junior minister for the budget calmly explained that he did not have an account in Switzerland, with no fear that his ministry might find out about it. Once again, it took journalists to reveal the truth.

Automatic transmission of information about financial assets, which is officially accepted in Switzerland and is still refused in Panama, is meant to deal with the question in the future. The only drawback is that this will only begin to be applied, somewhat cautiously, from 2018, with glaring exceptions, for example for the shares held in trusts and foundations. All this has been set up without the slightest sanction being laid down for countries which default. In other words, we continue to live under the illusion that the problem will be resolved on a voluntary basis, by politely requesting tax havens to stop behaving badly. It is urgent to speed up the process and impose heavy trade and financial sanctions on countries which do not comply with strict rules.

Let there be no mistake: only repeated application of sanctions of this type, at the slightest non-compliance (and there will be some, including by our dear neighbours in Switzerland and Luxembourg), will enable the credibility of the system to be established and an end seen to this climate of lack of transparency and widespread practice of impunity for many decades.

At the same time, a unified register of financial securities must be established; this involves putting Central Depositories under public control (Clearstream and Eurostream in Europe, Depository Trust Corporation in the United States) as Gabriel Zucman has clearly shown. In support of this approach, a common registration fee for these assets could also be envisaged, with the revenue used to finance a global public good (for example, the climate).

There is still one question outstanding: why have governments done so little since 2008 to combat financial opacity? The simple answer is that they were under the illusion that there was no need to act. Their central banks had printed enough currency to avoid the complete collapse of the financial system, thus avoiding the mistakes which post-1929 led the world to the brink of complete collapse. The outcome is that we have indeed avoided a widespread depression but in so doing we have refrained from the necessary structural, regulatory and fiscal reforms.

We could reassure ourselves by noting that the balance sheet of the major central banks (which has risen from 10% to 25% of GDP) remains low in comparison with the total financial assets held by public and private actors over each other (approximately 1,000% of GDP or even 2,000% in the United Kingdom) and could rise further in case of need. In reality, this mainly reveals the persistent hypertrophy of private-sector balance sheets and the extreme fragility of the system as a whole. It is to be hoped that the world will learn from the lessons of the Panama Papers and at long last combat financial opacity without waiting for a further crisis.

© Thomas Piketty, Le Monde

http://www.theguardian.com/commentisfree/2016/apr/09/panama-papers-tax-havens-thomas-piketty?utm_source=esp&utm_medium=Email&utm_campaign=GU+Today+main+NEW+H&utm_term=166283&subid=620800&CMP=EMCNEWEML6619I2

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Serbien

moderated by Srecko Velimirovic

Greek Bailout Talks Stall Over Demands for Reform.

Analysis

April 12, 2016 | 18:36 GMT

Note: Financial, political and social uncertainty has forced Greece’s ruling Syriza party to cut a deal with the European Union — despite its campaign promises against it — to keep the economy afloat. Additional measures will generate more political discord, if not violence, throughout the country. The influx of migrants has only aggravated the problem. Below is a routinely updated chronicle of the most recent developments. The following piece provides updates to this crisis in real time.

April 12: Bailout Talks Stall Over Demands for Reform

Greek leaders on April 12 suspended negotiations with the International Monetary Fund (IMF) and the European Union over Greece’s third tranche of bailout funds, saying IMF demands for more financial reforms are keeping Greece and its creditors from reaching a deal. IMF Managing Director Christine Lagarde insisted that before Greece receives any more funding, it needs to make more of an effort to make its budget sustainable. Greece must conclude the first bailout review before it can start talks on debt relief, which the Greek government needs in order to maintain public and parliamentary support.

Greek Finance Minister Euclid Tsakalotos said leaders still aim to finish the review by April 22, before the next Eurogroup meeting. Negotiators still have to reach an agreement on a number of issues, however, including pension reform and managing the rising number of Greek nonperforming loans. Talks may continue into May.

The deadline for Greece to repay its loan of 2.3 billion euros ($2.6 billion) is not until July, but a heightened sense of urgency has permeated the talks for the past two weeks. European leaders may be eager to conclude negotiations before the British referendum on EU membership on April 23; any drama surrounding the Greek bailout talks could sway the British vote. The IMF will be willing to support a quick resolution to avoid a Brexit, but it is less motivated than the Europeans are, and Greece is even less concerned about the British referendum. Brussels‘ relative impatience to reach a deal may put it at a slight disadvantage in negotiations. Still, with its payment deadline approaching, Greece has its own reasons for wanting to resolve talks sooner rather than later. The bailout review talks will recommence on April 18.

April 5: A Tussle at the Negotiating Table Over the Greek Bailout

As talks over Greece’s bailout program continue, a spokesman for German Finance Minister Wolfgang Schaeuble said debt relief for Greece is not currently on the table. Officials from the European Commission, the European Central Bank and the International Monetary Fund (IMF) convened in Athens on April 4. According to the spokesman, Athens must first focus on creating a sustainable budget and returning to financial markets. This happened after the IMF and the Greek government entered a dispute over a leaked conversation between IMF officials discussing ways to pressure Athens and its creditors to reach a deal.

Considering that Greece does not owe significant debt payments until July, Athens and its creditors still believe they have time to defend their positions, allowing negotiators debating the next tranche of bailout money to Athens to wrangle over debt relief and economic reforms. This means that in the coming weeks, threats and rumors are likely to continue before a bailout deal is reached. Debt relief, however, is likely to be postponed again.

The debt relief question is important to the IMF, which wants it included in the bailout package. Although Greece would welcome debt relief, the country would just as soon cut the IMF out of the picture to avoid the strict structural reforms the financial institution requests. Germany, in the meantime, wants to keep the IMF involved in the Greek bailout, in keeping with demands from conservative lawmakers. But Berlin thinks that granting debt relief to Greece would be unpopular at home, which explains the comments by Schaeuble’s spokesman.

In the short term, the German government wants Greece to get thenext slice of bailout money and to have a stable and cooperative government in Athens to deal with the flow of refugees arriving in the European Union from conflict-torn areas in the Middle East. The main program designed to mitigate that flow by returning illegal migrants to Turkey began on April 4, when about 200 people left Greece. But the sustainability of the EU-Turkey agreement is uncertain. It could still be declared illegal, and some EU members will resist the redistribution of migrants among member states. More important, Turkey could stop cooperating if the European Union drags its feet on issues such as visa liberalization and accession talks.

Although reports indicate that the number of migrants making the journey to Greece has slowed, the office of the United Nations High Commissioner for Refugees, the body’s refugee agency, reported that 228 illegal migrants reached Greek shores on April 4. In addition, better weather conditions in the Mediterranean have led to more people using the Central Mediterranean migration route, which connects North Africa with southern Italy. As a result, Austrian authorities are threatening to increase controls at the border with Italy, which will create new political frictions in Europe.

Feb. 16: The Role Refugees Play in the Greek Crisis

The Greek government is once again fighting on multiple political and economic fronts. Athens is negotiating the continuity of the bailout program while also pushing to avoid its suspension from the passport-free Schengen area. At the national level, the government of Prime Minister Alexis Tsipras is trying to prevent a rebellion within the ruling Syriza party while coping with growing domestic unrest.

Negotiations with the European Union and the International Monetary Fund temporarily ended earlier this month at an impasse. They will begin again in late February, and pension reform will likely still be the most contentious topic under debate. Both Athens and its creditors agree that Greece needs to save around 1.8 billion euros (roughly $2 billion) this year, but they disagree on how to accomplish that. While Tsipras‘ government is proposing to increase social security contributions for companies and workers and to introduce cuts in some auxiliary pensions, the creditors want a generalized cut in current pensions. Greece spends roughly 17 percent of its gross domestic product on pensions, more than any other EU member. But Tsipras believes that additional cuts will undermine one of the country’s last safety nets, one upon which hundreds of thousands of Greek households depend.

Judging by their statements that the negotiations will last weeks, the creditors seem relaxed. Not so Athens, which is slowly running out of time and money. Greek officials recently said Athens has enough resources to continue functioning without aid until at the latest June. And though Greece’s debt maturity calendar is not as pressing as it was in 2015, Athens must still repay approximately 2.3 billion euros to the European Central Bank in July. Though the payment pales in comparison to the roughly 7 billion euros in debt maturities Athens faced from July to August last year, Athens could nevertheless struggle to make it if it does not receive the next tranche of its bailout. Once the July payment is made, Greece does not need to make any substantial debt payments for the rest of the year, which dramatically reduces the chance of a default or a Grexit.

The EU Scapegoat

But Athens has other, more urgent problems to deal with. On Feb. 12, the European Union gave Greece three months to present and implement plans to cope with the refugee crisis or be suspended from Schengen. In recent weeks, Athens has shown Northern Europe it is willing to cooperate. It put the Greek Defense Ministry in charge of coordinating the handling of asylum seekers, announced the construction of reception centers in Athens and at the main entry points used by migrants (the islands of Lesbos, Chios, Leros and Samos), and agreed to cooperate with Turkey on patrols of the Aegean Sea under NATO supervision.

But this has not been enough to convince some Central and Eastern European countries that Greece has good intentions. On Feb. 15, members of the Visegrad Group (Poland, Hungary, the Czech Republic and Slovakia) met with representatives of Macedonia and Bulgaria to discuss measures to isolate Greece. Given that the European Union is failing to cohesively respond to the migration crisis, countries and groups of countries have decided to take regional and bilateral measures to sever the Balkan migration route that connects Greece to Austria and Germany. In addition to building fences and introducing quotas on the number of migrants allowed to enter their territories, these countries are also helping Greece’s neighbors enhance their border controls.

And if the European Union decides by the May deadline that Greece is not doing enough to protect its borders, Brussels could allow Schengen members to introduce border controls in the area for up to two years, a notable increase from the current limit of six months. On the surface, the idea is to "isolate" Greece. But Greece does not share land borders with any Schengen members, which means that Athens‘ failure to protect its borders would mostly be used as a justification for other Schengen members to reintroduce border controls with their neighbors.

Tsipras is on a diplomatic mission to repair the image of his country. He met Feb. 14 with Dutch Minister of Foreign Affairs Bert Koenders. Tsipras also met with European Council President Donald Tusk on Feb. 16, and will meet with European Commission chief Jean-Claude Juncker on Feb. 17. His goal is to secure support from EU institutions during a summit of the bloc’s heads of government Feb. 18-19. During the summit, Tsipras will hold bilateral talks with German Chancellor Angela Merkel and French President Francois Hollande.

Tighter border controls along the Balkan route will create problems for Greece, since migrants will have a harder time moving north. But most asylum seekers do not want to stay in Greece, prompting them to seek alternate routes. Albania is a likely option. Migrants could either try to cross the southwestern Balkan country to reach Montenegro, Bosnia and Croatia, or use the Adriatic Sea crossing to reach Italy. A growing bottleneck in the Western Balkans could also reactivate the central Mediterranean route, which connects North Africa to southern Italy.

Domestic Discontent

EU leaders are not the only ones upset by the refugee crisis. Many Greeks fear the economic and cultural impact of the massive arrival of asylum seekers, and in recent weeks there have been protests and vandalism at reception centers under construction. The influx of asylum seekers is expected to grow as weather conditions improve, as are attacks against migrants and clashes between anti-immigration groups and the Greek police.

EU threats to suspend Greece’s membership in Schengen will probably weaken popular support for the bailout. The program is already controversial, with farmers having blocked roads for weeks nationwide to protest the pension reform and the plans to lift subsidies for the agricultural sector. In the coming days, courts, ferry boats and schools will be shut down by strikes. Still, protests have become a common feature of Greek politics since the beginning of the crisis, and Tsipras is not the first prime minister to contend with multiple strikes and protests.

The main challenge to the Greek government comes from within. The ruling coalition rules with a majority of just three seats in parliament. Even a small rebellion in the government’s constituent parties would cause the government to fall. This explains why Tsipras frequently reaches out to small parties on the center and the center-left. He wants to show his own lawmakers that he has options in case of a rebellion and also ensure that he could remain in power should some abandon him.

Greece’s domestic and foreign problems are deeply intertwined. There should be an agreement of pension reform in the coming weeks because Athens‘ progressively weakening financial situation will make it more willing to make concessions to the creditors, though the relief the agreement provides will be temporary. The migration issue will not go away so easily. Border controls along the Balkan route are likely to remain in place, regardless of what is decided in Brussels about the future of Schengen. Countries will also continue to introduce measures to become less attractive to migrants. But with thecrisis in Syria still far from over, migrants are likely to simply look for new ways to reach Northern Europe. The key month to watch is May, when a formal suspension from the Schengen Agreement could trigger a political crisis in Greece that could derail the continuity of the bailout program.

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see our letter on:

*Herausgegeben von Udo von Massenbach, Bärbel Freudenberg-Pilster, Joerg Barandat*

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UdovonMassenbachMailJoergBarandat

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