The deteriorating status of the small Mediterranean country benefits Hezbollah and its patron saint, Iran.

With four different prime ministers so far this year, it is difficult to escape the vicious circle in which Lebanon finds itself, so that the continuity of the current political system and the severe financial crisis seem inevitable. This perpetuation gives rise to a number of possibilities, almost all of them bleak, for the Lebanese future. Here are some of these scenarios.

▲ State of the port of Beirut after the explosion on August 4, 2020 [Mehr News Agency/Wikipedia].

article / Salvador Sánchez Tapia

To say that the Lebanese political system is dysfunctional is nothing new. Based on a sectarian balance of power established in 1989 after a long civil war, it perpetuates the existence of clientelistic networks, encourages corruption, hampers the country's economic development and hinders the creation of a cross-cutting Lebanese national identity that transcends religious denominations.

For some time now, Lebanon has been immersed in an economic and social crisis of such magnitude that it has led many analysts to wonder whether we are facing a new case of a failed state. In October 2019, the country was rocked by a wave of demonstrations that the government itself considered unprecedented, unleashed by the advertisement the Executive to address the severe economic crisis with several unpopular measures including taxing the use of the popular Whatsapp application. The protests, initially focused on this issue, soon incorporated complaints against rampant corruption, the uncontrolled increase in the cost of living, or the lack of employment and opportunities in the country.

This popular pressure forced the resignation of the unity government led by Saad Hariri at the end of the same month. The government was replaced in January 2020 by a more technical government led profile former Education Minister Hassan Diab. The new government had little room for maneuver to introduce reforms before the coronavirus pandemic was declared, and soon found itself beset by the same street pressure that had toppled the previous government, with demonstrations continuing despite the restrictions imposed by the pandemic.

The devastating explosion in early August 2020 in the port of Beirut only further plunged the country into the downward spiral into which it was already plunged. Despite the voices that tried to see the hand of Israel or Hezbollah behind the catastrophe that took the lives of 163 people, the Lebanese population soon sensed that this was but the logical consequence of years of corruption, bureaucratic sloppiness and withdrawal the national infrastructure. Again there was a crescendo of popular indignation; again the government was forced to resign at a plenary session of the Executive Council.

With the echoes of the explosion still alive, at the end of August, Mustafa Adib, former Lebanese ambassador to Germany, was entrusted by President Aoun with the task of forming a government. Unable to complete such an arduous task, among other reasons because of Hezbollah's insistence on controlling the Ministry of Finance, Adib resigned on September 26, leaving the country on the brink of the precipice in which it still finds itself.

It is difficult to make predictions about Lebanon's future, beyond predicting that it looks bleak, as a complex dynamic of internal and external forces is gripping the country. Despite the pressure, at least from the urbanized and cosmopolitan Beirut, to put an end to it, it is enormously complex to untangle the dense skein of clientelistic networks that have controlled the country since its independence, not only because of the benefits it has generated for a small group of privileged people, but also because many fear the alternatives to a model that, with all its flaws, has avoided a reproduction of the savage civil war that took place between 1975 and 1990.

Its geographical status makes it difficult for Lebanon to escape the general climate of instability prevailing in the Middle East and the influence exerted on the country by regional and international actors such as Israel, Iran, Syria and France, especially if one considers that the problems of the Levantine state are so deep and its national leadership so weak that it does not seem to be able to overcome them on its own.

The drama of Lebanon is that its own sectarian division makes it difficult for nations to emerge that are willing to donate with cross-cutting criteria to help bridge the gap that divides the country internally, and that the financial aid it may receive from actors such as Iran or Saudi Arabia only reinforces it. The efforts of French President Emmanuel Macron, self-appointed as the driving force behind Lebanese reconstruction, do not seem, for the moment, to be gaining momentum. At the donors' lecture he convened on July 9 with fifteen heads of state, he obtained contributions worth $250 million to revitalize the moribund Lebanese Economics . Meanwhile, the mayor of Beirut estimates the reconstruction costs of the August explosion in the capital's port at between 3 and 5 billion dollars.

As a mirror image of this difficulty, Lebanese communities, comfortably ensconced in the status quo, reject financial aid, no doubt necessary, if they feel it could be detrimental to their respective power instructions . Hezbollah, for example, does not accept IMF programs, complicating the achievement of the necessary national consensus that would facilitate IMF support. It is difficult to escape from this vicious circle, so that the continuation of the current political system, and with it the continuation of the serious Lebanese financial crisis, seems inevitable. From this perpetuation result some possibilities, almost all of them bleak, for the Lebanese future. The first is that Lebanon will continue to slide down the inclined plane that is turning it into a failed state, and that this condition will eventually lead to a civil war precipitated by events similar to those that occurred during the Arab Spring in other states in the region. This eventuality would resurrect the ghosts of the past, produce regional instability that would be difficult to measure but which would undoubtedly provoke the intervention of regional and international actors, and could end up dismembering the country, a result that would only sow the seeds of further instability throughout the region.

Without going to that extreme, the internal disorder could break the precarious balance of power on which Lebanese political life is based, to the benefit of one of its sectarian groups. Hezbollah, the undisputed leader of the country's Shiite faction, appears here as the most organized and strongest group within the country and, therefore, as the one that stands to gain the most from this breakdown. It should be noted that, in addition to the support of the entire 27 internship of Lebanese Shiites, the militia-organization is viewed favorably by many members of the divided Christian community - some 45 percent of the country's population - who put their desire for internal Security Service in the country before other considerations. Aware of this, the leader of Hezbollah, Hasan Nasrallah, sample moderate in his proposals, seeing in the Sunni community, supported by Saudi Arabia, his real rival, and trying to broaden his power base.

Iran would undoubtedly be the real winner in this scenario, since it does not seem realistic to think of a Hezbollah that, once it has come of age, would have a life of its own outside the regime of the ayatollahs. Tehran would complete, with this new piece, the Shiite arc that connects Iran with Iraq and, through Syria, with the Eastern Mediterranean. The destabilizing effects of such a status, however, cannot be underestimated if one takes into account that the mere possibility of the Islamic Republic of Iran gaining absolute control of Lebanon constitutes a casus belli for Israel.

On a positive grade , the serious crisis the country is going through and the strong popular pressure, at least in urban areas, may be, paradoxically, a spur to overcome the sectarian system that has contributed so much to generate this status. However, such a transition only has a chance of advancing - no matter how tenuous - with strong external wholesale support.

In this scenario, the role of the international community should not be limited to the contribution of economic resources to prevent the collapse of the country. Its involvement must favor the development and support of civic-political movements with an intersecting base that are capable of replacing those who perpetuate the current system. To this end, in turn, it is imperative that the contributing nations lend their financial aid in a high-minded manner, renouncing any attempt to shape a Lebanon to suit their respective national interests, and forcing the elites controlling the factions to abdicate the status quo in favor of a true Lebanese identity. The obvious question is: is there any real chance of this happening? The reality, unfortunately, does not allow for high hopes.

Armenia and Azerbaijan face off in a conflict that also involves Turkey and Russia

▲ Monument to the Armenian capture of the city of Shusha in the war over Nagorno Karabakh in the 1990s [Wikipedia].

ANALYSIS / Irene Apesteguía

The region of Nagorno-Karabakh, traditionally inhabited by Christian Armenians and Muslim Turks, is internationally recognized as part of Azerbaijan. However, its population is Armenian-majority, with a pro-independence sentiment. In Soviet times it became an autonomous region within the republic of Azerbaijan and it was in the war of the 1990s when, in addition to leaving some 30,000 dead and about one million people displaced, separatist forces captured additional Azeri territory. Since the collapse of the Soviet Union in 1991, ethnic discrepancies between Azerbaijan and Armenia have deepened. Even a 2015 census of Nagorno Karabakh reported that no Azeris lived there, whereas, in Soviet times, Azeris made up more than one-fifth of the population. Since the truce between the two former Soviet republics in 1994, there has been a stalemate status , with the failure of several negotiations to reach a permanent peace agreement . The dispute has remained frozen ever since.

Last September 27, the conflict between Armenia and Azerbaijan once again led to a military confrontation. The latest developments go far beyond the usual clashes, as there are reports of downed helicopters, use of combat drones and missile attacks. In 2016 there was a violent escalation of the conflict, but Stepanakert, the capital of Nagorno-Karabakh, was not occupied, nor was any martial law declared. If one thing is clear, it is that the current escalation is a direct consequence of the freezing of the negotiation process. Moreover, this is the first time that armed outbreaks have occurred at such short intervals, the last escalation of the conflict having taken place last July.

Azerbaijani Defense Minister Zakir Hasanov threatened on September 27 with a "big attack" on Stepanakert if the separatists did not stop shelling its settlements. Nagorno Karabakh declared that it would respond in a "very painful" way. Armenia, for its part, warned that the confrontation could unleash a "full-scale war in the region".

The leaders of both countries hold each other responsible for this new escalation of violence. According to Azerbaijan, the Armenian Armed Forces constantly provoked the country, firing on the army and on crowds of civilians. Moreover, on multiple local Azerbaijani TV channels, President Ilham Aliyev has declared that Armenia is preparing for a new war, concentrating all its forces in Karabakh. Even the Azeri authorities have restricted the use of the internet in the country, mainly limiting access to social networks.

In its counter-offensive operation, Azerbaijan mobilized staff and tank units with the support of artillery and missile troops, front-line aviation and unmanned aerial vehicles (UAV), the Ministry's press statement said. In addition, agreement to the Syrian Observatory for Human Rights, a number of Syrians from jihadist groups, Turkish-backed factions, are fighters in Nagorno-Karabakh. This has been corroborated by Russian and French sources. In any case, it would not be surprising when Turkey sits side by side with Azerbaijan.

For its part, Armenia blames Azerbaijan for starting the fighting. Armenian authorities announced that the Azerbaijani army had attacked with rocket-propelled grenade launchers and missiles. Armenia has not stopped preparing, as in the weeks prior to the start of the battle, multiple shipments of Russian weapons had been detected in the country through heavy transport flights. On the other hand, Armenia's defense minister has accused Turkey of exercising command and control of Azerbaijan's air operations through Boeing 737 Airborne Early Warning & Control aircraft , as Turkey has four of these planes.  

Triggers

Both powers were on alert due to the July clashes. Since then, they have not abandoned military preparedness at the hands of their external allies. Therefore, the current events cannot be described as coming out of the blue. After the July outbreak, the feeling persisted that the armed confrontation had simply Fail

Hours after the outbreak of fighting, Armenia declared martial law and general mobilization. Azerbaijan, on the contrary, declared that such action was not necessary, but finally the parliament decided to impose martial law in some regions of the country. Not only was martial law decreed, but also the Azerbaijani Ministry of Defense declared the liberation of seven villages, the establishment of a curfew in several cities and the recapture of multiple important heights. It is clear that all occupied territories have crucial strategic value: Azerbaijan has secured visual control of the Vardenis-Aghdara highway, which connects to Armenian-occupied Karabakh. The road was completed by Armenia three years ago, in order to facilitate quick military cargo transfers, an indication that this is a strategic position for Armenia.

Drone warfare has also been present in the conflict with Turkish and Israeli drones used by Azerbaijan. The anti-drone measures that Armenia has to carry out are involving Iran in the matter.

An important factor that may have led to the conflict was the changes in the diplomatic leadership in Baku. Elmar Mammadyarov, Azerbaijan's foreign minister, left his position during the July clashes. He has been replaced by former Education Minister Jeyhun Bayramov, who does not have much diplomatic experience. Meanwhile, Hikmet Hajiyev, foreign policy advisor to Azerbaijan's president, has seen his role in these areas increased.

But the problem is not so much centered on the new appointments. For the past few years, Mammadyarov was the biggest optimist about the concessions Armenia might be willing to make under Nikol Pashinyan's new government. And that is because ever since Armenia's Velvet Revolution, which brought Pashinyan to the post of prime minister in 2018, Azerbaijan had harbored the hope that it could resolve the conflict. This hope was shared by many diplomats and experts in the West. Moreover, even within Armenia, Pashinyan's opponents called him a traitor because, they claimed, he was selling the country's interests in exchange for Western money. All this hope for Armenia disappeared, as the new Armenian Prime Minister's position on Nagorno-Karabakh was harsher than ever. He even declared on several occasions that "Karabakh is Armenia". All this led to the strengthening of Azerbaijan's position, which hardened after the July clashes. Baku has never ruled out the use of force to try to solve the problem of its territorial integrity.

In the 2016 conflict there were many efforts to minimize these armed disturbances, mainly by Russian diplomacy. These have been supported by the West, which saw Moscow's mediation as positive. However, negotiations between Armenia and Azerbaijan have not resumed, and the excuse of the coronavirus pandemic has not been very convincing, according to domestic media.

More points have led to the current escalation, such as increased Turkish involvement. After the July clashes, Turkey and Azerbaijan conducted joint military exercises. Ankara's representatives began talking about the ineffectiveness of the peace process, and Turkish President Recep Tayyip Erdogan, speaking last month at the UN General Assembly, described Armenia as the biggest obstacle to long-term peace in the South Caucasus. This is not to say that Turkey provoked the new escalation, but it certainly helped push Azerbaijan into a more emboldened attitude. The Turkish president stated on Twitter that "Turkey, as always, stands with all its brothers and sisters in Azerbaijan." Moreover, last August, the Azeri defense minister said that, with the financial aid of the Turkish army, Azerbaijan would fulfill "its sacred duty," something that can be interpreted as the recovery of lost territories.

International importance

In a brief review of the allies, it is worth mentioning that the Azeris are a majority population of Turkish origin, with which Turkey has close ties, although unlike the Turks, most Azeris are Shiite Muslims. As for Armenia, Turkey has no relations with the country, since the former is a majority Orthodox Christian country that historically has always relied on Russia.

As soon as the hostilities began, several states and international organizations called for a cease-fire. For example, Russian Foreign Minister Sergei Lavrov, in a telephone conversation with his Armenian counterpart, Zohrab Mnatsakanyan, called for an end to the fighting and declared that Moscow would continue its mediation efforts. Meanwhile, as it did after the July clashes, Turkey again expressed through various channels its plenary session of the Executive Council support for Azerbaijan. The Turkish Foreign Ministry assured that Ankara is ready to help Baku in any way. The Armenian president, hours before the start of the fire, mentioned that a new conflict could "affect the security and stability not only of the South Caucasus, but also of Europe". US Secretary of State Mike Pompeo expressed serious concerns and called on both sides to stop the fighting.

On the other hand, there is Iran, which is mainly Shiite and also has a large ethnic Azeri community in the northwest of the country. However, it maintains good relations with Russia. Moreover, having borders with both countries, Iran offered to mediate peace talks. This is where Iran's current problem over the new conflict is centered. Azeri activists called protests in Iranian Azerbaijan, which is the national territory of Azeris under Iranian sovereignty, against Tehran's support for Armenia. The arrests carried out by the Iranian government have not prevented further protests by this social sector. This response in the streets is an important indicator of the current temperature in northwest Iran.

As for Western countries, France, which has a large Armenian community, called for a cease-fire and the start of dialogue. The United States claimed to have contacted both sides to urge them to "cease hostilities immediately and avoid words and actions of little financial aid".

Russia may have serious concerns in the resumption of full-scale hostilities. It has made it clear on multiple occasions that the important thing is to prevent the conflict from escalating. One reason for that insistence may be that the Kremlin already has open fronts in Ukraine, Syria and Libya, in addition to the current status in Belarus, and the poisoning of Alexei Navalni. Moreover, despite the current attempt by the presidents of Russia and Turkey to show that relations between their countries are going well, the discrepancies between them, such as their views on Syria or Libya, are growing and becoming more and more diverse. And now, Vladimir Putin could not leave Armenia in the hands of Azerbaijan and Turkey.

The Minskgroup of the Organization for Security and Cooperation in Europe (OSCE) has as its main mission statement the mediation of peace negotiations between Armenia and Azerbaijan, and is co-chaired by Russia, France and the United States. In response to the present conflict, it called for a "return to ceasefire and resumption of substantive negotiations". Earlier this year, Armenia rejected the Madrid Principles, the main conflict resolution mechanism proposed by the Minsk group . Moreover, this initiative has been made increasingly impossible by the Armenian Defense Ministry's concept of "new war for new territories," as well as Nikol Pashinyan's idea of unification of Armenia and Karabakh. All this has infuriated the Azeri government and citizenry, which has increasingly criticized the Minsk group . Azerbaijan has also criticized the group s passivity in the face of what it considers Armenia's incendiary actions, such as the transfer of the capital of Karabakh to Susa, a city of great cultural importance for Azerbaijanis, or the illegal settlement of Lebanese and Armenians in occupied Azerbaijani territories.  

If any conclusion is to be drawn from this it is that, for many in both Azerbaijan and Armenia, the peace process has been discredited over the past three decades of failed negotiations, prompting increasing warnings that the status quo would lead to further escalation of the conflict.

Among some experts there is growing concern that Western countries do not understand the current status and the consequences that could result from the worst flare-up in the region in years. The director of the South Caucasus Office at the Heinrich Boell Foundation, Stefan Meister, has stated that the fighting between these two regions could go far. In his opinion, "the European Union and the West underestimate the conflict".

The European Union has also taken a stand. It has already order Armenia and Azerbaijan to reduce cross-border tensions, urging them to stop the armed confrontation and to refrain from actions that would provoke further tension and to take measures to avoid further escalation.

The conflict in the Caucasus is of great international importance. There are regular clashes and resurgence of tensions in the area. The relevance centers on the fact that any escalation of violence could destabilize global Economics , given that the South Caucasus is a corridor for gas pipelines running from the Caspian Sea to world markets, and more specifically, to Europe. If Armenia decides that Azerbaijan has escalated too far, it could attack Azerbaijan's South Caucasus Pipeline, which sends gas for Turkey's TANAP, and terminates with TAP, which supplies Europe. Another strategic aspect is the control of the city of Ghanai, as controlling it could connect Russia to Karabakh. In addition, control of this site could cut off connectivity between Azerbaijan, Georgia and Turkey in relation to gas pipelines. There were already conflicts in this area last July, therefore, as a result of the new conflict, Azerbaijan has been predisposed to close the region's airspace.

In bright green, territory of Nagorno-Karabakh agreed in 1994; in soft green, territory controlled by Armenia until this summer [Furfur/Wikipedia].

A new war?

There are several possible outcomes for the current status . The most likely is a battle for small and not particularly important areas, allowing the symbolic declaration of a "victory". The problem centers on the fact that each opponent may have a very different view of things, so that a new side of confrontation is inevitable, raising the stakes of the conflict, and leading to a lower possibility of understanding between the parties.

Although unlikely, many analysts do not rule out the possibility that the current escalation is part of the preparations for negotiations and is necessary to shore up diplomatic positions and increase pressure on the opponent before resuming talks.

Whatever the reasoning behind the armed clashes, one thing is clear: the importance of military force in the Nagorno-Karabakh peace process is growing by the day. The absence of talks is becoming critical. If the Karabakh pendulum is not mended soon and does not swing from generals to diplomats, it may become irreparable. And it will be then that the prospects of another regional war breaking out once again will cease to be a mere scenario described by experts.

While Russia continues to insist that there is no other option but the peaceful way, the Line of contact between the two sides in Nagorno Karabakh has become the most militarized area in Europe. Many experts have repeatedly shown as a possible scenario that Azerbaijan may decide to launch a military operation to regain its lost territory. The country, whose main source of income is its Caspian Sea oil wealth, has spent billions of dollars on new weaponry. In addition, it has been Azerbaijan that has replaced Russia as the largest carrier of natural gas to Turkey.

A major consequence of the conflict centers on potential losses for Russia and Iran. One more casualty of the conflict may be Russia's position as the leader of Eurasia. Another argument is based on the Turkish committee , which has demanded Armenia's withdrawal from Azerbaijani lands. The problem is that the members of that committee, Kazakhstan and Kyrgyzstan, are also members of the Collective Security Treaty Organization (CSTO), led by Russia together with Armenia. On the other hand, Iran also panics sample the total solidarity expressed by Turkey to Azerbaijan, as more Azeris live in Iranian Azerbaijan than in the Republic of Azerbaijan.

We are facing one of the many conflicts exemplifying the new and current "style" of warfare, where great powers place themselves behind the backs of small conflicts. However, the territory of Nagorno-Karabakh will be small in extension, but not in importance, since in addition to contributing to the continuity in the destabilization of the Caucasian area , it can affect nearby powers, and even Europe. The West should give it the importance it deserves, because if it continues along the same lines, the door is open to a more violent, extensive and prolonged military conflict.

Three visions

However, the desire to create a cooperative body within the Weimar Triangle is a challenge, as each country represents, in one way or another, one of the three foreign policy agendas that divide Europe.

At one end of the spectrum is French Gaullism, which advocates an independent Europe and is wary of the presence of the United States in Europe, as it should be remembered that France already has a strong army. Paris abandoned this perspective for the Atlanticist one in 2007 under Sarkozy, but it has been regained by Macron. This means that Macron's rhetoric could lead to clashes with the Americans, while he also seeks to set his own profile vis-à-vis Moscow and Beijing.

In the middle is German pragmatism: Germany does not want to increase conflicts and prefers to focus on its Economics. On the one hand it is negotiating with the Russians to receive gas for its industrial activity and on the other hand it wants US troops to remain on its territory, as their departure would force it to increase its security expense . In the European plans for recovery after the Covid-19 pandemic, Germany has been clearly more absent and Macron has been the one who has taken the initiative.

Finally we find Polish Atlanticism. Poland is perhaps the most Atlanticist country in the EU. Even under the Trump Administration there has been a high level of pro-Americanism among the population and the political class . The government has bid to succeed in hosting a U.S. base, and Defense Minister Mariusz Błaszczak has enthusiastically praised the U.S. role as a defender of the free world. This is not new, as already the 2003 invasion of Iraq was supported by Poland, in the face of French and German rejection. Poland continues to see Russia as its greatest threat and the United States and NATO as guarantors of protection.

The Triangle returns

Its geographical status explains Poland's position and it is not going to stop wanting NATO instructions on its territory. However, it understands that it needs close allies with greater internal stability - hence its rapprochement with Germany and France - than that offered by the Trump Administration, whose international image is badly damaged, or a United Kingdom more occupied with managing Brexit than security issues.

On the other hand, Macron wants to prevent Poland from replacing the United Kingdom as the representative of US policy in Europe, so he has changed his strategy to avoid alienating it by criticizing its judicial reforms. Macron did not mention them during his visit to Warsaw in February this year and only encouraged to "respect European values". Somehow Macron understands that after Brexit he will need Poland to advance his European foreign policy plans and that is why it is important to bring it into the command conference room . Macron went so far as to say in Warsaw that Poland, Germany and France should lead the post-Brexit Union. He also announced the dispatch of 600 more men to Poland, which will bring the number of French soldiers in Poland to 5,100.

At this meeting, the two leaders agreed to meet with German Chancellor Angela Merkel, although the constraints imposed by the coronavirus pandemic have slowed down some contacts, while waiting for Economics to start to recover. The newly inaugurated German presidency of the committee , moreover, discourages Berlin from appearing overly aligned with a certain European vector. There may therefore be a certain temporary hibernation of the Weimar Triangle; in any case, although it is a risky formula, if coordinated with the Parliament and the Commission, its consolidation could represent a step forward in European cohesion and governance.

Pandemic reinforces the value of production centers in the same subregions

The free trade zones of Central America and the Caribbean have been an important driving force for the economies of the region. Favored by the increasing globalization of recent decades, they could now be boosted by a phenomenon in the opposite direction: "glocalization", the desirability of having production centers in the same sub-region, close to major markets, to avoid the problems in distant supply chains seen during this Covid-19 crisis that has so affected transportation and communications. The two leading Latin American free trade zone countries, the Dominican Republic and Costa Rica, offer affordable and sufficiently skilled labor at the doorstep of the United States.

▲ One of the Dominican Republic's free trade zones [CNZFE].

article / Paola Rosenberg

The so-called free trade zones, also known in some countries as free zones, are strategic areas within a national territory that have certain tax and customs benefits. In them, commercial and industrial activities are carried out under special export and import rules. It is a way of promoting investment and employment, as well as production and exports, thus achieving the economic development of a part of the country or of the country as a whole.

Free trade zones are important in Latin America and, in the case of the smaller economies, they are the main production and export hubs. agreement to the association of Free Trade Zones of the Americas (AZFA), there are some 3,500 free trade zones in the world, of which 400 are in Latin America, representing 11.4% of the total. Within this region, they have a special weight in the countries of Central America and the rest of the Caribbean basin. They are particularly important in the Dominican Republic and Costa Rica, as well as in Nicaragua, El Salvador, Colombia and Uruguay (also in Puerto Rico).

These countries benefit from having abundant labor (especially trained in the Costa Rican case) and at low cost (especially in the Nicaraguan case), and this close to the United States. For manufacturers wishing to enter the U.S. market, it may be interesting to invest in these free trade zones, taking advantage of the tax advantages and labor conditions, while their production will be geographically very close to their destination.

The latter is gaining ground in a post-Covid-19 world. The trend toward subregionalization, in the face of the fractured dynamics of globalization, has been highlighted for other areas of the American continent, as in the case of the Andean Community, but it also makes a great deal of sense for greater integration between the United States and the Greater Caribbean. To the extent that the United States moves towards a certain decoupling from China, the free trade zones in this geographic area may also become more relevant.

Reproduction of the graphic report of the association of Free Trade Zones of the Americas (AZFA), 2018.

Export processing zones

Free zones can be export-oriented (external market), import substitution (internal market) or both. The former may have a high industrial component, either seeking diversification or depending on maquilas, or emphasizing logistics services (in the case of Panama's free zones).

Free zones for exporting products have been particularly successful in the Dominican Republic and Costa Rica. As AZFA indicates, of the $31.208 billion exported from Latin American free zones in 2018, first place went to the Dominicans, with $5.695 billion, and second to Costa Ricans, with $4.729 billion (third place went to Puerto Rico, with $3 billion). Exports from the Dominican Republic's free trade zones accounted for 56% of all exports made by that country; in the case of Costa Rica it was 48% (the third in the ranking was Nicaragua, with 44%).

The Dominican Republic is the country with the highest issue of free trade zones (71 multi-company zones) and its 665 companies generated the highest number of direct jobs (165,724). Costa Rica has 48 free zones (in third position, after Nicaragua), and its 343 companies generated 93,496 direct work (in fifth position).

In terms of the profitability for the country of this economic modality , for every dollar exempted between 2010 and 2015, Costa Rica's free zones generated an average of US$6.2 and US$5 for those of the Dominican Republic (El Salvador ranked second, with US$6).

With specific reference to Costa Rica, a report at the end of 2019 by the Costa Rican foreign trade promotion agency, Procomer, placed the contribution of free trade zones at 7.9% of GDP, generating a total of 172,602 work, both direct and indirect, with annual growth in the issue of jobs averaging 10% per year between 2014 and 2018. These areas account for 12% of the country's formal private sector employment . An important fact about the contribution to the development the local Economics is that 47% of the purchases made by the companies located in the free trade zones were from national companies. An important social dimension is that the zones contributed 508 million dollars to the Costa Rican Social Security Fund in 2018.

The Dominican Republic's free trade zone regime is particularly applauded by the World Bank, which describes the country as a pioneer in this subject productive and commercial promotion instrument, presenting it as "the best-known success story in the Western Hemisphere". agreement to the statistics of the Nationalcommittee of Export Processing Zones (CNZFE), these have contributed in recent years to 3.3% of GDP, thus contributing to the significant growth of the country's Economics in recent years (one of the highest fees in the region, with an average of over 6% until the onset of the current global crisis). The geographical proximity to the United States makes its free trade zones ideal for US companies (almost 40% of investment comes from the US) or for companies from other countries that want to export to the large North American market (34% of exports go to the US).

finding of a "significant" amount of oil in off-shore wells puts the former Dutch colony on the heels of neighboring Guyana

The intuition has proved to be correct and the prospections carried out under Suriname's territorial waters, together with the successful hydrocarbon reserves being exploited in Guyana's maritime limits, have found abundant oil. The finding could be a decisive boost for the development of what is, after Guyana, the second poorest country in South America, but it could also be an opportunity, as is the case with its neighbor, to accentuate the economic and political corruption that has been hindering the progress of the population.

▲ Suriname's presidential palace in the country's capital, Paramaribo [Ian Mackenzie].

article / Álvaro de Lecea

So far this year, drilling in two 'off-shore' oil fields in Suriname has result positive, confirming the existence of "significant" oil in block 58, operated by the French company Total, in partnership with the American company Apache. Everything indicates that the same success could be obtained in block 52, operated by the also American ExxonMobil and the Malaysian Petronas, which were pioneers in prospecting in Surinamese waters with operations since 2016.

Both blocks are adjacent to the fields being exploited under the waters of neighboring Guyana, where for the moment it is estimated that there are some 3.2 billion barrels of extractable oil. In the case of Suriname, the prospections carried out in the first viable field, Maka Central-1, discovered in January 2020, speak of 300 million barrels, but the estimates from Sapakara West-1, discovered in April, and subsequent programmed prospections have yet to be added. It is considered that some 15 billion barrels of oil reserves may exist in the Guyana-Suriname basin.

Until this new oil era in the Guianas (the former English and Dutch Guianas; the French Guianas remains an overseas dependency of France), Suriname was considered to have reserves of 99 million barrels, which at the current rate of exploitation left two decades to deplete. In 2016, the country produced just 16,400 barrels per day.

political, economic and social status

With just under 600,000 inhabitants, Suriname is the least populated country in South America. Its Economics depends largely on the export of metals and minerals, especially bauxite. The fall in commodity prices since 2014 particularly affected the country's accounts. In 2015, there was a GDP contraction of 3.4% and 5.6% in 2016. Although the evolution then became positive again, the IMF forecasts for this 2020, in the wake of the global crisis due to Covid-19, a 4.9% drop in GDP.

Since gaining independence in 1975 from the Netherlands, its weak democracy has suffered three coups d'état. Two of them were led by the same person: Desi Bouterse, the country's president until this July. Bouterse staged a coup in 1980 and remained at the helm of power indirectly until 1988. During those years, he kept Suriname under a dictatorship. In 1990 he staged another coup d'état, although this time he resigned the presidency. He was accused of the 1982 murder of 15 political opponents, in a long judicial process that finally ended in December 2019 with a twenty-year prison sentence and is now appealed by Bouterse. He has also been convicted of drug trafficking in the Netherlands, for which the resulting international arrest warrant prevents him from leaving Suriname. His son Dino has also been convicted of drug and arms trafficking and is imprisoned in the United States. Bouterse's Suriname has come to be presented as the paradigm of the mafia state.

In 2010 Desi Bouterse won the elections as candidate of the National Democratic Party (NDP); in 2015 he was re-elected for another five years. In the elections last May 25, despite some controversial measures to limit the options for civil service examination, he lost to Chan Santokhi, leader of the Progressive Reform Party (VHP). He tried to delay the counting and validation of votes, citing the health emergency caused by the coronavirus, but finally at the end of June the new National Assembly was constituted and it should appoint the new president of the country during July.

Total's operations in Suriname and Guyana waters [Total].

Relationship with Venezuela

Suriname intends to take advantage of this prospect of an oil bonanza to strengthen Staatsolie, the state-owned oil company. In January, before the Covid-19 crisis became widespread, it announced the purpose of expanding its presence in the bond market in 2020 and also, conditions permitting, to list its shares in London or New York. This would serve to raise up to $2 billion to finance the national oil company's exploration campaign in the coming years.

On the other hand, Venezuela's territorial claims against Guyana, which affect the Essequibo -the western half of the former British colony- and which are being studied by the International Court of Justice, include part of the maritime space in which Guyana is extracting oil, but do not affect Suriname, whose delimitations are outside the scope of this old dispute.

Venezuela and Suriname have maintained special relations during Chavismo and while Desi Bouterse has been in power. Occasionally, a certain connection has been pointed out between drug trafficking under the protection of Chavista authorities and that attributed to Bouterse. The offer made by his son to Hezbollah to have training camps in Suriname, a matter for which he was arrested in 2015 in Panama at the request of the United States and tried in New York, can be understood in light of the relationship maintained by Chavism and Hezbollah, to whose operatives Caracas has provided passports to facilitate their movements. Suriname has supported Venezuela in regional forums at times of international pressure against the regime of Nicolás Maduro. In addition, the country has been increasingly strengthening its relations with Russia and China, from which in December 2019 it obtained the commitment of a new credit .

With the political change of the last elections, in principle Maduro's Venezuela loses a close ally, while it may gain an oil competitor (at least as long as Venezuelan oil exploitation remains at a minimum).

The high incidence of Covid-19 in the country contrasts with the government's swiftness in implementing measures

Peru has been an example in the Covid-19 crisis for its speed in applying containment measures and for approve one of the largest economic stimulus packages in the world, close to 17% of GDP. However, the high incidence of the pandemic, which has made Peru the second Latin American country in coronavirus cases and the third in deaths, has made it necessary to prolong the restrictions on activity longer than expected. This and lower external demand, weaker than initially forecast, have "more than eclipsed" the government's significant economic support, according to the IMF, which forecasts a 13.9% drop in GDP for Peru in 2020, the largest of the region's main economies.

lecture by Peruvian President Martín Vizcarra (r), in the presence of the head of Economics, María Antonieta Alva (l) [Gov. of Peru] [Gov. of Peru].

ARTICLE / Gabriela Pajuelo

International media such as Bloomberg y The Wall Street Journal have shown admiration for Peru's young Economics Minister, Maria Antonieta Alva. At 35, after a master's degree from Harvard and some experience in Peru's own administration, Alva designed one of the most ambitious economic stimulus plans in all of South America at the beginning of the crisis.

"From a Latin perspective, Peru is a clear leader in terms of macro response; I could have imagined a very different result if Toni wasn't there," he said. Ricardo Hausmannwho was Alva's professor during his stay at Harvard and leads a team of experts advising Peru and ten other countries to mitigate the effects of the coronavirus. The minister has also become one of the best known faces of President Martin Vizcarra's government among the popular classes.

Peru was one of the first countries in Latin America to apply a state of emergency, limiting freedom of meeting and transit in Peruvian territory and restricting economic activity. To prevent the massive spread of the virus, the government decreed the closure of borders, restrictions on interprovincial movement, a daily curfew and a mandatory period of national isolation, which has been extended several times and has become one of the longest in the world.

This extension, which was agreed upon due to the high incidence of the pandemic, has damaged the economic outlook more than expected. In addition, the prolongation of the emergency in countries to which Peruvian exports are destined has weakened their demand for raw materials and damaged the resurgence of Peru's Economics . This is what the IMF estimates, which between its April forecast and the one updated in June has added nine more points to the fall in Peruvian GDP for 2020. The IMF now considers that Peruvian Economics will fall by 13.9% this year, the highest among the region's main countries. Although the ambitious stimulus package will not have prevented this decline, it will boost the recovery, with a GDP increase of 6.5% in 2021, in turn the strongest rebound among the largest Latin American economies. Regarding this last forecast, the IMF specifies that, nevertheless, "there are significant leave risks, linked to national and global challenges to control the epidemic".

A socioeconomic context that does not financial aid to confinement

Despite restrictive social distancing measures, the pandemic has had a high incidence in Peru, with 268,602 diagnosed cases (in Latin America, second only to Brazil) and 8,761 deaths (behind Brazil and Mexico) as of June 25. These high figures are partly due to the fact that the country's socioeconomic conditions have meant that compliance with containment has not been very strict in certain situations. The social context has hindered compliance with mandatory quarantine due to structural problems such as the fragility of health services and infrastructure, the difficulty in making efficient public purchases, prison overcrowding and the digital divide.

The high level of labor informalityThe fact that in 2019 it was 72%, explains why many people must continue working to ensure their subsistence, without following certain protocols or access to certain material; at the same time, this informality prevents greater tax collection that would help to improve budget items such as healthcare. Peru is the second Latin American country with the lowest investment in healthcare.

On the other hand, inequalityThe Gini index, which in 2018 was 42.8, is aggravated by the territorial distribution of the expense, linked to the centralization of employment of the rural population in Lima. During the pandemic, workers from the country's highlands who have migrated to the capital have wanted to return to their places of origin, as many are not on the payroll and do not have labor rights, in contravention of mobility restrictions.

This social context makes it possible to question some of the approved economic measures, according to some Peruvian academics. The president of the Peruvian Institute of Economics (IPE), Roberto Abusada, warned that Peru's macroeconomic strengths will not help forever. He considered that certain regulations cannot be complied withThe "setting parameters such as body mass index (BMI) or an age limit generates obstacles for this group of people, who could be highly qualified, and could not return to their workcenter".

Economic package

At the end of April, Minister Alva presented a $26 billion economic stimulus package, representing 12% of GDP. Additional measures raised this percentage to 14.4% of GDP a month later, and even then it would have been closer to 17%. Comparatively, this is one of the largest stimulus packages adopted in the world (in Latin America, the second country is Brazil, with a stimulus of 11.5% of GDP).

In agreement with the monitoring that the IMF Peru has adopted measures in three different areas: fiscal, monetary and macro-financial, and in terms of the exchange rate and balance of payments.

First, in terms of fiscal measures, the government approved 1.1 billion soles (0.14% of GDP) to address the health emergency. In addition, different measures have been implemented, among which two stand out: the "Stay in your home" bonus and the creation of the Business Support Fund for Micro and Small Enterprises (FAE-MYPE).

The first measure, for which the government approved approximately 3.4 billion soles (0.4% of GDP) in direct transfers, is a 380 soles (US$110) bond, targeted at poor households and vulnerable populations, of which there have been two disbursements. The second measure refers to the creation of a fund of 300 million soles (0.04% of GDP) to support MSEs, in an attempt to guarantee credit for work capital and to restructure or refinance their debts.

Among other fiscal measures, the government approved a three-month extension of the income tax declaration for SMEs, some flexibility for companies and households in the payment of tax obligations, and a deferral of household electricity and water payments. The entire fiscal support package accounts for more than 7% of GDP.

On the other hand, in terms of monetary and macro-financial measures, the Central reservation Bank (BCR) reduced the reserve requirement rate by 200 basis points, bringing it to 4%, and is monitoring the evolution of inflation and its determinants to increase monetary stimulus if necessary. It has also reduced reserve requirements , provided liquidity to the system with a package backed by government guarantees of 60 billion soles (more than 8% of GDP) to support loans and the chain of payments.

In addition, exchange rate and balance of payments measures have been implemented through the BCR's intervention in the foreign exchange market. By May 28, the BCR had sold approximately US$2 billion (0.9% of GDP) in foreign exchange swaps. International reserves remain significant at over 30% of GDP.

On the other hand, in the area of trade relations, Peru agreed not to impose restrictions on foreign trade operations, while liberalizing the loading of goods, speeding up the issuance of certificates of origin, temporarily eliminating some tariffs and waiving various infractions and penalties contained in the General Customs Law. This was especially true for transactions with strategic partners, as the European UnionAccording to Alberto Almendres, the president of Eurochambres (the association of European Chambers in Peru). 50% of foreign investment in Peru comes from Europe.

Peruvian exports, although the emergence of the coronavirus in China at the beginning of the year led to a slowdown in transactions with that country, mining and agricultural exports remained positive. in the first two months of the yearas indicated by the research and development Institute of Foreign Trade of the Lima Chamber of Commerce (Idexcam). Subsequently, the impact has been greater, especially in the case of raw material exports and tourism.

Comparison with Chile and Colombia 

The status in Peru can be analyzed in comparison with its neighbors Chile and Colombia, which will have a somewhat smaller drop in GDP in 2020, although their recovery will also be somewhat smaller.

In terms of the issue of confirmed Covid-19 cases as of June 25, Chile (259,064 cases) is similar in size to Peru (268,602), although the issue of deaths is almost half (4,903 Chileans and 8,761 Peruvians), which corresponds to the proportion of its total population.

In response to the pandemic, Chilean authorities implemented a series of measures, including the declaration of a state of catastrophe, travel restrictions, school closures, curfews and bans on public gatherings, and a telework law. This crisis came only a few months after the social unrest experienced in the country in the last quarter of 2019.

On the economic front, Chile approved a stimulus of 6.7% of GDP. On March 19, the authorities presented a fiscal package of up to US$11.75 billion focused on supporting corporate employment and liquidity (4.7% of OPIB), and on April 8, an additional US$2 billion of financial aid to vulnerable households was announced, as well as a credit guarantee scheme of US$3 billion (2%). In its June forecast update , the IMF expects Chile's GDP to fall by 7.5% in 2020 and increase by 5% in 2021.

As for Colombia, the level of contagion has been lower (77,313 cases and 2,611 deaths), and its economic package to deal with the crisis has also been smaller: 2.8% of GDP. The Government created a National Emergency Mitigation Fund, which will be partially financed by regional and stabilization funds (about 1.5% of GDP), complemented by the issuance of national bonds and other budgetary resources (1.3%). In its recent update, the IMF forecasts that Colombia's GDP will fall by 7.8% in 2020 and rise by 4% in 2021.

The trade dependence between the two countries - greater in the case of Brazil, but the Chinese also need certain Brazilian products, such as soybeans - ensures the understanding between the two countries.

The relationship between Brazil and China has proven to be particularly pragmatic: neither Jair Bolsonaro has reviewed the link with the Asian country as he promised before becoming president (in his first year in office he has not only kept Brazil in the BRICS but even made a highly publicized official trip to Beijing), nor has Xi Jinping punished his partner for having accused him of mismanaging the coronavirus pandemic, as has happened with other countries. The convenience of mutual trade relations, revalued by the trade war between China and the US and by the present world crisis, has prevailed.

▲ Jair Bolsonaro and Xi Jinping in Beijing in October 2019 [Planalto Palace].

article / Túlio Dias de Assis

After years of criticizing the "perverse communist government of Beijing", Jair Bolsonaro surprised at the end of last October with a state visit to the Forbidden City, which he himself specially publicized on social networks. On that trip he gave Xi Jinping the jersey of the Club de Regatas do Flamengo (the soccer team that at that time represented Brazil in the Libertadores Cup, which he would end up winning) and expressed his total conviction of being in a capitalist country. In November he hosted a BRICS summit in Brasilia.

Bolsonaro's policy toward China had already begun to change since shortly after acceding to the presidency in January 2019, in contrast to his anti-China messages during the election campaign.

In fact, diplomatic relations between the two countries date back to the time of the military board of which Bolsonaro sample so proud. In 1974, Brazil recognized the People's Republic of China as the only China, thus allowing, despite being unaware of it at the time, the creation of a huge trade link between the two nations of continental proportions. Since then, as China's openness to China progressed, relations between China and Brazil have been increasing, so that for almost a decade now China has been Brazil's main trading partner . China's dependence on Brazil is also remarkable in relation to some products, such as soybeans, although for the Chinese Brazil is the twentieth trading partner , since logically they are economies of very different sizes.

When in 1978 Deng Xiaoping decided to open up Chinese Economics to the rest of the world, Chinese GDP was close to $150 billion, 75% of Brazil's, which was already over $200 billion. Four decades later, in 2018, Brazilian GDP was $1.8 trillion and Chinese GDP was $13.6 trillion.

Soybeans and swine

Brazil's greatest commercial and even political rapprochement with China occurred during the presidency of Luiz Inácio 'Lula' da Silva, during which the BRICS was formed, a club that helped create a greater level of economic and diplomatic proximity between member countries. This rapprochement led China to become Brazil's leading trading partner in terms of exports and imports. Brazil's sales to China almost double exports to the US.

Although trade with Brazil represents less than 4% of the total value of goods imported by China annually, the South American country continues to be an important trading partner for the People's Republic, due to the fact that the main product imported from Brazil is soybeans, one of the usual per diem expenses instructions for a large part of the Chinese population. More than half of the soybeans imported by China come from Brazil and the trend is to increase, mainly due to the trade war with the USA - the second main exporter of soybeans to China -, thus making Brazil practically the breadbasket of the Middle Kingdom. China is the destination of more than 70% of Brazilian soybean production.

Dependence on China, from the Brazilian consumer's perspective, was accentuated at the end of 2019 due to an exorbitant rise in the price of meat. The average between the different Brazilian states hovered between 30% and 40% compared to previous months. Producers were able to substantially increase their profits in the short term, but the popular classes openly protested the uncontrolled price of a product very present in the usual per diem expenses of the average Brazilian. The rise in prices was due to a combination of factors, among them an outbreak of swine fever that devastated a large part of Chinese production. Faced with a shortage of supply in its domestic market, China was forced to diversify its suppliers, and being in the midst of a trade war with the USA, China had no choice but to turn to the Brazilian agricultural potential, one of the few capable of meeting the great Chinese demand for meat. During this period - a brief one, as it gradually returned to the previous status - Brazil obtained a certain coercive power over the Asian giant.

Huawei and credits

Brazil is in a status of extreme dependence on China in technological subject : more than 40% of Brazil's purchases from China are machinery, electronic devices or parts thereof. Already in the last decade, with the arrival of the smartphone and fiber optics revolution in Latin America, Brazil decided to bet more on Chinese technology, thus becoming one of the main international markets for the now controversial Huawei brand, which has come to dominate 35% of the Brazilian cell phone market. While the US and Europe were suspicious of Huawei and from the beginning placed limits on its markets, Brazil saw Chinese technology as a cheaper way to develop and never let itself be swayed by suspicions of Chinese government interference in privacy subject . Even several deputies of the PSL (former party to which Bolsonaro belonged) visited China in early 2020 to evaluate the possibility of acquiring Chinese facial recognition equipment to help state security forces in the fight against organized crime, a proposal that was ultimately rejected by the Parliament.

With the rise of the controversy about the risks of espionage that the use of the Chinese multinational's technology may pose, some voices have warned of the threat that Huawei's contracting may pose to many government agencies and offices: a couple of embassies and consulates, part of the infrastructure of the Chamber of Deputies, and even the headquarters of the Federal Prosecutor's Office and the Federal Justice in some federal states. Although given the lack of accusatory evidence against Huawei, little has been done by the government about it; only the cancellation of some purchases of Huawei devices has been given.

Brazil is the country that has received the second most public loans from China in Latin America: $28.9 billion (Venezuela is the first with $62.2 billion), spread over eleven loans between 2007 and 2017, of which nine come from the Chinese development Bank and two others from the Export-Import Bank of China. Despite being a high value, it represents a very small percentage of the Brazilian public debt, which already exceeds one trillion dollars. Most of the loans granted by Beijing have been earmarked for the construction of infrastructure for resource extraction. In addition, Chinese companies have invested in the construction of two ports in Brazil, one in São Luís (Maranhão State) and the other in Paranaguá (Paraná State).

Coronavirus rhetoric

Bolsonaro soon realized his dependence on China and opted for a policy of accommodation towards Beijing, far from his election campaign messages. Once again, then, Brazil was betting on pragmatism and moderation, as opposed to ideology and radicalism, in terms of Itamaraty (Ministry of Foreign Affairs) policy. Likewise, in the face of the instability caused by the US-China trade war and Trump's current weak position, Bolsonaro was demonstrating pragmatism by not closing himself off to high-potential trade partners because of his ideology, as was seen last November at the BRICS summit in Brasilia.

But sometimes a rhetoric emerges that is in line with the original thinking. In the wake of the coronavirus pandemic, Bolsonaro has copied Trump's anti-China narrative in some messages. A good example is the exchange of tweets that took place between Eduardo Bolsonaro, federal deputy and eldest son of the president, and the Chinese ambassador, Yang Wanming. The former compared the coronavirus to the Chernobyl accident, insinuating total irresponsibility, negligence and concealed information on the part of the Chinese Communist Party. The ambassador responded that the president's son "on his last trip to the US did not contract the coronavirus, but a mental virus", referring to his ideological proximity to Trump.

However, all this status seems to have calmed down after a call between the presidents of both countries, in which both reaffirmed their commitments, especially those of a commercial and financial nature. Also, once again Bolsonaro seems to follow Itamaraty's traditional line of neutrality, despite the constant insistence of his instructions to blame China for the current tragedy. It is clear that the economic dependence on China is still much stronger than the ideological principles of Bolsonaro's political base, however Trumpist it may be.

Albania and North Macedonia forced to accept tougher negotiating rules, as Serbia and Montenegro reassess their options

Brexit has been absorbing the EU's negotiating attention for many months and now Covid-19 has slowed down non-priority decision processes. In October 2019, the EU decided to cool talks with the Western Balkans, under pressure from France and some other countries. Albania and North Macedonia, which had done the work that Brussels had requested in order to formally open negotiations, have seen the rules of the game changed just before the start of the game.

▲ Western Balkans meeting with EU countries held in London in 2018 [European Commission].

article / Elena López-Doriga

Since its origins, the European Community has been evolving and expanding its competencies through treaties structuring its functioning and purposes. issue membership of the organization has also expanded considerably: it began with 6 countries (France, Belgium, the Federal Republic of Germany, Italy, Luxembourg and the Netherlands) and now consists of 27 (following the recent departure of the United Kingdom).

The most remarkable year of this enlargement was 2004, when the European Union undertook to integrate 10 new countries, which was a great challenge, given that these countries were mainly from Central and Eastern Europe, coming from the "iron curtain", with less developed economies coming out of communist systems and Soviet influence.

The next goal in the enlargement is the possible integration into the EU of the Western Balkan countries (Albania, Bosnia and Herzegovina, Kosovo, North Macedonia, Montenegro and Serbia). However, at a summit held in Brussels at the end of 2019 for the opening of accession negotiations for new members, some EU countries were against continuing the process, so for the time being the accession of the candidate countries is going to have to wait. Some EU leaders have described this postponement as a "historic mistake".

Expansion into Central and Eastern Europe

In May 1999, the European Union launched the Stabilization and association Process. The Union undertook to develop new contractual relations with Central and Eastern European countries that expressed a desire to join the Union through stabilization and association agreements, in exchange for commitments to political, economic, trade or human rights reform. As a result, in 2004 the EU integrated the Czech Republic, Cyprus, Slovakia, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, and Slovenia (the first member of the Western Balkans). In 2007 Bulgaria and Romania also joined the Union and in 2013 Croatia, the second Western Balkan country to join.

Integration of the Western Balkans

Since the end of the Yugoslav wars at the end of 2001, the EU has played a very prominent role in the Balkans, not only as an economic power subject reconstruction, but also as a guarantor of stability and security in the region. The EU's goal is in part to prevent the Western Balkans from becoming a security black hole, due to the rise of rising nationalism, the growing tension between Moscow and Washington, which fuels tensions between ethnic groups in the region, and the economic penetration of China into the area. Clearer progress towards Balkan integration was reaffirmed in the Commission's Western Balkans Strategy of February 2018 and in the Sofia Declaration following the EU-Western Balkans Summit held in the Bulgarian capital on May 17, 2018. At the Summit, EU leaders reiterated their unequivocal support for the European perspective of the Western Balkans. "I see for the Western Balkans no future other than the EU. There is no alternative, there is no plan B. The Western Balkans are part of Europe and belong to our community," said the then president of the European committee , Donald Tusk.

Official candidates: Albania and Macedonia

Albania applied for EU membership on April 28, 2009. In 2012, the Commission noted significant progress and recommended that Albania be granted candidate status, subject to the implementation of a number of outstanding reforms. In October 2013, the Commission unequivocally recommended that Albania be granted candidate status. Angela Merkel paid a visit to Tirana on July 8, 2015 and stated that the prospect of accession of the countries of the Balkan region to the European Union (EU) was important for peace and stability. He stressed that in the case of Albania the pace of the accession process depended on the completion of reforms in the judicial system and the fight against corruption and organized crime. In view of the country's progress, the Commission recommended the opening of accession negotiations with Albania in its 2016 and 2018 reports.

On the other hand, the Republic of North Macedonia (former Yugoslav Republic of Macedonia) applied to join the Union in March 2004 and was granted candidate country status in December 2005. However, the country did not start accession negotiations because of the dispute with Greece over the use of the name "Macedonia". When it was successfully resolved through the Prespaagreement with the new name of the country - Northern Macedonia - the committee agreed on the possibility of opening accession negotiations with this country in June 2019, assuming the necessary conditions were met.

Potential Candidates: Bosnia and Herzegovina and Kosovo

Bosnia and Herzegovina is a potential candidate country. Although it negotiated and signed a Stabilization and associationagreement with the Union in 2008, the entrance into force of this agreement was Fail mainly due to the country's failure to execute a core topic judgment of the European Court of Human Rights. In the meantime, the Parliament of Bosnia and Herzegovina has not reached an agreement concerning the rules of procedure governing its meetings with the European Parliament (twice a year), as these meetings have not been held since November 2015, and this status constitutes a breach of the agreement by Bosnia and Herzegovina. 

Kosovo is a potential candidate for EU membership. It declared its independence unilaterally in February 2008. All but five member states have recognized Kosovo's independence (Cyprus, Slovakia, Spain, Greece and Romania). Among the countries in the region, Serbia and Bosnia and Herzegovina have also not recognized Kosovo as an independent state. In September 2018, the European Parliament went a step further and decided to enter into inter-institutional negotiations, which are currently ongoing. However, the fact that not all member countries currently recognize its independence is a major brake.

Negotiating access: Montenegro and Serbia

Montenegro, one of the smallest states on the European continent, has been part of different empires and states over the past centuries, finally gaining independence peacefully in 2006. It applied to join the Union in December 2008; it was granted candidate country status in December 2010, and accession negotiations began in June 2012. By the end of 2018, 32 negotiating chapters had been opened, out of a total of 35.

Serbia 's process began in December 2009 when former President Boris Tadić officially submitted the membership application and also handed over to justice the war criminal Ratko Mladić, manager of the Srebrenica massacre during the Bosnian War, who was hiding in Serbian territory. However, the conflict with Kosovo is one of the main obstacles Serbia faces in achieving its accession to the European Union. It was granted candidate country status in March 2012, after Belgrade and Pristina reached an agreement on Kosovo's regional representation. The official opening of accession negotiations took place on January 21, 2014. In February 2018, the Commission published a new strategy for the Western Balkans stating that Serbia (as well as Montenegro) could join the Union by 2025, while acknowledging the "extremely ambitious" nature of this prospect. Serbia's future accession to the Union, like that of Kosovo, remains closely linked to the high-level dialogue between these two countries, held under the auspices of the Union, which should lead to a legally binding comprehensive agreement on the normalization of their relations.

A step back in the negotiations

In October 2019, a summit was held in Brussels whose goal was to structure the negotiations of the official candidates to join the EU. Both North Macedonia and Albania were convinced that a date would be set to start the long process of negotiations. However, the process reached an impasse after seven hours of wrangling, with France rejecting the entrance of both countries. France led the campaign against this enlargement, but Denmark and the Netherlands also joined the veto. They claim that the EU is not ready to take on new states. "It doesn't work too well at 28, it doesn't work too well at 27, and I'm not sure it will work any better with another enlargement. So we have to be realistic. Before enlarging, we need to reform ourselves," said French President Emmanuel Macron.

The then president of the European Commission, Jean-Claude Juncker, considered that this suspension was a great historical mistake and hoped that it would only be momentary. For his part, Donald Tusk said he was "ashamed" of the decision, and concluded that North Macedonia and Albania were not to blame for the status created, as the European Commission's reports were clear that both had done what was necessary to start negotiations with the EU.

In Albania, Prime Minister Edi Rama stated that the lack of consensus among European leaders would not change Albania's future aspirations for EU membership. He assured that his government was determined to carry forward the reforms initiated, in the electoral, judicial and administrative fields, because it considered them necessary for the development of the country, not just because they were requested in Brussels.

In North Macedonia, on the other hand, the European rejection was deeply disappointing, as the country had proceeded to reform its institutions and judicial system and to fight corruption; it had also modified its Constitution, its name and its national identity. The refusal left this country, an official candidate for accession for 14 years, in a status of great uncertainty, so that Prime Minister Zoran Zaev decided to dissolve the Parliament and call elections for April 12, 2020 (later postponed due to the Covid-19 emergency). "We have fulfilled our obligations, but the EU has not. We are victims of a historical mistake that has caused a huge disappointment," Zaev assured.

A new, stricter process

Despite the fact that, according to the Commission, North Macedonia and Albania fulfilled the requirements to become accession candidates, Macron proposed to tighten the accession process. In order to unblock the status and continue with the process, which the EU claims to be a priority goal , Brussels has given in to the French president's request by setting a new methodology for integrating new countries.

The new process provides for the possibility of reopening chapters of the negotiations that were considered closed or of fail talks on any of the chapters; it even envisages paralyzing the negotiations as a whole. It is intended to give more weight to the governments and to facilitate the suspension of pre-accession funds or the suspension of the process if the candidate countries halt or reverse the reforms they have committed to. The new method will apply to Albania and North Macedonia, whose negotiations with the EU have not yet started, while Serbia and Montenegro will be able to choose whether to opt in, without having to change their established negotiating framework , according to the Commission.

One of the main instruments for combating poverty loses its relevance between the end of the "golden decade" and the beginning of the "second lost decade

The so-called Conditional Cash Transfers (CCTs) submission cash transfers to underprivileged families with a commitment to schooling, medical check-ups or other basic requirements that, along with improving household income, sought to promote the options of the younger generation - have helped in the last two decades to significantly increase theaverage class in Latin America. But once the subsistence level was surpassed, citizens recently began to demand improved services, such as teaching, healthcare or transportation - as seen in the protests of recent months in the region - to which the CCTs no longer provided an answer. Just when the countries were thinking of readapting their policies in response to this change of perspective, the crisis triggered by Covid-19 threatened to throw millions of people back into poverty, making cash transfers necessary once again, this time without conditionalities.

▲ Beneficiaries of Brazil's Bolsa Família, one of the pioneering conditional cash transfer programs [Gov. of Brazil].

article / María Gabriela Fajardo

The first Conditional Cash Transfer (CCT) programs in Latin America, a pioneer region in the implementation of this instrument, were developed in the mid-1990s in Brazil and Mexico with the intention of "transforming and halting the intergenerational transmission of poverty through the development of human capabilities in the most vulnerable families," as stated in a report by ECLAC (United Nations Economic Commission for Latin America and the Caribbean). CCTs were designed to provide support to families status poverty or extreme poverty with minor children. The submission these monetary aids (also non-monetary) was made as long as the families complied with basic conditions of health, Education and nutrition of the minors.

The implementation of CCTs spread rapidly throughout the region. In 1997, only four countries had any of these programs: Brazil (Bolsa Escola), Ecuador (Bono Solidario), Honduras (Programa de Asignación Familiar) and Mexico (Progresa). A decade later, almost all Latin American countries had adapted the initiative.

Although in some cases this tool has been controversial, given that some governments have been able to use it as "an instrument of social policy and its targeting is discussed as a strategy to address actions that must operate under restricted budgets", according to the aforementioned ECLAC report , the truth is that CCTs are considered to have contributed to the socioeconomic progress of the region. This was recently pointed out by Alejandro Werner, director for the Western Hemisphere of the International Monetary Fund (IMF). "In the last 15 years," he said, attributing part of the credit to CCTs, "important progress has been made in the topic poverty alleviation and reduction of income maldistribution. Thus, Latin America is probably the region with the greatest improvement in income distribution.

Between 2002 and 2014, a time known in Latin America as the "golden decade" (a consequence of the commodities boom ), the poverty rate in the region fell from 45.4% to 27.8%, so that 66 million people overcame that status, agreement to the Social Panorama of Latin America 2019 published by ECLAC. Additionally, the extreme poverty rate decreased from 12.2% to 7.8%. However, since 2015, the level of poverty and extreme poverty began to increase, a patron saint that has continued since then, albeit moderately. For 2019, ECLAC predicted an increase in poverty and extreme poverty to fees of 30.8% and 11.5%, respectively, so that 27 million more people returned to situations of poverty compared to 2014. 

The challenge: from extreme poverty to the class average

This slight reversal indicates that many who in that "golden decade" gained access to the class average, making this sector of the population a majority for the first time, now find themselves in a high Degree of vulnerability Degree At the same time, these people have seen how, having overcome their previous survival status , their expectations of subsequent progress and access to better services from the State have not been met. The new challenge in many countries was to make public policies revolve around other factors that would allow the consolidation of these people in the class average. This neglect generated discontent that contributed to the large protests experienced in several Latin American countries at the end of 2019.

The greater demands of a population in better conditions made structural deficiencies more evident. "The region's structural deficiencies have become more evident and their solution is part of the demands of broad social groups, particularly the new generations," according to the Social Panorama report . Specifically, ECLAC warned about "segmented access to quality public and cultural services".

In Werner's words, "having achieved such a significant reduction in the reduction of poverty also generates an important challenge for policy makers in Latin America, since the design of social policies must be oriented to address other factors, not to the reduction of extreme poverty. It is not that we have to forget about that, but clearly the challenge now is to focus also on addressing those segments of the population that are no longer in poverty, which are class average". After highlighting the precariousness of this large group of the population that has moved up the social ladder, the IMF manager for the Western Hemisphere indicated that "clearly the instruments to address this vulnerability are different from the conditional transfer schemes that were implemented in the past", and he specifically mentioned access to quality Education and health.

But the States have faced the need for this paradigm shift without budgetary support. It is evident that there is little state reaction capacity to meet the new needs of the vulnerable population affected by low educational levels, few work opportunities and the inefficiency of the pension system.

The countries have found that economic growth, which between 2000 and 2013 hovered jointly around 2%, has been weakening since 2014. Thus, real GDP per capita in the region has declined by 0.6% per year. The causes of this decline in economic growth can be classified into two factors, as explained by Werner. First, structural causes have inhibited potential growth due to "the scarcity of investment, slow productivity growth, a Pass business climate, leave infrastructure quality and Education". Secondly, within the cyclical causes, the weak global economic growth and the low price of raw materials have also affected the uncertainty of large regional economies such as Brazil and Mexico, the sudden economic stoppages of stressed economies such as Argentina and Ecuador, and the social tensions that took place in the last quarter of 2019.

Coronavirus

The emergence of the Covid-19 pandemic has worsened the economic outlook for Latin America and the Caribbean, for which the April 2020 report forecasts a 5.2% drop in GDP this year. Although the IMF estimates a recovery of 3.4% in 2021, this will not be enough to allay fears of a new "lost decade". In his most recent intervention to comment on these data, Werner warned that between 2015 and 2025 GDP per capita "will be flat".

To cope with this new status, socially aggravated by the health crisis and the suffering of so many people, governments are resorting to direct cash transfers, no longer conditional, to vulnerable households. In a way, we are returning to a stage of need, even prior to the moment when CCTs were extended. We are returning to the urgency of the 1980s, known in Latin America as the lost decade, when countries had to apply shock measures to get out of a serious public debt crisis.

The president of the Inter-American development Bank (IDB), Luis Alberto Moreno, believes that it is still too early to speak of a second lost decade, but agrees that the moment leads to unconditional transfer programs. "The big question is whether everything we have achieved in the last 15 years in terms of reducing poverty and extreme poverty, with the incorporation of some Latin Americans into the middle classes, will be lost or whether, on the contrary, the capacity of the social systems and the governments' drive to increase debt and public expense will cushion the effects," Moreno said. All the countries "are strengthening the transfer programs that were developed almost two decades ago, and which have been very successful", although "in this case they will not be conditional, in order to preserve the income of many families".

Apart from China, Italy has received aid from Russia and Cuba, making a risky geopolitical move in the European context.

The global spreading of the virus is putting under stress the big ally of the Union, the United States, which is demonstrating its lack of an efficient social health care system. Furthermore, the initial refusal of Washington to send help to the EU was seen as an opportunity for countries like Russia, China and Cuba to send medical and technical support to those countries of the EU that are most affected by the virus. Italy has taken aid send by Beijing, Moscow and Havana, shaking the geopolitical understandings of the EU's foreign policy.

▲ Russia's aid arrived in Italy in the middle of the pandemic crisis [Russian Defense Ministry].

ARTICLE / Matilde Romito

The World Health Organisation (WHO) declared Corona Virus (Covid-19) a pandemic on the 11th of March, 2020. The fast widespread of the virus pushed numerous countries around the world and especially in Europe where there is the highest number of confirmed cases, to call for a lockdown. This extreme measure is not only leading the EU and the entire world towards an unprecedented economic crisis, but it is also redefining geopolitics and the system of alliances we were used to.

The pandemic. On January 30, 2020, the World Health Organisation (WHO) declared the first outbreak of novel coronavirus a 'public health emergency of international concern'. In mid-February, numerous cases of corona virus began to be reported in northern Italy and in several European countries. Initially, the spread of the virus mainly hit Italy, which reported the biggest number of cases among the EU states. In March, Italy started with the implementation of social-distancing measures and the consequent lockdown of the country, followed by Spain, France and other European countries. On March 11, 2020, the WHO declared covid-19 a global pandemic. Currently, Europe is the region of the world with the highest number of confirmed cases. According to the WHO, on April 6, Europe reached 621,407 cases compared to the 352,600 cases in America and the 112,524 in Western Asia.

The global lockdown. At first, several major airlines suspended their flights from and to China, in order to avoid further contaminations. Now, the majority of flights in Europe and in other regions have been cancelled. The biggest areas of world are under lockdown and the economic consequences of this are becoming more and more evident. A forced social distancing seems to be the only way to contain the spread of the virus and the closing of national borders is currently at the center of states' policies to combat the virus. However, some European countries, such as Sweden, do not seem to agree on this.

Lack of solidarity

We are assisting to a global situation of 'everybody for oneself,' and this has become highly evident within the EU itself. Individual countries within the Union have shown high levels of egoism on different occasions. The North-South divide within the EU is clearer than ever, particularly between the Netherlands and Austria on the one side, and Italy, Spain, France and Greece on the other side. The former group of countries is asking for compromise and conditions to lend money to the most afflicted ones for countering the crisis, while the latter group is asking the EU to share the debts accumulated in order to save European economies (eurobonds).

The different spread-intensity of the virus in different European countries has shown more than once the fragility of the Union, which demonstrated to be led by the arrogance of the rich. On different occasions European leaders have shown a lack of European identity, solidarity and common vision. For instance, at the beginning of the crisis France and Germany attempted to 'cover with the European flag' medical products directed to Italy, by declaring them 'European products', trying to compensate the initial inaction of the EU. Another example, could be the seizure by the Czech Republic of 110,000 Chinese masks and thousands of breathing supports, which were destined to Italy (March the 21st). Moreover, the lack of unity also came from an unjustified action of protectionism undertaken by Poland, which closed its market to agricultural products coming from Italy on March 18, despite it was already known that the virus could not be spread through such products.

Nevertheless, there are some good and unexpected examples of solidarity. For instance, a good lesson on European solidarity came from the small state of Albania. The Albanian prime minister Edi Rama taught European leaders what it means to be part of the EU by sending a medical unit to the Italian region of Lombardy, despite the numerous difficulties Albania is facing, thus showing that the fight against the virus has no nationality and it cannot leave room for selfish calculations. Moreover, more recently Germany has accepted to receive and take care of numerous patients coming from Italy, where the majority of health infrastructures are saturated.

Overall, little comprehension and solidarity has been shown between European member states, thus being criticised by the European Commission president, Ursula Von Der Leyen.

Geopolitical tensions

The EU is going through numerous changes in the relations between its members. The closing up of individual countries poses a big challenge to the EU itself, which is founded on freedom of movement of people and goods.

Currently, sending masks and medicines seems to have become the main means for countries to exert influence in global affairs. The global spreading of the virus is putting under stress the big ally of the Union, the United States (US), which is demonstrating its lack of an efficient social health care system. Furthermore, the initial refusal of Washington to send help to the EU was seen as an opportunity for countries like Russia, China and Cuba to send medical and technical support to those countries of the EU that are most affected by the virus, like Italy and Spain. After having seen its hegemonic position in Europe under threat, the US decided to send monetary help to some European countries, such as 100 million dollars to Italy, in order to help in countering the emergency.

At the end, the EU seems to start standing all together. But, did the European countries take action on time? Generally, countries, like human beings, are more likely to remember one bad impression better than numerous good ones. Therefore, are countries like Italy going to 'forgive' the EU and its initial inactivity? Or are they going to fall back on countries like Russia and China, which have shown their solidarity since the beginning?

Furthermore, did the EU take action because of an inherent identity and solidarity? Or was it just a counteraction to the Chinese and Russian help? It seemed that specifically Germany's mobilisation followed the exhortation of the former president of the European Central Bank (ECB), Mario Draghi. He accused Germany and other countries of taking advantage of the virus for imposing a 'conditionality' to the countries that were asking for help. Moreover, in an interview on the Financial Times he called for an exceptional investment in the economies and for a guarantee of the debts, in order to jointly face the crisis, because no country can face this unprecedented threat alone. Now, anti-virus economic action turned into a matter of urgency for Europe and the European Commission is working on a common European response to the crisis.

Future perspectives

Probably, after the end of the virus spread, the world will assist to important changes in the global dynamics of alliances. Russia and China will most likely have one or more European allies to advance their interests in the EU. On the one side, this could lead to a further weakening of the EU governance and to the re-emergence of nationalism on states' behavior within the Union. And on the other side, it could lead to the development of further mechanisms of cooperation among the EU members, which will go beyond the eurobonds and will probably extend to the sanitary dimension.

To preserve its unity, the European political-economic-cultural area will need to be strengthened, by fighting inequalities with a new model of solidarity. Its future prosperity will most likely depend on its internal market.

Nevertheless, for now the only thing we can be sure about is that the first impression on the EU was very bad and that this situation is going to lead all of us towards an unprecedented economic crisis, which most probably will redefine the political relationships between the world's biggest regions.