The always difficult negotiations are made more difficult by the 75 billion euros the UK is giving up.

ANALYSIS / Pablo Gurbindo Palomo

The negotiations for the European budget for the period 2021-2027 are crucial for the future of the Union. After the failure of the extraordinary summit on 20-21 February, time is running out and the member states must put aside their differences in order to reach an agreement on agreement before 31 December 2020.

framework The negotiation of a new European Multiannual Financial Framework (MFF) is always complicated and crucial, as the ambition of the Union depends on the amount of money that member states are willing to contribute. But the negotiation of this new budget line, for the period 2021-2027, has an added complication: it is the first without the United Kingdom after Brexit. This complication does not lie in the absence of the British in the negotiations (for some that is more of a relief) but in the 75 billion euros they have stopped contributing.

What is the MFP?

framework The Multiannual Financial Framework (MFF ) is the EU's long-term budgetary framework deadline and sets the limits for expense of the Union, both as a whole and in its different areas of activity, for a deadline period of no less than 5 years. In addition, the MFF includes a number of provisions and "special instruments" beyond that, so that even in unforeseen circumstances such as crises or emergencies, funds can be used to address the problem. This is why the MFF is crucial, as it sets the political priorities and objectives for the coming years.

This framework is initially proposed by the Commission and, on this basis, the committee (composed of all Member States) negotiates and has to come to a unanimous agreement . After this the proposal is sent to the European Parliament for approval.

The amount that goes to the MFF is calculated from the Gross National Income (GNI) of the Member States, i.e. the sum of the remuneration of the factors of production of all members. But customs duties, agricultural and sugar levies and other revenues such as VAT are also part of it.

Alliances for war

In the EU there are countries that are "net contributors" and others that are "net receivers". Some pay more to the Union than they receive in return, while others receive more than they contribute. This is why countries' positions are flawed when they face these negotiations: some want to pay less money and others do not want to receive less.

Like any self-respecting European war, alliances and coalitions have been formed beforehand.

The Commission 's proposal for the MFF 2021-2027 on 2 May 2018 already made many European capitals nervous. The proposal was 1.11 % of GNI (already excluding the UK). It envisaged budget increases for border control, defence, migration, internal and external security, cooperation with development and research, among other areas. On the other hand, cuts were foreseen in Cohesion Policy (aid to help the most disadvantaged regions of the Union) and the Common Agricultural Policy (CAP).

The Parliament submitted a report provisional on this proposal in which it called for an increase to 1.3% of GNI (corresponding to a 16.7% increase from the previous proposal ). In addition, MEPs called, among other things, for cohesion and agriculture funding to be maintained as in the previous budget framework .

On 2 February 2019 the Finnish Presidency of committee proposed a negotiation framework starting at 1.07% of GNI.

This succession of events led to the emergence of two antagonistic blocs: the frugal club and the friends of cohesion.

The frugal club consists of four northern European countries: Sweden, Denmark, the Netherlands and Austria. These countries are all net contributors and advocate a budget of no more than 1 % of GNI. On the other hand, they call for cuts to be made in what they consider to be "outdated" areas such as cohesion funds or the CAP, and want to increase the budget in other areas such as research and development, defence and the fight against immigration or climate change.

Austrian Chancellor Sebastian Kurz has already announced that he will veto on committee any proposal that exceeds 1 % of GNI.

The Friends of Cohesion comprise fifteen countries from the south and east of the Union: Spain, Bulgaria, the Czech Republic, Cyprus, Estonia, Greece, Hungary, Latvia, Lithuania, Malta, Poland, Portugal, Romania, Slovakia and Slovenia. All these countries are net recipients and demand that CAP and cohesion policy funding be maintained, and that the EU's budget be based on between 1.16 and 1.3 % of GNI.

This large group met on 1 February in the Portuguese town of Beja. There they tried to show an image of unity ahead of the first days of the MFP's discussion , which would take place in Brussels on the 20th and 21st of the same month. They also announced that they would block any subject cuts.

It will be curious to see whether, as the negotiations progress, the blocs will remain strong or whether each country will pull in its own direction.

Outside of these two groups, the two big net contributors stand out, pulling the strings of what happens in the EU: Germany and France.

Germany is closer to the frugals in wanting a more austere budget and more money for more modern items such as digitalisation or the fight against climate change. But first and foremost it wants a quick agreement .

France, for its part, is closer to the friends of cohesion in wanting to maintain a strong CAP, but also wants a stronger expense in defence.

The problem of "rebates

And if all these variables were not enough, we have to add the figure of the compensatory cheques or "rebates. These are discounts to a country's contribution to budget. This figure was created in 1984 for the United Kingdom, during the presidency of the conservative Margaret Thatcher. For the "Iron Lady", the amount that her country contributed to budget was excessive, as most of the amount (70%) went to the CAP and the Cohesion Funds, from which the UK hardly benefited. It was therefore agreed that the UK would have certain discounts on its budgetary contribution on a permanent and full basis.

These compensatory cheques have since been given to other net contributor countries, but these had to be negotiated with each MFF and were partial on a specific area such as VAT or contributions. An unsuccessful attempt was already made to eliminate this in 2005.

For the frugal and Germany these cheques should be kept, on civil service examination to the friends of cohesion and especially France, who want them to disappear.

Sánchez seeks his first victory in Brussels

Spanish Prime Minister Pedro Sánchez is staking much of his credibility in both Europe and Spain on these negotiations.

In Europe, for many he failed in the negotiations for the new Commission. Sánchez started from a position of strength as the leader of Europe's fourth Economics after the UK's exit. He was also the strongest member of the Socialist group parliamentary , which has been in the doldrums in recent years at the European level, but was the second strongest force in the European Parliament elections. For many, therefore, the election of the Spaniard Josep Borrell as High Representative of the Union for Foreign Affairs and Security Policy, with no other socialist in key positions, was seen as a failure.

Sánchez has the opportunity in the negotiations to show himself as a strong and reliable leader so that the Franco-German axis can count on Spain to carry out the important changes that the Union has to make in the coming years.

On the other hand, in Spain, Sánchez has the countryside up in arms over the prospects of reducing the CAP. And much of his credibility is at stake after his victory in last year's elections and the training of the "progressive coalition" with the support of Podemos and the independentistas. The Spanish government has already taken a stand with farmers, and cannot afford a defeat.

Spanish farmers are highly dependent on the CAP. According to the Ministry of Agriculture, Fisheries and Food: "in 2017, a total of 775,000 recipients received 6,678 million euros through this channel. In the period 2021-2027 we are gambling more than 44,000 million euros."

There are two different types of CAP support:

• Direct aids: some are granted per volume of production, per crop (so called "coupled"), and the others, the "decoupled" ones, are granted per hectare, not per production or yield and have been criticised by some sectors.

• Indirect support: this does not go directly to the farmer, but is used for the development of rural areas.

The amount of aid received varies depending on the sector, but can amount to up to 30 % of a farmer's income. Without this aid, a large part of the Spanish countryside and that of other European countries cannot compete with products coming from outside the Union.

Failure of the first budget summit

On 20 and 21 February an extraordinary summit of the European committee took place in order to reach a agreement. It did not start well with the proposal of the president of the committee, Charles Michel, for a budget based on 1.074% of GNI. This proposal convinced nobody, neither the frugal as excessive, nor the friends of cohesion as insufficient.

Michel's proposal included the added complication of linking the submission of aid to compliance with the rule of law. This measure put the so-called Visegrad group (Hungary, Poland, Czech Republic and Slovakia) on guard, as the rule of law in some of these countries is being called into question from the west of the Union. So, another group is taking centre stage.

The Commission's technical services made several proposals to try to make everyone happy. The final one was 1.069% of GNI. Closer to 1%, and including an increase in rebates for Germany, the Netherlands, Sweden, Austria and Denmark, to please the frugal and attract the Germans. But also an increase in the CAP to please the friends of cohesion and France, at the cost of reducing other budget items such as funding for research, defence and foreign affairs.

But the blocs did not budge. The frugal ones remain entrenched at 1%, and the friends of cohesion in response have decided to do the same, but at the 1.3% proposed by the European Parliament (even if they know it is unrealistic).

In the absence of agreement Michel dissolved the meeting; it is expected that talks will take place in the coming weeks and another summit will be convened.

Conclusion

The EU has a problem: its ambition is not matched by the commitment of its member states. The Union needs to reinvent itself and be more ambitious, say its members, but when it comes down to it, few are truly willing to contribute and deliver what is needed.

The Von der Leyen Commission arrived with three star plans: the European Green Pact to make Europe the first carbon-neutral continent; digitalisation; and, under Josep Borrell, greater international involvement on the part of the Union. However, as soon as the budget negotiations began and it became clear that this would lead to an increase in the expense, each country pulled in its own direction, and it was these subject proposals that were the first to fall victim to cuts due to the impossibility of reaching an understanding.

A agreement has to be reached by 31 December 2020, if there is to be no money at all: neither for CAP, nor for rebates, nor even for Erasmus.

Member States need to understand that for the EU to be more ambitious they themselves need to be more ambitious and willing to be more involved, with the increase in budget that this entails.

Georgian aspirations for EU and NATO membership meet Western fears of Russian overreaction

▲ View of Tbilisi, the capital of Georgia, with the presidential palace in the background [Pixabay].

ANALYSIS / Irene Apesteguía

In Greek times, Jason and the Argonauts set out on a journey in search of the Golden Fleece, with a clear direction: the present-day lands of Georgia. Later, in Roman times, these lands were divided into two kingdoms: Colchis and Iberia. From being a Christian territory, Georgia was conquered by the Muslims and later subjected to the Mongols. At this time, in the 16th century, the population was reduced due to continuous Persian and Ottoman invasions.

In 1783, the Georgian kingdom and the Russian Empire agreed to the Treaty of Georgiyevsk, in which the two territories pledged mutual military support. This agreement failed to prevent the Georgian capital from being sacked by the Persians, which was allowed by the Russian Tsar. It was the Russian tsar, Tsar Paul I of Russia, who in 1800 signed the corresponding incorporation of Georgia into the Russian empire, taking advantage of the moment of Georgian weakness.

After the demise of the Transcaucasian Federal Democratic Republic and thanks to the Russian collapse that began in 1917, Georgia's first modern state was created: the Democratic Republic of Georgia, which between 1918 and 1921 fought with the support of German and British forces against the Russian Empire. Resistance did not last, and occupation by the Russian Red Army led to the incorporation of Georgian territory into the Union of Soviet Republics in 1921. In World War II, 700,000 Georgian soldiers had to fight against their former German allies.

In those Stalinist times, Ossetia was divided in two, with the southern part becoming an autonomous region belonging to Georgia. Later, the process was repeated with Abkhazia, thus forming today's Georgia. Seventy years later, on 9 April 1991, the Georgian Soviet Socialist Republic declared its independence as Georgia.

Every era has its "fall of the Berlin Wall", and this one is characterised by the disintegration of the former Russia. The major armed conflict that was to unfold in 2008 as a result of the frozen conflicts between Georgia and South Ossetia and Abkhazia since the beginning of the last century came as no surprise.

Since the disintegration of the USSR

After the break-up of the USSR, the territorial configuration of the country led to tension with Russia. Independence led to civil unrest and a major political crisis, as the views of the population of the autonomous territories were not taken into account and the laws of the USSR were violated. As twin sisters, South Ossetia wanted to join North Ossetia, i.e. a Russian part, with Abkhazia again following in their footsteps. Moscow recognised Georgia without changing its borders, perhaps out of fear of a similar action to the Chechen case, but for two long decades it acted as the protective parent of the two autonomous regions.

With independence, Zviad Gamsakhurdia became the first president. After a coup d'état and a brief civil war, Eduard Shevardnadze, a Georgian politician who in Moscow had worked closely with Gorbachev in articulating perestroika, came to power. Under Shevardnadze's presidency, between 1995 and 2003, ethnic wars broke out in Abkhazia and South Ossetia. Around ten thousand people lost their lives and thousands of families fled their homes.

In 2003 the Rose Revolution against misrule, poverty, corruption and electoral fraud facilitated the restoration of territorial integrity, the return of refugees and ethnic acceptance. However, the democratic and economic reforms that followed remained a dream.

One of the leaders of the Rose Revolution, the lawyer Mikhail Saakashvili, became president a year later, declaring Georgian territorial integrity and initiating a new policy: friendship with NATO and the European Union. This rapprochement with the West, and especially the United States, put Moscow on notice .

Georgia's strategic importance stems from its geographic centrality in the Caucasus, as it is in the middle of the route of new oil and gas pipelines. European energy security underpinned the EU's interest in a Georgia that was not subservient to the Kremlin. Saakashvili made nods to the EU and also to NATO, increasing the issue of military troops and expense in armaments, something that did him no harm in 2008.

Saakashvili was successful with his policies in Ayaria, but not in South Ossetia. Continued tension in South Ossetia and various internal disputes led to political instability, which prompted Saakashvili to leave Withdrawal .

At the end of Saakashvili's term in 2013, commentator and politician Giorgi Margvelashvili took over the presidency as head of the Georgian Dream list. Margvelashvili maintained the line of rapprochement with the West, as has the current president, Salome Zurabishvili, a French-born politician, also from Georgian Dream, since 2018.

Fight for South Ossetia

The 2008 war was initiated by Georgia. Russia also contributed to previous bad relations by embargoing imports of Georgian wine, repatriating undocumented Georgian immigrants and even banning flights between the two countries. In the conflict, which affected South Ossetia and Abkhazia, Saakashvili had a modernised and prepared army, as well as full support from Washington.

The battles began in the main South Ossetian city of Tskhinval, whose population is mostly ethnic Russian. Air and ground bombardments by the Georgian army were followed by Russian tanks on the territory of entrance . Moscow gained control of the province and expelled the Georgian forces. After five days, the war ended with a death toll of between eight hundred and two thousand, depending on the different estimates of each side, and multiple violations of the laws of war. In addition, numerous reports commissioned by the EU showed that South Ossetian forces "deliberately and systematically destroyed ethnic Georgian villages". These reports also stated that it was Georgia that initiated the conflict, although the Russian side had engaged in multiple provocations and also overreacted.

Following the 12 August ceasefire, diplomatic relations between Georgia and Russia were suspended. Moscow withdrew its troops from part of the Georgian territory it had occupied, but remained in the separatist regions. Since then, Russia has recognised South Ossetia as an independent territory, as do Russian allies such as Venezuela and Nicaragua. The Ossetians themselves do not acknowledge cultural and historical ties with Georgia, but with North Ossetia, i.e. Russia. For its part, Georgia insists that South Ossetia is within its borders, and the government itself will take care of it as a matter of law and order, thus solving a problem described as constitutional.

Given Georgia's rapprochement with the EU, the conflict prompted European diplomacy to play an active role in the search for peace, with the deployment of 200 observers on the border between South Ossetia and the rest of Georgia, replacing Russian peacekeepers. In reality, the EU could have tried earlier to react more forcefully to Russia's actions in South Ossetia, which some observers believe would have prevented what happened later in Crimea and eastern Ukraine. In any case, despite initiating the conflict, this did not affect Tbilisi's relationship with Brussels, and in 2014 Georgia and the EU signed a agreement of association. Today it is safe to say that the West has forgiven Russia for its behaviour in Georgia.

The war, although short, had a clear negative impact on the Ossetian region's Economics , which in the midst of difficulties became dependent on Moscow. However, Russian financial aid does not reach the population due to the high level of corruption.

The war is over, but not the friction. In addition to a refugee problem, there is also a security problem, with Georgians being killed on the border with South Ossetia. The issue is not closed, but even if the risk is slight, everything remains in the hands of Russia, which in addition to controlling and influencing politics, runs tourism in the area.

This non-resolution of the conflict hampers the stabilisation of democracy in Georgia and with it the possible entrance accession to the European institution, as ethnic minorities claim a lack of respect for and protection of their rights. Although governance mechanisms remain weak in these conflicts, it is clear that recent reforms in the South Caucasus have led to promote inclusive dialogue with minorities and greater state accountability. 

Latest elections

November 2018 saw the last direct presidential elections in the country, as from 2024 it will no longer be citizens who vote for their president, but legislators and certain compromisers, due to a constitutional reform that transforms the country into a parliamentary republic.

In 2018, candidate of the United National Movement, Grigol Vashdze, and the Georgian Dream candidate, Salome Zurabishvili, faced each other in the second round. With 60% of the vote, the centre-left candidate became the first woman president of Georgia. She won on a European platform: "more Europe in Georgia and Georgia in the European Union". Her inauguration was greeted by protesters alleging election irregularities. The Organisation for Security and Cooperation in Europe (OSCE) endorsed the election process, but noted a lack of objectivity in the public media during the campaign.

Some Georgian media consider that Georgian Dream enjoyed an 'undue advantage' because of the intervention in the campaign of former prime minister Bidzina Ivanishvili, now a wealthy financier, who publicly announced a financial aid programme for 600,000 Georgians. It became clear that Ivanishvili pulls the strings and levers of power in the country. This questioning of the cleanliness of the campaign has led to Georgia's downgrading of democratic quality in the 2018 ratings.

Public event presided over in January by Salome Zurabishvili at the Georgian presidential palace [Presidency of Georgia].

THE APPROACH TO THE WEST

Since the policies pursued by the Georgian presidency since Saakashvili came to power, Georgia has made a determined move into the Western world. Thanks to all the new measures that Tbilisi is implementing to conform to Western demands and requirements , Georgia has managed to profile itself as the ideal candidate for its entrance in the EU. However, despite the pro-European and Atlanticist yearnings of the ruling Georgian Dream party and a large part of Georgian society, the country could end up surrendering to Russian pressure, as has happened with several former Soviet territories that had previously attempted a Western rapprochement, such as Azerbaijan and Kazakhstan.

EU compliance

Becoming the most favoured country in the Caucasus to join the European Union, with which it has a close and positive relationship, Georgia has signed several binding treaties with Brussels, following the aspiration of Georgian citizens for more democracy and human rights. In 2016 the agreement of association entered into force between the EU and Georgia, allowing for serious steps in political and economic integration, such as the creation of the Deep and Comprehensive Free Trade Area (DCFTA). This preferential trade regime makes the EU the country's main trading partner partner . The DCFTA financial aid encourages Georgia to reform its trade framework , following the principles of the World Trade Organisation, while eliminating tariffs and facilitating broad and mutual access. This alignment with the EU's framework legal framework prepares the country for eventual accession.

As for agreement of association, it should be mentioned that Georgia is a member country of the association Eastern under the European Neighbourhood Policy. Through this association, Brussels issues annual reports on the steps taken by a given state towards closer alignment with the EU. The committee of association is the formal institution dedicated to monitoring these partnership relations; its meetings have highlighted the progress made and the growing closeness between Georgia and the EU.

In 2016 the EU's Permanent Representatives committee confirmed the European Parliament's agreement on visa liberalisation with Georgia. This agreement was based on visa-free travel for EU citizens crossing the country's borders, and for Georgian citizens travelling to the EU for stays of up to 90 days.

Georgia, however, has been disappointed in its expectations when the EU has expressed doubts about the desirability of membership. Some EU member states cited the potential danger posed by Georgian criminal groups, which several pro-Russian parties in the country took advantage of to wage a vigorous campaign against the EU and NATO. The campaign paid off and anti-Russian opinion waned, prompting Moscow to assert itself further with military manoeuvres, although public support for the Georgian Dream continued in the 2016 elections.

Despite the lack of any prospect of forthcoming accession, the EU continues to offer hope, as in German Chancellor Angela Merkel's tour of the Caucasus last summer. On her visit to Georgia, Merkel compared the Georgian conflict to the Ukrainian conflict due to the presence of Russian troops in the country's separatist regions. She visited the town of Odzisi, located on the border with South Ossetia, and at a speech at the University of Tbilisi said that both that territory and Abkhazia are "occupied territories", which did not go down well with Moscow. Merkel pledged to do her utmost to ensure that this "injustice" remains present on the international diary .

Georgian President Salome Zourachvili also believes that the UK's exit from the EU could be a great opportunity for Georgia. "It will force Europe to reform. And being an optimist, I am sure it will open new doors for us," she said.

Hope in the Atlantic Alliance

Russia's behaviour in recent years, in addition to encouraging Georgia's rapprochement with the EU, has given a sense of urgency to its desire to join the Atlantic Alliance.

In 2016, several joint NATO-Georgia manoeuvres took place in the Black Sea, where a coalition fleet was stationed. This was evidence of a growing mutual rapprochement that Georgia hoped would lead to NATO membership at that year's NATO summit in Warsaw. But despite the country's extensive defence, security and intelligence training, it was not invited to join the club: Russia was not to be inconvenienced.

NATO assured, however, that it would maintain its open-door policy towards eastern countries and considered Georgia to remain an exemplary candidate . Pending future decisions, Tbilisi was left with strengthening military cooperation, offering as an incentive the "Black Sea format", a compromise solution that includes NATO, Georgia and Ukraine and increases NATO's influence in the Black Sea region.

Georgia, as the capital ally of NATO and the European Union in the Caucasus region, aspires to greater protection from the Atlantic Alliance vis-à-vis Russia. The European political centre observes the Georgian population's efforts to join the international organisation and opts for a strategy of patience for the Caucasus region, as in the Cold War years.

Approaching Russia's borders is problematic, and multiple criticisms have been levelled at NATO over the easy Georgian membership due to its geostrategic status . Russia has repeatedly expressed concern about such joint cooperation between the US, NATO and neighbouring Georgia.

President Zurabishvili's speech at the Holocaust remembrance events in Jerusalem in January [Presidency of Georgia].

A VIGILANT RUSSIA

The wounds of the 2008 South Ossetia war have not yet healed in Georgian society. Despite Georgia's political attempts at rapprochement with Western institutions, Russia remains suspiciously vigilant, so that relations between the two countries continue to be troubled. Last summer saw the latest episode of tension, which led the Georgian president to describe Russia as an "enemy and occupier".

After some rapprochement in 2013 that saw an increase in food trade and Russian tourism coming to the country, Moscow has shifted to a strategy of attempting rapprochement at the religious and political level. With that intention, a small group of Russian lawmakers travelled to the Georgian capital for the Orthodox Interparliamentary Assembly. This international organisation, led by Greece and Russia, is the only one that brings together the legislative bodies of Orthodox countries. The meeting took place in the plenary hall of the Georgian Parliament, where Russian MP Sergei Gabrilov took the seat of the Speaker of the House. Several politicians from the civil service examination did not take kindly to this and mobilised thousands of citizens, who staged serious public disorder in an attempted storming of the Parliament. The Russian delegation was forced to leave the country, but the attempt at Russian influence through religion was clear, whereas until then the Church had kept out of all political controversies.

The riots, in which many people were injured, prompted members of the government to cancel all foreign travel and the president to cut short her trip to Belarus, where she was to attend attend the opening of the European Games, a presence considered important in Western eyes. Demonstrators protested against the Georgian Dream headquarters, where they burned and stormed outbuildings. The ten days of rioting were not only justified by the incident at the Assembly, but also as a reaction to the Russian occupation. In addition, the conflict between the Georgian Dream and the opposing parties led by Saakashvili, now in exile in Ukraine, may also have contributed.

The crisis ended with the departure of Prime Minister Mamuka and the appointment of Georgi Gaharia as his successor, despite criticism that he had been criticised for his management of the unrest as interior minister.

The uprisings, while well-intentioned, are against Georgia's interests, the Georgian president said, as what the country needs is "internal calm and stability", both to progress internally and to gain sympathy among EU members, who do not want more tension in the region. Salome Zurabishvili warned of the risks of any internal destabilisation that Russia could provoke.

In the wake of the June protests, the Kremlin issued a decree banning the transport of nationals to Georgia by Russian airlines. While claiming to ensure "national security and protection of citizens", it was clear that Moscow was reacting to an anti-Russian tinged revolt. The decision reduced visitor arrivals from Russia, which had been accounting for one in four tourists, which the government said could mean a loss of $1 billion and a 1 per cent reduction in GDP.

The tension reached the television media in the Georgian capital. Days after the riots, the host of Rustavi 2's 'Post Scriptum' programme intervened in the broadcast speaking Russian and hurled several insults at President Vladimir Putin, which Russia described as unacceptable and 'Russophobic'. The channel apologised, admitting that its ethical and editorial standards had been violated, while several Georgian politicians, including the president, condemned the episode and lamented that such acts only increase tensions between the two nations.

The events of last summer show Georgians' rejection of an enmity with Russia that, in addition to heightening tensions with the big northern neighbour, may have an impact on Georgia's relationship with the EU and other Western international organisations, as they will not tread on quicksand, especially with big Russia in front of them.

REFERENCES

Asmus, Ronald D. A Little War That Shook the World. London: Palgrave MacMillan, 2010.

Cornell S. E. & Starr, F. The Guns of August 2008. Russia's War in Georgia. London: M.E. Sharpe, 2009.

De la Parte, Francisco P. The Returning Empire. La Guerra de Ucrania 2014-2017: Origen, development, entorno internacional y consecuencias. Oviedo: Ediciones de la Universidad de Oviedo, 2017.

Golz, Thomas. Georgia Diary: A Chronicle of War and Political Chaos in The Post-Soviet Caucasus.New York: Taylor and Francis, 2006.

Brexit, with the departure from the EU of a free-market champion, has boosted the coordination of the free-trade countries of northern Europe.

16th century engraving showing a view of Lübeck, when it was part of the Hanseatic League.

ANALYSIS / Jokin de Carlos Sola

Made up of the little people of Europe's northern coast, the Hanseatic League controls the sea and the money that moves across it. This definition applies to two organisations, one medieval and one recently created, ready to make its voice heard on the European stage.

In 2017, eight northern European countries (the Netherlands, Ireland, Denmark, Sweden, Finland, Estonia, Latvia and Lithuania) began the process of creating the New Hanseatic League initiative. Its main objective goal is to maintain and increase economic orthodoxy, now that the United Kingdom - one of its main supporters - is leaving the European Union, and to prevent France from taking advantage of this moment to implement its expansionary Economics policies.

The first League

The First Hanseatic League or simply the Hansa was a commercial and defensive alliance of trading cities and guilds of the major maritime cities of the Baltic and North Atlantic. Founded in Lübeck in 1158, the first alliance consisted of the free German maritime cities of Lübeck, Hamburg, Lüneburg, Wismar, Rostock and Stralsund.

Many other cities later joined the Hansa, such as Cologne, Groningen, Berlin and Stockholm. In addition, the Hansa set up trading posts in ports in almost all of northern Europe, and even established their own quarters - called kontors -in other places such as London, Antwerp, Novgorod and Bruges.

This alliance acquired great commercial as well as military importance. Since its foundation, the Hansa had maintained an almost symbiotic relationship with the Baltic monastic state of the Teutonic Knights. Later it would establish its own fleet. With the growth of the nation states and the decline of the guilds, the Hansa declined until it consisted only of Lübeck, Hamburg and Bremen, and was finally dissolved with German unification.

Creation of the New Hansa

With the enlargement of the European Union, new opportunities arose to balance the power of the dominant Franco-German bloc (also known as the Aachen bloc) on the European committee . Thus, the Visegrad group , the Three Seas Initiative or the Craiova group have been created in Central and Eastern Europe. In recent years, the New Hanseatic League has emerged in the north of the continent.

The latter initiative was born in the wake of Brexit. As the third country in terms of economic weight in the EU, the United Kingdom has had a great influence on the Union's economic policy, defending ideas such as economic stability, deficit reduction, debt reduction, economic deregulation and a stable monetary policy that avoids inflation, as well as a free trade policy.

These ideas clashed with the French economic policy of greater economic dirigisme and interventionism, with its emphasis on social projects and protectionism. Meanwhile, Germany's cautious attitude acted as a balance and middle ground between the two positions. London's positions have also been supported by the Netherlands and Denmark, as well as other countries with a tradition of maritime trade, who, faced with the prospect of the UK's departure from the EU, decided to establish greater coordination among themselves.

Another cause for the training of the New Hansa is the coming to power of Emmanuel Macron and his rise as a strongman in the EU. Macron has abandoned part of the economic speech with which he was elected in 2017 to move closer to traditional French positions, also followed by countries such as Italy and Spain.

A final trigger for the Dutch- and Irish-inspired initiative was the replacement in January 2018 of Jeroen Dijsselbloem as Eurogroup president by Mario Centeno, Portugal's socialist minister. For many northern European politicians, Dijsselbloem's intransigence in the face of the Greek debt crisis in 2015 was correct and a way forward for EU and Eurozone economic and monetary policy.

This group was initially known by names such as "The Vikings" or "Bad Weather Coalition". In February 2018 the finance ministers of the Netherlands, Denmark, Ireland, Sweden, Finland, Estonia, Latvia and Lithuania signed the founding document of the New Hanseatic League.     

Political and economic values

The main objectives of the New Hanseatic League are based on free trade ideas, as well as maintaining a balanced budget . Its main objectives are the development of the European Stability Mechanism, established in Luxembourg. The idea would be that this development would eventually turn the ESM into a plenary session of the Executive Council European Monetary Fund, which would redistribute wealth between member states with surpluses and those with trade deficits. The Hansa is also in favour of giving the ESM more power to interfere in national budgets in order to avoid exceeding deficit limits.

However, although the founding document sticks to the European Stability Mechanism, the Hansa does not intend to stop there. Some representatives of these countries have spoken out against a budget for the eurozone, a eurozone finance minister and a common deposit insurance scheme, as proposed by Macron. They also criticised the European Commission for its decision not to initiate a disciplinary procedure against Italy over its deficit and debt.

The Hansa's positions have gained general popularity in their respective countries. On the one hand, the right-wing parties in those places have long advocated free trade approaches, while the left-wing parties do not want the welfare state of their respective populations to be put at risk in order to help the southern European countries.

The ideological origins of the New Hansa could be traced back to British Thatcherism in the 1980s. This political ideology included on the one hand a liberal approach to Economics, advocating ideas such as deregulation, privatisation and free trade. Thatcherism did not advocate the break-up of the EU, but included a sceptical view, advocating a union limited to Economics, without advancing political union. This thinking, in opposition to traditional French dirigisme, has had a clear influence within British politics and within the Conservative Party. However, its influence on other European politicians, such as various leaders in the Netherlands and Denmark, is somewhat less well known.

The defence of a liberal and capitalist Europe, contrary to a strong central power, is shared by many countries, all of them located in the northern fringe of the Union. This pits them against the Mediterranean countries, which have required EU aid in recent years.

However, there are other elements that characterise these countries beyond their wealth and geographical position, such as their size and their dependence on trade, derived from their maritime character. This makes them favourable to increased trade treaties and forces them to seek resources they do not have on their own territory.

Leadership of the group

The New Hanseatic League is an initiative and not an organisation as such, so it has no official leader; decisions are taken in unofficial councils of heads of government and finance ministers. However, several personalities have been prominent, notably Mark Rutte, the Dutch prime minister, and Wopke Hoekstra, his finance minister.  

Wopke Hoekstra is considered the architect of the New Hansa. Aged 41, he is a Christian Democrat, a practising Protestant, a member of the Remonstrant Brotherhood and a former student of the Institut Européen d'Administration des Affaires (INSEAD), Europe's most prestigious business school. He has shown the most intransigent side of the Dutch government on economic issues in recent years. It has reached the point that Dijsselbloem himself has criticised the New League's training because, according to him, it damages the idea of solidarity within the Union.

Mark Rutte, on the other hand, has used the creation of the New Hansa to increase the Netherlands' weight in European politics. Rutte is regarded as one of the most active Dutch premiers in foreign policy since the Second World War and has tried to assert the Netherlands in the EU vis-à-vis France and Germany. At the same time Rutte has tried to occupy the British voice in Europe's committee as one of the most Atlanticist leaders.

Other leaders who have shown their involvement in this project have been the Danish finance minister until 2019, Kristian Jensen, and the Irish deputy prime minister, Simon Coveney. On the other hand, the role of Denmark and Sweden was core topic for the Baltic countries to move away from the Visegrad group and join the New Hansa.

Economic, financial and technological weight

The Hansa has managed to bring together an economic weight that other initiatives of the same kind have not been able to muster. Currently, the combined GDP of the Hansa countries is more than 2.2 trillion euros, close to the 2.5 trillion euros of the French GDP, the second largest economic force in Europe.

The group also has clear financial clout. Cities such as Amsterdam, Stockholm and Dublin have been climbing the ranks of Europe's leading financial capitals in recent years, although they have yet to overtake Paris and Frankfurt. Moreover, these are countries where technological innovation exists, especially Estonia and the Netherlands.

The fact that group does not exceed 10% of the European population somewhat mitigates its influence, as the votes of the countries and blocs in the European committee are partly based on issue of inhabitants, but it is nonetheless a relevant political actor in the EU. In contrast, the southern European countries (Spain, Italy, Portugal and Greece) account for 30 per cent of the European population, but are considered less decisive.

The Hansa positions represent a break with the EU principle that, for reasons of inter-territorial social cohesion, those countries that have more and are more developed contribute more. The ideas of the more radical sections of the Hansa can even be labelled as a certain neo-colonialism, insofar as they seek to use the supranational mechanisms of the EU to ensure that debtor countries in the South repay loans, which will keep them at certain levels of debt.

The Netherlands, Sweden, Denmark, Finland and Ireland are among the top contributors to the common European budget , behind the top four (Italy, UK, France and Germany). On a per capita basis, the Netherlands, Sweden and Denmark are at the top of the list. While Estonia, Latvia and Lithuania are beneficiaries, they are less so than Poland, Greece or Romania.

Given its greater contribution to the EU, or less dependence on aid, the Hansa is demanding a greater say in the EU's direction. For the time being, it has succeeded in imposing various criteria on budget in 2020, as opposed to those of the recipient countries.

Exercise of influence

One of the main objectives of the New Hanseatic League was to ensure that the two most controlling figures over the European Economics (the presidency of the Central Bank, and the leadership of the International Monetary Fund) were to its liking. In both cases it has failed, largely because of Emmanuel Macron's intervention.

The Netherlands had a particular interest in the appointment of the ECB, as outgoing president Mario Draghi had lobbied the Dutch government to activate stimulus policies. The New Hansa's candidate was Bundesbank president Jens Weidmann, known for his criticism of Mario Draghi's stimulus policies and for advocating a high-interest policy. Macron agreed with Germany that the European Commission would go to a German (Ursula von der Leyen) in exchange for the ECB being chaired by Christine Laguard, who would continue Draghi's policies.

For the IMF, Rutte proposed Dijsselbloem, despite his criticism of the Hansa. The final vote was between him and Bulgarian economist Kristalian Georgieva. Although Germany ended up voting for the Dutchman, Georgieva became the new head of the IMF. 

However, the Hansa has also had some victories, such as holding the Commission firm on the Italian budget , which was going to exceed deficit limits; exerting influence on the European budget , which has suffered a drastic reduction; or slowing down, if not completely blocking, Macron's project for a common budget for the Eurozone.

visit from Dutch Finance Minister Wopke Hoekstra (right) to his Irish counterpart Paschal Donohoe (left) at the end of 2018 [Gov. of Ireland].

Expansion strategy and partnerships

One of the problems previously mentioned for the Hansa has been its lack of weight in the European committee . For this reason, its leaders have sought the political alignment of countries with which there may be ideological overlaps.

One of the first countries to establish contact with the Hansa countries was Austria. This makes sense since Austria has a similar economic structure to the other Hansa countries due to its small size and population. In addition, the government of Sebastian Kurz seemed to have a strong programme towards Europe very much in line with the Hansa. Famous is the proposal of several Austrian politicians for the creation of two European currencies, one for the north and one for the south. This subject of connections would be very important for later influencing Germany. In the new von der Leyen Commission, the Finance Committee was won for Austria by the economist Johannes Hahn.

The Austrian courtship also seems to have a strategic goal as a step to also start influencing Germany, which acts as a balancer of the balance. Several German politicians from the CDU and CSU are favourable to the Hansa's thinking and have been very influential throughout Merkel's government. But when Wolfgang Schäuble was removed from the Finance Ministry and replaced by the Social Democrat Olof Scholz these positions lost importance.

Similarly, the Hansa (and above all the Netherlands) has been establishing contacts with the Flemish government in Belgium. Although Flanders is just another state in the Belgian federation, the lack of a government in Brussels gives it great importance, along with the government of Wallonia. In addition, the Flemish control the port of Antwerp and have always been closer to the ideas of the Hansa.

On the other hand, the Hansa also seems to have initiated contacts with Slovakia and the Czech Republic. This was seen when in March 2019 both countries signed a declaration together with the Hansa countries against the Italian budget . It would be unusual to see these countries moving very close to the Hansa because they remain natural recipients of European funds. However, given that they are countries with healthy accounts, they could be seen as allies of the Hansa in some future actions.

In a way we could see Hanseatic diplomacy as a partial evolution of Otto von Bismarck's diplomacy (to push France out of power by training regional alliances). The aim is to form a sufficiently strong bloc that can present itself solidly on the European committee and convince Germany to tilt the balance towards budgetary orthodoxy and the interests of the northern countries. Alongside France are most of the southern countries. One could very generally say that the Hansa's objectives are: "Mobilise the North, seduce Germany, silence the Mediterranean".

Strange alliances in front of the Hansa

The Hanseatic configuration of alliances around Europe and their influence on the new European budget seems to have created curious alliances, the largest of which is undoubtedly the one that may arise between Poland and France.

This may sound strange, because when it comes to foreign policy, social policy and on certain points of European integration, Poland and France have been poles apart. But when it comes to economic policy and the European budget , France and Poland are on the same page, and this may result in a common front against the Hansa.

The reasons for the Franco-Polish rapprochement are varied. Both nations follow the tradition of the social welfare state, France because of its republican fraternity bequest and Poland because of its Catholic heritage, both opposed to the Hanseatic absentee state. Moreover, both countries have reasons to want to avoid restrictive budgets. The Polish government fears that a drastic reduction of investment in Poland would force it to make social cuts, which would lead to instability. France is sample opposed for a more ideological reason: Macron has championed the idea of 'A Europe that protects' and would have trouble sticking to this idea.

Nevertheless, Poland and France have some sticking points, especially with Macron's attempt at a new Ostpolik to calm relations with Russia.

Conclusion

The creation of the New Hanseatic League is ultimately written request a reaction to two movements: the creation of European regional systems and the withdrawal of economic policies favouring Northern Europe. 

If the countries of Europe organise themselves into blocs, it may be easier to carry out certain initiatives because there are fewer interlocutors to negotiate with.

On the other hand, the creation of an initiative with the specific goal purpose of defending northern interests may pose a risk for southern countries, accentuating north-south differences in Europe. This would put Germany, which wants to avoid such a compromise, in a difficult position status .

The smart thing to do would be to avoid these confrontations directly by seeking other sources of revenue for the EU that do not compromise the wealth of the Hansa countries, as Morawiecki expressed and Macron has also pointed out. Thus, some taxes have been discussed, such as those on air travel, financial transactions and the digital world. But again, with the importance of the financial sector and new technologies in countries such as Ireland or Estonia, this may encounter civil service examination. It is not a simple task.

In any case, it should be ensured that European politicians have sufficient vision and understanding to make agreements that take into account all the idiosyncrasies of the European Union.

The success of several reforms is overshadowed by the impulsiveness and personal interests of a president with a tarnished image.

Jair Bolsonaro talks to the press at the beginning of January at the headquarters of the Ministry of Economics [Isac Nóbrega, PR].

ANALYSIS / Túlio Dias de Assis

One year ago, on 1 January 2019, a former Brazilian army captain, Jair Bolsonaro, climbed the steps of the Palácio do Planalto for the inauguration of his presidential mandate. He was the most controversial leader to assume Brazil's head of state and government since the presidency of the no less flamboyant populist Jânio Quadros in the 1960s. The more doomsdayers predicted the imminent end of the world's fourth largest democracy; the more deluded, that Brazil would take off and take its rightful place in the international arena. As was to be expected, neither extreme was right: Brazil continues to maintain the level of democracy of the last 30 years, without any military attempt , as some had feared; nor has Brazil become the world power that many Brazilians believe it deserves because of its exceptional territorial, population, cultural and political characteristics. As is often the case, the reality has been less simple than expected.

Economy

Among the most attractive aspects of Bolsonaro's candidacy to the public during the election campaign was the promise of economic recovery under the administration of Chicago Boy minister Paulo Guedes. In order to fulfil this promise purpose, right at the beginning of his mandate, Bolsonaro unified the former ministries of Finance, Planning, development and management, Industry, work and Foreign Trade and Services under the umbrella of the Ministry of Economics, all under the command of the liberal Guedes. Guedes became a sort of "super-minister" manager of the new government's entire economic diary .

From the outset, Guedes made it clear that he would do his utmost to lift the barriers of Brazilian trade protectionism, a doctrine adopted at Degree by every government for more than half a century. In order to deploy his crusade against statism and protectionism, Guedes has this year promoted bilateral trade rapprochement with several strategic allies, which, 'unlike previous governments, will not be chosen on the basis of ideological criteria', according to Bolsonaro. Already in January there was the advertisement of a Novo Brasil at the World Economic Forum in Davos, defined by greater openness, zero tolerance for corruption and the strengthening of Latin America as a regional bloc.

Retail

Despite his support for economic openness, Bolsonaro's team has never been overly favourable to trade with Mercosur - his regional multilateral trade bloc - with Guedes even stating that it was a burden for Brazil, as he considered it an ideological rather than an economic alliance. However, this aversion to Mercosur, and mainly to Argentina, seems to have ended after the signature of the Mercosur-EU tradeagreement , given that the potential volume of trade that would be generated by such a pact would be enormously beneficial for Brazilian agricultural and livestock producers. area Similarly, a agreement was also signed with the countries of the European Free Trade Area (EFTA), comprising Switzerland, Norway, Iceland and Liechtenstein.

Of these two agreements, the most controversial has been the one signed with the European Union, mainly due to the high levels of rejection in some member states such as France, Ireland and Austria, as it is seen as a possible risk to the Common Agricultural Policy. On the other hand, some other countries were critical, citing Bolsonaro's environmental policy, as the agreement was signed during the summer, which coincided with the time of the fires in the Amazon. As a result, several member states have still not ratified the treaty and the Austrian parliament has voted against it.

However, the fact that multilateral trade relations do not seem to have made much progress, due to the obstacles imposed by Europe, has not prevented Brazil from expanding its commercial activity. Contrary to what one might think, due to its ideological closeness to Donald Trump and his foreign policy, the rapprochement in subject economic relations has not been with the US, but with the antagonistic Asian giant. In this process, Bolsonaro's trip to Beijing stands out, where he showed himself to be open to Chinese trade, despite his previous less favourable statements in this regard. agreement During the proposal visit a free trade agreement with China, which has yet to be approved by the Mercosur summit, and several smaller agreements, including one on agricultural trade, came up.

This sudden Chinese interest in increasing agricultural imports from Brazil is due to the increase in demand for meat in China, triggered mainly by the swine fever epidemic that devastated domestic production. This has led to an immediate rise in the price of beef and pork in Brazil, up to 30% in some cuts in little more than a month, which has distorted the domestic market, as meat, mainly beef, is usually very present in the average Brazilian's regular per diem expenses .

Public accounts

With regard to the country's internal accounts, it is worth highlighting the approval of the pension reform(Reforma da Previdência), which initially had a markedly liberal character, with the aim of eliminating privileges and disproportionate pensions for high-level public officials. However, several modifications during its passage through the Chamber of Deputies and the Senate meant that the savings for the public treasury were slightly less than Guedes had envisaged. Still, it is a big step forward considering that the pension system had a deficit of 195 billion reais (about $47 billion) in 2018. This deficit is due to the fact that Brazil had one of the highest benefit systems in the world with the fewest demands, with many people retiring at the age of 55 on 70 per cent of their original salary.

This measure, together with several other adjustments in the public accounts, including the freezing of some ministerial expenditures, reduced the public deficit by 138.218 billion dollars in January (6.67% of GDP) to 97.68 billion dollars in November (5.91% of GDP), the most leave since the economic recession began five years ago. Among other relevant data is the drop in the Central Bank's base interest rate to a historic low of 4.5%, while the unemployment rate fell from 12% to 11.2%.

result As a result, Brazil's GDP has increased by 1.1 per cent, a timid but promising figure considering the huge recession from which Brazil has just emerged. Growth forecasts for 2020 vary between 2.3 and 3 per cent of GDP, depending on the approval of the long-awaited tax reforms and management assistant.

Security

Another reason for the controversial captain of reservation to become president was Brazil's historic crime problem. Just as Bolsonaro came up with a strong name to tackle the economic status , for security he recruited Sergio Moro, a former federal judge known for his indispensable role in Operação Lava Jato, Brazil's biggest anti-corruption operation, which led to the imprisonment of former president Lula himself. With the goal to fight corruption, reduce criminality and dynamite the power of organised crime, Moro was put in charge of a merger of Departments, the new Ministry of Justice and Public Security.

In general, the result has been quite positive, with a B decrease of issue in violent crime. Thus, there has been a 22% reduction in homicides, which is one of the most worrying indicators in Brazil, as it is the country with the highest absolute issue number of homicides in the world per year.

Among the factors that explain this drop in violent crime, the main one is the greater integration between the different institutions of state security forces (federal, state and municipal). The transfer of gang leaders to prisons with a higher level of isolation, thus preventing them from communicating with other members of organised crime, has also played a role. Another element has been the recent"anti-crime pack" C , which consists of a series of laws and reforms to the penal code to give more power to state security forces, as well as stiffer penalties for violent crime, organised crime and corruption.

In contrast to these developments, there has also been an increase in the number of accidental deaths in police operations. Some cases have been echoed in public opinion, such as that of an artist who ended up shot in his car when the police mistook him for a drug trafficker, or those of children killed by stray bullets in shoot-outs between drug gangs and the security forces. This, together with controversial statements by the head of state on the issue, has fuelled criticism from most of civil service examination and several human rights NGOs.

Social policy and infrastructure

In terms of social policies, the past year has been far from the apocalyptic dystopia that was expected (due to Bolsonaro's previous attitude towards homosexuals, Afro-Brazilians and women), although it has not been as remarkable as in the previously mentioned sections. There has been no progress in areas core topic, but neither have there been notable changes in terms of social policy compared to 2018. For example, the emblematic social programme Bolsa Família, created during the Lula government and which greatly helped to reduce extreme poverty, has not been cancelled.

Starting with Education, at the end of 2019 Brazil came out with one of the lowest report PISA scores, a fact that the minister of education, Abraham Weintraub, blamed on the "Education progressive Marxist mood of previous administrations". As result of the failure of the regular public system, and even the lack of security of some centres, the government has openly promoted the construction of new civic-military Education centres by state governments. In such a subject centre, students receive a Education based on military values while the officers themselves provide protection in these public spaces. It should be noted that the existing schools are among the highest ranked in Brazil on subject in terms of educational quality. However, this is not without controversy, as there are many who consider that this is not an adequate solution, as it may end up educating from a militaristic perspective.

On subject health, the most notable event this year was the end of the health cooperation programme with Cuba, Mais Médicos. goal This agreement was launched in 2013, during Dilma Rousseff's term in office, and its aim was to provide a larger and more extensive universal medical service attendance through the contracting of several doctors 'exported' by the Castro government. The programme was criticised because the Cuban doctors only received 25% of the salary provided by the Brazilian government and the remaining 75% was retained by Havana. Bolsonaro broke the agreement, thus causing vacancies in staff health care that could be filled in a short time. Cuban professionals were given the opportunity to remain in Brazil under political asylum if they revalidated their degree program in medicine in the Brazilian system. This incident has not brought about a significant change in the precarious national health system; the only consequence has been the deterioration of relations with Cuba.

Despite not making much progress on the social front, the Bolsonaro administration has made improvements in national logistics infrastructure. Under the command of the military's Tarcisio Gomes de Freitas, the Ministry of Infrastructure has stood out for its ability to complete works not finished by previous governments. This led to a noticeable difference in the issue and quality of operational roads, railways and airports compared to the previous year. Among the sources of financing for new works is the reopening of a pooled fund established in 2017 between Brazilian and Chinese financial institutions, worth US$100 billion.

visit Bolsonaro with Indian Prime Minister Narendra Modi during an official visit to New Delhi in late January [Alan Santos, PR] [Alan Santos, PR].

Environment

One of the areas most feared to be harmed by Jair Bolsonaro's administration was environmental policy. This concern was heightened by the controversial fires in the Amazon during July and August. To begin with, the Ministry of the Environment, like all the others, was affected by the austerity policies of Paulo Guedes, in order to balance the public accounts, although according to Minister Ricardo Salles himself, it was the one that suffered the least from the budget cuts. As a result, forest protection was compromised at the beginning of the drought period in the Amazon.

Seeing the 278% increase in deforestation in July, Bolsonaro reacted impulsively and fired the director of the high school Nacional de Pesquisas Espaciales (INPE), accusing him of favouring civil service examination and conspiring against him. The status prompted the departure from the Amazon Protection Fund of Germany and Norway, the two largest contributors, which was met with criticism from Bolsonaro, who also accused the NGOs of being the cause of the fires. Finally, under international pressure, Bolsonaro finally reacted and decided to send in the army to fight the flames. goal which he achieved in just under a month, reaching the highest number on record in October leave .

In the end, the annual total ended up 30% higher than the previous year's figure, but still within the average range of the last two decades. However, the damage to the national image was already done. Bolsonaro, thanks to his rivalry with the media, his vehement eagerness to defend "national sovereignty" and his lack of restraint when speaking, had managed to be seen as the culprit of a distorted catastrophe.

Additionally, at the end of the year, yet another controversy hit the Bolsonaro administration: the mysterious oil spill off Brazil's northeast coast. Thousands of kilometres of beaches were affected and to this day there is still no official culprit for the crime. There were several hypotheses on the matter; the most widely accepted, which was also supported by the government, was that the spill came from an illegal shipment of Venezuelan oil attempting to circumvent the trade blockade imposed on Maduro's regime. According to analyses carried out by the Universidade da Bahia, the structure of the oil was indeed very similar to that of crude oil from Venezuelan fields.

Foreign policy

In foreign policy Bolsonaro can distinguish himself rhetorically from his predecessors, but not in terms of his actions. Although he would like to apply his ideology in this area, he himself has accepted that this is not possible. In the face of the strength and interests of state institutions, such as the diplomatic tradition of Itamaraty (Ministry of Foreign Affairs), Brazilian foreign policy has remained as pragmatic and neutral as in all previous democratic governments, thus avoiding the closing of doors for ideological reasons.

A good example of Brazilian pragmatism is the economic rapprochement with China, despite Bolsonaro's rejection of communist ideology. This does not mean, however, that he has distanced himself from his quasi-natural ally in terms of ideology, Donald Trump. However, the relationship with the US has been of a different nature, as there has been greater proximity in international cooperation and security. The US pushed for Brazil's designation as a strategic NATO partner , reached a agreement for the use of the Alcântara space base, very close to the Equator, and supports Brazil's entrance in the OECD.

In the economic sphere, however, there does not seem to be such closeness, and there have even been some frictions. One of these was Trump's threat to impose tariffs on steel and aluminium from Brazil and Argentina, which he finally withdrew, although the damage to trade relations and the São Paulo and Buenos Aires stock markets had already been done. Some analysts even suggest that the lack of reciprocity from the US on subject , as well as the rejection by some EU members of the agreement with Mercosur, was what pushed Bolsonaro to seek a compensatory relationship with the BRICS, whose 2019 summit took place in Brasilia.

Another peculiar point of Bolsonaro's foreign policy has been his position on the Israeli-Palestinian conflict, which once again sample shows the inconsistency between rhetoric and action. During the election campaign Bolsonaro promised on several occasions to move the Brazilian embassy from Tel-Aviv to Jerusalem, something that has so far not happened and only an economic office has been relocated. Bolsonaro probably feared trade reprisals from Arab countries, to which Brazil exports products, mostly meat, worth almost 12 billion dollars. Prudence on this issue even earned him the signature of several agreements with Persian Gulf countries.

Despite the above, there has been one aspect of foreign policy in which Bolsonaro has managed to impose his ideology against the 'historical pragmatism' of the Itamaraty, and that is the Latin American sphere. Brazil ceased to be the theoretically neutral giant that timidly supported the so-called Socialism of the 21st century during the Lula and Dilma governments, and now coordinates with the governments of the other political side.

Most notable is his enmity with Nicolás Maduro, as well as with former president Evo Morales, whose request to pass through Brazilian territory was openly denied by Bolsonaro. There has also been a distancing from the returning Peronism in Argentina, with the absence of Bolsonaro and any high-ranking Brazilian representative at the inauguration ceremony of Kirchner's Alberto Fernández. In the same context are the approaches to Chile, Uruguay, Paraguay and Colombia, as well as the new Bolivian government provisional , with which Bolsonaro sees more similarities. With them he has promoted the creation of PROSUR as opposed to the former UNASUR controlled by the Bolivarian left. Even so, despite having adopted a more ideological policy in the region, Brazil continues to maintain diplomatic cordiality since, although its leader takes liberal conservatism to extremes in his rhetoric, his policies in the region hardly differ from those of other right-wing governments.

Bolsonaro

In general, as has been shown, Bolsonaro's government has achieved positive results in its first year, mainly highlighting its progress in the areas of security and Economics. However, while the work of various ministers has improved perceptions of the administration, Bolsonaro himself does not appear to be making a particularly positive contribution. Throughout the year, he has generated controversy over unimportant issues, which has accentuated his previous enmity with most of the press.

As a result, the president's public image has gradually deteriorated. At the end of 2019 his popularity stood at 30%, compared to the 57.5% he started the year with. This contrasts with the approval rating of members of his government, especially Sergio Moro, who has managed to remain unmoved above 50%. In addition, his son Flavio, who is a senator, has come under investigation for a possible corruption case, in a process that the president has sought to prevent. Bolsonaro also caused a scandal in the middle of the year when he tried to appoint his son Eduardo as ambassador to Washington and was accused of nepotism. In addition to the tensions in his own party, which led to a split, there is little rapport between Bolsonaro and the presidents of both chambers of the fractured congress Nacional, both of whom are under investigation in conveniently stalled anti-corruption operations.

Impeachment?

All this chaos caused by the president gives the impression of a Bolsonaro who goes against the tide of his own government. The apparent success of the reforms already carried out ends up being tainted by the impulsiveness and personal interests of the man who once defended the impersonality of the state, which ends up causing the deterioration of his political image. In addition, there is the recent release of former president Lula, which entails the risk of the unification of the civil service examination, depending on how moderate speech is adopted. This being the case, it is possible that Bolsonaro's headless but efficient government will not find it easy to stay in power until the end of its term. It should be remembered that the hand of Brazil's congress does not usually tremble when it comes to impeachments; in little more than three decades there have already been two.

Will success in parts of the Vision 2030's diary -like diversifying the economy- have a parallel opening up to religious moderation?

King Salman bin Abdulaziz Al Saud in a recent Custodian of the Two Holy Mosques Chairs Cabinet's Session [Saudi Press Agency] [Saudi Press Agency].

ANALYSIS / Marina García Reina

Since King Salman first envisioned the need of a reform of Saudi Arabia towards a less dependent economy on petroleum, gradual changes have been done upon the aim of progress, and, in a more precise way, not to be left behind in the world race led by western countries and the booming Asian giants. The crown prince Mohammed bin Salman Al Saud has positioned himself as the leader of the shift towards a religiously moderate Saudi Arabia within the frame of the Vision 2030 initiative. Predictably, however, the reforms held in the country have been subject to numerous criticisms and double readings.

A succinct contextualization

It is convenient to recall the year 1979, when Shiite militants overthrew the secular Shah of Iran and Sunni fundamentalists besieged the Masjid al-Haram (Grand Mosque) in Mecca. That same year, the country's Shiite minority started a revolt in Al-Hasa province, resulting in numerous deaths. The Saudi monarchy responded to those mishaps by moving closer to the Wahhabi (an extremely conservative conception of Islam) religious establishment and restoring many of its hardline stances. As a result, for instance, the government shut down the few cinemas that existed in the kingdom. It was not till 2015 (or 2014, depending on which reforms to base on) when King Salman bin Abdulaziz Al-Saud -along with Mohammed bin Salman (popularly known as MBS), who he promoted to crown prince-, proclaimed reforms in Saudi Arabia towards a more moderate political scenario, opening up a new era of Saudi politics. The two expressed their will to limit the authority of the religious police to arrest citizens. They allowed the first cinemas and music concerts since decades of prohibitions, condemned religious incitement, and gradually granted women several rights.

Vision 2030

First conceived by King Salman, Vision 2030 is meant to be the decisive plan to transform the country by a sweep in economy and society, and Crown Prince Muhammad bin Salman himself has positioned as its spearhead. It is basically the headline upon which all the modernization changes are framed. The plan aims to face the three major challenges that Saudi Arabia has nowadays: unemployment, diversification, and privatisation.

It is worth mentioning that in contrast to the great majority of western countries, Saudi Arabia has a growing youthful population. Approximately, 70% of Saudi population is under 30 and the 29% of Saudis between 16 and 29 are unemployed. Vision 2030 includes greater investments in education to train future Saudi leaders, which seems quite unnecessary when noticing that Saudi citizens pay no taxes and receive free education (making up 25% of the total budget), free health care and subsidies for most utilities.

Economy is something that has been worrying most Saudis, since the country's economy is almost entirely based on petroleum and recently the price of a barrel of oil has ranged between about $46 and $64 in 2019, much lower that what it has ranked for years. Diversifying the economy is crucial for the progress of Saudi Arabia. All in all, Vision 2030 will rely on earnings coming from the Aramco's IPO (initial public offering), which will be placed in a sovereign wealth fund -also sourced by Saudi fiscal assets and the sale of state-owned real estate and other government assets-, expectedly resulting into an investment-driven economy rather than a petroleum-based one as it has been for decades. It has also cast serious doubts the nature of the measures that are being developing to modernize the country, especially because the social aspects have been left apart by, for instance, the construction of Neom, a planned futuristic city in the middle of the desert, which is meant to be the great achievement of the crown prince MBS.

Additionally, the initiative has been configured as the political rebirth of the crown prince in the eyes of the international sphere, since it means diminishing the role of government by selling Aramco's 5% of shares to investors, even so, the enterprise still is under tight control of the royal family. Without going any further, Khaled Al-Falih, the chairman of Aramco, is also the new minister of Energy, Industry, and Natural Resources, which once again brings to light the relation between these two.

The stated target is to increase the private sector's contribution to GDP from 40% today to 65% by 2030. Much of this private sector growth will come through public-private partnerships, as said before, high-positioned Saudis will have been directly or indirectly pressured to invest in the IPO. The Saudi government has been criticised on several occasions for being corrupted and showing a lack of transparency over its acts. In this area, Vision 2030 hopes to ensure the law and the obligation of honestly reporting every business activities. Under proposal of MBS a follow-up department, headed by a ministerial rank official, has been set up to follow the implementation by government ministries of projects that have been approved.

Anti-terrorist positioning and extremist ideologies

Mohammed bin Salman has severely expressed his aim of not only dealing with extremist ideologies, but also of destroying them. As part of this determination, some clerics, which are meant to form part of the extremist ideology that the leader seems to condemn, have been targeted.

Nevertheless, organizations such as Amnesty International, Human Rights Watch and the Committee to Protect Journalists have demonstrated that these presumed extremist clerics have long records of advocating the type of reform and religious moderation MBS asserts to support. For instance, in September 2017, numerous clerics, journalists and scholars known for their reluctance to MBS policy, which they consider as half-measured and not going straight to the point, were arrested by Saudi security forces. On the other hand, certain state clerics continue unpunished despite publicly criticizing the reforms and inciting hatred against the Shia minority. In particular, two members of the Council of Senior Scholars -the highest religious body in the country, whose role is to advise the King on religious matters by issuing fatwas (judicial advice provided by a religious specialist)- have been in the spotlight for years. These are Saleh al-Fawzan and Samm leh al-Lohaidan, both close to bin Salman. These two scholars are owners of broadcasting channels funded and promoted by the Saudi government from which they divulge their ultra-conservative view of Islam and condemn with the death penalty whatever they consider as violations of religious and moral rules contrary to Islam. An example of such are the declarations made saying that Shiites are not Muslims or that Muslims are not allowed to protest or even publicly criticize rulers as this would lead to rebellion that would in turn justify rulers' violent response, like those held in 2017.

Together with these personalities, there are others who also hold high-rank positions in the country's politics and government. Abdulaziz al-Sheikh, for example, is the grand mufti (muslim religious who has the authority to interpret Sharia) of Saudi Arabia. In that capacity, he has issued numerous fatwas and statements preaching the virtues of obedience to existing authorities and submitting to their policies without question. This, once again, raises the question of whether or not Saudi Arabia is actually cleansing extremist ideologies. Some, as Abdullah Almalki -a religious academic-, argue that the sovereignty and free choice of the people must have precedence over any desire to implement Sharia and that justice and free choice must be the pillars of any political community.

Almalki's father, Salman Alodah, like himself, advocates religious tolerance against calls of jihad in Iraq, Syria, and elsewhere, calling for a democratic change, supporting the empowerment of women, fighting against discrimination, and respecting the religious minorities who are marginalized in the Kingdom. Both Almalki and Alodah were also arrested in the 2017 detentions and referred the following year to court for a secret trial -something that has become common when the accused are moderate voices, feminists and intellectuals-, facing death penalty for their extra-progressive views. Besides these cases, probably the best known one was that of the Washington Post columnist Jamal Khashoggi's murder at the Saudi consulate in Istanbul in October 2018.

In contrast to some of these powerful men characterised by their severe religious stances, the Saudi society as a whole holds a somewhat more nuanced view of Islam and does not completely identify with them. On this, it is worth recalling the attack on the Shia mosques carried out by Daesh in May 2015. The event was followed by mass funerals in the Saudi streets, which exposed the unity of the Saudi people above sectarian lines.

Al Qaida was apparently eradicated from the country and, as a result of that, it moved its operations to Yemen, where Saudi Arabia's military force together partnered with the UAE -with limited US support, it must be said- and the Yemeni government forces have been doing efforts to combat it, achieving, for instance, the liberation of Mukalla. Specifically, Saudi Arabia blames the failing states of Iraq, Lebanon, Syria, and Yemen as the reason why Al Qaida has not yet been definitively eradicated.

The Iraqi government broke down after the US invasion in 2003, which led to a sectarian and corrupt government. In Syria, Bashar al Assad led the military uprising and breakdown of authority, providing al Qaida refuge, although he continuously expressed he was combating terrorists, actually al Qaida freely operated in both sides of the border. Saudi Arabia claims that further efforts must be made to remove Assad as an essential part of the battle against terrorism in the region. It also advocates efforts at the international level to stop with the use by terrorists of pro-Palestine propaganda to recruit young members.  

Aramco and the oil crisis

Petroleum prices have dropped considerably in recent years, exacerbating the need of a side Saudi economy which does not revolve around oil. This has become a rough task, taking into account that the petroleum sector employs around 70% of the population in Saudi Arabia. Aramco's IPO, which promises to sell shares to investors, has become the centre of the Vision 2030 initiative for Mohammed bin Salman.

The reasons behind the IPO are two: money -Saudi Arabia needs greater money inputs in order to accomplish the reform plans and finance the war in Yemen- and the political rehabilitation of the crown prince (MBS) under the consent of the international sphere, portraying, in a way, that the IPO may not be motivated that much because of an economic interest (which of course it is) but more deeply because of a political benefit of claiming that Saudis are opened to the world by selling part of Aramco to foreigners.

The tremendous expectation raised around the IPO can be interpreted as a way of starting attention of the incidents of 2017 and Khashoggi's murder mentioned before. Aramco's initial public offering, which started this last December in Tadawul (Saudi Arabia's domestic stock market), went resoundingly bad after the US attack in Baghdad resulting in the death of the Iranian military commander Qasem Soleimani as well as the Iraqi-Iranian deputy chief of the armed organisation Popular Mobilization Committee. Shares of the State petroleum company have dropped in a 1.7%. However, in spite of this event, Aramco's IPO went reasonably well and the company managed to be valued at $2 billion, which is not surprising considering that the Saudi government has actively encouraged Saudis to invest, meaning that there are investors (people within the orbit of the royal court and big business) who have no choice in the matter because their livelihoods and stature are dependent on proving they support Mohammed bin Salman's program and retail investors who will invest because of all the hoopla and nationalist sentiment whipped up around the offering.

Women and the guardianship rule

Undoubtedly, changes have been done within the Saudi State to overcome the lack of involvement of women in everyday life. As an example of it, the permission to drive automobiles extended to women has found a significant echo globally. Women make up half of the population in Saudi Arabia. As part of the Saudi transformation of its economy plan, there is a need beyond the sole fact of integrating women in society, namely that of integrating this half of the Saudi population into the labor force.

Women conform nowadays just the 7% of the work force. After the implementation of the Vision 2030 plan, the number is expected to rise up to a 30% by that year. Following a worldwide tendency, more women than men graduate from universities in all disciplines. Furthermore, thanks to efforts attributed to the crown prince and to King Abdullah before him, women can be members of the Consultative Assembly since 2014. Currently, they occupy 20% of its seats. In September 2011, King Abdullah granted women the right to vote, a right they exercised in 2015 for the first time.

Further changes have been done within the country in favour of integrating women, which have gone unnoticed by the public eye. Princess Reema bin Bandar al Saud is an example of that. As president of the Saudi Federation for Community Sport, she has developed different initiatives, together with other ministries, to promote women; for instance, by creating football leagues. Moreover, opening women access to the armed forces has also been a huge step forward considering the impact in the shift of gender perspective. It cannot be omitted that Saudi Arabia has been for decades an extremely conservative country and that what may be seen as basic things for westerners in the 21st century, supposes a top-down reform within their principles, especially considering that they are being introduced in a considerably short time.

Conclusion

Saudi Arabia is facing -and will face in the following years- great challenges to redirect the country's economy into one less dependent on oil, and to reeducate a youth that has been raised up with almost everything being granted by the government. Finally, there is also the challenge of making bin Salman's vision more translatable to the western public, which, as said, see the reforms with some skepticism, notwithstanding official energetic and ambitious proclamations. As a summary, society, diversification of economy and governance and bylaws are crucial for the Saudi progress. What is true is that, regardless the reticence of Westerners, MBS has gained huge support among his compatriots and is thought to be the reformer he repeatedly self-proclaims to be. This may lead us, Westerners, to consider whether an Islamic conception of renovation of Islam in appliance to govern is similar, and if so, to which extent, to our own conception of it.

By blocking some candidates, the European Parliament seeks the prominence denied by the failure of the proclamation of the Spitzenkandidat

▲ Ursula von der Leyen, at the plenary session of the European Parliament in which she defended her candidacy [European Commission]

ANALYSIS / Jokin de Carlos

In 1963, the Elysée Treaty was signed between President Charles de Gaulle and Chancellor Konrad Adenauer, ending centuries of Franco-German rivalry and beginning the friendship between the two countries. Over the next few decades, France and Germany, as the leading economies of the Union, would largely mark the diary political and economic. Even in times of crisis, both leading countries avoided giving an image of confrontation.

However, after the European elections last May, there was a public tussle between Berlin and Paris over who should replace Jean-Claude Juncker as head of the European Commission. On the one hand, led by Angela Merkel, there were those leaders who defended the nomination of the Bavarian Manfred Weber, Spitzenkandidat of the European People's Party, made up of conservative formations; on the other hand, led by Emmanuel Macron, there were those who, of liberal or social democratic tendencies, opposed this nomination in preference to the Dutchman Frans Timmermans or the Danish Margrathe Vestager.

After weeks of negotiation and diplomatic tension, Weber's candidacy was withdrawn, in part because of Merkel's political weakness in Germany and the momentary defenestration of Sebastian Kurz in Austria due to Ibizagate. But the position it was not for Vestager or Timmermans but for Ursula von der Leyen, Germany's defense minister and Merkel's Christian Democrat colleague, originally from Hanover and from an aristocratic family. 

And so ends the summer of our discontent, with this Hanoverian sun.

Election

One of the main problems facing the new president of the Commission is going to be how to achieve consensus among the leaders in the committee and between parties in Parliament.

Von der Leyen was unanimously elected in the committee, however, his election to the European Parliament was the closest in history, with only nine votes above the required majority. This vote had several surprises, such as the favorable vote of the Italian 5-Star Movement or the Polish PiS and the rejection of the SPD or the totality of the Greens.

Composition of the Commission

On 9 September, von der Leyen announced her nominees for the new Commission, which is made up of 28 members in the 28 member countries, although the United Kingdom Withdrawal to have a site for its scheduled departure from the Union on October 31.

The von der Leyen Commission has been organised in the form of pillars, each led by a Vice-President and composed of one or more Commissioners with specific portfolios. There are five pillars: (a) agreement European Green, which will cover topics such as energy, transport and agriculture; (b) a Europe ready for the digital age, for issues such as innovation and skill; (c) protecting our European way of life, which will encompass the areas of immigration and security; (d) one Economics to work for the people, destined for commerce, work and finance, and (e) a strong Europe in the world, which will include issues such as international relations or crisis management.

For the composition of this Commission, von der Leyen has tried to integrate two of the Spitzenkandidat who were discarded for the presidency. Socialist Frans Timmermans, a former Dutch deputy prime minister, will remain as vice-president and lead the pillar of the agreement the European Greens, while the liberal Margrethe Vestager, former Danish Deputy Prime Minister, having been Commissioner for skill in the previous Commission, he will lead the pillar of A Europe Ready for the Digital Age. These are two of the most popular Commissioners in the Juncker Commission; in the case of Vestager for her fight against tax evasion by several large American technology companies, such as Google, Amazon or Apple.

Of the rest of the vice-presidents, three will head the other three pillars: the new High Representative of the Union Josep Borrell, former Spanish minister in several portfolios and former president of the European Parliament, will lead A Strong Europe in the World; Christian Democrat and former Latvian premier Valdis Dombrovskis will lead the economic pillar, and Greek conservative Margaritis Schinas will lead the pillar of protecting the European way of life.

Three other vice-presidencies, with smaller areas, will go to the Czech Republic's Verá Jorubá (Values and Transparency), Slovakia's Maroš Šefčovič (Interinstitutional Relations) and Croatia's Dubravka Šuica (Democracy and Demography).

Among the nominees for commissioners are prestigious people who have held important positions in their respective countries, as well as in previous European commissions: Paolo Gentiloni, former Italian premier, will be commissioner of Economics, and Didier Reynders, former Minister of Defence, Finance and Foreign Affairs in Belgium, will be in charge of Justice.

Analysis

There are two characteristics that can be highlighted about this Commission proposal: (1) The first is its more political character and (2) the second is a marked Francophilia. 

(1) On previous occasions the commissioners used to show a profile and in many cases a preference for staying in the shadows. In a way, they could have been considered the secretariat of the committee European. However, the selection made by Von der Leyen seems to want to put an end to this tradition, by opting for more well-known names. Thus, Gentiloni or Dombrovskis have previously governed their countries, while others such as Vestager, Timmermans or Reynders have had a certain previous prominence. It seems that the interest of EU politicians is no longer so much to create the European Federation as soon as possible as to bring Brussels closer to the people. Whether this strategy works or not, time will tell.

(2) The second characteristic of this new Commission is a clear pro-French direction, to the satisfaction of Emmanuel Macron. Many of the members of the Commission are political allies of the French President; the clearest is the case of Ursula von der Leyen herself, despite having been part of Merkel's cabinet and being a co-religionist of hers. It should be remembered that it was Macron who proposed it for the position after the veto of Weber, who was the candidate Merkel's initial. But that's not all. Both Timmermans and Vestager are political allies of Macron (Vestager had been his first choice to chair the Commission). Josep Borrell is also a well-known Francophile, and Didier Reynerds is a French-speaking Belgian whose party is allied with Macron's, as is the Italian commissioner Paolo Gentiloni. So this is a mostly Francophile Commission, which could increase Macron's weight on the Union and advance his vision of Europe.

Outside the Commission, the other officials nominated by the committee They were Christine Lagarde, a former French finance minister, who has stepped down from leading the IMF to head the European Central Bank, and Charles Michell, the French-speaking prime minister of Belgium and Macron's liberal colleague, the new president of the European Central Bank. committee European.

These nominations have also sought to meet a series of objectives:

i) The first and clearest is that the aim is to put an end to the possible alienation of the countries of Central and Southern Europe. Out of eight vice-presidents, four are from Central Europe, in charge of such important areas as the economic pillar or justice issues; two others are from the South, with responsibility for immigration and foreign policy issues.

ii) An attempt has also been made to reach out to groups that may have doubts about von der Leyen or directly voted against her in the parliamentary session. Looking at the greens, the portfolio agreement European Green aims to reduce carbon emissions by 55% from their 1990 levels by 2030 and make Europe the first zero-carbon continent by 2050. The pillar on immigration, called Protecting our European way of life, seems to want to augur a stricter immigration policy with the aim of promoting a more sustainable immigration policy. goal to maintain the support of Poland's PiS and Hungary's Fidesz.

iii) Briefly, it should also be mentioned that the nomination of Gentiloni to the economic portfolio seems to be a way of rewarding Italy for the training of a pro-Brussels government. While the nomination of a left-wing Italian to Economics It seems that the nomination of Austrian conservative Johannes Hahn to the Budget Committee has been made to balance that of Gentiloni.

Challenges and potential complications

The four main challenges facing this new Commission seem to be ecology, Economics, immigration and the construction of a common foreign policy.

As has been said before, the nomination of Borrell and other commissioners may lead to a foreign policy that follows French lines, which at times can lead to conflicts with Poland, the Baltic States or even Germany if tensions between France and the United States lead Washington to question its commitments to NATO and Russia.

Immigration looks set to remain a major issue for the Commission, although not as much as in recent years, largely because the issue The number of people arriving in Europe has dropped drastically. From more than one million in 2015 to less than 150,000 in 2018. Everything seems to indicate that the line on illegal immigration is going to be tougher than in previous years, although an attempt will be made to avoid populist rhetoric. However, the very name of the portfolio, Protecting our European Way of Life, has already come under fire from certain political sectors and civil society in Western Europe.

The Economics will be another element core topic. With a Brexit that could damage the Economics or cause a slowdown.

Another major problem is going to be related to Timmermans and his position. As the head of the pillar agreement The Dutch will be in charge of dealing with countries to reduce their carbon emissions. The countries of Central Europe, especially Poland, are still very dependent on the coal sector, which employs a significant portion of the workforce. Timmermans showed some clumsiness when it came to dealing with Poland and Hungary on justice issues as Juncker's vice-president, so it remains to be seen how he deals with the energy issue.

In relation to the nominations, there has been concern about Parliament's blocking of the commissioners from Romania, Hungary and France, who were rejected for various reasons. In the case of the Hungarian nominee, the veto was attributed to his relationship with a law firm, and in the case of the French nominee, to his relationship with an American think tank . However, the general analysis seems to indicate that these rejections, especially in the case of the French nominee, appear to be a reprisal by Parliament for having been section in the decision on the presidency of the Commission – since the proclamation of the Spitzenkandidat with the most votes was disregarded – by the committee European, especially Emmanuel Macron. The Fall of the Romanian Government and the Establishment of a Government provisional until the 2020 legislative elections may delay the training of the Commission. According to High Representative Josep Borrell, it is to be expected that the training of the von der Leyen Commission is delayed until 1 December.

Conclusion

To say that the von der Leyen Commission is going to be continuist, as many claim, would be partially incorrect. Although the ideology seems to be the same, the objectives set are very different and much more political. It seems that some of the mistakes made by the Juncker Commission want to be solved and it is trying to respond to some of the demands that citizens make to Brussels, on issues such as environmental care, economic improvement, the correct integration of Central Europe, border control, the development of the environment, and the development of the European Union. development of a common international policy and the rapprochement of Brussels with the Europeans.

Whether this will be a failure or a victory, on verra.

The need for labour has traditionally led Sweden to welcome waves of immigrants; Sectors of society today experience it as a problem

▲ Oresund Bridge, between Denmark and Sweden, seen from Swedish territory [Wikipedia]

ANALYSIS / Jokin de Carlos

Sweden has had a reputation, since World War II, for being a country open to immigrants and for developing tolerant and open social policies. However, the increase in issue The slow cultural adaptation of some of these new communities, especially the Muslims, and the problems of violence generated in areas of greater vulnerability have led to an intense discussion in Swedish society. The view that a generous migration policy may be destroying Swedish identity and making life more difficult for native Swedes has fuelled the vote of some civil service examination The Social Democrats last year revalidated public support for a government that maintains traditional policies with a certain greater emphasis on the expulsion of those whose application has been rejected.

Migration policy

One of Sweden's historical problems has been its leave By the 1960s, the fertility rate had fallen to the threshold of 2.1 children per woman needed for population replacement. That was something that threatened Sweden's notorious welfare state, because of the need for tax revenues to maintain generous public services, so the country promoted the influx of immigrants. At the same time, the need for manpower was also raised by the development of the national industry.

Sweden emerged from World War II in good condition. It did not suffer the destruction of other nations, as it remained territorially on the margins of the conflict, and it was able to consolidate a metallurgical industry that, thanks to the production of its iron mines, had benefited from selling to both sides in the war. That development required a great deal of work that the leave The concentration of the population on the coast and in the south, outside the industrial centres, made it difficult to gather. In addition, Sweden's welfare state and continued decades of peace created a class average that he did not want to work in the new industry because of the low wages it offered to be competitive.

To solve the labor shortage and thus maintain economic progress, Sweden turned to immigration since the 1950s. The government first opened the border to asylum seekers or work and then built clusters of dwellings, usually of leave near industrial areas where newcomers could find jobs without any language. When the cultural impact of these additions was too great in some areas, the government proceeded to close the borders, restricting immigration. When new workers were needed, the government reopened the border.

This system helped to advance economically, but it also isolated many social groups, who were stuck in low-income areas with little possibility of development or social integration.

development historical

Both during and after World War II, Sweden was an important destination for people from Norway, Denmark, Poland, Finland and the Baltic Republics escaping war or the destruction it created; It was also a neutral destination for many Jews. In 1944, there were more than 40,000 refugees in Sweden; While many returned to their countries after the war, a group A considerable number of them remained, mainly Estonians, Latvians and Lithuanians, whose home nations were incorporated into the USSR.

In 1952, Sweden, Denmark and Norway formed the committee Nordic, creating a area of free trade and freedom of movement, which Finland joined in 1955. With this, thousands of migrants went to Sweden to work in the industry, mainly from Finland but also from Norway, which had not yet discovered its oil reserves. This increased the percentage of the immigrant population from 2% in 1945 to 7% in 1970. All this helped Tage Erlander (Prime Minister of Sweden from 1946 to 1969) to create the project "Strong Society", aimed at increasing the public sector and the welfare state. However, this influx of labour began to harm native Swedish workers, and consequently, in 1967, trade unions began to pressure Erlander to limit labour immigration to the Nordic countries.

In 1969, Erlander resigned from the position and was replaced by his protégé, Olof Palme. Palme was a member of the most radical wing of the Social Democrats and wanted to further increase the welfare state, continuing the project of its predecessor on a larger scale.

In order to attract a larger workforce without angering unions, Palme began using pro-refugee rhetoric, opening Sweden's borders to people escaping dictatorships and war. At the same time, these people would be moved to industrial neighborhoods, built especially for them in nearby industrial areas where they would work. At the same time, Palme sought to make Sweden an attractive country for immigrants through assimilation policies in favor of multiculturalism.

During this period, people of many nationalities began to arrive in the country: from those fleeing conflict in Yugoslavia or martial law in Poland to those fleeing the Middle East and Latin America. These new populations settled far from native Swedish demographics; Because of this, many neighborhoods in the class They became isolated ghettos. In 1986, Palme was assassinated and his successor, Ingvar Carlsson, changed immigration policy and began accepting only those they configured as refugees from the United States. agreement with United Nations standards.

During the 1990s, increased conflicts in places like Somalia, Yugoslavia, and several African nations increased the flow of war refugees, with many of them going to Sweden. The Ministry of Migration and Asylum Policy was established in 1996. However, the two largest movements of people from foreign countries would occur in the wake of the subsequent conflicts in Iraq and Syria. The conservative government of Fredrik Reinfeldt began taking in a large volume of Iraqi refugees, who in 2006 became the country's second-largest minority, after the Finns. In 2015, the Social Democratic government of Stefan Löfven opened the border to Syrian refugees, who arrived en masse, fleeing the Syrian Civil War and the push of Daesh.

This succession of waves of immigrants from the Middle East aggravated some problems: in many neighborhoods, outsiders don't feel like they're in Sweden, mainly because they were built to "not be Sweden"; In addition, difficult integration and low-paying jobs fuel gangs and organized crime. All of this led Löfven to implement a stricter migration policy in 2017, accepting fewer asylum seekers and beginning to expel those whose asylum claims had been denied.

As you can see, the trend in Sweden is to open borders to immigration when it is needed and to close them when it starts to cause social tensions.

Origins of the Immigrant Population

Sweden has become a very ethnically diverse society, where almost 22% of the population has a foreign background. Until 2015, the largest ethnic minority in the country were Finns, who numbered more than 200,000 at the end of the last century. In the wake of the war in Iraq and the Syrian migration crisis, people from the Middle East have become the largest group.

Currently, 8% of the inhabitants of Sweden come from a country with a Muslim majority – mainly from Syria and Iraq, but also from Iran – although only 1.4% of the population practices the Muslim religion (around 140,000 people in 2017), as there are also immigrants from these countries with other religious affiliations. such as Christians, Druze, Yazidis or Zoroastrians. These numbers may have increased slightly, though not to cause very drastic changes in demographics.

Despite not being particularly numerous, the Muslim community has generated media attention as a result of various controversies. In 2006, Mahmoud Aldebe, a member of the committee A Muslim from Sweden, he put forward in a letter to the political parties of the Riksdag and the Swedish government especially controversial demands, such as the right to specific Islamic holidays, special public funding for the construction of mosques, that all divorces between Muslim couples be approved by an imam, and that imams be allowed to teach Islam to Muslim children in public schools. These demands were rejected by the authorities and the class Sweden's politics. It has also been the case that some Muslim associations or mosques have invited radical preachers, such as Haitham al-Haddad or Said Rageahs, whose lectures were eventually banned.

Vulnerable Areas and Organized Crime

The Swedish government has designated some neighbourhoods as Vulnerable Areas (Utsatt Område). They are not strictly "No-Go Zones", because they can be entered by police officers, health services or the media. These are areas of lower security that require greater attention from the authorities.

Some of them are located in Malmö, the city with the highest crime rate in the country, mainly due to its location. Malmö is located on the other side of the Oresund Bridge, which connects Denmark to Sweden and is the only overland route between Sweden and the mainland without having to go around the Baltic. There, various gangs and mafias participate in drug and human trafficking, while at the same time confronting each other in a struggle for control of space. Groups of this subject they also operate in Rotterdam, in relation to the activity generated by its important port.

Despite the impression given by certain anti-immigration messages, crime in Sweden is at levels similar to those of 2006. After that year, the issue crime prices fell, only to rise again in 2010 and 2012. A link could be made between this rise and the economic crisis, which led to an increase in unemployment, but its link to immigration records is less clear. The arrival of Iraqis in 2005 did not lead to greater insecurity on the streets of Sweden, nor has the reception of Syrians in recent years. Sweden's homicide rate is 1.1 per 100,000 inhabitants – below many other European countries – and there are more crimes recorded by native Swedes than by foreigners, according to the committee Swedish National Crime Prevention.

However, the mafias operating in Sweden are mostly made up of certain ethnic groups. His training it stemmed especially from the influx of people from Yugoslavia, both workers in the 1970s and refugees from the Balkan wars of the 1990s. Chief among these groups, known as the Yugo Mafia, is today led by Milan Ševo, nicknamed "The Godfather of Stockholm." Other groups include K-Falangen and Naserligan, composed of Albanians; the Werefolf Legion, made up of South Americans, and the Gangsters, originally made up of the Assyrians (Syria's Christian minority). However, one of the largest is Brödraskapet or the Brotherhood, founded in 1995, with more than 700 members who are all native Swedes and with a large presence in Swedish prisons.

Migratory movements in Sweden between 1850 and 2007. In red, arrival of immigrants; in blue, departure of emigrants [Wikipedia-Koyos]

Terrorism

Since 2011 there have been three terrorist attacks in Sweden; A fourth attack could have been avoided as its preparation was detected in time. The first was made by Anton Lundin Pettersson, a Swedish neo-Nazi who in 2015 attacked the Trollhättan School, killing four people, all of them immigrants. The next was perpetrated by the Nordic Resistance Movement, a neo-Nazi organization, which acted against a refugee center and the café of a left-wing organization; Only one person was injured in the attack. The third, the most well-known, was perpetrated in 2017 by a man from Uzbekistan apparently recruited by Daesh, who rammed a truck into pedestrians in central Stockholm, killing five people and injuring fourteen.

Of the three attacks, only one was jihadist-motivated, unlike the weight that Islamist terrorism has had in other European countries with larger Muslim populations. In any case, the segregation experienced in some communities and the radical indoctrination that takes place in them led young Swedish Muslims to go to Syria to join Daesh and the authorities are closely monitoring their possible return.

Hits and misses

For a long time, the European left held up Sweden as an example of model successful social democrat; Now, from certain right-wing groups, he is held up as an example of failed multiculturalism. Both statements are probably an exaggeration for partisan purposes. However, the truth is that Sweden has a generous well-being that is difficult to maintain, and that in its also generous opening of borders it has made mistakes that have not facilitated the integration of the new population. Everything seems to indicate that Löfven continues the path he began in 2017 and there has been an increase in police presence on the streets as well as a hardening of immigration policies, in turn following the policies made in Denmark.

Time will have to pass to see what results these policies will have in a future Sweden.

In Norse mythology, Valhalla is a huge, majestic hall that, in the afterlife, heroes aspire to enter

The upcoming gas self-sufficiency of its two major buying neighbors forces the Bolivian government to look for alternative markets

▲ Yacimientos Pretrolíferos Fiscales Bolivianos (YPFB) gas plant [Corporación YPFB].

ANALYSIS / Ignacio Urbasos Arbeloa

Bolivia, under Evo Morales, is the only economic success story of all the Latin American countries that embraced left-wing populism at the beginning of this century. Together with Panama and the Dominican Republic, Bolivia has achieved the highest GDP growth in the region in the last five years, and all this in a difficult context of decline on the part of its main trading partners: Argentina and Brazil[1]. The political stability brought by Evo Morales since 2006, coupled with prudent counter-cyclical macroeconomic policies and a new hydrocarbons management are part of the formula for this success. Nevertheless, there are enormous economic and political risks for Bolivia. On the one hand, natural gas accounts for 30% of exports and its destination is exclusively Brazil and Argentina, countries that are close to gas self-sufficiency. Finding alternative routes is not an easy task for a landlocked state, with a diplomatic conflict with Chile and separated by the Andes Mountains from Peru. Moreover, the Bolivian government's bid to exploit lithium through national companies that integrate its processing to favor industrialization is a risky strategy that could leave the country out of the growing world lithium market. Finally, Evo Morales and the MAS have followed a growing authoritarian trend, allowing the reelection of the president, undermining the separation of powers and the recent 2009 constitution. The new Bolivia faces in the next decade the challenge of reorienting its natural gas exports, diversifying its Economics and consolidating a real democracy that will allow a sustained growth of its Economics and its role as a regional actor.

Natural Gas: at the center of the 21st century political discussion

During the failed oil explorations in the Chaco in the 1960's, abundant natural gas reserves of great economic potential were found at finding . Although it was a resource of lesser value than crude oil, an incipient gas industry was soon developed by foreign companies, mainly American, such as Standard Oil. In 1972 a first nationalization took place, with the emergence of YPFB as the state-owned business in charge of the exploration, production, transportation and refining of Bolivian energy resources in partnership with foreign companies. That same year, the first export gas pipeline to Argentina was built. By 1999, Bolivia will export natural gas to Brazil through the Santa Cruz-Sao Paulo pipeline, whose project took more than eight years of negotiations and construction work and introduced Petrobras as an important player in the sector. Thus, Bolivia enters the 21st century with a growing gas industry, mostly privatized by the first government of Gonzalo Sánchez de Lozada, and boosted by a very favorable fiscal model for foreign companies[2].

The year 2001 marks the beginning of a convulsive political stage in Bolivia with the so-called Water War. A wave of protests arose from the privatization of municipal water services in the framework of financial negotiations between the IMF and the government of Hugo Banzer. At the nerve center of these protests in Cochabamba emerged the figure of Evo Morales, a coca growers' leader who will increase his popularity unstoppably. Gas became the protagonist in 2003, with a new wave of protests against the construction of a natural gas pipeline from Tarija to Mejillones (Chile) for consumption by the Chilean mining industry and export to Mexico and the USA in the form of LNG. The civil service examination at project argued the historical incoherence of contributing Bolivian resources to the exploitation of the mining region lost to Chile in the War of the Pacific (1879-1883) and which deprived Bolivia of an outlet to the sea. In addition, an alternative, more costly gas pipeline through Peru was proposed, but which would supposedly benefit the northern region of Bolivia and would not be a national humiliation. The protests took a nationalist and indigenist turn and became a real revolution that blocked La Paz, the international airport and plunged the whole country into violence and shortages. President Lozada resigned and most of his government fled abroad, while the project was cancelled and buried forever.

The new president Mesa comes to power with the promise to call for a binding referendum on gas, the establishment of a Constituent Assembly and a reform of the Hydrocarbons Law, including a review of the privatization processes. The referendum ended up giving the victory to Carlos Mesa's proposals, although with a leave participation and a confusing essay of the questions. President Mesa, unable to capitalize on the legitimacy granted by the plebiscite Withdrawal to position and called early presidential elections in 2005, which brought to power the first indigenous president in the history of Bolivia, Evo Morales, with an absolute majority. Natural gas thus became the main catalyst for political change in Bolivia.

Hydrocarbon reform

The arrival of Evo Morales brought about a profound change in the hydrocarbons legal framework . In 2006 the new hydrocarbons law "Heroes del Chaco" was enacted, nationalizing Bolivia's energy resources, expropriating 51% of the shares of companies involved in the sector and establishing a direct tax on hydrocarbons of 50% subject to an extra royalty of 32% to YPFB in those fields with more than 100 mcf of annual production[3]. This legislation, in the words of Evo Morales "turned the tables, going from 18% to 82% of the State's income on hydrocarbons"[4]. The legislation, although adorned with a radical revolutionary rhetoric, has proven to be moderate and viable in the medium term, since it allows in the internship much less burdensome tax formulas for energy multinationals and did not imply large expropriations of assets. As can be seen in the graph below, tax revenues from natural gas have grown enormously since 2005, the year of the reform, without dramatically affecting natural gas production. Moreover, this reform was accompanied by record highs in the price of raw materials in 2006, 2007 and 2008, cushioning the percentage reduction in foreign companies' revenues. In 2009 Bolivia included in article 362 the primacy of oil service contracts, a formula in which multinationals do not obtain any rights over the hydrocarbons extracted, but are remunerated for the services rendered. 

Since the reform, exports have been relatively stable, buoyed by growing demand in both Brazil and Argentina. The most controversial case occurred in the particularly cold winter of 2016, when Bolivia halted exports due to maintenance work at the Margarita field. This event unmasked a stubborn reality about Bolivia's proven natural gas reserves and the need to increase exploration and drilling work in the country. Bolivia's current reserves amount to 283 bcm (10 tcf), enough for only 10 years of export activity at the current rate. Aware of this status limit, the YPFB corporation has launched an investment campaign for 2019 amounting to 1.45 billion dollars, of which 450 million dollars will be dedicated to exploration work[5]. Much of the investment in the sector in recent years has been aimed at industrializing natural gas production instead of exploration work, building refining plants such as the Bulo Bulo ammonia and urea plant[6]. Total, Shell, Repsol and Petrobras are currently working in exploration and production[7]. This effort is intended to answer the IMF's report , which considered Bolivia's natural gas reserves to be too scarce to turn the country into a regional energy center, Evo Morales' greatest aspiration[8]. For YPFB, there are probable reserves of 850 bcm (35 tfc) that would guarantee a long life for the gas sector, but it should rethink its fiscal policy in order to attract foreign companies, which currently account for only 20% of total investment[9].

The future of Bolivian natural gas

From agreement with the contracts signed with Brazil (1999) and Argentina (2005) export prices are indexed to a basket of hydrocarbons, which in general has guaranteed Bolivia a very favorable price, higher than the Henry Hub, but which makes the country equally dependent on fluctuations in international commodity prices. However, the revolution of non-conventional technology and new forms of transportation, now more economical, such as LNG, are transforming the reality of the natural gas market in the Southern Cone. This new situation, linked to the end of the contracts with Brazil in 2019 and Argentina in 2026, puts in check the future of the main asset of the Bolivian Economics .

As shown in the graph sample , the Bolivian trade balance and its fiscal stability depend on the exported volumes of natural gas and its international price. The survival of the current Bolivian economic model and the presidency of Evo Morales depend to a great extent on the income derived from this hydrocarbon, being a fundamental factor for the future of the Plurinational Republic of Bolivia.

Brazil

Since 1999, Brazil has become the main destination for natural gas exports, being Bolivia's only client in the 2001-2005 period. This position allowed the entrance of Petrobras as the main investor in the sector until the year of the nationalization, which meant an important diplomatic friction between both countries. It was the complicity between Morales and Lula, as well as the importance of maintaining harmony between the leftist governments in the region, which allowed avoiding a major confrontation between the two countries. Despite the words of Petrobras' president in 2006, Sergio Gabrielli, announcing the end forever of the company in Bolivia, it has continued to be an important investor due to the profitability of its activities and the strategic importance of Bolivian gas for Brazil.

It seems clear that natural gas will play an important role in Brazil's future, since the main source source of electricity in the country, hydroelectric power, requires other sources to replace it when there is a shortage of rainfall, as occurred between 2012 and 2014. This context favored the entrance of natural gas in the electricity mix, which went from 5% in 2011 to 25% by 2015[10]. However, Brazil started a decade ago with the revolutionary pre-salt hydrocarbon exploitations, which have allowed the country to increase its crude oil production from 1.8 mbd in 2008 to 2.6 mbd in 2018. Natural gas production associated with these fields is expected to enter the Brazilian market as the necessary infrastructure connecting the off-shore fields to the still insufficient network of gas pipelines is built, something that is expected to improve with the entrance of private players to the sector following the 2016 energy reform. Likewise, Brazil already has 3 plants to import LNG, allowing it to diversify its imports, as it did during 2018 when Bolivia was unable to supply the 26 million cubic meters per day agreed in 1999. All this puts Petrobras and Bolsonaro, located in the ideological antipodes of Morales, in a privileged position for negotiation, and who could bet on increasing imports of the increasingly cheaper North American LNG and reducing the volume of Bolivian gas. In any case, due to certain non-compliances in the supply of gas from Bolivia, the contract will be extended for at least two more years until the pending volumes of submit , which Brazil has already paid for, are reached.

Argentina

The other natural gas market for Bolivia is also undergoing profound transformations, in this case derived from unconventional shale and tight oil techniques. The Vaca Muerta field, considered one of the largest shale deposits in the world, has begun to produce the first returns after years of investments by YPF and other multinationals. Despite Argentina's economic instability and the fiscal reforms demanded by the IMF that will delay the total development of this giant field[11], it is expected that by 2022 its production will cover approximately 80% of Bolivian imports, returning to the path of self-sufficiency achieved in much of the 1990s and 2000s[12]. For the time being, Argentina has already managed to renegotiate the volumes of natural gas imported in summer and winter in a way that is more favorable to domestic demand[13]. In addition, Argentina authorized natural gas exports to Chile after 12 years of interruption[14] and made its first LNG export in May 2019[15], which are early signs of growing domestic production.

It seems clear that the Argentine market will not have a long run for Bolivian natural gas and will probably put an end to its imports when the contract ends in 2026. Other options are to use the complete network of Argentine pipelines as transit to other destinations via LNG or to neighbors such as Uruguay, Paraguay or even Chile.

Peru

For some months now, Bolivia has been engaged in a public diplomacy campaign to extend a gas export pipeline to Puno, a Peruvian city located on Lake Titikaka. Although Peru has significant natural gas production in Camisea that allows it to export large quantities of LNG, the country launched a program known as Siete Regiones (Seven Regions) to universalize access to natural gas. Southern Peru can be supplied more economically through Bolivian imports due to the proximity of the La Paz pipeline, but there is reluctance, especially in the pro-Fujimori civil service examination , to import a surplus good in the country. This formula would be integrated into a plan to export liquefied petroleum gas from Bolivia to the same area, while Peru would build a gas pipeline to import oil and derivatives from the Pacific port of Ilo to La Paz. For Bolivia, the Peruvian market may be a temporary solution while exports continue to diversify, but it will have an early expiration date given the Peruvian natural gas reserves, double the Bolivian reserves, and the logical trend towards greater domestic production to cover the demand of the entire country. Likewise, it seems sensible to think that the Peruvian coast will in the future be one of the points through which Bolivia could export its natural gas in the form of LNG if the regional market is saturated.

Chile

From an economic point of view, Chile is the most attractive country for Bolivian exports. It lacks natural gas reserves and its mining area, with high energy demand, is located in an area relatively close to Bolivia's gas pipelines and fields network . However, the now century-old dispute over Bolivia's original territories annexed by Chile in the War of the Pacific (1879-1883) has been an insurmountable obstacle in the present century. It is worth mentioning that during the 50's and 60's Bolivia exported oil to Chile and the USA through the Sica Sica-Arica pipeline; that is to say, the refusal to export natural gas to Chile has been a flag used by Evo Morales and not a historical tradition in the relationship between these countries.

After the huge mobilizations caused by the Gas War, Evo Morales was able to catalyze popular fervor and use the territorial dispute to increase his popularity. In fact, a good part of his efforts in the previous legislature were focused on achieving the longed-for exit to the sea through the International Court of Justice in The Hague. In 2018 this court ruled favorably for Chile, ruling that this country has no duty to negotiate with Bolivia a territorial settlement. Morales' refusal to export natural gas to Chile looks set to continue for the duration of his presidency.

However, the 1904 Treaty of Peace and Friendship signed by both states grants Bolivia full customs autonomy in the Chilean ports of Arica and Antofagasta and the right to keep goods in transit for 12 months, with free storage for its imports, and 60 days of free storage for its exports. These conditions seem ideal for the construction of an LNG plant in Arica or Antofagasta to export natural gas by sea while supplying the Chilean north, in need of cheap natural gas to displace coal. The difficult political relations between both countries complicate the viability of this project, which should not be discarded when Morales leaves the presidency and there is greater harmony, as happened with Pinochet and Banzer in power.

Domestic consumption

Domestic consumption of natural gas in Bolivia has grown at an annual rate of 4.5% in the 2008-2018 period driven by subsidized prices for consumption and the implementation of state projects that aim to provide added value natural gas extraction such as the Bulo Bulo urea plant or the Mutun steel industry. It is expected that per capita income in Bolivia and electricity consumption will continue to increase over the next decade. If the volume of natural gas subsidies grows similarly while export revenues decline, Bolivia's delicate fiscal balance could take a similar path to that of Argentina. The process of domestic industrialization through natural gas does not seem far-fetched either, as long as it is based on market rules and not at the expense of public finances. The country has already achieved self-sufficiency in fertilizers and is already a growing exporter, an example of the economic diversification pursued by the Morales government.

The question: Is there a market for everyone?

After reviewing the regional context, it may appear that the natural gas market in South America will be saturated by future oversupply. As can be seen in the graph, natural gas demand in the Bolivian neighborhood will increase from 107 bcm to 140 bcm per year by 2030. Peru, Argentina and Brazil are likely to increase their production and may reach self-sufficiency during the 2020s. This complicates the commercialization of Bolivian gas, but does not make it impossible. In the first place, the geographical reality of South America makes certain cross-border projects more economical than other internal ones, as in the case of southern Peru. Likewise, the increasingly lower costs of exporting gas by sea make it possible to find a market for surplus regional production, as in the case of Peru, which concentrates its gas exports to Spain. In a context of increasing energy interconnection, Bolivia will be able to continue exporting natural gas, albeit from a less privileged position and having to invest in export infrastructure. The major challenges are focused on increasing exploration activities by attracting more foreign and private investment, as well as the search for new markets, with the Chilean issue being a central element in this discussion.

How Russia, China, India and the Gulf Cooperation Council countries react to the new US sanctions against Iran

▲ Presidents Putin and Rouhani during a meeting in Tehran, in September 2018 [Wikipedia]

ANALYSIS / Alfonso Carvajal

As US-Iranian relations continue to deteriorate, the balance of power and regional alliances will be prone to shifting and changing. Iranians will likely feel increasingly more marginalised as time passes and will seek to remedy their state of international isolation. Here, the main factors to look out for will be the nations seeking to achieve great power status, and how they will try to attract Iran towards them while pushing the Islamic Republic further away from the United States.

China and Russia's response

Russia's relations with Iran have historically been complicated. While at some points, the two countries have faced each other as rivals in war, other times have seen them enjoy peace and cooperation. Russia has been an important actor in Iranian international relations since at least the Sixteenth Century and will most likely retain its importance in the long run. Since the fall of the USSR, Russian-Iranian relations have improved, as many issues that had caused tensions suddenly disappeared. These issues where mainly caused by their ideological incompatibility, as the USSR's atheism was looked upon with suspicion by Khomeini, and its support given to Iraq in the Iran-Iraq war.

Recently, both countries have found themselves facing international, mainly US, economic sanctions. This is a factor that is important to acknowledge, and that will shape their future relations. As Russia and Iran struggle to defuse the effects of sanctions, they will seek trade elsewhere. This means that they have found in each other a way to make for their isolation, and their ties are likely to only grow. Militarily, cooperation has already been cemented by years of sanctions in Iran.

Whereas once the Iranian Armed Forces boasted of having the most advanced Western-built fighter jets and other military material in the region, Iran now often uses Russian and Chinese aircraft and military gear, coupled with its own native military industry that was independently developed as a result of its isolation. Iran is also said to cooperate with Russia in certain industrial sectors close to the military such as drones. However, due to the latest international sanctions, Russia is less keen to continue to cooperate on military sales and technology transfers. For this reason, Russia has shown reluctance towards helping the Iranian nuclear program, although it is in favour of reaching a deal with Iran along with the international community.

A cornerstone in Russian-Iranian relations has always been their mutual distrust towards Turkey. In the age of the Ottoman Empire, relations between Persians and Russians would often consist in an alignment against the Ottoman Turks. Nowadays, their relationship also has this component, as Turkey and Iran are increasingly competing in the Middle East to decide who will lead the reconstruction of the region, whilst Russia and Turkey find themselves at odds in the Black Sea, where Russia's ambition of naval dominance is being challenged.

While it may seem that Russia and Iran should be close allies, there are a series of reasons to explain why cooperation is not likely to see a fully fledged alliance. First of all, there are far too many differences between both regimes, as they have different geopolitical imperatives and ambitions in the Caucasus and the Middle east. The second issue is Israel. As Russia moves further into the Levant, it tries to maintain good relations with Israel, Iran's archenemy, also called little Satan by Iran's first supreme leader, Ayatollah Khomeini. As the conflict in Syria dies down in the following years, Russia will be forced to choose between who to support. This is likely to mean a withdrawal of support towards Iran's position in Syria, as it sees its meddling in the region increasingly unproductive, and would favour its retreat. Iran, however, has said it is there to stay.

Russian-Iranian cooperation has recently been developed in one important country of the region: Afghanistan. As the US seems to lose interest in the Middle East and pivots towards East Asia, Russia and Iran have moved into the war-torn country, as they back different factions aiming to end the decades-long conflict. Russia has previously backed the Taliban, because it wants to ensure that they are a part of the peace negotiations. Iran has backed both the government and the Taliban, as it wants to fight the rising influence of ISIS in Afghanistan, as well as keep good relations with the Taliban to maintain a degree of stability and control over Afghanistan's west, so that the conflict does not spill over. Although Russia and Iran might have different objectives, they are united in wanting to push the US of the region.

The other geopolitical giant that is slowly encroaching on the region is the People's Republic of China, albeit with a different stance altogether. Like Russia, China has welcomed business with Iran and currently supports the nuclear deal, the JCPOA, which the US recently left. Chinese-Iranian ties are more solid than the Russian's, as they don't have as many overlapping hegemonic ambitions. In a certain way, the relations between these two countries arose as a way to contain the USSR's expansive influence during the 1970's after the Sino-Soviet split, and predate the current Iranian regime. Both countries see their relation as part of the past, as great empires of antiquity, the present, and see each other as important partners for future and ongoing projects, such as the One Road One Belt initiative. However, as does Russia, China sometimes tries to play down its support towards Iran so as not to antagonize its relations with the West and the US in particular.

The Chinese have cooperated with the Islamic Republic since its conception in the 80's, as the Iranian isolation led them towards the few markets they could access. The main theme of this cooperation has been undoubtedly based on hydrocarbons. Iran is one of the most important producers of both crude petroleum and natural gas. China is Iran's largest trade partner, as 31% of Iran's exports go to China, whose imports represent 37% of Iran's in 2017. Military cooperation between these two countries has also been very important, a large part of Iran's non-indigenous military material is of Chinese origin. The Chinese have historically been the main providers of arms to the Iranian regime, as can be seen by much of the equipment currently used by the IRGC.

Both regimes feel a certain closeness as some parts of their ideologies are similar. Both share an anti-imperialist worldview and are sceptical of Western attitudes, an attitude best perceived among their unelected leaders. They are countries that are emerging from the misery left behind by Western imperialism, according to their own narrative. Both see each other as the heirs of some of the world's oldest cultures—the Chinese often talk of 20 centuries of cooperation between both states—, and thus feel a historical, civilizational and anti-imperialist connection in this sense. Iranians admire the great leaps that the PRC has taken towards development, and the great successes they have brought to the Chinese people and State. They also value the Chinese mindset of not meddling or criticizing the internal affairs of other States, and treating them all in the same way independent of their government.

On the other hand, the Chinese are happy to work with a Muslim country that doesn't stir the restive North-Western Xinjiang region, where the majority of China's Uighur Muslims live. In fact, Iran is seen by the Chinese as an important factor on the stability of Central Asia. More recently, they also see in Iran a key part of the pharaonic One Belt One Road infrastructure project, as Iran sits in the crossroads between East and West. It is understood that Beijing has high expectations of cooperation with Tehran.

However, not all of it is positive. Iranians and Chinese have different ideological foundations. China has shown that it will not be able to form an all-fledged alliance with Iran, as it fears Western backlash. In 2010 China voted a UNSC resolution in favour of sanctions towards Iran. Even though these were largely ignored by China later, Tehran understood the message. As a result of these sanctions, the only nations willing to trade with Iran where Russia and China. The latter became an increasingly important trade partner as a consequence of the lack of Western competition and began to flood the Iranian market with low-quality goods, which was unpopular among the Iranians. Resentment toward China only grew as the Chinese firms that became established in Iran brought their own workers from China and unemployment remained at high levels despite the increased economic activity. As discontent rose, Iranians of all backgrounds saw the negotiations with the West with great expectations. If successful, negotiations could provide a diversification of providers and a counterbalance against Chinese influence.

As negotiations have broken down under the Trump administration, China's role in Iran is likely to only intensify. While the Europeans fight to save the nuclear deal, Iran is set to count on China as its main trade partner. Chinese firms, although now more vulnerable to pressure from the US than in 2010, still have strong interests in Iran, and are unlikely to leave what will be a competition-free market once most foreign firms are deterred by US sanctions. The Chinese will seek to keep the nuclear provisions of the JCPOA agreement and will cooperate in the development of the Arak Heavy Water Reactor, probably displacing the Russians, which have historically led the Iranian nuclear program. Chinese involvement in the Iranian nuclear industry will likely prevent the development of a bomb, as China does not want to encourage nuclear arms proliferation.

While China moves into South Asia, alarms go off in New Delhi. India sees itself as the dominant power in the region and its traditional enmity towards China is causing a change in its foreign policy. India's PM, Narendra Modi, is following a policy of "Neighbourhood first" in the face of a growing Chinese presence. China has already expanded its reach to countries like Sri Lanka, where it has secured the port of Hambantota for a 99-year lease. In the latest years, Pakistan, India's other arch-enemy, has become one of China's closest partners. The relation between both countries stems from their rivalry towards India, although cooperation has reached new levels. The Chinese- Pakistan Economic Corridor runs from the Chinese city of Kashgar through the entire length of the country of Pakistan and ends in the developing port of Gwadar. The project has caused a rush of much needed capital in the financially unstable Pakistan, with Chinese and Saudi bonds keeping it afloat. In the face of China's new projects and its New Silk Road, New Delhi sees itself more and more surrounded, and has accused China of scheming to isolate it.

To face China's new stance, India has taken a more active role. Its prime minister made many State visits to the neighbouring countries in a bid to weaken Chinese influence. In this effort to impose itself on what it sees as its region, India is developing a deep-sea port in the coast of Iran, past the strait of Hormuz in the Indian ocean. Iran will be an important piece in the designs of the Indian political elite.

The development of the deep-sea port of Chabahar is a joint Indian, Iranian and Afghan project to improve the connectivity of the region and has more than one reason of being. It is effectively a port to connect Central Asia, a growing 65-million people market, through a series of rail and road networks which are also part of the project, to the Indian Ocean. Another reason for this port is the development of war-torn Afghanistan, which also serves the purpose of reducing Pakistan's influence there. Pakistan holds a firm grip in Afghanistan and sees it as its back yard. Pakistan is said to harbour Taliban guerrillas, who use the country to launch attacks against Afghanistan, as it did against the USSR in the 80's. The most important feature of all for India is that the port would allow it to bypass what is an effective land blockade from Pakistan, and will permit it to reach and trade with Afghanistan. The Chabahar port will essentially compete with the Chinese-built Gwadar port in nearby Pakistan, in the two superpowers' race for influence and domination of the ocean's oil-carrying sea lanes.

India's usual approach is to keep a neutral stance around world conflicts in order to be able to talk and deal with all parties. This is part of its non-commitment policy. For example, India has relations with both Israel and Palestine, or Iran and Saudi Arabia. This means that India is very unlikely to make any serious statement in favour of Iran against the United States if Iranian-US relations were to badly break down, as it might be seen as picking sides by some countries. It does not mean, however, that it will abandon Iran. India has already invested greatly in infrastructure projects and is unlikely to simply withdraw them. Far more importantly, India is one of Iran's biggest petroleum purchasers, and losing such an important market and provider is not a choice the Indian government is eager to make.

India calls its relationship with Iran a "strategic partnership", in terms of cooperation in energy and trade activities. The Indian government is likely to take a cautious stance while acting with principles of Realpolitik. They will try to sort out sanctions if they can and will discourage this sort of activity while trying to maintain their interests in the region. As said before, New Delhi will shy away from committing strongly from any project likely to keep its hands tied.

The Syrian War

In 2011, the Middle East and North Africa region was shaken by what would soon be called the Arab Spring. While the citizens of many Arab countries where chanting pro- democratic slogans and protesting outside dictators' palaces and in the squares of Middle Eastern capitals, outside observers began to say that the once dictatorship- riddled region was about to adopt Western liberal democracy in what would become an era of freedom never paralleled in such countries. What came later could hardly be further from that reality. The region was struck by great waves civil unrest, as one by one, from West to East, the waves of revolution spread. The most authoritarian regimes attacked their own citizens with brutal repression, and what seemed like democratic transitions rapidly turned out to fall back into authoritarianism. Such was the case in Egypt, among others. However, some countries where struck harder than others. The more serious cases became civil wars. Some of the countries that had enjoyed relative long-term stability, like Libya and Syria burst into civil war. Yemen too, was struck by sectarian conflict.

The longest of these conflicts, the Syrian Civil War, is on its 8th year already. For a long time, it has drawn many international and regional actors, turning its countryside into a patchwork of pro-government militias, rebel guerrillas, Islamist extremism, transnational nationalist movements and others. The ruling class, the Al-Assad alawite family, under an authoritarian and secularist regime, has held on to power through every means possible, using foreign support as a crucial part of its survival strategy. To his side, Bashar Al-Assad has drawn the support of Vladimir Putin's Russian Federation, as well as the Islamic Republic of Iran and its Lebanese ally, Hezbollah. Each of these players has brought their own forces to the battlefield, as Russia has helped give Syria the necessary aerial capabilities it lacked, while Iran provides it with Shia militias, material, volunteers, and the presence of Hezbollah.

The regime faces many groups, who often fight against each other, and have different international backing, if any. For example, the Free Syrian Army is said to be backed by Turkey and is made from Sunni Arab and Turkmen militias. Other groups such as the Islamic State or Al Qaeda affiliated organizations also fight for survival, or to implement their ideal society. Another important group, perhaps the most important one is the YPG, or People's Protection Unit, largely a Kurdish force, which holds much of Northern Syria, the Kurdish region called Rojava. The YPG and the Syrian government of Al-Assad seem to have come to an understanding and try not to enter into hostilities amongst each other, focusing on the Islamic State, or ISIL. YPG international backing comes mainly from the US, but with President Donald Trump having said that the US will soon leave Syria, their future is uncertain.

With Bashar Al-Assad's position having become dominant in the Syrian battlefield, it is expected that the conflict will enter a new stage. Israel has shown its growing discomfort in what it sees as Iranian expansionism, and has launched aerial offensives against Iranian positions, permitted by Russia, who currently controls much of Syria's aerial defences. This might spell the loosening of Al-Assad's coalition.

As Iranian-backed forces draw closer to the southwest of Syria, Israel becomes more and more nervous. The implication of Israel in the Syrian conflict would most likely be a disaster for all parties involved. If Israel comes to point of fearing for its territorial integrity, or its existence, it has previously shown, in many occasions, that it will not doubt to take action and use all of its military might in the process if needed.

This is why Hezbollah is unlikely to make a serious move towards the Golan Heights. Hezbollah now boasts of the greatest amount of power it has ever had in its domestic scene. It is an influential actor in the Syrian War and at home it has achieved serious political power, forming a coalition with various other Shia and Christian groups. A war with Israel, in which it was identified as the aggressor, would be disastrous to its image as a protector of the Lebanese, as it has always taken a stance of resistance. It would put all of Hezbollah's political achievements in jeopardy. Whatever the case, Israel boasts of significantly more modern and powerful armed forces, which would force Hezbollah to be on the defensive, thus making an offensive into Israel extremely unlikely. Hezbollah must then try to restrain Iran, although, amongst the myriad of Iranian-backed militias, it has lost leverage in its relations with Iran and the IRGC.

For Bashar Al-Assad, war with Israel might prove an existential threat, as it bears the potential to cause a great deal of damage in Syria, undermining any effort to consolidate power and end the war in his favour. If war with Israel broke out, even if it was just against Iranian-backed objectives, Al-Assad would never be able to obtain the reconstruction funds it so badly needs to rebuild the country. Israel's powerful and advanced army would, without a doubt, pose the patchwork of battle-hardened militias a very big challenge. Thus, it is very unlikely for Al-Assad to permit a war might cause his downfall.

Russia, wishing to end the war and keep its military instructions and prestige in the process, would no doubt discourage any sort of posturing against Israel from its allies in Syria. Moscow seeks to maintain good relations with Israel and wouldn't be very upset about an Iranian exit. It is already trying to prevent Iran and Hezbollah from coming too close to the Israeli and Jordanian borders and has opened the Syrian airspace to Israeli aerial attacks towards Iranian targets located in its vicinity. Russia would welcome a quick and impressive end to the war to consolidate its status as a global power and become a power broker in the region.

Reaching a deal with the US to end hostilities in exchange for the recognition of Al-Assad is not outside the realms of possibility, as chances of regime change get slimmer, the US will be forced to recognize that Al-Assad is there to stay. It is necessary to acknowledge that a Russian-US deal will be incomplete, and quite unfruitful. The US is very likely to demand that Iran leave Syria and stops occupying Iraq with is Quds Force. Russia does not possess the leverage to send Iran back home. It would also be unfavourable for Russia as it has chosen to help Assad to regain its status as a great power in the world and has become a major power broker in the Middle East. This means their position relies on their status, which would be compromised, were Iran to openly confront Russia. The Iranians have already said that they would not leave unless Bashar Al-Assad specifically asked them to. Russia could pressure on Al-Assad, but the Iranians are likely to have more leverage, as they have a larger ground force in the region, and where the first to help the Syrian regime.

If the US wants to achieve any sort of meaningful peace negotiations, it must come into dialogue with the Iranians. Any sort of negotiation that does not include Iran would be pointless, as the amount of influence it has acquired in the region these last years makes it a key player. Iran is determined to stay in Syria and the IRGC is committed to force the government to keep its presence abroad.

In any case, the retreat of US troops in Syria would mark a turning point in the war. Currently the US provides air support, has 2,000 ground troops and provides an vital amount of equipment to the YPG Kurdish forces. Its retreat would be a blow to American credibility as an international ally, as it abandons the Kurds in a decisive moment where all tables could turn against them. Turkey has committed forces towards fighting the Kurds, which it sees as a threat to its national integrity, as large numbers of Kurds live inside Turkey and are hostile to it. The main reason for Turkish entry into the Syrian war was to stop the YPG from uniting a long stretch of land along the Turkish

border towards the Mediterranean Sea and to prevent the establishment of a Kurdish state. It is therefore a possibility that, whether through its Syrian proxies, or with its own army, the Turks will ally with Al-Assad against the Kurds, if these two don't reach an agreement and begin hostilities. This alliance is more than likely, as Turkish animosity towards Kurdish forces will cause them to jump at the occasion, if Al-Assad asks for help. Al-Assad might seek in this way to balance Iranian influence by integrating another player, which would cause tensions between Iran and Turkey to rise, as both countries aspire to obtain regional hegemony, and would give Syria more margin to manoeuvre.

Saudi Arabian soldier from the First Airborne Brigade with a UAE soldier, 2016 [Saudi88hawk-Wikipedia]

Saudi-Iranian rivalry

The struggle for dominance in the region is expected to continue indeterminately. As long as the ideological argument between the Islamic Republic and the Kingdom of Saudi Arabia (KSA) exists, it will take geopolitical dimensions, as both states seek to ensure their legitimacy in the face of the other. The Iran-Iraq War shaped the Islamic Republic's sense of geopolitical isolation, giving the more entrenched sectors of its political elite a fierce will to prevent any further isolation as was done in the past. Chemical weapons, often provided by the US were used against it, without any action taken from the international community. Therefore, the Iranian elites believe that Iran will have to stand by itself, and knows it will have few allies.

For the moment, Iran seems to be winning the confrontation. With a the possibility of a consolidated Syria, Iran's influence would be unparalleled. Iraq, Syria, Lebanon will provide Iran the reach and the potential to expand its influence even in the Mediterranean Sea. The war in Yemen is proving as costly as it is ineffective to Saudi Arabia and its allies, with a minimum cost from Iran. It can be expected that Iran keeps its strong grip over these countries, as its presence has become necessary for the survival of some of these states. It will not be without difficulty, as local forces are likely to reject the imposition of Iranian authority. This has been shown before in the burning of the Iranian consulate in Basra [4], by local Sunni Arabs who resent the degree of influence its neighbour has in their country. The recently struck commercial deals with Iraq during Rouhani's visit to the country might cause more Iraqis to take a more confrontational stance, as they are seen to benefit Iran more than Iraq. Both counties have pledged to increase their trade up to 20 billion dollars, but it will be hard to determine how they will affect Iraq. With this degree of Iranian involvement, the KSA's influence diminishes.

The Yemeni war is likely to drag on for years, and if the Saudis are to win, the shall have to keep paying a high toll, which will require strong political will to overcome the adversities. The expense of this war is not only material, it has primarily taken a great diplomatic cost, as it loses credibility to its allies, like the US, which see the ineffectiveness of the Saudi military. At home, their western allies struggle to explain their partnership with a country that has proven too much to handle for certain political groups and the civil society in general, with its lack of human rights considerations and sharia-based laws that seem outdated to Westerners. The cruel Yemeni war further alienates the Saudi Kingdom from them.

The conflict for Middle Eastern hegemony might be about to attract a new player. As Pakistan tries to deal with its ongoing crisis, its new president, Imran Khan, has looked to the Gulf States for funding. The Saudis and the UAE have already pledged many billion dollars. For now, the economic woes make Pakistan an unlikely actor, but there is evidence of a change of direction in Islamabad, as Khan seems to part ways from his predecessor's foreign policy regarding its western neighbour. Cooperation with Iran has significantly been reduced, especially in terms of security and anti-terrorism, as in March 2019 Baluchi ethno-nationalists once again attacked Iranian positions from the Pakistani border. Tehran seems alarmed by these developments and has explicitly warned Pakistan that an approach towards Saudi Arabia and participation in the so called Middle Eastern Cold War will have severe consequences for Pakistan. It is right in fearing Pakistan, which has shown that it can play the same game as Iran, making use of foreign militias and having an impressive intelligence service, on top of the nuclear bomb. If Iran where to cause conflict in Pakistan, it might find itself in severe disadvantage, as it would be harder to use subversive activities in the predominantly Sunni country. It might also come to odds with China, who will view any menace to its infrastructure projects with great suspicion. Iran would have difficult time finding a serious counterbalance to Pakistan in India, as India would decline to strike a serious alliance due to its many interests in the Gulf States.

Iran, however, still holds many cards it can use if the conflict were to escalate. Bahrain, whose predominantly Shia population contrast to its powerful Sunni ruling family, which will find itself fighting to maintain control in the case of an Iranian- backed coup similar to the one in 1981, or a pro-democracy uprising with significant Shia elements such as the one of 2011. For the latter, had the Gulf states not intervened in Bahrain in support of its ruling family, Bahrain would now likely be part of the Iranian regional system, which would be extremely troublesome for the KSA, given its proximity. It can also be expected for Iran to influence the oppressed Shia Arabs along Saudi Arabia's Persian Gulf coast. These Shia Arabs lie just above most of KSA's petrol wells and reserves, and if stirred to open rebellion, and properly armed, would cause immense trouble in the Monarchy.

The other option open to Iran will be to exploit the current Gulf crisis between the KSA and UAE against Qatar, whose blockade has lasted almost two years. Iran will seek to build up stronger ties with Qatar, who has found itself isolated by most Arab nations. Currently, Turkey is the key ally to Qatar in the crisis, and their partnership is seen to have strategic importance by both parties.

Qatar has traditionally had better ties to Iran than most other Gulf states, also due to the fact that they share the South-Pars/North Dome natural gas field, the largest in the world, and rely on cooperation to exploit its resources and wealth. This is largely a product of its independent foreign policy. This means that Iran is likely to use the crisis to drive a wedge between the members of the GCC and take advantage of their disunity in favour of Qatar and in detriment to the KSA. It will be difficult for the Iranians and the Qataris form a significant partnership, since there are still too many obstacles to this. First of all, Qatar is a Sunni Arab state, and it is the main exporter of the Muslim Brotherhood's ideas, which would not fit Iran's tendency toward Shia countries. Secondly, a partnership with Iran would make the Gulf Cooperation Council's crisis permanently irreparable, which is not desired by Qatar. Finally, this would turn Qatar into the main objective of the Saudi-led coalition and would unnecessarily put it in harm's way.

One key factor could change everything in a highly unlikely scenario, also known as a 'black swan'. This is the disappearance of ISIS from the Levant, and its relocation to Khorasan, a term used for Central Asia, Northern Iran and Afghanistan. This would change the balance of power in the middle East as it would bring conflict to the very borders of Iran. It would allow for Iran's enemies to arm this extremely anti-Shia group, following a parallel of the Yemen's Houthi rebels for Saudi Arabia. These rebels are banking on the opportunity that, following peace in Afghanistan with the Taliban, the Taliban's followers will become disenchanted by its leadership dealings with the US and would thus join the newly founded group. They would acquire the battle-hardened Taliban troops, which would provide a formidable foe for Iran.

Why Tehran has decided to openly confront US sanctions and how the crisis could develop from now

▲ Persian chess-game [Pixabay]

ANALYSIS / Baltasar Martos

It is now time to suggest a possible future-oriented course of action for Iran in response to the US unilateral exit from the nuclear deal¹. The strategy employed to this end will be that of the network-hat analysis, capitalizing on cultural comprehension and adopting the Iranian regime's perspective to better understand the way in which it perceives the various threats and opportunities ahead, hence always considering situational factors.

A SWOT analysis will be provided beforehand by way of introduction, focusing just in one of the most important (1) strengths: high proportion of young people; (2) weaknesses: the intricate political system; (3) opportunities: a closer relationship with leading European countries, and (4) threats: joint pressure by the US, Israel and Saudi Arabia. This will surely enable a more in-depth approach to Iranian views and positions.

A simplified SWOT

1. First and foremost, Iran is home for more than 80 million people, 43% of which are less than 40 years old. This large young population is very much tuned to Western trends and habits of consumption. They embrace technology virtually as much as in any other Western nation. The most striking fact about Iranian youngsters is the amount of university students among them. The country is well known for hosting a highly qualified population and labor force that acquired superior education at any of the numerous universities in the major cities.

2. In second place, Iran owns a very complex, intricate political system that renders the hierarchy of the decision-making process very difficult to understand. Its current institutions are a product of the 1979 Islamic Revolution, which ousted the Shah and reformed the whole previous power network. The political system of the country then turned from an authoritarian Monarchy into a constitutional theocracy with a multipolar power structure. The religious figure of the Supreme Leader or Ayatollah is the ultimate responsible for setting both domestic and foreign policy. The main issue here is that this institution holds views that are deeply rooted in the old days and endeavors to influence the private lives of the citizens. Decisions are self-explanatorily not made according to economic efficiency or political experience, or even less to satisfy population's demands. Instead, they aim to preserve and safeguard the regime and ensure its survival. The primary concern of the ruling political elites is thus to last in power, not to introduce reforms or think prospectively.

3. In the third place, Iran has now the chance to strengthen ties with its traditional powerful trade partners in the European Union, such as France, England or Italy. Provided their opposition vis-à-vis the US reimposition of sanctions, Iran can utilize this opportunity to begin a rapprochement towards them and express its best desire to cooperate under certain established conditions that prove beneficial to both parts.

4. Finally, Iran should not disregard the warnings coming from the White House. The main threat Iran is likely to face is an aggressive diplomatic strategy at the initiative of the US with the aggregated—but separated—efforts of Israel and Saudi Arabia. This would definitely jeopardize Iran's current position as one of the dominant powers in the region and would force the nation to find an alternative solution.

network Hat exercise

Tehran's interpretation of Washington's 2018 diplomatic shift quite evidently differs from that of the Trump administration². In the words of Ayatollah Khamenei, the ultimate reason for this new move lies in the US's perverse ambition to progressively weaken and undermine the partner-political structure built after decades of arduous work by the Islamic Revolution. Khamenei claims that Washington's intention is to overturn a popular, legitimate government in favor of a puppet regime completely subjected to its will.

In their public speeches, the Iranian political elites constantly refer to the US's boundless ambition to regain total control of the region, oppress civil society and submit individuals to their corrupted dogmas and doctrines, as they did decades ago. They very often evoke the glorious past of their millenary civilization and emphasise that it is precisely its longevity what makes it worthy of the most careful preservation and promotion. Once a major empire, they say, Iran has developed a unique identity different from that of its closest neighbors.

In the Iranian collective mindset, especially that of the most orthodox Shia and the very influential clerics, the nation enjoys the highest dignity for having conquered other territories and peoples but also endured invasions and dominations from enemies and rivals, yet always remaining true and loyal to its ancient traditions and foundations. More recently, Iran owes its independence to the innumerable efforts made by the leaders of the Revolution to free the nation from the clutches of the American imperialism embodied in the Pahlavi dynasty. The country's civilisational pride is therefore deeply ingrained in the people's minds and very often put forward in the political discourse. Furthermore, its foreign policy is soaked by a traditional 'regional fear', for Iran sees itself as the guardian of true Shi'a values amidst a region dominated by Shi'a-adverse powers with superior military capabilities.

The strong resentment and hatred against the Western world in general, and the demonization of the United States in particular, appear very often in Iranian politics. Such an anti-Western narrative is very often used to cover up the regime's economic mismanagement over the last decades, instead blaming the West for all the struggles, ills and evils of society. We must remember that, for Iranians—at least for the most religious sector of the society—the Islamic Revolution is a path that leads believers into Paradise and salvation as understood by the Shi'a. The revolution purports to redeem the peoples from the national humiliation suffered during Western dominance in the times of the Shah. Therefore, martyrdom, resistance and endurance are considered three most valuable virtues that will guarantee all kinds of enjoyments to those cultivating them throughout their lifetime.

Iran presumably decided to start a nuclear program based off several historical reasons. On one hand, in face of a strong isolation experienced during the bloody war waged against Iraq—an opponent which used chemical weapons against both combatants and civilians alike—Iran began its works with the aim of further intensifying its nuclear technology developments as a means to guard against a future surprise of similar characteristics.

On the other hand we shall recall the Revolution's need to constantly legitimate itself and maintain its status in front of the international community, thus preserving Iran's independence from outside influence or external intervention while restoring its former greatness as a center of scientific progress. Moreover, Tehran has long claimed its need to promote a solid nuclear energy plan to ensure energy security at home and satisfy the needs of its huge domestic demand in peaceful civilian, energy and medical terms. The government emphasizes the right to develop, research, produce and use nuclear energy as endowed by Iran's membership in the Non-Proliferation treaty.

However, the most pressing issue for Iran's security is undoubtedly the fact that five of the world's nine nuclear powers are located nearby or directly on its borders. The theocracy claims to have substantial grounds for feeling victim of the foreign arrogance of the outside world, which has allegedly endeavored to restrict Iran's rights to freely develop its nuclear activities by having it sign the Non-proliferation Treaty, unlike other neigboring nuclear-armed states such as Pakistan, Israel or India. This brings us to the conclusion that, even if the regime vehemently denies any interest in developing nucler weapons and rather uses the need to supply its domestic market with much needed energy resources as an excuse to keep its works running, some evidence found in recent discoveries of covert facilities and nuclear plants can confirm the vital importance for some of the regime leaders to obtain weapons in the short or medium term.

Scenarios ahead

The Persian nation is now standing on a crossroads with three different paths ahead, each one leading to a very different place. We will place them in an order, ranging from the most likely scenario to the least plausible one: (A) prolongation of diplomatic stalemate with minor tensions; (B) quick escalation of tensions and direct military confrontation, and (C) bring back the so-called '12 conditions' to the bargaining table and stick to them. 

A. The most likely: Diplomatic stalemate

On May 8, exactly a year after Donald Trump's announcement of US exit from the JCPOA, President Rouhani announced that Iran would cease to perform parts of its commitments under the nuclear deal, namely the observance of the limit for its stockpile of low-enriched uranium and the compliance with the limit of heavy water reserves. Its statement included a 60-day ultimatum, addressing specifically the European State parties to the treaty and urging them to find a diplomatic solution via economic packages to ease the current oil and banking restrictions. Should they prove unable to fulfill this conditions, Rouhani warned, Iran will continue with its intended pullout from the accord through a 'multi-phased approach'.

Europeans have recently been employing a rhetoric that has resulted in ambiguous and confusing promises to Iran, mainly due to the innumerable efforts they need to make in order to balance out a strong willingness to save the deal and the fear of a further detachment from an everyday more hostile American partner. On his side, President Rouhani has remained true to his bet on 'strategic patience' in the style of the Moderation and Development Party, to which he belongs, during all this time.

Nevertheless, it seems that the patience of the Iranian leadership is coming to an end with each passing day. The political elites have harshly critized its European counterparts for making lots of empty promises throughout this last year without achieving any substantial or practical outcome, especially after the U.S. decision on April 22 to put an end to the waivers on oil imports from third countries in an attempt to 'bring oil trade to zero'. This will no longer exempt any customer engaging in oil transactions with Iran from the US-led second wave of sanctions. Moreover, Rouhani has called on the Europeans to allow Iran to repatriate its money sitting in European bank accounts, which still remain blocked as part of previous sanctions.

Without disregarding the vital importance of the E3 for Iran's national economy and the pivotal role they play in the political scenario surrounding the country in the Middle East, it is also true that there are other strategic partners involved in this game whose existence as credible alternatives to the E3 is precisely the cause that pushes the Iranian leadership to discard a complete withdrawal and rather remain adhered to the nuclear accord. At the front of this group of Iranian oil importers are China and India, which will self-evidently ignore the effects of the recent termination of the US waivers and prosecute their purchases to satisfy their huge domestic demand. Although with weaker currencies and perhaps using more rudimentary instruments, both China and India will manage to secure those transactions in an orderly manner and will most likely help other purchasers to do the same. In fact, some voices speak of a possibility of performing oil-swap arrangements via Russia to lock oil prices and protect their finances from the high volatility of global energy prices.

Following this logic, Iran will then go ahead with its ongoing business while persuading and encouraging importers to keep buying Iranian oil despite the inability of European counterparts to meet the aforementioned ultimatum as set by President Rouhani. In parallel to this, Iran will probably threaten the remaining parts and especially the Americans with a further development of its nuclear capacities, but this will only add to a strategy that seeks to prolong the current state of affairs until the next U.S. presidential elections in 2020 take place.

B. The apocalyptic, yet no the least plausible scenario

The most apocalyptic—yet not the least plausible—scenario can be inferred from the most recent moves of US military assets after the government's official designation of the Iran Revolutionary Guard Corps as a 'Foreign Terrorist Organization' on April 8. Fist, on May 6, the Pentagon announced the deployment of the aircraft carrier USS Abraham Lincoln and a bomber task force on the Persian Gulf. Four days later, the Pentagon confirmed that it had sent some warships, the USS Arlington amphibious transport dock and a Patriot missile defense battery to the same region as a deterrent to Iran. Lastly, on May 12, two Saudi oil tankers and four additional Emirati ships off the coast of the Persian Gulf were sabotaged. President Trump blamed Iran for malicious behaviour targeting maritim traffic along the Gulf. More recently, Washington officials have announced a new deployment of some fighter jets and additional troops to the same territory in what they have called a 'mostly protective measure'. This suddenly heightened tensions might result in the outbreak of renewed hostilities in the coming months.

The American public opinion does not discard a military confrontation in a close future. In fact, a poll conducted in the US between May 17 and May 20 disclosed surprising results³: more than half of the American citizens consider Iran as a 'worrying' or even 'imminent' threat. Roughly the same percentage assumes their country will go to war against Iran in the coming years. Very few civilians believe that a preemptive attack should be conducted on Iranian military interests, but roughly 80% of them are convinced that the US should respond to an attack from the side of Iranian via airstrikes or even ground troop invasions.

An undeniable fact is that there are differing views inside the White House. The National Security Advisor John Bolton and in some way also the Secretary of State Mike Pompeo have always shown a maximalist approach that seeks to overthrow the mullahs' regime in Tehran. Apparently, none of them would hesitate to enter into a dire military confrontation if the situation so required. Bolton himself had already declared his intentions even before substituting his predecessor in office, Herbert McMaster. On the other hand, President Trump has used his recent meeting with the Japanese Prime Minister Shinzo Abe to affirm the following: 'Iran has a tremendous economic potential. [...] It has a chance to be a great country with the same leadership. We are not looking for a regime change. I just want to make that clear. We are just looking for no nuclear ^weapons'4. This somehow spaces out his view from that of his hawkish aides. In the words of Karim Sadjadpour, a well renowned Iranian-American policy analyst, 'What Trump articulated in Japan was another reminder that his main problem with the Iranian nuclear deal was that it was signed by Obama. Given Trump's eagerness for a public summit and deal with Tehran, it is conceivable that Iran's leaders could sign a more favorable deal with Trump than they did with Obama. But the pride and mistrust of Iran's supreme leader makes him more inclined to subject his population to another year of sanctions and economic malaise rather than do a deal with Trump'.

C. The unlikely back to the negotiating table

On May 12, 2018, four days after President Trump made public his intention of withdrawal from the JCPOA, Pompeo set out a list of twelve conditions under which Washington would agree to a new agreement with Tehran. Besides addressing the termination of Iran's participation in different conflicts throughout the Middle East, it explicitly called on Tehran to 'stop enriching its uranium and plutonium reserves, grant IAEA unrestricted access to all sites throughout the entire country and end proliferation and testing of ballistic missiles'.

It should be noted that Trump never presented explicit and clear evidence that Iran was failing to comply with its obligation. Instead, he merely denounced the treaty as far from being minimally advantageous for American interests, once again reinforcing the idea that the Obama Administration resoundingly failed to negotiate a deal that could benefit both parts. The three European State parties also emphasized that Iranians had remained faithful to their commitment and that had been officially attested by international inspectors supervising the nuclear facilities. That was the main piece of evidence supporting Iran's thesis of not being in a state of violation of any provision of the deal, but instead strictly observing every single aspect as they were agreed upon.

Having all this in mind, there are other aspects we should look at. The war in Syria is slowly coming to an end and Al-Assad owes his victory to the strong and uninterrupted financial and logistic aid from Tehran. There is no doubt that the regime will hold him accountable for all the support provided throughout the conflict and will seek to consolidate positions around the war-torn territory, thus expanding the influences of Shia islamist ideology as promoted by the Supreme Leader and the most prominent clerics. Moreover, not only is Iran-backed Hezbollah movement present in Syria, but also it enjoys a very prominent position inside the Lebanese parliament and holds an enormous influence in the country in general terms.

All this together, in addition to the round success Tehran is enjoying in his efforts to back Houthi rebels as compared to the exorbitant cost Saudi Arabia is paying to counter the rebellion, suffices to conclude that Iran is by no means willing to get back to the conditions advanced by Pompeo in order to renegotiate a new treaty that would thwart all the efforts already made along the way. This would signify an absolute humiliation for the regime. Iran has already come too far and it would now only accept to resume negotiations if it was granted the chance to depart from a dominant diplomatic position.

Representatives from the P5+1 countries in 2015, weeks before reaching the JCPOA, the nuclear agreement [US State Department]

What the EU is doing

Among all the State parties involved in the JCPOA, the E3 are likely to be the most severely affected by the US reinforcement of sanctions given the big stake they have in the region in form of finances and investments in the oil sector, and their unwillingness to go undercover. As a result of this new decision by Washington, companies and banks doing business in Iran could see their access to the American market cut off. Among other collateral effects, the re-imposition of sanctions will cause a negative impact on the region's trade flows, energy supplies, connectivity, security and stability. Indeed, sanctions present a special conundrum for the European counterparts: either they decide to carry on with their economic activities in Iran or they remain inside the US-led international financial circuit. They need to solve this jigsaw puzzle if they still want to secure their economic interests.

In order to do so, following the US exit, the High Representative of the European Union Federica Mogherini issued a statement bitterly regretting the US retaliation and expressing the EU's strong commitment to enact an updated blocking statute that would enter into force on August 7. This blocking statute refers to the 'Council Regulation (EC) No 2271/96 of November 1996 protecting against the effects of the extra-territorial application of legislation adopted by a third country, and actions based thereon or resulting ^therefrom'5. It basically 'allows EU operators to recover damages arising from US extraterritorial sanctions and nullifies the effect, in the EU, of any foreign court rulings. It also forbids EU persons form complying with those ^sanctions'6. In a nutshell, this statute acts as a shield against trade wars and mitigates the impact of those sanctions on the interests of European companies doing legitimate business with Iran, thus keeping Iran's oil and investments flowing.

The European Union considers that its Member States' business decisions should not be determined by any kind of foreign legislation. It would never recognize such legislation applicable to European operators. However, the EU still holds to the commitment of pursuing a continued, full and effective implementation of the treaty as long as Iran also plays its part by refraining from acquiring further equipment to develop a nuclear weapon and enables monitored verification of its uranium-235 enrichment activities. The E3 considers that the agreement is delivering on its goal so far and ensuring the peaceful nature of the nuclear program.

It is hence no surprise that the three European Member States involved in the deal are determined to preserve and implement it, insisting upon the numerous benefits it entails for Iran, the Middle East and the rest of the international community. Acting on behalf of the E3, the EU has recently endeavored to take several measures in order to offset the US withdrawal of the JCPOA⁷.

i) In the first place, they seek to extend the European Investment Bank lending mandates, allowing the bank to decide strictly under the EU budget to what extent and under which conditions it will finance commercial activities in Iran.

ii) Secondly, they also attempt to encourage and promote activities by Small and Medium Enterprises (SMEs) willing to undertake operations in Iran.

iii) Thirdly, they purport to accelerate the activation of the Instrument In Support of Trade Exchanges (INSTEX). This is a 'Special Purpose Vehicle' acting as a clearing house or barter arrangement for Iran to conduct trade with European companies outside of the SWIFT mechanism. This mechanism was officially registered by France, Germany and the United Kingdom on January 31, 2019. It works as an alternative payment channel that facilitates legitimate trade and investment between the EU and Iran despite sanctions. It is led by the EU3 and self-evidently euro-denominated. The entity originally focused only on trade in non-sanctionable essential goods, namely medical and humanitarian, and not so much on oil-related transactions so far. It mainly addresses SMEs whose total trade volume is usually small. In principle, it has not been designed to circumvent or bypass US sanctions but rather to fight money laundering and counter the financing of illicit terrorist activities. These last aspects reinforce the European efforts to voice its disagreements on Iran's declared support for Al-Assad in Syria and the promotion of terrorism region-wide, its multiple human rights abuses and its development of ballistic missiles.

However, in view of the technical complexities resulting in a long delay to set in motion this mechanism as well as the more immediate challenges the Union has to face in the first instance, it is very unlikely that the E.U. finds enough resources and time to effectively give a definite impulse to this apparatus before the deadline of 60 days from May 8 set by Iranians eventually expires.