Europe Geopolitics – December 6, 2021

Leo Nelissen | December 6th, 2021

This week starts with a closer look at the challenges of the incoming German coalition as well as the first female candidate for president for Les Républicains, Valérie Pécresse.

We also cover new developments from Austria where the government is planning on imprisoning unvaccinated people who either cannot afford or are unwilling to pay sky-high fines.

EU will soon be able to step up its game when it comes to sanctions, which gives it more geopolitical significance.

Additionally, and related to recent Vienna talks, Israel has a three-point plan to deal with the Iranian nuclear threat itself, which includes preemptive attacks.

1.  GERMANY

1.1 Lindner asks for “humility, patience and tolerance” – Frankfurter Allgemeine

The FDP has combined the approval of the coalition agreement with the SPD and the Greens with a review of its programmatic renewal, which began eight years ago in that Berlin event hall where the party leadership now gathered for a hybrid party conference to explain the contents of the coalition agreement to the delegates via video link.

Marco Buschmann, the future Federal Minister of Justice, said that after the FDP’s failure to clear the five-percent threshold in the 2013 federal election, the Free Democrats’ journey back into government began at a party conference in that hall; at that time, the party promised itself to “work on ourselves and win back trust”. The delegates now approved the coalition agreement with an approval rate of 92.2 per cent.

FDP leader and future federal finance minister Christian Lindner campaigned for the adoption of the coalition agreement, affirming that the FDP would “shape this coalition” and its governance. Lindner recalled that four years ago, under his leadership, the FDP allowed coalition talks with the CDU/CSU and the Greens on the formation of a Jamaica coalition to fail. At that time, it was clear that such an alliance would not have been able to achieve much in the way of liberal policies, Lindner said.

Comment: Lindner’s liberal FDP voted in favor of the coalition agreement. There are now no more meaningful barriers that stop him from becoming finance minister.

One of the first decisions likely to be taken by Christian Lindner as Germany’s next finance minister is to allow front-loaded tax deductions of investment. The German post-war economic miracle was caused by a private investment boom, which in turn was encouraged by front-loaded investment write-offs. The policy made sense because the war-ravaged economy was short of physical capital stock, and this was a highly efficient way of getting companies to replenish their plant and machinery. Our modern economy is not ravaged by war, but rather by years of austerity and a pandemic, with a similar effect on private sector investment. There is now once again a case for governments to give tax incentives for companies to invest.

This time, however, it won’t be nearly as generous. Allowances will likely be 30% to 40% for long-term investments.

Right now, investment amortization periods depend on the type of investment. FAZ calculates the example of a digital network, which would normally be written off over 8 years. If the hypothetical cost is €1m, the company can normally offset 12.5% of its corporation taxes for eight years. The new coalition will grant an additional one-off write-off allowance of 25% for year one, with the remainder of the investment stretched over the remaining period. This means the company would be able to write off some €340,000 in year one, and €90,000 for each of the next 7 years.

This comes after Germany became one of the most conservative countries when it comes to tax deductibility after being aggressive since the 1950s.

Note that this premium has been drafted by the outgoing team of Olaf Scholz. It is likely that Lindner could draw up a completely different system, for example, one where the value of the assets is not written off equally over the period, but front-loaded.

1.2 Germany: the three biggest issues facing Chancellor Olaf Scholz – CAPX

It is a complex coalition as the three allies had different – at times opposing – priorities ahead of the elections. On taxation, for instance, the Greens and SPD promised to raise taxes on high-earners, while the FDP was strongly opposed. With the SPD receiving six ministries on top of the chancellery and the Greens and FDP on five and four respectively, Scholz must unite them while providing the leadership expected from the chancellor of Europe’s largest economy.

[…] The next German foreign minister will be Annalena Baerbock, the Green co-leader. The Greens repeatedly criticised Angela Merkel for prioritising German commercial interests at the expense of core western values, and much of this related to China and Russia.

For instance, Merkel backed the Nord Stream 2 pipeline between Russia and Germany, despite longstanding opposition from the US among others. One objection to the pipeline is that it makes Russia less dependent for supplying Europe via another pipeline that goes through Ukraine, so it enables Putin to squeeze Ukraine’s income from supplying gas for political advantage.

As for China, Merkel pushed the EU-China Comprehensive Agreement on Investment over the finish line in late 2020 despite widespread criticism. The agreement, which gives the two sides better access to one another’s markets, is now on hold and still needs to be ratified. Yet it shows the extent to which Merkel’s government was on good terms with China.

[…] The announced objective of the newly formed coalition is that renewables will account for 80% of German electricity by 2030 – a substantial increase from the approximately 45% registered in 2020. In the recent coalition press conference, Scholz reiterated that the coalition intends to execute the ‘biggest industrial modernisation project Germany has undertaken in more than 100 years’.

But this requires gigantic investments in climate protection, and the modernisation of the country’s bureaucracy, digitisation and more. The Greens favour paying for this by changing Germany’s rule that it can only borrow up to 0.35% of its GDP in any given year, but the FDP is opposed and so the debt brake is going to remain.

[…] The creation of the EU’s €750 billion (£638 billion) coronavirus recovery fund earlier in 2021 has been seen as a defining moment for the bloc. It means that the member countries have for the first time agreed to raise their common debt to ensure that those most hit by the pandemic will be able to alleviate the negative consequences and invest in recovery plans to allow for higher growth across the region.

Merkel was only able to convince her political allies at home to agree to this by assuring them it was a one-off measure. Yet numerous EU nations such as Greece, Italy and Portugal had debts that were already verging on unsustainable pre-Covid-19, and the pandemic has further exacerbated their problems. The debate about whether the rest of the EU should bail them out is therefore bound to come to a head sooner or later.

1.3 The foreign policy reality check for Annalena Baerbock – Welt

[…] EU eastern border

It could be an unpleasant cold start for Annalena Baerbock. Because at the moment it seems pretty certain that the new foreign minister will take up her job in the middle of an international crisis with an acute threat of war. According to estimates from Kiev, about 115,000 Russian soldiers have been deployed on the border with Ukraine. The USA is warning Moscow of an invasion and threatening economic sanctions of new intensity.

In this case, pressure would grow in the EU to follow suit. Here, Olaf Scholz will be called upon above all, but sanctions will also be voted on in the foreign ministers’ councils, i.e. by Baerbock if necessary. And a de-escalation of the conflict could also be negotiated in the so-called Normandy format, i.e. with meetings of representatives from Germany, France, Ukraine and Russia, possibly also at foreign minister level.

[…] China

Baerbock could learn that courage also costs something most clearly in the relationship with China. For years, the Greens have been particularly vocal in denouncing human rights violations in the People’s Republic. In the European Parliament, Green MEP Reinhard Bütikofer is a central figure in the fight against Beijing’s influence in Europe – and against the China policy of Angela Merkel’s government, which many observers believe is too lenient.

“Eloquent silence is not a form of diplomacy in the long run, even if some have seen it that way in recent years,” Baerbock also said in an interview with the “Tageszeitung” on Thursday. In it, she announced a “combination of dialogue and toughness” towards China, condemned forced labour in the Uighur province of Xinjiang and recommended discussing a boycott of the Winter Olympics in Beijing.

[…] Afghanistan

The crisis in the Hindu Kush could quickly dominate Baerbock’s schedule. For the negotiations with the new Taliban government are the responsibility of the Federal Foreign Office. A good a fortnight ago, the German Special Representative Jasper Wieck travelled to Kabul with his Dutch counterpart. Both offered help, but it would depend on the Taliban keeping their promises on human and civil rights. Ways to provide rapid humanitarian assistance were being explored. Other diplomats report similar things. One offers, one demands, one examines. But little happens.

[…] Iran

Negotiators from the Federal Foreign Office are currently in Vienna, together with representatives of the five veto powers in the UN Security Council, trying to negotiate a new agreement in the nuclear dispute with Iran. In the meantime, Iran has advanced its programme to such an extent that the Islamic Republic would presumably be able to build a nuclear weapon within weeks.

And hopes for an agreement are lower than they have been for a long time. They are “disappointed and concerned” about the latest Iranian amendments to the text negotiated so far, say senior EU diplomats. “Iran is breaking with almost all the difficult compromises agreed in several months of hard negotiations and is demanding substantial changes to the text.” Because Tehran is pushing its programme so hard, there is little time left for a solution.

[…] Climate policy

Baerbock has promised an “active energy and foreign policy”. Countries like the Gulf States, long indispensable for the supply of oil, will be replaced in the long term by states in Africa, where green hydrogen is to be produced from solar energy. Baerbock would like to have more money for joint climate investments in Europe, but this is being negotiated at the EU level by her cabinet colleague Christian Lindner of the FDP.

1.4 The shift to the right by France’s conservatives should be a warning to the CDU and CSU – Handelsblatt

The Union parties in Germany are currently going through the painful experience of losing power. A feeling that their political partners in France have known for some time: The bourgeois-conservative party family in the neighbouring country, which goes back to Charles de Gaulle and now trades under the name Les Républicains, has been in opposition for almost ten years. And the chances that this will change in the elections next spring are not particularly good at the moment.

The problems of their French sister party should be a warning example for the CDU and CSU. They show what can happen when a former people’s party of the centre right loses its orientation away from government responsibility: The conservatives’ attempt to compete with the right-wing populists in the fields of migration policy and national identity has only put them in more trouble.

The Républicains are not only driven by Marine Le Pen, the leader of the far-right Rassemblement National. The Islamophobic publicist Éric Zemmour, who is getting a lot of attention with his shrill warnings of an impending downfall of French culture and who also wants to become president, has further sharpened the tone of the migration debate.

The conservatives will not be able to win the game with exaggerated fears of foreign infiltration. In case of doubt, Zemmour, who has been convicted of hate speech, is still moving up a gear. At the same time, the Républicains are alienating voters from the bourgeois centre, for whom the liberal camp of President Emmanuel Macron opens up a new political home.

2.  FRANCE

2.1 Valérie Pécresse wins the Republican nomination for the 2022 presidential election – L’Opinion

The militants of the right have definitively chosen their champion for the 2022 presidential election. It is Valérie Pécresse who came out on top on Saturday 4 December in the second round of the Republican nomination vote, which opened on Friday and was conducted by electronic voting. The president of the Ile-de-France region, designated as the candidate of the Republicans, won 60.95% of the votes, against 39.05% for Eric Ciotti, announced the president of the party, Christian Jacob, from the headquarters of LR, rue de Vaugirard.

“Your confidence is very important to me and it obliges me. I also measure the audacity that is yours today: for the first time (…), our political family will have a candidate for the presidential election,” said the victorious candidate, who added: “I think of all the women of France today. Thank you to the members. Thank you for having had this audacity. I will prove myself worthy of it”. “The Republican right is back,” said Valérie Pécresse, who will be visiting the Vésubie valley for her first trip as the nominated candidate of the Republicans.

Valérie Pécresse was also keen to warn voters against “the merchants of fear”, who are Marine Le Pen and Eric Zemmour. On the current head of state, the right-wing candidate said: “Emmanuel Macron has only one obsession, which is to please. Me, I have only one passion, it is doing.”

Eric Ciotti, whom Valérie Pécresse thanked for “her frank and massive support”, sent her his “warmest, most sincere congratulations”. “She now has the immense responsibility of leading our political family to victory,” he said. “I want, tomorrow, that we both lead this great fight together,” added the deputy of the Alpes-Maritimes.

Some political figures have already expressed their opinion on the victory of the former minister. “So there will be two Macronist candidates in this presidential election,” blasted the president of the National Rally, Jordan Bardella, on Twitter. “The authoritarian nationalist themes of the far right (…) make up 40% of the Republicans and Pécresse wants to be in porosity with them,” criticised Jean-Christophe Cambadélis, former Socialist Party boss, on the social network. LR senator Philippe Bas welcomed “a decisive step towards alternation to break with the in-between and the half measures”.

Comment: Pécresse is the official candidate of Les Républicains, getting 60% of the vote in the second round. Her first job will be to unify a deeply divided party. This divide includes the fact that Ciotti made the decision to create his own movement in the party. He is doing this to lure voters away from Eric Zemmour.

We also need to take into account that Pécresse is not considered an official contender for next year’s second round – which could be against Macron. In order to make it to the second round, Pécresse needs to advance beyond playing the woman card. She wants to be France’s first female president. That is a strong ambition and might attract voters. However, attacking Macron based on his decision to mostly surround himself with men will not be enough.

That should not be an issue as she is known to surround herself with capable people and her promise to rein in the budget will do well with voters who believe that Macron’s spending is out of control. 

Meanwhile, Zemmour has started to campaign. So far, turnout is lower than expected and it consists mainly of die-hard fans. Polls suggest that Zemmour and Le Pen voters are at least 35% of votes. This will change as Les Républicains are now getting aligned behind their candidate, which should give them more time in the media.

This battle is heating up and upcoming polls will tell us two things: is Zemmour able to regain upside momentum to overtake Le Pen and how is Pécresse doing in the polls?

2.2 Vitriolic France seems intent on trashing the precious Franco-British relationship – The Telegraph

[…] Now, I understand the anger, the disappointment, the frustration, the humiliation. Brexit threw a giant spanner into the works of France’s greatest project, European integration – something the French state has worked at for nearly a century. Its politicians and pundits proclaimed that Britain after Brexit was heading for economic disaster and political isolation. Despite the best efforts of the Remainer die-hards to talk up every problem, and even labelling every success as ‘despite Brexit’, we have been outpacing Europe over Covid and hence economically too.

[…] First, over fishing. The EU signed, on behalf of all its members, an agreement on fishing rights which gave much to the EU, and especially to France, which has taken the lion’s share of licences to fish in British waters. Britain has been applying the agreed rules, which require that EU boats wishing to fish in British waters prove that they have done so in the past.

[…] Next, Northern Ireland. On this matter, in contrast, they insist that nothing in the Northern Ireland Protocol can be altered, although the text itself says the opposite. On fishing, the agreement is rubbished as a mere scrap of paper; over Northern Ireland, Paris’s interpretation becomes Holy Writ.

[…] Finally, the question of illegal cross-Channel migration. First, the French claimed that they were doing everything they possibly could to stop it – until videos appeared of French police standing by watching embarkations. This in a country in which even an old-age-pensioners’ rally would be escorted by an ample force of riot police. Also it emerged that people traffickers had long been buying rubber boats at Decathlon – and no one had noticed? So then the tone changed: it was all Britain’s fault, alleged the Interior Minister, for having such an attractive labour market (unlike France’s, one presumes).

[…] The only logic I can imagine behind this is that they think that if they keep the pressure up, Boris Johnson and his government will be damaged enough so that eventually some pro-EU replacement will turn the UK back (however long it takes) towards docility with regard to Brussels and Paris. That would indeed be a huge prize for which they might be willing to take huge risks. So they apply General de Gaulle’s formula for dealing with the British: “Bang the table and they back down.” Unless of course the motive is nothing more than Macron’s petulant vanity. 

3.  COVID

3.1 All details on the law against vaccination opponents: up to one year in custody – exxpress.at

The fine is now lighter at € 2000 (instead of € 7200), but the amendment to the law against vaccination opponents is explosive in terms of democratic politics: in future, vaccination critics in Austria will face one year of imprisonment. The amendment has already passed the parliamentary committee. The vaccination critics will have their own detention rooms, and the costs for meals will be charged to “the obligated”.

[…] Quietly, and without wanting to cause much of a stir, the government has now finalised the current bill for the enforcement of the planned compulsory vaccination. Specifically, this is a corresponding amendment to the Administrative Enforcement Act.

The text of the law, which has already passed the parliamentary committee designated for this purpose and has already been rubber-stamped by the ÖVP, SPÖ, the Greens and NEOS only with the dissenting votes of the FPÖ, is available to eXXpress.

According to the bill, anyone who refuses to be vaccinated against the Corona virus despite being asked to do so will have to pay a fine of 2000 euros. But it will not remain with a one-time payment: Each violation will be punished again with 2000 euros – just like violations of the speed limit. And: Those who refuse to be vaccinated and also to pay the fines are to be taken into preventive detention.

[…] On 2 December, the Constitutional Committee already gave the bill the green light – without the content having been publicly debated again beforehand.

The regulation is to come into force in a few weeks in 2022. Amendments would still be possible – but there was no criticism of it among the MPs of the governing parties, as excerpts from the minutes of the committee meeting, which are available to eXXpress, show.

Comment: This article speaks for itself. We’re officially at the stage where a country (in this case Austria) will imprison people who refuse to get vaccinated. We’re talking about a virus that will never be defeated through a vaccine as it mutates like the flu. Instead of vaccinating the most vulnerable people of society, Austria has chosen to go down a very, very dark path.

3.2 Dutiful Germans get the point of mandatory Covid jabs – The Times

A weak culture of individual freedom and a strong ingrained sense of duty means that Germans will submit to compulsory vaccination while other Europeans, such as the Dutch, would be up in arms, according to experts.

Joost van Loon, a sociologist at the University of Eichstaett-Ingolstadt, said that a German crackdown on unvaccinated people would succeed where it would fail in other nations.

“In the Netherlands, wearing a facemask was seen as an attack on individual freedom,” he told the Dutch NOS public broadcaster. “In Germany, there is much more a culture of collective responsibility, a more ingrained sense of duty. So people do what is asked of them rather. They don’t grumble so much.”

[…] The discriminatory lockdown, which would have been unthinkable a year ago due to the country’s Nazi past, are now seen as popular because of the large numbers of unvaccinated people in German intensive care units at the expense of other seriously ill people.

“We now see that a majority of people have very little sympathy that intensive care unit beds are not immediately available for the seriously ill, such as for people with cancer,” said Alex Friedrich, a German microbiologist and professor. “This is because mainly unvaccinated Covid patients are admitted while a vaccine could have prevented that.”

[…] “Certain groups try again and again to subvert rules and break rules, something the state cannot tolerate,” he told Deutschlandfunk public radio.

Switzerland has also announced new pandemic measures including a certificate to prove a person is vaccinated or has recovered from the virus to access bars or restaurants.

Comment: In Sebastian Schnoy’s book called “Von Napoleon lernen, wie man sich vorm Adwasch druckt”, he briefly explains that the Germans have a need to have a strong leader that tells them how to behave and what to do. The examples he used are Germany’s emperors, Hitler, but also Angela Merkel who just left after being in office for 16 years with the nickname “Mutti”.

3.3 Germany’s lurch into Covid authoritarianism – Spiked

It was meant to be a new start. Just last week, Germany’s newly formed coalition government had even announced its ‘appetite for something new’, in its coalition agreement. But one week on, with Covid rates soaring and compulsory vaccinations seemingly incoming, any sense of the new has vanished.

Right now, any coalition government – especially one comprising such different groupings as the Social Democrats, the Greens and the Free Democratic Party – was always going to struggle to win the trust of the German public. It even tried to turn its patchwork nature into a virtue, declaring in its coalition agreement that ‘three such different parties [reflect] the complex social realities’ of modern Germany.

Yet its response to the escalating Covid crisis has only further undermined its public standing. So far it has announced plans to make vaccination compulsory from February onwards, with the threat of heavy fines for those who refuse. And, as of this week, there will be a lockdown for the unvaccinated.

Indeed, the new Covid measures run counter to much that voters were told only a few weeks ago by leading figures in the SDP, FDP and some Green politicians. During the election campaign, they led people to believe there would be no compulsory vaccination programme and that they were opposed to nationwide lockdowns. The FDP, in particular, won the support of many younger people by promising more liberty and freedom. ‘We Free Democrats’, its manifesto declared, ‘place our faith in freedom, the rule of law and civil rights, which apply even in times of crisis and must not be dismissed as “privileges” to be allocated or withheld from us at will’. Grand words now betrayed by authoritarian actions.

[…] There are several reasons for this. Scholz lacks Merkel’s personal authority, and he won’t be able to hide behind mummy forever. The FDP leadership’s betrayal of its election promises, especially its sudden turn towards mandatory vaccinations, could start to tear the party apart. And the Greens, who were always the natural home of anti-vaxxers, are likely to pay for their support for the new restrictions, too.

Comment: This article discusses one aspect we briefly touched upon. Both the Greens and the FDP risk losing voters over these decisions. Especially the FDP went into the election campaign to promote “freedom” and the importance of blocking any attempts of forced vaccinations. The polls in the weeks ahead will show how this impacts its voter base. So far, sentiment on social media has turned heavily against the liberals.

4.  RUSSIA

4.1 Putin to demand from Biden guarantees against Ukraine joining NATO – The Times

The Kremlin said that President Putin will seek binding guarantees against Ukraine joining Nato during a phone call with President Biden next week, as the Ukrainian defence minister warned that Russia could invade next month.

Biden earlier said that the US and allies were “putting together what I believe to be the most comprehensive and meaningful set of initiatives to make it very, very difficult for Mr Putin to go ahead and do what people are worried he may do”.

US intelligence officials estimate that the Russians are planning to deploy an estimated 175,000 troops for a possible military offensive that could begin as soon as early 2022.

Speaking to reporters as he set out for Camp David, Biden said: “We’ve been aware of Russia’s actions for a long time and my expectation is we’re gonna have a long discussion with Putin.” He sought to head off any demand for guarantees over Ukraine, adding: “I don’t accept anyone’s red line”.

[…] When asked about Putin’s likely demands, Jen Psaki, Biden’s spokeswoman said: “Nato member countries decide who is a member of Nato, not Russia. That is how the process has always been and how it will proceed. I think it is important to remember where the provocative action is coming from at this point in time: it is not the United States, it is not Ukraine.”

Comment: The red line we discussed last week: NATO. While the Ukraine is extremely unlikely to join the NATO anytime soon, it is used to trigger Putin.

As a Twitter thread explains, if Putin were to attack Ukraine, he will have to move quickly and avoid major cities to quickly come within striking distance of Kyiv. Moreover, a map presented by Germany’s BILD (in German) shows the plans that Russia likely has. It’s a mixed invasion including sea, land, and air troops. This would be the only way to advance as the Ukrainian defence forces have gained significant capabilities over the past few years that make a quick invasion impossible. Any invasion will be costly.

4.2 Great expectations: why the West is looking to Germany to counter Russian aggression – The Times

[…] Germany’s Nato allies have long grumbled that it is failing to pull its weight, with the US feeling perennially short-changed by its stingy defence spending. Its armed forces, with their malfunctioning hardware, and equipment shortages so dire that a broomstick had to serve as a tank’s gun barrel during one international training exercise, are the butt of countless jokes.

On foreign policy matters, the kid-gloved diplomacy towards Russia and China is seen by critics as a short-sighted campaign to protect German business interests under the thin pretext of maintaining “bridges of dialogue”, while the Nord Stream 2 natural gas pipelines from Russia to Germany are regarded in the UK and Poland as a geopolitical lever that President Putin has been allowed to plunge into the core of Europe.

When Olaf Scholz and his Social Democratic party (SPD) won the Bundestag election in September, many observers feared the worst: a bickering coalition torn between a continuation of Angela Merkel’s circumspect doctrines and a radical pacifism tinged with suspicion of the US.

The SPD’s left-wing leadership had previously called on the US to clear out the 20 or so atomic warheads that have been stationed in Germany since the Cold War. The Green party, its new partner, had campaigned for a “Germany free from nuclear weapons”.

[…] The military will be upgraded more broadly, at least to some extent. The coalition deal is packed with paeans to Nato. While there is little concrete detail on the defence budget, there is a commitment to spend 3 per cent of GDP on foreign policy objectives. The three ruling parties have also made a pledge to co-ordinate their stance on China with the US.

This week Annalena Baerbock, 40, the Green party’s co-leader and foreign minister-in-waiting, illustrated what this might mean in practice with an uncompromising message to China: not only was Germany open to joining an international boycott of the 2022 Winter Olympics in Beijing, she said, but it also wanted to persuade the EU to use its economic muscle to stand up for itself against the Chinese government.

[…] Many of Germany’s allies would welcome a change of tack. For years its central European neighbours have looked in vain to it for assertive leadership in the EU and on the wider global stage. As Radoslaw Sikorski, the Polish foreign minister a decade ago, said: “I fear German power less than I am beginning to fear German inaction.”

[…] “Germany is seen [in Washington] as quite a reliable and stable ally, but also as an ally with a strong voice in Europe,” said Sophia Besch, a defence and foreign policy expert at the Centre for European Reform. “A Germany that finds consensus within Europe before coming to the US is the kind of partner that the US wishes for.”

[…] “There’s this idea in Germany that if only we just ask nicely then everybody else is going to be nice as well,” he added. “But that’s not the world that we find ourselves in, and military power still plays a huge role in international politics. That’s something that’s totally misunderstood in Germany: we don’t recognise the reality because we don’t want to believe it’s the reality.”

Comment: Germany’s involvement in the Russia “situation” is complex. Germany Is fighting hard to get Nord Stream 2 approved as soon as possible and not shying away from making itself heard in the US. New investments in defense capabilities are unlikely and a tougher stance on China is not possible given its dependence on the Chinese consumer. There is a start as the Greens and Liberals are tougher on Russia and China, but the coalition leader SPD has strong ties with the Russians. This story is far from over. If anything, it’s just beginning.

4.3 The West is skating on thin ice, warns Finland’s Putin whisperer – The Times

[…] “There’s a saying in Finland,” he said. “Do you know when you can walk on thin ice? Two weeks after you have seen the first ice fisherman out there.”

Over almost a decade as the top diplomat of a smallish country with a vast and unpredictable neighbour massing jet fighters, nuclear submarines and missile-launchers near its eastern border, Niinisto, 73, has learnt to tread delicately.

He may be the only western head of state to have both charmed Donald Trump and wrangled grudging concessions out of President Putin of Russia in the course of a dozen private encounters.

Today, though, he looks worried. As a young law student in the 1970s, during what he calls the “coldest Cold War”, Niinisto looked on as the United States and the Soviet Union inched towards rapprochement in Helsinki, bound together by the knowledge that a single misstep might result in nuclear armageddon.

Yet he thinks that the modern world is a far more dangerous place. It is not just that the foundations of international atomic weapons treaties that were laid half a century ago are crumbling. It is that there are new, untraceable tools of war — artificial intelligence, drones and hybrid warfare, where migrants and misinformation are deployed as weapons — that have blurred the awful clarity of mutually assured destruction.

[…] Among western leaders, only the departing Angela Merkel has more experience of keeping Putin at the negotiating table. Niinisto says his most useful insight from 12 meetings with his Russian counterpart is that Putin, 69, is fixated on mutual respect: he scorns signs of weakness but also nurtures a deep desire to be taken seriously.

“This is, with the Russians, most important: that you don’t undermine or ignore them,” Niinisto said. He cited a former mayor of Turku, the former Finnish capital, who used to meet regularly with Putin in the early 1990s, when the future Russian leader was a relatively junior city official in its twin city of St Petersburg. Niinisto says that Putin never forgot the mayor’s respectful demeanour, and still often invites the old man to visit him in Moscow.

[…] Niinisto’s attempts to broker a diplomatic entente on the militarisation of the Arctic have so far been thwarted, with both Washington and Moscow racing to expand their reach into the melting ice.

Yet the Finnish president is not alone in sensing the danger. Britain, too, is fretting about the western end of the Arctic sea route, which extends through a choke point in the north Atlantic known as the Greenland-Iceland-UK gap. On the sidelines of the Cop26 summit in Glasgow last month, Niinisto says, he was approached by Ben Wallace, the British defence minister, for advice on how the gap might be secured.

[…] The Finnish president says this has left the European Union with “double standards”. On the one hand, it is committed to humanitarian values. On the other, it cannot possibly cope with such a large influx of economic migrants, and needs to find some way of drawing a distinction and protecting its outer borders.

“I see it as a construction problem,” he said. “If your ground is not solid, there’s not much sense in trying to build on it more. And whether our ground is now solid or not, I have questions.”

5.  EUROPEAN UNION

5.1 Europe forges sanctions hammer – POLITICO

EUROPE FORGES A HAMMER: Brussels has prepared a new revolutionary trade — and, effectively, foreign policy — instrument that will allow it to impose counter-sanctions on individuals, companies and entire countries, bringing the bloc a step closer to its ambition of becoming a “geopolitical” actor.

In brief: The highly sensitive draft law, obtained by Playbook, gives the EU real power as a foreign-policy actor. It essentially grants Brussels the legal right and means to fight fire with fire when the EU or one of its members is economically threatened.

Beijing, Moscow and Washington will be watching: If the proposal passes the legislative process — and that’s not unlikely given heavy hitters including France and Germany have backed the idea — it’ll be the EU’s biggest gain in foreign policy powers in decades. Even big players such as China, the U.S. and Russia would have to think twice before imposing sanctions on the EU.

IF I HAD A HAMMER … The instrument allows Brussels to impose economic pain — ranging from trade and investment restrictions to sanctions on intellectual property rights — on any country that has sought to economically blackmail the EU. But before wielding it, Brussels would give countries the opportunity to backtrack from their “coercive measures,” to broker an agreement based on international rules.

Comment: This protects individual EU member states against foreign sanctions. The EU would retaliate as a whole. It’s very supportive of more EU power on a global scale. As POLITICO says, the EU does not have a phone number, but soon they will have a big hammer.

5.2 Europe’s far-Right and nationalist leaders gather in attempt to forge new alliance – The Telegraph

The leaders of far-Right and nationalist parties from across Europe gathered in Warsaw on Saturday in an attempt to form a new alliance that could become the second-biggest party in the European Parliament. The talks gathered 14 parties and were hosted by the leader of Poland’s ruling right-wing populist Law and Justice party (PiS), Jaroslaw Kaczynski, at the regent Warsaw Hotel.

Marine Le Pen, the leader of France’s far-right National Rally, Hungarian prime minister Viktor Orbán and Santiago Abascal, the leader of Spain’s Vox party, attended. Ms Le Pen, who is campaigning ahead of France’s presidential election next April, described the meeting as “an important step” on Friday, but said she did not expect an imminent announcement of a new parliamentary group.

“We can be optimistic about the launch of this political force in the months to come,” she told the AFP news agency.

[…] Mr Orban wrote on Facebook: “We want to change the politics of Brussels. We’ve been working for months to create a strong party family. Hopefully we can make a step towards this goal today or tomorrow.”

[…] Earlier this year, Mr Orbán’s Fidesz party was forced to leave the centre-right European People’s Party, the biggest group in the European Parliament, and is seeking to gather a new alliance around it.

Poland and Hungary accuse the EU of undermining their sovereignty, while the Commission has taken legal action against the countries for violation of fundamental rights of LGBT people.

Mateusz Morawiecki, the Polish prime minister, on Friday said Europe was at “a turning point” and called for member states to end the “usurpation that is concentrating power in the hands of the European elites”.

5.3 As Vienna talks continue, Israel prepares for possible war against Iran, Hezbollah – AL-Monitor

Never, to the best of our knowledge, has an incumbent Mossad chief publicly issued such a pronouncement, but on Nov. 2, the spy agency’s director David Barnea pledged that Iran would never have nuclear weapons. “It’s clear that there’s no need for uranium enriched to 60% for civilian purposes,” he said at a ceremony honoring outstanding Mossad agents. “There’s no need for three enrichment sites. There’s no need for thousands of active centrifuges — unless, that is, there is an intention to develop nuclear weapons. … Iran will not have nuclear weapons — not in the coming years, not ever. That is my promise, that is Mossad’s promise.”

Barnea leaves next week for talks in the United States against the backdrop of growing US-Israeli tensions over the Iranian nuclear issue. The Americans, according to a front-page Nov. 3 headline in the mass circulation Yedioth Ahronoth, are demanding that Israel freeze all clandestine and intelligence activity designed to sabotage Iran’s nuclear program during the ongoing Vienna negotiations so as to avoid undermining the talks with Tehran. Israel, claims the report, is refusing to commit itself.

Meanwhile, Barnea’s declaration is drawing quite a bit of criticism, in Israel, too. “The only one who can make such a commitment is the United States,” a senior Israeli source told Al-Monitor on condition of anonymity. “Only a world power of the stature of the United States has the ability to make such a promise.” However, the United States has already issued such pledges publicly many times, and no one in Israel believes them any longer.

Barnea’s statement came on the heels of dramatic pronouncements by Israel’s top leaders — Prime Minister Naftali Bennett, Foreign Minister Yair Lapid, Finance Minister Avigdor Liberman and President Isaac Herzog — on the Nov. 29 opening day of the Vienna talks. Defense Minister Benny Gantz also addressed the issue this week, saying, “The military option must always be on the table. It is, of course, the last thing we want to use but we do not have the right to not prepare that option for ourselves.” Bennett, for his part, spoke Dec. 1 with US Secretary of State Antony Blinken, urging the powers yet again not to surrender to Iran’s “nuclear blackmail.”

[…] Israel destroyed the nuclear reactors of Iraq and Syria in two single daring air force strikes. Iran is a different case altogether. There are no reactors. There is a uranium enrichment infrastructure and facilities spread throughout the huge country, at least one of them, in Fordo, heavily fortified under a massive mountain. It is considered indestructible barring a prolonged, pounding with bunker busting munitions that only the United States owns.

Israel has been trying for years to come up with creative ideas to overcome these and other physical obstacles. The distance, which is supposed to greatly hamper its air force in reaching Iranian skies appears less of a problem now that Israel has stable relations and cooperation with quite a few Gulf countries and with Azerbaijan.

“Even if we are unable to destroy Iran’s nuclear infrastructure in one fell swoop,” a former senior Israeli intelligence official told Al-Monitor on condition of anonymity, “I have no doubt we could cause it great damage and delay the whole thing for a year or two, perhaps for even longer.” Asked whether Israel would risk a “world war” with Iran and Hezbollah to achieve a limited delay of a year or two, the source answered, “Perhaps. If and when the sword is on our neck, we will do everything possible, take all the risks and not let them get there. It is an existential question.”

[…] Asked whether the IAF is capable of removing the Iranian threat, Norkin would not react to it directly. Instead, he said that if it comes to it, the IDF will explain what it is capable of doing and carrying out. The military and political leaderships would then have to decide whether the expected achievements are sufficient. “Regardless of the different scenarios, and I hope it does not come to any fighting at any arena, we must always be ready with a military option. And this is why the issue has been placed high on the agenda.”

[…] The only question left is the cost. If Hezbollah enters into an all-out war with Israel the minute the IAF strikes in Iran, Israel would be vulnerable to the greatest destruction and damage it has ever known (and at the same time restore Lebanon to the Stone Age, as it has threatened). Interestingly, some in Israel now believe that Hezbollah would not necessarily or automatically choose to take on Israel. “Under certain circumstances,” a senior security source told Al-Monitor on condition of anonymity, “[Hezbollah Secretary-General Hassan] Nasrallah could decide to stay out of it or to join only in limited and symbolic fashion.”

Comment: It makes technical sense for Israel to take matters in its own hands as the country bears the highest risks in a situation where Iran builds nuclear weapons. However, as Albert Marko on Twitter explains, “wouldn’t Israel assess the situation in the White House as too weak or unstable to attempt a geopolitical move w/o knowing what the Pentagon would be directed to do under Biden’s new appointees?”

6.  UNITED KINGDOM

6.1 Boris Johnson orders de-escalation of tensions with France – FT

UK prime minister Boris Johnson has ordered his team to de-escalate tensions with French president Emmanuel Macron, telling colleagues not to retaliate against what London regards as recent provocation from Paris.

Johnson is convinced that Macron is going to win a second term, according to allies, and wants to prepare the ground for better relations after next April’s presidential elections, possibly via a new Anglo-French treaty.

With Macron reportedly labelling Johnson a “clown” — amid a bitter row over how to respond to the deaths of 27 migrants who last month tried to reach the UK by crossing the English Channel in a small boat — the idea of any post-election “entente cordiale” seems far-fetched to some diplomats.

Johnson is regarded by Macron as not “serious” and the prime minister has antagonised Paris on a range of issues beyond migrants, including Brexit and a new security partnership between Australia, the US and the UK that will enable Canberra to build a fleet of nuclear-powered submarines.

[…] Number 10 did not hit back at Macron’s reported comments to colleagues, outlined by French satirical newspaper Le Canard enchaîné, that Johnson was behaving “like an idiot” and that it was sad Britain was being “led by a clown”.

There was then only a modest plea by Number 10 for people to choose their words “carefully” after Macron said the handling of post-Brexit trading arrangements for Northern Ireland were a matter of “war and peace for Ireland”.

Nor was there a robust British response to claims last week by Clément Beaune, France’s Europe minister, that migrants were attracted to the UK by an economic model featuring “quasi modern slavery”.

Some diplomats, however, believe Johnson has left it too late to smooth tensions and is deluded in thinking that Macron’s attacks are down to electioneering — they think the French president is simply fed up with a prime minister who he regards as unreliable and trivial.

6.2 We need a new entente cordiale, but it won’t happen any time soon – The Telegraph

[…] Yet nearly a year after exiting Europe’s single market, Britain remains pretty much a pariah among Europe’s main political leaders, with ongoing conflict on multiple fronts.

I’ll come to the business of apportioning blame later, but that this lamentable state of affairs is doing quite a bit of economic damage on both sides of the Channel is not in doubt. According to analysis by the Centre for European Reform, UK goods trade was 11.2pc, or £8.5bn, lower in September than it would have been if the UK had stayed in the EU’s single market and customs union.

This kind of modelling is of course highly contentious; so much depends on the assumptions used. The pandemic has also hugely complicated the picture, making it virtually impossible to disentangle Brexit effects from the supply chain disruptions caused by Covid.

[…] The economic case for Brexit always lay crucially in seizing the opportunities for free trade and for regulatory and tax divergence it might offer. Yet as Lord Frost, the Cabinet minister with responsibility for relations with Brussels, insinuated in a recent speech, there is as yet zero evidence of this occurring.

Instead, we have seemingly opted for tax-funded levelling up and healthcare spending. “We can’t carry on as we were before and if, after Brexit, all we do is import the European social model, we will not succeed,” Lord Frost said.

His remarks speak to widespread disillusionment with government policy among UK business leaders, many of whom now openly question the pro-business, Tory credentials of the present leadership. The Prime Minister’s speech to the CBI annual conference was an opportunity for a reset; instead, Mr Johnson lost his way, and started going on about Peppa Pig.

[…] France’s Emmanuel Macron reportedly called Johnson a clown on a recent trip to Croatia, while Johnson has urged Macron to “prenez un grip” and “donnez moi un break”. Whether imagined or real, Macron claims Johnson has apologised to him in private, and asked for understanding that he must cater to his UK base.

“Very quickly, he (Johnson), realised that the situation was catastrophic for the British,” Le Canard Enchaîné reported Macron as saying. “There’s no petrol in the pumps, there’s a whole bunch of stuff missing. He positions himself as a victim, he makes France a scapegoat.”

[…] In any case, Downing Street looks set to cave over the Northern Ireland Protocol, and accept the concessions Europe has been offering. If even unionists are starting to say privately that in economic terms the Protocol is actually working rather well for Northern Ireland, it would look odd if Johnson continued to stand against it for territorial reasons alone.

The Biden administration’s refusal to lift Trump-era tariffs on UK steel and aluminium until satisfied that the Protocol is safe may also be having an impact.

Britain simply cannot afford a trade war with both Europe and the US, nevermind China, where relations are also strained to breaking point. Maybe agreement over the Protocol will presage a wider revival in relations. Hard to be optimistic, though.

Comment: The last few paragraphs of this article hit the nail on the head – especially after we speculated last week that the US’ unwillingness to lift trade tariffs was a tool to get the UK to give in to the EU’s demands. While we’re still in the midst of these negotiations, it looks like the UK might refrain from going all-in. Especially given ongoing supply chain issues and global tensions, the UK is better off fighting for somewhat favorable trade deals instead of risking too much to get better conditions in the Northern Ireland talks.

6.3 Britain’s US trade charm offensive at risk amid steel row – POLITICO

The U.K. wants to win over the Biden administration on trade this week — but it’s got its work cut out for it.

New International Trade Secretary Anne-Marie Trevelyan is heading to Washington in her first overseas visit since taking on the job in September, while junior Trade Minister Penny Mordaunt is touring western states.

The effort illustrates the eagerness in Britain to develop trade ties with its transatlantic partner and work toward that elusive Brexit prize: a free trade deal — even though U.S. President Joe Biden has little interest in pursuing talks.

But the new drive also risks being overshadowed by a separate trade row: the so-called Section 232 tariffs former President Donald Trump slapped on steel and aluminum on the grounds of national security. The Biden administration did a deal with the EU to relieve the tariffs but, so far, the U.K. has been left out in the cold.

Reports last week claimed the refusal from Washington to lift the tariffs was a bid to put pressure on London not to make rash moves over Brexit, amid turmoil over trade relations in Northern Ireland and the resulting risk to peace in a nation that saw decades of sectarian conflict.

There are fears in and around the British government that those claims are accurate, despite Mordaunt branding suggestions the two are linked a “false narrative.”

The White House is said to deny that the two issues are tied, but the U.S. government did not respond to a request for comment.

Whether linked to Brexit or not, Trevelyan will push to get the tariffs lifted when she meets her U.S. counterpart Katherine Tai on Tuesday, and during a crucial meeting on the issue with U.S. Commerce Secretary Gina Raimondo on Wednesday.

Back home, the pressure is rising to get a steel deal done. In a letter to Trevelyan seen by POLITICO, the Labour Party’s Shadow Trade Secretary Nick Thomas-Symonds urged his opposite number to clinch an agreement to protect manufacturing jobs ahead of Christmas.

He noted that EU steelmakers are set for a “significant advantage” over those in Britain once the deal with Brussels kicks in, adding: “This situation is urgent as customers in the United States will be factoring this into their plans for next year now. Steel is a foundational sector for our national economy and with jobs and livelihoods across the whole of the U.K. dependent on it.”

7.  ITALY

7.1 As Italy eyes a new president, can Berlusconi bewitch? – France 24

Billionaire media mogul, Italian prime minister, cruise ship crooner and convicted criminal — after a colourful career, could Silvio Berlusconi, 85, be soon adding head of state to his CV?

Just weeks before secret parliamentary elections next month to choose Italy’s new president, no clear candidate has emerged for a role crucial to keeping the country’s fractious parties in line.

There is intense speculation Prime Minister Mario Draghi might take the job, but in the meantime Berlusconi — despite recent poor health, including a bad bout of coronavirus last year — is on manoeuvres.

“Berlusconi will try (to get elected), and could succeed,” Gianfranco Pasquino, political science lecturer at Bologna’s Johns Hopkins University, told AFP.

Italy’s president has a firefighting rather than a ceremonial role.

The incumbent, Sergio Mattarella — who is bowing out after a seven-year term — was instrumental in bringing in Draghi at the head of a national unity government last February after the previous coalition collapsed.

Draghi, a former European Central Bank chief, has refused to say publicly if he is interested in the presidency.

He currently has his hands full managing a vast 200 billion euro ($225 billion) post-pandemic recovery fund from the European Union and implementing reforms Brussels expects in exchange.

Comment: Since Italy’s last general election in 2018, the right-wing coalition between Forza Italia, Lega, and the Fratelli d’Italia has already gone separate ways twice. Shortly after the election, Lega formed a government with Five Star, leaving Forza Italia and the FdI in opposition. And in February, FdI was the odd one out, staying in opposition while Lega and Forza Italia joined the coalition government.

There’s now a new fissure opening up within the coalition, this time between Forza Italia and the other two parties. The immediate source of this dispute is Silvio Berlusconi’s own ambitions for the presidency. As Corriere della Sera recently reported, both Giorgia Meloni and Matteo Salvini are having second thoughts about a potential Berlusconi candidacy.

The big difference between Forza and its peers is that Berlusconi is more centrist than Lega or FdI. This includes European integration, which Forza favors. However, even more important than this is that both Meloni and Salvini want early elections.

Another very important factor is that Matteo Renzi’s Italia Viva is shifting to the right. They could form a new centre-right camp with Berlusconi.

If this scenario were to come to fruition, it would have a significant impact on the electoral map. The prevailing assumption has been that the Forza Italia-Lega-FdI coalition would almost definitely win the next election, regardless of when it is held. The parties splitting would make this less certain. Instead, any centrist bloc could act as kingmakers.

It’s a scenario that would play to Berlusconi’s benefit, whether he is in the Quirinale palace or out of it. In the centre-right coalition, he is the third man in a Salvini-Meloni showdown. Out of it, he is a likely power broker.

As an aside, we actually believe that Mattorella will stay for another term, although resign as and when Draghi is ready to push himself towards the Quirinale.

8.  TURKEY

8.1 Turkish opposition leader helps shape unlikely alliance to challenge Erdogan – FT

For years, Turkish opposition leader Kemal Kilicdaroglu suffered ridicule for his mild- mannered demeanour and failure to make inroads at election after election. Lately, though, the head of the Republican People’s party (CHP) has discovered a taste for boldness.

On Friday, he turned up uninvited at the country’s statistical agency and accused it of manipulating inflation data under the orders of Recep Tayyip Erdogan, Turkey’s president. Standing outside its locked gates after being refused a meeting, he starkly warned the country’s civil servants to “do the right thing”.

With the country gripped by economic turmoil, a plunging currency and double-digit inflation, Kilicdaroglu has been buoyed by polls showing that the combined votes of the opposition alliance that he helped to build are higher than those of Erdogan and his allies. The loose coalition is convinced that it could topple the president in a national vote scheduled for 2023, but which could be called earlier.

[…] The CHP that he leads was established by the country’s founding father Mustafa Kemal Ataturk and has long been seen as a standard bearer for secularism, bringing it into conflict with Turkey’s conservatives. Describing itself as social democrat, the CHP also has a strong nationalist vein that has alienated the country’s millions of Kurds.

But after years of failing to dent the popularity of Erdogan, whose Justice and Development party (AKP) has ruled for almost two decades, Kilicdaroglu has emerged as the architect of the unlikely grouping now challenging Erdogan’s grip on power.

The coalition began in 2017 when rival parties buried their differences to campaign together for a “no” vote in that year’s referendum on abolishing the country’s parliamentary system and consolidating the president’s control.

[…] Despite such overtures, a recent survey by the Turkish pollster Metropoll found that almost 70 per cent of AKP voters, many of them devout Muslims, were fearful of the prospect of a government comprised of the CHP and its allies from the rightwing nationalist IYI party.

Some of the CHP’s key policies are also contentious internationally, including a pledge to reconcile with Bashar al-Assad, Syria’s president, and return Turkey’s 3.6m Syrian refugees.

The opposition could also trip itself up, analysts warn. Some within the CHP worry that Kilicdaroglu will suggest himself as the best candidate to challenge Erdogan for the presidency, despite polling showing that he would be less popular than Imamoglu or Mansur Yavas, Ankara’s mayor.

Comment: These are important developments that pressure Erdogan politically. He will need to get inflation down to support the middle and lower classes. If not, he loses the next elections. Next up are his talks with Qatari officials that could end up with much-needed foreign investments in Turkey. The kind of investments he needs for economic and PR reasons.