Europe Geopolitics – December 7, 2021

Leo Nelissen | December 7th, 2021

Today, we take a closer look at the new German coalition, which does come with challenges and less influence for Christian Lindner than he might have expected.

In France, we see that the just-elected candidate Pécresse of Les Républicains is already in a great position to make it to the second round of the election next year.

Meanwhile, the tension in East Europe could be eased through a phone call between Putin and Biden.

We also take a closer look at reasons why Putin has his eye on Ukraine. 

1.  EUROPEAN UNION

1.1 Europe arms itself against the global trade bullies – FT

We’ve been going on for a while about how the EU is arming itself with an array of unilateral (sorry, we keep doing this, “autonomous”) trade instruments. The aim: to clobber trading partners whose companies are being unfairly state-subsidised to export cheap goods, bid for procurement contracts or operate in the EU single market, or which use forced labour or destroy the environment in the process of trading with Europe.

A prototype of one of these weapons is being wheeled out of the European Commission workshop this week for examination by the European Parliament and the council of member states. The “anti-coercion instrument” (ACI) would aim to deter — and if necessary hit back with tools such as trade restrictions, divestment and blocks on government procurement — foreign governments from using unfair means to try to force policy change. The European Council on Foreign Relations has an excellent paper on the subject here.

There are several intriguing things about this. First, it rests on a creative interpretation of a general principle of public international law, that (roughly speaking) governments are not bound by treaties with foreign governments that are exerting undue coercion, including economic and financial pressure. It was much discussed during the Arab oil embargo of 1973, an attempt to get oil-importing countries to withdraw support for Israel.

If the targeted country then challenged the use of the ACI at the World Trade Organization, the EU would have to defend it using various provisions in WTO rules. The strategy is a bit suck-it-and-see — whack a trade restriction on a miscreant foreign government and see if you can convince a WTO dispute settlement panel that it’s justified. Full marks for entrepreneurial legal innovation, anyway.

[…] The debate now is how to set the rules of deployment: who decides to use the weapon (if it’s the commission on its own, that’s a lot of power to hand it) and under what circumstances. Fans of the idea say it should be flexible and speedy with limited room for discretion. Bernd Lange, chair of the European Parliament’s international trade committee, says: “We should make a whole bouquet of measures possible, so that our measures are not calculable from the outset.” He also wants “a certain element of automaticity to prevent the EU and its member states from being vulnerable to being divided”.

[…] As it happens, we’ve got a test case of coercion going on now. Lithuania (population 2.8m, GDP $63bn) has taken on China (population 1.4bn, GDP $15tn), not least by establishing strong relations with Taiwan. Strategic autonomy, indeed. Until now China has made only modest efforts to punish Lithuania, but Vilnius complained on Friday that all its exports were being blocked at Chinese customs. It’s not clear whether the measured response (until recently) is because Beijing thinks Lithuania is too small to matter or whether it fears wider repercussions across Europe.

[…]

To some extent the principle in both cases would be the same, an equivalent to Nato’s Article 5 on collective defence: an attack on one member state obliges a collective response. It’s exactly the kind of thing the EU was made for. However, it’s not just the method that’s in question but the political will. Although general disaffection with China has been growing, member states often still vary considerably in their attitude to dealing with Beijing. It’s not just the design of legal tools that matters: it’s also the readiness to use them.

Comment: As we covered yesterday, the EU has no phone number, but now it has a hammer (referring to its ability to apply tariffs and sanctions). The problem is that the EU is divided and unlikely to agree on measures due to a lack of shared values and varying trade partners and country leaders.

2.  GERMANY

2.1 SPD, Greens and FDP sign coalition agreement – Frankfurter Allgemeine

The SPD, the Greens and the FDP have officially sealed their joint government programme. In Berlin, the leaders of the three parties signed the 177-page contract for their future government. Chancellor-designate Olaf Scholz (SPD) said that three parties had come together committed to progress. “Let this be a tomorrow where we set out to form a new government.” He said the fight against the Corona crisis would first require the full force of the new coalition. FDP leader Christian Lindner said, “Now the time for action begins.” Green Party leader Annalena Baerbock spoke of a coalition agreement “on the level of reality, on the level of social reality”.

In the morning, Scholz, Green Party leader Robert Habeck and Lindner wanted to face questions from the media at the Federal Press Conference. Habeck is slated to be Minister of Economics and Climate Protection in the new federal government and will assume the duties of Vice-Chancellor. Lindner takes over the office of Finance Minister.

Comment: It’s done, the coalition agreement has been signed. In this case, the SPD holds six ministries on top of the chancellor and the chancellery minister. The FDP hold four, the Greens hold five.

Scholz apparently built his cabinet around Lauterbach who will become Germany’s next health minister. The problem Scholz faced was that most SPD top candidates are state premiers, combined with a desire to involve more women, meant that Scholz had to use women nobody was familiar with.

The problem with the SPD jobs cabinet is that it highly lopsided, with a western bias. Scholz and Schmidt are from Hamburg. Lauterbach and Schulze are from North-Rhine Westphalia; Hessen also has two, Lambrecht and Faeser. As the CSU noted yesterday, there won’t be single Bavarian in the entire cabinet. But, perhaps even more importantly, eastern Germany is massively unrepresented too, with only two cabinet members in relatively junior positions: Geywitz and Steffi Lemke, the new Green environment minister.

Another region that is not represented is Rhineland-Palatinate, one of the SPD’s strongholds in the west. The danger of regional under-representation is the exposure during upcoming state elections. The lack of Bavarians in the cabinet is an almost ideal campaign scenario for Markus Söder, who will stand for reelection in 2023.

It also needs to be seen if the Lauterbach nomination pays off. He is not known to be a team player, which is an issue when dealing with Germany’s various states to combat the pandemic. It is also a problem after the pandemic (whenever that might be) when he needs to reduce healthcare spending.

2.2 Lindner is Finance Minister – but the SPD is sitting on the money – Handelsblatt

The SPD not only provides the next Federal Chancellor. It also has a large part of the money in the traffic light. Even if the SPD, the Greens and the FDP are not separated by so many percentage points in the election results, they are worlds apart in the distribution of budgetary resources.

In any case, the SPD negotiated the coalition agreement extremely well in terms of money. Based on the budget planning for 2022, the seven SPD ministers and the Federal Chancellery alone have 72 per cent of all budget funds. The FDP has 18 per cent, and the Greens are only allowed to distribute ten per cent of all funds.

Thus, the two houses with the largest budgets are in SPD hands. The Federal Ministry of Labour will have a budget of 162 billion euros next year, the budget of Defence Minister Christine Lambrecht (SPD) is 50 billion euros next year. The Ministry of Transport, soon to be led by the FDP, follows at some distance behind with a budget of 35 billion euros.

The imbalance is also due to the fact that the budget of the Federal Ministry of Labour is so huge because it also includes the fiscal pension subsidy of more than 100 billion euros. This money is fixed, so the old and new Federal Labour Minister Hubertus Heil (SPD) will not be able to simply distribute it.

[…] Also not included in the calculation are the net 29 billion euros that are in the “Energy and Climate Fund”. This is a special pot in the federal budget in which funds to combat the climate crisis are parked. Some of the funds are likely to go to the environment and economics ministries, i.e. to two Green-led ministries.

Overall, however, the Green Party clearly has the ministries with the smallest budgets. And also the ministries that do not belong to the “investment ministries” mentioned above. The Federal Ministry of Economics, which will in future be led by Robert Habeck, does award a lot of subsidies. Compared to other ministries, however, it is on a small scale.

The large sums are moved around in other ministries. In the Ministry of Labour, for example, when pensions are stabilised. In the Ministry of Defence, when it comes to defence contracts, which often cost billions. In the Ministry of Transport, when it comes to large infrastructure projects, or in the Ministry of Education and Research.

Comment: An interesting comment on the power of Lindner. While he has without doubt one of the most important ministries – maybe THE most important ministry given the deteriorating significance of Germany’s foreign ministry (sad but true) – we should not assume that he is able to play hardball. The FDP will likely give in when decisions need to be made regarding funding for growth projects. This will likely be caused by indirect tax hikes like higher diesel taxes. On the larger stage, Lindner will likely be powerless if the majority of euro area countries support looser stability pact rules.

2.3 Jörg Kukies to become economic advisor to future Chancellor Scholz – Handelsblatt

Future Chancellor Olaf Scholz (SPD) has filled a key position in the Chancellor’s Office: Jörg Kukies is to become his economic advisor and head of the Finance and Economic Policy Department. The Handelsblatt learned this from coalition circles. Until now, Kukies has been responsible for financial market and European policy as a civil servant state secretary in the Federal Ministry of Finance.

Kukies thus succeeds Lars-Hendrik Röller in the Chancellor’s Office, who headed the economic department under Angela Merkel (CDU) for ten years and was also the Chancellor’s sherpa for the G7 and G20 summits. Before Röller, outgoing Bundesbank President Jens Weidmann held the post.

Who will succeed Weidmann at the central bank will be announced in the coming days. Former Bundesbank board member Joachim Nagel, who currently works at the Bank for International Settlements (BIS), is considered the favorite for the post. According to coalition circles, however, no final decision has yet been made on the personnel.

With Kukies, Scholz has now made the first important personnel decision for his future economic policy. The head of the Finance and Economic Department has a lot of influence in the Chancellor’s Office.

He advises the chancellor on international economic policy issues and is thus involved in the preparation of most talks with foreign heads of government or summit meetings. In addition, the economic advisor maintains contact with the heads of German corporations.

Kukies has earned Scholz’s trust at the Federal Ministry of Finance and is now considered one of his closest advisors. The economist and former co-head of Goldman Sachs Germany was initially also under discussion as Weidmann’s successor as Bundesbank president. But already a few days ago, coalition circles said that Kukies was out of the running. He was said to be indispensable for the future chancellor in Berlin.

In his three years as State Secretary for Finance, Kukies has established contacts in Brussels and with his colleagues in other European capitals. He also has good connections to the German financial industry. The G7 and G20 summits will be new for him. International financial policy had been the responsibility of State Secretary Wolfgang Schmidt in the Federal Ministry of Finance, who will now become Chancellery Minister.

3.  UNITED KINGDOM

3.1 By attempting to punish Britain for Brexit, Irish nationalists are forgetting their own history – The Telegraph

‘War and war within three days”. So Lloyd George threatened Irish leaders on 5 December 1921 if they would not accept a partitioned, independent Ireland as a dominion within the British Empire. The Irish did not want to be a dominion and stay within the British orbit. They had had enough of Britain. But in the early hours of 6 December, one hundred years ago, they acquiesced and the Anglo-Irish Treaty was signed, leading to the creation of the Irish Free State a year later. Given the row over the Northern Ireland Protocol, the lessons are still relevant.

The Anglo-Irish Treaty was meant to end centuries of enmity, but misunderstandings were inherent from the start. Dominion status was said to be voluntary, yet the Irish were coerced into accepting it.

Many in Britain also wanted Ireland outside the British orbit. They had had enough of Ireland, north and south. In 1920 the Government of Ireland Act had enacted partition but had made Irish unity easy to achieve by giving Northern Ireland a parliament she did not want and a Council of Ireland which could facilitate reunification. In 1921 Lloyd George sought to coerce Northern Ireland into joining the new Irish Free State, but was frustrated by Conservative opposition. He then proposed a boundary commission which, he hinted, might make Northern Ireland unviable. The other dominions except for New Zealand – Canada, Australia, South Africa – had all begun with partition and then been unified.

[…] Irish nationalists had sought a republic in 1921. But Eamon de Valera, who opposed the Treaty, had suggested a compromise. He would accept the King as externally associated with Ireland and, as such, head of the association. This was the formula by which, in 1949, republican status for India and other ex-colonies, of which Barbados is the latest, was made compatible with Commonwealth membership, with the Queen as head of the association. De Valera, regarded by many in Britain as a nationalist fanatic, was in a sense the founder of the modern Commonwealth. He would not have taken Ireland out of it as a Fine Gael government did in 1949.

However, the Anglo-Irish Treaty could not last. Few in Ireland regarded it as a final settlement but rather, in the words of Michael Collins, as giving the freedom to achieve freedom. In Britain, suspicion of Ireland grew as De Valera proved Collins right by progressively whittling away provisions of the Treaty and declaring Ireland neutral in the war against Hitler.

Irish membership of the EU, which she joined with Britain in 1973, gave her the chance to carve a future independently of her overbearing neighbour. But distrust of Britain remains deep in the Irish subconscious, as brilliantly described in Conor Cruise O’Brien’s book Ancestral Voices, and it surfaces at sensitive times such as Brexit. Some in Ireland now feel schadenfreude at Britain’s post-Brexit discomfiture and the loosening of ties between Northern Ireland and the rest of the UK. They regard this as just punishment for Brexit. They are wrong to do so.

For, just as intransigent Unionism could not reconcile Ireland to the British connection, so also intransigent nationalism cannot resolve the problems of Northern Ireland and the Protocol. Ireland, happy to whittle away the Anglo-Irish Treaty as unsuitable to her needs, now presses the EU to maintain the Protocol by appealing to eternal and immutable principles of the EU, principles which Brussels has been happy to discard left, right and centre during the euro and Covid crises.

The post-Brexit problem of the relationship between Britain and Ireland cannot be resolved by the EU, but only by a realisation in both countries of the essential truth of Gladstone’s perception that amity depends both upon recognising the distinctive identities within these islands but also their essential unity.

4.  FRANCE

4.1 Valérie Pécresse or the omelette strategy – L’Opinion

Visiting Eric Ciotti’s land, Valérie Pécresse, the new candidate of the Republicans for the presidential elections, declared that she wanted to “bring together all the sensibilities of the right”.

This is indeed her main challenge. First of all for a simple question of form: this is where François Fillon had failed before her, by closing himself to the ideas of those he had just beaten in the primary at the time. Hence the little Tour de France that Valérie Pécresse has undertaken this week, with a stopover in the stronghold of each of her opponents: after Eric Ciotti, it is Michel Barnier, Xavier Bertrand and Philippe Juvin who will successively receive her visit. Not to offend, not to forget anyone, is the B-a-ba for the winner of a competition: because to take care of his unfortunate competitors is also to avoid humiliating their voters. It is, as they say, putting on a show.

Except that there are serious fundamental issues to be resolved.

Exactly. And there, the challenge is much greater. The right has been divided for 10 years. The defeat of Nicolas Sarkozy in 2012 marked a return to the scattering of ideas. There was no longer an indisputable leader at the head of the party, the one who silenced the oppositions and smoothed out the nuances. So each little leader took his little capital and tried to make it prosper politically.

Some wanted more radicalism, more regalness, more authority, others focused on more Europe, or less Brussels, and still others focused on immigration problems.

And of course, in this context of great fragility of the party, the political pressure of Marine Le Pen on the one hand and Emmanuel Macron on the other did not help matters. In short, the Republican right has become the right again, as it has done several times in history. This is the great challenge for Valérie Pécresse: to regain the leadership of this plural right.

Comment: Great news for Pécresse. In the first polls after her nomination, she’s tied with Le Pen at 17%. This means that she is very close to making it to the second round, which would be a head-to-head election with Macron – as he’s leading with 25% in the first-round poll.

Her main opponents are, needless to say, Le Pen and Zemmour when it comes to making it to the second round. Zemmour already influenced her campaign by announcing his candidacy a day before the first round vote of Les Républicains. That way, he helped Ciotti into the second round as he was considered a candidate capable of taking on Zemmour. Now, Pécresse needs to reach out to the right to attract voters. Hence, her first visit yesterday was to Ciotti in his constituency.

The only thing that’s missing is an official statement from Macron that makes him a candidate. He is leading in every poll but needs to be careful not to blow it. There are a lot of pitfalls like the ongoing pandemic, energy crisis, and his fights with Boris Johnson.  

4.2 Against a backdrop of Zemmourist pressure, Pécresse brings people together – L’Opinion

[…] But this visit to Eric Ciotti will also have served to put oil in the wheels. Since Saturday, the man who obtained 39% of the votes of the members has not stopped increasing the pressure to obtain from Valérie Pécresse a central role in her team. In order to ratify his status as a heavyweight, knowing that he is indispensable to address LR voters who may be attracted by Eric Zemmour, he even proposed on France Bleu Azur this morning a “tandem, side by side”. Speaking on BFMTV in the aftermath, Patrick Stefanini, the candidate’s campaign manager, was quick to dismiss the idea: “We are not in the United States. There is no ticket system, with a president and a vice-president. Similarly, it is not in the spirit of the institutions of the Fifth Republic for the presidential candidate to designate his or her Prime Minister in advance. There were five candidates in the primary. It’s the five fingers of the same hand. One of our challenges will be to ensure that the four unsuccessful candidates can rally around Valérie Pécresse so that we can run a good team campaign together.

A few hours later, the Ile-de-France politician and the deputy of the Alpes-Maritimes explained themselves during their lunch. Eric will have a very singular place in my campaign because he has a very singular voice to make heard for the country”, Valérie Pécresse reaffirmed later in a meeting in Saint-Martin-Vésubie, Eric Ciotti’s native village. “I will be at your side”, the latter declared. The episode is closed.

Just before the arrival of the candidate, the deputy of the Alpes-Maritimes had addressed a wink to Eric Zemmour and his voters, as he regularly did during the campaign of the congress. He posted a tweet to describe as “unacceptable” the attack on Eric Zemmour the day before, during his meeting in Villepinte. “The lack of condemnation from the government is unworthy and worrying,” he added. However, there is no mistaking it. Eric Ciotti, who made loyalty one of the first arguments of his campaign, has no intention of joining the polemicist. In any case, he does not believe in his victory.

It was in fact another tweet that set off the fire at LR. It is a very important issue for the government,” he said, “but it is also a very important issue for the people of France. In Villepinte, the polemicist nevertheless attacked Valérie Pécresse and launched an OPA on the Republicans. “Your word does not commit our political family in any way. The speech of Eric Zemmour is far from our values”, replied the spokesperson of the movement, Agnès Evren. “Guillaume Peltier has become a saboteur. That’s enough. He is taking our political family towards the worst to kill it,” said Aurélien Pradié, the secretary general of LR, to the Opinion. The affair should not end there.

4.3 Eric Zemmour is the Trump for the French – The Telegraph

A“French Guantanamo” where terrorists would be detained even after completing their prison sentence. Expelling from France all foreign nationals who committed a crime. Charging criminals for prison residence. Holding popular referenda on controversial bills to avoid “allowing the Constitutional Council to weaken them and deprive the French people of the strong policies they truly want”. Barring all foreign relatives of French citizens from moving to France for a minimum of five years. Overruling European Court of Justice decisions when they impinge on French sovereignty. Bringing order and discipline into French schools.

On and on it goes. It’s hard not to flinch at maverick presidential candidate Eric Zemmour’s far-Right policy prospectus, wouldn’t you say?

Except that all those proposals were included in the platforms of the main candidates for the centre-Right Républicain nomination: Nice MP Eric Ciotti, Michel “You will pay for Brexit” Barnier, and even Valérie Pécresse, the supposedly middle-of-the-road Paris Region president who won in the runoff at last weekend’s party conference.

[…] Zemmour’s name has become a shorthand for “Fascist, racist and dangerous to know” for every mainstream columnist in the Paris bubble. His rapid rise in the polls of voting intentions (from 3 per cent voting in the first round to 18 per cent in early November, briefly overtaking Marine Le Pen) drove them to new heights of fury. Examples of Zemmour Derangement Syndrome abound – and the election is still four months away.

When Le Z flunked a primetime television interview last week, the gloating could have heated two floors of the Eiffel Tower. His followers were derided as racist, far-Right oiks, nostalgic for the good old days of the Vichy regime. There was no way he could win.

This will sound familiar to anyone who followed Donald Trump’s 2016 presidential campaign. Zemmour, a slight, cultured and literate polemicist who has written 18 books, many of them best-sellers, has little in common personally with The Donald – he does self-deprecation, for instance, with a twinkle in his eye.

[…] For years, Zemmour has been battling wokeness and what he relentlessly calls le politiquement correct in his Le Figaro column, his books, his television talk show, and now in his rallies. He does this wittily, piling in quotes from 18th-century philosophers and 19th-century historians.

His culture is somewhat frozen in aspic and his oratory has the rousing cadences of Third Republic politicos; but unlike Macron, who is also fond of literary quotes in his long addresses to the nation, he manages not to make this sound contemptuous of his audience. Rather, he sounds as if he were sharing old family tropes and far-off memories of the great days of France’s past, ones that his fans delight in sharing.

[…] “Everything was already sewn up,” Zemmour joked. “This election would be a re-run of 2017, with the same candidates and the same result – except for a small grain of sand in the machine.” The audience roared. “No, not me – the grain of sand is you. We can change it all,” and they roared again.

So far, all projections show Zemmour losing against Macron in the runoff; and he may not even reach that. But the Zemmour revolution has already changed the French political landscape.

Comment (UnHerd): […] Meanwhile, Éric Zemmour’s entrance into the presidential race has taken the direction of French politics further Right than it has been in many decades. Openly campaigning against “the Great Replacement,” against the “theft of democracy” by unelected judges and journalists, and promising to pull France out of NATO’s decision-making structures at the helm of his newly-titled “Reconquest” party, Zemmour is rapidly expanding the terrain of acceptable French political speech on the Right. At his rally yesterday, he ruminated, in Trumpian fashion, over the epithets applied to him by French tastemakers. “Me, a fascist?” he asked, as the crowd roared in approval, “Well, let’s see.”

No wonder that the centre-Right Les Republicains, the equivalent of the Conservative party, are paying attention to the new public mood. In the first round of their ballot for a presidential candidate, the hard-Right MP Eric Ciotti, who warns darkly of a “war of civilisations” and has previously said he’d vote for Zemmour against Macron, unexpectedly came first.

When Sunday’s second round saw him eliminated by the centrist figure Valerie Pécresse (who describes herself as one third Thatcher and two thirds Merkel), Ciotti announced a new movement, To The Right!, proclaiming that “we want a strong right that isn’t ashamed to be rightwing” (though a photo opportunity over lunch with Pécresse shows him staying in the Les Republicains fold). As the political scientist Douglas Webber has observed, Ciotti’s rise to prominence “clearly reflects a strong sort of shift in political opinion in France and certainly amongst the rank and file members of the Républicains towards the right or the far right.”

5.  RUSSIA

5.1 Biden must resist joining Putin’s poker game – The Times

[…] One result is tomorrow’s emergency video call with President Biden, giving the Russian leader the international prestige that he craves. Indeed, before a shot is fired Russia is shaping the argument and its outcome. The explicit wish list is a formal end to Nato expansion, limits to the military presence on its borders and Ukraine’s de facto dismemberment. But the real gain is much bigger: an end to the post-1991 security order in Europe. Russia will no longer be bound by promises and standards of the past. Welcome to a new world where might is right.

Ukraine is the immediate target because of the threat it poses: not military, but political. If the other large, majority-Orthodox, ex-Soviet country can prosper in freedom, why must Russians endure the corrupt, pompous, repressive and stagnant rule of Putin? Russian propagandists depict Ukraine as a failing state and a fascist hellhole because its success as a multi-ethnic, multi-lingual, multi-party democracy (with a president who is, incidentally, both Jewish and a native Russian speaker) is intolerable.

[…] Putin may believe his own propaganda. We should be outraged by it. Ukraine is a real country; Russia guaranteed its territorial integrity in 1994 (in return for Ukraine giving up its Soviet-era nuclear weapons stockpile). That deal, the Budapest Memorandum, was unconditional. It did not contain footnotes saying, “unless we don’t like your government”. Ukraine’s 40 million people should not be treated as pawns on someone else’s chessboard. They have real hopes and real grievances, unlike Putin’s manufactured ones: 14,000 have died in a war that Russia started.

Putin will not stop with Ukraine. Having made us accept Russia’s paranoid worldview he can deal with other irritants. He can demand further demilitarisation in neighbouring countries: an end to all military exercises, perhaps, or the withdrawal of the Nato tripwire forces in Poland and the Baltic states. Long-term energy deals would entrench Russia’s role in exporting gas to Europe. With Nato and the EU rendered ineffective, Russia can increase its presence further in the Black Sea and continue boosting its influence in former Yugoslavia.

[…] I have spent most of this year working on a think tank report on Baltic Sea regional security. The picture is daunting — for us. Nato forces there are heavily outnumbered. They have no air defences and little long-range strike capability. We lack a maritime strategy for the region; the command structure resembles a plate of spaghetti. For Russia to portray these puny forces as a threat is absurd. So too is the idea of encirclement: just one-sixteenth of Russia’s land frontier borders Nato countries.

We should tell Putin that his complaints are nonsense. Instead, we negotiate with ourselves about how to appease him.

Comment: An excellent comment on what it’s at stake. Putin knows that he does not need to invade anyone to get what he wants. He can weaken Ukraine by just threatening to invade based on the claim that forces in the region are a threat to Russia. If (in this case) Biden gives in, Putin will focus on other areas as well. The US as the world’s largest military power and backbone of European defense should not give in. Unless Putin is looking for a full-blown war in the region Biden can call the bluff. After all, the Ukraine was “never” going to be a NATO member. The west knows it, and Putin does too.

As Albert Marko points out, Biden should not threaten Putin with economic sanctions. Putin could invade on a small scale and embarrass Biden and NATO on the world stage.

5.2 A fateful call between US and Russian leaders – FT

A video call on Tuesday between Joe Biden and Vladimir Putin promises to be one of the most difficult and consequential encounters between US and Russian leaders since the cold War. After positioning 90,000 troops near Ukraine’s borders, Russia has begun to signal what it aims to achieve. The Kremlin has said Putin will demand an agreement to “exclude any further Nato expansion eastward” to encompass Ukraine. Biden has rightly said he cannot provide such a guarantee. Deterring Russian aggression, while attempting to resolve the Nato conundrum without betraying Ukraine’s security or hopes for greater western integration, is the key to defusing tensions that pose a threat to stability in Europe.

In reality, it is the Kremlin’s actions since the 2014 pro-democracy uprising that toppled Russian-leaning president Viktor Yanukovich that have left a majority of Ukrainians now in favour of joining Nato. Russia’s annexation of Crimea and fomenting of a separatist conflict in east Ukraine convinced many previously agnostic citizens that they need the alliance’s protection.

Russia has also moved its red lines. Ukraine has not been granted a “membership action plan” that would be a step towards joining Nato. But Putin now argues “Nato” arms on its soil amount to a form of creeping, de facto membership — though Kyiv sought these defensive weapons to help it contain the Russian-supported eastern insurgency.

An unfortunate irony of today’s situation is that while Russia is convinced Nato membership for its neighbour is only a matter of time, there is no consensus in the alliance in favour of it joining, which some countries see as a step too far. Blocking membership, however, would contravene a key post-cold war principle that European countries are free to choose their own alliances. Some western leaders also share Kyiv’s concerns that Moscow would treat such a declaration as carte blanche to march into Ukraine.

Biden should at the same time send a message that the US and western partners are prepared to engage in talks with Moscow on reforming a European security architecture that looks increasingly precarious — subject to conditions. One must be that all Russian troops and hardware first return to their permanent bases.

The US president must also make clear there can be no return to zones of influence in Europe imposed by force; the Putin circle have repeatedly hinted they are seeking a “new Yalta” — referring to the 1945 meeting where Stalin, Churchill and Roosevelt carved up postwar Europe. Ukraine’s future cannot be negotiated — as Moscow wants — over the head of Kyiv, or its choice of allies blocked by threats or diktat. Russia’s illegal occupation of Crimea and Donbas must be part of any negotiation.

5.3 Why Vladimir Putin has Ukraine in his sights – FT

When Vladimir Putin talks about Ukraine, he sounds like a spurned, abusive husband. A 5,000-word essay that the Russian president published in July, entitled “On the historical unity of Russians and Ukrainians”, is full of protestations of undying love for Ukrainians — combined with threats of violence if the love is not reciprocated. Ukrainians are variously portrayed as the blood brothers of Russians and as neo- Nazis.

Volodymyr Zelensky, the president of Ukraine, joked that Putin must have a lot of time on his hands, to be able to write such a long article. But the contents of Putin’s essay look increasingly alarming when read alongside obvious preparations in Moscow for an invasion of Ukraine. There are now close to 90,000 Russian troops, as well as tanks and artillery, deployed near the Ukrainian border. Last week, Putin made a threatening speech, warning the west not to cross Russia’s “red lines”.

[…] Searching for the sources of Russian conduct, western officials point to Putin’s July opus, which is regarded as an authentic expression of his deeply-held views. In it he emphasises the ties of history, language, ethnicity and religion that link Russia and Ukraine. He points out that these ties long predate the Soviet Union. Indeed Putin, who is often accused of nostalgia for the USSR, condemns Soviet leaders who set a “most dangerous time bomb” under the ties between Russia and Ukraine — by granting any part of the USSR the right to secede from the union. “Russia was robbed, indeed,” the president fumes.

Putin insists that Ukraine is a failed state being led astray by scheming foreigners. This is where his argument takes a truly alarming turn. The west, he suggests, is playing a “dangerous geopolitical game” and is intent on using Ukraine as a “springboard against Russia”. This argument could clearly be used to portray a Russian invasion of Ukraine as defensive in nature.

To avert a conflict, the Russians are demanding an explicit guarantee that Ukraine will never join Nato. That demand is likely to be central to the conversation between Putin and Joe Biden, scheduled for this week.

[…] The second reservation is prudential. Would giving Russia what it wants really end the possibility of a war? The logic of Putin’s love-hate letter is that the very independence of Ukraine is an abomination — a historical anomaly that has to be reversed. Make a concession now and Putin might move on to the next demand. Russia has already annexed Crimea, part of Ukraine, in 2014, and also demands a veto over aspects of its domestic policies.

[…] The real difference between Kazakhstan and Ukraine may be that Kazakhstan shows no sign of becoming a democracy. Ukraine, by contrast, has consistently resisted efforts to set up an authoritarian regime of the type that Putin has installed in Russia. The Ukrainian system is corrupt and dysfunctional in many ways. But the country has elections that are not a foregone conclusion, and a vibrant civil society.

As Putin accurately observes, Ukraine and Russia are closely linked by history and culture. So the fact that Ukraine has taken a different political path from Russia raises awkward questions for the Kremlin — which likes to argue that “western liberalism” is completely unsuited to Russia. Perhaps that is the real reason why Ukraine excites such fury in Putin. Containing that fury, through the threat of massive economic sanctions, is suddenly the most urgent challenge facing the western alliance.

5.4 Companies Linked to Russian Ransomware Hide in Plain Sight – New York Times

When cybersleuths traced the millions of dollars American companies, hospitals and city governments have paid to online extortionists in ransom money, they made a telling discovery: At least some of it passed through one of the most prestigious business addresses in Moscow.

The Biden administration has also zeroed in on the building, Federation Tower East, the tallest skyscraper in the Russian capital. The United States has targeted several companies in the tower as it seeks to penalize Russian ransomware gangs, which encrypt their victims’ digital data and then demand payments to unscramble it.

Those payments are typically made in cryptocurrencies, virtual currencies like Bitcoin, which the gangs then need to convert to standard currencies, like dollars, euros and rubles.

[…] “It says a lot,” said Dmitry Smilyanets, a threat intelligence expert with the Massachusetts-based cybersecurity firm Recorded Future. “Russian law enforcement usually has an answer: ‘There is no case open in Russian jurisdiction. There are no victims. How do you expect us to prosecute these honorable people?’”

Recorded Future has counted about 50 cryptocurrency exchanges in Moscow City, a financial district in the capital, that in its assessment are engaged in illicit activity. Other exchanges in the district are not suspected of accepting cryptocurrencies linked to crime.

[…] American officials point to people like Maksim Yakubets, a skinny 34-year-old with a pompadour haircut whom the United States has identified as a kingpin of a major cybercrime operation calling itself Evil Corp. Cybersecurity analysts have linked his group to a series of ransomware attacks, including one last year targeting the National Rifle Association. A U.S. sanctions announcement accused Mr. Yakubets of also assisting Russia’s Federal Security Service, the main successor to the K.G.B.

[…] It is at this point, cybersecurity experts say, that criminals should be identified and apprehended. But the Russian government has allowed the exchanges to flourish, saying that it only investigates cybercrime if Russian laws are violated. Regulations are a gray area in Russia, as elsewhere, in the nascent industry of cryptocurrency trading.

[…] Like the banks and insurance companies they share space with, those firms are likely to have chosen the site for its status and its stringent building security, said Mr. Smilyanets, the researcher at Recorded Future.

“The Moscow City skyscrapers are very fancy,” he said. “They can post on Instagram with these beautiful sights, beautiful skyscrapers. It boosts their legitimacy.”

5.5 Western leaders plan reprisals if Russia invades Ukraine – The Times

Boris Johnson held talks last night with President Biden and other western leaders to agree a package of sanctions against Russia should it invade Ukraine.

The prime minister joined the leaders of Germany, France and Italy to form a joint strategy “to impose significant and severe harm on the Russian economy” before Biden’s high-stakes phone call with President Putin today.

Measures being considered by Nato leaders include cutting off Russia from the international financial settlement system, and restrictions on banks similar to those that crippled the Iranian economy over nuclear non-compliance. Biden is also expected to warn that the US would agree to deploy “additional forces and capabilities” to eastern Europe in response to any incursion. However, officials made clear that the president would not threaten a direct US military response.

The White House fears that Putin believes he has a moment of opportunity to act because he sees the US and UK focusing on the pandemic, France in the throes of an election and Germany changing leader. Fears have been raised of an invasion in the new year after satellite images showed a build-up of Russian troops that could reach 175,000, US security analysts said.

6.  AUSTRIA

6.1 Karl Nehammer vows to heal ‘division’ as Austria’s new chancellor – FT

Austria’s former interior minister Karl Nehammer was tasked with “restoring trust in politics” as he was sworn in as chancellor on Monday, becoming the country’s fifth leader in just four years.

The law and order champion from the conservative Austrian Peoples party takes office at a time of huge political tumult after the former chancellor, Sebastian Kurz, stood down amid a corruption scandal.

He inherits the leadership of a government — a coalition with Austria’s Greens — whose popularity has collapsed in recent weeks amid public anger over the graft allegations and its handling of the pandemic.

At the swearing-in ceremony on Monday, president Alexander Van der Bellen urged the new chancellor to “restore trust in politics that, I think, has been shaken for many people”.

“Division harms all of us as citizens of this country,” Nehammer said in a statement after the ceremony, adding that his “primary objective” was to show angry Austrians “that we are listening to them and we take them seriously”.

As interior minister Nehammer was responsible for implementing Kurz’s hardline immigration policy and his pitch to Austrians, at least on paper, is that he offers a degree of continuity as well as the chance for change.

Some analysts wonder whether now he is in charge he might plot a different course from his former ally Kurz and adopt a more liberal and consensual style of government.

But even within his own party, Nehammer faces a tricky balancing act. He must differentiate himself from his tarnished predecessor, who dramatically quit politics last week, while preserving certain elements of the once hugely successful Kurz political playbook.

[…] Nehammer’s must now steer Austria through the pandemic. Covid-19 cases are soaring, but the government’s efforts to contain them through a highly controversial mandate for all adults to be vaccinated from February, have inflamed tensions across the country.

As members of the new cabinet walked with Nehammer to the presidential palace, the Hofburg, on Monday flanked by police, crowds of angry protesters, defying lockdown orders, jeered, whistled and booed.

Comment: Nehammer is indeed a big reason for Kurz’ success in the past. However, trying to cure division in the country while planning to imprison people who refuse to get vaccinated is not worth anyone’s time.

7.  ITALY

7.1 Letta, Franceschini and Zingaretti pressuring Conte: “You run for the Gualtieri seat”. The former premier thinks about it – La Stampa

As a gesture of support now that he finds himself in difficulty within the Movement, Enrico Letta is ready to cede the capital’s seat that was once held by Roberto Gualtieri to his ally Giuseppe Conte. There is already an outline agreement with the leader of the 5stelle party (always struggling with the controversies of the various factions of the grilline that only weaken him), aimed at cementing the Pd-M5s alliance: an agreement also sponsored by the Minister of Culture, Dario Franceschini. Together with Letta and Zingaretti, Franceschini is pressing the former Prime Minister to run in the Rome city centre constituency on 13 January. A constituency that on paper is easy to win (Gualtieri won it with over 60%), but that could prove to be very tricky. This is why Conte is thinking carefully about it.

It is not known how Matteo Renzi and Carlo Calenda, for example, will act, but it is likely that they will field an opposing candidate. There is already talk of Marco Bentivogli, a former CISL strongman who is now a member of the Base association, a reformist from the Renzi area and a fearsome opponent in a certain centre-left electorate.

Letta’s scheme for this election was simple: either deploy the so-called joker, embodied by the figures of Nicola Zingaretti and Giuseppe Conte, always in the logic of the alliance. Or a woman, or alternatively Enrico Gasbarra, another strong man of the Roman PD, former president of the province. Zingaretti, with whom Letta has a very solid relationship, must complete his mandate in the Lazio region, especially now that there is a worsening of the pandemic. The Conte option would serve to strengthen the reasons for the alliance. Among the women, the names are those of Cecilia D’Elia and Annamaria Furlan. But at this point the PD hopes that Conte will accept, also because time is running out and it is necessary to start an electoral machine to beat the right: certainly, if Conte were to be elected, Meloni and Salvini would try to take a highly symbolic revenge.

Comment: Enrico Letta made Five Star and Giuseppe Conte an intriguing offer: to effectively cede them a seat in parliament. The seat in question, located in central Rome, was vacated by Roberto Gualtieri, a PD member who is the city’s mayor now. Letta’s proposal to Five Star was that, if Conte wanted the seat, he could run, and the PD would not stand in his way.

The reasoning behind this is that it would be another milestone in the alliance between PD and Five Star. These parties have been close since the coalition government from 2019-2021.

Ceding this seat would have brought Letta closer to a much bigger prize: a formal electoral pact between the two parties.

Conte, however, turned down the offer because of two stumbling blocks. First is the general reticence on the part of some sections of Five Star to get too close to the PD. Hence, losing its identity. The arrangement would also be much better for PD than for the Five Star movement.

Another reason (wild card) is that Conte could lose the election as Five Star is not that popular in Rome. Letta is clearly pushing for a closer tie-up, one that would make a good deal for electoral sense, but for now, these plans need to be put on ice.

8.  TURKEY

8.1 A More Perfect Turkic Union? – Project Syndicate

[…] But a gradual cultural rapprochement has taken place in the 30 years since the ex-Soviet Turkic states gained independence, and major powers are increasingly taking note. The latest step came at a summit in Istanbul in November, when the seven members of the Cooperation Council of Turkic Speaking States – Azerbaijan, Kazakhstan, Kyrgyzstan, Turkey, and Uzbekistan, plus Hungary and Turkmenistan as observers – renamed themselves the Organization of Turkic States.

The OTS spans 6,149 kilometers (3,821 miles) from Hungary to Kyrgyzstan and has a combined population of over 170 million and an aggregate GDP of over $1.3 trillion. In Istanbul, the assembled leaders proclaimed that an alliance based on deep roots, kinship, brotherhood, and political solidarity would guide cooperation in economic development, trade, and investment. The countries pledged to pay special attention to strengthening their cultural and humanitarian ties.

In the economic domain, OTS members will focus on improving the transport corridors between Central Asia, the Caucasus, and Turkey, which are the shortest and most economical routes connecting China and Europe. Here, the organization’s geographic location may prove invaluable.

Likewise, potential future energy cooperation among OTS states is assuming considerable geopolitical weight. Four of the seven members – Kazakhstan, Uzbekistan, Turkmenistan, and Azerbaijan – have significant hydrocarbon reserves. And Turkey is positioning itself as a hub for delivering energy resources from Russia and the Caucasus to Europe.

It is no secret that Turkish President Recep Tayyip Erdoğan wants to turn Turkey into a pivotal regional player. To realize this goal, the country could pursue one of three models: pan-Islamism, neo-Ottomanism, or pan-Turkism. With pan-Islamism, the Turks have serious competitors in Saudi Arabia and Iran. Neo-Ottomanism is untenable, because Turkey has lost its influence in its former European and Asian territories. But when it comes to pan-Turkism, the country has no rivals. For example, Turkey recently cemented its special relationship with Azerbaijan by actively supporting it in its 2020 war with Armenia over Nagorno-Karabakh.

So far, there is no sign that Turkey is seeking to dominate the Turkic world, and even if it wanted to, the Central Asian states have too much geopolitical room for maneuver. Because the region is now a playground for three global powers – Russia, China, and the United States – the Central Asians are able to play them off against each other.

All states build partnerships to promote their domestic and foreign priorities. And because the Central Asian countries value their multi-vector orientation, they will not put all of their diplomatic eggs in one basket. Instead, they will continue to cooperate with Russia for historical reasons, China for economic investment, and the US for security.

[…] For its part, China has been studiously silent on the new Turkic union. But the Global Times, a newspaper published under the auspices of the Communist Party of China, recently published a commentary about the OTS that may well have expressed the Chinese government’s fears. “This organization,” the newspaper said, “may trigger the rise of extreme nationalism, which could intensify ethnic conflicts and hit the regional stability and security.”

Moreover, it added,

“There are also groundless sayings that Uyghur people in the Xinjiang Uyghur Autonomous Region are of the same ethnic group as Turks. […] China should remain vigilant against the spread of pan-Turkism and pan-Islamism that the Organization of Turkic States may bring about.”

9.  COVID

9.1 The death of Europe – Spiked

Europe is on a precipice. It has marched, blindly, towards something very much resembling tyranny. Austria will shortly criminalise those who refuse the Covid vaccine. Germany looks set to follow. Ursula von der Leyen, president of the European Commission, is wondering out loud if every member state should do likewise and make offenders of those who reject this form of medication. In Italy you are deprived of your livelihood rather than your liberty if you say no to vaccination: the unvaxxed are not permitted to work. Anywhere. In Greece, everyone over the age of 60 must pay the government 100 euros for every month they remain unvaxxed. As if the Greek government, in cahoots with its masters in Brussels, had not immiserated Greek pensioners enough already.

Police in Rotterdam opened fire on people protesting against Covid restrictions. Three were seriously injured. Austrian cops have wielded batons and shields against the thousands who took to the streets of Vienna to say no to mandatory vaxxing. In Brussels, the black, bureaucratic heart of the EU project, water cannons and tear gas were unleashed upon citizens agitating against vaccine passes. The irony is almost too much: in the European quarter of Brussels, the very part of Europe in which the modern European sensibility was forged by politicians, experts and technocrats, ordinary people make a blow for freedom and the forces of this supposedly liberal new continent beat them down. Rarely has modern Europe’s bluster about ‘human rights’ and ‘respect’ been so savagely exposed.

What is happening in Europe right now is nothing short of terrifying. We are not merely witnessing another round of Covid restrictions. This isn’t just the introduction of another set of emergency measures that some people believe are necessary to stave off the latest Covid wave and the Omicron threat lurking on the horizon. No, we are living through a chilling overhaul of the entire relationship between the state and the individual, with the state empowered to such an extraordinary degree that it can now instruct its citizens on what to inject into their bodies, and the individual so politically emaciated, so denuded of rights, that he no longer even enjoys sovereignty over himself, over that tiny part of the world that is his own body and mind. We are witnessing the violent death of European liberalism and the birth pangs of a new and deeply authoritarian era.

[…] Strikingly, there is very little pushback from the so-called human-rights lobby against the proposed new regime of forced medication. Europhiles in the UK and elsewhere – the kind of people who assured us the EU was the great modern defender of the dignity of the individual – are meek as mice in the face of these state threats to strongarm citizens into medical compliance. It wasn’t meant to be like this, you see. It was Brexit Britain, they said, that would become a hotbed of deranged authoritarianism, while the EU would hold a candle for the modern principles of rights and respect. And now that the opposite has proven to be the case, they look the other way, or they subtly give their nod to what amounts to a tyranny of the state over the souls and flesh of individual human beings. European liberalism is dying, the European Union stands exposed as a seat of extreme authoritarianism, and the future of this continent looks very uncertain indeed. Covid will look like a blip in the affairs of man in comparison with the fallout from this political and moral crisis of the European continent.

Comment: Europe is going down a dark path, and nobody seems to care – at least the ones who are immediately called anti-vaxxers or Nazis. What is happening in Europe is dangerous because it gives politicians a lot of power. The incoming health minister Karl Lauterbach in Germany already made clear that COVID will take a while, but that it will be defeated eventually. As long as COVID is still a threat, politicians can do almost anything they want. Lockdowns, penalties on people who refuse to get vaccinated, and all kinds of travel bans. The problem that it’s hard to take this kind of power away because unlike a professional soccer match, it’s not clear when it’s finished as COVID cases will never reach zero. It’s a flu-variant and will come back every flu season. Maybe it ends when people understand that.

9.2 What’s the point of vaccine passports? – The Spectator

[…] The study analysed the results of a Kantar survey on public attitudes which has been carried out in Denmark regularly since May 2020. Respondents are asked six questions, including: ‘I trust the political strategy behind the health authorities’ advice’ and ‘the health authorities’ advice are important to achieve a safe society’. Researchers found that among the unvaccinated, trust in health authorities’ handling of the Covid epidemic plunged by 11 to 13 per cent and their individual motivation to engage in collective action to stop Covid infections fell by 7 to 9 per cent. There was no such change in attitudes among the vaccinated. The findings were based on responses from just under 25,000 people, 800 of whom were unvaccinated.

In other words, while vaccination passports appear to have persuaded some people to get vaccinated, it has hardened the attitudes of a small proportion of people who had already decided that they did not wish to have the vaccine — possibly making it less likely that they will agree to have a vaccine in the longer term. Given Denmark’s relatively high vaccination rate — 77 per cent of the population have been jabbed, including 88 per cent of the adult population — the Danish government might decide that it is not too bothered about a small number of holdouts.

Comment: East Europe is another great example, where trust in the government is below the European average. Hence, its vaccination rates are lower. Once the government starts to force people, trust goes down even further. It’s a vicious circle that some politicians fail to see and, therefore, fail to deal with in a manner that does not cause social tensions.