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News & Insights on Europe

News and Views on Europe – 13 Apr 2018

posted by eucentresg

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Brexit brings 20-year-old Good Friday Agreement to the fore

Tuesday (10 April) marked the 20th anniversary of the signing of the Good Friday Agreement which ended decades of violence in Northern Ireland. With the UK leaving the EU in 2019, the Agreement and the broader issue of peace and stability in Northern Ireland came to the fore again. Former US Secretary of State Hillary Clinton – whose husband and former US president Bill Clinton, helped pave the way for the agreement two decades ago – wrote an article in the Guardian on Tuesday, warning that reinstating the Irish border would be an “enormous setback” as “communities would once again be set apart”. Referring to the UK’s negotiations with the EU, she said “we cannot allow Brexit to undermine the peace that people voted, fought and even died for.”

Concurring with her assessment, the EU’s chief negotiator Michael Barnier in an interview published on Tuesday stated that “Brexit causes a risk in Ireland.” Two months ago, the EU proposed to keep Northern Ireland in the European Single Market through “full regulatory alignment” in order to avoid the need to re-impose a hard border. This position triggered an immediate row in the UK, but Barnier defended this position in the latest interview. He argued that the British citizens voted to leave the EU, and not necessarily the Single Market or the Customs Union. As such, keeping the Northern Ireland in the Single Market/Customs Union is justified given the political and historical background of the issue. He warned that, if the UK insists to leave the Single Market for the purpose of “regain[ing] full independence on trade matters”, Brexit will “[cause] problems in Ireland.”

Speaking in a more emotional tone, European Council President Donald Tusk told an Irish audience on the same day that “Brexit is one of the saddest moments in 21st-century European history. In fact, sometimes I am even furious about it.” He made those remarks in a speech accepting a lifetime membership award from the University College Dublin Law Society in Ireland. In addition to Brexit, Tusk said he saw “dangerous potential for conflict” across Europe, citing conflicts in the Balkans, the tensions with Turkey and the strained relations between his home country, Poland, and the EU as top sources for concern. He called for unity “when European entropy is again starting to compete with European gravity.”

Tusk is not alone in thinking that Brexit will not bode well for Europe. Giles Merritt, chairman of Friends of Europe, a Brussels-based think tank, wrote an op-ed this week, arguing that Brexit’s focus on minutiae is an unnecessary distraction from the more pressing challenges Europe must meet in the age of “Trump, Putin, and Xi”. Instead of “pettifogging details of intra-European trade and regulation” with the UK, the EU should focus on more “big picture” issues such as undertaking euro zone reform, addressing internal divisions pitting federalist countries against others and pondering about the future of the European integration project. At the end of the day, Merritt argued that “No single European nation has the resources and the clout to stand up on its own to China, America or Russia, so unity is crucial to Europe’s security and well-being.”

While Tusk and Merritt lamented the British decision to leave the bloc, some in Brussels are betting that Brexit will make a trade deal with India a little easier. Chief negotiators from the EU and India met in Brussels on Thursday (12 April) in an attempt to revive talks that stalled five years ago. While India is one of the most difficult countries in the world to negotiate a trade deal with, optimists believe that Brexit will at least remove two traditional hurdles. First, Britain always wanted India to drop its high tariffs on Scotch whisky. Second, Britain was deeply concerned that a more liberal visa regime — one of New Delhi’s priorities — would bring a wave of Indian workers primarily to the UK. Moreover, Brexit may have created a sense of urgency in New Delhi that talks with the EU should be revived, primarily because Indian companies had traditionally focused on the UK as a launch pad into the single market. With Brexit, India’s gateway to the continent will be lost.

 

Re-election of Nationalistic Orbán and implications for the EU

On Sunday (8 April), Hungarians went to vote and the conservative Fidesz Party, an advocate of the “illiberal state” won a landslide victory of 48.9% of votes, as well as a constitutional majority of 134 seats. This was up by 4% from previous election, and an additional one seat in the parliament. They were trailed behind by the Movement for a Better Hungary (Jobbik), campaigning for an anti-Fidesz corruption platform, with 19.3% and 25 seats. Viktor Orbán, the leader of the Fidesz Party has been the Prime Minister of Hungary since 2010. Labelled by Bloomberg as “Europe’s Bad Boy”, nationalistic Orbán has ‘made his name in the EU selling his “illiberal state” as an alternative to the mainstream. Orbán is now serving his third consecutive four-year term as the prime minister.

The campaign ran by the Fidesz party has been described by the EUobserver as “marred by xenophobia”. During the last weeks leading up to the election, the Fidesz party had distributed and released the same picture of a group of migrants that Britain’s Eurosceptic party UKIP has used in the Brexit Campaign, with “Stop” written on it. The party had also communicated to the citizens that Hungarian-born billionaire Soros as wanting to help transfer one million migrants into Europe with the help of the EU, UN and opposition parties. The populism and immigration card has become commonly employed in politics and elections in Europe, including that of Germany’s last September; and the recent Italian elections that had resulted in a hung parliament.

Some in the EU have considered Fidesz government as radical for its xenophobia, anti-immigrant rhetoric. Belgian MEP Pascal Arimont, said on Wednesday that Orbán had crossed the line, and that he would “argue for the expulsion of Fidesz’s 12 MEPs” from the European Parliament. However, Orbán enjoys considerable support from the Visegrád Group (V4) an alliance of four Central European nations consisting of Poland, Slovakia, the Czech Republic and Hungary.

Already, the ostensible principles of “illiberal democracy” have manifested, when on Wednesday (11 April), it was announced that Hungary’s 80-year-old main opposition daily newspaper Magyar Nemzet will shut down. The newspaper, owned by Orbán’s former ally had been regarded as loyal to Orbán’s party before a falling out between the two. Additionally, citing financial reasons that included being deprived of state advertisement, its affiliated sister radio Lanchid will similarly cease operations. This is an unpropitious turn of events since Magyar Nemzet is the largest publication that has managed to preserve an opposition voice “in a media landscape dominated by the state”.

As the so-called East-West divide within the EU looks set to deepen with the re-election of Orban and also other Euroskeptic politicians in the V4, Valéry Giscard – former French president and a preeminent architect of the European Union, called for the EU to move forward with a smaller group of committed countries. Calling for “a smaller Europe”, he noted that the bloc is in a “state of profound confusion” and that “the EU needs new ideas”. Ian Bremmer in his article in Time also expressed fear that Orbán’s far right stance may cause fray to the EU fabric. A handful of countries now have Euroskeptic governments, and this will undermine Macron and Merkels’ push “to reform to the Eurozone, manage relations with Russia, and find a lasting solution to the migrant crisis”. Bremmer concluded that these divisions are “becoming harder to ignore”.

 

German Chancellor Merkel admits that Nord Stream 2 carries political implications

The Nord Stream 2 (NS2), a joint venture, in which Russia-owned Gazprom holds 51%, and E.ON, Shell, OMV and BASF / Wintershall – 10% each; Engie – 9%, is a project consisting of a 1,200km pipeline with a capacity of delivering 55 billion cubic meters of natural gas under the Baltic Sea to Germany. The project is estimated to cost around $12 billion and is expected to come into service at the end of 2019.

The NS2 did not have the broad support at the European level, but has had implicit approval from Germany’s Chancellor Angela Merkel when she previously said that the NS2 was purely an “economic project”, dismissing claims that the project is political.

On Tuesday (27 March), German authorities had issued a final approval for NS2 much to the chagrin of other EU members. Therefore it comes as a bit of a surprise when, after talks in Berlin, “Germany has for the first time acknowledged allies’ concerns on the ‘political and ‘strategic’ aspects”. It was reported that at a meeting with the Ukranian President Petro Poroshenko, Merkel had acknowledged the strategic importance of Nord Stream 2 for Ukraine, and that the project is “not possible without clarity of how Ukraine’s transit role will continue”.

As aforementioned, NS2 has had its fair share of critics, and has in fact, as described by Foreign Policy, faced “years of political and legal skirmishes” . For one, Denmark had passed a law allowing to factor in foreign relations, defence policy and security aspects when considering gas pipelines and pipelines applications. Danish Energy Minister Lars Lilleholt said the bill was imperative because “times change”. Anders Rasmussen, former NATO chief, who currently advises the president of Ukraine, told EUobserver on Tuesday that it would be “absurd” to let NS2 proceed when the EU was trying to impose a cost on Russian aggression in Ukraine via economic sanctions and that “it would be very damaging to Ukraine and the Ukrainian economy”.

Critics are also concerned about the resulting increasing in reliance on Russian natural gas and their fears are not unfounded since Moscow had previously used gas prices to pressurise Ukraine. Additionally, 12 years ago, “in the depths of winter” Gazprom had cut the pressure on its pipelines into Ukraine, straining energy security throughout Europe. Fear of Russia’s political aggression appears to be a recurring theme, when more recently head of energy for the Commission, Dominique Ristori announced during a briefing in Kiev on Friday (6 April) that “the pipeline will violate the principles of transparency and free access of European consumers to energy sources” and that the Commission will work to hold off talks on continuation of gas transit through Ukraine after 2019.

Clearly this is no zero-sum game; despite the fractious political relations and history of Moscow and Kiev. The latter stands to lose out on a hefty $3 billion a year if the project does not come to fruition.

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