Europe

Western alliance in trouble 7-7-18

Source: "Transatlantic rift"  

 The alliance between the US and Europe helped created NATO and the European Union. After the collapse of the USSR in 1991, this alliance promoted the creation and secured the existence of democracy in eastern Europe. The current tensions: Trump accuses the EU of engaging in unfair trade practices and threatens tariffs. Trump wants all European nations to live up to their NATO defense spending pledges (2% of GDP - Germany now at 1.22% and Italy at 1.13%). Europe supports the Iran deal (they helped create it) - Trump does not. Europe supports the Paris climate accords - Trump does not. The rise of authoritarian illiberalism in Hungary, Poland and Turkey is troubling to Europe - Trump encourages and embraces these autocrats. And now Italy has a new populist coalition in charge of its government that is pro-Putin.

Solutions - NATO needs to sharpen its response to cyberwarfare and misinformation so beloved as tactics by Putin’s Russia. Yes, European military spending must increase and should focus on R&D and yes, NATO and the EU can take on a new role to help combat the spread of illiberal authoritarianism.

In the "What If?" section of the July 7, 2018 issue, there is an article that looks at what will happen if Europe's divides, driven by the rise of illiberalism and anti-migration nationalism, continue. Here, the assumption is that the recent purging of Poland's courts by the ruling PiS party, results in the EU Courts of Justice declaring Polish court decisions illegitimate. The EU needs unanimity to remove voting rights from a member state. Its easier to discipline a state through the EU budget. Illiberal countries like Hungary are net recipients of EU funds (Hungary gets the equivalent of 6% of its GDP from the EU). Shutting off the funds however, makes exit from the EU on the part of these nations more likely. In the case of a country like Italy, the prediction is that to remain in power, the populists will boost government spending and cut taxes so that Italy exceeds the 3% of GDP budget deficit limit imposed by the EU.   

And again, from the "What If" section of the July 7, 2018 issue, another article - this one hypothesizes growing Chinese power in the years ahead as a direct result of the Trump-led weakening of the West. As the Trump-led trade disputes weaken the World Trade Organization, then a vacuum is created and perhaps China could start their own trade court. From the article: "An obscure Chinese arbitration panel, originally created to hear disputes linked to the Belt and Road Initiative, was rebranded in 2022 as the Global Infrastructure Tribunal. With its first cases this embryonic trade court has offered glimpses of how a Chinese-led commercial order might work. Unlike the WTO, it draws no distinction between nations with state-directed and market economies. Its judges take a benign view of subsidies that claim to support national development. And though they talk a good game about intellectual-property protection, they have consistently taken the view that sovereign governments, rather than individual businesses, should have final say in patent disputes." China could also create an alternative system for international payments in Chinese yuan, euros and Russian roubles, aimed at the Eurasian countries that form the backbone of the Belt and Road Initiative. Suh a system would be immune to dollar-based economic sanctions from the United States.