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Month: January 2019

Geopolitics of Brazil

Brazil is South America’s emerging power. It is the largest and most populous country in the continent; and it benefits from a favourable geographic position, important natural resources and a growing economy. As such, it is taking a more active international role both in the region and beyond. Yet, it must also face notable challenges; notably corruption, criminality, inequality and others; all of which may undermine its rise as a great power.

Geography and Brazil’s rise

Like any other country, Brazil’s geopolitics can be examined as a combination of three factors: dimension, configuration and position.

Brazil covers a total area of about 8,515,000 square kilometres, making of it the 5th country in the world in terms of size. This puts Brazil in a favourable position to dominate the continent, as it can access any region with relative ease. Similarly, its 7,500 kilometres-long coastline on the Atlantic Ocean enables Brazil to easily project its power abroad and to engage in lucrative maritime trade.

In terms of configuration, Brazil’s territory can roughly be divided in two parts. The north-west is centred on the Amazon river basin and its vast rainforest, the largest in the world and a real treasure in terms of biodiversity. The south-east is made up of ridges and mountain ranges crossed by the Parana river. As a matter of facts, watercourses are an important feature in Brazil’s geography: the country has a complex hydrographic system that brings significant benefits to electric power generation and agriculture, which is also favoured by Brazil’s warm climate. Most of Brazil’s 208 million citizens, the majority of which are young people, live in the cities along the coast. This has resulted into vast metropolis where economic prosperity meets overcrowded slums.

But position is Brazil’s most important characteristic. It borders ten nations, meaning all the countries in South America except Ecuador and Chile. None of its neighbours represents a real threat, and not only because relations are generally good: Brazil is simply more powerful than any of them. Even Argentina, the second most influent country in the continent, cannot seriously challenge Brazil’s supremacy due to a worse geopolitical and economic situation. Other states are not a real matter of concern; yet, they are important for Brazil’s own geopolitical ambitions. Brazil wants to extend its influence westwards to connect the Atlantic and the Pacific Oceans so to unlock its innermost territories, become the centre of coast-to-coast trade and increase its regional influence. To reach this objective, Brazil needs to keep the URAPABOL area in its sphere of influence. This zone takes its name after the three states composing it: Uruguay, Paraguay and Bolivia. They are seen as South America’s geopolitical pivot, meaning that the power who controls them can extend its influence over all the continent and obtain a dominant position. Moreover, the URAPABOL states were also seen as useful buffer zone against foreign threats and Argentina in particular; even though today the likelihood of a war is really remote. For these reasons, Brazil is attentive to maintain a solid political, economic and demographic presence in these three countries. But Brazil’s is also located along the Atlantic’s coasts, meaning that it can easily reach the large American and European markets to the North; as well as Africa with its natural resources and many fast-growing economies. So, Brazil also wants to become a naval power to boost its economy and develop its Navy to project its power abroad.

Brazil’s economic & military outlook

Apart from geography, Brazil also has natural resources, a considerable economic potential and important military means.

Brazil is certainly South America’s leading economy, but its outlook is made of mixed figures. This year, its GDP is projected to reach 1.9 thousand billion dollars, which goes to 3.5 thousand in terms of Purchasing Power Parity. The expected growth rate is of 2.4% in current prices. Brazil was at the 9th place on the list of the world’s largest economies in 2018, and it is expected to reach the 5th position by 2050. Its per capita GDP will stand around 16.7 thousand dollars in 2019, a relatively low figure to be combined with an unequal distribution of wealth. After years of high inflation, the price growth seems to have stabilized at around 3.5%. The debt of the central government is on the rise, amounting to almost 79% of the GDP in 2017, Along with a slight budget deficit of around 1%, this trend can become problematic in the long term. Unemployment affects 10.7% of the population today, and 4% of Brazilians lived below the poverty line in 2016. The trade balance has been in constant surplus for years, sustained by agriculture and manufacturing exports. As a matter of fact, Brazil is a true agronomic giant and its industry is also developing in many sectors. In addition, it also hosts significant hydrocarbon and mineral reserves, and is a leading producer of biogas. However, this has negative environmental consequences: huge swathes of the Amazon rainforest have been cut to grow the crops required for producing biogas; and also for other reasons like timber production. Brazil has nuclear reactors for energy generation and infrastructures are being improved, but much work remains to be done.

This overview shows that Brazil is indeed an emerging country, but like other economies in analogous conditions it has still considerable challenges to deal with. Corruption, poverty and inequality continue affecting its economy. This has important repercussions on the country’s political life, since similar matters are a cause of social unrest and high crime rates. In fact, Jair Bolsonaro has been elected President largely out of promises of tackling corruption, reforming the economy and crushing criminality.

Brazil is the main power in South America also in military terms. It spends regularly more than 1.32% of its GDP on defence, and it possesses large and well-equipped armed forces who remain politically influential. The Army includes, among others, specialized units for jungle warfare and a vast park of vehicles. It also maintains the Strategic Rapid Action Force, ready to be deployed anywhere in the country at a short notice. In recent years, due to better relations with Argentina and in accordance to its strategy to extend its power westwards, it has relocated many units in the Amazon area. The Air Force operates fighters, cargos and airborne warning & control planes. But the Navy is the most notable component of the Brazilian military, as it is a powerful mean of power projection. Today, it includes diesel-electric submarines, landing ships and a helicopter carrier plus naval aviation and marines; and it also plans to deploy a nuclear-powered attack submarine by 2025. Finally, Brazil also possesses a considerable defence industry and carries on its own space program.

Brazil’s foreign relations

Brazil’s foreign policy is largely based on multilateralism. It maintains pretty good relations with its neighbours, and it is a member of the main regional bodies like the Organization of American States, the Union of South American Nations and the Southern Common Market; where it plays an important role in promoting integration. It provides economic aid to developing countries, notably African ones; but this is also motivated by economic interests, like accessing resources and opening new markets for Brazilian firms. It also takes part to UN missions and promotes the enlargement of the UN Security Council. Moreover, it is a member of the informal BRICS group along with Russia, India, China and South Africa; and it keeps cooperating with all of them all while maintaining good ties with the US and with European countries.

Now that Bolsonaro is President, US-Brazil relations will receive a boost: Bolsonaro is openly pro-American and share many similar views with Trump: they oppose immigration, they are close to Christian and conservative groups, they promise to crush criminality and fight terrorism, they are favourable to death penalty, they support the rights of gun owners, their economic policy focuses on privatization and deregulation at home while protecting their industry from foreign competition by introducing tariffs, they criticize authoritarian regimes and are very friendly towards Israel and other pro-US states like Japan or South Korea, and they are hostile to foreign (and especially Chinese) economic penetration in their countries. Since Brazil is the main power in South America and the only one capable of countering US supremacy to some degree, Bolsonaro’s election is a gift for America: it virtually ensures that Brazil will remain friendly and that it will oppose rival powers like China and Russia. Both of them are indeed expanding their presence in South America to access resources and to subtract the area from American influence, but now their efforts risk being thwarted. Nevertheless, China remains a central economic partner for Brazil, and along with Russia it will continue to extend its presence in South America. Brazil, on its part, will maintain its multilateral approach to diversify its partnerships, maximize its benefits and increase its global influence.

Conclusion

Brazil is South America’s main power and its influence in international affairs will certainly increase in the future. Yet, its economic growth is not as spectacular as China’s or India’s; and it has to face many challenges like poverty and inequality, environmental degradation, corruption and social unrest. All such factors will limit its geopolitical role. But Brazil, is that contrarily to other emerging countries, it is not involved in rivalries with other states and it is not challenging the existing international order. Instead, it focuses on multilateralism and mutually-beneficial cooperation. This is probably the most remarkable aspect of Brazil’s rise: at least by now, it looks that it will be peaceful and not destabilizing.

Is Macron a friend of the Rich?

Recently France has been swayed by large scale protests carried out by tens of thousands of its citizens in response to a series of economic reforms since the new government came to power in 2017. A growing mistrust amid the tax cuts on corporations and high earners while raising taxes for the working class has prompted the people to put pressure on the government to make big changes.

Emmanuel Macron founded the centrist movement named “En Marche!” in April 2016 and much to the surprise of many, won the elections the following year. The French saw promise in Macron’s manifesto, which promised significant economic reforms backed up by his relevant experiences both in the public and private sectors. The fragile economy and mistrust for the previous regime left the people with no options but to take a risk instead of voting far-right candidate Marine Le Pen. However as the recent “Yellow Vests” movement spread out in France the truths behind the reforms have only started to get publicity.

Historical information

Francois Hollande, who preceded Macron as President, failed to live up to expectations having faced major opposition from his proposed economic and employment reforms. He faced criticism for many issues including failing to address difficulties in integrating immigrants into the French society and even pandering to the right with his comments on stripping French citizens with dual nationalities off their citizenship following the high profile terrorist attacks that shook the country, including the Charlie Hebdo shooting in 2015 and the Nice truck attack in 2016. Hollande decided not to re-run for the election due to a combination of social, political and economic frailties and the huge mistrust shared among the French citizens.[1] Macron on the other hand was appointed Deputy Secretary General to Hollande in 2012, while also serving as Minister of Economy, Industry and Digital Affairs between 2014 and 2016, where he formulated several business reforms to aid the economy.[2]

Macron was born in Amiens, France and is an alumnus of the elite École Nationale d’Administration. He showed great aptitude in the areas of literature, politics and theatre at an early age and had been able to forge powerful connections during his time as an inspector at the French Finance Ministry during Nicolas Sarkozy’s tenure as President. However he switched civil service to work in investment banking at Rothchilde and Co where he swiftly rose up the ranks to become managing director before being appointed as Francois Hollande’s staff. [3] His most significant contribution in investment banking was his crucial role in advising Nestlé on its USD 12 billion acquisition of a unit of Pfizer in 2012 which earned the nickname- “the Mozart of finance”.[4]

Despite public protests as, the business reform package he introduced in 2015 as Finance Minister was forced through parliament by then Prime Minister Manuel Valls who invoked the special article 49.3 procedure which also received criticism from within the ruling Socialist party.[5] However he soon resigned (in 2016), and founded En Marche! And announced his candidacy for the 2017 presidential election. His manifesto attracted a lot of attention, and was even able to gain support from both the left and the right, especially through his proposals that aimed at lowering housing and corporate taxes, reforming pensions and welfare, and allocating substantial resources.

He became France’s youngest ever president by defeating Le Pen in 2017. He had received 66.1 percent of the 47 million votes cast. He had never held an elected post but it did not seem very difficult for him to achieve his objective.

Plans for the economy/budget:

The biggest test, and also Macron’s main objective has been to overhaul France’s economy. He inherited a very poorly performing economy from his predecessor with the biggest challenges being[6]:

  • 10% unemployment, and nearly one in four among under-25s
  • Bloated public spending (56% of GDP compared with 44% in Germany and 39% in the UK)
  • Low economic growth

 His twin aims are to boost investment and set up a “new growth model” that is both good for social mobility and the environment. Macron has been advocating a Nordic-style economic model that mixes spending cuts of 60 billion euros with a 50 billion euro stimulus package over the same period. The “spend and save” system that Macron plans is meant to mix targeted public spending with fiscal discipline as a Nordic model. Besides lowering corporate tax rate from 33 to 25 percent he also has plans to slash 120,000 jobs from France’s bloated civil service while lowering companies and households; tax bill by 20 billion euros.[7] These are part of the major economic reforms that Macron has planned while making France stick to the EU government deficit limit of 3 percent of GDP.[8]

Security and Defence

In light of the recent terrorist attacks that have rattled France and resulted in the loss of hundreds of lives, Macron has proposed increase in defence and policing by recruiting 10,000 new police officers and expand prison capacities. He also advocates the idea of an EU army, and has been promoting joint military projects and setting up a permanent European headquarters.

Some of his notable plans for governance includes reducing number of lawmakers by a third in both the Senate and National Assembly, banning the hiring of family-members as assistants of lawmakers, and banning consulting activity for people holding elected office.[9]

Foreign relations and others

France’s commitment to 2015 Paris climate agreement has been among the key global issues that Macron has promised to back-up and promote since his early days in the office.

When it comes to foreign relations he has voiced support for multilateral institutions such as the UN security council, however also supporting the promotion of the French language and Francophone institutions as “an essential vector of our influence and a weapon against the spread of radicalism”. He stands strong against the Syrian regime led by Bashar al Assad and wants him to answer for his crimes before an international tribunal while being a strong critic of Russian policy, backing EU sanctions following the Ukraine crisis.

Europe

Macron is pro-EU and has campaigned for greater cooperation and integration within the EU on fiscal, environmental and social regulation. In his European agenda he has expressed his plans towards a common fiscal policy, a joint finance minister, implementation of the banking union and a bolstered bilateral relations with Germany.[10]

Macron’s tenure as president

Macron came to power at a problematic time- he faced a massive restructuring of regional powers following the Brexit referendum, as well as US President Donald Trump’s reshuffling of American interests. These major changes made the situation a little more difficult from the very start, and especially after the shocking withdrawal of the US from the Paris climate accord, a decision made my Trump himself, who does not believe in climate change. This prompted Macron to offer France as a second homeland to climate researchers.

One of the first things he did was making a state visit immediately after his election to meet Angela Merkel in his quest for improved Franco-German relations and since forged a strong relationship with Merkel and agreed on a “common roadmap” for Europe. However Merkel has a more cautious approach than Macron when it comes to major issues concerning the EU.[11]

He has always been vocal about increased European cooperation on many issues, and has been pushing for a “European Army” to improve security in the EU-with Merkel quick to endorse Macron’s plan, and . Macron also voiced strong interests to pursue security dialogue with Russia seeking to improve EU-Russia relations especially in terms of security.

In France

Macron had been quick in pressing for reforms soon as he took charge- with one of his first significant contributions being against mass corruption and nepotism in French politics- introducing a ban on elected representative from hiring family members.[12]

Yellow vests movement

In the May 2018, a political movement arose that challenged Macron’s economic reforms. It has been named “Mouvement des gilets jaunes” or the “Yellow Vests Movement” where demonstrations started on 17 November 2018, months after it was created. The main protagonists of the now ongoing movement are the ordinary working and middle class French citizens who strongly feel that Macron is not the leader for the ordinary working class. What triggered the movement was the proposal to keep increasing a direct tax on fuel, as well as the carbon tax. Although Macron stated that these were part of his plans to reduce fossil fuel reliance but it has been widely criticised as an act of “taxing the poor to tackle climate change”.[13]

In his first budget Macron’s business friendly government had proposed trimming corporate rates and a “wealth tax” on the rich, explaining that boosting investment will aid the economy, however also increasing certain taxes such as one on low-income pensioners. While giving tax breaks to big corporations, plans of charging lower taxes on high-paid workers in certain industries have garnered mistrust from ordinary citizens and political rivals alike, with the left-wing calling him “Hero to the rich”.[14] He also moved to loosen hiring and firing regulations on companies to improve France’s paralysed labour market.

Protests have been going on for over a month and hundreds of thousands of French citizens have taken part in what seems to be an anti-Macron rebellion, with the premier making a U-turn by suspending the proposed tax hike amid the protests that have turned violent. French authorities have deployed nearly a hundred thousand security forces during several days of protests detaining thousands and using anti-riot weapons such as tear gas against protestors.[15]

In a very recent bid to end the standoff, Macron announced a package of measures for low-income workers estimated by economists to cost up to 15 billion euros. Besides suspending the fuel-tax hike plans for six months, he also announced raising the minimum wage by a 100 euros per month from 2019 while scrapping the recent increase in social security taxes on pensioners earning less than 2000 euros.[16]

The protests are still ongoing with protestors expecting their 42 directives to be accepted. However recently it has garnered criticism for a lack of leader and organisation, and violence by protestors and use of force by police has already resulted in over 500 injuries. Despite Macron announcing several major changes bowing down to protestors, there are many demands to yet to be met and it is not clear when or how the Yellow Vests Movement will end.

Conclusion

Macron, poised to become “Europe’s next leader” as Merkel nears her exit from politics, saw a major slump in his popularity since the protests. Falling out of favour may mean nationalists such as Marine Le Pen gaining support, and with the rise of the populism in Europe in the past few years, it may not come as a surprise if France leans towards the far-right. A major shift in powers may make the situation in the region volatile and with France being a major power in the EU, and with the UK poised to officially leave the EU in a few months, it would cause a major restructuring in regional powers and interests. Most concerning of all, with countries such as Italy, Hungary and Poland having already given in to populism, a major power joining their ranks will shake up the EU and prove to be a major challenge in the future of the EU. The current situation and its developments in France will have a significant impact on the economic and political stability in the rest of Europe.

[1] https://theconversation.com/where-did-it-all-go-wrong-francois-hollande-flops-out-of-presidential-race-69806

[2] https://www.biography.com/people/emmanuel-macron-050817

[3] https://www.nouvelobs.com/rue89/20160830.RUE5451/au-fait-il-faisait-quoi-chez-rothschild-emmanuel-macron.html

[4] https://www.ft.com/content/9bd62502-12cf-11e7-b0c1-37e417ee6c76

[5] Revault d’Allonnes, David (17 February 2015). “Loi Macron : comment le 49-3 a été dégainé comme un dernier recours”

[6] https://www.bbc.com/news/world-europe-39845905

[7] https://www.bbc.com/news/world-europe-39845905

[8] https://www.ft.com/content/37223e92-3319-11e7-bce4-9023f8c0fd2e

[9] https://www.reuters.com/article/us-france-protests/french-yellow-vests-protest-in-their-thousands-for-fifth-saturday-idUSKBN1OE0BF

[10] https://www.ft.com/content/37223e92-3319-11e7-bce4-9023f8c0fd2e

[11] “Emmanuel Macron and Angela Merkel pledge to draw up ‘common road map’ for Europe”. The Telegraph. 15 May 2017

[12] “France bans hiring of spouses by politicians in wake of Fillon scandal”. Reuters. 27 July 2017.

[13] https://www.politico.eu/article/macrons-mistake-taxing-the-poor-to-tackle-climate-change/

[14] https://www.thelocal.fr/20170927/hero-to-the-rich-macron-cuts-taxes-for-wealthy-in-first-french-budget-france

[15] https://www.reuters.com/article/us-france-protests-tax/france-drops-fuel-tax-hike-as-yellow-vest-anger-persists-idUSKBN1O40PQ

[16] https://www.france24.com/en/20181210-macron-france-tax-cuts-raise-wages-speech-yellow-vest-unrest

Modern Nations – Rise of Muslims Episode 7

Based entirely on the book by Ali Mahmood titled “Muslims” –

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In this episode, Author Ali Mahmood, looks at the emergence of Muslim nation states following the collapse of the Ottoman empire. He looks at the birth of modern Egypt, Pakistan, Afghanistan and Iran.

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5 Geopolitical Trends to watch in 2019

In today’s globalised world, many geopolitical events take place every year, and they have a long-lasting effects in time. So, considering what happened on the international scene in the year that has just ended, what are the top five global trends to watch in 2019?

1 – “America first”, America alone?

President Trump’s “America First” policy was put into practice various times in 2018. He introduced new tariffs to protect the US economy; he abandoned those agreements that he deemed contrary to America’s national interest; he criticised allies for free-riding on the US in security issues.

This is a trend that will continue as long as Trump remains in the White House, and that will have an important impact on the global order. For decades, the international system was centred on the US and its commitment to sustain its rules and provide security; albeit with limitations and largely for its self-advantage. But now, Washington prefers pursuing a narrow definition of its own national interest. This has already raised concerns with traditional partners; most notably with the European members of NATO to whom he demanded to spend more on defence. This divergence between the two sides of the Atlantic has cast doubts over the tenure of the Alliance. All this happens in a moment of renewed tensions with Russia, who in turn is taking benefit from the situation because in case of a confrontation, it will have to face a more divided and therefore weaker NATO. This uncertainty over the future of the Alliance damages European but also American interests: alienating its traditional allies risks to isolate the US and to reduce its international influence.

All this happens in a delicate moment for the US economy. While its GDP grew of almost 3% in 2018, its monetary policy is object of political debate as Trump accuses the Federal Reserve of being the “only problem” of America’s economy. If the Fed keeps on raising the interest rates to contain inflation, the US growth will slow down. This will also combine with the effects of tariffs plus the considerable public and private debt. Moreover, American stock markets have lost much value in the past year: the price of shares according to the Dow Jones index dropped of around 9.5% in 2018. And if the US economy slows, the rest of the world will follow.

2 – China’s economic slowdown

The world’s second-largest economy is also facing troubles. While it is predicted to grow of about 6.6% this year, which is still extraordinary given its size, the rate is no longer a double-digit figure as in the past. The Chinese economy is also slowing down, and this will inevitable have repercussions on the global scale. As economic prosperity is considered fundamental for social stability and for the rule of the Communist Party, the government is taking measures to maintain a steady growth. This explains various initiatives like “Made in China 2025” aimed at upgrading its industry, the huge investments in high-tech, or the far-reaching “One Belt, One Road” project.

Apart from purely economic issues, this will also have geopolitical consequences. Beijing has been increasing its worldwide presence in the past decade, notably through economic means; but if its growth slows down, its ability to sustain its greater plans in the Asia-Pacific and beyond will suffer. In this sense, the very plans it is implementing to boost its economy may result counterproductive: they are certainly ambitious projects with a great potential, but they are also very challenging. The enormous investments they require will result in a waste of resources if they do not translate into economic growth, and this will hamper China’s economy. As such, observing Beijing’s economic policies and its performance through 2019 will be an indicator of its future global role.

3 – The European (dis)Union

The EU will cross troubled waters in 2019. Anti-EU movements have risen everywhere, its economic recovery remains sluggish and each of its four most important members is not in the position to lead a reform of the common institutions. The United Kingdom will finally leave, but the exact terms are still undefined and a “No Deal” Brexit seems probable. This is the worst scenario, because it means uncertainty for economic and political actors alike. Italy is now ruled by a Eurosceptic coalition that has already clashed with the EU over immigration and economic policy. Germany continues opposing more economic integration in the form of a common fiscal policy, and Angela Merkel’s leadership has been weakened. In France, President Macron is calling for a reform of the EU and promotes further integration, but his popularity is at a record low and the country has first to deal with domestic issues.

Other members are also unable or unwilling to move the integration project ahead. The emerging countries of Central-Eastern Europe, notably Poland and Hungary, want to preserve their sovereignty and therefore oppose devolving more powers to the EU. Moreover, the Union has even initiated the infraction procedure for violation of core values against these two countries, thus leading to an open diatribe. Spain is focused on problems at home; while Greece is heading towards elections in 2019, and any change in its government could make the markets nervous and result in a renewed standoff with the EU.

As such, no state is in the condition to take the lead and move forward the much-needed reform of the Union. However, what is more worrisome is that the divergences do not simply concern the policies to implement, but the basic values of the EU and its very legitimacy are questioned and openly criticised. Considering also its complex institutional procedures, it is unlikely that the stalemate will be solved in 2019. On the contrary, it is likely that the EU will be even more divided at the end of the year.

4 – Sanctions on Iranian oil

Following President Trump’s decision to scrap the nuclear deal, a boycott on Iranian oil will be reintroduced in 2019. Given that it is largely dependent on oil revenues, the Islamic Republic will certainly suffer. The effects will not be only economic, but they will extend to the social sphere as well. Signs of discontent already appeared in late 2017 – early 2018, when mass protests erupted all over the country. As pressure increases on Iran’s economy, similar episodes may repeat in 2019 with destabilising effects on the region. Moreover, this means that Iran will have much less resources to sustain its goals abroad; notably in Iraq and Syria. As a result, it will have to reduce its international commitment and focus on domestic issues.

But this will also affect other countries who used to buy oil from Iran. China and India were its main customers, followed by Japan, South Korea and European countries. As sanctions come back into effect in 2019, such states will comply and change their import sources to avoid angering the US. This will impact the global oil market by putting an upward pressure on its price; even though many effects such as a less than expected demand may nullify this effect at least in part. Finally, while the intended effect of the boycott is to put pressure on the country and force it to negotiate another deal deemed more compatible with America’s interest, it is possible that the result will be the opposite. If Iran feels threatened enough by the US, it may decide to resume its nuclear programme after concluding that is the only way to ensure its national security. This is not likely, because Teheran would be even more isolated, but if this happens the whole region will be further destabilized.

5 – Tension with Russia

Relations between Russia and the US have not improved through 2018. Many important issues continue dividing them, like the war in Syria or Ukraine’s issue. The situation remains volatile in both cases, and the recent Kerch Strait incident has revived tensions between Moscow and Kiev. Additionally, there is another country to watch: Georgia. The new President Salome Zurabishvili has pro-EU Western views and openly calls for Georgia to join the EU and NATO. Russia will hardly accept such a scenario and may launch a military operation to prevent it, thus sparking another crisis in the post-Soviet space.

Moreover, a pillar of the longstanding strategic equilibrium between Russia and NATO has fallen: the Intermediate-Range Nuclear Forces Treaty, or INF. This agreement, dating back to the Cold War, prohibited the deployment of intermediate-range ballistic missiles in Europe, as they risked compromising the nuclear balance in the region: due to their limited range, such weapons enabled the Soviets to strike NATO in Europe without threatening the US territory, thus casting doubts among Europeans that in such an eventuality the Americans would have exposed themselves to retaliation by launching nuclear weapons on the USSR just to protect Europe.

Now that the Treaty is gone, a new arms race is likely to take place, and in fact this is already happening. Russia has tested several nuclear-capable ballistic missiles in 2018, and is rapidly working to deploy new hypersonic missiles capable of travelling at five times the speed of sound or more. The US is doing the same, and both powers are developing new weapon systems and doctrines to prevail on the other. But to pursue these objectives, Russia needs economic resources. Since oil is one of its main sources of revenues, Moscow will seek to coordinate with other producers to keep its price high enough to sustain its economy. This will largely determine the evolution of Russia’s role in 2019, but one thing is sure: Moscow will do its best to pursue its interests abroad, and as the Russian-American rivalry continues, the international scene will remain tense.

Where is Venezuela Heading?

Understanding Venezuela’s foreign policy

Venezuela often dominates the news agenda on account of its profound economic crisis and associated societal ills, including the dubious distinction of boasting one of the highest crime rates in the world.

Venezuela is often depicted as a revolutionary power owing to the so-called “Bolivarian Revolution” started by the late Venezuelan leader Hugo Chavez. Ideologically the Bolivarian revolution is a mix of Venezuelan nationalism, Pan-American regionalism and socialism.

Whilst enormous academic and media attention has focussed on how “Bolivarianism” has shaped Venezuela’s economic policy since 1998 (the year Hugo Chavez first came to power), comparatively small effort has been expended on understanding how the Bolivarian revolution has influenced Venezuelan foreign policy in the past two decades.

Welcome to KJ Vids. In this video we will examine the ideological, political and strategic considerations shaping Venezuela’s foreign policy.

 A Socialist revolution?   

Venezuela radically changed direction in the late 1990s with the advent of Hugo Chavez and his “Bolivarian” revolution. First elected to the presidency in December 1998 Chavez proved to be a remarkably resilient revolutionary leader in the face of massive internal and external opposition.

During his fifteen years at the helm of Venezuelan politics, Chavez faced determined opposition by US-backed political groups, widespread industrial unrest culminating in a general strike in 2002-2003 and an ill-fated coup attempt in April 2002. It is widely accepted in the expert community that much of the political, industrial and business opposition to Chavez was sponsored by the United States government.

But the nature of Chavez’s politics, and specifically his radical economic policies, intensified divisions in Venezuelan society leading to a highly charged polarised environment. Chavez’s support base was mostly amongst the poor – especially Venezuela’s indigenous (i.e. non-European) community – and the lower middle classes, whereas opposition to his rule was concentrated amongst the middle class, which is dominated by people of European origin.

Whilst drawing attention to Chavez’ shortcomings (in particular his demagoguery and single-minded pursuit of ideological-based economic policies) it is important to avoid the propaganda of his enemies who have tried to paint him as a dictator or failing that an authoritarian leader.

Throughout his 15-year reign Chavez operated within the confines of the Venezuelan constitution and by and large he respected the checks and balances of Venezuela’s democracy. By contrast, Chavez’s opponents consistently displayed disdain for Venezuela’s democratic institutions by continually fomenting unrest and attempting to overthrow Chavez through extra-illegal measures, notably an extended general strike and a failed military coup.

Chavez’s radical economic policies, and specifically his concerted attempt at the redistribution of wealth and opportunity, was fuelled by high oil prices in the first decade of the 21st century. The qualified success of some aspects of Chavez’s economic policies led to high hopes amongst left-wing activists in Latina America, and more broadly on the global stage, that Venezuela was successfully implementing a socialist economy.

But the reversal of these qualified successes, particularly after Chavez’s death in March 2013, has called into question the sustainability of “Chavismo”, Chavez’s quixotic take on the Bolivarian ideology. These shortcomings have come into sharp relief under the leadership of Chavez’s successor, Nicolas Maduro.

In the past couple of years Venezuela has been gripped by a severe economic crisis interspersed with riots and widespread civil disorder. On top of this the country suffers from multiple systemic societal disorders, notably one of the highest crime rates in the world.

The combination of these ills points to the failure of “Chavismo”, and specifically the socialist economic policies underpinning it. But before we rush to judgement on Venezuela, it is important to note that the final script has yet to be written. To that end, it is noteworthy that Maduro’s government is proving to be resilient in the face of concerted and ferocious opposition.

More importantly, the socio-economic base of “Chavismo” appears to be largely intact, in spite of Venezuela’s profound economic crisis. This speaks to the intense polarisation of Venezuelan society and raises the prospect of civil war further down the road, especially in the event of foreign intervention in Venezuela’s domestic affairs.

The “Bolivarian” foreign policy

Named after the 19th century Venezuelan military leader, Simon Bolivar, who liberated vast swathes of South America from the grip of the Spanish Empire, the Bolivarian ideology is essentially a form of pan-American nationalism centred on national sovereignty as the building bloc of Hispanic solidarity.

“Bolivarianism” has been utilised by a variety of political movements in South and Central America and it is elastic enough to serve a multitude of political goals and ends. But in its native Venezuela, Bolivarianism is associated with militarism and a tough and uncompromising approach toward notions of national sovereignty and independence.

Hailing from a military background, Hugo Chavez fit the conventional Bolivarian mould perfectly, but he was also sufficiently innovative to marry up elements of the Bolivarian ideology with his own socialist ethos. The result was “Chavismo” which has had a profound impact on Venezuela’s foreign policy.

Immediately after coming to power Chavez pivoted toward Socialist Cuba, a revolutionary state with a legendary anti-imperialist reputation. By extension, Venezuela distanced itself from the United States which from the very outset has attempted to overthrow Chavez’s Bolivarian revolution.

Chavez’s tough stance on American hegemony was entirely in keeping with his nationalist ethos and more importantly it resonated widely and deeply amongst nationalist communities across Latin America.

In trying to understand Venezuela’s post-1998 foreign policy, it is helpful to think of it as forming three concentric circles. The first circle is composed of the main political-ideological pillar of the Bolivarian revolution, which is centred on anti-imperialist sentiments, and specifically opposition to the US role in Latin America.

The second circle is centred on achieving Latin American unity and wider notions of pan-Americanism. In practise this involves greater engagement with Latin American states, in some cases to the point of interfering in the internal affairs of regional states with a view to strengthening nationalist and socialist movements.

The third circle is concerned with developing global positions, and specifically using Venezuela’s oil wealth to develop influence and outreach beyond Latin America. To that end, Bolivarian Venezuela has sought to develop strong ties with major non-Western powers, notably Iran and China.

Pushing back against America

During the early years of “Chavismo”, Chavez’s huge reputation and his massive influence on public opinion across Latin America was interpreted as the locus of a continent-wide Socialist “Pink tide”. The “Pink tide” was depicted as representing a decisive political and economic tilt toward the left, and by extension a decisive rejection of the dominant neo-liberal economic model.

In so far as the United States is the chief proponent of the neo-liberal economic model, Venezuela was necessarily in opposition to it. But contrary to conventional wisdom Chavez’s anti-Americanism was not primarily driven by socialist ideology. For a start, in the early years of his reign Chavez proved to be a moderate socialist in so far as he refrained from the root and branch rejection of the capitalist model.

Instead Venezuelan foreign policy developed an anti-American trajectory for primarily two reasons. First, in keeping with the Bolivarian nationalist ethos – and mindful of America’s consistent intervention in Venezuelan domestic affairs throughout the 20th century – the “Chavistas” had to be by definition anti-American.

There was also an immediate practical need for a tough attitude towards the United States inasmuch as Venezuela had a pressing need to contain American influence both domestically and more broadly in its immediate environment. This need intensified when the US government openly reached out to the Venezuelan opposition and leading industrialists with a view to fomenting unrest in the country.

Under Nicolas Maduro’s leadership attitudes towards the United States have hardened still further. This development is a direct reaction to hostile US policies which seek to isolate Venezuela in South America, in addition to weakening it from within by fomenting unrest and insurrection.

The forlorn quest for Latin American unity

The Chavistas never stop talking about South American unity. To be fair their vision of “unity” is not entirely unrealistic in so far as they envisage a broad-based solidarity bound by minimalist principals revolving around nationalism and a rejection of neo-liberal economic models. These principles resonate widely across the continent and they continue to energise a multitude of political parties and movements in every Latin American country.

More specifically, despite its economic crisis, neo-Bolivarian Venezuela continues to be a source of ideological inspiration across the continent. Notwithstanding these positive features, it is fair to say that Venezuela’s policy of promoting South American unity has failed.

For a start, the continent is as divided as ever and by extension American influence, particularly in Colombia, Brazil and Chile, is arguably as strong as it has ever been. Second, Venezuela is politically isolated on the continent as demonstrated by its strained relationship with the continent’s biggest power Brazil.

Furthermore, Venezuela faces hostility from neighbouring Colombia as Caracas has supported left-wing political and guerrilla groups in Colombia for the past 20 years. This has largely been a reaction to Colombia’s outreach to anti-Chavez groups in Venezuela.

A “global” foreign policy?

The Chavistas have always aspired to a global standing. Buoyed by high oil prices, in the first decade of the 21st century they set out to develop influence and sympathy across the world. This led to some strange policies, notably the decision in 2007 to supply cheap fuel to bus services in London, the capital of the United Kingdom. The deal was a flamboyant demonstration of gesture politics designed to strengthen the position of London’s then left-wing mayor Ken Livingstone.

Theatrics aside, Venezuela has undertaken serious moves on the international stage. The most important and far-reaching, both in terms of Venezuela’s global outreach and the reaction it elicits from the US government, has been Caracas’s alliance with the Islamic Republic of Iran.    

Originating in the close personal bond between former Iranian president Mahmoud Ahmadinejad and Hugo Chavez, the embryonic Iranian-Venezuelan alliance has persisted to this day (albeit at a less dramatic level), thus allowing Iran to establish a firm foothold in Venezuela. This is in keeping with the broader Iranian policy of penetrating Latin America with a view to achieving strategic parity with the United States.  

By developing strong ties to countries like Iran and China, Venezuela both improves its global standing and simultaneously acquires an insurance policy against American threats to overthrow the Bolivarian revolution.

In conclusion, whilst Venezuela has failed to achieve its core foreign policy objective of creating a united Latin American front, nevertheless it has successfully raised its international profile by developing sustainable ties with major non-Western powers like China and Iran.

The Ottoman Dynasty – Rise of Muslims Episode 6

Based entirely on the book by Ali Mahmood titled “Muslims” –

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The Ottoman dynasty governed the Muslims and built one of the largest empires the world has ever seen

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The POST-FINANCIAL CRISIS of GREECE and it’s economic prospects

Greece is just recovering from a severe economic recession, and it will take several years to consolidate economic growth and return to pre-crisis levels. But now that the worse seems over, various opportunities open up for Greece. The degree to which it will be able to manage this combination of challenges and occasion exploit will determine its course in the decades ahead.

The Financial-Economic History of Greece

Greece has a turbulent financial history marked but repeated bankrupts. Since its independence was recognized in 1830, it experienced five defaults, the last of which took place in 1932. Greece contracted its first debt from Great Britain even before becoming independent, as a mean to finance the armed insurrection against the Ottoman Empire. Unable to fully repay the interests for this loan, the Greek state had to declare its first bankruptcy while the War of Independence was still ongoing. Since then, it often contracted debts with foreign powers just to repay previous ones. A recurrent pattern can be identified in these crises. Greece received foreign loans, whose terms were not always advantageous; but it failed to repay debts and ended up declaring bankruptcy. The precondition for debt restructuring or cuts from foreign creditors was to apply austerity measures such as reducing government spending and imposing new taxes, which ultimately resulted in financial stabilization and readmission to international credit markets. Soon, investments and loans started flowing in again as foreign lenders were disposed and even eager to provide funds; but this always resulted in unsustainable levels of debt. Combined with domestic problems such as government overspending and corruption, this led to another debt crisis, thus restarting the cycle. A notable even occurred in 1898, when an International Committee was set up to monitor Greece’s public finances; thus anticipating the role of the EU institution in the most recent recession. The last default in 1932 also presents notable similarities with the recent situation, as that that crisis followed a major global-scale financial crunch; namely the 1929 Wall Street collapse.

After suffering huge human and economic losses during WWII and the Civil War that followed it, Greece managed to settle most of its external debt and experienced an exceptional economic growth; also thanks to US aid received via the Marshall Plan. It built infrastructures and promoted industrialization, the living conditions of its citizens greatly improved and its GDP growth rate was one of the highest in the world, second only to countries like West Germany or Japan. During this period, which goes roughly from the early 50s to the mid-70s and that reached its apex in the eight-year rule of Prime Minster Konstantinos Karamanlis of the New Democracy party between 1958 and 1963, the debt/GDP ratio fell to a record-low of 9.7% in 1959; and continued oscillating around 20-25% until the early 1980s. But since the Socialist Party (PASOK) took power it started rapidly growing, stabilizing at a high level of about 100% in the 90s and early 2000s. The return to power of New Democracy in 2004 did not change this course. This massive surge of public debt was largely due to uncontrolled and unproductive government spending combined with the effect of an economic slowdown plus structural inefficiency and lack of transparency, especially in the public sector. Yet, Greece achieved its objective of joining the Eurozone since its beginning in the 1999-2002 period; even though it did so by dissimulating the real entity of its debt; as otherwise the discrepancy from the financial stability criteria established by the 1992 Maastricht Treaty would have been too high for its admission. At that point, things started getting alarming, and Greece itself warned that the situation of its public finances was worse than it appeared; resulting in the country was put under observation by the EU Commission in 2005.

The Crisis

The 2008 US financial crunch had world-spanning effects; and in the EU it shook the very idea of European integration. The refusal of the US government to bailout Lehman Brothers resulted in the latter’s bankruptcy, which had chain effects on the world’s financial markets. States acted to prevent the collapse of major financial companies, as this would have had detrimental repercussions on national economies. But soon, this raised concerns over the ability of states to repay their own public debt; especially over those Eurozone states having the bigger debt/GDP ratio. Among them Greece stood out with its huge debt of more than 120% of GDP. This was the result of a combination of factors. The introduction of the Euro had caused wages to rise, thus deteriorating Greece’s competiveness. The trade balance went negative and the government deficit also reached 15% of the GDP in 2009. As the crisis struck the EU, loans from other countries begun to decline and their interest rates grew, meaning that Greece could no longer finance its deficit via cheap external debt. Moreover, while joining the Eurozone increased financial credibility and favoured trade thanks to lower transaction costs, it also deprived the country of its monetary sovereignty. Consequently, Greece could not counter the effects of the crisis by depreciating its currency; even though this would have been just a short-term solution.

At the height of the crisis, Greece found itself in a serious standoff with foreign investors over the terms of debt restructuring and cancellation. The so-called Troika, formed by the European Commission, the European Central Bank and the International Monetary Fund, demanded Greece to adopt harsh austerity measures to reorganize its finances as a precondition for a bailout; similarly to what had happened in previous cases. In this, Germany played a major role, because its banks owned the largest share of the Greek public debt. As such, Angela Merkel’s government acted primarily to protect the interests of Germany and its financial actors, who would have suffered significant losses in case of a Greek default with negative consequences for the German economy. Yet, given the relative small size of the Greek economy, a default would not have been fatal for the Eurozone; but Germany’s very decision made the situation worse. Berlin has always been very unwilling to implement expansionary economic policies to boost growth in the EU and assist countries facing economic troubles like Greece. For this reason, initially it insisted for a bail-in, which would have meant making private creditors withstand the costs of restructuring the Greek debt. However, Germany’s stance greatly undermined the market’s trust by creating fears among investors, thus further worsening the situation for Greece and the EU.

In the end, Greece had no choice but to implement the austerity measures demanded by the Troika; and in exchange it obtained three bailout programmes which included a cancellation of 100 billion euros of debts in 2011. Nevertheless, Greece plunged in a deep economic recession. Its GDP shrunk, and so did salaries. Unemployment grew to reach about 27% of the workforce in 2013, and it still remains above 20%. Living conditions worsened for large swathes of the population. Today, the government budget has returned in surplus, but due to the contraction of the economy the debt/GDP ratio has actually increased to a current level almost 189%.

But even more importantly, the crisis caused tremendous social harm, disrupting the lives of millions and sparking violent protests alimented by anti-EU and anti-German sentiments. This also arose the controversy over German reparations for WWII. Like other states, Greece was plundered by the Germans during their occupation, and it received some material compensation after the conflict in the form of equipment and commodities. But since the US wanted Germany to rapidly recover in an anti-Soviet logic, Greece and other countries were convinced to soon renounce to the remaining reparations. In addition, a 400 million marks loan that the Germans forced Greece to concede during the occupation was not included in the reparations; but today Berlin refuses to discuss the issue. Converting this amount to today’s dollars is very complex, but considering that in 1941 one dollar was worth 2.5 Reichsmark and accounting the changes in purchasing power of the USD, a rough estimate suggests that in 2017 the loan would have been worth 16.6 billion dollars. This is a huge sum, but still small compared to Greece’s 388 billion USD of debt.

What Prospects for Greece?

The acute phase of the crisis is over; yet, Greece will have to deal with its consequences for many years ahead. Its recovery is still shaky, unemployment is a problem and its debt/GDP ratio remains very high. In this context, the result of the 2019 elections and in general the future political orientation of the country is uncertain; as new economic turmoil may have negative effects on political stability and vice versa.

Still, there are also opportunities that Greece can exploit. Lower wages translate into a competitive advantage, and in the post-crisis scene there is plenty of opportunities for investment. More importantly, Greece’s large merchant fleet combined with its location give it the potential to become a Mediterranean trade hub. Being close to the Suez Canal, Greece can be seen as a gateway to Europe for Asian countries. China, in particular, has shown great interest in Greece as part of its “One Belt, One Road” initiative; and COSCO, its state-owned shipping company, acquired the majority of shares in the Piraeus Port Authority. Since then, both the container volume and revenues have greatly increased. Russia has also interests in Greece, because it is a pipeline crossroad: its Trans-Anatolian Pipeline (TANAP) is scheduled to connect on Greek soil with the Trans-Adriatic Pipeline (TAP) to reach Western Europe. Exploration for hydrocarbons in the Eastern Mediterranean is also opening opportunities for Greece, but is also accompanied by greater tensions with Turkey. Finally, as Washington’s relations with Ankara deteriorate, the former is building closer ties with Athens, who can take benefit from this.

Greece remain in complicated situation, but with a careful management it can fully recover. It must pay attention to its public finances, favour domestic saving, avoid contracting external debt, diversify its partners and attract foreign direct investments capable of sparking a positive economic spill-over. To what extend Greece will succeed in doing so will determine its future well-being and its role in international affairs.

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