Thursday 8 March, 2018 Update: The EU’s Vulnerable Southern Flank

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The Italian general elections on Sunday ended up as a triumph for Italy’s populist parties. The Northern League and Five Star Movement (M5S) were the major winners. Both parties campaigned on anti-establishment, anti-immigration, and anti-European Union platforms. A new government has yet to be formed and it could be some time yet before that happens. However, that government will almost assuredly be staunchly anti-European Union in sentiment, as well as in deed.

Italy has long been considered to be one of the economic problem children of the European Union, along with Greece, Portugal, and Spain. The growing debt and economic vulnerability of of the Southern European EU members brought about an era of austerity from Lisbon to Athens. Austerity was more than enough for Southern European nations to contend with. But then came the European migrant crisis which saw continuous waves of African, and Middle Eastern migrants washing up on Southern European shorelines.

Italy was arguably the hardest hit. Austerity, and the migrant crisis combined to bring about a political shift in Italy. In recent years, voters have moved away from mainstream political parties, and tossed their lot in with populist parties that are opposed to essentially everything that the European Union supports. Brussels, and Rome appear to be fated towards a clash down the road and the EU is not waiting for the new government to form before it fires the first shot.

Yesterday, the European Commission urged Italy to increase economic reforms. The nation’s recovery from the 2008 crisis continues, yet at a sluggish pace. The commission also cited ‘excessive economic imbalances’ present in Italy. To be fair, the commission’s report also pointed to Cyprus and Croatia as having similar problems, yet their inclusion serves to highlight the fact that the EU’s southern flank is becoming increasingly vulnerable.

This increases the scrutiny which will be placed on Rome in the coming months. The new Italian government will not be as receptive and compliant to EU ‘economic suggestions’ as Greece and Alex Tsipras’ government was in 2015. More to the point, Rome will not submit itself to the wishes of Brussels, and the veiled threats of Angela Merkel like Athens did. The EU feels it would be in its best interests to have a stake in determining Italy’s economic policies for the foreseeable future. How far Brussels is willing to go to keep its influence alive remains to be seen?

What will Italy’s reaction be to increased EU bullying? An Italexit could have severe consequences for Brussels and signal the final nail in the coffin for the great European Experiment.

 

Tuesday June 30, 2015 Update: Greece Defaults

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Greece has defaulted on the IMF loan. As much as it was expected, when midnight struck in Brussels a sense of disbelief seemed to blanket Europe. The truth of the matter is that few people expected the Greek debt crisis to reach this point. Right up until the last minutes before midnight, many people were holding out a somewhat unrealistic hope that an extension or entirely new bailout could be crafted. Greece even took an eleventh hour proposal to the Eurozone, however the appeal was rejected and labeled ‘unrealistic.’ Midnight came and went. Now Greece has the unfavorable distinction of being the first European nation to have missed an IMF payment.

So, what will happen next? As the referendum date grows nearer, uncertainty will grow. The European Union is entering uncharted territory. On the surface, EU financial chiefs do not appear to be overly panicked by the situation. Quite the opposite, in fact. They seem to firmly believe that the defenses they’ve put in place will prevent instability in Europe if a nation leaves the Eurozone. In spite of the defenses being erected, EU leaders have to face the possibility of a European nation beset by financial misery abandoning the Euro currency.

Global markets have, predictably, not responded well to the Greek drama. How they respond tomorrow on the first day of post-default trading remains to be seen. Chances are, there will be much volatility as traders and investors wait to see what direction the crisis takes. There is much speculation about what consequences the default has for Europe and beyond. It’s quite evident that the immediate effects in Greece are very negative. Cash is dwindling and the banks remain closed. Long lines at ATMs and supermarkets are the norm, even though cash machines are, for the most part, already empty.

Beyond Greece, the real danger is that the Greek default will turn out to be a spark that ignites a very large powder keg. Will the default be a ‘Lehman Brothers’ moment, a ‘Sarajevo moment’ or something altogether different? There are a number of scenarios that take the default beyond a pure economic crisis. Some are more frightening and realistic than others.

Tomorrow, I will post more on the possibilities as well as provide more updates. The final Defending Poland article will also be posted tomorrow evening. Apologies for the long delay, but with Greece at the top of the headlines, my focus has been there.

A Gradual NATO Awakening

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The headlines coming out of Europe for the last month paint the a picture of NATO awakening: A month long multinational training exercise in Estonia involving aircraft and airmen from the United States, Estonia, Finland and Sweden. Florida Air National Guard F-15C Eagles  commence a six month deployment to Eastern Europe. A number of NATO nations increase their defense spending in light of recent Russian actions. Germany decides to recommission 100 Leopard 2 Main Battle Tanks to bolster the combat capability of its long neglected ground forces.

NATO exactly is not making like its 1985 all over again, but the latest moves by alliance members are steps in the right direction. The unwillingness to adequately meet the dangers posed by Vladimir Putin’s Russia is slowly melting away. The notion of conceivably having to confront a militarily resurgent Russia is becoming less theoretical and more concrete as time goes on. Military preparedness is becoming a hot topic in capitals across the continent. Some alliance members are coming around to the realization that their armed forces are not adequately prepared for modern conventional warfare. Almost twenty five years of relative peace, shrinking defense budgets and political indifference have taken a toll. Now, in order to ensure that their forces are ready to meet treaty commitments, the majority of alliance members are being forced to play catchup.

Even the United States has had to adjust to the new realities. US combat power in Europe was drawn down dramatically from what it even a decade ago. EUCOM had become something of a clearinghouse more than a combat command. Fighter wings and Army brigades based in Europe were being deployed to Afghanistan and Iraq regularly for combat tours. In April of 2013, the last American tanks had been withdrawn from Europe. The strategic shift to Asia and the Pacific was underway.

Now, two years later, it’s a different situation altogether. The European Reassurance Initiative will allow US commanders in Europe to draw funds from $1 billion dollars set aside by Congress for contingency operations. American armor is back in demand in Europe. Abrams and Bradleys are rolling through the Baltics. USAREUR is exploring options for prepositioning equipment in Eastern Europe. F-16s are thundering across the Estonian sky while Flordia ANG F-15s take part in Frisian Flag and prepare to deploy east to Bulgaria. Power projection and combat preparedness are the priorities. Once again, US European Command has become a combatant command in its own right.

Germany’s reaction to Russian aggression is somewhat more ambiguous. On April 10, the German government announced that it will be placing 100 mothballed Leopard 2 MBTs back into service and modernizing them. The move is intended to give the German Army more combat power at a time when NATO revamping its Reaction Force to meet the threat emerging from the east. This is not a short term solution, though. The tanks will not begin modernization until 2017 and only after that is completed will they be placed back in service with line units. Two or three years is a long time. If relations between NATO and Russia begin to normalize by then, the modernization can be cancelled and the tanks placed back in reserve. In essence, the Germans are hedging their bets with this move. It will not change the balance of power in the short term, so Moscow will have a difficult time viewing it as a provocation.

NATO’s Eastern European members are addressing the threat posed by Russia with robust increases in defense spending. After all, these nation-states share a border with Russia, and at one time most were either part of the USSR or the Warsaw Pact. Lithuania’s defense spending will increase by 50% in the foreseeable future. The other Baltic States will join the trend with more modest defense budget increases. Poland began a military modernization program in 2013 before Russian annexed Crimea or the Ukrainian conflict began. This year, Poland’s defense spending will rise by 20%.

In contrast, defense spending in much of Western Europe continued to decline. Austerity remains the name of the game and defense cuts continue to occur. In Paris, Brussels and London, Russia is not yet viewed as an imminent threat. In Warsaw, Vilnius, and Riga, Russia is. Little by little, NATO is awakening. Progress is being made, but will enough of it be made in time?