Latest publications - Elcano Royal Institute empty_context Copyright (c), 2002-2018 Fundación Real Instituto Elcano Lotus Web Content Management <![CDATA[ A plea for the German Presidency: invest boldly and smartly in the future of Europe ]]> http://www.realinstitutoelcano.org/wps/portal/rielcano_en/contenido?WCM_GLOBAL_CONTEXT=/elcano/elcano_in/zonas_in/commentary-pirozzi-tekin-toygur-a-plea-for-the-german-presidency 2020-06-30T02:53:03Z

Expectations for leadership are high, as are hopes that the German Presidency of the Council of the EU will give substance to the claim ‘Together for Europe’s recovery’.

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Spanish version: Un llamamiento a la presidencia alemana: invierta con valentía e inteligencia en el futuro de Europa.

Italian version at Euractive Italy and German version at Euractive Germany.

The German Presidency of the Council of the EU will officially kick off on 1 July 2020.1 Expectations for leadership are high, as are hopes that the Presidency will give substance to the claim ‘Together for Europe’s recovery’. Germany has the unenviable task not only of guiding the Union out of the crises generated by the COVID-19 pandemic, but also of encouraging it to design a credible strategy for longer-term reform. In fact, the health emergency has exposed the many gaps in the European project that affect its ability to respond to citizens’ needs, posing a question for the EU’s survival. In a sense, the pandemic has served as a wake-up call, reminding Europeans that there are no options other than to change or to disintegrate.

“Bold reforms are not easy to make and require a combination of different elements: the political will of leaders, courageous action by institutions and the support of citizens”.

The long list of strategic agenda points require careful expectation management as regards what the German Presidency will be able to achieve. Bold reforms are not easy to make and require a combination of different elements: the political will of leaders, courageous action by institutions and the support of citizens. The German government has already given a preview of its political drive through the Franco-German initiative for European recovery, which paved the way for an unprecedented proposal by the European Commission. However, the Franco-German engine is a necessary but not sufficient condition for a successful outcome. A core task for the German Presidency is to build bridges between Member States.

Thus, the German Presidency should start by convincing Member States, particularly the ‘frugal four’, to support the European Commission’s ‘Next Generation EU’ recovery plan and an ambitious Multiannual Financial Framework (MFF) for 2021-27, including also the Budgetary Instrument for Convergence and Competitiveness (BICC), a permanent instrument that remains an important feature for the euro’s durability. Possible longer-term reforms on the economic governance of the EU are also important, starting with the long-avoided conversation on the mandate and accountability of the European Central Bank. What are at stake are not only the symbolic emblems of EU integration, namely the common currency and the Eurozone, but –most importantly– the well-being of European citizens. Social cohesion should be at the plan’s centre.

“The German Presidency also needs to strengthen the EU’s role in a post-pandemic world”.

The COVID-19 recovery offers a window of opportunity to reinforce the sustainability of the EU’s development model. This means that climate action needs to be at the heart of recovery plans and the EU must not deviate from the Green Deal’s ambitions and needs to be aware of and transparent about potentially inherent trade-offs in terms of economic uptake. The German Presidency needs to activate all the EU’s climate diplomacy potential to rebuild global plans for scaling up national pledges under the Paris Agreement.

Rapid digital transition should get a fair share of the Presidency’s agenda –and of the recovery plan– as a vital investment for the future, too. It is also very much connected to the broad concept of strategic autonomy. Digital and technological sovereignty should be key items on the agenda.

If the EU wants to strengthen its ability to resist and adapt in times of crises it will have to strengthen its resilience. This essentially requires holding on to Europe’s core values: democracy, rule of law, human rights, freedom and equality. Particularly, seeking basic consensus on the rule of law shared by all Member States is desperately needed as a fundamental precondition for the future of Europe. Long before the COVID-19 pandemic, Article 7 procedures were initiated against Poland and Hungary. The pandemic has reinforced the challenges to the EU’s common values. The German Presidency needs to break the silence on this topic. Additionally, rule of law conditionality needs to become an inbuilt feature not only of the MFF but also of the recovery plan. If common values are at risk, the EU’s future will be at stake.

Violations of human rights have been reported at the external borders of the European Union both before and after the COVID-19 pandemic. Along with the comprehensive opening of the internal and external borders of the Schengen Area, the Common European Asylum System urgently needs a reform in the spirit of joint solidarity.

The German Presidency also needs to strengthen the EU’s role in a post-pandemic world. Both the US election in November and the developments in US-China rivalry should be followed closely. While looking far ahead, the EU should also design a more effective strategy for its neighbourhood: from the Western Balkans to Turkey, from the Mediterranean to Africa there are various agenda items. Brexit is another urgent item on the list that will not allow any suspension. Since the British government is not willing to extend the transition period, the German Presidency will have to deal with the issue.

The scattered and belated European-level response after the outbreak of the emergency, combined with the latter’s profound economic and social consequences, may impact negatively on the people’s trust in EU institutions, reinvigorating Euroscepticism. Regaining the hearts and minds of the people of Europe will need a strong symbolic initiative to make the EU more visible in their daily lives. A reviewed Conference on the Future of Europe, with a shorter timeframe, clear objectives and a credible mobilisation system could prepare the ground for a metaphorical vaccine for the EU.

The choices made during the second half of 2020 are destined to have a long-lasting impact on Europe and its citizens: the German Presidency will be well advised to choose its priorities wisely in order to invest boldly and smartly in the EU’s future.

Nicoletta Pirozzi
Istituto Affari Internazionali
| @NicolePirozzi

Funda Tekin
Institut für Europäische Politik
| @FundaTekin17

Ilke Toygür
Elcano Royal Institute
| @ilketoygur


1 A prior version of this text was published as a part of the Trans European Policy Studies Association’s (TEPSA) ‘Recommendations from the members of the TEPSA network to the incoming German Presidency’. The authors wish to thank Michele Chang, College of Europe; Gaby Umbach, European University Institute; Saila Heinikoski and Niklas Helwig, Finnish Institute for International Affairs for their contributions.

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<![CDATA[ Living with COVID-19: The thinking behind Spain’s lockdown exit plan ]]> http://www.realinstitutoelcano.org/wps/portal/rielcano_en/contenido?WCM_GLOBAL_CONTEXT=/elcano/elcano_in/zonas_in/commentary-oteroiglesias-living-with-covid-19-thinking-behind-spains-lockdown-exit-plan 2020-06-02T12:38:00Z

Spain’s lockdown exit plan is based on four pillars: (1) proper data and healthcare capacities; (2) geographical asymmetry; (3) a two-way street with different speeds; and (4) subsidiarity and co-responsibility.

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As COVID-19 started to hit the country hard, on 14 March 2020 the Spanish government declared a state of alarm (Article 116 of the Constitution contemplates three states of response to crises: alarm, emergency and siege, in ascending order) and confined its population . Residents were obliged to stay at home unless they needed to go to a hospital, a supermarket, a pharmacy or work in essential economic sectors. Schools were closed and online work was encouraged in all business activities, while the retail and hospitality sectors were completely closed down and, for the first time ever (something that had not even occurred during the Civil War), bars were shut. Tourism had gone; dystopia was upon us.

Some days later I received a call from the Spanish government and was asked to join a small group whose task would be to design a lockdown exit route. Those were difficult days: on 15 March the death toll was for the first time above 100 per day (in fact, 152), on 24 March the country recorded 500 deaths (at 514) and on 2 April the rate reached a high of 950 deaths. The headlines in the newspapers were frightening: Spain was losing 1,000 people a day; it felt like wartime.

By then our work, carried out in confidentiality and away from the media spotlight, was well under way. Naturally, the team was multidisciplinary , including not only epidemiologists, microbiologists and virologists, but also experts in infectious diseases and public health, and medical statisticians. In addition, there were economists, political scientists, sociologists, diplomats, philosophers, engineers and new technology and law experts. The complexity of the task was immense (it had never been done before), so counting on different perspectives was essential. My own task was to focus on anything related to international and comparative political economy.

Very soon one of the first political-economy questions to arise was precisely how to deal with the tension between the priority of the epidemiologists –to continue with the lockdown until the virus was under control– and that of the economists –to reignite the economy as soon as possible–. After intense debates we agreed that while these two realms could not be seen separately, since, indeed, they are strongly intertwined –the economy cannot function if the population is not healthy, and people cannot be healthy in the long run if the economy collapses–, the epidemiologists should have the primacy.

Where there was a strong consensus between the epidemiologists and the economists, however, was in agreeing that geographical asymmetry would be inevitable in lifting the lockdown.

The course of the epidemic was uneven in different parts of the country, so it made sense to have stricter lockdown and social-distancing measures in the areas that were hardest hit, while they should be started to be eased in those less affected, so that economic activity could resume earlier.

That is why, when the French President Emmanuel Macron announced on 13 April that France would start lifting its lockdown on 11 May, we received the news with scepticism. As one of the medics told us at a discussion, ‘those that speak about dates do not know much about viruses’. But the reality was that very quickly everyone became obsessed with dates. The business community was becoming particularly restless, noting that other countries were already putting dates to their exit strategies. The pressure on the Spanish government was mounting and we felt it.

What was our counter-proposal? First, we realised early on that there was no blueprint for a successful exit. China was the only empirical case that we could study. It had shown that dividing the country into geographical units to choke the spread of COVID-19 was effective. But its units were small (districts) and based on very intrusive ‘neighbourhood patrol teams’ that would be unacceptable in a democracy like Spain. The experiences of ‘testing, tracing and isolating’ in countries such as South Korea, Taiwan and Singapore were far more instructive.

Taking all of this into consideration, after four weeks of comparative studies and analysing the situation of the virus in Spain, and what was needed to combat it, and following numerous debates and meetings with members of the government, we finally came up with a plan based on four pillars: (1) proper data and healthcare capacities; (2) geographical asymmetry; (3) a two-way street with different speeds; and (4) subsidiarity and co-responsibility.

The first pillar is the most important. It hinges on generating the right data. For instance, about when the first symptoms appeared in each patient, his contacts, when he was hospitalised, how many beds were free in his hospital, the saturation level of the ICUs in his particular hospital on entering, and the date of discharge. We realised that the information was not complete and rapidly became aware that this was a problem in other European countries too, including Germany, which was coping with the crisis relatively better (I would like to use this opportunity to express my gratitude to our counterparts in similar task forces during those intense and dramatic weeks: many frustrations were shared and useful information was exchanged).

Hence, the first pillar is based on precisely this: the capacity to test, trace and isolate (potential) cases and to have the strategic healthcare infrastructure to deal with a possible new outbreak. In other words, the minimum number of beds and ICUs empty and ready to be used, but also enough resources and staff in primary care to detect and trace potential cases as soon as possible, and even the use of new technologies like apps, with a pilot project starting soon in the Canary Islands.

The second pillar is geographical asymmetry in lifting the lockdown. Here we agreed that the municipal level was too small. Many people live and work in different municipalities, hence closing them off would be too disruptive. Spain’s Autonomous Communities (regions), on the other hand, were too big. Imagine, for instance, that Almería were to have very few cases and Sevilla many. Why would Almería need to wait to open up until Sevilla improved? So we opted for the province, which is an administrative layer in between the region and the municipality (NUTS3 in the European Commission regional map, see Figure 1) and roughly coincides with the functional urban areas (cities and commuting zones, as identified by Eurostat, see Figures 2 and 3 below), covering 70% of Spain’s population.

Figure 1. NUTS 3 regions in the EU
Figure 1. NUTS 3 regions in the EU

 

Figure 2. Functional urban areas in Spain
Figure 2. Functional urban areas in Spain

 

Figure 3. Functional urban areas in Europe
Figure 3. Functional urban areas in Europe

The Spanish Government has broadly applied this scheme, although certain regions have opted for sanitary areas, instead of provinces, to accommodate the diverse geographical idiosyncrasies such as the difference between urban and rural areas, where population density is lower and therefore restrictions can be milder (see Figure 3).

This leads to the third pillar. The lifting of the lockdown has been divided into four phases: one preparation phase and three exit phases. Phase 1 started for half of the country on 11 May, and two weeks later (25 May) this half moved to phase 2, while the rest of the country moved to phase 1 (see Figures 4 and 5 below). Every phase has different restrictions. For example, in the preparation phase, bars and restaurants were closed and there were to be no social gatherings. In phase 1, however, bars can admit customers if they have outside tables, and there can be social gatherings of up to 10 people, while retail shops can open 400 square metres of commercial space. In phase 2 bars and restaurants can open their indoor facilities, social gatherings can rise to 15 people, retail shops have no space restrictions and theatres and cinemas start operating with limited admissions and subject to social distancing.

Of course, this gradual and asymmetric approach has been politically controversial. Every province and every region want to move to the next phase as soon as possible, but it was important to assimilate the notion that the generation of capacities is fundamental and that we need to learn to live with the virus gradually and with precautions. The Region of Valencia first complained that it could not pass from the preparation phase to phase 1 on 11 May and later, after seeing a spike in new cases, it decided to wait to move on to phase 2 for another week in order to have the situation better under control, only progressing to that stage on 1 June (see Figures 4, 5 and 6 below to see the gradual change in the map). Indeed, the plan is designed to move forward, but if the virus again gains strength, certain geographical units might need to move backwards to a previous phase. This is a two-way street, with, it is hoped, most traffic moving forwards, although setbacks may occur and U-turns might be necessary.

Figure 4. Spain’s transition to the new normal: geographical asymmetry in exiting lockdown, as of 11/V/2020
Figure 4. Spain’s transition to the new normal: geographical asymmetry in exiting lockdown, as of 11/V/2020

 

Figure 5. Spain’s transition to the new normal: geographical asymmetry in exiting lockdown, as of 25/V/2020
Figure 5. Spain’s transition to the new normal: geographical asymmetry in exiting lockdown, as of 25/V/2020

 

Figure 6. Spain’s transition to the new normal: geographical asymmetry in exiting lockdown, as of 1/VI/2020
Figure 6. Spain’s transition to the new normal: geographical asymmetry in exiting lockdown, as of 1/VI/2020

For all of this to work, however, it is necessary to count on the cooperation of regional and local administrations. The subsidiarity principle is a key factor. For instance, it is not the job of the central government to decide how social distancing should be applied in the country’s 3,000 beaches, since that is the task of local municipalities. The police cannot check whether the maximum number of people (and the two-metre social distancing) is respected in social gatherings at home. That is the responsibility of each citizen. Co-governance and civil discipline are therefore indispensable.

At present, moving between provinces or sanitary areas (in the regions that have applied such a division) is banned. In principle this should last until phase 3 is completed and Spain enters a ‘new normal’. But if the minority government is unable to renew the state of alarm (requiring Spanish parliamentary approval every two weeks) there should be other co-governance and co-responsibility schemes agreed upon by the regions and the central government to maintain the plan’s (sound) logic.

In terms of dates, the initial idea was to move from phase to phase every two weeks, a reasonable time frame to assess the course of the pandemic. This would mean that the geographical units that moved to phase 2 on 25 May would be in the green zone (the new normal) by 22 June and places like Madrid and Barcelona, which have a two-week lag, would be there only on 6 July. But the government has already announced that it wants to open up the country to European tourism on 1 July, so it is likely that opening up might accelerate if the epidemiological situation continues to improve (see Figure 7 below).

Figure 7. Daily number of COVID-19-related deaths in Spain, February to May 2020
Source: Spanish government / RTVE.

Nonetheless, as mentioned above, although the speed might be accelerated because the economic pressure to open up is beginning to be huge, it would be good to keep the plan’s basic framework in mind, even if only in the background, because there may be a few bumps on the road to achieving a treatment, vaccine or herd immunity, and we might have to slow down, stop or even turn back temporarily. Of course, if most people respect social distancing (the widespread use of masks in Spain is encouraging) that is less likely. One can design the best plan, but if people fail to adjust to it, effectiveness will be undermined.

This also means that the plan needs to be flexible. The central government needs to listen to regional and local authorities and to key social actors in business and civil society in order to improve the plan. In this respect, some recent rectifications and improvements are also encouraging. We are in uncharted waters and, as Paul Collier has pointed out , experimentation, trial and error, and best-practices are the best way to fight COVID-19. And this is applicable to both Spain and the rest of Europe. Exit strategies have been different in each EU country and that is not bad per se (it might even be positive, since we can learn from each other) but now is also the time to think how we can cooperate to make them compatible so as to re-start social mobility in the EU in the safest possible way.

Miguel Otero-Iglesias
Senior Analyst at the Elcano Royal Institute, and Professor at the IE School of Global and Public Affairs | @miotei

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<![CDATA[ Expectations, competences and power: understanding the dynamics of EU institutions in tackling the COVID-19 crisis and setting the tone for the Conference on the Future of Europe ]]> http://www.realinstitutoelcano.org/wps/portal/rielcano_en/contenido?WCM_GLOBAL_CONTEXT=/elcano/elcano_in/zonas_in/commentary-toygur-expectations-competences-and-power-understanding-dynamics-eu-institutions-tackling-covid-19-crisis 2020-06-01T04:15:57Z

It is vital to understand all its power dynamics before judging the EU’s performance while dealing with these multidimensional crises (such as the COVID-19 crisis), or any others to come.

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Introduction

The coronavirus has been an unprecedented challenge for the world. The EU, an incomplete integration project with a very high degree of interconnectedness between nation states, was slow in responding at the very beginning of the crisis. Since both health and border management are mainly member-state competences, the primary reaction was to rally around the national flag. Once the scenario and the need for a coordinated response was clearer, the shaping of a ‘European’ response could begin.

Even if the Union has been criticised for a lack of solidarity –as in all other crises of the 21st century–, some of its institutions –mainly the European Commission and European Central Bank– rose to the challenge in March and took definite steps. Some of the political groups in the European Parliament called for united action since the early stages of the crisis, and ended up with a resolution asking for an ambitious plan that has been widely supported. The European Council, on the other hand, has already met (virtually) four times since the beginning of March to discuss the next steps forward. Now a decisive meeting is around the corner. Leaders will gather on 19 June to discuss the European Commission’s long-term budget proposal together with its economic recovery plan. The differences between member states will have an impact on the shape and size of the plan and set the final tone.

“(…) it is vital to understand all these dynamics before judging the EU’s performance while dealing with these multidimensional crises, or any others to come”.

The power battle in the European Council is very much connected to national politics. The heads of state and government have their own national politics to push forward. Party politics and coalition dynamics are important pillars of their decision-making mechanisms, in addition to public opinion in their home countries. For this reason, it is vital to understand all these dynamics before judging the EU’s performance while dealing with these multidimensional crises, or any others to come. Studying the competences and power dynamics could be a useful exercise right before the Conference on the Future of Europe begins.

Institutional and political dynamics: do we need a power re-shuffle?

The COVID-19 pandemic has had asymmetric consequences for various member states in the Union. The severity of the pandemic in a country also defines each country’s perspective and its expectations from the EU. This situation opens up the Pandora’s box about decision-making in the EU, the role of institutions and the power balance within them and between them. To adjust expectations, it is important to understand the logic of competences and the distribution of power between institutions. This requires a knowledge of the functioning of supranational institutions, which should also be completed with background information on national interests.

It is clear that the centre of gravity has shifted in favour of the European Council as a result of the multiple crises that the EU has faced in the 21st century. Having said that, the differences are at a historical high, with a significant degree of fragmentation, geographically and also ideologically. In addition, many governments are in coalition which makes it very difficult to come up with agreements that will please all the partners. The current practice is ad-hoc cooperation between countries, instead of the historical solid alliances of the past. Intergovernmental bargaining and the power dynamics between member states play an important role in defining what will become ‘the EU response’.

“The power dynamics should be revisited in the light of the Conference on the Future of Europe”.

The recently published Franco-German initiative for recovery is a very good example to understand the role national leaders play in the European decision-making mechanism. The German Chancellor, Angela Merkel, said that she had spoken to all the leaders in the European Council before agreeing on a compromise with the French President Emmanuel Macron. The initiative clearly set the scene in shaping the economic recovery plan of the European Commission.

When we are talking about national interests, there is the party-politics dimension and the interests of each government, depending on the electoral cycle. There is a gap between policies that enforce European integration (like moving forward with the fiscal union or coming up with a common health policy) and that will be politically beneficial for the politicians in office. If there is a poll on the horizon, the desire to please public opinion becomes very intense. In spite of this, politicians might have to invest in the future of European integration against the short-term interests of their own governments. That is not necessarily a virtue that is frequently found. We are see this situation in many countries, even if real leadership in times of crises requires the shaping of public opinion and not hiding behind it. There is a very thin line between the national interests of a country and the electoral interests of the political elite in office.

Positions in the European Council (and the Council of the EU) should be judged in light of all these dynamics. If you add to that that the members of the European Parliament are selected through national political parties and that the Commissioners are proposed by each country’s government, there is a further twist. National governments and political elites play a key role in the EU. They should rise to the occasion at times of crisis and open the way for communitarian policies for the greater good.

The future ahead

“The aftermath of the current crisis and its legacy will define the future of integration”.

The power dynamics should be revisited in the light of the Conference on the Future of Europe. In that debate, the expectations/competences gap should be addressed. In every crisis, the interconnectedness (economic, social and political) between member states becomes even more visible. It is clear that, completing the European integration project is not just needed for acting within the principle of solidarity at times of difficulty, but also because there is a need to have related instruments for the well-being of all countries. To be able to fulfil citizens’ expectations, the EU should have the necessary toolbox. However, this may well mean transferring further competences to the Union.

In every crisis the EU is expected to save the day. It also faces the question of ‘what is the future of European integration?’. Articles about the inevitable fall of the European project and the rise of nationalism rapidly make an appearance. Nevertheless, passionate observers of European politics know the answer: it has always been the crises that have pushed the European project forward. COVID-19 and its consequences are being identified as being the biggest challenge since the end of World War II. That is why the French President Emmanuel Macron recently called it a ‘moment of truth’. The aftermath of the current crisis and its legacy will define the future of integration. At the end of the day, democratically-elected national governments play a vital role in every step ahead.

This time it is not just the EU that is facing a huge challenge. The pandemic has only deepened the already existing problems and highlighted the flaws inherent to international organisations. It is clear that the world is undergoing a period of reconstruction and reform in global cooperation. The process is very much needed since the current system was built in the 20th century and it did not necessarily reflect all the needs of the present day. If the EU wishes to play a more influential role in the world –or must do so because of the White House’s lack of interest– its institutions must be firm. They should be reinforced not just with new competences that require Treaty changes but also with the political will of the politicians currently in office in each national capital. It is time to invest in the future, in the next generation.

Ilke Toygür
Analyst of European Affairs, Elcano Royal Institute | @ilketoygur

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<![CDATA[ EU-Japan cooperation on defence capabilities: possibilities? ]]> http://www.realinstitutoelcano.org/wps/portal/rielcano_en/contenido?WCM_GLOBAL_CONTEXT=/elcano/elcano_in/zonas_in/ari76-2020-tsuruoka-fiott-eu-japan-cooperation-on-defence-capabilities-possibilities 2020-05-22T12:29:44Z

Europe and Japan have an interest in developing defence capabilities and research but there are challenges and cooperation is conditioned by a shifting geopolitical landscape.

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Theme

Europe and Japan have an interest in developing defence capabilities and research but there are challenges and cooperation is conditioned by a shifting geopolitical landscape.

Summary1

European countries and Japan both possess advanced defence technologies and they can bring to bear a range of civilian or dual-use technologies for defence procurement and defence research. At the same time, both players recognise that it is increasingly difficult for individual countries to manage defence equipment projects without cooperation. Therefore, it is clear that both Japan and Europe have a vested interest in cooperating with each other on capabilities and industrial defence issues.

Within this context, there is scope to assess the current level of cooperation between Europe and Japan on defence capability development and equipment procurement. In the particular context of the EU-Japanese economic (EPA) and strategic (SPA) partnerships , this paper asks what the current scope is for closer cooperation between the two partners and whether there are any avenues that could be explored to improve cooperation. It first looks at the strategic rationale for closer European-Japanese cooperation on defence capabilities, and later analyses the hurdles to improving and promoting a higher level of cooperation between Tokyo and Brussels.

Analysis

Introduction

European countries and Japan both possess advanced defence technologies and can bring to bear a range of civilian or dual-use technologies during defence procurement and defence research. These countries account for a large share of technological innovation in the global economy. At the same time, both actors recognise that it is increasingly difficult for individual countries to manage defence equipment projects without cooperation: therefore, there is a need for more European and Japanese cooperation on defence capabilities and defence research. The need for such cooperation is increasingly seen against a backdrop of transatlantic tensions and the rise of China.2 Both Europe and Japan buy a large amount of defence equipment such as jet fighters and advanced systems from the US, but there is increasing frustration with the way the US deals with allies in its joint R&D and arms transfer initiatives (Foreign Military Sales, FMS) despite the importance of the relationship with Washington. If Japan and Europe’s relationship with the US is to be put on a sustainable footing to meet growing strategic challenges, a sensitive but much needed conversation about defence capability development and the allied defence industries is needed sooner rather than later.

Indeed, in Europe countries such as France are increasingly determined to emphasise the importance of ‘strategic autonomy’ for Europe. This is principally a national discussion but one that is having a wider resonance in Europe, especially with reference to the need to ensure a minimum level of ‘technological sovereignty’ for European critical technology areas. Despite the fact that countries such as Belgium and Poland have recently procured the F35 fighter (and Finland is yet to take a decision on its next fighter acquisition), Europeans increasingly understand that simply buying from the US may have a detrimental effect on their national and European industrial bases. It is, therefore, natural that Europeans want to invest more in Europe’s own defence industry as a precondition for more strategic autonomy in the world, particularly given the fact that many European countries are increasing their defence expenditure.

In Japan, as the Abe government has substantially increased the volume of procurement of expensive US equipment (most notably F-35 fighters, V-22 Osprey transport aircraft and Aegis Ashore missile defence system –all through the FMS–), Tokyo’s desire to be more autonomous in its defence procurement looks less clear than it is in Europe. However, or more precisely, because of the increasing FMS imports from the US, the crowding out of Japan’s own defence suppliers means that the challenge of maintaining the country’s own defence industrial infrastructure and technology base becomes more acute. Joint R&D with European partners (and resultant joint manufacturing and arms exports to third countries) is seen as a new way to maintain Japan’s declining defence industry. What is more, Tokyo’s interest in pursuing defence equipment cooperation with Europe can be located in a broader drive to strengthen European-Japanese political and security cooperation , be it with the EU, NATO or individual European countries such as the UK, France and Germany.3

Therefore, it is clear that both Japan and Europe have a vested interest in cooperating with each other on capabilities and industrial defence issues. Brussels continues to value its international partnerships with key global players such as Japan. In fact, the Union has become adept at integrating security into its trade and economic partnerships and Japan is a core like-minded player in buttressing the multilateral order against the vagaries of states that no longer seem to value and openly question the rules-based order. Whether regional organisations like the EU and countries like Japan, Canada, Australia and others can be called the upholders of the ‘liberal order’ remains to be seen. What is clear, however, is that the EU sees the need to take on a security and defence perspective to its foreign policy and opportunities to partner up with countries like Japan on issues such as maritime security and crisis management is genuinely valued.

Within this context, there is scope to assess the current level of cooperation between Europe and Japan on defence capability development and equipment procurement. In the particular context of the EU-Japan Economic Partnership Agreement (EPA) and Strategic Partnership Agreement (SPA),4 it is worth asking what scope there is for closer cooperation between the two partners and whether there are any avenues that could be explored to advance cooperation. In this respect, it is necessary to acknowledge that Japan already maintains close bilateral ties with key European countries such as the UK and France on defence, but we should not neglect the growing importance of the EU as a defence actor too. This paper first looks at the strategic rationale for closer European-Japanese cooperation on defence capabilities, and then analyses the hurdles to improve and promote better cooperation between Tokyo and Brussels. The paper ends with some concrete policy recommendations.

Two peas in a pod? Analysing the basis for cooperation

In Europe, and specifically the EU, there is currently a profound strategic discussion about the future of European defence. Not only have tensions in the transatlantic relationship raised questions about the future of NATO and the US security guarantee, but Europe is increasingly aware of the need to safeguard critical technologies as a way to ensure its political autonomy vis-à-vis the US and China. As those two countries head towards greater conflict, Europe and Japan need to think about their alliances and what more they can do for their own security and defence. In this respect, Europe increasingly recognises that defence is a pillar –among other areas– designed to ensure the Union’s technological sovereignty.

For Japan and others states wishing to nurture their defence industrial bases, the case of the EU –not a state but an organisation– is interesting because it highlights to what extent powers traditionally dependent on Washington for defence can support their own firms and technology development. Europe still maintains globally competitive defence firms,5 but this is set to be tested not only by competition from the US but, increasingly, from China as it starts to export sophisticated defence equipment globally.6 It is for this reason that large markets in Europe –principally France and Germany, but also Spain– are launching ambitious capability programmes such as the sixth-generation Future Combat Aircraft System (FCAS) and the Main Ground Combat System (MGCS) tank.

European governments and EU institutions have long-held that maintaining individual national defence markets is unsustainable and financially costly. EU institutions have also argued that the duplication of defence systems not only imperils the long-term health of Europe’s defence market but it also raises strategic questions such as a lower level of interoperability and standardised components, equipment and technologies. Historically, institutions such as the European Commission have sought to manage the European defence market through a dual process of market liberalisation (lowering barriers between EU member states on procurement and equipment transfers) and pushing defence industrial regulation to the EU level. This process was managed by two EU laws adopted in 2009 on a Union-wide basis.

While Europe already possesses some world-class companies that produce leading defence technologies (in missiles, aircraft and space), European producers face competition on a global and intra-EU basis. Recent discussions in the EU have focused on improving the competitiveness of Europe’s defence industries and enhancing the Union’s strategic autonomy. US moves to continue to corner the European defence market have been met with rejection by some member states, even though a number of European governments still want to maintain a strong security relationship with Washington. Here, we should note a nuance between the security interests of European governments (maintaining the US security guarantee) and their industrial interests (nurturing their own defence industrial and technological bases).

In recent years, however, this historically regulatory approach has been enhanced by a foray in defence investment by the Commission.7 Indeed, a European Defence Fund announced in 2016 will now seek to stimulate defence research and capability development between EU member state governments. This new course of cooperation has not only raised the suspicions of the US but it has spiked the interest of close EU partners such as Japan. There is at present some question about the total amount of the Fund. Under the current negotiations for the EU’s next multi-annual financial framework (MFF), the Commission asked for €13 billion over the 2021-27 period for defence investments. However, under Finland’s Presidency of the Council of the EU in 2019, member states agreed on half the amount: €6 billion over the same seven-year period. We shall have to wait and see how the EDF and the broader MFF might be affected by the COVID-19 crisis .

The European Defence Fund should not be taken in isolation from other initiatives designed to improve the Union’s defence capabilities and strategic autonomy. In 2017, 25 EU member state governments (minus Denmark, Malta and the UK, at the time an EU member) agreed to embark on Permanent Structured Cooperation. This form of cooperation binds governments to 20 defence-related commitments and engages a number of them in 47 capability programmes. The budget lines and development of each of these projects is unknown at present but progress is subject to a yearly review by the HR/VP with the support of the European External Action Service and the European Defence Agency. All of this is to say that the focus on EU defence capability development has intensified since 2016 and recent steps are likely to generate further European cooperation in the future at a time when the transatlantic relationship (not only in defence, but even in areas like trade) is likely to become even more bumpy in the future.

In Japan the Abe government introduced the ‘Three Principles on Transfer of Defence Equipment and Technology’ in April 2014, paving the way for defence equipment cooperation with other countries such as joint R&D and joint manufacturing including arms exports. Until the introduction of the new three principles, there was a blanket ban (‘Three Principles on Arms Export etc.’), which effectively precluded all arms exports including joint R&D and production with other countries (with individual exemptions mainly vis-à-vis the US) for decades. Following the introduction of this new policy, Tokyo has so far concluded ‘Agreements on the Transfer of Defence Equipment and Technology’ with the UK (July 2013), France (March 2015), Germany (July 2017) and Italy (January 2019), and specific projects are being developed with the UK and France.

Defence equipment and technology cooperation has thus rapidly become a new pillar of Tokyo’s strategic partnerships with an increasing number of countries, particularly those in Europe like the UK and France, expanding the horizon of Japan’s political and security engagement. While Tokyo did not have a clear vision about what it wanted to achieve at the outset, the level of expectations on the part of Tokyo’s partners were always high on the European side. Thus, the process started as something driven by Europe, to which Japan cautiously responded: Japan –both the government and defence companies– had no expertise and experience in exporting arms or joint R&D with other countries, because of the ban that had been in place for decades.

That said, there is a growing realisation that the ways in which Japan has been developing and producing defence equipment in the domestic market is becoming ever more unsustainable not least because of the rising cost of developing new technologies and equipment. Furthermore, Tokyo’s domestic defence procurement budget has not increased over the past decade, which has forced Japanese defence companies to seek a new way to sustain their business.

A rock and a hard place? Assessing the hurdles to cooperation

Nonetheless, there remain a number of serious obstacles to Japan becoming an effective international arms producer and exporter. Recently, a lot of attention has been paid to Japan’s big arms export ideas including Australia’s submarine bid and the export of the US-2 amphibious aircraft to India, none of which has materialised so far, disappointing those who wrongly thought it would not be too difficult to export Japan’s state-of-the-art defence equipment on global markets. They should have known how competitive and already crowded the international defence market is. Japanese equipment is not competitive in terms of price and has not been tested in combat, which raises doubts about its performance. These export efforts have largely been led by the government. Within the defence industry, the level of eagerness for export varies a lot from one company to another –generally speaking, big companies are less eager to expand their defence business than smaller ones (because the latter are more vulnerable and recognise that they need to try new business to survive)–.

Furthermore, another remaining problem on the Japanese side has to do with the lack of the government’s clarity on its policy priorities, which makes it difficult for private companies to invest more in the defence sector, in anticipation of more international R&D and arms export. Japanese companies are still wondering how serious the government is regarding arms exports (including joint R&D with other countries). In particular, Japanese companies do not know what the government will be able to approve as every project needs the go-ahead from the National Security Council and most probably also needs to undergo parliamentary scrutiny. Experts argue that the establishment of ATLA (Acquisition, Technology and Logistics Agency) within the Japanese MOD in October 2015 does not help much in this regard. Without an assured prospect of being able to sell products to international markets and third countries, it would be difficult for European defence companies to cooperate with their Japanese counterparts beyond R&D. It might be possible to engage in R&D without knowing whether the resulting products will be sold to third countries, but the hurdle for joint production would be higher.8

In short, Japan still lacks a proper national defence industrial policy. The government emphasises the importance of maintaining and strengthening the domestic defence industrial base, but at the same time, the amount of FMS imported from the US has skyrocketed in recent years, making the volume of domestic procurement even smaller. For Japan, there is a trilemma between the need to (1) procure the most capable equipment (often resulting in FMS imports from the US); (2) ensure value for money (thus reducing the unit cost); and (3) maintain (and preferably strengthen) the domestic industrial defence base. The government does not seem to have a coherent idea about how to prioritise and reconcile between those different and conflicting aims.

A similar trilemma afflicts Europe, with many governments seeking to develop their national industrial bases while also keeping the US ‘sweet’ through FMS. In basic terms, European governments are worried that the US may increasingly pull-back from European security and so purchases of US equipment are desirable for the maintenance of the alliance (while being somewhat detrimental to the objective of supporting domestic industry). What is more, in the context of defence planning requirements in NATO (eg, the NATO Defence Planning Process) the idea that Europeans should fill capability shortfalls is valid, but there is some question whether filling these requirements simply supports US defence contractors. As the French Defence Minister Florence Parly recently observed, ‘NATO is about Article 5 and not about Article F35’ –meaning that the alliance should go beyond a sort of club to support the US defence industrial base–.9

It is for this reason that attention to defence capability development within the EU has increased over the past few years. Although the EU has come a long way in developing its defence industrial policy, the Union cannot really show much for its efforts in the way of capabilities. So far, EU initiatives have led to relatively more internal market openness and a handful of defence research projects related to advanced camouflage, maritime surveillance, etc. For the EU to become a serious player in defence, the European Defence Fund must be endowed with sufficient financial assets and lead to a tangible difference in the way European’s organise their defence (harmonised military requirements, identification of relevant capabilities, etc). There is still no overall accord on some sensitive issues such as export and third-party access. On exports, the Commission has stayed away from the question of whether the EU should have a say over EU-funded defence capabilities and instead it is up to governments to decide on a common approach to selling defence equipment abroad (France and Germany have historically maintained different arms export policies).

The European Defence Fund understandably comes with certain restrictions for non-EU states/companies seeking to participate in programmes. The Union wishes to safeguard the interests of the EU even though the proposed regulation does not rule out a ‘non-associated third country entity’ from participating should this participation be ‘necessary for achieving the objectives of the action’ (see Article 10.2). However, as the proposed regulation goes on to state (see Article 25.2), ‘the results of actions receiving support from the Fund shall not be subject to any control or restriction by non-associated third countries or by non-associated third country entities, directly or indirectly through one or more intermediate legal entities, including in terms of technology transfer’. Thus, non-EU entities have a scope to cooperate but under special circumstances.

Finally, much like Japan, the EU does not have a proper defence industrial policy per se, but, unlike Tokyo, the Union faces the difficulty of forging a coherent defence policy. Whereas Japan as a sovereign state is engaged in the development of its national defence policy, the EU finds it difficult to find a common defence policy and to properly define what it means by terms such as strategic autonomy. Under the leadership of the new HR/VP and European Commission, there will be a process underway in 2020 to better define what the Union’s defence policy should look like. Such a process (called for now the ‘strategic compass’) should guide the Union in deciding what it wants from its defence policy and what type of military actor it should become.

Turtle or hare? Moving forward together

Given the similarities in both the objectives of the EU and Japan, and the common hurdles they both have, it is not necessarily easy to come up with specific recommendations to improve cooperation in defence capabilities. For the foreseeable future, as a general observation, Europeans should take their bilateral cooperation with Japan seriously and see whether bilateral defence capability projects and R&D programmes can be enhanced with a more pan-European and/or EU focus. Both Europe and Japan need to give a better account of what type of defence actors they are (and want to be) given the rapidly shifting geopolitical tectonic plates. Joint capability development and R&D investments are not feasible with only an industrial rationale, important as it is. In this respect, high-level political guidance is needed to ensure that any capability initiatives respond to the broader defence objectives of the EU and Japan.

For Japan, Tokyo needs to clarify what it is going to prioritise regarding its defence industrial policy –particularly regarding what is possible for joint manufacturing and export to third countries purely on a commercial basis–. The Japanese MOD (ATLA) needs to improve its ability to find cutting-edge civilian technologies available in Japan that can be applied to military use. Based on this, the Japanese and European authorities could get a better sense of what is available and what can be done together. For the moment, at least, Japan needs to focus on parts/components rather than trying to pursue large-scale projects. The kinds of technologies that Japanese companies are good at include electronic and radar as well as emerging areas such as neuroscience, brain science and artificial intelligence (AI). Tokyo (through the Mission of Japan to the EU in Brussels) needs to establish regular contact with the new DG on defence industry and space (DG DEFIS) at the European Commission, including the latter’s new European Defence Fund.

The Union needs to give a better account of what type of defence player it actually is and wants to become given the rapidly evolving and deteriorating geopolitical dynamics. This discussion will have a great bearing on the military capabilities the Union develops and it will set the parameters of any international cooperation the Union may have with partners such as Japan. In particular, greater attention in EU defence planning could be given to geographical and thematic issues that are of mutual interest to the Union and partners such as Japan (what Union capabilities are required for maritime security?). Although the Union is still at an early stage of thinking about new technology areas such as AI and how they apply to defence, there is scope for more international discussion about how emerging technologies can be managed in the defence sector by actors such as the EU and Japan. Such discussions should not simply be limited to ethical and international regulatory measures, but how liberally-minded actors perceive and apply emerging technologies to their defence and to common global challenges.

The major vehicle through which to enhance EU-Japan relations in the area of defence capabilities is the EU-Japan Strategic Partnership Agreement (SPA). The SPA specifically calls for strategic and sectoral cooperation between the partners. An obvious place to start would be Article 4 on crisis management and the specific reference to cooperation ‘on crisis management operations and other relevant programmes and projects’. Article 4.4 refers to the need to maintain and enhance dialogue, and steps to enhance official dialogues between EU institutions (EDA, EEAS, EUMS, EUMC and DG DEFIS) should be encouraged with Japanese partners.

Another avenue for enhanced dialogue on defence capabilities is Article 9 of the SPA, which refers to cooperation on CBRN threats –particularly salient in light of COVID-19–. The EU and Japan can exchange lessons learnt on capability development in this area, especially given the prominence of CBRN as part of the PESCO projects. Another potential pathway for an initial dialogue on defence capabilities is through the issue of outer space, because both actors share a stake in the increasing militarisation of space and developing science and technology for space.

The EU and Japan need to find a suitable avenue to discuss the threats posed by emerging technologies and defence. The SPA calls for cooperation on Science, Technology and Innovation and it refers to the risks of proliferation too. As part of the regular EU-Japan Summits, leaders could support a joint EU-Japan expert group to discuss threat perceptions on technologies, as they pertain to defence and security matters. In particular, the EEAS’ ‘Global Tech Panel’ could be broadened to include dialogue with close partners like Japan. Although the Panel is currently piloting projects in North Africa and does not have a specific remit for defence-related matters, issues such as proliferation and international regulation of new technologies such as AI could be a sound basis to expand EU-Japanese dialogue on defence capabilities. On AI, Japanese representatives could be invited to dialogue with the Commission’s ‘High-Level Expert Group on Artificial Intelligence’.

Finally, given Japan’s low-level of industrial defence penetration in Europe and the importance of dual-use and civilian technologies to both markets, there is scope to enhance industrial dialogue between Japan and the EU (see Article 17 of the SPA too). Starting at a very basic level, Japanese representatives could be invited as observers to defence industry meeting days held in Europe –since such information and exchange meetings are held on a regular basis–. These concrete examples of cooperation are unlikely to fundamentally alter EU-Japan cooperation on defence capabilities without overarching political leadership from both sides.

Conclusions

As a matter of urgency, opportunities at EU-Japan summits to organise strategic discussions on defence and capabilities should be seized, and one way to stimulate this debate is by focusing on the threats and opportunities posed by new technologies such as AI and quantum computing –both will lay the basis for future technological supremacy and the EU and Japan stand a chance of leap-frogging in these areas–. Mastery of these technology areas and improving their respective strategic autonomy is good for their economies and defence. They are also a good basis from which the EU and Japan can leverage their interests in the relationship with Washington and stave off the threat of being left behind in defence technology terms by China.

Michito Tsuruoka
Keio University | @MichitoTsuruoka

Daniel Fiott
European Union Institute for Security Studies | @DanielFiott


1 The views expressed in this policy brief are the authors’ own and do not reflect the position of the EU or of the EU Institute for Security Studies. The authors would like to thank the European External Action Service and Japan’s Ministry of Foreign Affairs for their support of this project. Previous versions of this paper were presented at two expert workshops held at the EU delegation in Tokyo on 14 January 2020 and at the Institute for European Studies of the Vrije Universiteit Brussel on 9 March 2020. The authors are grateful to all the participants in those two workshops for their comments on a previous version of this paper, with special thanks to Alejandro Cainzos, Patricia Flor, Thomas Gnocchi, Hajime Hayashi, Kazuo Kodama, Hideshi Tokuchi, Shogo Yoshitake, Marianne Peron-Doise, Tomonori Yoshizaki, Maaike Verbruggen, Jun Nagashima, Céline Pajon, Alessio Patalano, Luis Simón, Tomohiko Satake and Zoe Stanley-Lockman.

2 M. Tsuruoka (2018), ‘The Donald J. Trump Administration as seen from Tokyo: will the US-Japan alliance remain unique?’, IAI Papers, nr 18/02, Istituto Affari Internazionali, January.

3 M. Tsuruoka (2016), ‘Tokyo wants a stronger European foreign policy’, The International Spectator, vol. 51, nr 3; and C. Pajon (2018), ‘A new Japan-France strategic partnership: a view from Paris’, Lettre du Centre Asie, nr 74, 16/XI/2018.

5 D. Fiott (2019), ‘What does it mean to be a European defence company today?’, Editoriaux de l’Ifri, Institut français des relations internationals, Paris.

6 D. Fiott (2019), ‘Strategic investment: making geopolitical sense of the EU’s defence industrial policy’, Chaillot Paper, nr 156, EU Institute for Security Studies.

7 D. Fiott (2019), Defence Industrial Cooperation in the EU: the State, the Firm and Europe, Routledge, Oxford/New York.

8 T. Taylor (2015), ‘The prospects for Japan-UK collaboration in defence equipment’, in J. Eyal, M. Tsuruoka & E. Schwarck (Eds.), Partners for Global Security: New Directions for the UK-Japan Defence and Security Relationships, RUSI Whitehall Papers, 11/VIII/2015.

9 D. Fiott (2019), ‘Defence industry, industrial cooperation and military mobility’, in G. Lindstrom & T. Tardy (Eds.), The EU and NATO: The Essential Partners, EU Institute for Security Studies, Paris, p. 44-51.

10 Daniel Fiott writes in a personal capacity and the views in this piece do not necessarily reflect those of the EU Institute for Security Studies or the EU.

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<![CDATA[ Life beyond multilateralism? COVID-19, European strategic autonomy and Spanish foreign policy ]]> http://www.realinstitutoelcano.org/wps/portal/rielcano_en/contenido?WCM_GLOBAL_CONTEXT=/elcano/elcano_in/zonas_in/ari74-2020-arteaga-simon-life-beyond-multilateralism-covid-19-european-strategic-autonomy-and-spanish-foreign-policy 2020-05-20T10:30:28Z

EU and Spanish foreign policy were undergoing a transition from multilateralism to strategic autonomy to adapt to an increasingly competitive geopolitical environment. However, COVID-19 raises questions about whether international politics will be characterised by a renewal of multilateralism or an aggravation of great power competition.

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Original version in Spanish: ¿Más allá del multilateralismo? COVID-19, autonomía estratégica europea y política exterior española.

Theme

EU and Spanish foreign policy were undergoing a transition from multilateralism to strategic autonomy to adapt to an increasingly competitive geopolitical environment. However, COVID-19 raises questions about whether international politics will be characterised by a renewal of multilateralism or an aggravation of great power competition.

Summary

This paper discusses the potential impact of COVID-19 on EU foreign policy, and does so from a Spanish perspective. Specifically, it unpacks two flagship concepts in EU and Spanish foreign policy –multilateralism and strategic autonomy– and critically assesses their utility in a post-COVID-19 context.

Analysis

The geopolitical context before COVID-19

The impact of the COVID-19 pandemic on EU and Spanish foreign policy cannot be viewed in isolation from geostrategic dynamics that were already in train before the crisis. In recent years we have witnessed a confrontational turn in international politics, best illustrated by the intensifying great-power competition between the US and China and the mounting difficulties faced by the multilateral systems in responding to the challenges of globalisation.1 Critically, the US and China have extended their competition to the multilateral domain and tried to leverage different organisations and norms accordingly. Today, the effects of Sino-US competition span most policy areas (eg, trade, military, technology, diplomacy, information) and geographical regions –even though East Asia remains the epicentre, Sino-US competition is also permeating many other regions, including Europe, the Middle East, Latin America and the rest of Asia)–.

Partly in response to these broader geopolitical transformations, EU foreign policy has taken a ‘realist’ turn in recent years. Thus, the 2016 European Global Strategy affirmed the need for more pragmatism in the EU’s external action, and set out an approach based on ‘principled pragmatism’ and ‘European strategic autonomy’ to promote action in partnership with others when possible and otherwise alone.2 In a similar vein, Commission President Ursula von der Leyen has called for a ‘geopolitical approach’ to ensure greater coherence between the EU’s internal and external policies.3 More recently, the European Commission has used the term ‘technological sovereignty’ to address the issue of European strategic autonomy in technology, industry, digitalisation, data and artificial intelligence in the face of growing global competition in those domains.4 Finally, Josep Borrell, the High Representative of the Union for Foreign Affairs and Security Policy, has repeatedly alluded to the EU’s need to adapt to an increasingly competitive international environment by ‘rediscovering the language and logic of power’.5

Admittedly, the concept of ‘European strategic autonomy’ was introduced by the Global Strategy to respond to the EU’s need to play a growing role in the areas of security and defence. Yet, such a concept appears to have taken on a new dimension in the face of mounting Sino-US competition, having become associated with the crafting of an alternative space in international politics –potentially led by the EU itself–. To be sure, the very concept of European strategic autonomy need not imply geopolitical equidistance between the US and China, which would prove extremely challenging anyway given the depth of the shared interests and values that bring Europeans and Americans together. Simply put, European strategic autonomy means that EU policies towards the US and China cannot be reduced to some expectation to ‘take sides’ but must instead be based on European interests in relation to each of the parties. More broadly, as the US and China offer a grammar of great power competition and rivalry, the EU would aspire to recover the predictability that multilateral norms and institutions bring to international politics. In doing so, it aims to reconcile European strategic autonomy with the renewal of multilateralism, all the while explicitly rejecting the frame offered by ‘Sino-US competition’.

For its part, Spain also acknowledges the need for a “strategic adaptation to a more geopolitical world”, even though it prefers to speak of a “nodal approach” to foreign policy. The term “nodal” – coined by the Obama administration and used by former Secretary of State Hillary Clinton and in the National Military Strategy of 2011- seeks to capture the difficulties faced by international organisations to adapt to an increasingly competitive international context, and entails the formulation of policy responses based on ad hoc coalitions of interest, which may vary in function of a dynamic context.6 Thus, nodality implies flexibility, and has the advantage of allowing foreign policy to overcome the paralysis of any given node or institution by shifting attention to more receptive nodes. Yet, it entails risks for multilateral institutions, which may become increasingly marginalised to the detriment of flexibility. Against this backdrop, Spain’s approach is to continue to bet on the EU’s constitution as a go-to node in a renewed multilateral network.7

Enter COVID-19

The pandemic has challenged our understanding of concepts like strategic autonomy and multilateralism, which are now being repeatedly applied by both Spain and the EU as part of the response to the global health challenge. Both Spanish Foreign Minister Arancha González Laya and EU High Representative/Vice President Josep Borrell have repeatedly alluded to the “global and transnational nature of the crisis”, the need to pursue “global and multilateral solutions” and “avoid quarrels and blame games”. In their view, the pandemic underscores the fact that “we are all in the same boat”, and the importance of rowing together by strengthening international cooperation and betting on multilateral solutions.8 Relatedly, the pandemic has spurred calls for a greater EU effort in responding to its economic ripple effects. Critically, given that the EU had not yet completed its transition towards a more ‘geopolitical’ and interest-based approach to foreign policy, an important question comes up: is the EU pivoting back towards a more multilateral and normative approach to international politics or is its renewed emphasis on multilateralism restricted to health policy?

Against this backdrop we set out to critically probe the strategic value of two flagship concepts in EU and Spanish foreign policy –multilateralism and strategic autonomy– and evaluate their strengths and weaknesses in light of a dynamic geopolitical context.

Autonomy is a prerequisite for external action: without it, we depend on others. Multilateralism is often the refuge of the weak –yet, autonomous actors can make multilateralism more affective, and allow it to operate in line with their strategic interests–. In other words, the exercise of autonomy focuses on one’s own interests; it requires flexibility and ‘nodal’ policies, and even bypasses multilateralism whenever it proves ineffective. It is precisely their strategic autonomy that allows the US and China to exert influence in multilateral forums in pursuit of their national interests.

The COVID-19 crisis has shown that, without autonomy in health policy, neither the EU nor Spain are able to contribute to the multilateral response they are now promoting. Similarly, the multilateral response to the crisis will not improve unless the EU and Spain can become more autonomous in the provision of assistance. Autonomy is thus a fundamental objective of external action, both for cooperating with others as part of multilateral frameworks and for acting individually, as set out in the European Global Strategy.

Viewing autonomy as an end (as opposed to a means) will allow the EU and Spain to leverage their external action through multilateral venues when necessary (multilateralism as a means). To be sure, the EU has, as a normative power, benefitted from the support of multilateral organisations and frameworks in advancing its interests and vision of global governance. However, mounting geopolitical and great power competition has weakened the multilateral system, and left the EU lamenting its lack of autonomy in areas where it can no longer count on multilateral support. As such, it is natural for the EU and Spain to aspire to a renewal of multilateralism in challenging situations like the COVID-19 pandemic. Yet there are doubts as to whether the interest in multilateralism extends beyond its instrumental use in tackling the pandemic or whether this will provide the vital spark to correct the drift of multilateralism, allowing it to be reasserted as the framework of reference for EU and Spanish foreign policy.

At present, calls to ‘renew multilateralism’ appear to have dominated the EU’s response to the COVID-19 crisis, even displacing Borrell’s previous references to ‘rediscovering the language of power’ or Von der Leyen’s ‘geopolitical approach’. Thus, the pursuit of multilateralism seems to have reclaimed its status atop the EU’s strategic priorities. In such a scenario, strategic autonomy would become a means to the end of renewing multilateralism, thus inverting the ‘natural’ order between autonomy (end) and multilateralism (means). But this proposition is inherently problematic. After all, multilateralism requires the power (and autonomy) of actors to be able to respond to collective challenges. As such, European and Spanish autonomy should be the number one priority of external action, especially in a geopolitical context such as that prior to COVID-19.

Any attempt by the EU to bet on the resetting of multilateralism assumes that the pandemic –thanks to its global and transnational nature– can usher in a period of renewed optimism towards multilateral governance, and that a more ‘geopolitical approach’ based on ‘the language and logic of power’ can be put on ice. But this is a risky proposition, especially when the two most important global powers are locked in a multidimensional geopolitical competition driven by zero-sum dynamics. Going forward, the EU faces an important dilemma: can it leverage COVID-19 to swing back to yesterday’s ‘multilateralism first’ approach or should it use it to accelerate its transition towards a new, power-centric paradigm in foreign policy?

To be sure, COVID-19 also poses an obstacle to the objective of European strategic autonomy, particularly in the areas of foreign policy, security and defence. Critically, public spending priorities are likely to shift towards budgetary lines aimed at reducing or mitigating the direct effects of the pandemic on public health, as well as its socio-economic ripple effects. Although pandemics know no borders and any response to them must draw on both internal and external policy instruments, priorities ought to be established. In that context, we should expect a shift of EU and Spanish political attention and economic resources to domestic matters rather than foreign policy. Nor should we rule out cuts or delays in defence programmes and budgets, which are at the heart of European strategic autonomy –or, at the very least, a slowdown in the rise in defence spending experienced in recent years, both in Spain and EU-wide–.

Some may argue that the less resources available for defence, the more incentives and opportunities for spending and developing capabilities collectively, ie, within the EU framework. However, following the 2008 financial crisis and subsequent defence budgetary crisis, member states behaved in exactly the opposite way: each country cut unilaterally in line with its priorities, without taking into account the combined impact on European strategic autonomy. Furthermore, it is unlikely that those great powers currently immersed in a process of geostrategic competition (ie, the US, China and Russia) will engage in significant defence cuts in the coming years, let alone in the same way as Europeans. Indeed, crossed accusations, disinformation campaigns and efforts to monopolise research and medical aid outside multilateral organisations show how COVID-19 is being instrumentalised as yet another dimension of this rivalry. This raises questions about the future of European strategic autonomy, which could become further endangered if the pandemic leads to an erosion of intra-European political trust and cohesion.

Implications for Spain

Spain clearly benefits from multilateral cooperation, both at the European and global levels. However, the question arises as to whether the country should delegate its strategic thinking and autonomy to the EU or rather seek to increase its own national strategic autonomy by leveraging different multilateral and bilateral channels in a diversified manner. In this regard, it is important to bear in mind that EU member states continue to have significant differences about the development and direction of EU foreign policy, as well as the absence of a realistic roadmap for a genuine political union within the EU framework (a prerequisite for strategic autonomy). Given these circumstances, it would seem prudent for Spain to avoid putting all its eggs in the European strategic autonomy basket and instead look at the EU as a tool –perhaps even a central one– in pursuit of its own strategic interests.

From a Spanish perspective, then, it becomes critical to identify the contours of national and European strategic autonomy. For example, faced with the possibility of defence budget cuts, which capabilities should be prioritised at the national level and which at the European level? Likewise, Spain should ensure that any initiatives or capabilities aimed at furthering ‘European strategic autonomy’ should not result in the strengthening of the autonomy of some member states at the expense of others. Thus, for instance, Spain can leverage its relationships with key allies like the US to strengthen its negotiating position within EU foreign and defence policy –this seems to be the approach followed by countries like Italy, Poland, the Netherlands and Sweden, all of which tend to resort to the US or the UK to push back against the spectre of a Franco-German dominated European defence industrial base–. Indeed, Spain should identify a number of relevant nodes or partners both within and without the EU so as to be able to leap from one node to another as its own interests and national autonomy require.

Conclusions

Between multilateralism and strategic autonomy

To what extent has multilateralism become an end in itself in the context of Spanish and EU foreign policy? Should Spain and the EU continue to bet the house on multilateralism no matter what? Should efforts to reset multilateralism take priority over all other European and Spanish interests and values, such as the pursuit of strategic autonomy?

To be sure, multilateralism can be strategically attractive for those actors who lack the resources or power to defend their interests autonomously. This may well explain why Spain and many other EU member states reflect a multilateral reflex of sorts. Moreover, and in light of an increasingly competitive and uncertain international environment, the promise of multilateralism offers small and medium powers a reliable and commonly accepted framework, ie, one that provides opportunities for them to participate in the design of shared rules, norms and institutions. Yet, if great power competition leads to the paralysis of multilateral venues, small and medium states can get caught between their lack of autonomy and a dysfunctional multilateralism.

As we glimpse into the post COVID-19 world, there seem to be few signs that suggest a de-escalation of great power competition, with the possible and partial exception of the health sector. Nor is there any reason why a resetting of multilateralism post-COVID-19 should resemble the sort of multilateral framework that took root in a context defined by US and Western power. And there is a big difference between a multilateral framework dominated by liberal Western powers who share Spanish and EU interests and values –as was the case in the 1990s and even at the start of the 2000s– and one characterised by the growing influence and values of non-democratic and autocratic powers. Spain and the EU should therefore critically re-assess the strategic value of multilateralism –especially the notion of multilateralism as an end– not least given China’s systematic (rhetorical?) bet on multilateralism or, for that matter, the US’s own scepticism vis-à-vis that very concept. Neither China nor Russia will abandon multilateral forums or their rhetorical commitment to multilateralism because they practice –and always have done– a selective and nodal approach that seeks to leverage different forums and norms as instruments in pursuit of their own interests while rejecting or ignoring them when they stand in their way.

In the end, we must ask to what extent the multilateral reflex that continues to dominate European and Spanish foreign policy thinking provides for a realistic and appropriate framework. The EU and Spain run the risk of misreading the geopolitical implications of COVID-19 that, rather than offer a window of opportunity for a resetting of multilateralism, might aggravate existing dynamics of great power competition and global economic decoupling. Against that backdrop, and notwithstanding the potential that multilateral forums and institutions continue to offer to advance Spanish and European interests on many fronts, it appears unwise for the EU and Spain to embrace multilateralism as the ordering principle of their foreign policies.

Félix Arteaga
Senior Analyst, Elcano Royal Institute

Luis Simón
Senior Analyst and Director of the Elcano Royal Institute’s Brussels Office | @LuisSimn


1 See, for example, Graham Allison (2018), Destined for War: Can America and China Escape Thucydides’s Trap?, Mariner Books, Boston and New York.

3 Ursula von der Leyen (2019), ‘Speech in the European Parliament Plenary Session’, Strasbourg, 27/XI/2019.

4 See, for example, ‘Shaping Europe’s digital future’, 19/II/2020.

5 See, for example, Josep Borrell (2020), ‘Embracing Europe’s power’, Project Syndicate, 8/II/2020.

6 Felix Arteaga (2012), ‘From multipolarity to multinodality in international security’, Expert Comment, nr 19/2012, Elcano Royal Institute.

7Comparecencia de la ministra González Laya, ante la Comisión de Asuntos Exteriores’, 20/II/2020.

8 See, for example, ‘Coronavirus: Statement by the High Representative/Vice-President Josep Borrell following the EU leaders’ video conference’, Brussels, 27/III/2020; Arancha González Laya (2020), ‘As we fight the pandemic, it’s clear the world wasn’t ready. Here’s how to fix that’, The Washington Post, 25/III/2020.

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<![CDATA[ Rules-based connectivity, maritime security and EU-Japan cooperation in the Indian Ocean ]]> http://www.realinstitutoelcano.org/wps/portal/rielcano_en/contenido?WCM_GLOBAL_CONTEXT=/elcano/elcano_in/zonas_in/ari70-2020-simon-satake-rules-based-connectivity-maritime-security-eu-japan-cooperation-indian-ocean 2020-05-14T03:23:02Z

This paper puts forward a number of specific proposals to further EU-Japan maritime security cooperation in the Indian Ocean region.

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Theme1

This paper puts forward a number of specific proposals to further EU-Japan maritime security cooperation in the Indian Ocean region.

Summary

Taking the 2019 EU-Japan Strategic Partnership Agreement (SPA) as its point of departure, this paper puts forward a number of specific proposals to further EU-Japan maritime security cooperation in the Indian Ocean region. It begins by discussing recent developments in EU and Japanese security policy, and briefly outlines the political and geo-strategic drivers of EU-Japan security cooperation, as well as its limitations. Next, it identifies maritime security and the Indian Ocean region as two areas that have a great potential for greater EU-Japan security cooperation. It then discusses a specific proposal to further EU-Japan security cooperation: the setting up of an Indian Ocean Maritime Capacity Building Initiative.

Analysis

Introduction

Why maritime security in the Indian Ocean? The maritime domain is the artery of global trade, the glue that holds together the rules-based international economic and political order. Its security is therefore of the utmost importance to Japan and the EU, whose economies are highly dependent on external trade and whose politics are deeply invested in the preservation of a rules-based international order. More specifically, the Indian Ocean region is where the EU’s ‘extended neighbourhood’ meets Japan’s concept of a Free and Open Indo-Pacific (FOIP).

Japan has the strategic mindset of a sea power. It is fully aware that the maritime domain is critical to its security and prosperity, and it has a characteristically global perspective of international politics. Moreover, the Indian Ocean is a key highway for Japanese trade, notably with Europe, but also East Africa and the Middle East. From a broader geostrategic perspective, the Indian Ocean region matters increasingly to Japan: it is becoming a central piece in China’s outreach and Belt and Road Initiative (BRI), and for many it has already become a sub-theatre of the broader Indo-Pacific maritime axis.2 This has been endorsed by Prime Minister Shinzo Abe’s FOIP vision, but also by the US decision to replace its Pacific Command with a new Indo-Pacific Command, and thus treat the Indo-Pacific as an integrated geostrategic space.

From a European security perspective, the maritime domain offers the best entry point to think beyond the immediate European neighbourhood (ie, North Africa and Eastern Europe). This becomes particularly relevant as we move towards a geopolitical paradigm that is increasingly defined by great power competition, whereby the centre of gravity of world politics is shifting towards the Indo-Pacific maritime axis. The result will be a shattering of a geostrategic mindset in which Europe is at the centre of world politics, and events in and around the European region very much shape what happens elsewhere. Today –and presumably even more so tomorrow– much of what happens in Europe and its neighbourhood is affected by geostrategic and geo-economic dynamics further afield, and more particularly on the Indo-Pacific maritime axis. From that viewpoint, the Indian Ocean is Europe’s highway into the 21st century. This is something that some European countries like France and the UK seem to well understand, and that the EU is becoming aware of.

The fact that the maritime domain and the Indian Ocean region constitute the ‘natural’ meeting place for EU-Japan cooperation is arguably upheld by Japan’s ongoing presence in Djibouti, its ongoing engagement with EUNAVFOR Atalanta and the decision to deploy a destroyer to the Arabian Sea, as also by the EU’s ongoing commitment to fight piracy off the coast of Somalia.

But what are Japan and the EU’s shared interests in the Indian Ocean? To the extent that it lies at the crossroads of China’s BRI, Japan’s FOIP, the EU’s connectivity vision, America’s Indo-Pacific and India’s ‘Look East’ policy, we see a number of visions –partly competing, partly complementary– about the world order that centre on the Indo-Pacific and meet in the Indian Ocean. In many ways, this is the one region where all important world powers meet more directly, and where the battle for the soul of the international system is being fought.3 From an EU and Japanese viewpoint it is therefore critical to ensure that the behaviour of Indian Ocean rimland states is bound by rules and openness, and not by spheres of influence or protectionism. And the best way to do that is to preserve a balance of power in the Indian Ocean region, to ensure that no single power is able to change the status-quo coercively and impose its views on the region –and that rimland states operate according to widely shared rules and not to the designs of any given individual power–. To do that, the EU and Japan ought to make sure that India Ocean rimland states are capable of standing on their own feet. That may sound like a rather tall order for the EU and Japan, given the many constraints and caveats that surround their security policies. So the question is: how can the EU and Japan help advance such geostrategic aims in a way that is politically realistic?

We argue that the EU and Japan should focus on initiatives that do not entail the direct, kinetic use of military force; that de-emphasise military-only solutions and further a more mixed ‘civ-mil-pol’ approach to security; that they use transnational threats (such as piracy, disaster relief, the fight against pandemics and environmental security at sea) as their entry point, as opposed to inter-state threats; and that they focus on empowering others through training, advising and capacity building. This is our framework of reference.

The strategic importance of the maritime domain and the Indian Ocean region for European security

In recent years the EU has sought to strengthen its role as a security provider. The development of European defence was a strategic priority for the High Representative for Foreign Affairs & Vice President (HRVP) Federica Mogherini, as well as for the Juncker Commission writ large. The 2016 European Global Strategy singled out the importance of security and defence, and proclaimed that ‘Europeans must be able to protect Europe, respond to external crises, and assist in developing our partners’ security and defence capacities’.4 Building on the ambition set out in the 2016 European Global Strategy, the EU has since launched a number of initiatives aimed at consolidating its role in security and defence.5

If anything, the new EU leadership is set to increase its efforts to consolidate the Union’s role in security and defence. In his confirmation hearing, HRVP Josep Borrell alluded to the existence of an increasingly competitive world and argued that the EU should learn to ‘use the language of power’.6 In the same vein, the Commission’s President, Ursula von der Leyen, identified the creation of a ‘stronger Europe in the world’ as one of its key priorities, and thus referred to the Commission as a ‘geopolitical’ one.7

Admittedly, when it comes to its security and defence policies, the EU identifies its immediate geographical neighbourhood as the main area of strategic priority.8 However, the 2016 report on the implementation of the EU Global Strategy in security and defence outlines a revised set of military tasks for which there is no geographical delimitation. Notably, the report calls for the EU to be able to undertake military tasks such as close air support and maritime security (including on the high seas).9

The EU’s emphasis on maritime security (including on the high seas) stems from the importance of the maritime domain to Europe’s prosperity. Over 90% of the trade between Europe and East Asia is sea-borne and it is largely conducted through the Indian Ocean.10 Indeed, from a European and EU perspective, the Indian Ocean constitutes the main entry point into Asia and the Pacific, which are rapidly consolidating as the world’s centre of economic and geostrategic gravity.11 Thus, the EU’s interest in maritime security also stems from a broader recognition that global geopolitical and security dynamics (including developments in the Indo-Pacific space) impinge upon the security of Europe’s immediate neighbourhood, and upon that of the European continent itself.

It should therefore come as no surprise that the EU has engaged in a number of maritime security operations beyond its immediate neighbourhood in recent years, paying particular attention to the Indian Ocean region. These include, notably, EUNAVFOR Atalanta (a naval mission aimed at fighting piracy off the coast of Somalia) and EUCAP Somalia12 (a mission aimed at building the maritime capacity of Somalia). In the same vein, the EU floated in 2019 the concept of a Coordinated Maritime Presence, ie, a mechanism that would allow member states to coordinate their maritime deployments in certain key areas. To instil greater coherence to these and other initiatives, the 2018 Revised EU Maritime Security Strategy Action Plan features, for the first time, a section devoted to regions and sea basins, including the Horn of Africa-Red Sea, which is a major choke point of international trade and the crossroads between the Mediterranean basin and the Wider Indian Ocean region.13

Operational and geographical limitations

To be sure, the EU is still significantly constrained in its security and defence policies. For one thing, security and defence are intergovernmental areas, and the existence of divergent views and interests amongst the EU’s key member states mean the parameters for the EU’s development as a security actor are rather tight. Moreover, most EU member states are also NATO members, and recognise the latter as the main point of reference when it comes to the core areas of deterrence and defence, but also an important one in the conduct of expeditionary military operations due to its possession of an advanced military command and control infrastructure, which the EU lacks. For these and other reasons, the EU’s role in security and defence has been primarily confined to ‘low-end’ external crisis management operations. In particular, the EU has identified the challenges that straddle the civilian and military divide as its main competitive advantage (vis-à-vis NATO as well as its member states). More recently, the backlash against out-of-area interventions has led the EU’s Common Security and Defence Policy to pivot away from so-called executive missions (in which the EU plays a direct, kinetic role) and towards capacity building, training and advisory missions.

The EU’s limitations in engaging in maritime security in the Indian Ocean are also of a geographical or geopolitical nature. In principle, the EU’s commitment to maritime security is global in scope, and knows no boundaries. However, resource scarcity means that the EU’s strategic bandwidth to engage beyond its geographical neighbourhood remains rather limited. Indeed, as already argued, discussions on EU security policy often revolve around the so-called eastern and southern neighbourhoods, which include, respectively, Eastern Europe and the Caucasus and the Levant and North Africa. In this regard, the need to deal with the socio-economic effects of the COVID19 crisis may also limit the EU’s foreign and security policy bandwidth overall.14

Admittedly, there has been a debate in EU circles about the need to engage in the ‘extended neighbourhood’ or with ‘the neighbours of the neighbours’, ie, in areas such as the Sahel, Gulf of Guinea, Central Asia or the Red Sea and Persian Gulf. It is perhaps in this context that we must understand the EU’s security engagement in the Indian Ocean region, which is arguably not anchored in an EU strategic vision of the Indian Ocean region as a whole –let alone the broader Indo-Pacific– but is rather confined to the north-western Indian Ocean and seen through an ‘extended neighbourhood’ prism. This would explain why the EU’s security initiatives in the Indian Ocean are primarily confined to that ocean’s north-western part, namely the stretch of water running from the Red Sea and Bal el Mandeb to the Persian Gulf. In particular, Somalia has become a referent for EU security initiatives in the area, most notably through EUNAVFOR Atalanta (designed to fight piracy off the coast of Somalia) and EUCAP Somalia (a mission aimed at building the maritime capacities of that country).

Arguably, a number of issues prevent the EU from developing a more holistic and strategic approach to maritime security in the Indian Ocean. One relates to resource and attention scarcity, and the fact that the EU’s resources are concentrated in its immediate vicinity, with much fewer to spare for the extended vicinity (which would include the north-western Indian Ocean), let alone beyond that. Another limitation is political, and relates to the fact that some EU member states and constituents are wary of anything that smacks of an EU security engagement further east –or even embracing the Indo-Pacific concept– for that might lead to tension with China. In other words, the north-western Indian Ocean is better from an EU viewpoint because: (a) it is part of the EU’s extended neighbourhood; ad (b) it emphasises the transnational dimension of security, rather than the inter-state one.

Japan’s initiative for a Free and Open Indo-Pacific

Japan has also undergone a period of change and greater outreach in terms of its security policies. In August 2016 Japan’s Prime Minister Shinzo Abe announced Japan’s vision for a ‘Free and Open Pacific’ (FOIP).15 While FOIP comprehensively covers security, economic and diplomatic activities, maritime security is at its core. In particular, protecting and maintaining freedom of navigation and the rule of law at sea is one of the underlying priorities of FOIP. As a country surrounded by the sea, and hugely dependent on sea-borne trade, Japan realises that maintaining the rule of law at sea is indispensable for securing its interests. Due to its lack of domestic production of natural resources, Japan is particularly dependent on maritime resources and trade.

In recent years, Japan has strengthened its strategic partnerships with other like-minded maritime democracies, such as India and Australia, and has also broadened the geographical scope of the US-Japan alliance to the broader Indo-Pacific. Japan’s strategic outreach to both Australia and India has now developed up to the level of what some describe as ‘quasi-alliances’. Japan has also reinvigorated ‘minilateral’ groupings to support the rules-based order, such as the Trilateral Strategic Dialogue (TSD) and the Quadrilateral Security Dialogue (QSD) with these countries. Meanwhile, the Maritime, Air and Ground SDF has frequently visited South-East Asian (and Indian Ocean) countries to conduct port calls, joint military training and capacity-building assistance. The number of joint bilateral or minilateral training/exercises with navies of European countries like the UK or France has also increased over the past few years.

Japan’s capacity-building assistance to Indo-Pacific countries has had a strong maritime security component. Since 2013 Japan’s Ministry of Defence (MOD) has conducted a number of seminars and training for such areas as oceanography, search and rescue, vessel maintenance and underwater medicine in Indonesia, Sri Lanka, the Philippines, Vietnam and Myanmar. For its part, Japan’s Ministry of Foreign Affairs (MOFA) has provided Japanese coast-guard vessels to countries like Indonesia, Malaysia, the Philippines and Sri Lanka mainly through the Official Development Assistance (ODA) scheme. Additionally, the Japan Coast Guard (JCG) has conducted joint training, human-resource exchanges and technical support to South-East and South Asian countries with a view to improving their maritime security capabilities.16

While these activities are important elements to realize the FOIP, they have also some limitations. Simply put, Japan needs more money and manpower to maintain an effective and sustainable maritime engagement in the Indo-Pacific. Although the Japanese government has increased its defence budget for eight years running, the pace of such an increase is far slower than that of other major regional countries such as China, South Korea, India and Australia. Indeed, the greatest share of the defence budget increase has been consumed by growing labour costs, with aging and the purchase of new equipment for homeland defence, while maintenance, logistics and training costs for SDF equipment and personnel are not sufficiently funded. Japan’s response to the COVID-19 crisis, including its emergency financial package worth over ¥117 trillion (approximately US$1.08 trillion), may worsen this already severe budgetary situation, although its impact remains unclear.17

Likewise, the Japanese government has recently boosted its budget for the JCG to strengthen its maritime patrolling capabilities.18 Nevertheless, the number of Chinese Coast Guard vessels has already surpassed that of the JCG, and the capability gap will continue to expand in the foreseeable future. Both the SDF and JCG have also suffered from a shortage of manpower due to Japan’s ageing society, while their missions continue to increase in both the Indo-Pacific and in the areas surrounding Japan.

The SDF’s overseas missions are also still heavily constrained by legal restrictions. Even after the introduction of a new security legislation issued in September 2015, the SDF cannot be directly involved in conflicts in the South China Sea or Indian Ocean unless there is a recognition of ‘survival-threatening situations’ that directly impinge on Japanese security. While the Japanese people have become more receptive to the SDF’s overseas activities, it is not clear how they would react to its involvement in a conflict in a region far from Japanese territory. These legal and normative impediments could become an obstacle for Japan to further deepen its existing strategic partnerships with like-minded allies.

Notwithstanding these difficulties, it is clear that Japan’s security and prosperity increasingly relies upon maritime security in the Indo-Pacific, including the Indian Ocean itself. Although Japan’s primary strategic focus still rests on its homeland defence and North-East Asia, developments in the broader Indo-Pacific can indirectly or even directly affect its security and prosperity. This explains, for instance, why the Japanese government has recently decided to dispatch an MSDF ship to the Arabian Sea for information-gathering purposes. Notably, the SDF has also increased its defence engagement with some coastal countries in North-East Africa, with Kenya and Uganda standing out, and has expanded the function of its operational facility in Djibouti, which is currently used for anti-piracy missions in the sea off the coast of Somalia and the Gulf of Aden. These activities suggest the existence of important synergies between Japan and the EU’s missions in the Red Sea-Indian Ocean corridor, and offer significant opportunities for the SDF to cooperate with the EU and other countries in the Indian Ocean.

These activities are often recognised as measures to counter China’s growing power and influence through the BRI. However, Japan’s FOIP vision is broader than that. As already discussed, Japan’s security and prosperity are heavily dependent on a rules-based order and free trade. Without such an order, Tokyo’s regional and global influence will easily diminish as Japan has less power to change the status-quo by force than other great powers like the US and China. Japan’s pursuit of a FOIP does not simply come from its idealism, but from the necessity of maintaining a favourable international order in which the exercise of physical power is constrained or regulated through multilateral institutions, rules and norms. Cooperation with like-minded partners, such as the EU, is indispensable for Japan to realise such objectives.

Towards greater EU-Japan cooperation in the Indian Ocean

The EU-Japan SPA comes at critical time in world politics. The seeming rise of protectionism and inward-looking tendencies across the world compel Japan and the EU to step up their global role, and strengthen their economic and strategic ties. Europeans and Japanese are interested in a rules-based international order, one that revolves around existing liberal economic and political principles. As such, they share an interest in advancing multilateralism and strengthening collective action problem-solving in the fields of trade and economics, security and the environment. In this regard, the intensifying US-Chinese rivalry has also increased the need for cooperation between Japan and the EU, whose interests rely on an inclusive rather than an exclusive order divided between two different blocs.

Both the EU and Japan have a shared interest in preserving a rules-based order in the maritime domain, ie, a medium in which no country can exclusively dominate or regulate under its jurisdiction. Ninety per cent of world trade is sea-borne and the maritime domain provides transactional access for maritime security forces to undertake humanitarian missions during various contingencies on and off foreign shores.19 With an increasing global demand for food and energy, the development of maritime resources has rapidly grown. Preserving a rules-based order and freedom of navigation at sea as a ‘public good’ is therefore particularly important for the adequate functioning of the global security and economic system, in which both the EU and Japan have invested deeply.

The Indian Ocean connects Europe and East Asia to East Africa’s mineral riches and to the Indian sub-continent, an important source of cheap labour and manufactured products. Given demographic projections, East Africa and the Indian sub-continent offer considerable potential as investment and export markets in the medium and long term for both Europe and Japan. Critically, the Indian Ocean is also the gateway to the Persian Gulf, which is the main source of oil for Europe and Japan, as well as an important source of gas. This is why Japan and the EU agreed on the partnership for sustainable connectivity and quality infrastructure development in the broader Indo-Pacific area. So far, no initiative on EU-Japanese security cooperation in the Indo-Pacific has been made. And yet the vision of fostering greater economic and social connectivity within the Indo-Pacific space will only be sustainable if security is part of the equation.

It is important to be realistic about the political and geo-strategic parameters of EU-Japanese security cooperation, both in general and in the Indo-Pacific more specifically. For one thing, dealing with their respective regional threats is going to absorb most of the strategic resources and bandwidth of the EU and Japan for the foreseeable future, thus limiting their ability to engage with each other. For another, there are also obstacles of a political and cultural nature, which have to do with the reticence of the Japanese and Europeans to use military power for other than defence. In their security policies, both the EU and Japan have eschewed high-intensity expeditionary combat operations and shown a preference for low-end peacekeeping and even non-kinetic tasks such as training, advice and capacity building; they have preferred to focus their external intervention on transnational challenges (rather than inter-state conflicts) and followed a political-civilian-military approach to dealing with security challenges.

Both the EU and Japan are focused on the security of their immediate neighbourhoods, which means that the limitations on Japan’s direct contribution to European security or the EU’s contribution to security in North-East Asia are very real. However, both the EU and Japan acknowledge that security in their immediate vicinities is affected by dynamics further afield, especially in geopolitically adjacent regions. And the Indian Ocean is part of the extended neighbourhoods of both the EU and Japan, therefore representing both the meeting place and the natural basis for EU-Japan security cooperation. The EU and Japan share two fundamental geostrategic objectives: the security of the Indian Ocean Sea Lanes of Communication and the existence of a balance of power on the Indian Ocean ‘rimland’, particularly in the Persian Gulf area. In this regard, the fight against piracy in the Gulf of Aden is an important foundation on which to further EU-Japanese cooperation in an Indian Ocean context.

After having recognised ‘maritime security in the Indian Ocean’ as a promising area for EU-Japan cooperation, it is important to further unravel the concept. For one thing, the Indian Ocean is a geographical concept that is far from being integrated in security terms, let alone homogeneous. It comprises numerous sub-components or sub-regions, such as the Arabian Sea and Persian Gulf in the north-west, the Gulf of Aden and the Red Sea area further down, the Bay of Bengal in the north-east, and the Burma Sea and Malacca straight further east (bordering the South China Sea and the Pacific), the maritime approaches to Indonesia and the Australian continent in the south-east, and those to Madagascar and the southern part of East Africa in the south-east. These sub-regions are defined by different (mixes) of actors and challenges, and have little or no connection to each other.

There is no such thing as an Indian Ocean region in the sense of being a coherent strategic whole. Thus, it is important for the EU and Japan to identify the areas of the Indian Ocean in which their joint efforts should concentrate, at least to begin with, even as they remain committed to extending such cooperation to other areas of the Indian Ocean or the broader Indo-Pacific. In this regard, the area delimited by the Red Sea, the Gulf of Aden and Madagascar in the south appears to be a good candidate. It is an area where the EU’s security efforts in the Indian Ocean have concentrated (mainly around Somalia), has been identified as an area of interest by Japan (which is present in Djibouti and active in Kenya and Uganda) and has already seen joint EU-Japanese initiatives.

Maritime security must be delimited too. We are not talking about high-end warfare or deterrence in the context of inter-state competition, which may be significant in areas like the Persian Gulf, the Bay of Bengal or the Strait of Malacca. Such challenges constitute important barriers to entry for both the EU and Japan, given their capability and political limitations. This is not to say they are not important, nor that the EU and Japan should ignore them. But other actors and frameworks may be more suited for dealing with such contingencies –that is not where EU-Japan cooperation can add the most value–. Rather, the EU and Japan should focus on tackling transnational security challenges at sea, such as terrorism, piracy, the trafficking of narcotics, people and illicit goods, arms proliferation, illegal fishing, the fight against pandemics, environmental concerns, and maritime accidents and disasters.

In particular, some environmental problems in the maritime domain, such as the pollution of maritime environment, the rise of seawater temperature and the depletion of marine resources have already affected some countries’ security and international security in general. More particularly, the EU and Japan should focus on building up the capacities of IO states for such challenges. As advanced democracies, the EU and Japan can jointly cope with these maritime environmental issues and lead international initiatives by making the best use of their knowledge and expertise. Thus, our analysis suggests that transnational challenges and the non-kinetic realm in the Gulf of Aden area constitute the most promising areas to further EU-Japanese security cooperation in the Indian Ocean.

Conclusions

On the basis of such considerations we can put forward a concrete proposal to advance EU-Japanese cooperation in the maritime domain.

The Indian Ocean Maritime Capacity Building Initiative (IOMCBI) should focus on the Indian Ocean –an area that is geo-strategically relevant to both the EU and Japan– and help advance the geopolitical interests of both parties (ie, by empowering the Indian Ocean’s littoral states). It should also underscore their strengths (maritime frame, capacity building), whilst respecting their operational and political caveats (ie, be non-kinetic, straddling the civil-military divide). More broadly, it should help underpin the concept of rules-based connectivity.

Building on the example of EUCAP Somalia, the EU-Japanese IOMCBI would consist of:

  1. A common fund to support the training and educational activities of navies and coast guard around the Indian Ocean rim (open to contributions from other like-minded partners, such as India, Australia, the Republic of Korea, the US, Canada, Turkey and NATO). One possibility in this regard would be to use NATO’s Centre of Excellence on maritime interdiction (based in Cyprus) to train naval and coast guard officers from Indian Ocean countries and ASEAN partners. This would be in line with the recent push for greater EU-NATO and Japanese-NATO cooperation.
  2. An Indian Ocean patrol boat programme, co-funded by the EU and Japan (and open to relevant partners), which would help provide patrol boats to coastal countries in the Indian Ocean region.
  3. A centre of excellence on Maritime Domain Awareness focusing on the Indian Ocean based in Djibouti, led by the EU and Japan and open to relevant partners. It should focus on information sharing and the joint monitoring of choke points: Hormuz, Suez, Bab-el-Mandeb, Malacca, Lombok, Sunda, etc. This should link with existing initiatives, such as the Regional Cooperation Agreement on Combating Piracy and Armed Robbery against Ships in Asia (ReCAAP) and the Information Fusion Centre in Singapore, as well as the Fusion Centre in India. That way, it would build on existing initiatives and seek to connect them with a view to developing a networked architecture on maritime domain awareness aimed at supporting rules-based connectivity in the Indian Ocean.

One interesting possibility in this regard would be a joint Table Top Exercise (TTX) between defence authorities of the EU and Japan focused on the maritime domain and non-traditional security issues such as humanitarian assistance and disaster relief (HA/DR), counter-piracy, the fight against pandemics and environmental security in the maritime domain. While such an exercise could be initiated bilaterally and separately, the idea would be to progressively expand the number of participants, and thus integrate the TTX in the IOMCBI.

The IOMCB initiative would be open to all rimland states in the Indian Ocean region. However, with a view to ensuring its political and technical feasibility, the EU and Japan should first identify one or two ‘pilot countries’ to begin with. As already argued, given that the EU and Japan are both engaged (together and separately) in the Western Indian Ocean, that might be the best way to start, even if the ambition would be to progressively expand and move the initiative eastwards. In this regard, some possible candidate pilot countries could be Kenya and Somalia, which have been identified as priority countries by Japan and the EU respectively.

Luis Simón
Vrije Universiteit Brussel and Elcano Royal Institute | @LuisSimn

Tomohiko Satake
National Institute for Defence Studies (NIDS)


1 The authors would like to thank the European External Action Service and Japan’s Ministry of Foreign Affairs for their support of this project. Previous versions of this paper were presented at two expert workshops held at the EU delegation in Tokyo on 14 January 2020 and at the Institute for European Studies of the Vrije Universiteit Brussel on 9 March 2020. The authors are grateful to all the participants in those two workshops for their comments on a previous version of this paper, with special thanks to Daniel Fiott, Patricia Flor, Thomas Gnocchi, Hajime Hayashi, Kazuo Kodama, Hideshi Tokuchi, Shogo Yoshitake, Marianne Peron-Doise, Tomonori Yoshizaki, Maaike Verbruggen, Jun Nagashima, Céline Pajon, Alessio Patalano, Zoe Stanley-Lockman, Michito Tsuruoka and Oren Wolff.

2 See, eg, Kai He & Mingjiag Li (2020), ‘Understanding the dynamics of the Indo-Pacific: US-China strategic competition, regional actors and beyond’, International Affairs, nr 96, p. 1-7.

3 Robert D. Kaplan (2010), Monsoon: The Indian Ocean and the Future of American Power, Random House, New York.

4 EU Global Strategy, p. 19.

5 These include, notably, the Coordinated Annual Defence Review (CARD), which surveys existing defence capabilities and identifies opportunities for cooperation; Permanent Structured Cooperation (PESCO), which provides a framework to develop key capabilities collaboratively; and the European Defence Fund (EDF), a vehicle that aims to provide financial incentives for EU Member States for cooperative defence research as well as the joint development of European military capabilities up to the prototype phase. For a more detailed overview of these and other recent initiatives see Daniel Fiott (2018), ‘EU defence capability developments’, EU Institute for Security Studies, June.

6 ‘Green light to EU’s new Foreign Policy Chief’, Forbes, 9/X/2019.

7 ‘A Commission to stand up for Europe’s interests, Financial Times, 10/IX/2019.

8 EU Global Strategy, p. 23-25.

9 Council of the EU (2016), ‘Council conclusions on implementing the EU Global Strategy in the area of Security and Defence’, nr 14149/16, Brussels, 14/XI/2016.

James Rogers (2009), ‘From Suez to Shanghai: the European Union and Eurasian maritime security’, Occasional Paper, nr 77, EU Institute for Security Studies, Paris.

11 Luis Simón (2015), ‘Europe, the rise of Asia and the future of the transatlantic relationship’, International Affairs, vol. 91, nr 5, p. 269-289.

12 Formerly named EUCAP Nestor.

13 European External Action Service (2018), ‘Horn of Africa-Red Sea: revised EU Maritime Security Strategy Action Plan’, Regional and Global Maritime Affairs, Brussels, 26/VI/2018.

14 See, eg, Daniel Fiott (2020), ‘Will European defence survive coronavirus?’, Expert Comment, nr 11/2020, Elcano Royal Institute.

15 Ministry of Foreign Affairs of Japan (2019), ‘Towards a free and open Indo-Pacific’, January (last accessed 2/I/2020).

16 Japan Coast Guard (2018), Japan Coast Guard Annual Report 2018 (in Japanese), Nikkei Publishers, Tokyo, p. 151-154.

17Japan’s emergency stimulus reaches ¥117 trillion as virus crisis deepens’, The Japan Times, 20/IV/2020 (last accessed 22/IV/2020).

18 Robert D. Eldridge (2017), ‘Japan’s changing demographics and the impact on its military’, Education About ASIA, vol. 22, nr 3, Winter, p. 27-30.

19 Gurpreet S Khurana (2016), ‘Common public good at sea: evolving architecture in the Indo-Pacific region’, International Fleet Review Series, National Maritime Foundation, January.

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<![CDATA[ The influence –and weakness– of Spain’s European policy in the face of the pandemic: from a diagnostic to proposals and recommendations ]]> http://www.realinstitutoelcano.org/wps/portal/rielcano_en/contenido?WCM_GLOBAL_CONTEXT=/elcano/elcano_in/zonas_in/ari68-2020-molina-steinberg-influence-and-weakness-spains-european-policy-in-pandemic-diagnostic-proposals-and-recommendations 2020-05-12T05:12:15Z

This paper analyses the position of Spain in the EU’s management of the present health and economic crisis.

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Original version in Spanish: Influencia (y debilidad) de la política europea de España en tiempos de pandemia: del diagnóstico a las propuestas

Theme1

This paper analyses the position of Spain in the EU’s management of the present health and economic crisis.

Summary

The coronavirus represents a major challenge for the EU and its Member States, with Spain among the countries that will be hardest hit. The crisis has struck when the country is extremely fragile but also at a time when it aspires to play a proactive and leading role in Brussels. This paper provides an initial diagnostic of the political and economic position of Spain in the context of developments in the EU in March and April 2020. It also sets out ideas to minimise the many risks on the horizon and take advantage of the opportunities also created by the situation. It aims to help identify the supranational response most closely aligned with Spain’s national interest, taking into account a number of issues: how to address the management of the disease and the re-establishment of mobility at the European level; the crucial economic decisions for financing reconstruction (the European Stability Mechanism, coronabonds, perpetual debt and the European budget) and the specific allocation of funds (digital agenda, decarbonisation, inclusion and unemployment); the institutional and national alliances and narratives to support the measures; and the best way to connect this complex negotiation to domestic politics, given Spain’s young and polarised parliament and the risk of weakening pro-European sentiment.

Analysis

The coronavirus presents an enormous challenge for the European integration process. While all Member States are severely affected in health and economic terms, in some countries, including Spain, the effects of the disease and the consequences of confinement on employment or the outlook for the recovery and the sustainability of public finances are particularly severe. In light of the many risks, it is crucial to develop a negotiating strategy that takes these dangers into account, identifies pragmatic objectives and lives up to expectations of a constructive relationship between Spain and the EU, both internally and at the European level.

A symmetric shock with asymmetric consequences

National health systems in almost all Member States, particularly in countries like Italy, Spain, France and the Benelux states, were unprepared for a pandemic of this scale. Hospitals have been placed under strain, there have been problems with medical supplies (largely outsourced to China), the lack of own technology has been thrown into sharp relief and we have seen instances where alert and crisis-management systems have failed. In these challenging circumstances, the EU’s role, which, in the area of health, is limited to providing support, has been marred by its slowness to react and lack of coordination, above all at the start of the crisis. Furthermore, the individual management of confinement or restrictions on mobility by Member States (applied by practically all countries) has affected the Schengen area, one of the most iconic aspects of European integration.

The economic challenge, this time an area in which the EU institutions have competence (the eurozone, the single market and the policy agenda until at least 2024), is equally daunting. In terms of Spain, while the country has shown some weakness in the area of health (due to the extremely high numbers of cases and deaths in both absolute and relative terms), its position is especially delicate as regards the impending recession. There are a number of reasons for this, including the role of tourism in the country’s economy, the high level of unemployment and lack of permanent jobs in the run-up to the crisis (which suggests a severe social impact), and the country’s high level of debt, which creates an obstacle to providing stimulus and makes European financial support vital.

The political consequences of this set of circumstances are also significant. The EU’s role in managing the health and economic dimensions of the crisis has been politicised in Spain, an aspect that is both positive, since it can be seen as a sign of maturity, and negative, since it shows the ever-fragile legitimacy of the integration process. The risk of reputational harm is a two-way street, threatening the image of the EU in certain countries (such as Italy and Spain) and these countries in the EU, should the idea that the pandemic has been particularly poorly managed or that the unsustainable fiscal policy in recent years has left countries limited room for manoeuvre take root. Yet the prevailing rhetoric is now more balanced than in 2010 and the reputations of countries such as the Netherlands, which runs the risk of being perceived as being recalcitrant in its response, is also now at stake. All this means that Spain is not on solid ground, given the distrust between creditor and debtor Member States. There is a further element of tension, since the crisis has a significant and direct impact on Italy, a founding State of the EU, its third-largest economy and whose public is wearying of the pro-EU consensus that has lasted since the 1990s.

Spanish interests in the area of health and mobility

As noted above, largely as a result of its powers, the EU has not played a significant role in the management of the pandemic itself. The Commission’s response was initially limited to pushing back against harmful national decisions to restrict exports of medical supplies between Member States, minimising the effect of restrictions of the free movement of people on the free movement of goods as much as possible and promoting research initiatives for a vaccine and cure for the disease. Nonetheless, the added value of a common response in terms of supplies (joint procurement of medical material in what is now a highly competitive market in which buyers’ economies of scale are important), the storage of stock and even production (facilitating standards to allow the repurposing of industrial production lines in Europe) has become clear.

Going forward, Spain must ensure the EU learns from this episode and is willing to apply the lessons in time for a second wave of COVID-19 in the autumn or to other pandemics in the future. This includes strengthening information systems and support for national health responses, building up strategic reserves of medical equipment, promoting the repatriation of some industries in this area on European soil and ensuring a more coherent reaction in the areas of security and the movement of people and goods. In the short term, however, it will be important to coordinate the exit strategies of the 27 Member States, even if this does not occur simultaneously. The existence of a European system of standardised certifications (immunity or, where applicable, a vaccine), which will make it possible to re-establish movement between countries for work or tourism, is essential to the Spanish model of production. The secure storage of sensitive data (for both the public and the authorities) and the associated requirement to develop EU digital apps and ‘clouds’ is another key aspect.

All these pan-European measures will have profound social and economic consequences for Spain in areas such as its national health system, science, innovation, industry and also the security system (eg, risks related to bioterrorism and critical infrastructure). The country must pay close attention to their design and remember that many EU decisions on industrial, scientific and technology policy in the wake of the crisis will have winners and losers (or, perhaps more accurately, some Member States will win more than others).

Spanish interests in the economic response

The economic policies adopted by the EU will be important when it comes to reducing the economic impact of the pandemic and taking advantage of the crisis as an opportunity to build a more integrated EU, with a more robust monetary union, which has always been among Spain’s key priorities. After some initial delay, the EU has managed to provide a reasonably satisfactory response in terms of monetary policy and has begun to outline its fiscal response.

The ECB has committed to the Pandemic Emergency Purchase Programme (PEPP), which will see it buy as much public and corporate debt as necessary on the secondary market to prevent the recession evolving into a financial and debt crisis in countries with weaker fiscal positions due to higher risk premiums. It has even lifted the limits on the percentages of debt of each country it can hold on its balance sheet and the types of collateral it accepts in its financial liquidity programmes. In facing this crisis, the fact that States explicitly have a lender of last resort and that it has taken just a week to decide on measures that took two years during the Euro crisis of 2010-12, is highly positive. Had this not been the case, it would have been necessary to reconsider the mandate of the ECB. Indeed, this may still be required if other countries embark on large-scale monetary financing (direct purchase of public debt by central banks on the primary or secondary markets) and the eurozone does not. There is also the risk that, if the situation persists, institutions such as Germany’s Federal Constitutional Court, will challenge the legality of the programme. Similarly, the key to the success of PEPP (and any subsequent extensions) lies in investor expectations as other measures in the fiscal area are approved (otherwise, risk premiums could rise).

In terms of fiscal policy, it is necessary to distinguish between an initial urgent package and the design of a more ambitious recovery plan, currently being drawn up by the Commission under the mandate of the European Council of 23 April. The urgent decisions adopted by the eurogroup on 9 April can be divided into three types of measures: (1) a new precautionary credit line for the ESM of €240 billion (up to 2% of the GDP of each country), which can be used to cover health costs derived from the pandemic, subject to limited conditionality that is still being negotiated; (2) a line of credit of €100 billion under the Support to mitigate Unemployment Risks in an Emergency (SURE) programme to finance part of the salaries of workers who must remain in confinement; and (3) guarantees and other financing from the European Investment Bank (EIB), with €200 billion for European companies. This strong provisional agreement provides a package of coordinated measures, available from 1 June and may be of considerable economic and political use. Its adoption was enough to change the tone of the public in Member States of the south, who began to see the EU more as part of the solution and not the problem. However, it is important to note that this support is in the form of loans (not joint spending) and the majority of the fiscal burden will remain with the individual countries, meaning it is not fully satisfactory to highly indebted states.

Since the start of March, Spain, France and Italy, alongside Belgium, Slovenia, Greece, Ireland, Luxembourg and Portugal, have been arguing for a response based on eurobonds, which would avoid increasing existing national debt and would not mean having to accept politically unacceptable conditionality (particularly relevant in the case of Italy). However, the idea of issuing shared sovereign debt, even as time-limited eurobonds or coronabonds, is equally unpalatable to Germany and the Netherlands, Madrid has been working hard to find common ground. On 19 April the Spanish government presented ‘Spain’s non-paper on a European recovery strategy’, outlining provisions to create a recovery fund of up to €1.5 trillion. The fund would not be financed by eurobonds but by perpetual debt issued by the Commission as part of a revised Multiannual Financial Framework (MFF) and the establishment of new European taxes. The money would be spent from 1 January 2021 onwards to address the economic impact of the coronavirus in each Member State. The idea has drawn praise from the international financial press and nobody denied its coherence in terms of clearly defining its objectives and how to achieve them. All in all, it was a good example of a proactive attitude, able to exert influence at the right moment in time.

Although the Spanish proposal was not endorsed at the European Council on 23 April, the Council tasked the Commission with drawing up a plan with a similar price tag in the first three weeks of May, which will include extremely long-term loans (a format more closely aligned with German interests than the zero-coupon perpetual bonds proposed by Spain) and increases to North-South transfers through the EU budgets. The decision has certain federalising potential, since funds from the plan will not be channelled through an intergovernmental organisation like the ESM but through the Commission itself, and the value of the MFF will increase from 1.2% of EU GDP to 2% (although not from direct contributions but from guarantees). The balance between transfers to the most-affected states and loans to the private sector, as well as the associated investment objectives and targets, have yet to be determined. There are also proposals for the fund to directly acquire stakes in the companies of Member States that need to be fully or partly nationalised, responding to the debate on the extent to which different countries can support businesses facing difficulties, due to their fiscal circumstances, now that limits on state aid have been temporarily lifted. If this initiative serves as a federalising impulse for the creation of ‘European champions’, it could be of interest. However, Spain must pay close attention to the small print to ensure its businesses receive sufficient funds and their headquarters do not end up transferred to other Member States.

Regardless of whether the Commission’s proposal is satisfactory to Spain and even though it will help make debt more sustainable and represents a strong starting point in political terms, it is important not to overestimate the potential of its impact on the management of the crisis in the aftermath of the pandemic. While the battle over eurobonds (or coronabonds) has not been won, both due to deeply-rooted legal objections and because the idea did not fully coincide with the interests of Spain, France and Italy, the ECB’s unconditional support and the prospect of permanently increasing the European budget represent significant progress.

Nonetheless, Spain must continue to insist that the European recovery plan does not allow the crisis to exacerbate divergences between countries and regions along a North-South divide and that it truly embodies the ideas of a ‘Europe that protects’ and a ‘social Europe’, side-lined over the last decade and increasingly demanded by its citizens. The country should aspire for the recovery fund to support the transformation of its economy, based on the principles of digitalisation, sustainability, inclusion and the fight against inequality. These objectives must also be supported by a major political consensus at the national level and ensuring Spain has projects ready in these areas to receive financing when funds become available.

The crisis also provides an opportunity to adopt a firmer stance against European tax-havens like the Netherlands, Ireland and Luxembourg. If the ideal outcome of making fiscal decisions by qualified majority voting in the area of tax –which should be the aspiration of Spain and is expressly stated in its non-paper of 19 April– is not achieved, there should be the possibility of strengthened cooperation, excluding countries that fail to cooperate. On this issue, Germany sides with Spain, Italy and France, and Ireland is in debt due to the solidarity shown by the EU during Brexit.

Spain must also position itself in the debate on the effects of the crisis on action to address climate change. Alongside 12 other Member States, Spain explicitly supports the part of the economic stimulus for reconstruction being channelled through the European Green Deal. Member States opposed to quick progress on decarbonisation should not use the coronavirus as an excuse. Moreover, Mediterranean countries like Spain could benefit from and contribute to Europe’s climate neutrality in 2050. If there are Member States that do not believe in this strategy, they should renounce this stimulus. All Europeans would win through measures allowing Spain to capitalise on its potential for renewable energy in the medium term by strengthening its electricity links with France and the cooperation mechanisms for the exchange of renewable energy.

Another area where stimulus should be focused is the social sphere. The weakest members of society will be most affected by the economic fallout of the pandemic and recovery will require a rebuilding of the working class, which has been severely impacted by the Great Recession and the revolution heralded by new technology. This means forging a new European social contract with a fair generational component to ensure young people are not the worst affected, as was the case in 2008-13. Access to education (an area in which the EU does not have direct powers), both at the start of and throughout one’s working life, based on public–private cooperation is another area that should be studied. It is also time to temporarily trial a basic or minimum income (this need not necessarily be universal) at the European level, as well as temporary European unemployment insurance for job losses caused by the crisis. The SURE programme, mentioned above, is a step in the right direction, although it only covers people who are in employment. In general, regaining the idea of a ‘social Europe’ and linking it to the idea of European citizenship, which Spain helped develop, would be a positive outcome.

As a pro-European country, Spain must continue to encourage the debate on fiscal and political union, which will mean showing a willingness to trade sovereignty (in fiscal, labour and other public policy areas) for permanent joint European spending. It should be for other countries to pay the price if they do not wish to move forward with the required integration.

The political narrative

The result of the general election that took place in Spain in April 2019 initially appeared to favour the idea that the country could play a greater role in the new European political cycle. This objective would be achieved by taking advantage of a number of favourable circumstances: economic recovery, strong pro-European sentiment and the vacuum left by Brexit. However, a year further on, it is fair to say that this desire has not been fulfilled. While some progress has been made, with Spanish parties increasing their influence in the European Parliament, alongside the de-escalation of the Catalan conflict and the appointment of a Spaniard to one of Europe’s top jobs, the long period without a stable government, the fragile coalition that was eventually formed and internal political polarisation in the country have shown Spain to be weaker than originally thought, significantly shrinking the window of opportunity. The coronavirus has reduced this space further. If Spain squanders this momentum, it will be the fifth time in 20 years that both internal and external desires to play a more proactive and influential role in the EU have failed to bear fruit. This was the case during the final years of the Aznar presidency (in the context of the Iraq conflict and the estrangement of the Franco-German axis). It was also the case with the two terms of Rodríguez Zapatero (due to the failure of the European Constitution and then the economic crisis). Finally, it was the case with Rajoy (whose ambitions were frustrated by the pro-independence movement). If a country promises five times to strengthen its leadership in Europe but fails to do so as a result of causes both within and beyond its control, its reputation is clearly tarnished.

However, it is not just about ensuring Spain’s objectives in Europe are not frustrated. The converse also holds: in the domestic arena, it is important to avoid resentment taking root among the public as a result of believing the solution to the pandemic, in terms of both health and the economy, is the responsibility of an EU that is unable to step up to the mark. If we can no longer benefit from the relative economic improvement, which so far has been an objective benefit for the country, damaging the clear pro-European sentiment that persists among the Spanish public would clearly be an act of self-harm.

Despite the challenges presented by the crisis, it also creates opportunities for Spanish interests, not least in terms of the country’s ability to exert its weight as the EU’s fourth Member State, both in institutional and economic terms and intellectually. Spain has ranked among the five most important countries (which make up 70% of GDP of the EU 27) in the debates in the eurogroup and the European Council, as well as in the press, the business sector and among experts. More assertive and with greater cohesion than a decade ago, as well as being more aligned with the Commission and with the benefit of certain sympathy from Germany and even the Netherlands, the South, which in contrast to 2010, now includes France, has achieved a more balanced negotiating position. Moreover, Madrid has also been able to avoid unnecessary open conflict with Berlin and the Hague while persisting on the issue of eurobonds. Moreover, it has restored communication with Rome, showing that if Spain is to occupy fourth place, its interests are not served by a weak partner in third (note, however, that this relationship must be handled with caution to avoid importing foreign and dangerous Eurosceptic debates). Other coalitions have also emerged, grouped around issues such as the rule of law and climate change, which have softened the North-South divide and allowed Spain to show its clear pro-European sentiment (notwithstanding that these alliances portend future turbulence along the East-West axis, which will also need to be managed).

Regardless, when it comes to the strategy and priorities of Spain’s action in the context of the EU response to the coronavirus, we must recall that the its European policy is about much more than the coordinated formulation and effective defence of the country’s positions in supranational decision-making. While this aspect is undeniably important, the relationship between Spain and the EU is politically much richer and more delicate. It also plays a fundamental domestic role by providing coherence and authority for the country’s programme of internal reforms to build a more competitive, innovative, sustainable, secure and internationalised country. In doing so, it provides a valuable example of consensus on the content of national policies implemented to achieve these objectives. The growing scarcity of such consensuses makes it all the more valuable, given the confrontational and ultimately polarised nature of Spanish democracy.

Any strategy for European policy in times of crisis must take into account the need to address these two aspects simultaneously. This means maximising influence (or minimising weakness) on the European agenda, while promoting the idea that this agenda is not foreign or imposed but is based on the joint leadership of a project that belongs to the country and is shared by the vast majority of the Spanish public.

Just like the sovereign debt crisis, the COVID-19 crisis shows that not all roads to integration are positive for Spain. The national position must be more clearly defined to proactively guide behaviour in Brussels. The care taken by Spain to emphasise avoiding a more unequal EU and a weakening of the single market (‘all rules and financing by the MFF should ensure that the cohesion and convergence objectives, as well as a level playing field for companies and states within the Single Market, are reinforced’) instead of grounding its ambitions in solidarity in its proposal for the recovery was a smart move. However, having identified how to embody the national interest in specific policies, the challenge, as was the case with the design of the cohesion funds in the 1990s, lies in being able to accommodate them in the larger EU agenda. As the COVID-19 crisis has shown once again, this means avoiding introspection and ensuring anticipation replaces Spain’s preference for a more reactive approach. It also requires effective communication with the Commission and the Parliament, intellectual complicity in the Brussels universe of ideas and political empathy from and towards countries more inclined to support states they believe to be willing to trade solidarity for stability and/or a genuine willingness to share sovereignty. This is precisely where the national interest lies, although there is no reason why it should fully coincide –and indeed it does not– with France, Italy or Portugal.

However, as well as being able to translate the national interest into a European context, Spain must also be able to translate the European interest into its national politics, allowing it to feed back into its national interest. In the 1980s and 1990s the economic requirements of the accession criteria, single market reform and convergence criteria all supported a modernisation agenda and openness that would otherwise have been undermined by internal cracks. In the context of the post-coronavirus reconstruction, a more integrated Europe, which pays serious attention to competitiveness, environmental sustainability, innovation, social protection and fiscal stability, can once again strengthen the steering capacity of a state seeking to renew its model of production and governance. There is no need to reject EU support in doing so with a debate that is too narrowly focused on conditionality (and, once again, alien to our political reality). Spain benefited from the ESM in 2012 in the recovery of part of its banking sector and the experience was neither humiliating nor negative. The crucial point is that any conditions for accessing more financing (whether through the budget, the ESM, the ECB or joint debt at some point in the future) are not imposed and do not go against the country’s definition of its national interests. Spain is a country with significant weaknesses in the areas of education, technology, employment, inequality, renewable energy and even institutional design. Many of these weaknesses were consistently and jointly identified with the Commission in successive European Semesters. It would be pointless to ignore the EU’s potential –as clearly demonstrated by the virtuous relationship between 1986 and 2001– to provide the incentives for the reforms required to make progress in these areas.

Conclusions

The coronavirus represents a major challenge for the EU and its Member States, with Spain among the countries likely to be hardest hit. The first and biggest strategic danger posed by the crisis threatens not only Spain but the integration process itself, since the crisis is simultaneously affecting its three most iconic achievements: the single market, the European monetary union and the Schengen area. Spain’s membership of the EU is so important that it is often confused with the ambitions of the country itself, such that supporting the solidity of the process (whose resilience is not without limits) is itself a priority. However, we must remember that the EU has been forged in crises and there is also an opportunity to strengthen integration. The definition of Spain’s overall position in Brussels should weigh up both these aspects, with an ambitious pro-European attitude that accommodates the country’s national interests as part of the broader European context. This is true of both the health response (and the re-establishment of mobility) and the complex economic response. It should be translated into specific proposals formed alongside with the European political narrative taking shape in Brussels and other European capitals but also at home.

The task must be carried out simultaneously at both the supranational and internal levels. It is imperative for Spain’s EU position on the coronavirus to reflect a project with broad political and social support. This means strengthening communication between the government and the opposition at this critical juncture (taking advantage of the fact that the Spanish Socialist Workers’ Party, the People’s Party and Citizens are all part of the same coalition in the European Parliament). It is also the time to negotiate and present a major sociopolitical consensus on the same scale as the Moncloa Pacts of 1977, with the involvement of civil society (businesses and unions). However, the key issue is the public. The current widespread weakening of political legitimacy, the signs of a recession and the climate of internal polarisation (with radical parties) must not be allowed to tarnish the EU’s image in Spain. Recent weeks have shown that, despite the problems created by the crisis, the country can find space to make progress and find support for its interests. This room for manoeuvre is increased by playing a more proactive role in Europe and eschewing the politics of resentment.

Ignacio Molina
Senior Analyst at the Elcano Royal Institute | @_ignaciomolina

Federico Steinberg
Senior Analyst at the Elcano Royal Institute | @Steinbergf


1 An early version of this paper was presented as an input paper at the virtual seminar ‘COVID-19 and the influence of Spain in the EU’ on 20 April as part of the Spanish Influence Ecosystem project in Brussels. The authors would like to express their gratitude for the comments made by the event’s participants and the ideas debated with other Elcano Royal Institute analysts during the course of those weeks, particularly Félix Arteaga, Gonzalo Escribano, Enrique Feás, Lara Lázaro, Iliana Olivié, Andrés Ortega, Miguel Otero and Luis Simón.

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<![CDATA[ Spain-China relations and COVID-19: the bright and dark sides of a necessary partnership for Spain ]]> http://www.realinstitutoelcano.org/wps/portal/rielcano_en/contenido?WCM_GLOBAL_CONTEXT=/elcano/elcano_in/zonas_in/ari62-2020-esteban-armanini-spain-china-relations-and-covid-19-bright-and-dark-sides-necessary-partnership-for-spain 2020-05-06T02:13:17Z

The COVID-19 crisis may be a turning point for China’s foreign relations. This paper analyses its impact on Spanish-Chinese relations, an issue of particular importance from a European perspective.

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Original version in Spanish: Las relaciones hispano-chinas y el COVID-19: luces y sombras de una cooperación imprescindible para España.

Theme

The COVID-19 crisis may be a turning point for China’s foreign relations. This paper analyses its impact on Spanish-Chinese relations, an issue of particular importance from a European perspective.

Summary1

As to whether COVID-19 will bolster or erode China’s international influence, for the time being there is no qualitative change in Spanish-Chinese relations. This does not mean that the crisis has no bearing on the evolution of bilateral relations, as it has, but rather that it boosts different trends that balance each other out. China has established itself as a key partner for Spain while at the same time certain governance shortcomings and limitations to its cooperation have become apparent. This has increased the perception of China as a threat amongst the Spanish public, which at the same time has come to identify China as its second preferred ally outside the EU. Furthermore, relations with China are entering Spain’s political debate for the first time due to the far-right VOX.

Analysis

The coronavirus crisis has once again shown that China and Spain are two countries that provide help to each other when in difficulties. When the pandemic hit China the hardest, the Spanish authorities sent medical supplies to China twice –at the end of January and in the first week of February–. The aid shipments were jointly arranged with the UK and took place in a context of high-level political support by the Spanish authorities to the Chinese community in Spain, to the people of China and to their leaders.

On 4 February the Spanish Prime Minister, Pedro Sánchez, met representatives of the Association of Chinese Residents in Spain at the Moncloa Palace to convey his solidarity and support in the face of the health emergency in China and to reject any stigmatisation of the Chinese community in Spain. The following day, the Head of State, King Felipe VI, expressed his explicit support to the measures taken by the Chinese authorities to fight the coronavirus: ‘Spain values very highly the critical efforts and measures put in place by the Chinese government to achieve an effective management of this crisis that affects us all; and it has expressed from the very beginning its willingness to cooperate with China, in whatever is in its power to help contain and overcome it’. Spanish gestures of goodwill to China have been welcomed by both the Chinese authorities and the media and were the prelude to the subsequent cooperation Spain received from China.

Since the second half of March, when the health emergency decreased in China but intensified in Spain, aid flows have been channelled in the opposite direction. China’s central and local governments, the Chinese business sector, as well as the Chinese community in Spain, have all mobilised to assist Spain in its fight against coronavirus. The most significant Chinese public donation –on 22 March– came from the central government and comprised 834 diagnostic kits for 20,000 people, 50,000 face masks, 10,000 gowns, 10,000 protective goggles, 10,000 pairs of gloves and 10,000 pairs of shoe covers. In addition, several Chinese local governments such as Fujian, Gansu and Nanning have donated medical supplies to Spanish local governments with which they have cooperation agreements (respectively Cantabria, Navarra and Murcia).

Among private donations, those of the chairmen of Huawei and the Alibaba group –both with a significant presence in Spain– are particularly noteworthy and have been explicitly praised by Spain’s Royal Family. The volume of Chinese private donations has exceeded public ones and involved direct talks between Chinese business leaders and the Spanish authorities. In addition, the Chinese community in Spain –more than 225,000 people– was actively mobilised throughout the country to make donations of medical supplies, especially to hospitals and law enforcement institutions as shown in many videos and social networks posts. The Chinese community also acted as a liaison between Spanish administrations and Chinese medical providers.

China has been the basic provider of the medical supplies purchased by Spain’s central and regional governments to face the pandemic. The amount of contracts signed to acquire medical material and supplies from China exceeds €726 million, among which stand out the €628 million from Spain’s central government and, among the regional governments (‘Autonomous Communities’), €35 million from Catalonia and €23 million from Madrid. This has made evident both the essential role of China as the only country capable of supplying such a volume of medical material at a time of crisis and the various challenges in doing business in the country. Despite significant monitoring by Spanish officials and authorities, transactions with China have not been without problems, such as shipments of defective products, lack of required technical specifications and the failure to meet deadlines.

Chinese public policy in action

The Chinese authorities are well aware that the COVID-19 crisis may have a significant impact on the country’s position within the international community. The scale of the threat and its possible origin in Wuhan have led multiple players within and outside China to question the role of the Chinese authorities in the origin and management of the crisis, stressing governance shortcomings such as an ineffective regulation of the consumption of meat from wild animals and the lack of transparency.

In this context, Chinese public diplomacy is being very proactive in sharing a narrative about the coronavirus crisis that improves China’s international image. That is the case in Spain, where Chinese diplomacy stresses the speed and effectiveness of the sanitary and economic measures adopted in China to face the crisis caused by the coronavirus, quoting the support received from various international institutions such as the World Health Organisation and the International Monetary Fund.

In Spain, when referring to the coronavirus, Chinese public diplomacy had a prominent defensive orientation until March, as shown by the items published by the Embassy of China in Spain on its website and social media and by interviews with Chinese diplomats over the period. The Embassy’s communication efforts during the first two months of 2020 sought to prevent the stigmatisation of Spain’s Chinese community, restrictions on transport and communications with China, and criticism of the Chinese authorities for their role in the origin and spread of COVID-19.2 On the latter point, the Chinese official narrative aims to avoid an association between the consumption of the meat of wild animals without adequate sanitary controls and the origin of COVID-19, and the regime’s lack of transparency in regard to the spread of the disease.3

Once China had passed the peak of the pandemic and the latter’s epicentre moved to Europe, Chinese diplomacy became more assertive. From March, the Chinese official discourse started to emphasise China’s contribution to stop the spread of COVID-19, both through domestic measures it had adopted and through the assistance it could now provide to other countries in terms of medical material and good practices to fight against the disease. China is presented as a top scientific and medical power capable of developing and producing state-of-the-art vaccines, medicines, health protocols and medical equipment. The contrast between these defensive and assertive phases was made clear with great clarity in the two interviews with Yao Fei, Charge d’Affaires of the People’s Republic of China in Spain, in one of the most popular Spanish morning radio shows on 24 February and 17 March 2020.4 This enhanced confidence also translated into an extensive coverage from the official Chinese news agency, Xinhua, of the telephone conversation between Foreign Minister Arancha González Laya and her Chinese counterpart on March 15, in contrast with the brief news published by the EFE Press agency.

On March 21 Xi Jinping sent a message of solidarity and support to King Felipe VI similar to those sent by the Spanish authorities to China a month and a half earlier. The main difference is that President Xi offered China’s experience in ‘prevention and control, [as well as] diagnosis and treatment plans’ and used core concepts of Chinese diplomacy such as ‘mutual benefit’ and the ‘community of a shared future for mankind’. This explicit link between the fight against the coronavirus and some key concepts of Xi Jinping’s foreign policy had already been promoted by the Embassy of China in Spain, which published a statement of the Chinese Foreign Minister on its website: ‘Resolutely winning the battle against the epidemic and promoting the construction of the community of shared future for mankind’. This connection between fighting the Sars-CoV-2 and the ‘community of a shared future for mankind’ was also echoed by the Consulate General of China in Barcelona.

The public diplomacy carried out by the Chinese Consulate General in Barcelona placed a greater emphasis on the assistance provided by the Chinese community,5 in comparison with the Chinese Embassy in Madrid, which remained more focused on the official and business dimensions.6

Regarding the concerns expressed by the European External Action Service (EEAS) about Chinese disinformation on COVID-19, on 20 March the official Twitter account of the Embassy of China in Spain forwarded a message from Hua Chunying, spokeswoman for the Chinese Foreign Ministry, which generated confusion about the origin and spread of COVID-19 from the US. However, beyond this instance, the Embassy of China and the Consulate General of China in Spain had not explicitly confronted the advantages of the Chinese model with those of other countries, nor explicitly discredited the EU or Spain’s traditional allies. Rather, the Chinese authorities have deployed various joint initiatives between China and those actors to combat the coronavirus.7

Spanish perceptions of China’s role in the COVID-19 crisis

Chinese assistance, cooperation and experience have been positively regarded by Spain’s Head of Government and by the King of Spain but not rated above those of other players or used to criticise the response of other countries inside or outside its borders. To date, the Spanish authorities have not changed their position, unlike the governments of other European countries –and France– by publicly requesting the Chinese authorities to provide more detailed information on the onset of COVID-19 in China.

As for the controversies over the quality of some medical supplies purchased in China, in particular rapid diagnostic tests, and the motivations of Chinese assistance to Spain, the Spanish government has adopted a conciliatory attitude. The interview given by Spain’s Foreign Minister Arancha González Laya on the CGTN programme The Point is a clear example. The Minister explained that China and Spain are countries that help each other in times of need and that ‘in exercising generosity, you [China] in a way project soft power. This is true for China as it is true for the US and for Europe’. She also acknowledged that the malfunctioning testing kits were bought through a Spanish contractor, not through direct agreements with the Chinese authorities, and that the issue had been solved with new shipments.

Likewise, although Pedro Sánchez himself said that ‘it is as important and necessary to buy abroad as it is to be self-sufficient and buy domestically’, and whereas the difficulties in purchasing healthcare equipment and materials in China’s overcrowded market have been acknowledged, there have been no publicised concerns about overdependence on China. In any case, the issue has become an internal question within the public administration and many Spanish companies, and it remains to be seen how it will be resolved in the medium term.

In Spain, the strongest criticism of the Chinese government’s management of the coronavirus crisis arose in two sectors: on the one hand, non-governmental organisations that consider COVID-19 within the context of their causes, be they press freedom, wildlife preservation or the protection of human rights protection; and, on the other, conservative and liberal politicians and media groups critical of the Spanish government that have not only condemned domestic measures in China but also China’s cooperation with Spain.8 The most critical political leaders with China are members of VOX,9 whose message echoes not only the traditional Spanish far right but also the US ‘alt-right’ with which it has significant connections, and, to a lesser extent, those of the moderate-conservative Popular Party. Senior officials of these two parties have referred to COVID-19 as the ‘damned Chinese viruses’ or ‘the Chinese plague’, have described the Chinese market as a chaotic ‘bazaar’ and have spread conspiracy theories about the origin of COVID-19.

The 41st wave of the Barometer of the Elcano Royal Institute can be useful to assess how this has affected the image of China in Spain, although the collected data should be considered with caution as the study’s fieldwork was carried out on 2-19 March 2020. In other words, at the time of the survey many interviewees had not been meaningfully exposed to the events analysed in this paper. In any case, from the data in Figure 1 it could be tentatively noted that by mid-March the coronavirus crisis had neither skyrocketed or sunk the image of China in Spain. Between April 2012 and March 2020 China’s rating has ranged from 4.7 to 5.3, reaching a valuation of 5 points in March of 2020.

Figure 1. Evolution of country ratings, 2011-20 (averages from 0 to 10). Source: Barometer of the Elcano Royal Institute (BRIE), nr 41 (2020), p. 6.

However, among the Spanish public the perception of China as a threat has indeed increased significantly (Figure 2), to the extent that China is the country whose perceived threat has increased the most since 2018 and only Middle Eastern countries were identified as the biggest threat to Spain in March 2020.

Figure 2. To what extent are these countries a threat to Spain? 2018 and 2020 (scale from 0 to 10). Source: Barometer of the Elcano Royal Institute (BRIE), nr 41 (2020), p. 11.

This is partly linked to COVID-19 since traditionally the perceived threat from China was exclusively associated with economic factors, while today more than 25% of Spaniards who identify China as a threat cite the diseases originating from the country (Figure 3). It is very likely that perceptions of China as a source of threat to Spain, especially with regard to disease transmission, have increased since the fieldwork of the survey was carried out: the state of emergency was not declared until 14 March and the health emergency the country was facing was not fully evident until later.

Figure 3 Threats from China (spontaneous multiple answers). Source: Barometer of the Elcano Royal Institute (BRIE), nr 41 (2020), p. 12.

Implications for bilateral relations

Faced with the threat posed by the coronavirus, the Spanish authorities have followed a diversified foreign policy and defended multilateralism as the most effective way to deal with the crisis. This suggests they will continue to bet on maintaining close relations with China. Among other factors, the health emergency has highlighted China’s role as a provider of medical equipment and supplies to Spain and the reinforcement of multilateralism that Spain defends requires the active participation of China.10 On the latter point, it is evident that any coordinated response by the international community to face the socioeconomic crisis caused by the pandemic will be more effective if it includes the second-largest economy in the world rather than if it does not.

This is in line with Spanish public opinion, which identifies China as Spain’s second-preferred ally outside the EU (Figure 3).

Figure 4. Spain: preferred ally outside the EU. Source: Barometer of the Elcano Royal Institute (BRIE), nr 41 (2020), p. 17.

What is not so clear, in such an uncertain context, is whether this crisis will strengthen bilateral relations in the way the Chinese government wishes. The press release by the Chinese Ministry of Foreign Affairs on the talks between Pedro Sánchez and Xi Jinping on 17 March 2020 stated that ‘it is believed that, following the epidemic, relations between the two countries will develop even further’. This will probably depend on three interrelated issues. The first is how the Spanish authorities assess the impact that a further rapprochement with China might have on Spain’s relations with its traditional allies. The second factor will be to what extent Spanish political authorities and companies want to depend on Chinese suppliers in such sensitive sectors as medical supplies and 5G communication networks. The third is how Spanish domestic politics evolve. Multiple statements by the leaders of the far-right VOX suggest that if they were to be part of the government the consensus on the advisability of maintaining privileged relations with China, that the Spanish Socialist Workers Party (PSOE) and the Popular Party (PP) had upheld for almost four decades, could break down.11

Mario Esteban
Senior Analyst at the Elcano Royal Institute and Professor at the Autonomous University of Madrid | @wizma9

Ugo Armanini
Research Assistant at the Elcano Royal Institute


1 This is a free translation by the authors of an ARI originally published in Spanish.

2 ‘Debemos trabajar juntos para combatir la epidemia’, People’s Daily, 6/IV/2020; Embassy of China in Spain, Twitter, 29/IV/2020; Khadija Bousmaha, ‘La Embajada de China critica la discriminación a su población en España: “A nuestros hijos les llaman coronavirus”’, 20 minutos, 4/IV/2020; Gu Xin, ‘Vlogger español defiende a China contra maliciosos cibernautas’, People’s Daily, 6/II/2020.

3 Between 11 February (https://twitter.com/ChinaEmbEsp/status/1227200676402470913) and 23 March 2020 (https://twitter.com/ChinaEmbEsp/status/1242043834047004672) the Embassy of China in Spain published 40 reports on the evolution of COVID-19in China on its Twitter account.

4 At that time, Yao Fei was the highest-level Chinese diplomat in Spain after the ending of Ambassador Lyu Fan’s mission in Spain. ‘Yao Fei: “En China estamos pensando en enviar equipo de médicos y expertos en coronavirus a España”’, Onda Cero, 17/III/2020; ‘Yao Fei, ministro consejero de la Embajada china en Madrid: “Algunos gobiernos han actuado de forma muy excesiva ante el coronavirus’”, Onda Cero, 24/II/2020.

5 Consulate General of China in Barcelona, Twitter, 5/IV/2020; Consulate General of China in Barcelona, Twitter, 2/IV/2020; Consulate General of China in Barcelona, Twitter, 25/II/2020; Consulate General of China in Barcelona, Twitter, 21/II/2020; Consulate General of China in Barcelona, Twitter, 14/II/2020.

6 Embassy of China in Spain, Twitter, 8/IV/2020; Embassy of China in Spain, Twitter, 7/IV/2020; Embassy of China in Spain, Twitter, 27/II/2020.

7 Embassy of the PRC in Spain, Twitter, 13/IV/2020; Embassy of the PRC in Spain, Twitter, 6/IV/2020; Embassy of the PRC in Spain, Twitter, 5/IV/2020; Embassy of the PRC in Spain, Twitter, 27/III/2020.

8 Alberto Rojas, ‘Un Chernobyl en Wuhan’, El Mundo, 9/IV/2020; David Alandete, ‘Estados Unidos pone a Sánchez como ejemplo de lo que no hay que hacer’, ABC, 9/IV/2020; Mar Llera, ‘Pekín ofrece ayuda sanitaria a España contra el coronavirus virus pero, ¿a qué precio?’, El Confidencial, 21/III/2020; Mario Noya, ‘China es culpable’, Libertad Digital, 22/III/2020.

9 VOX is a far right-wing populist party that has the third largest number of seats in the Spanish parliament.

10 Arancha González, ‘Cómo una sanidad pública global puede reactivar el multilateralismo’, Project Syndicate, 15/IV/2020; Mario Villar, ‘España cree que la respuesta al coronavirus puede marcar el futuro de la ONU’, El Heraldo de Aragon, 3/IV/2020.

11 The two parties have governed Spain alternately since 1982.

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<![CDATA[ Regional or global player? The EU’s international profile ]]> http://www.realinstitutoelcano.org/wps/portal/rielcano_en/contenido?WCM_GLOBAL_CONTEXT=/elcano/elcano_in/zonas_in/policy-paper-regional-or-regional-player-eus-international-profile 2020-05-05T11:27:44Z

By means of the Elcano Global Presence Index, this policy paper aims to depict the EU’s international profile while tracking to what extent its features and the objectives of the EU’s global strategy are aligned with the volume, nature and geographical allocation of the Union’s external projection.

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Contents

Introduction – 5

  1. Presence, not power – 9
  2. Not only soft presence – 13
  3. Towards technology and security – 17
  4. The EU’s diversity – 21
  5. A closer Atlantic – 25
  6. Our neighbours – 31
  7. Enlargement – 33
  8. Latin America: the wider Atlantic space – 35
  9. A connected Asia – 37
  10. Conclusions – 39

Annex: methodology – 41
References – 45

Abstract

The upcoming ‘Geopolitical Commission’ has the task of re-thinking several aspects of the EU’s foreign policy and global role. This reflection will necessarily build on the current global strategy, published in 2016, which insists on the need for the EU to upscale its military capacities and to focus on its nearest and extended neighbourhood.

By means of the Elcano Global Presence Index, this policy paper aims to depict the EU’s international profile while tracking to what extent its features and the objectives of the EU’s global strategy are aligned with the volume, nature and geographical allocation of the Union’s external projection.

As stated in the EU’s global strategy, there is a significant gap between the EU’s presence and its international influence. In that same line, and unlike other major international players, its soft profile still needs to be balanced with stronger military capacities. However, despite what the strategic document claims, the EU external projection is strongly concentrated   in few facets and member states. This is also linked to its geographical allocation, with a decreasing importance of the near and extended neighbourhood (including candidate countries) with respect non-EU West Europe, Asia, North America and, to a lesser extent, Latin America. Moreover, the exact consequences of Brexit on the EU’s global presence remain unknown.

Introduction1

The EU renewed its strategic document for foreign policy and security in 2016. The current strategy (Shared Vision, Common Action: A Stronger Europe. A Global Strategy for the European Union’s Foreign and Security Policy– henceforth EUGS) (EC, 2016) has been assessed by academic literature from different perspectives. These assessments can prove to be particularly useful, as the upcoming ‘Geopolitical Commission’ has the task of re- assessing the Union’s foreign policy and strategic role (Biscop, 2019).

Some authors focus on the relevance and implementation of its key principles such as, for instance, resilience (Tocci, 2019; Wagner & Anholt, 2016), politicisation (Barbé & Morillas, 2019) and differentiation, co-ownership and flexibility in the EU’s relation with its Eastern neighbours (Rodríguez Prieto, 2018). Although according to several assessments the strategy is a realistic guide for the EU’s foreign and security policy in the near future (Davis Cross, 2016; Grevi, 2016; Juncos, 2017; K. E. Smith, 2017), it is also seriously challenged by the Brexit process (Biscop, 2016; Sidiropoulos, 2016; K. E. Smith, 2017). Moreover, it has also been claimed that this strategic document might be failing to address the current transitional order (Howorth, 2016; Newman, 2018).

From a geographical perspective, the strategy focuses on the EU’s immediate borders and extended neighbourhood, adopting a regional rather than global approach (Dijkstra, 2016; Grevi, 2016; Juncos, 2017; Winn, 2019).2 In this vein, neighbouring countries such as those included in the European Neighbourhood Partnership (ENP) (Johansson-Nogués, 2018), the MENA region (Harders, Jünemann, & Khatib, 2017) and Russia (Korosteleva, 2019) are now depicted as a source of challenges and this is also reflected in the approach to specific external actions or policies, such as migration (Ceccorulli & Lucarelli, 2017) and security (Legrand, 2016).

This policy paper aims to contribute to the debate by exploring the EUGS –both its claims on the nature of the EU’s external projection and its objectives regarding foreign action– from the perspective of the Elcano Global Presence Index. First, it details the gap between the EU’s global presence and its level of international power; secondly, it looks at the nature of its presence (soft, hard, technological…); third, it focuses on the domestic construction of the Union’s projection; and, finally, it looks at its geographical composition by destination.

Regarding the domestic grounds of the EU’s global presence, the Union is here defined including the UK, in accordance with the EU as defined in the EUGS and taking into consideration that although Brexit has recently come to pass, a transition period will follow until the end of 2020. Moreover, as detailed below, the exact consequences of Brexit for the Union’s external projection remain unknown.

The Elcano Global Presence Index aims to reflect to what extent (and on what grounds) countries or groups of countries project themselves beyond their borders on the basis of three dimensions –economic, military and soft– that comprise 16 variables– from primary goods to military capacities and development cooperation–. The Index’s objective is twofold. On the one hand, it hopes to contribute to the debate on conceptualising and measuring the globalisation process. On the other, it assesses the foreign policy of the countries included in the calculation, for instance, by comparing efforts and means versus the actual level of international presence, by defining sectoral presence profiles and by establishing a relation between presence and influence. Consequently, its second object is to provide a tool for foreign policy making (see Figure 1).

Figure 1. The Elcano Global Presence Index
Figure 1. Structure of the Elcano Global Presence Index (variables, dimensions and weightings of the composite index)
Source: Elcano Royal Institute, Elcano Global Presence Index.

Since the first publication of the Index in 2011 (Olivié & Molina, 2011), and on a regular basis, it has calculated the projection of an increasing number of countries (up to 120 in the latest edition). To these, the EU (as a single entity) was added in the 2012 edition. Roughly, this is achieved by adding the EU member states’ global presence and detracting intra-European international exchanges.3 This also allows the EU to be calibrated as an international player, leads to an understanding of the different contributions of the 28 member states in different dimensions (eg, the economic, military and soft) and specific variables (from troop deployments to international aid) and helps determine the Union’s softer or harder projections (Olivié & Gracia, 2018c).

Although all these data and analyses have proved to be a useful tool for understanding key aspects of the EU’s global role, significant questions remain that are addressed in the EUGS. These refer to the geographical breakdown of the EU’s global presence, such as,  for instance, the magnitude of its transatlantic links and its bonds with its immediate and enlarged neighbourhood (which is, as mentioned above, one of the EUGS’s key geographical concepts). Answering these questions poses an important methodological challenge as it requires conceptualising the geographical distribution of certain indicators (such as military capacity and science) and combining the Index database and sources with additional official national and/or European data sources.4 The results, however, provide a good basis for analysing the geographical pattern of external relations outlined in the EUGS.

Iliana Olivié
Senior Analyst at the Elcano Royal Institute and Coordinator of the Elcano Global Presence Index Project
| @iolivie

Manuel Gracia
Analyst on the Elcano Global Presence Index project
| @mgraciasn


1 The authors are grateful to Davide Rognini for his invaluable research assistance.

2 To this, (M. E. Smith, 2016) argues that, much to the contrary, the geographical approach of the EUGS is still too broad and not sufficiently focused on the European neighbourhood.

3 For further details on this methodology, see (Olivié & Gracia, 2018b).

4 A similar disaggregation was also carried out for the pilot case on one member state, Spain. Details on the methodology and results can be found in (Olivié, Gracia, & Gomariz, 2017).

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<![CDATA[ The end of globalisation? A reflection on the effects of the COVID-19 crisis using the Elcano Global Presence Index ]]> http://www.realinstitutoelcano.org/wps/portal/rielcano_en/contenido?WCM_GLOBAL_CONTEXT=/elcano/elcano_in/zonas_in/ari60-2020-olivie-gracia-end-of-globalisation-reflection-on-effects-of-covid-19-crisis-using-elcano-global-presence-index 2020-05-04T01:44:43Z

The health, economic, social and political crisis created by the COVID-19 pandemic will also reconfigure international relations and globalisation.

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Original version in Spanish: ¿El fin de la globalización? Una reflexión sobre los efectos de la crisis del COVID-19 desde el Índice Elcano de Presencia Global.

Theme

The health, economic, social and political crisis created by the COVID-19 pandemic will also reconfigure international relations and globalisation.

Summary

Similar to the 2008 crisis, the current pandemic and its consequences could precipitate a slowdown in globalisation or even result in a process of deglobalisation. This study seeks to envisage and understand the possible forms of any such reconfiguration of relations, identifying three specific scenarios based on the Elcano Global Presence Index.

In the first scenario, we assume the structural effects on globalisation will be similar to the crisis at the end of the 2000s, both in terms of volumes and nature, allowing the features of globalisation –in all its dimensions, economic, military and soft– to remain intact.

In the second, we assume a deeper impact, comparable to the more significant reductions in each variable during the previous crisis, with a deeper fall in global exchanges, in all areas. Under this scenario, the world will experience an episode of deglobalisation, with a 10% reduction in the soft dimension and a 9% reduction in the economic dimension.

The third and final scenario seeks to account for the specific features compared to the previous one. Here, globalisation will remain intact, particularly in the soft dimension, largely due to the information, technology and science variables.

Analysis

Introduction

The current globalisation process, which dates back to the 1970s, includes phases of growth, contraction and mutation. Many of these correspond to structural changes in the global economic and geopolitical order, including the rise of emerging powers in Asia and the associated shift of the epicentre of global activity from the Atlantic to the Pacific.

The Great Recession at the end of the 2000s and the start of the 2010s has largely resulted in the acceleration and consolidation of these changes, a trend reflected in the Elcano Global Presence Index. The health, economic, political and social crisis currently facing the world will also leave its mark on international relations and the process of globalisation itself.

While it is still too early to predict the impact, we are already seeing some of the consequences of the crisis, such as interruptions in production and consumption (and thus trade). It is also possible to anticipate some of the effects from the dramatic reduction in the international flows of people. Multilateral organisations, the media and research institutes are trying to identify and study many of these short-, medium- and long-term effects.

This paper builds on previous research at the Elcano Royal Institute, reflecting on the consequences of the current crisis for the process of globalisation (Ortega, 2020; Fanjul, 2020). The first section uses the Elcano Global Presence Index to characterise the reconfiguration of globalisation in the crisis at the end of the 2000s. The second section then uses past research to outline the main effects to be expected in the economic, military and soft dimensions of globalisation. Finally, the third details three medium-term scenarios in which the transformational effects of the current crisis are similar, deeper or different to its predecessor.

(1) The interval between the Great Recession and the coronavirus: continued globalisation but slower and softer

The policies of economic liberalisation implemented throughout much of the world in the last three decades of the 20th century resulted in a rapid increase in international economic exchanges. The various waves of economic globalisation have always been accompanied by other forms of internationalisation (military or soft) involving the international movement of people (troop deployments, migrants, tourists, students, sports players in international competitions and international development workers) and ideas (the exchange of information, culture, science, technology and education). While the academic conceptualisation of globalisation has always recognised these other non-economic aspects, analysis of the process of internationalisation has tended to focus on the economic dimension. One of the reasons for this phenomenon is the availability of statistics in this area (Held et al., 1999; Rosenau, 1997; Keohane and Nye, 2000; Conley, 2002; Scholte, 2004; Lee, 2004; Marber, 2005; Caselli, 2008; Figge and Martens, 2014).

This focus on the economic dimension was partly responsible for various analysts predicting globalisation would slow down, end or even enter a period of ‘secular stagnation’ during the financial crisis of 2008 and the Great Recession that followed (Altman, 2009; Summers, 2014; Postelnicu, Dinu & Dabija, 2015). Yet while there was a slowdown –and even a reversion in certain variables and in certain years– in economic internationalisation, particularly for specific trade flows and foreign direct investment, the Elcano Global Presence Index shows that, despite slowing down significantly and mutating towards softer forms of internationalisation, globalisation did not go into reverse (Olivié & Gracia, 2020).

The Elcano Global Presence Index (Figure 1) was developed for the two-fold objective of providing a tool for exploring the international projection of countries, calculated in terms of both volumes and nature, and of observing global trends in internationalisation processes. Given the large number of countries for which it is currently calculated (120) and its representativeness in terms of the global population and GDP, it is also a useful tool for studying the process of globalisation itself (Olivié et al., 2017, 2018).

Figure 1. Structure of the Elcano Global Presence Index (variables, dimensions and weightings of the composite index)
Figure 1. Structure of the Elcano Global Presence Index (variables, dimensions and weightings of the composite index)
Source: Elcano Royal Institute, Elcano Global Presence Index.

Globalisation since 1990 can be divided into three phases: (a) an initial phase of deglobalisation between 1990 and 1995, coinciding with the geopolitical reconfiguration of Europe, when the aggregate global presence fell by an annual average of -0.7%; (b) a second period of sustained globalisation between 1995 and 2011, with a cumulative increase of 43%, equivalent to an annual average of 2.7%; and (c) the current phase, with moderate increases and decreases and annual averages of just under 1% (Figure 2).

It is important to stress that the Elcano Global Presence Index captures structural trends, meaning transient financial turbulence or political changes are seldom reflected in its results. There is also a lag of around two years before changes in the dimensions and variables are reflected by the index. The effects of the 2008-09 crisis are not reflected by the index until 2011 and the effects of the COVID-19 pandemic are not expected to register in the values of the index until 2021 or 2022. With these caveats in mind, the value of the index for the last year for which data is available (2018) shows an unprecedented rise in globalisation since the start of the crisis at the end of the 2000s, with the aggregate value of 12,646 for the 120 countries currently included in the calculation, compared to 12,199 for the previous year.

These figures suggest that the world has not yet experienced a process of deglobalisation. While this trend may have slowed down since the start of the decade, except for two falls (-0.7% in 2014 and -1.4% in 2015), the process has not contracted and was recovering prior to the current crisis.

Figure 2. Global economic, military and soft presences, 1990-2018 (index value)
Figure 2. Global economic, military and soft presences, 1990-2018 (index value)
Notes: (a) the time series for the Elcano Global Presence Index includes data for the years 1990, 1995, 2000 and 2005, with observations extended across the corresponding five-year periods, followed by annual data for the period 2010-18; (b) the economic, military and soft dimensions are expressed in absolute terms and the weightings for calculating the Elcano Global Presence Index are not applied.
Source: Elcano Royal Institute, Elcano Global Presence Index.

The different variables and dimensions (economic, military and soft) have also contributed in different ways to the speed of globalisation in recent years. Between 1990 and 2005, the main vector of globalisation was the economic dimension, whose rate of growth was between 3.5% and 6%. The soft dimension made a positive albeit modest contribution to the process during this period, with growth of 0.7%-2.2%. Finally, the military dimension shows a certain deglobalisation, with negative rates for most of the period (Figure 3).

However, these trends change significantly in the 2000s, when the soft dimension begins to lead the process of globalisation, with average annual growth of 3.6%-5.0%. At the same time, the economic dimension becomes much less dynamic, with low and even negative interannual growth (2016 and 2017), together with a slight recovery in the military dimension, which grew in 2015 and 2016.

In short, during this period of slow globalisation, the nature of the process also changed, with the soft dimension replacing the economic dimension as the main vector. Similarly, the structural contraction of the military dimension during the first two decades was replaced by a modest but sustained recovery.

Figure 3. Annual changes in the economic, military and soft dimensions of global presence, 1990-2018 (%)
Figure 3. Annual changes in the economic, military and soft dimensions of global presence, 1990-2018 (%)
Notes: (a) the time series for the Elcano Global Presence Index includes data for the years 1990, 1995, 2000 and 2005, with observations extended across the corresponding five-year periods, followed by annual data for the period 2010-18; (b) the economic, military and soft dimensions are expressed in absolute terms and the weightings for calculating the Elcano Global Presence Index are not applied.
Source: Elcano Royal Institute, Elcano Global Presence Index.

(2) The effects of the coronavirus on global exchanges

There are a number of points to consider before reflecting on the potential impact of the current health crisis and the subsequent outlook for the process of globalisation, both as a whole and in its various dimensions and indicators.

First, there is the dimension of time. We must distinguish between analyses of the short-term effect of the health emergency itself, together with the measures to contain it, and the medium- and long-term effects. In macroeconomic terms, the debate, which is still in its early stages, is focused on the shock itself, to supply and/or demand and its effects (Camaduro & Papadia, 2020; Carlsson-Szlezak, Reeves & Swartz, 2020; Fornaro & Wolf, 2020), alongside the political responses required based on the different diagnostics (McKibbin & Fernando, 2020; OECD, 2020b). However, the consequences of the shock and the scale of the response will also depend on how long the health emergency and the confinement measures persist. There is no doubt that the severity of the situation requires a reactivation of major State policy intervention (Bénassy-Quéré et al., 2020; Krugman, 2020; Saez & Zucman, 2020; de Grauwe, 2020; Gali, 2020; Wolf, 2020).

Analysts agree that the crisis we are facing will have a major economic impact on all dimensions of international exchange (OECD, 2020b, 2020a) and that both its duration and the different responses will affect the rhythm and nature of globalisation in different ways (IMF, 2020).

Secondly, despite numerous comparisons with the economic situation during the Second World War and the years that followed, there are significant differences, such as the absence of the need for the large-scale reconstruction of major infrastructure, which would have countered the supply shock. Above all, however, we are living in different times (Hernández, 2020). We are in a context in which integration processes are going into reverse and national identities are strengthening, while the spread of the health crisis and its effects are global in nature. Even before the outbreak of the pandemic, we were witnessing a trade war between the US and China, largely driven by a technology race, now intensified by the response to the health crisis and the scramble to find a vaccine (Campbell & Doshi, 2020). However, we do not know how the pandemic will impact this geopolitical rivalry, particularly in terms of the effects on China and its growth, internal cohesion and international image (Esteban, 2020). Similarly, at the time of writing, the health emergency is still in its early stages in the US.

The crisis has hit at a time in which part of the international community is questioning the pillars of the world order put in place after the Second World War, especially multilateral governance and the meaning and even existence of the EU. All this means that a health crisis that is undeniably global in nature is occurring in a context in which national identities are being reasserted.

(2.1) Economic dimension

There is unanimous consensus on the negative economic impact of the current crisis on the global economy, both in the short and medium term. In the energy and commodities markets, the crisis is framed by the drop in oil prices as a result of the conflict between Russia and Saudi Arabia, which has dragged down the prices of other primary goods (Escribano, 2020).

In terms of trade and investment, the pandemic has struck at a moment at which production and investment are highly transnational in nature, with fragmented manufacturing processes distributed across global production chains (Molina, 2020).

The current situation is laying bare the vulnerability of current models of production, characterised by their flexibility (short production lines, the minimisation of stock and just-in-time supply chains) compared with supplier countries (Treceño, 2020; Haren & Simchi-Levi, 2020). As Fanjul (2020) notes, the crisis has highlighted the risk of geographic dependence on China, which could either result in strategies to diversify the location of suppliers, without negatively impacting aggregate trade, or trigger a wave of relocalisation, with the associated drop in trade volumes.

In terms of service exports, while they have been increasing in recent years, most notably in line with the transnationalisation of production, a significant fall in service flows is expected as a result of the impact on the global tourism sector. Economies like Spain, with a large service sector and a heavy emphasis on tourism, will see a significant impact from the pandemic as a result of the fall in visitors.

The impact of the external shock to foreign direct investment (the fifth indicator in the economic dimension of the Elcano Global Presence Index) will depend on the reconfiguration of transnational production and the impact on international financial markets in the medium term (Álvarez-Pickman, 2020).

(2.2) Military dimension

We may not immediately expect to see a direct link between the coronavirus and the military dimension of the Elcano Global Presence Index. While the armed forces have played a significant role in managing the health crisis in practically all countries, at present their role is limited to national territories. Nonetheless, we cannot rule out future international missions to respond to specific health emergencies in specific countries, especially developing ones.

(2.3) Soft dimension

As explained in the first section, the soft dimension has been the main vector of globalisation since the crisis at the end of the 2000s. However, in contrast to this crisis, this time round there are reasons to expect a significant but uneven impact on a number of areas. The main variables that will be affected are those that imply the movement of people, such as tourism, migration, education and sports (Molina, 2020). In this respect, we have already seen the cancellation of international sporting events like the Olympic Games.

Nonetheless, other soft variables could be strengthened by the coronavirus crisis. In terms of information, there is nothing surprising about the current increase in international news. Similarly, confinement and the rise in people working from home mean improvements to the physical infrastructure of the Internet. The variable of science may also behave in a similar way, given the increase in scientific research (vaccines and treatments, pandemics and climate change) and the important role of the social sciences (analysis of the impact and exploring the economic, political and social dimensions of responses).

There are also other indicators in the soft dimension where different factors with opposite effects mean the overall impact of the crisis could be positive or negative. The indicator for the variable technology, for example, reflects foreign patents, which is linked to trade and may thus fall, although it is equally possible that there could be an increase in this variable, since, similar to the variable science, there may be a rise in patents due to the need for new technology, which could in turn drive investment in research and development.

The situation for the culture variable, measured by exchanges of audio-visual services, is similar: the retreat of economies inside national boundaries and falling global trade over the coming years could exert downward pressure on such exchanges, although digital exchanges could escape from this dynamic, especially if we take into account the increased consumption of films, television series and music during confinement.

Finally, when it comes to development cooperation, certain governments may choose to increase development aid to help preserve global public goods, particularly in the area of health, although we could also see cuts to spending in a context of strengthening national identities and the reduction of forums for multilateral cooperation (Olivié, 2020).

(3) How will this affect the globalisation process?

One way to measure the response is by calibrating its impact on the aggregate of the Elcano Global Presence Index (with all the necessary caveats and reservations). This can be done by examining the transformational effect during the previous crisis in 2008 (section 1 of this paper) and forecasting the impact of the current pandemic on the different variables and dimensions of the index (section 2).

(3.1) Scenario A: a crisis like 2008

Generally speaking, structural changes have a two-year lag before they are reflected in the Elcano Global Presence Index. The 2018 index, which was published in 2019, includes the data for the 16 variables available as of 31 December 2018. In general, the data refer to 2017 or in some cases 2016. This means that the structural effects of the crisis that began with the collapse of Lehman Brothers in autumn 2008 are first reflected by our index in 2010 and extend into the second half of the decade.

If the current health emergency and its economic, political and social consequences are on a similar scale to the crisis last decade, we would expect the change in the aggregate of the Elcano Global Presence Index to be similar to the period 2010-15, for all the variables and dimensions (Figure 4).

(3.2) Scenario B: a crisis worse than 2008

Some analysts argue that the economic, political and social consequences will be more devastating and deeper than those of the 2008 crisis. In such a scenario, the figures for the various components of the index would, perhaps from 2022, register the worst possible decline for each of the indicators during the period 2010-18 (Figure 4).

(3.3) Scenario C: a different crisis to 2008

Finally, the particular features of this crisis and the differences with respect to 2008 may mean that variables behave differently, as mentioned in the previous section.

Energy is a good example: energy prices are at historic lows and policies linked to climate change are expected to continue, especially the process of replacing fossil fuels. The behaviour of this variable is expected to be similar to previous years (Escribano & Lázaro, 2020), which will translate into similar behaviour for the primary goods variable. If this is the case, the average annual variation for the coming years could be around -2.6%, which is the average value for the period 2015-18 (Figure 5).

Also in the economic dimension, the outlook for manufacturing is similar, since it has already shown a cooling down of international trade. In the military dimension, the troops and military equipment variables should also behave in a similar manner, since, at least in principle, there should not be a significant reaction to the current crisis. In terms of the soft dimension, the culture variable is expected to follow a similar course, since it could be significantly affected by a fall in international trade or increased consumption of services linked to culture. Similarly, the evolution of the development cooperation variable will depend on the tension between increased pressure to reduce public spending and the demand for increased protection of global public goods.

In terms of services, the tourism industry could see a significant impact, perhaps comparable to the worst years of 2010-18 (and thus of a similar magnitude to scenario B), alongside other variables that involve the flow of people (migration, tourism, sport and education).

There is also a third group of variables that could behave similarly to the aftermath of the Great Recession (and thus similar to scenario A) in the short term. Investment is a good example, given the potential for the relocalisation of production and the sensitivity of this variable to the behaviour of international financial markets. In the soft dimension, there are a number of variables that could follow this pattern: information, due to increased consumption and the foreseeable increase in installed capacity, and technology and science, in which major powers that did not suffer the crisis like many European economies have invested.

Figure 4. Three scenarios for globalisation after COVID-19 (%)
  Scenario A
Crisis similar to 2008
Average rate (2010-15)
Scenario B
Crisis worse than 2008
Larger reduction (2010-18)
Scenario C
Different crisis to 2008
Average rates Figure 5
Energy 7.2 -7.3 -2.6
Primary goods -0.5 -36.7 -10.5
Manufacturing 3.3 -3.3 -0.5
Services 1.3 -1.4 -1.4
Investment 1.0 -12.4 1.0
Troops -3.4 -8.3 0.5
Military equipment 4.0 -1.9 -0.2
Migration -1.0 -1.1 -1.1
Tourism 3.5 1.9 1.9
Sport -1.3 -1.7 -1.7
Culture 11.2 -11.7 1.2
Information 16.5 -3.1 16.5
Technology 3.1 -27.4 3.1
Science 3.2 -16.5 3.2
Education 4.3 -1.2 -1.2
Development cooperation 4.7 -12.2 1.3
Source: the authors, based on the Elcano Global Presence Index.

 

Figure 5. Scenario C: different crisis to 2008
  Arguments + Arguments - Estimate (%)
Energy Oil dependency Price war, climate change policies -2.6
Primary goods   Link to oil prices, financial markets -10.5
Manufacturing Transnational nature of current global value chains Relocalisation, production shutdowns -0.5
Services Transnational nature of current global value chains Relocalisation, production shutdowns, tourism -1.4
Investment Transnational nature of current value chains, financial mergers and acquisitions Relocalisation, financial crisis 1.0
Troops Health missions National withdrawal 0.5
Military equipment     -0.2
Migration Migration crises National withdrawal -1.1
Tourism   National withdrawal, health crisis 1.9
Sport   Cancellation of events and competitions -1.7
Culture Digital consumption Reduction in multiculturalism 1.2
Information Increase in news and Internet infrastructure   16.5
Technology Increase in technology development Fall in trade 3.1
Science Increase in publications   3.2
Education   Reduction in movement -1.2
Development cooperation Global health National withdrawal 1.3
Source: the authors, based on the Elcano Global Presence Index.

Just one of the three scenarios (scenario B) results in effective deglobalisation, which would affect all the dimensions, especially the economy, with the total economic presence of the 120 countries for which the index is calculated falling by 630 points (9%) with respect to the most recent value for 2018. The reduction in the soft dimension would be approximately half (10%) and the military dimension would fall by 100 points (Figures 6 and 7). The net result would be a fall of 1,065 points (8.5%) in the aggregate global presence of the 120 countries included in the calculation of the index with respect to the 2018 figure, resulting in a return to the post-crisis levels of globalisation.

However, if the transformational effects are similar to the previous crisis (scenario A), we could expect continuity in the process of globalisation, with cumulative increases, particularly in the soft dimension (over 200 points or 6%) and, to a lesser extent, the economic dimension (just under 150 points or slightly over 2%). The combined effect would be an increase of 391 points (3.1%) in the aggregate global presence, just 0.7 of a percentage point less than the change between 2017 and 2018.

Finally, the scenario based on different transformational effects from the previous crisis, would see a near standstill in globalisation, with the aggregate global presence increasing by just 88 points (0.7%). This would be the result of a more dynamic soft dimension, whose 120-point increase (3.6%) would be offset by a slight fall in the economic dimension (-0.5%), with the military dimension practically unchanged.

Figure 6. Aggregate global presence, projections under scenarios A, B and C (change in the value of the index with respect to 2018)
Figure 6. Aggregate global presence, projections under scenarios A, B and C (change in the value of the index with respect to 2018)
Source: the authors, based on the Elcano Global Presence Index.

 

Figure 7. Aggregate global presence, projections under scenarios A, B and C (percentage change in the index with respect to 2018)
Figure 7. Aggregate global presence, projections under scenarios A, B and C (percentage change in the index with respect to 2018)
Source: the authors.

Conclusions

Similar to the crisis at the end of the 2000s, the current crisis will have an impact on international relations. We can expect to see an acceleration in the structural changes that we have already been seeing in the process of globalisation.

Under all three scenarios identified, the soft dimension will lead globalisation, as was the case in the aftermath of the 2008 crisis, despite the potential for restrictions on the movement of people (which will affect the variables of education, tourism and migration). Above all, this can be explained by the expected dynamism of the variables information, technology and science, sectors that are set to grow, consolidating the technology gap between countries and regions, as well as how this increasingly shapes the roles of different countries and blocks (eg, China, the US and Europe) on the international stage.

Iliana Olivié
Senior Analyst at the Elcano Royal Institute and Coordinator of the Elcano Global Presence Index Project
| @iolivie

Manuel Gracia
Analyst on the Elcano Global Presence Index project
| @mgraciasn

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<![CDATA[ Is Spain doing well or badly in its response to COVID-19? ]]> http://www.realinstitutoelcano.org/wps/portal/rielcano_en/contenido?WCM_GLOBAL_CONTEXT=/elcano/elcano_in/zonas_in/commentary-gonzalezenriquez-is-spain-doing-well-or-badly-in-its-response-to-covid-19 2020-05-04T01:32:30Z

According to the GRID Index, which seeks to compare the quality of countries’ responses to COVID-19, Spain is ranked last. Is there any basis to this comparison in which Spain emerges so badly?

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Original version in Spanish: ¿España lo está haciendo bien o mal en su respuesta a la COVID19?

Comparisons are odious, as the saying goes, and yet we all like making them. In fact, we like them so much that drawing comparisons has become a way of gaining visibility in the media and social networks, a way of claiming a place in the world and even, sometimes, a way of making a living. When comparisons are systematic and quantified and seek to encompass all countries (or all the companies in a sector, or all the universities in the world, or any other comparable subject) they are known as rankings or indices and innumerable examples of them have been produced in recent years. One of the most recent is the GRID Index (Global Response to Infectious Diseases, GRIDTM), drawn up in Australia, which seeks to compare the quality of countries’ responses to COVID-19. Spain is ranked last by this index, a fact that has been widely reported in the Spanish media, whether as ammunition in the internal political debate or to show once again how willing we Spaniards are to talk badly about our own country. Following its initial success in the media, the index has lost credibility die to its inconsistencies.

But is there any basis to this comparison in which Spain emerges so badly? In order to evaluate the quality of countries’ responses to any problem it is first necessary to fully ascertain the nature of the problem. Secondly, there is a need for a yardstick; in other words, one must know what are the appropriate measures required for resolving it. And, thirdly, one must have truthful, complete and homogeneous information regarding the basic data (the numbers of those affected by the problem, the impact of the measures that have been taken). As will become evident below, none of these three requirements is fulfilled in the case of COVID-19.

“(…) the lack of homogeneity in counting methods affects not only deaths but, to an even greater extent, the number of infections”.

It is true that according to the data published by the countries themselves, Spain and Belgium are ahead in terms of deaths per capita caused by COVID-19. Thus, according to the data available at the time writing (29 April 2020), 647 people per million have died from the pandemic in Belgium, while the figure for Spain is 510. These are followed by Italy (453) and France (362). All western European countries are in the upper part of the list, with a mortality rate higher than the world average, currently standing at 28 deaths per million people. China, despite being the origin of the pandemic, only accounts for 4,633 deaths, or three per million, significantly below the average.

The first problem with the data is that there is no consistency in the way they are collected: some countries assume that the deaths of all elderly people during the pandemic, whether in their own homes or at care homes, are attributable to COVID-19, whereas others do the opposite, assuming that old people died due to their previous state of health, and to add even further confusion some countries have counted such deaths among the elderly first in one way and then in another. To add to the opacity, most countries do not have data based on autopsies: these have been avoided in order to prevent the risk of infection, so the exact causes of such people’s deaths are frequently unknown. Did all those who died from pneumonia do so because they contracted the virus causing COVID-19? No-one knows. It is even possible that they were infected but died from another cause. This is why, amid the lack of autopsies and clear diagnoses, epidemiologists commonly use the concept of excess mortality rate for any given period; in other words, the comparison between how many people in each age group normally died in each month prior to the pandemic and how many die in each month during the pandemic.

But the lack of homogeneity in counting methods affects not only deaths but, to an even greater extent, the number of infections. Health services all over the world, overwhelmed by the need to care for patients with symptoms, lack both sufficient capacity and the measuring tools needed to ascertain the extent of the infection. In this context, some countries have been much more capable than others in deploying the resources needed to identify and quantify infections (Germany is a good example), possibly because their health services have not been so overwhelmed by the healthcare needs of patients, but even in these countries the exact number of infections is unknown.

This leads on to another question: how many of those infected go on to develop the illness with symptoms and how many of them then require hospital care, ICUs, ventilators and so on? In order to measure the quality and efficacy of countries’ responses it would be imperative to know the answer to this question, but no such answer exists, only conjectures. The most widely quoted conjecture is that 80% of infected people lack any symptoms, 17% develop symptoms that are either mild or treatable with the current treatments, and 3% die (the WHO calculates 3.4%). Again, without knowing the number of infected cases, these percentages are only estimates based on flimsy foundations.

Given that the virus is passed from person to person, clearly there are certain conditions that make it more easily transmissible: population density and forms of socialisation are the most obvious. This could go some way to explaining the low incidence of the disease in countries with very low population densities and, within countries, its concentration in metropolitan areas (London, Milan, Barcelona, Madrid and New York), and even, within cities, in more densely populated districts. The latter factor, overcrowding in certain districts, is related to immigration and in general to low incomes. In Singapore, for instance, which was thought to have controlled the spread of the pandemic, the infection has made a significant reappearance in densely-populated districts inhabited by immigrants. In Madrid, COVID-19 mortality rates vary considerably depending on districts, and these differences broadly correlate to income levels and the population density of immigrants.

With regard to forms of socialisation, there are countries where interpersonal distancing in excess of 1.5 metres is observed as a matter of course (getting closer to one another is deemed intrusive), while others, such as Spain, tend towards physical proximity and greetings involving contact between hands, faces and bodies.

From this perspective, any health policy that imposes social distancing will be more effective over the short term than one that permits physical contact. But as medical authorities all over the world have explained, such isolation is only a temporary measure to prevent the build-up of cases from overwhelming the response capacity of the health services. Social isolation measures cannot prevent infections from continuing to take place when isolation comes to an end.

It is widely acknowledged that the age structure of societies is one of the most determining factors in the mortality caused by this pandemic: COVID-19 has a disproportionately serious effect on the elderly, so if two countries of the same size are compared, everything else being equal, the one that has the more elderly population will suffer more deaths on this account. Not all viruses are like that (the so-called ‘Spanish flu’ predominantly killed young adults), but in the case of SARS-CoV2 the relationship is well established. Spain, which has one of the most aged populations of any country in the world, is at a disadvantage in this respect. It has also been shown that women suffer the impact of the infection less than men. But the gender difference does not affect international comparisons, because virtually all countries have the same sex ratio.

What this means is that, all other things being equal, the countries most affected by the pandemic ought to be the ones with the most elderly populations, are the most densely populated and have forms of socialisation involving greater physical proximity. However, the data do not back this up: Japan, the country with the most elderly population in the world, with high population density and moreover geographical proximity to China, is well below the average mortality ascribed to the pandemic: just three deaths per million. Does that mean that Japan has performed much better than France or Spain? It is possible that the habit of wearing masks as a means of protection against pollution, sunshine and infections throughout South-East Asia and the Far East has provided a highly significant degree of protection. And the use of mobile phones to trace the movement of infected people has undoubtedly proved to be effective in reducing the spread of the virus. But it is also possible that there are other factors at work.

Indeed, from a genetic standpoint there is the hypothesis that SARS-CoV2, the virus that causes COVID-19, could have different impacts on different parts of the population depending on the most common haplotypes, in other words, genetic variants. This would help to explain why the population of the Far East is suffering much lower mortality rates than Europe and why in the US the pandemic is disproportionately affecting the black population. It is also worth applying the hypothesis to Europe, where it would explain why countries with similar population pyramids and population densities nonetheless have very different mortality rates attributable to COVID-19. The whole of Eastern and South-Eastern Europe (Greece, for example) is suffering much less from the pandemic than Western Europe.

Also from the perspective of genetics, applied in this case to the virus itself and its mutations, hypotheses have been put forward suggesting that the variety of the virus that has reached Europe and the US is more harmful than the one affecting other parts of the world.

“The question of what phase of COVID-19 a country is in does not yet have a clear answer”.

Another consideration that for the time being makes it impossible to ascertain which governments have been most effective is the different developmental phase that the pandemic has reached in the various countries. At the time of writing, African countries, for instance, have very low mortality rates attributable to the virus. Is this because the pandemic is only now starting to spread across the African continent? Is it because heat counteracts the virus (something that has not yet been corroborated)? Is it because, as some have suggested, Africa has more experience than other continents in responding to pandemics?

The question of what phase of COVID-19 a country is in does not yet have a clear answer: responding to this question would require knowledge of what percentage of the population has been infected. At present, neither Spain nor most other countries know for certain what percentage of their populations have been infected (in theory, Spain will know by the end of June, when the study being carried out by the Carlos III Institute and the National Statistics Institute has been completed). It follows that a low number of deaths due to the pandemic at a given moment in a country could mean that it has taken appropriate measures or it could equally mean that the country is still in an initial phase of the spread of the pandemic.

Meanwhile, it is still not clear whether the illness does or does not bestow immunity on those who have recovered from it and this is a key aspect, because, if it does not, until a vaccine can be produced, indefinite isolation becomes the only guarantee of not becoming infected, something that is socially and economically unsustainable. Moreover, if the illness does not produce immunity, the development of a vaccine is much more difficult, because vaccines are based on the ability of the human body to immunise itself against the onslaught of the virus.

With this accumulation of unknown variables, it is impossible to ascertain the quality of the various steps that countries take. Governments are acting in the dark, basing their measures on indications stemming from lessons learnt in other countries, everyone is learning from everyone else in a steady accumulation of experiences, successes and failures. Fortunately, the very globalisation that has allowed the virus to spread from China to the rest of the world in a matter of weeks also enables the rapid transmission of lessons and international scientific cooperation in the search for a vaccine and antiviral treatments.

There is currently a torrent of new information relating to COVID-19, with data about the incidence of the illness being updated daily, thousands of scientists throughout the world conducting research and publishing extremely important findings about how the illness is transmitted, how the virus acts and mutates, and about the success of various medical treatments. Never before in the history of humanity has there been such a concerted intellectual effort aimed at solving a single problem. The consequence is that every day, literally every day, we know more. Meanwhile, those opportunistically making noise on the side-lines can be safely ignored.

Carmen González Enríquez
Senior Analyst at the Elcano Royal Institute

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<![CDATA[ European defence should not be the casualty of ‘the Great Lockdown’ ]]> http://www.realinstitutoelcano.org/wps/portal/rielcano_en/contenido?WCM_GLOBAL_CONTEXT=/elcano/elcano_in/zonas_in/european-defence-should-not-be-the-casualty-of-great-lockdown 2020-04-30T08:08:43Z

Europe is currently facing an unprecedented sanitary crisis, which will have gigantic economic consequences and could turn into a severe depression. A group of experts argue that defence should be included in the critical sectors as the EU renegotiates its next long-term budget that will seek to boost recovery.

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Spanish version: La defensa europea no debería ser la víctima del “gran cierre”.

Europe is currently facing an unprecedented medical crisis, which will have gigantic economic consequences and could turn into a severe depression. Whereas the EU is planning its ‘exit strategy’ and long-term response to the pandemic, the Multiannual Financial Framework (MFF) for 2021-27 has been reframed in recent weeks to be the backbone of its recovery plan. Undoubtedly it will focus on critical sectors such as health and energy. We believe that the defence sector should be included in such critical sectors and that a revised version of the MFF should be the opportunity to reassert a truly ambitious budget for the European Defence Fund.

Today, we are rightfully focusing on the COVID-19 crisis, but the truth is that we do not know what crises could be around the corner. This pandemic has shown that the unthinkable can happen. With the significant geopolitical challenges currently facing the EU, this is no time to cut or under-invest in Europe’s defence. Indeed, COVID-19 will not stop or mitigate the ongoing deterioration in the international security environment, threatening European security and interests. On the contrary, it is likely to make the world more unstable and more insecure. It should also be borne in mind that in addition to the pandemic, there are a number of unresolved crises on the EU’s borders and its wider neighbourhood. Furthermore, the European industrial defence sector is a core element of the new impetus to make Europe’s military capabilities fulfil the purpose of protecting the European public, be a pillar of Europe’s strategic autonomy and ability to act, and be a credible asset for its allies.

Although the COVID-19 and the 2008-10 crises are very different, they may well have highly similar effects on European defence investments and industry, if fiscal consolidation policies are be implemented. Indeed, economic recession and cuts in military spending led to a significant decline in defence investments in the wake of the earlier crisis. With a drop in 2020’s GDP –at the EU level– of possibly two to three times higher than after the 2008 crisis, there is a risk that defence will –again– not be considered a priority by European leaders during economic recovery and fiscal consolidation. Even more worrying, after 2008 and 2010 the cuts will hit research and development (R&D) and its most prospective part, research and technology (R&T), both of which are critical to anticipate long-term defence innovation. However, restricting the funds for defence research risks imperilling the initiation of major defence programmes at a time when Europe is trying to develop next-generation fighter aircraft, main battle tanks, frigates and other capabilities such as unmanned systems crucial for its military and technological edge.

While duplication and fragmentation have been long-standing and major problems in European defence, cooperative programmes were heavily hit after 2010. If such a scenario were to be replicated today, Europe would lose critical industrial and technological capabilities and develop new dependencies on third states. This would not only hamper Europe’s efforts to develop its strategic autonomy but would also significantly hinder the credibility of European nations as military partners, notably within NATO. Already now, as defence firms are increasingly dual-use producers and the economic crisis is hitting the economy, valuable industrial capabilities (advanced technology, highly qualified jobs, etc.) are at risk and may well disappear. Specific support for this sector will be needed to mitigate the effects of the economic crisis and preserve Europe’s long-term future.

We need to learn the lessons of the aftermath of the Eurozone crisis and not repeat past mistakes. The European Defence Fund (EDF) was, following the 2016 EU Global Strategy, and together with the Permanent Structured Cooperation (PESCO), a key initiative to make our defence and security more collective and more credible while ensuring a more efficient use of public spending. Yet even before the pandemic, the EDF was under threat during the negotiations for the next MFF and it was proposed to halve its potential budget. Such a scenario would significantly hamper the progress made over the past decade to ensure that European defence would be an effective and credible reality, leading to a considerable waste of time and effort. Now is the time to redouble efforts and to use the MFF to ensure a greater industrial defence cooperation in the EU. Therefore, we believe the new MFF should at the very least maintain the original proposal of a €13 billion budget for the European Defence Fund (ie, 1% of the Union’s budget) and, if possible, foresee a realistic increase.

As Europe gradually emerges from the pandemic, there cannot be a secure ‘new normal’ without a sound European defence capability.

Signatories are scientific advisers of the Armament Industry European Research (ARES) Group:

Felix Arteaga, Senior Analyst at the Elcano Royal Institute; Daniel Fiott, Security and Defence Editor at EUISS; Keith Hartley, Emeritus Professor of Economics at the University of York; Sylvie Matelly, deputy director at IRIS; Jean-Pierre Maulny, Deputy Director at IRIS; Alessandro Marrone, Head of Defence Programme at IAI; Margarita Šešelgytė, Director at the Institute of International Relations and Political Science, Vilnius University; and Edouard Simon, Research director at IRIS.

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<![CDATA[ Thirty years of EU-Mediterranean Policies (1989-2019): an assessment ]]> http://www.realinstitutoelcano.org/wps/portal/rielcano_en/contenido?WCM_GLOBAL_CONTEXT=/elcano/elcano_in/zonas_in/wp8-2020-khader-amirah-thirty-years-eu-mediterranean-policies-1989-2019-an-assessment 2020-04-27T11:57:42Z

This working paper seeks to present a critical overview of the EU’s latest major Mediterranean policies, analysing the context, the text and the pretext of each of these policies.

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Original versión in Spanish: Treinta años de políticas mediterráneas de la UE (1989-2019): un balance.

Index

(1) Introduction – 3
(2) The Euro-Mediterranean Partnership: the Barcelona Process (1995) – 4
(2.1) The European and international context – 4
(2.2) Structure and objectives – 5
(2.3) Difficulties and deficiencies – 6
(2.4) Inconsistencies and lack of political will – 9
(3) The European Neighbourhood Policy (2004-19) – 11
(3.1) Origins of the new policy – 11
(3.2) From multilateralism to bilateralism – 13
(3.3) The dilemma between values and interests – 14
(4) The Union for the Mediterranean (2007-19) – 16
(4.1) Proliferation of initiatives towards the Mediterranean – 16
(4.2) Reactions to the French initiative – 17
(4.3) The complicated logic of the ‘union of projects’– 18
(5) The EU and the ‘Arab awakening’ of 2011 – 20
(5.1) A neighbourhood that calls for change – 20
(5.2) The accentuated dilemma and the EU’s lost opportunity – 21
(5.3) Pending lessons from the ‘Arab awakening’ – 22
(6) Conclusions – 23
Bibliography – 25

(1) Introduction1

From the EU’s perspective, 1989 was an annus mirabilis. The fall of the Berlin Wall and the end of the Cold War were events of great historical and geopolitical importance, not only for international relations, but more specifically for relations between the EU and the Mediterranean. This is not to say that the southern shore of the Mediterranean had been ignored, but the Cold War had overshadowed many of its problems and challenges. The southern Mediterranean had only served as a ‘security chessboard’ for the policies and strategies of the US and the Soviet Union. From a Western perspective, the southern Mediterranean was not seen as a region per se, but simply as a line of communication and a route for trade and oil flows that could be threatened by the presence of the Soviet Union. In short, the Mediterranean was perceived simply as a secondary theatre of antagonism between the superpowers.

In the early 1990s the EU or some of its member states were involved in multilateral policies (Renewed Mediterranean Policy) or smaller cooperation initiatives (Dialogue 5+5 and Foromed), or even NATO’s Mediterranean Dialogue. However, with the end of the bipolar system, the EU shifted its focus to the North-South divide. It considered that the Renewed Mediterranean Policy was not ambitious enough to prevent a possible destabilisation derived from socio-political and economic disparities. As a consequence, the EU felt the need to forge a more comprehensive policy towards the Mediterranean. The shift in emphasis came at a time when some controversial but influential political thinkers, such as Samuel Huntington, raised the question of the cultural dimension of security, arguing that the ‘clash of civilisations’2occurs along the lines of religiously-inspired militancy against Western values.

Such a thesis is particularly pernicious because it builds on old stereotypes and reinforces them under the guise of critical scholarship. Indeed, the idea of confusing Islamist fundamentalism with Islam as a religion is not new. As early as 1979, Edward Said, in his seminal book Orientalism, observed that trend. He stressed that ‘negative images of Islam are very much more prevalent than any others, and that such images correspond not with what Islam “is” [...] but to what prominent sectors of a particular society take it to be’.3 But the timing of the publication of Samuel Huntington’s article in Foreign Affairs in 1993, just after the collapse of the Soviet Union, was undoubtedly a factor that contributed to the worldwide spread of the ‘clash of civilisations’ thesis, where ‘Islam’ (and not just Islamist groups) is presented as a kind of scapegoat for everything the West does not like in the world’s political, social and economic spheres.

Concerned about the fallacy of such a thesis, the EU felt the urgency of demonstrating the dangers that can result from such a simplistic diagnosis that overemphasises the notion of a clash of civilizations. For the vast majority of Europeans, it was clear that many of the security-related concerns in the southern Mediterranean were not military in nature or culturally based, but were primarily ‘soft security issues’.4 These included economic disparities, the demographic divide, migratory flows and the persistence of authoritarian regimes. The idea of a ‘new partnership’ emerged in this context of conflicting views about security in the Mediterranean.

This working paper seeks to present a critical overview of the EU’s latest major Mediterranean policies, analysing the context, the text and the pretext of each of these policies.

Bichara Khader
Professor Emeritus at the Catholic University of Louvain and founder of the Centre for Studies and Research on the Contemporary Arab World (CERMAC)

Haizam Amirah Fernández
Senior Analyst for the Mediterranean and Arab World, Elcano Royal Institute. Professor of International Relations at the School of Global and Public Affairs, IE University | @HaizamAmirah


1 A Spanish version of this working paper was published as a chapter in J.M. Beneyto Pérez (Dir.), J. Maillo González-Orús & B. Becerril Atienza (Coord.) (2020), Tratado de Derecho y Políticas de la Unión Europea (Tomo X): Las Relaciones de la Unión Europea con Áreas Regionales y Terceros Estados, Editorial Aranzadi, January.
The authors would like to thank Adelaide Isaacs for her assistance with the editing and proofreading of this document.

2 S. Huntington (1993), ‘The Clash of Civilizations?’, Foreign Affairs, vol. 72, nr 3, summer, p. 22-49.

3 E. Said (1981), Covering Islam: How the Media and the Experts Determine How We See the Rest of the World, Pantheon Books, 1981, p. 144. See also E. Said (1979), Orientalism, Vintage Books.

4 S. Stavridis & N. Fernández Sola (Coords.) (2009), Factores políticos y de seguridad en el área euro-mediterránea, Prensas de la Universidad de Zaragoza.

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<![CDATA[ Oil markets, energy transition, climate governance and COVID-19: the short, the medium and the long term ]]> http://www.realinstitutoelcano.org/wps/portal/rielcano_en/contenido?WCM_GLOBAL_CONTEXT=/elcano/elcano_in/zonas_in/wp6-2020-escribano-lazarotouza-oil-markets-energy-transition-climate-governance-and-covid-19-short-medium-and-long-term 2020-04-22T12:44:10Z

While the priority of governments and citizens is undoubtedly the fight against coronavirus, the radical change in the short-term context should not distract energy and climate policy from the challenges it faces over the medium and long terms.

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Summary

The COVID-19 pandemic has radically altered the energy outlook, both in economic and geopolitical terms. Climate governance has also been significantly affected in a key year for increasing ambition. This working paper analyses the impact of the coronavirus crisis on the geopolitics of oil and gas, on the evolution of the European Green Deal and on climate governance, updating and deepening a previous policy brief published in Spanish.1 It concludes that, while the priority of governments and citizens is undoubtedly the fight against coronavirus, the radical change in the short-term context should not distract energy and climate policy from the challenges it faces over the medium and long terms. Furthermore, energy and climate policies will be key to shaping an optimal policy response to the crisis.

Index

Summary – 2
(1) Introduction – 2
(2) Oil and gas diplomacy: from price war to G20 amid demand collapse –3
(3) Energy transition and the European Green Deal against coronavirus – 10
(4) Climate and pandemic – 17
(5) Conclusions – 22
(6) References – 24

(1) Introduction

The coronavirus crisis has completely transformed the global landscape, and energy and climate issues have not escaped unscathed. Rarely have analysts had to rectify so much in so short a time. One of the problems facing social scientists in this context is that, unless they specialise in matters related to public health, there is still no academic literature available to guide the reflections of public decision-makers and think-tanks, which are starting to respond to the challenge necessarily in a reactive way. Not only oil prices and production forecasts have drastically changed: the very nature of global oil diplomacy has mutated, with the OPEC+ and the G20 reaching unprecedented agreements that signal the exceptional times the market is undergoing.

It has been said that the coronavirus crisis has led to ‘a situation of radical uncertainty, which may persist over time’.2 To some extent this observation may be viewed as an amendment to almost all the conjectures made about the possible course of 2020 at the beginning of the year.3 ‘Almost’, because although the outlook over the short term has changed in tandem with the spread of the virus, the challenges of the energy transition and the fight against climate change remain. In line with the overlapping stages of the response to the COVID-19 crisis (immediate response to the health crisis, contention of the twin supply and demand economic shocks, economic recovery and transformation of the economic model), this paper analyses the possible impact of the coronavirus crisis on the following issue-areas and time horizons: in the short-term, on oil and gas geopolitics and geo-economics; in the short to medium-term, on energy transition and the European Green Deal; and in the short- to long-term, on climate governance and climate policies. The paper concludes with some tentative reflections on energy and climate policy.

Gonzalo Escribano
Director of the Energy and Climate Programme, Elcano Royal Institute
 | @g_escribano

Lara Lázaro-Touza
Senior Analyst at the Elcano Royal Institute. Lecturer, Cardenal Cisneros University College (affiliated to Madrid’s Complutense University) and IE School of Global and Public Affairs | @lazarotouza


2 Federico Steinberg (2020), ‘Liderazgo y cooperación ante la incertidumbre radical’, 19/III/2020.

3 Escribano (2020); Lázaro Touza (2020).

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<![CDATA[ Coronavirus: trends and landscapes for the aftermath ]]> http://www.realinstitutoelcano.org/wps/portal/rielcano_en/contenido?WCM_GLOBAL_CONTEXT=/elcano/elcano_in/zonas_in/ari-51-2020-ortega-coronavirus-trends-and-landscapes-for-the-aftermath 2020-04-20T12:33:57Z

This paper examines several possible trends in the world and in Spain originating from the coronavirus crisis, the policies implemented and their consequences, in four dimensions: temporal; economic and social; political; and geopolitical. It concludes with three possible scenarios that stand out among the many possibilities.

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Original version in Spanish: Coronavirus: tendencias y paisajes para el día después.

Theme1

This paper examines several possible trends in the world and in Spain originating from the coronavirus crisis, the policies implemented and their consequences, in four dimensions: temporal; economic and social; political; and geopolitical. It concludes with three possible scenarios that stand out among the many possibilities.

Summary

In an attempt to peer into the future, this paper analyses a range of trends that are beginning to emerge as a result of the coronavirus crisis and their possible consequences for a world transformed and for Spain. The trends are grouped into four distinct categories, although they interact with one another: (1) the temporal (the duration of the crisis and the different rates at which it is unfolding); (2) the economic; (3) the socio-political; and (4) the geopolitical. By way of conclusion, three possible scenarios (from among many others) are explored: (1) ‘every one for himself’, the most adverse; (2) the pursuit of an ‘international collective intelligence’, which would be the most positive; and (3) an intermediate scenario of ‘step by step muddling through’. The goal is to provide a foundation for public and private decision-makers.

Analysis

Introduction

The coronavirus crisis is already changing the world. It is transformative. In the current circumstances, foreseeing the impact of coronavirus and the measures taken to combat it is an impossible task. In an exercise of future-gazing, however, it is important to try to identify trends and to anticipate problems that may lie in store, even if it is only in terms of alternatives, to be able to get ahead of the curve amid the difficult and complex decisions to be taken over the coming days and weeks. It is not possible at this juncture even to hazard what the new normality might be like once the crisis is over. It is not a matter of being alarmist, but it does require flagging up problems that are being caused in order to prepare the policies and institutions needed to respond to them, or, better still, anticipate them, although more questions arise than answers. And it is unrealistic to expect solutions for everything.

Timeframes are important. It is not a matter of divining what the world will be like in 2030 –although we ought to start to think about and know what world we want or might want within 10 years– but rather scrutinising trends over the medium term, for the next two or three years. The utility of the exercise lies above all in providing a comprehensive overview. Four types of factors are examined along with the courses they might take, their causes and their consequences: time, the economy, politics and geopolitics. Their combination could give rise to a limitless number of scenarios, but for the purposes of clarity three will be explored. The aim is also to enable public and private decisions to be taken that are well-informed and operating at multiple scales.

While it does not refer exclusively to Spain, this (inevitably incomplete) exercise is essentially conducted from a Spanish and European perspective.

Strands of development

The aforementioned dimensions in the strands of development are not only interrelated, they affect each other in feedback loops. Certain trends emerge. Others were already under way and may now speed up or go backwards. A key concept here is not so much that of resilience, which in engineering is ‘the ability of a material to absorb energy when it is deformed elastically’, or in psychology ‘the ability to mentally or emotionally cope with a crisis’, since we are not going to return to the starting point. A more useful concept might be hysteresis, the tendency of a material to preserve one of its properties in the absence of the cause that triggered it, which amounts to saying that there will be permanent consequences of this crisis once its causes have been overcome (definitions from Wikipedia). By extension, the concept of hysteresis is applied to phenomena that depend not only on the current circumstances, but also on how such circumstances have been arrived at. It is even worth speculating whether we might witness what Nassim Nicholas Taleb calls ‘antifragility’: the property of systems to increase in capability to thrive as a result of stressors, shocks, volatility, noise, mistakes, faults, attacks or failures. In other words, whether after the coronavirus crisis we will be able not only to resist and preserve but to improve, whether we will be able to learn from all we will have endured.

First strand: duration – short/long/intermittent

The title of this paper refers to ‘landscapes for the aftermath’. But the temporal location of this ‘aftermath’ is the first great unknown. The health, lifestyle, economic and social crisis could last for two months or much longer. The way Wuhan and Hubei province in China have developed, which needs to be subject to ongoing monitoring, suggests that after two long months of strict lockdown, some of the exceptional measures restricting freedom of movement can be lifted, but in a piecemeal and highly gradual way. This does not mean that the exceptional period has concluded or the virus has been vanquished. For this it will be necessary to find antiviral treatments or medication to counter its effects or to discover a vaccine, which is by no means guaranteed, particularly if the virus is mutating. Indeed, many experts are of the opinion that 12-18 months will be required to come up with a vaccine, and more time needed to distribute it. Meanwhile, there could be fresh outbreaks of the disease in areas where the virus has already struck, although in principle they should be easier to control than in the current situation, since more people will be immune and medical supplies and management experience will have improved.

The virus and disease have spread around the world in an asynchronous, rather than synchronous, way, however. It started in China and Asia, before spreading to Europe, also at different rates. The Americas (north and south) have lagged behind, as has the Indian subcontinent. But Africa is subject to the greatest time lag, which, as we shall see, could have consequences and extend the global duration of the pandemic and the subsequent crisis. And the asynchronicity applies not only to the spread of the virus and the quarantine measures, but also to the next important phase, the emergence from socio-economic hibernation, which ought to be coordinated (not synchronised) at a global level.

  • Short duration (three-four months): this entails a relatively early lifting of the quarantine measures, improvements in the treatments, gaining time and cutting infection and death rates in the hope of acquiring a vaccine and other medication. Even in this scenario there will be fresh outbreaks, as occurred in Hong Kong and on mainland China. The important thing is that they are kept under control. This is what Tomas Pueyo refers to as the ‘dance’ period, after the ‘hammer’, in his now-famous article. There will be a gradual process of ‘hedonic adaptation’, as seen in China, and a step-by-step reactivation of the economy and some jobs.
  • Long duration (5-18 months): this entails the need to maintain the quarantine measures for longer. There is the possibility of fresh outbreaks (which we will be better prepared to deal with and may be manageable without overwhelming ICUs). The economy may come to a standstill (to varying degrees) over a long time, alternating between periods of various weeks of quarantine and others with no quarantine. If it drags on, it could lead to a change of policy to give priority to reactivating the economy, albeit at the expense of more infections, but with growing herd immunity and more healthcare resources.

Second strand: economic and social – profound and lengthy crisis taking a social toll, or relatively rapid recovery

The time factor will also be decisive for determining the scope of the ensuing economic and social crisis. Falls in annual GDP of between 7% and 20% are forecast if the economic standstill –of varying levels of intensity– required to combat the virus extends to two or three months. This would be a much worse recession than the one unleashed by the crisis triggered in September 2008. It might even be doubted whether the term ‘recession’ adequately captures such a standstill or ‘hibernation’ (Paul Krugman prefers to call it a ‘medically-induced coma’) impacting so widely across national, European and global economic life, with its potential to pave the way to a depression. We are simultaneously suffering a supply side (output) and a demand side (consumption) shock and a major impoverishment effect (the value of stock markets has fallen by half in the US, although slightly less in Europe). It is important that the crisis should not spread to the financial system, which is in better shape than in 2008-10 but lacks sufficient safeguards. New bank bailouts would divert the resources needed for healthcare, social and employment policies, resources that are in turn weakened by a potential liquidity crisis in the global payment chains for goods.

According to Ángel Gurría, director of the OECD, the global economy is set to suffer for a prolonged period. Gurría and other economists, such as Nouriel Roubini, rule out a V-shaped recovery, in which the economy first nosedives and then bounces straight back. A U-shape is the only barely feasible alternative to an L-shaped depression. China has not experienced a drop in its GDP since the Cultural Revolution of 1968, and as the second-largest economy on the planet, this could have consequences for the whole world and for its own internal stability and international status. The same would apply to a recession of indefinite duration in the US and Europe.

The more activity is suspended now the more will have to be reactivated in the future, although it will undoubtedly be a gradual, step-by-step process. Spain, which had to endure severe and now rarely-mentioned internal devaluation in the wake of the 2008 crisis, did not recoup the GDP it lost until 2016. GDP may be recovered in a matter of years, relatively few if there is a coordinated European and global solution, for which the G20 (which until now has restricted itself to joining national efforts) could serve, as it did in 2008-09. In fact, there are no precedents for how to rescue an economy from the sort of standstill we are now witnessing. Economic output in wartime is not interrupted to the extent that it is now, although priorities change.

  • Even if output recovers soon, consumption will not recover amid the impoverishment of many people and their changes of behaviour (saving more out of fear of the future and the aforementioned hedonic adaptation). Amid the trepidation and the slow return to what will be the ‘new normal’, tourism, aviation and the hospitality industry –all fundamental for Spain– are the sectors that will suffer the most for the longest.
  • It is likely that the salaries of both private and public employees will fall, which, together with high unemployment, will hamper recovery in demand. A change may occur, an adaptation in the hedonic pattern. Spending that is not strictly necessary, and certainly conspicuous spending, will be cut back for some time. Patterns of consumption will change for a prolonged period. Consumers will put more emphasis on purchasing goods originating from within their own country’s borders. Less travel and fewer mass leisure activities. But there will be winners too.
  • The economic crisis is going to affect the life and prosperity of everyone, with a fall in welfare. Societies and economies are going to emerge more impoverished, and states (and the EU) with inevitable debt, but on a colossal scale. The fall in middle and working class incomes could accelerate (with a consequent political impact), in addition to the aforementioned impoverishment effect.
  • The process of deglobalisation was already under way and has gained pace with this crisis. A collapse in international trade has already occurred, which will become evident as things recover. Demands for policies involving greater national (or at least European in our case) control (sovereignty) of supply chains are starting to become widespread, not only in terms of healthcare equipment but all manner of industrial products. There are trends pointing to greater economic nationalism and protectionism. Putting one’s own country first will predominate, even without Trump, at least in the short term. In the EU, will it be a case of ‘Europe first’ rather than the member states? Over the long term, the need for global governance mechanisms to make the world more resistant to systemic threats, including slowing down pandemics and coordinating economic recovery, could and should achieve the opposite, although there is no guarantee of this.
  • We are heading for reduced globalisation (deglobalisation), less centred on physical supply chains and more on their digital counterparts. Online competition surrounding our employment/tasks may increase to the level of what Richard Baldwin refers to as ‘globotics’.2
  • When the health crisis subsides, the landscape it leaves could be bleak. We could see a ‘Katrina effect’, without physical destruction, so that when the high tide of the crisis subsides, many companies, particularly SMEs, will remain at a standstill without any chance of recovery. This applies at a national, European and global scale.
  • We are already seeing an effort by states to save companies. In some strategic cases, which could end up in nationalisations, this is to save them or to prevent them falling into the hands of undesirable foreign owners cashing in on their weakness. This is something that the Spanish measures, among others, allow for. All states are taking steps to streamline and facilitate loans.
  • Unemployment, even if temporary, is already rocketing in many parts of the world. It catches Spain at a bad time, having not yet absorbed the shock of the previous recession and internal devaluation.
  • The lockdown and remote working policies have boosted digitalisation and many people’s digital skills. This could entail permanent changes in working habits and arrangements, a good example of hysteresis.
  • In the reconstruction and recovery phase there may be a temptation to strengthen automation technologies to replace humans, a trend that was already under way.
  • As a world and as a country we are far wealthier than in, for example, 1918 (the First World War and the global pandemic of the so-called ‘Spanish Flu’), in 1929 (the global economic crisis) or in 1939 (the end of the Spanish Civil War). But this does not necessarily mean that countries are going to recover sooner than the least advantaged. It is likely, but it depends on their capacity for adaptation.
  • There is a reversion to the state, to all things public, to the welfare state as a safety net and to public policy. This is the case both in terms of combatting the disease, offering a safety net for those who lose employment and income and salvaging the viability of companies and the economic system. The maintenance of low interest rates will aid this. Neoliberalism, and what it has meant for healthcare policies, could lose viability as an option, to the benefit of the principle of more public intervention (social democracy, traditional Christian democracy, etc.). Other economic paradigms may gain ground, among them the monetisation of the deficit (certainly in the US).
  • But over the medium to long term it will be necessary to increase the tax burden, and this will be extremely difficult without binding agreements governing international and supranational coordination and cooperation.
  • It will be necessary to recalibrate the tax system. There has been a general trend in the Western world since 1980 to reduce taxes on capital and on the most well-off, and increase those on work and consumption. Kenneth Scheve and David Stasavage have shown that the wealthy are willing to pay more taxes following wars.3
  • There will be a need to agree a restructuring of the taxation system, a new and fairer mix within each country and between countries (tax havens, including those operating in the EU). In a context of capital movement facilitated by new technologies this is not possible without robust transnational institutions.
  • Large businesses and philanthropists in general are making generous gestures in the fight against the virus, both in terms of donations and by avoiding direct dismissals in favour of temporary lay-off schemes and/or reduced working days. This is occurring both in Spain and other countries. Will this translate into companies taking a step back from the maximisation of profits (which has been the order of the day since the 1980s) for shareholders and investors, and above all for their boards of directors? There is a mixture of ethics and aesthetics (reputation) that could have a creative outcome.
  • European efforts and solidarity are going to be decisive for slowing down the effects of the crisis and paving the way to recovery. European construction makes headway at times of crisis. Will this be an opportunity? It remains to be seen whether we are heading for a more member state-based Europe, as evident with the management of internal and external borders, or more Europe. Old divisions have reappeared with the new crisis. However, it is also possible to discern new forms of alliance (as suggested by the letter from Pedro Sánchez and the leaders of eight other countries calling for coronabonds prior to the European Council meeting at the end of March).
  • The ECB has so far acted resolutely with the Pandemic Emergency Purchase Programme. And the Commission has given the green light to relaxing the straightjacket of the Stability Pact and has temporarily suspended the rules relating to state aid, thereby heralding the end of austerity policy and a new policy of fiscal stimulus. It will be necessary to ensure coordination to avoid a repeat of what happened in 2008 when, after an agreement at the G20 (and in the Eurozone) to make major fiscal injections, Germany and the Netherlands imposed a radical lurch towards austerity in the spring of 2010.
  • The question is, when will there be a major European intervention in the fiscal realm, a possible European Marshall plan self-directed at the EU? Now, or when the possibility of starting to reactivate and rebuild is on the table? It is also worth remembering that the recession that began in 2008 looked as if it was going to be short lived, but after a brief recovery it came back. It does not seem that Eurobonds will get off the ground. The important thing is to ensure that the additional spending incurred by this crisis does not translate into greater debt for individual countries: everything else ought to be secondary. A great deal of investment will be needed for the reactivation, and the budgetary Multiannual Financial Framework will need to have more resources, something that could turn into a type of mutualisation within the EU. The commitment to digital and green agendas could help.
  • Europe also needs to make headway in other areas. Despite the existence of the European Centre for Disease Prevention and Control, which oversees an Early Warning and Response System, the EU does not have the final say on health matters, and it shows. There is a clear need for an independent European public health authority.4
  • Some measures that are being taken (such as so-called ‘helicopter money’, giving financial aid to people in need, as the US is proposing) point towards the introduction of basic, if not universal, income. It is part of the new paradigms and of hysteresis.

Third strand: political – social obedience/disobedience

One of the dangers of this crisis is social and political breakdown. This goes beyond the imposition, depending on the duration, of social distancing as a general rule of life.

Factors of civil obedience/disobedience

The following elements, as well as certain socio-economic factors already mentioned above, may contribute to varying degrees of social unrest and breakdown or an increase in civil obedience or disobedience, in a situation of inequality that dates back some way:

  • Fear, both of the disease and the economic downturn, and the prospect of what comes next.
  • An excessive period of lockdown and the suspension of a face-to-face social and economic life, with a notable increase in psychological damage that currently revolves around the sense of impotence felt by members of the public and could lead to widespread depression, also caused by loss of employment and life prospects.
  • Protests about the unequal social impact (unemployment and bankruptcies), particularly when the lockdown is lifted or eased. It is during recovery phases that protests are most likely to break out.
  • A delicate moment comes when (if) there are vaccines or treatments, but not enough for the entire population. It will be necessary to avoid new inequalities (in the 2011 film Contagion, they are distributed by date of birth).
  • The decline of the middle classes, due to impoverishment and unemployment. This was already under way, but will speed up. Together with the problems of the much more vulnerable working classes, it will undermine the social basis of democracy.
  • The intergenerational conflict may be aggravated if young people –who are less susceptible to the virus– perceive their life prospects as even bleaker than before. There could be a clash with the baby-boomers, the most privileged (salaries for those who had a relatively secure job and properties, including housing) in the crisis of 2008. The ‘lost generation’ feeling among the millennials could intensify with a new setback for their life prospects. Roubini argues that this crisis is a generation-defining moment for younger age groups.5 This includes China. Although young people feel less affected by this pandemic, health is now going to be added to the list of younger generations’ priorities (the fight against climate change, feminism and inequality). All are sectoral, but for the first time they cut across many areas of politics.
  • Recovery from the coronavirus crisis could give rise to a society with more structured organisations, possibly this time more vertical and hierarchical, with the real ability (one that is facilitated) to channel specific and practical demands to the upper reaches of public decision-making. This could lead to greater proximity between the Third Sector (civic society organisations, NGOs, charities, etc), the Third Pillar as Raghuram Rajan refers to it,6 and state power. First, because the public sector has been overwhelmed in its efforts to manage a crisis on such a scale (bereft of any alternative, the private sector not being up to the task). Secondly, because the national strategies also require an agreed and coordinated implementation at the local level to achieve the desired results as quickly as possible, and to save transaction costs.
  • The need for a new social contract is already being set out, with more social security, health care and educational provision in an era when the job market is changing rapidly thanks to the Fourth Industrial Revolution. What is the minimum level of social services that states ought to provide?

Political consequences

All Western governments are liable to be hit by delays in their initiatives and by healthcare management problems, beyond certain protocols that have been set out.

  • The perception of mismanagement and poor planning on the part of many governments, although this will vary depending on how the various situations unfold.
  • Destabilisation of political systems (including China if it fails to get back to the path of sufficient growth).
  • Emergence from the health crisis but not the economic crisis could generate new socio-political movements in many countries, as in 2010-11 when the Occupy, Indignados and 15M movements were born, but this time larger and more irate.
  • For now, the populists in power are the ones managing the crisis worst. But in the US, for the time being at least, Trump’s popularity is rising despite, or because of, the disastrous management of the crisis. The situation could fuel the emergence of new populist movements, and the strengthening of Western societies’ polarisation, as is already being observed.
  • Another (already existing) trend that could gain strength involves calling for strong leadership, even authoritarian or totalitarian; likewise, a return to strong ideologies. The Chinese model could gain adherents not only in the Third World but in parts of European societies. There is already a certain hankering after communism as a Chinese or a ‘new’ option, as the Slovenian neo-Stalinist philosopher Slavoj Zizek has argued.
  • Weakening of the independent press (the Fourth Estate, essential in democracy), which was already under way (the 2008 crisis and competition from the Internet) owing to the steep decline in advertising to the benefit of states, governments and the Fifth Estate, the social media and similar platforms, where misinformation may receive a fillip.
  • Reinforcement of techno-authoritarianism, under the guise of personal control measures for monitoring the virus, with losses of privacy and ongoing rather than temporary instruments of control. Something will depend on whether societies have sufficient strength and collective intelligence to disactivate them once the crisis is over. So far, government initiatives in this field have focused (unlike in Singapore, for example) on anonymised mass data, adhering to the EU’s GDPR regulations.
  • Reinforcement of ‘us first’ approaches, as opposed to global or at least regional cooperation, could lead to greater nationalism and protectionism. Europe will be important in this respect.
  • Even greater rejection of immigration. This could especially apply to Europe if the coronavirus crisis cuts a swathe through Africa with a time lag. A return of borders within Europe. The preservation of the internal market and Schengen is feasible, however, albeit with restrictions until the pandemic can be brought under control.
  • There is also an opportunity for those who advocate robust multi-level interventions by the state, without ignoring the contribution of scientists and experts, and supporting the idea that we are a single humanity, broadening humans’ basic instinct for cooperation.
  • In a general sense there is going to be a questioning of the way states operate. In Spain there is the prospect of a crisis involving the system of autonomous regions; in the case of healthcare, this has revealed some operational failings owing to a distribution of powers in which the central government was unable to ascertain the medical resources possessed by the regions, which are responsible for them, or impose rules until the state of emergency had been declared.

Fourth strand: geopolitics – conflict or cooperation?

Geopolitical rivalry, and the reasons that sustain it, has not stopped with coronavirus. Depending on its depth and duration, the crisis could lead to a more cooperative or a more divided world; or to ongoing tension between the two alternatives for an indefinite period.

  • Although power is also relative, in absolute terms all states or groups of states are going to emerge weakened from this crisis. We may witness greater or lesser geopolitical rivalry, but based on weaker powers, possibly with temptations, but with reduced abilities to act on them.
  • Acceleration of global disorder. The existing structures do not work.
  • Acceleration of the process of de-Westernisation, which was already under way owing to the rise of the East (which could, nonetheless, be slowed down although not reversed by the crisis) and the internal divisions within the West. Will we become more Asiatic in general, more communalistic, less individualistic?
  • Accelerated de-Westernisation could lead to de-Europeanisation, even to the collapse of the EU if it is not able to react concertedly or, on the contrary, to new economic and geopolitical progress towards European integration.
  • Despite the number of migrants and refugees who want to come to the continent, Europe’s image was already tarnished. No other part of the world had considered following its model of integration. The manner of managing the health crisis has added to the poor image, and to its loss of influence in a world that has lost its eurocentrism. The way in which it manages the economic crisis could help it regain prestige and influence, but the EU is going to have to focus its efforts on emerging from its internal crisis. The EU will wield influence on the world to the extent that it is able to resolve its internal problems and emerge from the crisis in a coordinated, integrated and mutually supportive way. Otherwise, the idea of a more ‘geopolitical’ EU, or of ‘strategic sovereignty’, will be devoid of all credibility. With regard to Brexit, there will be no alternative but to extend the transition period.
  • US leadership has been absent (in contrast to Obama’s reaction to the Ebola epidemic). One factor that will weigh decisively on scenarios over the medium term is whether Trump is re-elected in November, because the coronavirus crisis has become a factor of enormous uncertainty. While a pragmatic Trump could modify some of his proposals, a Democrat such as Joe Biden in the White House from January (with a female Vice-president who could replace him at any time if needed) could drive a more multilateral approach, with more attention to the importance of allies to the US, but who will still maintain misgivings with regard to Russia and China. A new internationalism cannot be ruled out, like the one Woodrow Wilson tried but failed to achieve and that Franklin D. Roosevelt did succeed in establishing even before the end of the Second World War, this time with health as its basis. Were Trump to be re-elected on the other hand, it would aggravate the problems of global governance and relations between allies and would increase antagonism with China.
  • US-Chinese rivalry will continue being a structural factor in the (new) world order, especially in the field of technological and ideological domination. China, following its management of the health crisis, has seen an opportunity to bolster its international image (and utility), although as more becomes known its image may change. China has major internal economic and social problems, however, which may undermine the financial capabilities it has earmarked for some of its geopolitical instruments, such as the Belt and Road Initiative. At all events, the world’s centre of gravity will continue shifting towards the East, including in ideological terms.
  • The UN has been completely absent during the crisis. Only a restoration of trust among the great powers will be capable of establishing the centrality of the Security Council. The WHO has proved inadequate; a Global Health System is needed.
  • The G20 worked in 2018 because there was US, British and French leadership (now it is the Saudis in the chair). This time it is being reduced to a framework lacking any genuine capacity for coordination although, as mentioned, it could be regained as a means of emerging from the crisis.
  • The crisis is highlighting the need for multi-level and inductive governance (national, international and global), in other words, more complex, with diverse actors –states and organisations of states, companies, citizens, NGOs, etc– taking part, because the state sector on its own is not enough.
  • The need to prioritise national aid for the underprivileged will reduce development aid even further –European, national and general– and cast the attainment of the 2030 Sustainable Development Goals in even greater doubt.
  • Care should be taken not to abandon Africa, Europe’s neighbour and the continent with the fastest-growing population; this is particularly true at a time when borders are being closed and the subsequent increase in social inequality and slowdown in economic activity, with major informal sectors lacking safety nets (something that also applies to Latin America and parts of Asia). Migration has stopped (but there is a danger if intraregional migration within Africa, already the greatest, increases even more: disarray and greater infection rates could trigger an exodus). It is not clear that it is going to resume. This crisis could lead to a multiplicity of failed states on our doorstep and in the MENA region, with all the attendant risks and dangers.
  • The developing economies in Latin America have already started to suffer. They have been subjected to abrupt withdrawals of capital and currency depreciations and, apart from the weakness of their health systems, they cannot withstand the economic standstill in prospect, also because of the importance of their informal sectors. It is likely that there will be balance of payments crises and rescues led by the IMF. Political crises are in prospect.
  • The fall in the oil price, stemming from the industrial and social shutdown and competition between Russia and Saudi Arabia, and that of other raw materials, will have an economic and geopolitical impact on the producer countries. Russia appears to have better financial reserves for withstanding this situation.
  • Efforts being made in the fight against climate change could be eased, although the crisis and deglobalisation could contribute to helping the environmental situation, and to demonstrate that more can be done and more can be asked for in order to halt climate change. Awareness of the need for public intervention in order to confront risks could help to get an institutional infrastructure up and running that facilitates interventions to slow climate change.
  • As mentioned, support for some form of deglobalisation, and nationalism, is also going to grow. From a security perspective these are delicate times that could pave the way to various kinds of conflict. It is not the right moment to undermine defence policies.
  • The renewed dependence on online activities –both economic and social– will lead to greater emphasis being placed on cybersecurity in all countries. It will also focus attention on the possibility of biological attacks and bioterrorism, and the need to defend against them.

Conclusions

Three scenarios

As suggested in the introduction, there are multiple scenarios –or landscapes– but for the sake of simplification and as illustrative examples, three base scenarios will be set out; their simplicity contrasts with what in reality is enormously complex.

Scenario 1: ‘every one for himself’

This involves both the health and the economic crises being lengthy and profound. There is a globally diachronic aspect to the crisis, which could delay recovery, trigger a crisis in the financial system and lead to unemployment levels in excess of 30% in advanced countries. Lack of international coordination and solidarity. Lifting of the lockdown policies to reactivate the economy, with considerable human cost. Deglobalisation (‘my country first’). Social unrest and the strengthening of populists and authoritarian regimes. Undermining of democracies due to the collapse of the middle classes. Global chaos. De-Westernisation and de-Europeanisation. Multiplicity of failed states in Spain’s periphery. Risks of social upheavals and, eventually, armed conflicts.

Scenario 2: ‘collective international intelligence’

Health crisis persisting over the mid-long term. Public-private international cooperation in the fight against the virus (healthcare resources, apps, treatments and vaccine) and in the recovery from the economic crisis. Coordination at the G20 for fiscal stimulus measures and the establishment (at the UN) of a global health system. Reform of capitalism, with a greater role for the state sector. Limited social protests thanks to direct aid and lines of credit for companies. Greater European integration, with the financial and political institutions working in the same direction. Limited deglobalisation. Recovery of trust in governments, and in open systems in democracy. Containment of the geopolitical confrontation between the US and China, and with Russia, and even cooperation. Cooperation with Iran. The sense of there being a single humanity could thrive. Development of a new social contract that involves more actors, and with more and better public policies leading to reduced inequality.

Scenario 3: ‘step by step muddling through’

The crisis persists over the short-medium term. There is a degree of international cooperation in the healthcare field, but there is no coordination in the fiscal-economic realm. The economy in Spain and the EU as a whole starts to recover slowly, but it does not revert to its position prior to the crisis, remaining for a time in depression. Social protests rise due to the high levels of unemployment that show no sign of abating, but the system does not collapse. The spread and control of the pandemic is globally diachronic, which hampers reactivation of global flows. More nationalism and protectionism. The EU remains half-built. The ECB, the EIB and the Commission all function, but the European Council does not succeed in coordinating itself and acting in an integrated way on the joint fiscal stimulus issue. No substantial progress is made on European integration.

It is clear that the second scenario is the most advantageous, while the first is the least advantageous. The likely outcome of a ‘new normality’ is a mix. This has been an initial and preliminary analysis of possible trends, not a policy paper for putting forward the public and private policy options to be followed.

Andrés Ortega
Senior Research Fellow, Elcano Royal Institute | @andresortegak


1 This analysis stems from personal reflections and multiple sources too numerous to cite. I am grateful for the comments and contributions of José Balsa-Barreiro (MIT), Raquel Jorge-Ricart (George Washington University), Federico Steinberg (Elcano Royal Institute) and Francesc Trillas (UAB).

2 Richard Baldwin (2019), The Globotics Upheaval: Globalization, Robotics, and the Future of Work, Weidenfeld & Nicolson.

3 Kenneth Scheve & David Stasavage (2016), Taxing the Rich: A History of Fiscal Fairness in the United States and Europe, Princeton University Press.

6 Raghuram Rajan (2019), The Third Pillar – How Markets and the State Leave the Community Behind, Penguin Press, 2019.

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