Europe's World

The COP 20 conference in Lima should stand as a warning to Europe that its leading role in global climate negotiations is being eroded. That is a consequence of Europe’s diminishing global importance, but also of its inability, and perhaps will, to create alliances.

The EU is still the only player fighting for a really ambitious and legally binding global agreement that takes the 2ºC goal seriously and accepts the findings and recommendations of all the IPCC reports. In short, everything needed to get the right result at COP 21 in Paris.

Europe held together in Lima, in contrast to before, and is still the region that has been the most successful in determining climate policies, setting binding targets and showing real results through falling CO2 emissions and the rising share of renewables. The 2020 targets are impressive and important beyond Europe too.

“The EU tends to misjudge its own strength in the world. It has to abandon the idea that it is enough to “be the best” and stand as the moral beacon”

But – and it is a big but – the EU tends to misjudge its own strength in the world. It has to abandon the idea that it is enough to “be the best” and stand as the moral beacon. It needs to increase its efforts to build strong alliances and that requires a climate policy focus that extends beyond CO2 reductions.

The U.S. and China have built a new political alliance, and as the two largest polluters they have unfortunately agreed not to commit themselves internationally to anything not already agreed upon at home. At the same time, polluters among the world’s emerging economies – including to some extent China – have hidden behind the protective G77 rhetoric that the rich countries are to blame and should commit to a special effort. On top of all this, the trend over the past 15 years has been against global agreements, notably in trade, and this is affecting the climate negotiations too. Yet the alternative would at best be regional climate change agreements.

The EU should arguably draw some obvious conclusions. The first is the building of alliances. A deal with Africa and with the world’s most vulnerable countries was reached in Durban, but it must now be re-established and enlarged to include countries in Latin American and Asia that really want an international agreement. COP 21 in Paris appears to be the last chance for a solid and effective global agreement, with the alternative being that China and the U.S., as the two big ones, set the agenda and decide on momentum. This would not be in the interest of the rest of the world.

“Follow-up mechanisms will therefore be extremely important, making the task of ensuring that Paris doesn’t become the end of the line a vital one”

A second EU conclusion should be that Europe must understand that climate adaptation has a major role to play. The EU must therefore be ready to speak loud and clear about the financial support it promised in Copenhagen. Yet in Lima it seemed as if this had been forgotten, and that financial aid for developing countries is not intricately connected to environmental and climate efforts.

The third, and most cumbersome, conclusion is that agreement in Paris will not prove as ambitious as it should be. Nor will it be as ambitious as we could agree on within the EU. Follow-up mechanisms will therefore be extremely important, making the task of ensuring that Paris doesn’t become the end of the line a vital one. The need will be for continued international negotiations, exchanges of experience, ever-greater global awareness and no let-up in the pressure for mankind’s largest transition project.

If we in the EU can draw these three conclusions in ample time before COP 21, we will have a chance to share our leadership with others. But if COP 21 is seen as merely a continuation of COP 20, we will be putting both our leadership and the world’s climate at risk.

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International climate negotiations are now in much better shape than before the 2009 Copenhagen conference, and that’s partly because there is now less emphasis on a legally binding treaty.

The big challenge in the run-up to the Paris conference is to understand the political issues and find realistic ways to resolve them through dialogue.  The conference itself would then be about removing any obstacles and celebrating its success.

A successful agreement in Paris would need four key elements. The first is for all countries, whether rich or poor, large or small, to commit to clear action on climate change. The second is to ensure that they all pledge to incorporate their commitments into national law. The third is to regularly review their cutting of emissions, while the fourth is to agree on robust financing in support of developing countries’ efforts on commitments.

“It will be crucial for the global community to meet every three years or so to review progress on the promises, and if necessary agree on further actions”

Financial support for developing and emerging economies is important, and to increase their access to climate finance, international organisations and agencies, including ourselves at the Global Green Growth Institute, are helping to develop investment-ready projects. Finance will be key to reaching agreement in Paris, but even if all these listed elements are met, Paris is unlikely to deliver on the 2ºC target. It will therefore be crucial for the global community to meet every three years or so to review progress on the promises, and if necessary agree on further actions.

The whole climate problem will not be resolved in Paris, and expectations for further emission cuts before 2020 are not very realistic. Asking countries like China, India and South Africa to reduce their emissions in absolute terms from 2020 onwards looks unrealistic. It would be more sensible to ask developing economies to limit their emissions growth in an initial time frame, and then start to reduce them in absolute terms.

Expectations in Copenhagen were too high and were not too clear. Six years on, there is more clarity on what the Paris conference should deliver, and when expectations are more realistic there’s a better chance of achieving results.

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The world will agree a global climate deal in Paris this year; of that, I have no doubt. The question is whether that deal will be enough.

Let us imagine a deal with a commitment to reduce global warming to below 2ºC, emissions targets for all major economies, and a system for reporting progress against those targets. At first sight, this might sound like the comprehensive deal we need. Yet in reality we already have an agreement on did all of this – the Copenhagen Accord that leaders approved back in 2009.

“All countries will need to show more flexibility in their positions, rather than keeping their cards close to their chest ahead of a final showdown in Paris”

This shows how important the substance of the final deal in Paris will be. It’s what we agree to, rather than whether we agree to anything at all that will be important.

To get a deal that has real substance, we need four things. First, countries need to start making compromises sooner rather than later. I have been to three COPs (the annual climate change conferences organised by the UN) – two of them as Spanish Minister for Agriculture and Environment and one as the EU Commissioner for energy and climate change. The most important lesson I learnt is that you get the best results when you don’t leave all the negotiating until the last minute.

As we say in Spanish, ‘No dejes para mañana lo que puedas hacer hoy’ – don’t leave for tomorrow, what you can do today. That’s why the EU submitted our contribution to the final deal back in March, including a legally binding commitment to reduce our emissions by at least 40% by 2030, well ahead of the deadline. We are now providing support to other countries preparing their own contributions.

All countries will need to show more flexibility in their positions, rather than keeping their cards close to their chest ahead of a final showdown in Paris. We cannot leave all the difficult decisions in Paris to the EU’s heads of state and government. Paris should be the icing on the cake, not the meat of the negotiations.

“It’s what we agree to, rather than whether we agree to anything at all that will be important”

Second, the final deal has to be worth the paper it’s printed on. It needs to be binding – a legal commitment and not just a loose aspiration. There are island nations whose very future depends on this. Without an ambitious deal they could literally disappear underwater by the end of this century. We owe it to them, and to industries whose companies are waiting to invest in our low carbon future, to give them long-term certainty.

The EU announced in March that we would be aiming for a binding protocol. It is no secret that like the United States a number of countries are reluctant to agree to some forms of binding deal. We have been working with our partners to search for a solution that works for everyone. We are absolutely clear, though, that Paris cannot just produce another set of vague voluntary goals.

Third, Paris cannot be the final word in climate negotiations. We need to be realistic. At the Paris Conference, countries might not be ready to make the commitments that would put us on track to keep global warming below 2ºC. If this proves to be the case we must agree a process for reassessing ambition, and increasing commitments at regular intervals in the years that follow.

“It needs to be binding – a legal commitment and not just a loose aspiration”

The eventual deal can only be considered a success if it is truly universal – that means if it works for every country, not just a few. Throughout the years of climate negotiations different countries and regions have had different priorities. The EU is trying to build bridges to other countries and take on their concerns. We delivered more than €9.5bn in climate finance to other countries in 2013, and we are clear that their priorities and concerns should be reflected in the final deal agreed in Paris.

The current co-chairs of the negotiations have done an excellent job of making sure all views are included in the final negotiating text. This spirit must be taken forward right to the end. No backroom deals, no secret pacts, no private texts. If we have all these things – early compromise, legal certainty, scope for raising ambition at later date, and a deal that’s truly universal – then Paris will be a success.

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Europe has for a quarter-century been at the forefront of climate change efforts, and the hope was that others would recognise its leadership and follow its example. Sadly, anyone attending international events knows that many non-European countries are finding chinks in Europe’s moral armour. The European Union may still be the global leader on climate questions, but its own internal policies, and its achievements, are falling short of its rhetoric.

First, there’s the question of headline emission levels. The EU’s greenhouse gas emission reduction goal of at least 40% by 2030 sounds the most ambitious of the “intended nationally determined contributions” (INDCs) declared so far to the UNFCCC. But Europe starts in 1990 and spans the years to 2030, while the U.S., with its 26-28% reduction goal started in 2005 and aims at 2025.  Using a 2005 start point, the EU is aiming for a 34% reduction by 2030 and, interpolating between the 2020 and 2030 targets, a 23% reduction by 2025. That sounds rather less impressive.

“The rise in renewables has for a combination of reasons been accompanied by a switch from gas towards coal”

There is, of course, no theoretically correct baseline year, but the ambiguity makes the case for Europe’s leadership harder to argue. There is also the question of the coherence between the 2030 target and the longer-term aspiration to reduce emissions by 80-95% by 2050. Current targets envisage emissions falling by a fifth between 1990 and 2020, and by a quarter in the 2020s. To reach even its minimum long-term aim would mean emissions falling by a third in the 2030s and by half in the 2040s. It’s far from clear that such an acceleration of effort is feasible. If an 80-95% emissions reduction by 2050 constitutes a fair European contribution to the global effort, then far more attention to the “at least” part of the “at least 40%” target is going to be needed.

The second issue is the energy mix. Europe’s achievement in expanding its renewable energy generation has been truly impressive. But in the last few years, the rise in renewables has for a combination of reasons been accompanied by a switch from gas towards coal. Weaknesses in the EU’s Emissions Trading Scheme (ETS) have resulted in carbon prices that are too low to discourage coal burning. Meanwhile, world prices have been depressed as shale gas has displaced coal at power stations in the U.S., and operators have taken advantage of low coal prices to use up remaining operating hours under the Large Combustion Plant Directive. EU member states with abundant coal reserves have been keen to enhance their energy self-sufficiency and construct new plants, so Europe’s arguments against coal elsewhere in the world have been weakened.

“Striving for internal policies that are ambitious, credible and effective is essential if European leadership is not only to be retained, but reinforced”

Third, effective carbon pricing is widely seen as indispensable to climate change policies, yet the over-allocation of emission allowances, the promotion of low carbon renewable energies and the effects of economic recession on baseline emissions have together created a perfect storm for the ETS. The backloading decision for Phase III and the proposal for a market stability reserve have been steps in the right direction, but it remains to be seen whether these will rectify the fundamental structural weaknesses of the ETS. As other countries begin to introduce their own trading schemes, some of which may generate higher carbon prices than has the ETS, Europe’s leadership is once again coming under challenge. Some economists have argued for “border carbon adjustments” to compensate for differences in the stringency of national climate policies. It would be a shame if even a theoretical case could be made for applying these against, rather than by, Europe.

Leading by example is the key to effective leadership – and Europe’s halo has been slipping. Striving for internal policies that are ambitious, credible and effective is essential if European leadership is not only to be retained, but reinforced.

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Climate change is an area where no nation can afford to be inward-looking. Noble though they may be, countries’ individual initiatives are virtually ineffective if taken in isolation. The abatement measures taken so far by individual nations will not achieve the policy-based 2°C goal needed to just reduce the effects of climate change. In contrast to the Kyoto Protocol, the aim should therefore be to include all major “economies and economic sectors” in an international climate change agreement with legally binding emission reductions.

All the world’s major economies, including Brazil, China, India and the U.S., but far from them alone, should set legally binding goals on emissions reduction in the medium and long term to relieve the problem of carbon leakage and open up new cost-effective reductions.

“Fundamental to climate change mitigation is education, and although some commendable educational efforts are being made the focus must shift to moving away from traditional concepts of outreach”

An international commitment of this sort would filter down to regions, cities and even individual industrial sectors, and ensure they all play a proactive role in the future. The submission of ‘Intended Nationally Determined Contributions’ by individual countries as a bottom-up approach that includes robust compliance and enforcement would then have to follow. Such a system should ensure that all countries in the climate change agreement comply with their commitments; support should be given where needed, but all countries should be held accountable for non-compliance.

For the international negotiations on the 2015 agreement to succeed, the financing of climate mitigation and adaptation in developing countries is key. Disadvantaged states have in the past rightly voiced their concern about the lack of financial help from industrialised countries, yet the reality is that modern economies do indeed ‘exploit’ their natural and human resources, and one of the main victims of this has been the environment.

A two-pronged approach is needed when helping under-developed nations. The first is cleaner extraction at source, and the second is financial aid for cleaner energy. At the Cancún conference back in 2010, the EU and other developed countries said they would mobilise $100bn every year by 2020. However, since then progress on this has been slow if not non-existent. Those negotiations mainly revolved around the structure of the Green Climate Fund, a new multilateral fund meant to channel climate finance to developing countries.

“For the international negotiations on the 2015 agreement to succeed, the financing of climate mitigation and adaptation in developing countries is key”

The need to shift the environmental focus away from the national to the international – from the individual to the collective – is now overriding. The nature of climate change means new policies needs to transcend geographic borders. Fundamental to climate change mitigation is education, and although some commendable educational efforts are being made the focus must shift to moving away from traditional concepts of outreach. A holistic approach is needed to bring together community and business leaders, and of course the younger generations.

What we Europeans should be creating is a profound dialogue with developing countries that addresses the negative connotations of climate change. A successful EU climate pledge must therefore look beyond emissions within Europe, towards a collaborative approach with developing nations.

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Climate change isn’t new – the science has been known for a long time, and governments have been negotiating what to do about it for more than 20 years. What has changed, though, is that climate change is no longer a far-off problem. It is also just one manifestation of a plethora of inter-related issues. Development in rich and poor countries alike is pitting short-term gain against the wise use and equitable sharing of the world’s natural resources.

Opportunities for countries to collectively change course are rare. Yet 2015 offers a number of opportunities to abandon business as usual and set a common course of global action. The Paris conference in December could cap a year in which the world’s governments chart an ambitious course to eradicate extreme poverty while shifting to clean, affordable and renewable energy.

“The previously unshakeable belief that action on climate change was in opposition to economic growth has given way to a growing understanding that both goals are achievable”

The debate over whether climate change is real has given way to a richer discussion of the costs, benefits and actions needed. The previously unshakeable belief that action on climate change was in opposition to economic growth has given way to a growing understanding that both goals are achievable.

There are significant issues still to be addressed. There remain profound differences on how to assess the obligations and responsibilities of each country, and it is still an open question where the financing will come from. UN Secretary-General Ban Ki-moon has consistently called for a universal climate agreement in Paris, and his preparatory climate summit last September brought together a hundred national leaders to boost the level of political ambition on climate change. Governments and corporate CEOs announced eight action areas that included climate finance, energy, transport, industry, agriculture, cities, forests and building resilience.

When negotiations came together again in Lima, Peru, last December, change was very much in the air and the Lima-Paris Action Agenda was established to increase momentum. The good omens now include early agreement on a baseline negotiating text, increased levels of ambition from China, the U.S. and from European countries, and $10bn pledged to the Green Climate Fund with the prospect of more to come. But of course Paris is not the destination. It is just a very necessary way station on the road to a sustainable world.

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The EU expects the Paris climate change conference to show that all major economies are leading the rest of the world in a new global agreement to prevent dangerous climate change. The science tells us that success depends on limiting the global temperature rise to below 2ºC by gradually reducing greenhouse gas emissions to near zero before the end of this century. But will the emissions reduction targets announced by Paris put us on this pathway?

On their own, the Paris targets are unlikely to meet this challenge. For many countries, whether industrialised or developing, this will be the first time they act domestically and commit internationally to limiting their greenhouse gas emissions. And for most, the Paris targets will set goals only until 2025 or 2030. Paris can nonetheless be judged a success by reaching three critical tipping points.

The first tipping point is regulatory. The targets set in Paris should demonstrate that more than 80% of global greenhouse gas emissions will for the first time be regulated domestically for their effect on the global climate system. This means that governments in all the major economies are acting to limit emissions in the near-term, and it implies that policymakers must continue to act within the timeframes and emissions limits determined by science.

“The Paris conference should provide evidence that a combination of regulatory push and consumer pull is driving down the costs of the low carbon technologies essential to decarbonisation”

The second tipping point involves markets and the technological innovations driven by market forces. The Paris conference should provide evidence that a combination of regulatory push and consumer pull is driving down the costs of the low carbon technologies essential to decarbonisation. Together, public and private investors, multinational companies that command global supply chains and governments that procure products and services need to demonstrate that demand is growing inexorably for alternatives to fossil fuels, and for the technologies that will deliver carbon neutrality.

The third tipping point is political. Paris should show that it’s no longer possible for any political leader to deny the science of climate change, or to shirk its country’s responsibility to be part of the solution. The key evidence for this will be the commitment by all governments to a legally binding system of transparency and accountability that will hold each party to account for meeting its targets, and to return regularly to the negotiating table to strengthen their targets over time, in line with what the science requires.

While the Paris agreement will represent a first step, it may also be our last chance to stabilise greenhouse gas emissions at safe levels.

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All eyes will be focused on Paris in December when leaders from almost 200 countries that are parties to the United Nations framework convention on climate change (UNFCCC) next meet. Their challenge is to agree a new phase of the climate change treaty that is ambitious enough to keep global temperatures below to 2ºC by the end of this century instead of the nearly 4ºC we are currently heading to.

The deal to be negotiated in Paris needs all countries to substantially reduce their emissions of greenhouse gases, a goal attempted unsuccessfully a few years ago in Copenhagen.

“The good news is that the basic negotiating text has been agreed, and all countries are putting forward their own emission reduction pledges”

Among the sticking points in these global negotiations is the famous phrase Common but Differentiated Responsibilities, or CBDR, which means that while all countries should do what they can, some, mostly rich ones, should bear a greater responsibility and should do more than the others. Developing countries are a single negotiating bloc called the “Group of 77 and China” (although there are now well over 130 countries in this group), which has a number of sub-groups like the Least Developed Countries (LDC) group, the Alliance of Small Island States, (AOSIS) and others.

When the UNFCCC process began over 20 years ago, this division between rich and poor countries made sense. But then things have changed dramatically. China is now the world’s biggest emitter of greenhouse gases, having overtaken the U.S., while countries like India, Brazil, South Africa and Indonesia are becoming bigger greenhouse gas emitters than many rich western countries.

The time has therefore come to de-emphasise the “Differentiated” and re-emphasise the “Common” in CBDR. This may require new alliances that will break the traditional rich versus poor dichotomy. Just such an alliance happened already at the UNFCCC meeting in Durban a few years ago when to break the deadlock between the rich countries and the G77 plus China the European Union allied itself with the LDC group. This led to agreement on the Durban Platform which set in train the negotiations now due to be finalised in Paris.

The good news as we head for Paris is that the basic negotiating text has been agreed, and all countries are putting forward their own emission reduction pledges. These are positive signs, but the trick will be to create alliances and coalitions of the willing. The hope must be that once again the LDCs and EU could form just such an alliance.

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Climate change is posing unprecedented challenges in two ways. There is a growing body of knowledge on the consequences of climate change, and there is the imperative need to act on mitigation and adaptation due to related disasters.

The negotiations between parties to the United Nations Framework Convention on Climate Change (UNFCCC) need to find of solutions to a series of issues. These include differentiation, which is closely related to the principle of common but differentiated responsibilities and respective capabilities, the legal nature of the agreement, the political balance between mitigation and adaptation, and ways to finance loss and damage. In any negotiation, groups build alliances to find consensus that would be the basis of an agreement.

“The solution to the problem of climate change extends beyond the inter-governmental process”

Of course, the solution to the problem of climate change extends beyond the inter-governmental process. It affects the everyday life of people, their livelihoods and economic stability, for developed and developing countries alike. The impact of climate change will deeply affect our ways of life, but so too will the solutions. That’s why many stakeholders have recognised this challenge as an opportunity to tackle climate change outside the formal UNFCCC process.

The alliances between the different stakeholders at all levels, both state and non-state actors, can give inputs that complement the inter-governmental process. These alliances should be at the heart of the development process, with inputs from all stakeholders recognised. We should foster the creation of more spaces for policymakers and environmental experts to exchange their concerns, and hopefully this will lead to new practices and paradigm shifts.

Climate change is a two-sided problem that has to be addressed from both ends. For many years, the identification of mitigation measures has shown progress and countries around the world are working on them to a varying extent. On the adaptation side, the need for peoples, ecosystems and economies to respond to the adverse effects of climate change means we must improve our resilience at all levels.

There is a causal relationship between mitigation and adaptation; the more we mitigate, the less adaptation will be required. There is, of course, a gap in terms of the timing as the causality is not immediate, the alliances between mitigation and adaptation experts can be win-win ones.

We can expect to see more alliances, and Peru’s contribution to the engagement with state and non-state actors is being made through the Lima-Paris Action Agenda (LPAA). Launched by the governments of Peru and France representing COP20 and COP21 presidencies, the LPAA aims to stimulate new initiatives, showcase existing partnerships and engage with the public sector to scale up finance for climate mitigation and adaptation.

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What will India’s position be at the Paris conference? The fact is India is a victim of climate change, with unseasonal rain and weird, erratic weather resulting in huge crop losses. Farmers have been taking their own lives because they cannot face the prospect of penury and debt. It is time we should accept this changing weather as part of the catastrophic future that awaits us all. It means, too, that India must take a proactive position so the world understands that it has become a victim of climate change while the world continues to do too little to reduce greenhouses gases.

This doesn’t mean that India will not be part of the effort to reduce emissions. India should present its Intended Nationally Determined Contribution (INDC) to demonstrate its own seriousness, but it is also clear that this target for emission reduction has to be based on an equitable sharing of the burden.

“India must take a proactive position so the world understands that it has become a victim of climate change while the world continues to do too little to reduce greenhouses gases”

The U.S.-China agreement on climate change is highly unfair and not at all ambitious enough. It puts the world at risk, for China and the U.S. have agreed to “equalise” emissions by 2030. In other words, China will be allowed to increase carbon dioxide emissions until then so as to reach the same level as the U.S. In turn, the U.S. will by 2025 reduce its emissions by 26-28% from its 2005 levels – when they peaked.

The Chinese will thus go from roughly 8 tonnes per capita of carbon dioxide now to 12-13 tonnes in 2030. The U.S. comes down from 17 tonnes per capita of carbon dioxide to 12-13 tonnes in 2030. The cake is being carved up in such a manner that each country would occupy equal atmospheric space by 2030. The U.S.-China deal makes it clear that each of the two countries get 16% of the atmospheric space.

This will leave little for the rest of the world’s economic growth. At this rate of emissions, there is no way the world can stay below the guardrail of a 2°C rise in temperature that would keep us all safe.

So what should India do? Its current per capita emissions are roughly 1.8 tonnes of carbon dioxide. New Delhi must argue that all countries, including India, agree to cut emissions, based on their past contributions so that all can share the common atmospheric space. It is what the Narendra Modi government has promised to do, and it is what must be supported internationally so that the rich world is taught to walk the talk and not just talk the talk.

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Europe’s infrastructure gap stands high among the many problems challenging its economy, and particularly in the field of transport. The last few years of crisis and austerity have led national governments to slow their investments in this field, not least where maintenance work and the renewal of rolling stock are concerned.

These shortcomings should be placed against a background in which the European Union has over the last two or three decades devoted much attention to transport infrastructure, especially when cross-frontier links between neighbouring countries were concerned. It has been done so because for the single market to be truly effective, Europe must have a well-integrated infrastructure. This was clearly set out back in 1992 in the Maastricht treaty’s reference to trans-European networks (TEN) not only in transport, but in energy and telecommunications too.

“Europe’s main problem will be attracting private capital to finance infrastructure through public-private partnerships”

In the following year, a European Commission White Paper on growth, competitiveness and jobs underlined the pivotal role of TENs in the development of the internal market and for job creation. Then, in 1994, the European Councils of Corfu and Essen saw EU leaders approve 14 “priority projects” for transport and 10 for energy. That was followed in 1996 by guidelines for developing the promised European transport network.

In the context of the EU’s “Big Bang” enlargement, and to cope with various financial difficulties, the infrastructure plan was reviewed and expanded in 2004. Since then, the infrastructure gap between the EU’s older and newer member states has been reduced, but some considerable differences remain. In some of the older ones, the quality of their infrastructures has deteriorated because not enough has been spent on maintenance and the modernisation of ageing networks. In most of the newer EU countries, basic networks have still to be completed.

The financial picture is daunting. The cost of rehabilitating existing networks is now estimated at around €20bn a year, and on top of that there are huge new investment requirements. A study carried out in the context of the Commission’s 2011 White Paper on Transport, “Roadmap to a Single European Transport Area”, calculated that for Europe’s transport infrastructure to cope with the expected demand, investments of €1.5 trillion were needed between 2010 and 2030. The Commission estimated that just for the trans-European transport network from 2014 to 2020 the investment costs would be €500bn, half of which are needed to address the main bottlenecks, missing cross-border rail and inland waterway links and horizontal priorities like air and rail traffic management.

“The cost of rehabilitating existing networks is now estimated at around €20bn a year, and on top of that there are huge new investment requirements”

The end of 2013 saw a re-organisation of infrastructural priority projects accompanied by a new financial instrument within the EU’s 2014-2020 budget named the “Connecting Europe Facility”. Over €32bn, which includes €10bn from the EU’s cohesion fund, will cover energy and telecommunications infrastructure as well as transport, with the latter expected to benefit from €26.3bn of EU co-financing.

The EU’s new transport infrastructure guidelines pay special attention to high-speed and high-capacity rail, and aim at an EU-wide multimodal and interoperable “core network” by 2030. It is to consist of nine “Corridors” that are to increase efficiency and speed up both passenger and freight services. They will also promote links been rail, airports and sea ports.

So much for the EU’s ambitions. There remains, however, a huge divide between Europe’s infrastructural needs, which so far are mainly dependent on public funding, and ways of closing the gap. The resources of the Connecting Europe Facility (CEF) are quite modest when compared to Europe’s needs. The CEF’s call for proposals that closed this year at the end of February with available funding of €12bn was oversubscribed by more than three times. The European Fund for Strategic Investments, best known as the “Juncker Plan”, may be able to support those projects that the market is ready to undertake, like motorways, airports or the more efficient ports, but important projects like alpine tunnels, will still have to rely on public sector support.

It is still too soon to assess the Juncker Plan, but comparing it with other approaches can be interesting. In the U.S., one of the key pillars of the Obama Administration’s counter-cyclical strategy consisted of raising more than $100bn to provide federal support amounting on average to 35% to state and local infrastructure investment. In all, the U.S. government’s effort was equal in size to the Juncker Plan’s target of around €315bn. The latter, though, mainly provides leverage and guarantee instruments out of the EU budget to mobilise private capital rather than the fresh money that was the case in the United States. So far, European Institutions have not been allowed to raise money in the capital markets when earmarked for specific purposes like project financing.

Europe’s main problem will be attracting private capital to finance infrastructure through public-private partnerships (PPPs). Good examples of this sort of partial financing are important projects like France’s high-speed Tours-Bordeaux railway link and the Oresund link between Denmark and Sweden, and it is hoped these will be followed by many more. Some existing European financial instruments like project bonds, the loan guarantee instrument for trans-European transport projects, or the Marguerite Fund offer incentives for private capital to become involved, but so far their track-record is rather modest. But in these times when liquidity is abundant and so many institutional investors are looking for long-term opportunities, it should be possible in theory to attract the private sectors. The conditions for doing so need to be carefully analysed, and have much to do with the quality of projects, procurement procedures and the regulatory context in which financial institutions have to operate – Basel III for banks and Solvency II for insurance companies. Some of these pre-requisites play quite a different role in the case of private rather than public funding.

A good many infrastructure projects can be seen as “public goods” that produce long-term economic benefits that rarely have a price in the market, and consequently rely mainly on public financing; in other words, are typical cases of “market failure” that call for public intervention. But when private financing is to be involved, that calls for a better identification of the positive overall economic benefits. Unlike with public funding, when private capital investment in a project produces such benefits as less pollution, less congestion and fewer accidents there must be an appropriate financial return for the investor. An interesting example of this problem is the EU’s Emissions Trading Scheme on greenhouse gasses, which applies to air transport but not to rail.

“Rather than seek private sector partners, EU’s national governments struggle with their public finances”

Other possible financial sources could be a better use of both the “user pays principle” and the “polluter pays principle”. Interesting examples are the tolling system for freight in Germany, and more generally the Swiss Alp transit scheme. Cross-financing, as in the case of the Brenner Base Tunnel for rail which is partly financed by the existing motorway, could also provide financial support for some projects, because they are in some sense an extension of the polluter pays principle.

A much more active role for private funds is not only desirable but very necessary, but many of the EU’s national governments still seem reluctant to encourage this. Rather than seek private sector partners, they struggle with their public finances. Whenever there are budget problems, infrastructure spending is at best rescheduled if it isn’t cancelled. When funds are made available, they are often quite modest, witness the €10bn two-year package in Germany to cover federal as well as local projects. EU governments continue to be very reluctant to take on more debt for infrastructural development, even though borrowing conditions are at present very favourable.

Another problem is the way PPPs are treated by the current Eurostat rules concerning the calculation of overall public debt in relation to the eurozone’s Growth and Stability Pact. Without re-opening the debate on the “golden rule”, a more favourable treatment of investment spending, especially when compared to current consumption, for projects being scrutinised at both national and European levels would seem to make a lot of sense.

A major debate is needed on all these issues. If we fail to address these problems and resolve them, Europe’s transport infrastructure will soon start to fall apart. If that happens, a severe blow will be delivered to our hopes of economic recovery in a Europe that is becoming the “old continent” in so many senses.

Photo credit: Flickr Tim Boric

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Since time immemorial, North Africa has been a land of rebellion and resistance against foreign invaders and illegitimate rulers. Today’s armed extremism is more complex, with its indiscriminate targeting and ever-expanding effects. Widespread international connections, effective use of communication technologies and a vast reservoir for recruitment, have made the Maghreb radical movements a lethal and durable threat not only to North Africa itself, but increasingly to the weak states of the Sahel and the wider Mediterranean region.

It is now over 15 years since extremist groups first took arms against the Algerian government after the flawed 1992 parliamentary elections. The long lifespan of this armed extremism is exceptional, as are the widespread local, regional and international connections of the extremist groups and their continued attraction for large segments of the population – not only among disenfranchised youth.

The extremists have demonstrated a particularly strong capacity to resist professional governmental forces, enabling them to carry out individual and mass killings of innocent citizens. No one is left to feel safe; local Muslim populations are targeted as well as foreigners, rural as well as urban populations, and women as well as men. Among the characteristics of the Maghreb’s violent extremists are extraordinary capacities to move foot soldiers and equipment across borders and organise hostage takings and other sophisticated attacks. The business of hostage taking and the long, often dubious, negotiations that follow enable the terrorist organisation to gain publicity and funds, making the payment of ransoms one of terrorists’ main sources of financing.

One of their objectives is to get local recognition, even through fear or disgust, so as to compete with other terror groups operating in the same area. Most violent extremist movements have repeatedly  demonstrated an extraordinary ability to develop successful and appealing modern communication policies. Regardless of the political contradictions, they do not hesitate – if it can help to meet their objectives – to make efficient use of tribal systems they often denounce. Western governments underestimated this capacity to reach out to local populations and mobilise recruits among foreign youth.

“Even with migration to Europe or elsewhere, youth unemployment remains high”

For the last few years, barely a week goes by without a headline on terrorist activity in North Africa. Armed violence has become part of daily life. The most recent violence included the bloody attack on tourists visiting the Bardo Museum in Tunis this past March, when almost 20 people, mostly tourists, became innocent victims. The assassination of the French climber Hervé Gourdel last autumn in eastern Algeria was another cold-blooded killing by the “Caliphate Soldiers”, a jihadist group affiliated to the Daesh, or the Islamic State. The raid on a gas plant at In Amenas, Algeria, in January 2012, should be a permanent reminder of how determined and well-organised these terrorist groups are. That spectacular military-style operation was meant to grab attention in the international media, with the ultimate objective of gaining an edge over competitors in AQIM (Al-Qaeda in the Islamic Maghreb).

Libya is in turmoil after years of irresponsible governance that has planted the seeds of extremism within its own territory and around all its borders. The chaos that followed the demise of Muammar Gaddafi continues to generate instability. There are roaming radical elements, including from Daesh and its Al-Qaeda-affiliated rivals; flows of all kinds of weapons; trafficking in drugs, migrants, cigarettes and more.

Looking back at an almost quarter-century of armed violence in the Maghreb, one cannot but ask why there has been so much blood letting and destruction of vital economic infrastructure. The root causes of the entrenched extremism and armed violence in the Maghreb lie, as in many other parts of the world, in a combination of causes. While some are not unique to the region, a few are specific to North Africa.

“Ineffective governance is a leading cause of the enduring armed violence”

The major causes of the structured armed extremism include: inadequate governance; strong demographic growth not matched by a robust economy; massive internal migration to overcrowded cities; inadequate education system; neglect of citizens’ aspirations especially in housing, water and health; and deep frustration over the lack of a credible future. These causes are exacerbated by weak or non-existent economic, political and security cooperation between the main regional powers – Algeria and Morocco.

Ineffective governance is a leading cause of the enduring armed violence. With restricted space for free debate, limited economic prospects and the heritage of their freedom-fighter fathers, many young people, especially Algerians, engaged in radical activities. They went as far away as Afghanistan, where many served as volunteer combatants after the Soviet invasion of 1979. In a much more limited number, Tunisians and Moroccans went also to fight in Afghanistan, and their return introduced armed radicals to the Maghreb. External funding from individuals in other Muslim countries reinforced their capacities.

The failings of Algeria’s 1992 parliamentary election and the subsequent frustration over the results encouraged these returnees to take up arms against their own government. They engaged in a merciless uprising. More than 10 years of civil saw over 100,000 deaths. Many observers date the beginnings of today’s insecurity in the Maghreb and the Sahel to that period.

Despite economic progress, the three main North African countries have been unable to meet the aspirations of their young people. Even with migration to Europe or elsewhere, youth unemployment remains high. By combatting terrorists at home, the Algerians pushed them further south into the Sahel exposing the fragile states of Mali, Mauritania and Niger to a brutal new terrorist threat. Without French intervention, Mali would have fallen to the combatants in January 2013.

Finally, the deficit in security cooperation between Algeria and Morocco and their decades-old struggle for pre-eminence continues to hinder a credible fight against armed extremism in the Maghreb. Unable to stabilise Libya, the two sister states may, unwillingly, be strengthening armed extremism and helping it expand further, to Mediterranean Europe after the havoc it has already brought to the Sahel.

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Over the past ten years, there have been significant geopolitical shifts in the European Union’s (EU) near and far neighborhood. Crafted in 2003, the opening remarks of the European Security Strategy underline: “Europe has never been so prosperous, so secure nor so free. The violence of the first half of the 20th Century has given way to a period of peace and stability unprecedented in European history.” This is no longer the case. The ring of instability that currently characterises the EU security landscape both in the East – from the crisis in Georgia in 2008 to the on-going conflict in Ukraine – and in the South calls for a serious reassessment of Europe’s neighbourhood and the adoption of  adequate foreign policy tools to respond to fast-changing developments.

“The success of the EaP will largely depend on its ability to meaningfully deal with a diverse group of partners with divergent and diverging goals”

Europe faces new risks and opportunities on its periphery and beyond and needs to recast its strategic and foreign policy thinking to conform to the evolving setting. The EU’s Neighborhood Policy (ENP) – along with its regional component that has been strengthened through the Eastern Partnership (EaP) and the Union for the Mediterranean (UfM) initiatives – needs to be closely integrated into a unified EU Foreign Policy framework. To promote a shared commitment to stability, security and prosperity, it needs to reassess the conditions needed for further economic integration and the deepening of political co-operation between the EU and partner countries. These competing patterns of policy platforms do not easily cohere into a unified vision.

Formally launched on March 20, 2009, the overarching aim of the EaP initiative is to intensify the EU’s relations with six partner countries in the neighborhood, namely, Belarus, Moldova and the Ukraine to the east and Armenia, Azerbaijan and Georgia to the south-east. Based on the existing ENP framework, the partnership puts the emphasis on a more pragmatic and regionally-tailored format of co-operation.

The programme aims to create a secure ring of stable and well-governed countries on the eastern borders of the EU. It seeks to establish a security belt around the EU borders that is sustained through effective co-operation networks including multi-lateral and bi-lateral frameworks.

“The EU member states do not have a common position on the implantation of EaP”

However, the underlying objective of the new regional co-operation initiatives such as the UfM and the EaP remains unclear and is contingent on different priorities, largely determined by the dominating group interests within the EU. The primary question is whether these initiatives are complementary or whether they compete with existing policies. For example the EaP is often characterised as an initiative which was launched as a response by some EU member states to the the UfM.

Because of absence of a unified vision on regional priorities within the EU some EU member states focus on the South Caucasus, some on the Mediterranean and others on the Middle East. This is all the more compelling since the EU member states do not have a common position on the implantation of EaP; nor do the eastern neighbors have converging views on its execution on the ground.

While all of the Caucasian republics have declared EU integration as their “strategic choice,” albeit with different evidence to sustain these pronouncements, there is no regional coherence within the group as a whole due to existing security concerns and different country-specific measures to accommodate them. For one, Russia is perceived as a major security threat in Georgia, while Armenia – given its geopolitical location and security perceptions vis-à-vis Azerbaijan and Turkey – regards Russia as the main guarantor of its security and heavily relies on it both militarily and economically. Azerbaijan, on the other hand, maintains strong security partnerships with Turkey and Israel, while procuring modern military hardware from Russia.

To complicate the landscape further, Georgia recently signed an Association Agreement with the EU that sets up the legal foundations for an enhanced political and economic co-operation. Armenia has indicated its readiness to join the Russian-led Eurasian Union, along with Belarus and Kazakhstan, and has already gained membership of the body. Azerbaijan has stayed away from both.

These security perceptions and alliances clearly weaken the impact of the EaP. Different visions, political agendas, and alliance partnerships that drive the policies of South Caucasian republics present a clear challenge to the successful accomplishment of the initiative.

“To succeed on its eastern borders, the EU needs to come up with more realistic initiatives, clearer incentives and better mechanism”

On a broader scale, the frequently contradictory interests both within EU member states and those between the EU and Russia not only cripple the integration processes in the region, but also weaken their effective execution on the ground. The success of the EaP will largely depend on its ability to meaningfully deal with a very diverse group of partners with divergent and diverging goals.

While finding a compromise between member states is a complex practice in the EU foreign policy-making process, the divergence  between the Mediterranean and Eastern initiatives undermines the EU’s strategic leverage in the region. Also, such discrepancies find a direct reflection in the perceptions of the participant countries, resulting in half-hearted efforts that undercut the overall outreach of the program and compromise its effectiveness.

The Eastern Partnership summit in Riga on 21-22 May will serve as an important platform for the review of the ENP strategy – and its integration into an overall EU Foreign Policy – in order to bridge the widening gap between the EU and partner countries. To succeed on its eastern borders, the EU needs to come up with more realistic initiatives, clearer incentives and better mechanisms that can be meaningfully translated into more workable and regionally-attuned policies.

The EU’s role in promotion of stability and security at its eastern borders cannot be meaningfully accomplished without taking into account the current geostrategic realities in its eastern neighborhood, as well as aspirations of individual countries with respect to the programme. What is indeed needed is the formulation of a coherent EU policy which reflects the concerns and interests of the eastern neighbors. The partnership should be a two-way process of mutual accommodation.

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The European Commission’s newly proposed Agenda on Migration recognises Europe’s legal and moral obligation to save lives and provide protection to people fleeing war, persecution and violence. All EU member states should fully back the proposals, as the right to asylum in Europe is enshrined in Article 18 of the European Charter of Fundamental Rights and both international and EU law obligate member states to offer asylum and provide safeguards to those needing protection.

People are currently paying huge sums to travel on unseaworthy boats to flee war in Syria, conflict and repression in Africa and the dangerous situation in Libya, because Europe’s land borders are closed. Decisions made with full knowledge of the journey’s life-threatening nature prove these people’s desperation. They have no other option because EU countries provide almost no safe and legal routes to seek asylum in Europe. Existing legal avenues of humanitarian visas, family reunification and sponsorships are not utilised by most member states, driving the demand for smugglers’ services.

“The most efficient method of shutting down smugglers is to eliminate the need for their services by providing safe and legal channels to Europe”

The EU has now added a naval operation to “disrupt the business model of smugglers and traffickers networks”. However, the most efficient method of shutting down smugglers – a goal we agree with – is to eliminate the need for their services by providing safe and legal channels to Europe. A military operation will lead to more deaths, either directly as collateral damage in this unwinnable “war” against smugglers or indirectly as desperate refugees take even more dangerous journeys when boats are destroyed. The ultimate irony is that these people are fleeing war, persecution and violence; with this military action they are being met with the same.

Thankfully, Europe has also recognised the need for effective search and rescue in the Mediterranean, and has responded by utilising available expertise within the European border agency Frontex. Several European states and private humanitarian organisations have also made ships available to provide search and rescue outside of the Frontex-led operations. As the Mediterranean has become “the world’s deadliest border”, it is imperative that proper search and rescue equipment be in the right location when it is needed. This requires a substantial operation, perhaps even greater in scope than Italy’s Mare Nostrum.  As life is the most fundamental of human rights, further work on establishing search and rescue operations should receive top priority.

But does Europe’s obligation end when people are plucked from the sea? Certainly not.

Given the legal responsibility under international and EU law toward asylum seekers, individual member states cannot rescue without also assuming their share of Europe’s responsibility to provide international protection. This is where the need for “a European solution” and European solidarity are key, as it is unfair for a small number of countries to take responsibility for the majority of asylum seekers and refugees.

“Refugees are not refrigerators, and their apportionment should not be a logistics exercise”

The Commission has proposed an EU-wide resettlement scheme that includes a “distribution key” as a safe and legal channel to Europe. While the resettlement numbers proposed are miniscule compared to the vulnerable people in need of protection, and resettlement has long been a safe and legal channel open to member states, this new scheme does offer a statistics-based method to apportion refugees. A similar temporary relocation scheme and “distribution key” for those already on EU soil would transfer asylum seekers from member states under the most strain.

While these schemes may contribute to building European solidarity in situations of mass influx and emergency, these models fail to take “the best interest of the individual” into account. Refugees are not refrigerators, and their apportionment should not be a logistics exercise. Refugees are children, women and men, most of whom have undergone traumatic experiences during their flight, seeking stability and a new life. Factors such as ties to a member state – such as a family member residing there, existing language abilities and the strength of the existing ethnic community – should be taken into consideration to promote effective long-term community integration. Without such consideration, and given wide disparities in treatment by member states, refugees will continue to move around Europe to live in places most suitable to their situation – as we would all do if our children faced the same peril.

Protection also includes integration support, which the EU must continue to prioritise. The offer of language tuition and additional job skills training, the recognition of existing qualifications and the opportunity to access the job market, decent health care and housing will all help to create a functioning, taxpaying, member of society.

A new rights-based approach to asylum and migration reflecting fundamental European values is urgently needed. While this situation is complex, and further complicated by the realities of European politics, the status quo is untenable.

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Despite the $5.4bn pledged at the Cairo donors’ conference last October, Gaza remains in ruins. This cannot continue.

When I visited the bombed-out wreckage of Gaza at the time, the conference was seen as a success, creating a glimmer of hope for families who sat amid the rubble. They thought better days were ahead, the blockade would be lifted and reconstruction would actually begin, creating jobs for the unemployed. That optimism has gone.

Growing bitterness

Over 100,000 men, women and children remain displaced, unable to rebuild their homes. The UN-designed mechanism to allow building materials to pass through the Israeli blockade of the Gaza Strip has been slow to make any visible impact. Bitterness is growing over the scarcity of cement and other materials making it through. The blockade is also preventing exports and economic opportunities. On the streets, the talk is no longer about how to rebuild, but about desperation and possible war. Militants are again telling people “you have nothing left to lose”.

The lack of building material is down to strict Israeli restrictions rather than shortages of money. Israel claims the restrictions are necessary for its security. If that is the case, and Israeli security is really the reason for the crippling border closures, I have a solution: let security personnel from Heathrow or JFK airports control the crossing of people and goods at Gaza’s borders.

Israeli politicians feel safe when they pass through the world’s busiest airports – even in the age of international terror – so the Americans and Europeans should convince Israel to transfer responsibility for border security from its young soldiers to real professionals, experienced in detecting security threats and explosives.

It’s hard to see how Israeli could oppose such a proposal without signalling that the Gaza blockade is actually not about security, but is in reality designed to foster regime change by strangling reconstruction, development and hope – in violation of international law. As the International Committee of the Red Cross (ICRC) has stated, the closure is now a collective punishment against the civilians of Gaza.

Slow reconstruction

If all the houses, schools and other buildings destroyed during the war last summer are to be rebuilt over the next five years, and Gaza’s housing needs are fully met, approximately 430,000 tons of basic construction material will need to enter Gaza every month. Even at their highest, levels this year have failed to reach a quarter of that amount. In March, construction material entering Gaza peaked at 64,000 tons. At this rate, it will take decades to complete the reconstruction.

The blockade continues to blight the lives of tens of thousands of women, children and men who have nothing to do with terrorism. The international community is almost unanimous in verbally denouncing its illegality. The UN Secretary-General Ban Ki-moon has stated that the blockade of Gaza must end, the EU has called for the immediate and unconditional lifting of the border closure, and both the ICRC and the Zeid Ra’ad Al Hussein, UN High Commissioner for Human Rights, have spoken out against the punitive collective nature of the blockade under international law.

Oslo agreement

In 1993, I co-organised the Norwegian Channel that led to the Oslo Agreement between Israel and the Palestinian Liberation Organisation (PLO). Through active international diplomacy, Gaza was able to get Palestinian self-rule for the first time. Palestinian-Israeli joint industrial parks were planned, tens of thousands of Palestinians continued to cross the border into Israel for work every week, the Israeli stock exchange surged and Shimon Peres declared “Gaza can become the Singapore of the Middle East”.

The contrast with today’s dismal situation could not be starker. The IMF reported a contraction of Palestinian economic activity in 2014. The desperation in today’s Gaza is damning both for the Israeli and Palestinian political and military elites, and for the Quartet of U.S., UN, EU and Russian mediators. Things have to change. Israelis are not safe when their Palestinian neighbours are left without hope. International players cannot accept spending scarce public funds on rebuilding from the rubble of each new war.

The EU can lead

For those of us who have mediated in the many frustrated peace efforts since Oslo, it is clear that the Quartet – in particular the EU and the U.S. – must work with regional actors to take the lead, instead of being led along by Israeli and Palestinian politicians incapable of breaking their peoples out of the vicious cycle of hatred and revenge.

Instead of ritualistic donor conferences and new declarations of intent, Brussels and Washington should set deadlines for Palestinian elections and ending Israel’s blockade. They should impose compromise solutions. There are many excellent plans hidden away in drawers that could bring security to Israelis and justice to Palestinians, but they need to be driven by international pressure.

So let 2015 be different. Start by giving hope to Gaza. We have seen over the last 20 years that there are no entities on earth less qualified to control Gaza’s borders than those doing it now. It is time to lead rather than be led in Middle Eastern diplomacy.

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Europe faces new opportunities for cooperation with China. In 2013, Chinese President Xi Jinping initiated the One Belt One Road (OBOR) initiative, comprising the ‘Silk Road Economic Belt’ and the ‘21st Century Maritime Silk Road’, which envisages a comprehensive network of railways, roads, air and sea links, pipelines and transmission grids connecting China to Europe and the wider world. Before that, many in Europe were talking of building a free trade zone from Lisbon to Vladivostok so partners would not have to choose between Moscow and Brussels.

These developments would push forward intercontinental cooperation between China and Europe. Overland and maritime Silk Roads could link Central Europe with Eastern Africa and connect the Pacific and Indian oceans to the Mediterranean. This would not only drive the rise of China and India and consolidate Asia’s growth momentum, but also create a more inclusive globalisation, closing gaps between coastal and inland areas. By opening up to the West, One Belt One Road would encourage the development of China’s western regions as well as Central Asia and Mongolia. It would also create an opportunity for Europe to rediscover its ties with China and take East-West integration to new levels.

Global geopolitics may be reshaped through OBOR, returning Eurasia to its historic place at the centre of human civilisation. The two great civilisations of East and West were linked until the rise of the Ottoman Empire cut off the ancient Silk Road. That forced Europe to move seaward, leading to globalisation through colonisation and a further decline of the Silk Road. Eastern civilisations turned conservative, and the world became centred on the West. With the rise of the United States, Europe entered into a decline which recent attempts at integration have been unable to be reverse. Europe is now faced with a historic opportunity to return to the centre of the world through the revival of Eurasia.

China’s One Belt One Road offers the EU opportunities spanning from Europe itself to the Pacific and beyond, beginning with fulfilling European Commission President Jean-Claude Juncker’s plan to inject €315bn into the EU economy over the next three years. European economic growth would be stimulated through the two-way connections extending the EU single market into Eurasia. The number of middle class consumers in OBOR regions is estimated to reach 3bn by 2050, while over the coming decade OBOR will create $2.5 trillion in trade among 65 countries.

“For a long time, the EU has been unable to prioritise between its Eastern and Mediterranean partnerships”

The initiative could also spur an upgrade the China-EU comprehensive strategic partnership. The European interconnection plan, linked with OBOR, will enable “five-way” connection in policy, trade, transportation, currency and people to mesh with China and Europe’s “four great partnerships” of peace, growth, reform and civilisation. Poland and Greece will become new gateways for China’s access to Europe under the 16+1 framework of dialogue between China and countries in central and eastern Europe. China and Europe can discover new sectoral dialogues in maritime and cyber issues.

For a long time, the EU has been unable to prioritise between its Eastern and Mediterranean partnerships which both have problems in implementation. With the Ukraine crisis tearing Europe apart, it seems that in order to strengthen European integration, actions cannot be confined to the present Union. One Belt One Road would turn central and eastern Europe into China’s new European portal, and vice versa.  In addition, the inclusive development advocated under OBOR should be seen as an opportunity for integration, helping a dozen Chinese provinces to establish close economic partnerships and investment ties with European regions.

Through such increased connectivity, OBOR may even lead to EU-Russia reconciliation. Since the end of World War II and the establishment of NATO, “keeping Russia out” has been a clear strategic goal for the West. The current Ukraine crisis is a consequence of that strategy. EU-Russian reconciliation could be the cornerstone of stability in Europe. One Belt One Road aims to “keep Russia in” by working with Russia’s development projects in the Far East and organisations like the Eurasian Economic Union, the Collective Security Organisation of the Commonwealth of Independent States and the Shanghai Cooperation Organisation. German Chancellor Angela Merkel has realised that, since we are unable to choose our neighbours, Europeans must interact with the Eurasian Economic Union. This could help resolve the Ukraine crisis and forge long-term peace and stability.

Further East still, OBOR is an entry point for the EU into Asia-Pacific affairs. Since the United States put forward its “return to Asia” strategy, the EU has been concerned it will be marginalised. EU efforts to accelerate the promotion of free trade agreements with Asian countries have made less-than-satisfactory progress. OBOR would make it much easier for Europe to participate in Asia-Pacific affairs.

OBOR would enhance the EU’s global influence, promoting green, sustainable and inclusive development, and the high labour and environmental standards long promoted by the EU. Many of the countries along the route are Europe’s former colonies who need to draw from European experience in global and local governance. There will be a greater opportunity for China and the EU to cooperate in markets like West Africa, the Indian Ocean and Central Asia. Europe’s experience, standards and historical and cultural influence are valued by China, and One Belt One Road will uphold the spirit of the Silk Road, namely solidarity, trust, equality, tolerance and mutual benefits to produce win-win cooperation.

Europe will also find the opportunity to balance its transatlantic relationship. Since World War II, Europe has relied heavily on transatlantic relations but found it hard to get out of an asymmetric position with the United States. The hope of “speaking with one voice” has remained elusive. OBOR, on the other hand, emphasises openness and inclusiveness. It transcends the bi-lateral exclusivity of the Transatlantic Trade and Investment Partnership (TTIP), and does not seek to exclude any country, to create spheres of influence nor to engage in military expansion. Engaging with OBOR will make the EU both a Eurasian power and an Atlantic power more equal to the U.S. By promoting China-EU cooperation on Silk Road security, it may also contribute to bolstering Europe’s position in NATO.

“There will be a greater opportunity for China and the EU to cooperate in markets like West Africa, the Indian Ocean and Central Asia”

China-EU cooperation brings benefits for both sides. It enhances the potential for bi-lateral cooperation and world influence through the joint development of third-party markets, ultimately bringing regional integration and inclusive growth. Such are the shared expectations of both China and the EU. Europe should grasp the opportunities of One Belt One Road to realise its dream, which is complementary to the Chinese dream.

The New Silk Road Initiative could help redirect the centre of geopolitical gravity away from the U.S. and back to Eurasia. Europe is faced with an historic opportunity to return to the centre of the world through the revival of Eurasia. From this perspective, Europe should support new infrastructure and other development projects. The recent decision by France, Germany, Italy and the UK to join the China-led  Asian Infrastructure Investment Bank (AIIB) goes in this direction, and represents a major shift in European attitudes towards Asia, and China in particular, that clearly departs from the U.S. position.

The post One Belt One Road: Opportunities for Europe-China cooperation appeared first on Europe’s World.

Infrastructure has quite suddenly become the new mantra of governments around the world. Europeans and Americans are waking to the modernisation of their crumbling roads, sewerage and water systems as ways of reviving flagging economies, but in Asia infrastructure is the key to a new era of progress and prosperity.

For vibrant as Asia undoubtedly is, it still has leaden feet. It’s not hard to understand the region’s preoccupation with infrastructural development when stuck in, say, Jakarta’s or Manila’s endlessly gridlocked traffic jams. Outside the cities, rural life in much of Asia contends with road and rail communications so poor that economic development risks being seriously handicapped for many years to come.

The contrast between backward Asia and the go-getting image of ‘Asia Rising’ is stark, and the implications are inescapable. Unless Asia’s teeming mega-cities and largely undeveloped rural communities can resolve their transport and mobility problems, they are liable to start slipping backwards in terms of global economic competitiveness.

The politics of infrastructural investment are a hot topic in Asia. From India to China, and including all the smaller nations in between, the region’s transport and information-related needs by 2020 have been estimated at a gigantic $8 trillion by the Asian Development Bank. How to mobilise such an amount, and where and how to spend it were that sort of money to be available, are burning questions.

That’s why so much attention is being focused on the Beijing-backed project of an Asian Infrastructure Investment Bank (AIIB), and also on a parallel project that has received no attention at all in most parts of the world, but is potentially a highly significant geopolitical game-changer. Plans are afoot to set up an Islamic Infrastructure Investment Bank (IIIB), probably to be headquartered in Jakarta as capital of the world’s largest Muslim nation.

High hopes are now pinned on both. The aim of the AIIB is to mobilise much more investment capital than the World Bank and its development arm, the International Finance Corporation, have so far contributed in Asia. Its supporters and propagandists say that in only a few years its capitalisation should double from $500 billion to $1 trillion.

The birth of the AIIB, no one should be in any doubt, reflects China’s undisguised impatience with Western-dominated global institutions, rules and standards that many developing countries see as skewed to favour America and Europe. The origins of the IIIB are very different, yet perhaps equally capable of catalysing change in the international banking system.

The IIIB is to be an off-shoot of the Islamic Development Bank that has been based in Jeddah for the last 40 years, and whose chief shareholders along with its Saudi Arabian hosts are Nigeria, Iran and Libya, with Malaysia and Indonesia holding smaller stakes. Although the IIIB will start with a capital base of only $1 billion, an important element of the project will be to further develop Sharia banking that adheres to Islamic principles on lending, and then harness that growing sector of financial services to Asia’s hunger for infrastructure. Once the IIIB is up and running in Jakarta, it will evidently operate in tandem with financial institutions in the Malaysian capital Kuala Lumpur, where Sharia-compliant bank assets stand at $170 billion against Jakarta’s $21 billion.

The uncertainties and unanswered questions surrounding both these proposed multilateral lending bodies are legion. To begin with, who will call the shots on the AIIB’s structure and development? China is clearly in the lead, but with almost 60 countries around the world now signed up as founding members, can Beijing claim ownership and retain sweeping executive powers? Unsurprisingly, China refused Taiwan’s candidacy, but that doesn’t mean its own role will forever go unchallenged.

And where will the AIIB be based? Hong Kong seems out of the running because the democracy protests there have irritated Beijing. Singapore is actively lobbying to play host, and its sophisticated banking industry is an undeniable lure. Even more important than location is the wider issue of lending criteria. Both the AIIB and the IIIB will have to deal with extremely sensitive political choices about priorities in the financing queue. This is already apparent at the embryonic Shanghai-based New Development Bank – better known as the BRICS bank. Launched two years ago in New Delhi by Brazil, Russia, India, China and South Africa, it is already grappling with its founders’ very different development needs.

Asian nations, too, are disparate. The ten countries in the almost 50-year-old Association of South-East Asian Nations – Asean – range from tiny, rich Singapore to sprawling Indonesia. Its fast-growing population of 250m may eventually even challenge China economically, but first, like so much of Asia, it must tackle daunting infrastructural weaknesses.

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A Tory government, sceptic on the EU, with a small majority sounds familiar – think of the Major government in the 1990s (though with a majority then of 21 well ahead of Cameron’s slender advantage). But little else looked the same as politicians, pundits and the public alike surveyed the new British political scene on Friday morning.

Within minutes of the UK’s polls closing on Thursday evening, an election outcome no one had predicted was harshly outlined by the exit polls: a Tory majority government, a complete wipe-out for the Lib-Dems nationwide, and a dreadful and hugely disappointing overall result for Labour, with their wipe-out in Scotland by the Scottish Nationalist Party every bit as bad as Labour’s worst scenarios.

Big names fell throughout the night – Labour’s Douglas Alexander went early on, later shadow Chancellor Ed Balls after a recount in the grey light of the next morning. Vince Cable, Simon Hughes, Charles Kennedy, Danny Alexander and many other Lib-Dems saw their parliamentary careers ended, while Nick Clegg kept his seat only to gaze out over a rump Lib-Dem contingent of 8 MPs down from 57. The Lib-Dem share of the UK-wide vote was under 8%, a debacle from which there may be no return. By early breakfast time, pundits were wondering if it would be Clegg or Miliband to step down first; in the event, UKIP’s Nigel Farage beat them to it, resigning first, then Clegg shortly before midday and Miliband less than 30 minutes later. The face of British politics changed in one short hour.

The two big victors of the night were David Cameron and Nicola Sturgeon. Cameron is back in Downing Street with a majority no poll had predicted before election day and that the Tories hadn’t dared to dream of. And Nicola Sturgeon led the SNP to victory in 56 out of Scotland’s 59 MPs – up 50 MPs from 2010. As one Scottish journalist put it ironically on Twitter, there were even so more Unionist MPs in Scotland than pandas (three MPs – one each of Labour, LibDem and Tory, with just two pandas on loan from China in Edinburgh zoo).

The UK’s first-past-the post system delivered the Tories their small but so unexpected majority with about 37% of the vote, while the landslide in Scotland reflected the SNP getting over 50% of Scotland’s votes. Labour was  wiped out in its historic heartland of Scotland, despite – or indeed very much linked to – the ‘no’ vote in the independence referendum. The UK Independence Party with its anti-EU, anti-migration, Little Englander stance came out of the night as the UK’s third biggest party in percentage terms – around 12% – but only one MP. Leader Nigel Farage failed to win his target seat and promised (before his resignation) to fight for proportional representation, something that David Cameron is not likely to be spending time on in the next five years.

EU Referendum, potential Brexit on Cards

David Cameron has said very clearly that he would not govern again without holding an EU referendum, so that prospect will now move centre stage. He has also said it would be by 2017, yet it is very unclear how any treaty change could be agreed and ratified by the EU’s 28 member states in such a short time scale, but that will be his aim.

Cameron’s likely demands for EU reform are fuzzy and have changed often in the last couple of years. Migration, despite its prominence in the British political debate in the last few years, did not figure centrally in the election campaign, but issues of controlling and restricting other EU citizens from UK benefits is likely to figure strongly in Cameron’s demand for EU reforms, but what sort of changes other member states will support is less than clear.

Still, with a possible ‘Brexit’ now on the cards, other EU leaders, however reluctant given the ‘awkward squad’ approach of the UK to EU affairs, will mostly do what they can  to keep the UK in while protecting their own interests. The most recent polls put the ‘yes’ vote for staying in ahead, but much can change in a country with a Tory government with a small majority and a strong right-wing agenda, a large eurosceptic UKIP contingent, a wiped-out Lib-Dem party, and a Union with Scotland fraying rapidly.

While the main focus in EU politics for the Cameron-led government will be the referendum, the loss of British influence in the EU over the last five years – from a low profile on Ukraine and Turkey, to no influence over budgetary policies – is likely to continue along with the UK’s wider lessening of global foreign policy influence.

Future cuts in public expenditure are likely to lead to a harsher atmosphere, with unpredictable impacts on opinion on the EU. The Tories’ promised cuts are likely to leave the British state a much smaller share of national income than, in some predictions, since the 1930s. The Tories promised £12 billion in cuts from the welfare budget heralds some drastic attacks on poorer people’s benefits, from young people to the disabled and sick.

Independence for Scotland on the cards again

The bonds linking the four countries of the United Kingdom are now visibly strained to a new level with Scotland and England heading in such different directions politically. The vote in Scotland was in many ways positive, representing a new, positive engagement with politics across the country, including a more positive outlook on the EU, on migration, as well as a strong anti-austerity position. But the SNP will have little influence over Cameron’s majority government (though in his first statement on the steps of no 10, Cameron promised more devolution soon), and the chance of a majority at Westminster with Labour disappeared in the earlier hours of Thursday night.

In the middle of election night, Nicola Sturgeon insisted that this vote was not one about independence, but held out the possibility that elections to the Scottish Parliament due next year would indeed potentially bring the issue up all over again. Any ‘no’ in the now definite EU referendum would also clearly propel the more pro-EU Scots towards an independence ‘yes’. The UK’s historic 300-year existence is now under question like never before.

Where next for the UK?

Cameron has said he would not serve a third term as Prime Minister, so his fellow cabinet ministers will  surely be setting out their stalls very soon to succeed him as leader, and contenders will doubtless be pushing for a leadership election in two years’ time rather than the three or four that Cameron might prefer.

The UK has a clearer government now than many had expected, but the future of the UK, as a country and in the EU, is anything but clear.

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So it would appear that we will have a Conservative Government with a small majority in the House of Commons. A single party governing over a divided country means the first priority will be dealing with divisions within the United Kingdom – most notably the ‘Scottish question’. Yet of equal importance for this government will be the question of Europe.

David Cameron promised to hold a referendum on British membership of the EU before the end of 2017 if re-elected to Downing Street. Such is the desire to see this amongst his back benchers that Europe might be the issue that maintains discipline among them for other government business – at least until a referendum campaign begins.

Ironically, it may be that the result is the best that those concerned with seeing Britain continue as a member of the EU over the medium term could have hoped for. The UK is now certain to hold a referendum which it would not have had if Ed Miliband had triumphed. Yet, and perhaps more significantly, Cameron’s victory means that the conditions under which this referendum will be held will be more favourable than virtually any conceivable alternative.

For one thing, the ability of the Tory right to talk of a UKIP threat may now be limited; UKIP won only a single seat, which was not claimed by party leader Nigel Farage. More importantly, support for UKIP seems to have affected Labour as much as the Conservatives, notably the defeat inflicted on Ed Balls by the Conservatives, where UKIP polled around 7,000. One potential implication of this is that these backbenchers will find it much harder to bully the Prime Minister when he comes to drawing up the wishlist for his much-vaunted ‘re-negotiation’ of the terms of EU membership.

This in turn increases the likelihood that David Cameron will campaign in favour of continued membership following a re-negotiation that is more likely to succeed. Thus, both major national parties alongside, presumably, the SNP, will come out against ‘Brexit’.

Given this, and despite the suspicion with which the British press – particularly the tabloids – is viewed by Europhiles, it seems likely that only the Daily Express will openly campaign for ‘Brexit’. It will be interesting to see how the Murdoch press approaches the referendum campaign, but my bet would be that metaphors about ‘holding ones nose and voting to stay in’ will be thick on the ground.

Finally – and this would have been the case whatever government had been elected – the business community will come out overwhelmingly in favour of continued membership. However unpopular some in business – notably the banks – may be, their capacity to induce fear was on open display at the time of the Scottish independence referendum and will doubtless be at the fore again in a referendum on EU membership.

Support for British membership has been rising steadily over the last year or so, and this combination of political and broader contextual factors points to a victory for the anti-Brexit camp. For all the uncertainty the prospect of a referendum might seem to bring, there is room for some optimism for those keen to see the UK continue as an EU member.

Of course there are caveats. Perhaps the overwhelming lesson of last night for all those – particularly academics – interested in politics is that polls must be taken with a pinch of salt. And referenda are, of course, particularly unpredictable.

Events in Scotland point to the fact that one referendum may not be enough. For all the rhetoric of some Europhiles that a popular vote on EU membership might ‘lance the boil’ or ‘empty the poison from’ UK-EU relations, it is conceivable that one referendum will lead to calls for a second.

All this being said, it seems that we are finally at a point where the British can have a genuine debate on EU membership. The election campaign warns us that this campaign might not be an exercise in soaring rhetoric and clarity of vision, but that chance for a proper debate is welcome. Were I a betting man – which, after last night, I no longer am – I would place my stake on the public voting to remain in the club.

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The spectre of a British exit from the European Union has begun to recede, although it has far from vanished.

The surprise result of the UK general election that is returning the governing Conservative party to power for another five years suggests that Britain’s voters prefer the devil they know to the devil they don’t. That may well apply to EU membership too.

The question-mark over the UK’s future within the EU had been widely seen throughout continental Europe as key to this election, yet it figured hardly at all as an issue. It posed too many awkward issues for the country’s mainstream political parties, and was therefore pushed aside by their focus on domestic economic and social problems.

The main message of the UK election result is that British voters do not welcome the fragmentation of the political system and the birth of smaller parties leading to a new era of coalition governments. That doesn’t mean that the debate over shifting to some form of proportional representation is over, but it does suggest that the British electorate favours the stability of its traditional ‘first past the post’ system that favours the Conservative and Labour parties.

The clear loser in this election has been UKIP, the anti-EU ‘independence’ party that within only a few years has been threatening to alter the British political landscape. Despite gaining some 12-13% of the overall vote, its representation in the House of Commons has been halved to just a single MP. Nigel Farage, UKIP’s charismatic leader, has been denied the parliamentary seat he so desperately sought, and the party’s bandwagon appears to be slowing and perhaps going into reverse.

None of this should be taken as an end to the ‘Brexit’ threat. The next major political test for prime minister David Cameron will be the ‘in-out’ referendum on EU membership that he has pledged by, or before, 2017. The number of votes cast yesterday for UKIP candidates still points to a hard fight by the government to keep Britain in Europe.

Cameron’s first reaction to exit polls indicating that the Conservatives would be able to govern without a coalition partner was to call for a return of his Tory party to the ‘One Nation’ policies of 50 years ago that emphasised the reduction of social and economic inequalities. The major issue, though, is whether his party will also embrace a ‘One Europe’ policy.

David Cameron has long insisted that he and his government will campaign for a ‘Yes’ vote when the British people take part in a referendum on whether to stay in the EU. But the rank-and-file of his MPs seem increasingly eurosceptic, and there are now reckoned to be at least 60 die-hard anti-European MPs out of the Conservatives’ total of 300-plus seats.

This parliamentary arithmetic suggests that while Cameron’s personal stature and authority will have received a strong boost, he will be very vulnerable to pressure from his own eurosceptic MPs. Unless he agrees to water down the new government’s pro-EU stance, runs the argument, he could very well suffer a rebellion and even the collapse of his majority.

Because the Europe issue figured so little in the UK’s pre-election campaigns, it’s hard to gauge the country’s mood on EU membership. Business leaders have of late swung belatedly into action with warnings of the serious economic consequences of a ‘Brexit’, but voting intentions – as this general election has plainly demonstrated – are opaque.

Cameron sees himself as an internationalist who is at odds with the ‘Little Englanders’ who are a force to be reckoned with in the Tory party. His best policy now will be to capitalise on his surprise election victory and set a very early date for the referendum. He has been repeatedly advised that his promised “re-negotiation” of Britain’s UK membership cannot yield any substantial results, so he should opt for a vote before the end of this year that would pre-empt the humiliation of Britain’s demands being rejected by almost all the other EU governments.

For British voters, this election was all about Britain; whether the sacrifices of tough austerity measures are now being rewarded by economic growth that outstrips the eurozone has been a constant theme, and the outcome has endorsed that view. But the view of many European politicians and commentators that this election was about much more than the UK is also true.

Europe can heave a sigh of relief that the UK’s membership of the EU will not be a political football to be kicked around in an unruly melée of coalitions, and that British voters apparently favour the status quo rather than the unknown. But David Cameron will still face a tough fight over Britain’s future in Europe.

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